The Stock Market as a Restaurant

If we were to imagine the stock exchange as a restaurant, where an investor's earnings equates to the satisfaction deriving from the quality of the food and the price paid for it, then

Investor Returns = Quality of Food divided by Price Paid for Food

When the restaurant enjoys a rip-roaring business due to hear-say, leading from "hear-says" from food bloggers (equities analyst who sets target prices), impossibly long queues from natives and tourists alike (speculators) are form.

It would be quite sensible to assume that the quality of food will drop when the restaurant is busy. After all, the chefs are faced with a growing list of tickets from the servers.The broth will be diluted.. the purchasing supervisor might be tempted to lower his/her standards and purchase lower quality food, and perhaps pile up on stock in case of shortages.

Investor Returns = Lower Quality of Food divided by Price Paid for Food

In response to the overwhelming patronage, the restaurant has no choice, possibly due to greed or increases in variable costs, to raise prices (just like how a stock's price is increase).

Investor Returns = Lower Quality of Food  divided by  Higher Price Paid for Food

 

Isn't it time to start cooking at home or to eat at another restaurant?

How many times have you queue for an hour and realize the food is only passable?

 

SGX Stockfact Screener and Hong Kong Land

I believe that you need very little capital expenditure to be a value investor. If someone like Seth Klarman does not have a Bloomberg terminal, simple, free and easily accessible tools online is usually enough.

Heck, even Walter Schloss depend on Valueline reports all his life, read annual reports and doesn't usually attend AGMs.


So one of the available screener is StockFacts. There are very little parameters available, and also a maximum of 4 parameters that you can set at any point of time.

If your appetite for risk is big, you can increase the market cap allowance to a minimum of even 1.3million (that is the market cap of the smallest stock in SGX).

I look for a dividend yield of at least 2%. Fix deposit rates lies at about 1.8% in Singapore, but it could be as low as 1.4% now. The whole idea is I want to be rewarded for waiting and holding stocks.

I don't have a fixation for any industry, but usually P/BV (Price over Book Value) stocks of 0.5 or less are currently property stocks, who are largely cyclical stocks. Cyclical refer to stocks that are highly value during good times and vice versa.

As you can see, companies that didn't see a dime of profits like Hyflux is screened. You can add a Price/Earning ratio and set it to 0.001 or some sort of value.

Right from the bat, I will take special notice of a few companies above.
Tiong Seng Holdings - Construction and Engineering... how good is its PE over the years? How valuable are the assets? A large value for PPE (Property, Plant and Equipment) is not desirable.

If dividends are important to you, www.dividends.sg will be indispensable. A check at this extremely valuable website reveals that Tiong Seng actually cut dividends over the years...

From the list of companies, one of them which I am keen in is Hong Kong Land, a subsidary wholly owned by the conglomerate Jardine Strategic Holdings.
It is also listed in STI, which brings about a great deal of liquidity and attention. Looking at its annual report, this company is so well regarded by bank. Most of its loans are unsecured.

This is the dividend history of HongKong Land:
http://www.dividends.sg/view/H78

Clicking on HongKong Land within Stockfacts bring you to this page where it throws up some past history of this large company. I am inclined to click on the "Download/Print" page which will display a nice 3-4 page PDF.

Selected items that I am interested in are:

Consistent Cash Flows in Operations. I believe the large outflow of cash in FY2015 in financing is to service its debt. Hong Kong Land has an extremely strong balance sheet at the moment.

 Payout ratio refers to the % of earnings it is paying as dividends. During the pre-2011 days, this company has fast-growing revenues. I can only assume at this moment that it is re-investing its profits for growth. As revenue growth slows, it is paying out a decent amount as dividends.

Who are the major shareholders?
I will only be worried in Jardine starts paring down ownership..

 You will still need to read the annual report to understand the business. For its latest report in March, it appears that HKL is a property rental collector with large revenues from its rental in Greater China, particularly Hong Kong. Almost 70% of its income is from property investment. The rest is from property development, in which most of which are in China.

