Taking Stock of 2019

Is it me or time really seems to fly when you are getting old. We have reached the end of 2019 in the blink of an eye. Time to take stock for the year again!

Family

Wifey and I are spending most if not all of our free time we have with Baby M who arrived on Father's day 2018.

Having turned 1.5 years young recently, she has been getting more active by the day. Grabbing our hands to walk around, dictating where should we sit, dancing when there's music and basically exploring all stuffs around her.

Her vocabulary is also expanding everyday. Sometimes she surprises me by saying a word or pointing out the correct thing when I ask her where is it. 

I have noticed this little cutie likes three things in particular - music, dancing and reading. If she wants to pursue interest or enrichment in these areas I will support her.

On the other hand I do not want to be like some parents who send their kids to tons of classes and tuition, thus depriving their kids of the happy childhood that all children should have.

Sometimes we should draw a line against kiasuism.

Our biggest wish for her remains the same. That is for her to grow up happily and healthily.

Healthy Lifestyle

I feel I have done quite well in this area. As far as I can remember I have not fall sick for the past year or two. Touch wood!

I attribute this to my healthy lifestyle which I try to adhere to as far as possible. Aspects of this lifestyle includes:

1) Cold shower

I have not been using the water heater since at least two years back. Whether it's the morning shower before I go out or the night shower when I get back, it is always a cold shower for me and I firmly believe it helps in building up my immune system.

A cold shower helps in muscle recovery too especially after an intense workout.

2) Exercise

I always try to start my day with a workout after I get off bed. This helps to jump start my day and secondly, builds up my fitness and muscle mass obviously.

Most importantly, it acts as a counterweight against my diet which I do not restrict because I can't! There's just too much good food in Singapore which pushes my will power to the abyss.

I do not have a fix routine for my workout. The type of exercise and repetition varies but generally it is something like this.

50 ~ 100 x Pushups
50 x Toe Touch Crunches
2 min x Plank
50 ~ 100 x Bicep Curls
25 x Squats

I try to do the above during the evenings too but that doesn't always happens especially when baby M is around..

I run for cardio exercise. I enjoy running for the longest time. It's good for de-stressing and helps to clear my mind. Mileage-wise of course the more the merrier. But for 2019 I only done about 216 km.

Last run did for 2019: A morning run near my neighbourhood. 

Healthy lifestyle, healthy body. Totally worth it!

Work

With my financial year ending in February 2020, I still have two months to charge ahead. 

Results so far are not bad. I can't say I'm totally pleased as the targeted turnover has not been hit yet. However bottom line is encouraging due to the high margin in several projects.

Year-to-date top line is already higher than whole of last year while bottom line is close compared to whole of last year.

I expect the latter to exceed last year's when we close the book by year end.

Moving forward, my focus continues to be growing the business and buy an office space as part of my recurring income plan.

Financials and Other Incomes

Bought a new car this year due to the expiring COE of my previous car. Luckily did not have to touch my investments but it did affected my cash flow.

Previously I have set these targets for 2019.

Targeted passive income: S$7,200
Targeted side income: S$3,000

Actual passive income achieved: S$4,471.25* (vs S$6,069.08 in 2018)

Actual side income achieved: S$5,314.78 (vs S$3,042.86 in 2018)

Results: One target achieved.

For 2020,

Targeted 2020 passive income: S$7,200
Targeted 2020 side income: S$6,000

Investments

My holdings as of 31/12/2019:

Relatively quiet year for me. Opted for scrips for MLT and ESR REIT.

Total number of holdings increased to 13 compared to 12 last year. 

However portfolio value at end of the year decreased slightly to S$122,453 (vs S$123,356 in 2018). This is due to several reasons:

1) Cash received from my sold transactions have not been fully redeployed to the portfolio.

2) Share price of Japfa has not recover fully to the pre-swine flu level.

Tabulated summary*:

As shown in the above summary, I am actually at a slight paper loss excluding dividends. However the power of dividends is evident here.

The overall portfolio is mainly bogged down by ISOTeam of which I am having a S$9K paper loss currently.

Although the dividends help to cushion the lousy feeling abit, the opportunity cost is mounting. I will make a decision on this counter within this year or two depending on the share price.

This year ISOTeam should be presenting a nice set of results due to the following:

1) The numerous contract wins which add to the already high order book.

2) SG Bikes which should turn profitable this year.

3) Integration of Pure group into ISOTeam which will further contribute directly to ISOTeam's expected good results.

4) The election year which should means more public projects out for tender in ISOTeam's area of expertise.

Of course whether these will serve as catalysts for the share price to move up is anybody's guess.

My transactions for 2019:

Not much transactions done for 2019. Accumulated Japfa in batches. Yeah it's not really a dividend stock which goes against my style. But I can't resist my itchy fingers. Bad habits die hard.

On the other hand, wifey's portfolio performed much better.

 

Did some re-balancing for her. Number of stocks remained the same as compared to 2018.

However year end portfolio value increased to S$63,158 (vs S$52,371 in 2018).

Tabulated summary:

Her paper gain + realised dividends hit S$11,981. Looks good I must say.

You can see the risk attitude I adopted while managing her portfolio as compared to managing my own.

If I had been as prudent in managing my portfolio it would have performed much more beautifully.

So this is it. A long post of 2019.

Last but not least, I wish everyone a happy new year ahead. Good health and good wealth!

