Post-Brexit updates, and small thoughts about Noble, Keppel and Yoma.

The Brexit pessimism sold down markets heavily. There is an old saying that cheap becomes cheaper.

While it is necessary to keep a positive frame of mind that markets will eventually recover, one should not forget the fact that a correction doesn't equates that all stocks are cheap now. The need to have some basic fundamental knowledge and control over one's emotion is applicable at these times.

By that I mean selling in panic, or buying in a frenzy.

I have been keen in quite a few companies lately, especially after they have gone into trouble. I guess it will help to discuss them briefly here

Noble
Clearly they are in debt and tons of trouble. But raising equity via such a heavy rights issue is a major deal-breaker for me. I guess what I can take away from reading Peter Lynch's One Up on Wall Street is that companies usually turnaround successfully from diluting shareholder's equity but the end-result usually wouldn't reward shareholders in the end.

There are better bets out there especially when your capital is as limited as mine.

Keppel Group
Keppel is a conglomerate and they want you to know that.. especially when their cashflow is severely affected by their Offshore and Marine (O&M) division. Revenues are contributed mostly by O&M and Property, and this is the first time in 3 years that property contributed more $ to Keppel than O&M.

Hence about 5,000 employees in O&M lost their jobs this year. Interesting enough, manpower cost remains the same for the last three years. I have no idea why this has come to pass and I hope shareholders asked during the AGM.

I have no idea how to value Keppel as it is a cyclical company. However I have faith that this company will definitely not go belly up as its major shareholder is Temasek Holdings. This does not mean that shareholders will lose capital (Remember NOL?).

Price of shares follows earnings in the long run. The question is whether Keppel is nicely priced at 5.2x? I have no idea. Its free cash flow is extremely volatile. But no worries about the dividend pay out and whether the company has shareholders' interest at heart. They paid 40 odd percent of retained earnings to sharehodlers in 2014, and paid 50% this year. I don't think dividends will suffer too much.

It is also vague in whether the 230million provisions for Sete Brasil's unsold rigs is enough. I have not scrutinized the report yet, though.

Yoma Strategic Holdings
I can't read annual reports off the screen, and I paid some printer almost 9 SGD for this report to be printed... but before I can finish half of the report, I am already put off by loans extended to customers. Hence I doubt I will be investing in this company. The introduction of his son as the CEO is no problem but it seems like an abrupt decision to me.

I intend to look elsewhere.