If you believe in the direction of this business, I think HKL is a worthy buy.
Will it pay off handsomely? Not really. But is it safe? Sure is.

SGX Stockfact Screener and Hong Kong Land USD

I believe that you need very little capital expenditure to be a value investor. If someone like Seth Klarman does not have a Bloomberg terminal, simple, free and easily accessible tools online is usually enough.

Heck, even Walter Schloss depend on Valueline reports all his life, read annual reports and doesn't usually attend AGMs.


So one of the available screener is StockFacts. There are very little parameters available, and also a maximum of 4 parameters that you can set at any point of time.

If your appetite for risk is big, you can increase the market cap allowance to a minimum of even 1.3million (that is the market cap of the smallest stock in SGX).

I look for a dividend yield of at least 2%. Fix deposit rates lies at about 1.8% in Singapore, but it could be as low as 1.4% now. The whole idea is I want to be rewarded for waiting and holding stocks.

I don't have a fixation for any industry, but usually P/BV (Price over Book Value) stocks of 0.5 or less are currently property stocks, who are largely cyclical stocks. Cyclical refer to stocks that are highly value during good times and vice versa.

As you can see, companies that didn't see a dime of profits like Hyflux is screened. You can add a Price/Earning ratio and set it to 0.001 or some sort of value.

Right from the bat, I will take special notice of a few companies above.
Tiong Seng Holdings - Construction and Engineering... how good is its PE over the years? How valuable are the assets? A large value for PPE (Property, Plant and Equipment) is not desirable.

If dividends are important to you, www.dividends.sg will be indispensable. A check at this extremely valuable website reveals that Tiong Seng actually cut dividends over the years...

From the list of companies, one of them which I am keen in is Hong Kong Land, a subsidary wholly owned by the conglomerate Jardine Strategic Holdings.
It is also listed in STI, which brings about a great deal of liquidity and attention. Looking at its annual report, this company is so well regarded by bank. Most of its loans are unsecured.

This is the dividend history of HongKong Land:
http://www.dividends.sg/view/H78

Clicking on HongKong Land within Stockfacts bring you to this page where it throws up some past history of this large company. I am inclined to click on the "Download/Print" page which will display a nice 3-4 page PDF.

Selected items that I am interested in are:

Consistent Cash Flows in Operations. I believe the large outflow of cash in FY2015 in financing is to service its debt. Hong Kong Land has an extremely strong balance sheet at the moment.

 Payout ratio refers to the % of earnings it is paying as dividends. During the pre-2011 days, this company has fast-growing revenues. I can only assume at this moment that it is re-investing its profits for growth. As revenue growth slows, it is paying out a decent amount as dividends.

Who are the major shareholders?
I will only be worried in Jardine starts paring down ownership..

 You will still need to read the annual report to understand the business. For its latest report in March, it appears that HKL is a property rental collector with large revenues from its rental in Greater China, particularly Hong Kong. Almost 70% of its income is from property investment. The rest is from property development, in which most of which are in China.

If you believe in the direction of this business, I think HKL is a worthy buy.
Will it pay off handsomely? Not really. But is it safe? Sure is.

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.

Time to Watch by the Sidelines?

This will be a really short post.

When I started investing, I frequently look at stocks trading at 52-weeks low. I have been doing it frequently from BarChart 52-weeks low, looking at its balance sheet and thinking if it makes a good turnaround bet. I had a few success in spotting these stocks but unfortunately, I wasn't confident in my abilities then, and watch stocks like Spartan Motors (SPAR), and MidSouth Bancorp go as high as 100%.

Such a practice can be pretty robotic, getting the list, and looking at its balance sheet quickly. It has been a while since I did that though, and I was very surprised today.

And today, there is really only a handful of stocks, regardless of market capitalization, that is trading at 52 weeks' low, and that smells like the market could possibly be overly optimistic.