* Reclassification of RHT special dividends

ISOTeam AGM 2019

This year's AGM is held at Sheraton Towers again in a ball room with about 120 seats at ~80% full.

The AGM started at 10.02 am with a video clip on an overview of ISOTeam business and introduction of board members. 

After that is the Q&A session. 

Q: Big fluctuations on earnings between 2018 and 2019. What are the key factors that contributed to this?

A: ISOTeam has a fixed cost to maintain in terms of overhead expenditures. Managed to reduce that in 2019. 

Q: Any loss-making projects? 

A: No. 

Q: A&A segment went up alot and that segment contributes a big chunk of the revenue. Is this the focus of ISOTeam going forward?

A: A&A is a big margin segment. Moving forward ISOTeam will continue to focus on this segment. 

Current overall orderbook for ISOTeam is about S$140 million. 

Q: Can throw some colours on Pure group? How will they boost ISOTeam? 

A: Pure group is a project management company. ISOTeam is not project manager. We are just a contractor. The S$40 million MBS project is from Pure group and ISOTeam is their contractor and this is not the first time ISOTeam is working with them. 

80% of Pure group business is in Singapore and rest of the 20% is in Thailand, Malaysia and China. 

Q: Regarding SG bike. Is it easier for ISOTeam to just buy the busted bike company (Mobike) instead of buying SG bike?

A: ISOTeam is buying the bikes from Mobike only, not the business of Mobike.

ISOTeam paid about S$350 per bike when setting up SG bike. 

However ISOTeam paid about S$20 for each Mobike bicycle after nett of licensing fee and refundable deposit to LTA.

Following is my opinion: (I think back then when ISOTeam set up SG bike, Mobike has not gone bust yet so this question of buying over Mobike is not really relevant.) 

Q: Government is pushing for BMW (bike, MRT, walk) initiative. Bike might not be as popular a choice. What do ISOTeam think? 

A: ISOTeam is very positive on the bike business. ISOTeam is the only full licensed bike operator now. 

Currently on weekends, all SG bikes are fully taken up.

When the bike count is increased after buying over Mobike bicycles, it should get even better because more bikes can be deployed to other housing estates. 

Q: Operating cash flow every year is negative. 

A: Mainly related to timing difference. Payment timing from customers. But since the government is the major customer, there is little risk of default. And government's payment term is 3 months whereas ISOTeam need to pay their sub contractors first. 

Another reason is also due to working capital for larger contract values now. 

Q: Proposed a lower fixed amount for the 3 founders' salary and a higher variable bonus component as a motivation for management to perform better. 

A: 3 of them don't get the same salary. They have different functions so they received different fixed pay. Variable bonus is devised in such a way that they get the same amount.

Q: Gross profit margin can be further improved from the current 15 - 16%?

A: Is sustainable and can be further improved. 

Q: Has all the savings been realised from the consolidation of operations and company office? 

A: ISOTeam has reduced from 6, 7 different places to one place now. 

The company is also applying for a higher quota to house more workers together. It is pending government's approval. Each worker approved can save the company about 200 bucks per month. 

Q: Any comment on the recurring income streams of ISOTeam? 

A: That is currently quite minimal. Solar Nova 1 is ending soon and ISOTeam is discussing with Sunseap on the maintenance of their solar systems and with Pure group in place, they are discussing with Sunseap on project management next time. 

Q: Is SG bike already profitable? 

A: Operationally broken even. With more bikes coming in things will improve further. 

Q: Is the geopolitical situation affecting ISOTeam? 

A: 99% of ISOTeam business is in Singapore so not affected negatively. 

Q: R&R margin used to be very good in 2015 and 2016. Can ISOTeam improve to that margin again? 

A: 2015 and 2016 are election years. After that the government tenders became smaller in contract value. 

Previously R&R contributed about S$20 million. But this year it already has S$60 million order. 

Q: Any upcoming big HIP project? 

A: Just completed one. Another one about 20% completed.

Q: What is the fair value gain of other investment? 

A: Investment in Sunseap. Fair value stated in accordance to FRS. 

Q: Is ISOTeam trying to expand outside Singapore by buying Pure group and going into project management? 

A: Most of ISOTeam business comes from the government. Stable income comes from them. 

ISOTeam is also moving towards becoming a one-stop soution provider as a turnkey player.

Q: Why are Goodwill and Intangible Assets treated differently? How are they classified? 

A: Both are related to previous acquisition of a company (not Pure group). Items are classified according to FRS. 

After the Q&A session is the customary voting of resolutions.

All resolutions passed with vast majority. 

The AGM ended at 11.15 am. 

As per previous years, the chairman and CEO stayed behind to mingle and answer further questions. 

This is the hallmark of a sincere and responsible management team. 

I had the chance to discuss with Anthony, the CEO on several issues and found him to be candid in his replies as per previous discussions. 

I personally like him as a CEO as I feel he has a very clear vision of the company and how to move it forward. Also feels that he is an 'on the ground' person who can resonate with the lower levels instead of someone who is sitting in an ivory tower. 

There are of course, couple of stuff that have been discussed which I don't think should be revealed in a public blog. 

But those, along with what I heard in the above Q&A, make me decided to continue holding on to the shares and actually make me looking forward to the near future of ISOTeam. 

Lastly I apologise if there is any incoherence or grammatical / spelling error in the above post. 

I have been having diarrhoea since this afternoon (4 times and feeling coming again..) and is rushing out this post using mobile phone.

Happy reading and hope it helps.