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Unusual cash cows
29-04-2012, 12:05 PM.
Post: #1
Unusual cash cows
This is literally investing in a "Cash Cow"! Cows which are bred and then sold off on a farm through animal husbandry! Wow....but it's not for me, I'll stick to equities and an established business. Tongue

The Straits Times
Apr 29, 2012
Unusual cash cows

Investors are pumping money into exotic investments for high returns, but proceed with care

By Magdalen Ng

You know it's getting hard to make a dollar when investors start sinking their cash into exotic investments like wine and art. But are things so grim that money is going into seaweed farms?

Rock-bottom interest rates and volatile share markets are forcing some investors to consider ever more unusual alternatives to beat the stickily high inflation rate here.

Wine and art have long been the alternative stand-bys, but more investors are thinking outside the box and looking for better returns in seaweed farms, tree plantations, fish farms and cattle ranches.

All investments come with a certain degree of risk, but these relatively new ventures have the added danger of the unknown.

Naturally, experts do not encourage diving headfirst into such investments; background checks are essential.

Mr Alfred Chia, chief executive of financial adviser SingCapital, said: 'As society advances, investors get more sophisticated and they want more choice.

'There is nothing wrong with that but, as with every investment decision, you have to look out.'

Know the risks

Mr David Gerald, president of the Securities Investors Association (Singapore), advised investors not to look just at the good returns, but also to pay attention to the risks that may be involved.

'They need to consider if they will be okay if they lose all their investments, which is possible in these risky products,' he said.

'Personally, I am not into such products, but each individual has to assess if the products are suitable for their risk profiles.'

The usual questions should be asked, no matter how exotic the investment:

•Does the company have a good track record of running the business and where is it regulated?

•What's your investment horizon and risk tolerance?

•What is your means of recourse if the investment goes bust?

Mr Chia said: 'If you are investing for your child's education, the time frame you are looking at is 10 to 20 years, you can sit it through.' But if one's time horizon is short, for example, if you are getting married in the next two years and would need the money to finance the wedding, it is best not to risk your capital.

OCBC Bank's head of content and research for wealth management, Mr Vasu Menon, recommends visiting the premises of the company selling the investment.

For some of these investments, it may mean making a trip overseas to check if the farms are well maintained and if the cattle look well-fed and healthy.

'If it looks dodgy, it's a tell-tale sign to walk away.'

Former banker Victor Hong, 63, placed about $100,000 with Asia Plantation Capital a few weeks ago to invest in Aquilaria trees from which oudh oil is extracted.

Oudh oil is used in the production of fragrances and has some medicinal properties.

Mr Hong, who is also invested in property and blue-chip stocks, said: 'It was a way to diversify my portfolio. After doing my due diligence, I felt that the company had previous experience, although they were planting different trees.'

The fact that Plantation Capital is regulated by the Financial Services Authority in Britain also gives Mr Hong some peace of mind.

Mr Chia cautions against companies that advertise that they are 'regulated' when they may not be.

He encourages investors to do a thorough check, adding that 'not all financial services authorities are equal'.

If regulation is being carried out in another country, it is possible an investor seeking legal recourse may have to go to court in that jurisdiction.

Retired sales manager Eddie Goh, 72, has been investing in Dynasty Marine Farm, a seaweed farm, since 2009.

He put in an initial investment of $200,000 after his wife made a trip to the farm in East Malaysia and confirmed that it was a 'genuine business'.

He has since increased his investment amount, and now receives more than $10,000 every six months in returns.

songyuan@sph.com.sg

---------------------------------------------

What seaweed and cattle have to offer
Seaweed farming

Who: Dynasty Marine Farm

Minimum investment:

US$3,600 (S$4,460) for one unit in the company's latest plot of 'sea-land' in Sabah, East Malaysia.

Investment time frame: Five years, with a guaranteed buy-back scheme after three years

Returns: The yield is guaranteed at 15 per cent per annum after an annual management fee of US$60 per year is deducted. Your capital is guaranteed by insurance. At the end of five years, you will receive US$6,660.

However, if you take up five units, you get one free unit and the management fee is waived. The yield will be 24.4 per cent per annum.

What you are buying: Rows of seaweed are grown and harvested every 45 to 60 days. Every year there are six harvests. The seaweed, which is edible but can also be used in a variety of commercial and industrial production, is then dried and sold.