I don't know about you, but I very much prefer to stand by the side of the court and wait.
While it is usually better to be vested most of the time, I think it might be prudent to lay hands off the American market. I still vested in SGX, in stocks that I find that are cheap.

Hopefully it will pay off in the long term.

A Little Talk about My Portfolio

Primary Holdings

Sim Lian Group

Sim Lian Group is a respectable property developer that is purchased because I believe it is trading at a huge discount to its cashflow. The dividend yield is very high at the moment-- which is deceiving because the yield is derived from a special bonus last year.

The biggest reason why this company is a little different from other small-scaled property developers-- check out the board members and you will know what I mean. I leave the fun to you..
  

Capitaland Commerical Trust

The stock is trading at a significant discount to its net asset value. Recently they have acquired the whole of CapitaGreen and is expecting it to be accretive for shareholders. This bring debt-to-equity at 37%, which is not all that bad.

The property yield of CCT is actually weaker than Fraser Commerical Trust, but on the whole the quality of CCT's properties is higher, so I am not so concerned. Holding on to my paper losses at the moment and waiting for a good chance to average down.

Secondary Holdings

VICOM

 A needless fear among investors for this stock, which is down-trending. The main rationale for buying this stock is for the quality of its dividends. When a friend of mine draw attention to me about it trading at 52-week low, I took up a small position without much consideration.

Singapore Shipping Company

Small company, some debts, decent cashflow, but single-customer. Based on cashflow over the years, it is considered cheap at 0.27x and but there are some concerns with its business fundamentals, namely an inexperienced CEO (family business, ahem), and single-customer risk.

DBS

DBS was purchased because it is trading at 0.9x book value. Not one of my proudest purchase since I did very little homework. It is a easy one to make since this is Singapore's biggest and one of Asia's biggest. I don't expect terrific gains.

UOL

Trading at below book value and strong management. Even if Mr. Wee leaves the business, it will still go on strongly. However, the rental and property developing business is facing headwinds regionally, and earnings should remain suppressed. I have taken up a small position just in case the price becomes more favorable, and I can build on my position.
 

Sing Holdings

With the latest quarter report, it appears that Sing Holdings is now debt-free, but have a variable asset in Account Receivables and unsold properties. It will be very interesting to see what it does for the rest of the year. Any company that is debt-free and a 0.5 book value per share should be quite safe for long term holding.

Small Holdings

Ascendas Hospitality Trust

This stock is trading at below book value. It has a pretty patchy property yield as the trust is still so young (property accumulation stage), so the dividends should offset some risk. Staying vested and waiting on the side lines for a change in its story.

CapitaMall Trust

This company's property yield is extremely impressive but it is trading at a significant price over book value. I will add on to my position should fear take over the market again, as it was with much regret that I did not partake in this during this Feb's great correction. I am eager to make this one of my main holdings.

One Up on Wall Street- A Short Review

I have just completed my first reading of Peter Lynch's classic text, "One Up on Wall Street," recently.

While the contents of this book is extremely palatable, it contains very little technical information and little is mentioned about valuation. I am a little amused because while this book is easily understandable, it should be best read by someone who had a look at more technical books such as "5 Rules to Successful Stock Investing."

The danger is that Mr Lynch made it sound too easy.

There are of course good takeaways from this book, such as classifying companies into 6 different categories, which are:

• Turnarounds- Stocks like Noble who are issuing new shares would be frown upon by Peter Lynch as they usually does not bode well for investors in the long run.
• Slow Growers- usually dividend stocks. Various REITs, ST Engineering comes to mind. This company desperately need a breakthrough of some sorts to increase revenues
• Fast Growers- Best World, who is expanding into China, have a sizable market to grow at.
• Stalwarts- Apple could be deem as a stalwart, but I thinking of DBS when it comes to local markets
• Cyclicals- Property Developers, Keppel, Sembcorp Marine. Times are bad now, but things will definitely be better if their balance sheet remains healthy. Basically cyclical companies generate tons of revenues during good times.
• Asset Plays- Stocks that are the proverbial "50cents for a dollar." Could be as simple as cash (Sing Holdings, possibly), property (SMRT with its many malls) , or companies holding equities of well-to-do equities (Yahoo comes in mind).

