Friday, November 27, 2020

Credit Bureau Asia Limited IPO - A Defensive Business Model With A 30x PER Valuation

Credit Bureau Asia (CBA) has just lodged its final prospectus for an initial share offering that will raise S$53.9 million.

This comprises an offering of 28.5 million placement shares and 1.5 million public offering shares at an offer price of S$0.93.

Separately from the IPO Offerings, the Cornerstone Investors will subscribe at an aggregate of 28 million new shares at the Offering Price of S$0.93. This constitutes approximately 12.2% of the total number of 230.39 million shares issued as of the date of the listing.

The Offering will close at 12 noon on the 1st December 2020, and the trading of CBA shares will commence at 9.00 am on the 3rd December 2020.


Credit Bureau Asia (CBA) is the leading player in the credit and risks information solutions market in Southeast Asia, providing credit and risk information solutions to an extensive client base of banks, financial institutions, MNCs, government bodies, public agencies, and individuals across Singapore, Malaysia, Cambodia, and Myanmar.

These include products and services such as credit and risk information reports, credit scores, data analytics, and client-specific tailored requests and solutions.

The Group has established a credit bureau through an Associate or Joint Venture in each of the respective countries they operate in:

  • Credit Bureau Singapore (CBS)
  • Credit Bureau Cambodia (CBC)
  • Myanmar Credit Bureau (MMCB)

For Singapore and Malaysia, the Group has a joint venture partnership with Dun & Bradsheet with access to an extensive database containing 330 million business records and operates through the subsidiaries D&B Singapore and D&B Malaysia to provide customers with a range of business information and risk management services, sales and marketing solutions, commercial insights, and other ancillary services.

  • Dun & Bradsheet (Singapore) Pte. Ltd.
  • Dun & Bradsheet (D&B) Malaysia Sdn Bhd.

The full structure of the Group as at the date of the Prospectus is as follows:

Source: Credit Bureau Asia Limited Prospectus

The main business model of the company encompassed their revenue model into two core segments:

i.) Financial Institution Data Business ("FI Data Business")

ii.) Non-Financial Institution Data Business ("Non-FI Data Business")

Financial Performance

The Group has done relatively well financially in the past few years, even during the first half of this year when faced with a pandemic outbreak.

In the 1HFY20, the Group's revenue came in at $20.5m, which is an increase of 4.5% year on year.

The revenue from the "FI Data Business" increased by $0.1m or 1.6% from $8.4m in the first half of FY19 to $8.5m in the first half of FY20.

The revenue from the "Non-FI Data Business" increased by $0.7m or 6.5% from $11.3m in the first half of FY19 to $12m in the first half of FY20. This was mainly attributed to the i.) increase in revenue contribution (+$0.5m) from the Singapore and Malaysia commercial credit risk reports sold to international customers, driven by the increased demand for compliance on requirements globally; and ii.) increase in revenue contribution from the increased sale of reports under the Singapore Commercial Credit Bureau division.

Source: Credit Bureau Asia Limited Prospectus

Source: Credit Bureau Asia Limited Prospectus

The business model is also highly cash-generative.

From FY2017 to 1HFY20, the Group had a net operating cashflow of $10.9m, $12.0m, $19.8m, and $10.8m respectively, which translates into a cash conversion ratio of 69.7%, 72.6%, 85.0%, and 83.3%.

In FY2019, the Group had an acquisition in a business which resulted in a net CAPEX spent of $6.7m during the year. In FY2018, the Group's negative cashflow from investing activities were due to placement in long-term fixed deposits.

The Group was also rather generous with the previously dished out dividend payouts:

  • In the first half of FY20, the Group paid over $15.4m in dividends to its shareholders and non-controlling interest holders, even though profits after taxes only came in at $3.72m. 
  • In FY19, the Group paid out S$5.9m in dividends.
  • In FY18, the Group paid out S$10.4m in dividends.
  • In FY17, the Group paid out S$21.7m in dividends.

Reasons To Like Them

The Group has proclaimed itself as having the first-mover advantage in Singapore, Cambodia, and Myanmar which has allowed them to build rapport and maintain relationships with the various businesses and individuals. While they are not operating on a monopoly model (more on that below), it would nevertheless be difficult for new market entrants to replicate their model due to the regulatory and the extensive database and expertise they have maintained over the years with these businesses.

Also, I find that the business model they are operating is also defensive in nature.

During a period of economic boom, the bureaus would benefit from an increasing number of business registrations, the volume of transactions, and increase lending activities - thereby uplifting the demand from the request of the credit and analytic reports. There would also be an increase in demand in the consumer credit report applications due to an increase in confidence in business activity as more people are buying more assets, lending more, and transacting more volume.