More than 2,000 investors have put in a total of RM60 million (S$24.4 million) since the company started in 2010. About 10 per cent are Singaporean.

Dynasty Marine Farm's president, Datuk Seri Dr Chong Man Tung, said the firm has a capital guarantee as it has bought insurance in case a natural disaster wipes out the entire seaweed farm, or if a company director or executive commits fraud, for example.

He said: 'I don't want to let corporates invest in my company because I want to give small investors the chance to grow their money.

'This insurance on capital is important because these people are putting their hard-earned money with us.

'So far, the insurance premiums that we pay are the only 'losses' that the company has made.'

The company conducts monthly inspection trips for their investors and held an investment seminar last Saturday, where more than 100 people turned up.

---------------------------------

Livestock

Who: Salisbury Investments

Minimum investment: US$2,500 (S$3,100) for six heads of cattle that are reared in Colombia's San Pedro milk region, inclusive of full insurance premium.

Investment time frame: 18months

Returns: Expected 12 per cent to 15 per cent

What you are buying: The company purchases cattle when they are adolescents and sells them at the optimum level of maturation for profit. This is roughly 12 to 18 months after purchase at a state administered auction.

Mr Richard Mason, one of the firm's founders, has put in about US$500,000, mainly investing for friends and family.

There are about 1,000 heads of cattle and 25 farm hands on the ranches.

Mr Mason said: 'People are unsure with things they do not know, that is the general rule of thumb in life. But that is okay, you can try this out, start small and see if we do what we say. You can always come back in 18 months and buy more.

'The major risk attached to the product is that the whole of South America turns vegan and I personally do not see this happening.'

Mr Mason is optimistic about the continued demand for beef, especially in South America, where Colombia is one of the largest meat consumers in the region.

---------------------------------

OUDH OIL FROM AQUILARIA TREES

Who: Asia Plantation Singapore, the sales and marketing arm of Asia Plantation Capital

Minimum investment: $27,500 for 100 trees. Each plantation has 12,000 trees.

Investment time frame: Six-and-a-half to seven years

Returns: Returns are expected to be at 19 per cent to 22 per cent per annum.

There is a buffer stock of trees planted around the plantation in case the ones you buy do not produce the resin or are struck by lightning.

What you are buying: The trees produce a resin which is extracted and sold for up to US$50,000 (S$62,000) per litre. On average, one tree produces about 12 grams in each cycle.

In the wild, 7 per cent of the trees get infected by a fungus that forms a resin that is known as Oudh.

In a controlled plantation environment, the trees are inoculated in their fifth year with an organic compound which ensures all the trees produce the oil.

Marketing director Steve Watts said the typical Singaporean investors are married couples, aged 32 to 65, who are looking to diversify their portfolios.

Asia Plantation Capital is part of the Plantation Capital group in Britain. It has sold about six plantations in Thailand and Sri Lanka.


--------------------------------------------------------------------------------

Keep your eyes open

'As society advances, investors get more sophisticated and they want more choice. There is nothing wrong with that but, as with every investment decision, you have to look out.'

MR ALFRED CHIA, chief executive of financial adviser SingCapital, warning investors to exercise caution before plunging into untried investments
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29-04-2012, 12:17 PM.
Post: #2
RE: Unusual cash cows
(29-04-2012, 12:05 PM)Musicwhiz Wrote: This is literally investing in a "Cash Cow"! Cows which are bred and then sold off on a farm through animal husbandry! Wow....but it's not for me, I'll stick to equities and an established business. Tongue

The Straits Times
Apr 29, 2012
Unusual cash cows

This is not the "Cash Cow" that i am familiar with Big Grin Cash Cow suppose to be in mature market and generating stable cash flow.

Ops, i miss the title, "Un-usual cash cows", yes, it is very un-usual to me.Tongue
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29-04-2012, 01:06 PM. (This post was last modified: 29-04-2012, 01:18 PM by yeokiwi.)
Post: #3
RE: Unusual cash cows
Dynasty marine farm

http://www.dynastymf.com/

Dynasty Marine Farm Ltd is an offshore company registered in the BVI (British Virgin Islands). All foreign-sourced income received by resident individuals in Malaysia (By virtue of Paragraph 28, Schedule 6 of the Malaysian Income Tax Act 1967) and Singapore (with effect from 1 Jan 2004) will be tax exempt.

http://www.dynastymf.com/subscription.htm


Dynasty marine farm is an offshore company registered in BVI, conducting business in Malaysia and transacts using a bank account in hong kong. So interesting...


