SATS, er, SAF must get AK to be a food ambassador!

When I first enlisted in the Singapore Armed Forces, combat rations were made up of canned sardines, canned chicken curry, canned baked beans, hardtack biscuits and chocolate bars.

When I went back 4 years later, combat rations came in army green packets and the variety was amazing! The packaging was strong and practical too.

We would leave the packets on the bonnets of 3 tonners and they would heat up under the Sun. Simply tear open the packets, pour out the contents into mess tins and we would have really yummy (almost gourmet, I feel) and warm meals.

I brought home a packet of red bean soup then and my mom loved it! My mom is very critical when it comes to red bean soup and she loved it! So, it must have been really good.

Anyway, a friend who went for reservist training recently told me packets and packets were thrown away as none of his fellow soldiers consumed any of the combat rations, preferring to simply dump the food packs in the rubbish bin at the end of the exercise.

It really pains me to think that so much perfectly good food is going to the landfills. All the resources that went into producing, transporting and storing the food are wasted. Of course, it is also a waste of precious tax-payers' money.

I do not understand why people would throw away perfectly good food:

Potato, cheese and sausages.

Black pepper mushroom noodles with sausages.

Baked beans, corn, cheese and sausages.

To readers who are still serving our country either as active servicemen or reservists in the military, please don't waste food. Please don't throw away your combat rations.

Like what my mother used to tell me when I was a boy, "Think of the many less fortunate people who do not have enough to eat."



Finally, for a bit of trivia, do you know that there is a company called Singapore Food Industries (SFI)? I used to be a shareholder. They are the people who supply combat rations to the Singapore Armed Forces. I rather liked the regular and good dividends which they paid.

Soldiers have to be fed and MINDEF is a good paymaster. 

Unfortunately, SFI was bought over by another company, SATS. 

Yes, interesting bit of trivia, isn't it?

Related posts:
1. AK71 gets recognition from the government!
2. SATS: A nibble while learning from Rusmin Ang.

An incomplete analysis of Wing Tai Holdings Limited.

Wing Tai Asia.

Someone asked me that since I bought into OUE Limited at a 50% discount to NAV, why not Wing Tai? Wing Tai's NAV/share is $3.78 and it last traded at only $1.74. That is a massive 54% discount to NAV.

Well, both OUE Limited and Wing Tai might be in the real estate business but they are not exactly the same. Wing Tai makes most of its money from property development, more than 80%, in fact. On the other hand, OUE Limited keeps its exposure to property development to a smaller 20% or less.

Of course, we know that in the current day environment with all the cooling measures in place and also an impending increase in interest rates, property development business is really not as promising as it was a few years ago.

We could say that Wing Tai also develops properties in Malaysia and China but are the residential real estate markets there insulated from rising interest rates? I would think not.

In an environment that makes building and selling residential real estate difficult, it is the property companies which have strong recurring income streams that will weather the downturn better. In this area, Wing Tai is rather weak as its investment properties are a small fraction in value compared to its development properties.

Undeniably, for Wing Tai to do well, its development properties will have to sell well but it seems unlikely that this is going to be the case.

Revenue has dropped significantly in the last 12 months and the decline could continue for some time to come. Although Wing Tai's boss said that they are not dropping prices to move stock, I would not be surprised if he should eat his words in the next 12 to 24 months.

Unless some of the earlier cooling measures should be removed by the Singapore government, things are unlikely to look up for the property sector. Unless interest rates stay low in future, investors are more likely to avoid investing in properties.

Wing Tai will have to pay extension charges for development properties which have not been sold two years after receiving their TOPs. It will be a percentage of the respective sites' purchase prices. 8% in the first year, 16% in the second year and 24% in the third and subsequent years.

To avoid paying these charges, Wing Tai could do a SC Global and privatise but with only slightly more than 50% of the issued shares in their control, it would cost the Cheng family quite a fortune to do so and Wing Tai's boss has already said that there is no plan to privatise.

I am not an expert analyst on the property sector and I am not sure how well Wing Tai's properties will sell in future but I am willing to bet that conditions will continue to be difficult. Revenue could continue to decline and if Wing Tai should drop prices on its development properties, revenue could receive a boost but earnings might be flat.

The question now is really what is Wing Tai worth on a per share basis?

Well, I am more sanguine about its investment properties than its development properties. Those are worth about 72c or 73c a share. These properties are recurring income generators. Income could be increased by improving occupancy levels or increasing asking rents or rates where possible.

As for its development properties, the only way for them to make money for Wing Tai is if they were sold. Otherwise, even if we were to assume further write downs in value, they are just dead weight if they remain unsold. With the extension charges payable 2 years upon receiving their TOPs, they will become liabilities until they are sold. Therefore, to be very conservative, taking into consideration possible bigger write downs in future, to me, they could be worth $1.50 a share.

Wing Tai has cash on hand but not enough to pay off all its borrowings. They are short of some 58c per share. However, unless things get seriously bad, Wing Tai is in no danger of going belly up. It could always sell a fraction of its development properties cheaper to raise cash. At the moment, with the cash that it has, Wing Tai is at least able to reduce borrowings further in case interest rates should go up in order to avoid higher finance cost.

So, based on this incomplete analysis of Wing Tai Holdings Limited, to me, a fairly good entry price would be $0.72 + $1.50 - $0.58 = $1.64, give or take a few bids.

Technically, $1.64 looks like it could be tested as a support while in the short term, we could see a rebound in share price as the MACD formed a higher low.

See: Full Year 2014 Financial Statements.

Related post:
OUE Limited: A nibble.

Formerly Wing Tai's headquarters.