During a period of an economic downturn (such as the one we're experiencing right now during the Covid) - banks, financial institutions, and businesses are likely to conduct more stringent risk assessments on an individual profile when it comes to lending and borrowing which leads to purchasing more credit reports for risk mitigation purpose. Businesses are more wary of higher credit risks of their existing and prospective customers which will encompass them to purchase more in-depth reports that provide better assessments so companies can make better evaluations as a whole.

Global trends of increasing government and industry regulation, risk management requirements, and the rising importance of data in decision-making, have resulted in increasing importance and need for credit and risk information solutions as they become a fundamental component in the business decision-making process.


In Singapore, Experian Credit Services Singapore Pte Ltd. is their main competitor.

For the year 2018, D&B Singapore and Experian Credit Services Singapore held 40% and 57% of the market share respectively - essentially making them an oligopoly in these sectors.

In Malaysia, the Group competes with three other major operators in the Non-FI Data corporate credit bureau space - CTOS Data Systems Sdn Bhd, Basis Corporation Sdn Bhd, and Experian Information Services (Malaysia) Sdn Bhd.

Future Growth & Synergies

The Group will continue to drive for organic growth in the Singapore market under the regulatory regime of the Credit Bureau Act by making preparations to provide corporate credit reporting through CBS under the commercial bureau operator license which the Group intends to apply. This will provide a huge amount of synergies to the volume in addition to the existing consumer credit reporting license which focuses solely on a consumer individual.

For the Non-FI Data business, the Group intends to expand and increase the market penetration of their risk diligence solutions products and service offerings in the Singapore Commercial Credit Bureau platform.

The Group also intends to focus heavily on the next two hottest markets - Cambodia and Myanmar as the penetration growth looks to supersede and increase in the next few years. The Group will introduce additional product offerings and services that cater to these markets.


At the price offering of $0.93 cents, this trades well at a massive 30x Price to Earnings (PER).

It is not cheap but they certainly have the growth and defensive factors baked in the valuation.

While the Group did not declare any dividend policy, the Board intends to pay out dividends of at least 90% of CBA's net profit after taxes for the year FY2021 and FY2022. Based on the latest EPS, this would translate to about 3% yield at the offer price.

For investors who are looking at both yield + growth play, this may suit your type of needs.


I think the IPO would make a strong performance on the day of the offering, given the strong cornerstone investors and the clear growth strategy they have listed out.

Clearly, the valuation doesn't make it any cheap but given the defensive business model of how well it has performed during the pandemic and a clear growth strategy, we should have good interests in the company.

Also, we currently have a global market that is on the way back to recovery so that should also play out well for the offering.

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Thursday, November 26, 2020

How P6 Pupils Deal With The Fate of Their Future

The Primary 6 pupils collected their first major national examination results in the form of PSLE on the morning of the 25th November - one which is likely to be extra special this year due to the circumstance of the COVID-19 situation.

As these students go deeper into the future from their present moment, uncertainty increases with the logarithmic value of every misfit score divergence that they received on their PSLE subjects.

Every distinction score that they see printed on the paper deserves a heartened relief and a spontaneous burst of applause because it's the output of a long harvested effort.

I can tell you that myself personally because I couldn't and didn't score any single distinction myself when in hindsight I could have worked harder (and perhaps scored a little better).

I just wasn't matured enough back then to switch on my gear to go into excellence mode.

But what are we exactly applauding these students for?

For obtaining a good score and getting into a good secondary school? 

Or are we applauding them for the societies' approval of them? 

After all, surely it must feel good having your name being screened in front of the entire school hall. That's like some Million Dollar Round Table recognition or WWE Hall of Fame in the other world's dimension.

Applause is such a curious yet neglected phenomenon.

We tend to imagine that when we are watching a performance live on stage we tend to applause the performers and thank them for their relentless and passionate performance as an intent of our approval to them. The louder it gets the higher the elevation of that moment. When it gets to an extreme, we give them a standing ovation as a commensuration.

But this kind of applause is itself an expression of performance and to some extent an enactment of judgment, not a communication.

This year, we have a total cohort of 39,995 pupils who received their results and 98.4% of those pupils did well enough to progress to a secondary school.

Among that cohorts, 66.3% qualified for an Express course in secondary schools, while the rest of the cohorts are staged into the Normal Academic stream.

I was one of those who was back in my days staged into the Normal Academic stream.

While I wasn't matured enough back then to distinguish the two fates between the Express and Normal Academic paths, I vividly remembered the disappointment I had in myself - the hopes to manifest the failure of expectations from my parents and teachers.

Since then, I clicked and switched on my gear to do better and account for myself, which embeds a powerful mark of maturity from thereon.

It is the beginning of a direction of where to sail, how I wanted to sail, and whom I was sailing with.

The map is not the actual territory.

