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Thanks for the explanation. I think Leveraging is too "high-end" for me....way above my risk appetite ....

(24-06-2014, 07:06 PM)GFG Wrote: [ -> ]

(24-06-2014, 06:36 PM)GPD Wrote: [ -> ]

(24-06-2014, 05:36 PM)GFG Wrote: [ -> ]

(24-06-2014, 02:25 PM)specuvestor Wrote: [ -> ]

(24-06-2014, 01:56 PM)GFG Wrote: [ -> ]Yup that's basically it

I get very attractive tiered rates, <3.5% while KW yield is ard 10% for me
So I earn on the spread
Plus the appreciation is tremendous this far

Danger is if you're not careful and don't have holding power, when you get margin calls you can end up having to sell at the wrong time so be careful with share financing schemes.
Anyone interested to know more can just drop me a msg.

When you do margin financing you lose control of the asset and there is counter party risk.

The 3 Kings fiasco already show us that the financier like GS can sell or demand for top up anytime they deemed appropriate.

Those who use Lehman as custodian will have higher appreciation of what is counterparty risk. It is not just risk of losing the money, it is that the segregated assets will take a long time to get back while you continue to bleed. Then there is of course the classic counterparty risk as in MF Global.

Sharp tools have to be handled carefully and appropriately

if you get financing from local companies and banks from POEMS, HLF or Orix Capital, its generally safe and not much counterparty risk to worry about.
But as with all forms of leverage, the big risk is margin calls so like I said, you want to be very certain of where you employ your leverage into, and you want to give a big buffer zone so that even if it drops substantially in the near term, you wont get margin calls.
And even if you do get a margin call, you want to prepare such that you have holding power.
So leveraging up several times into a PENNY stock like what happened in the fiasco is a crazy suicidal idea to me.

Can you in theory use the leverage to purchase more KWC shares and use those for further leverage?

Yes of course.

This is called a pyramid which was what the 3 kings were doing. Do be aware of the heightened risk of collateral value moving symmetric with your shares that u are doing margin, including those in similar industry.

Skywoods project sales up to June 2014 :
Unit launched : 420
Unit sold : 101 (24%)
Unit unsold : 319 (76%)

King Wan Corporation wins S$25.5 m worth of new M&E contracts

Order book stands at S$178 million, with contracts lasting to 2017

SINGAPORE, 15 July 2014: MAINBOARD-LISTED King Wan Corporation Limited (King
Wan or the Group) (庆源企业), today announced it has secured five new mechanical and
electrical (M&E) projects in Singapore during the period from May 2014 to July 2014, worth a
total of S$25.5 million.

The five new projects are as follow:
 Plumbing, sanitary and gas system installation for a Civic Community Building with
sports and recreation developments atop a 2-level basement located at Tampines;
 Plumbing and sanitary installation for the Crown Plaza Hotel Extension located at
Airport Boulevard;
 Plumbing, sanitary and gas system installation for The Venue located at Tai Thong
Cresent (a mixed development comprising of 28 commercial units and 266 residential
units atop a 3-level basement carpark);
 Plumbing and sanitary installation for Sembawang N1C10 (1,200-unit HDB project
with multi-storey car park, precinct pavilions and community facilities);
 Plumbing and sanitary installation project for the Selarang Camp;

These projects will commence in the second half of 2014 and are scheduled to be completed
by 2017.

http://infopub.sgx.com/FileOpen/KingWanC...eID=305405

THE SECRET BEHIND KING WAN’S SUCCESSFUL INVESTMENTS

http://aseanequities.com/insights/secret...vestments/


Somebody shared this in other forum. A short interview with kingwan MD Chua Eng Eng, to understand more about management philosophy and approach to making Investments.

(28-07-2014, 09:49 AM)desmondxyz Wrote: [ -> ]THE SECRET BEHIND KING WAN’S SUCCESSFUL INVESTMENTS

http://aseanequities.com/insights/secret...vestments/


Somebody shared this in other forum. A short interview with kingwan MD Chua Eng Eng, to understand more about management philosophy and approach to making Investments.

Thanks for sharing this

As I understand it their forays into investments was a function of HDB biz slowdown and looking to deploy cash

It is likely they will face the same predicament after 2015

(28-07-2014, 10:16 AM)specuvestor Wrote: [ -> ]As I understand it their forays into investments was a function of HDB biz slowdown and looking to deploy cash

It is likely they will face the same predicament after 2015

They have orders stretching to 2016 at least. Also, there are a lot of ongoing projects, not just Hdb but private as well, that will require their services
In any case, with their successful track record, even if there is no pressure from reduced revenue from core business, they will still actively look out for opportunities

Believe the issue is not about revenue. In terms of core business, no doubt King Wan has been able to continuously grow it with the order book stretching till 2017. However, the problem is with the foreign labor policy shift, these few years, the bottom line margins have been decreasing despite top line growth.

(28-07-2014, 11:44 AM)GFG Wrote: [ -> ]

(28-07-2014, 10:16 AM)specuvestor Wrote: [ -> ]As I understand it their forays into investments was a function of HDB biz slowdown and looking to deploy cash

It is likely they will face the same predicament after 2015

They have orders stretching to 2016 at least. Also, there are a lot of ongoing projects, not just Hdb but private as well, that will require their services
In any case, with their successful track record, even if there is no pressure from reduced revenue from core business, they will still actively look out for opportunities

(28-07-2014, 11:44 AM)GFG Wrote: [ -> ]

(28-07-2014, 10:16 AM)specuvestor Wrote: [ -> ]As I understand it their forays into investments was a function of HDB biz slowdown and looking to deploy cash

It is likely they will face the same predicament after 2015

They have orders stretching to 2016 at least. Also, there are a lot of ongoing projects, not just Hdb but private as well, that will require their services
In any case, with their successful track record, even if there is no pressure from reduced revenue from core business, they will still actively look out for opportunities

Put in another way: HDB will not be more than 50% of their core biz after 2015. The rest is up to our "imagination" There are signs that MND will slow down HDB constructions after achieving their purpose. This is after asking their guy in charge of their HDB biz earlier this month

Nonetheless most of my questions were more directed to their investment strategy. It is not a function of reduced revenue and hence PnL, it is more a function of how to deploy their excess cash when activities are slow. They dont seemed to have an ROI target or timeframe but more focused on relationship and opportunity sets. From the thai to the ship investments, it's all about knowing somebody who wants to do something.

I had also asked why don't they do share buy back or increased dividend, reply was the family doesnt need the money and they prefer to keep the cash in the company