I also love the idea of developing a "story" for your stock. You need to pitch a stock, to yourself, and it serves as a good reason to sell it when the story changes.

For e.g. assuming a stock like GSK, who is paying excellent dividends but isn't growing rapidly (a slow grower), started to fail in paying a dividend, that will be cause for concern.

An asset play that has its property valued down recently could also be cause for concern.

As with most books I think it is worthwhile to re-read them a couple of times to digest the concepts fully, and I am in the process of doing so.

Peter Lynch's One up on Wall Street in Book Depository

Beliefs to Hold Dear During a Bull Market

Business doesn't change from week to week.

When prices goes up, so does the risk.

When prices goes up, it doesn't necessarily reflect on the credibility of the company, nor the reliability of its earnings.

Good times will follow bad times; just like bad times will be succeed by good times. Nothing last forever. 

Bulls do charge slower than a bear slide-- investors, like any human beings, prefer cash in the hand over unrealized profits (and certainly unrealized loss!!!).

Will the economy do well? Your guess is as bad as anyone's. 

 

And finally, debts don't disappear during a bull market. 

Invest wisely.

This too shall pass.

ISR Capital, A Ticking Timebomb?

In Oct 2013, three companies, Liongold, Blumont and Asiaons crash after a heavenly ascent of 800% within months, and crashed. Within 3 days, 8 billion worth of capital evaporated.

The MD of ISR Capital, Datuk Md Wira Dani Bin Abdul Daim, is the son of ex-Finance Minister of Malaysia, Tun Daim Zainuddin. He was also involved in Liongold, being its Executive Deputy Chairman. The CEO is Quah Su-Yin. Thanks to Google, you can find out if they are truly reputable or trustworthy.

So who are the major shareholders?

You can download their annual report from http://www.isrcap.com/attachment/201605041716311781353157_en.pdf or from SGX (which is the preferred choice).

Both Datuk Jared Lim Chih Li and Mr Ng Teck Wah were involved in the penny stock crash of 2013, under Asiason Capital (which is renamed ISR Capital!)

http://business.asiaone.com/news/were-not-bunch-cowboys

Seems like a tightly knitted group if you ask me. All of the investment companies listed appears to be related to one another, with no reputable outsiders vested (or trusting) this company.

Assuming you are not interested in the history of a company's board members nor its senior management, have a look at the annual report.

Auditor's Statement

Emphasis of matter
We draw your attention to Note 34 to the financial statements, which states that in April 2014, the Company with five of its wholly owned subsidiaries (one of which has since been disposed of), and two funds (including two subsidiaries of one of the funds) managed by the subsidiary of the Company that has since been disposed of, were served notices by the Commercial Affairs Department of the Singapore Police Force (“CAD”) for an investigation into an offence under the Securities and Futures Act, Chapter 289 (“SFA”). In the notices, the Company and those entities were asked to provide certain information pursuant to an investigation to be conducted by the CAD.
On 4 February 2015, the CAD confirmed to us that their investigation is still ongoing. As informed by the Board, apart from certain key personnel being requested to attend further interviews by the CAD in 2015, there have been no further new developments in the ongoing investigations.

In view of the above, there exist a material uncertainty, whether the ongoing investigation, the outcome of which is unknown, may have an impact on the Group’s ongoing business operations. Accordingly, the extent of adjustments, if any, that may arise from the ongoing investigations, may have an effect on the financial statements of the Group and the Company for the financial year ended 31 December 2015 and preceding years, if any.

Our opinion is not qualified in respect of this matter.

The contents of an annual report are prepared by the company in question, not the auditor(s). The auditors' role is to audit the contents and give an opinion, as well as write the auditor statements produced on page 39 of the annual report. 