Even the best and most realistic of maps are imperfect by their own fidelity, not to mention there are some unraveling places today in the world that are not even on the map.

We define our own findings and abstract and make our own mark tomorrow. 

For all the P6 students graduating from the cohorts, you deserve a round of applause today - All of you.

The real hard work starts again today and will likely be the case for your traits foundation for the rest of your lives.

The fate of your future is in your own hands and the world awaits.


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Saturday, November 14, 2020

Nov 2020 - Portfolio & Transaction Updates



No. of Shares

Market Price (SGD)

Total Value (SGD) based on market price

Allocation %










Jardine C&C







Bank of America (US)







Lendlease Reit




























Yuexiu Trans. (HK)







Ascendas Reit







Tencent (HK)







Alibaba (HK)







Bank of China (HK)







GA Pack (HK)







Ho Bee Land









































What a busy month we had for November.

The election took most of the headline news when many investors thought we would have a crash should the Democrats win the election. Turns out otherwise and now we are staring back into one of the best gains in the month and trying to make sense of what's happening.

For the past couple of months, I have been positioning my portfolio for the eventual recovery from the Covid.

I wasn't expecting things to resume back anywhere to normal anywhere this year but I would like to think we could get some sort of normalcy by early to mid of next year.

The market is likely to react faster than the actual normalcy itself as we've seen in the past one week or so since Pfizer announced its 90% vaccine effectiveness and the portfolio has greatly benefited from the recovery as it is heavy on the recovery sector. 

We are still in the infancy stage of the news so I believe there would be more rooms for the portfolio to run.

There are always people who are going to doubt the effectiveness of the vaccine or the logistic ability to be able to transport or store the vaccine to its maximum effectiveness. My take on that is we should read all the comments and opinions with a pinch of salt. After all, if we can get through the hardest part, I'm sure there are some ways that the logistic part could be arranged. Already, Fedex and SATS have announced their ability function to store and we are likely to see more coming.

For this month, I've made a couple of changes but mostly rotations within the portfolio.

I've reduced my stake for Micro-Mechanics upon the announcement of the good Q1 results which sent its share price rising by more than 20% (and more than 40% since my purchase a couple of months ago). I still kept the majority of the shares at the moment but given the run-up ahead I wanted to trim it down a little bit.

I've also reduced more than half of my stakes for both Baba (HK) and Tencent (HK) after the shock announcement of the Ant IPO suspension which was certainly out of anyone's guess. I felt that there could be a further clamp-on the regulatory which might impact how future listing for these giants is going to come. In due and appropriate time, and at a level I am looking at, I will try to add back to my position for the longer term.

I've doubled down and accumulated more shares for Jardine C&C, Bank of America (US), and Lendlease Reit before the announcement of the Pfizer vaccine came out as I find their valuation too compelling to add. These three positions are now right behind my highest position in Comfortdelgro.

For a new entry this month, I've added Ascendas Reit at $2.99 after it announces its placement and preferential offering. While the yield is not the most enticing among all the other Reits, I feel that the current valuation presents a good runway for future further compression on the yield, which is likely to come in the form of share capital gain. It is common to see weaknesses in the share price in the short term whenever a Reit announces preferential offering, even if the acquisition is accretive but it should recover back within a while.

Networth Updates

With the positive news on most recovery sectors after the announcement of the vaccine (potential) and seemingly the rotation back to these unloved sectors, the portfolio ended a strong month with $278,431, up from the previous month of $242,897.

It has run up beyond my expectation as I had a stretch target to reach $250k in the earlier parts of the months not knowing that the rotation would come that quickly.

If this is just the start of the rotation, we could see perhaps a lot more to come in the next couple of months. I am cautiously watching and hoping for that to happen.

In a blink of an eye, we are left with one final month before we end this "Stay At Home" year due to Covid.

We should expect Moderna to announce its results sometime early next week so I'm staying tuned for it hoping for the vaccine to be as effective as we all really wanted the world to return back to normalcy soonest so we can resume our daily lives with activities and folks can visit their families who are overseas. Hopefully, we could get that to happen before the next Chinese New Year.

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Monday, November 2, 2020

Will There Be Light At The End of The STI Tunnel?

As of 31st October 2020, the STI index had lost 24.9% year to date.

We are once again in the market cycle where fear and turbulent times are over-riding investors' sentiments towards the market. 

In fact, a Bloomberg news article reported last week that Singapore and Thailand are two of the worst-performing market in Asia with the two markets down 24.95% and 24.96% respectively. 

Singapore, being an open export-oriented economy, struggled to find its feet under the radar after a soft reopening in the economy fails to spur up buoyant in the market.

For the older investors that have been around in the market for a while, this isn't something new that they've encountered in the market.

Let's take a look back at how STI performed in past global recessions and how it managed to bounce back.