In 2011, we planted 15,000 lines in 1,300 acres of sea land, resulting in harvests of 800 metric tonnes of high quality seaweed per month

The following website has some calculation of seaweed farming.
http://www.fao.org/docrep/005/AC888E/AC888E05.htm#ch5.2

According to the website, for 630 culture lines, the yield per year is 10.54 tonnes.
The yield per line per year is 0.0167

According to dynasty, for 15000 lines, the yearly yield is 800x12 = 9600 tonnes.http://www.dynastymf.com/about.htm
The yield per line per year is 0.64

Maybe the lines are different, but if you are not an expert, it is simply impossible to verify the given figure.

Even the malaysian forum is talking about DMF and the insurance claim is proved to be false and the farm visits were conducted at farms that did not belong to them.
http://forum.lowyat.net/topic/659265/all

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29-04-2012, 06:23 PM.
Post: #4
RE: Unusual cash cows
As society advances from agricultural based to info-tech based, the sophisticated investors are investing in farming/ranching?

Noted that the seaweed farming ROI yield of 24.4 per cent per annum allow investors a chance to be richer than Warren Buffett, provided investors can secure the return of their investment, of course.

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29-04-2012, 07:21 PM.
Post: #5
RE: Unusual cash cows
Here we go again.

We have had ostrich farms, Oilpods, Sunshine Empire, Genneva, The Gold Label and so on. Now we have seaweed, cows and trees. I guess it will be only a matter of time before someone tries to sell land on the moon. Oh wait they already did that:

http://en.wikipedia.org/wiki/Extraterres...eal_estate

I suppose MAS will, as it has in the past, declare that these are "offshore" investments, so they are unregulated and therefore none of MAS' business.

All I can see in these schemes are yet more losses for hapless Singaporean investors who refuse to learn, and another black eye for a government who refuses to regulate.
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29-04-2012, 11:43 PM.
Post: #6
RE: Unusual cash cows
(29-04-2012, 06:23 PM)wsreader Wrote: As society advances from agricultural based to info-tech based, the sophisticated investors are investing in farming/ranching?

Noted that the seaweed farming ROI yield of 24.4 per cent per annum allow investors a chance to be richer than Warren Buffett, provided investors can secure the return of their investment, of course.

As d.o.g. has very succinctly summarized, are all these "investments" regulated and can they really generate the so-called "consistent" returns which they tout? I doubt it.

Warren Buffett's track record is not so easily beaten. His is a consistent one over booms and busts, bulls and bears,
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30-04-2012, 08:40 AM. (This post was last modified: 30-04-2012, 08:44 AM by sgd.)
Post: #7
RE: Unusual cash cows
oil from trees ... heh heh Tongue ... reminds me of the potential Jatropha oil as biodiesel not so long a ago. Was later found though Jatropha oil had great potential cost a lot to produce, uses 5 times more water than sugarcane and corn, requires a lot of land which could otherwise use to grow edible crops.

usually when there is more money on the market than common sense you will start seeing these kinds of investment products remember tulips, Big Grin so much for "sophisticated" tulip investors.

which means we are in sort of market mania right now.

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30-04-2012, 08:52 AM.
Post: #8
RE: Unusual cash cows
(30-04-2012, 08:40 AM)sgd Wrote: usually when there is more money on the market than common sense you will start seeing these kinds of investment products remember tulips, Big Grin so much for "sophisticated" tulip investors.

which means we are in sort of market mania right now.

Apparently, common sense ain't that common! Tongue

That said, I guess sentiment is rather "optimistic" even though there are so many problems.

The bulls will argue that the market climbs a "wall of worry", the bears will insist the worst is yet to come.

So for me, being a realist, I simply assess valuations. Tongue
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02-05-2012, 03:46 PM.
Post: #9
RE: Unusual cash cows
common sense will tell you if really got such thing can earn 25% a year who the heck needs any investors to pump money into it? Big Grin

Anything that still requires investors with such a high return is probably a scam or has a dark side to it.

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02-05-2012, 04:11 PM.
Post: #10
RE: Unusual cash cows
Actually it's fine if there are people who believe in it and are convinced by these companies dealing in alternative assets.

All I know is that personally, I will continue to avoid; and focus on my equity investments in listed companies.
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