In short, the auditors' statement is the only portion written by the auditors.
 
The last 3 paragraphs are important-- it tells us that investigation is on-going, and there is an uncertainty involved with this company.

The Revenue
The company booked a revenue of almost 3 million compared to a paltry sum of 131,000 the year before. How could a company made such ridiculously high improvements within a year?The ROE and ROA were -500++% and -300++% the year before, and now we have 22.2% and 11.6%?
If we look under note 4, the company claims that it makes the entire revenue from consultancy, with only about 70,000SGD from interest income from debt securities. There are no further breakdown on revenue.

The company's segment information, on page 119, said that the company's main operation are split to

• consultancy (IPOs?)

• investment management (no revenues recorded this year!?)

Geographical markets are split primary between Singapore and the British Virgin Island (Tax heaven? Opaque banking systems!?), in which 800,000 is from Singapore and the other 2M with BVI.


The Balance Sheet
This is the craziest part of this company

Let's look at current assets, which means assets that can be convert to cash within 1 year.
This company has only 20k of cash, and bulk of the assets (3million) comes from Trade Receivables. Which means sums that is owe to them by customers.

Note 13 (page 89) reveals

• about 3.171M of receivables

• After impairment (which means probably, not going to get these sums), it stands at 2.8M

• Amount already due by less than 90 days, the full sum of 2.8

• Page 90 says
  

  These receivables are not secured by any collateral or credit enhancements.

  Which means, this company is screwed if those "customers" don't pay!

So who exactly are those people that owe this company money?

Note 14 shows you that in the past year, 30M was owe but 27M is already impaired. Erm...

The true entertainment comes from Non-Current Assets, Debt Securities, which contribute to 2.2M of the balance sheet. Under note 18, it says

A debt facility with a principal amount of S$2,350,000 has been extended to a third party in 2015 for a period of five years. Interest is charged at 12% per annum with a 5% arrangement fee deducted upfront at each disbursement. The effective interest rate is computed at 13.4%.

What kind of rubbish credit rating is this 3rd party that will necessitate it taking a loan of 12% per annum? And the next paragraph says:

 

The debt facility could be drawn down by the third party for up to S$5,000,000 with maturity due 2020. The undrawn balance as at 31 December 2015 was S$2,650,000

It is telling you: This 3rd part can borrow from us another 2.65M.

This is exciting because I don't think ISR has that capital.

What can probably happen is that this mysterious 3rd party can keep borrowing from ISR Capital, as long as ISR keep issuing new shares, and then ISR can write off these "bad" debts?

And it is already happening. Look at Note 22

CONVERTIBLE REDEEMABLE BONDS
The proposed issuance of 2% convertible redeemable bonds due 2018 (the “Bonds”) with an aggregate principal amount of up to S$35,000,000 comprising seven tranches of bonds was approved by shareholders at an Extraordinary General
Meeting held on 8 September 2015. Each tranche comprises five equal sub-tranches of S$1,000,000 each. S$3,000,000 of the Tranche 1 Bonds were issued in September and October 2015. As at 31 December 2015, Bonds with a face value of S$750,000 have been converted into 187,500,000 ordinary shares. The present value of the Bonds after conversion amounted to S$2,053,672, which was arrived at using 5.5% per annum, an average rate compiled from interest rate quotations of 10 leading banks and financial institutions. The Bonds that remained outstanding as at 31 December 2015 were subjected to an interest rate of 2% per annum, payable in arrears on 31 December in 2015. Please refer to Note 20 for bond interest payable as at 31 December 2015.

As at 31 December 2015, the Company allocated approximately S$2,200,000 for investments in debt securities and approximately S$480,000 for general working capital (such as payment of remuneration of directors and employees, office rentals, insurance premiums and professional fees).  

Stay away from this company.

As of writing, this stock has gain another 10% or so in a single day. Just because the price goes up, doesn't mean that the company is doing well. For those speculating, do question yourself on the ethical aspects. 