STI Market Performance (1987 - 2020):

Singapore is a mature open state with a focus on productivity in manufacturing and an export-oriented economy.

It is not the first time that the STI has to face the bear market and adapt to new challenges, as with evidence in the past few years it has managed to always bounce back stronger from past crises.

From 1987 to 2020, the STI has entered bear market territory a total of 10 times, which brings on average a period of downturn once every 3.3 years. It didn't really tell much of a story though because a bear market is simply defined as a fall of more than 20% from the previous peak, which technically means you can play around within that 20% range in a nutshell but harder to predict a larger range.

STI (1987 - 2005)

STI (2003 - 2020)

For the past 33 years, the market has seen turbulence of varying lengths and severity.

I still recalled the days when the Asian Financial Crisis hits us because it was the year when my parents had to fly me over to Singapore and I had remained here ever since (events happened for a reason). 

I also recalled the days when schools had to shut for several days (jumping in joy back then) because of the severity of the SARS breakout and schools had to take caution.

There was also the tech bubble, 9/11, Great Financial Crisis, European Crisis, China bubble, etc.

And then there was the Covid-19 this year, which one day will become history to us.

There will be light at the end of the tunnel as past histories have shown that past growth returns will come on strongly on average the next 2 to 3 years after a bear market.

A Path to 3Fs (STI Compilation)


The STI market is clearly an unloved territory right now - judging from the fact that it is the worst-performing market in Asia and investors are shunning the local market as much as possible.

Investors often forget that bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria. 

Chances are today the STI market is tilted more towards pessimism and this is where I think we can find some good accumulation point for some of the stocks listed in the market.

While STI may disappoint many investors in performance this year, it might stage a strong rebound as the dog of the market may prove once again that investing in a market that is near the bottom is likely to yield greater rewards when the economy opens up again.

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Lendlease Global Commercial REIT - Q1 FY2021 Business Update Review

Lendlease Global Commercial REIT announced its Q1 FY2021 business update this morning which I will quickly go through below.

As some of you might already know from my previous update, Lendlease REIT remains one of my biggest portfolio holdings and I am cautiously confident it will continue to become a good investment for the mid to longer term.

I have also summarized the previous Lendlease Q&A on my Facebook page which you can find here.

Q1 FY2021 Business Update:

The First Quarter ("1 Jul 2020 to 30 Sep 2020") business update released did not provide much information on the financial numbers (yet), but we can infer and take reference from the operational update given.

During Q1, tenant sales and footfall visitors at 313@Somerset continue to show signs of recovery as we all expected since the soft reopening of phases 2 and 3. 

Visitors Footfall recovered 60% QoQ as compared to pre-Covid levels but what is more impressive is Tenant Sales have recovered stronger at 70% QoQ. You would expect most people to do window shopping with the soft economy but tenant sales are actually increasing more than the footfall increase, which shows people are actually spending.

I suspect this is due to the increase in marketing spending decisions from the management which intends to help boost tenant sales through various promotion offerings. 

For instance, one of those offerings is through a partnership collaboration with Lazada where shoppers are eligible to purchase Participating Retailers E-Vouchers at a 55% discount on the Lendlease Lazmall page. This is previously a conjunction partnership during the celebration of our 55 years National Day.

For the upcoming 11.11 campaign, they'll be doing the same so you can head out to Lazmall and see what they've got to offer.

What this means in terms of financials is there will likely be an increase in operating expenses which will impact the bottom-line. 

As with other retail REITs that have already announced their business updates, the focus will be on tenant retention and tenant sales, and malls with good management will try to help from that angle, rather than specifically say provides rental rebates back to the tenant.

As of 30 September 2020, 313@Somerset had maintained a healthy occupancy rate of 96% and tenant retention of 80%. Lendlease REIT has also recently secured new tenants that would boost its occupancy rate further to 98% in the Q2 FY2021.

The commercial asset at Sky Complex in Milan continues to be their long term fixed asset yield bond alike, with a long term lease to Sky Italia until 2032. 

During the pandemic, there were no rental waivers given and there were no late payments made so that speaks volumes about the kind of quality the tenant is.

Comparison Across Retail Malls

I tabulated across a very simple comparison across the retail malls that have a presence in the Orchard district (which is one of the most affected areas due to the lack of tourists). I have excluded MCT and FCT because they are more in the suburban mall areas which have no lack of visitors and would be expected to perform better and more resilient.

Turns out most REITs are likely to have seen the bottom in the previous quarter and have bounced back strongly this quarter both operationally and financially.

Most REITs are also still conserving the distribution withheld and this is done in prudency in case there is a need to beef up the working capital for other purposes. Otherwise, this distribution will have to be distributed by the end of FY2021, which will likely see a nice bump for unitholders for most of the REITs.

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