Investment Rudder

A rudder is a vertical piece of wood that steers the boat. Small, and largely concealed by water, you will largely go nowhere without it. You don't usually see it, and neither do you hear investors talking about it.

Is it important to have an investment principle?

Graham, Schloss, and Buffett (in the early years) largely lived by the same principles, which is to look for $1 companies priced at 60 cents. The big difference in the early years is that Buffett is so sure of his analysis, that he is willing to dump a large part of his net worth into a single stock.

I think it is necessary to be stubborn as a value investor. When Schloss passed Graham a nice little company to Graham, the latter replied that it isn't the type of company that he is interested in. That nice little company was call Xerox, and they could have term it a growth stock then. Graham remain successful and beat the market by 2 percent or so for 20 over years.

***
Of all investors, I aligned myself to Walter Schloss's principles the most.

I am not great at evaluating a business (this is something I need to add to my toolbox), hence, sticking to the balance sheet can be a smart move.

Two of the companies that I missed out during the correction this year were Spartan Motors (NYSE:SPAR) and Midsouth Bancorp (NYSE:MSL). Both got on my radar during their dips, and both have a good balance sheet. Spartan Motors however did not have great earnings.

Both companies went up by almost 80% as of this writing, despite being small companies.

The idea is that earnings are unpredictable, but balance sheet is. I don't find companies that are heavily leveraged, attractive. Unless it is a failing business with many years of negative cashflow, companies usually trade above their book value.

While both Schloss and Buffett do not disclose their holdings (during the early years), each have their own reasons for doing so. Buffett did not want anyone to ride on his coattails, while Schloss has a bunch of companies which many will be afraid to invest in.

For instance, someone like Schloss might be interested in Noble (SGX:N21), but he will diversify his risk.
***

I live frugally and have no great lust for the luxuries of life. I do find myself an odd-ball for not knowing the movements of watches, no desire for a nice car, salivate the thoughts of dining at the best restaurants.


One day, I might just become a full time investor, living in a small room in Vietnam (to keep costs down, and I love the food there). There will be

• A shelf with all the books to keep my investment rudder intact.
• Another shelf with all the annual reports of companies I am keen of. 
• A little printer to print these annual reports.
• A bean bag to sit on while reading the reports.
• A small notebook and a fairly large U shaped desk (made of wood of course)
• A modest steel chair.
• A large erasable whiteboard
• A tatami mattress to sleep on
• A space for my cat to live in.

Perhaps. One day when I am old and alone. Perhaps.

The Best Long-term Investment

I made the plunge recently and invest on a course, conducted by Mr SS Sandhu. The course is Analyzing Financial Statements and is hosted by SGX Academy.

First off, the changes it made to my attitude to investing.

It might changes my approach to investing. My main strategy in investing is looking for $1 companies that cost 60cents. Hence, my first step is to look at companies that have recorded a significant drop. However, perhaps this time round, I should be reading the news a little more proactively, as they might spell an improvement to a company that has not suffered a discount.

I have taken a significant interest in the board and senior management. I used to look at management as something generic, but now I realize they could bring certain value to the company:
- They could have ties to important government/ financial institutions
- They can have (or not have!) experience that is useful.
- Their background can suggest if they have the competence for the job.

I adopted a deeper appreciation to the balance sheet, the quality of its assets, and the details of its liabilities. Not all assets are equal; every liability deserves a closer look. Hidden assets (and liabilities!) are actually recorded in the annual report.

One can understand the business better just from reading the annual report. For instance, I understand now how low margin a property development company is, and most of them should at least have another branch of income available.

I highly recommend this course for the instructor is extremely experienced and intrinsically passionate in teaching his self-developed materials. However you will need to have a rudimentary understanding of the financial statements in the first place, in order to fully adsorb majority of the materials. Annual reports are a toughie-- it will pay for you to study some AR before going for this course.