Eating a crab too many

My family had decided to go to Pulau Ketam(Crab Island) just off the coast of Kuala Selangor. It was my first time there. Upon arrival at the jetty, there were so many cars parked by the side of the road. We had a hard time finding a parking, but eventually my dad squeezed the car between two cars. The journey there was quite short, only taking us 45 mins or less because we lived in Shah Alam which is the capital of Selangor and quite near the sea.

The scenery there is of the Malaccan Strait. The waters were quite blackish and brown in colour. It wasn't that clean. And there were many ships around, with Port Klang stationed nearby. We had to take an expressboat to the island, and that cost RM10 one person one way. The journey took about 30 minutes, and along the way we saw many small islands. This was basically the river bank, and it reminded me of the time when I went camping at Talang Lake. I wondered if there were any crocodiles left.

Even though it was just a 30 mins ride, I breathed a sigh of relief as we were nearing the jetty at Pulau Ketam. On one hand, I was quite bored because I had been staring at basically the same kind of scenery all my way on the boat for the whole journey, which was just small islands and lots of mangrove trees. On the other hand, I was reliefed because the route the boatman took us on was sort of a shortcut, so it seemed at first as if he was going to bring us to some secluded island with his friends on it and try to rob us. Luckily it wasn't so as I saw Pulau Ketam approaching with many restaurants and people.

Pulau Ketam is a nice place. The way people live there is really simple. The kids just run about anywhere they wanted to. The whole island is actually pretty small. You could rent a bicycle for the whole day for ust RM5. And you could ride from one end of the island to the other in 10 minutes. But one thing about the island, there is just too many restaurants that seem to be selling the same thing: crabs. Pulau ketam is mainly famous for their crabs and their o jien(mussels). We had lunch in one restaurant that my dad hand-picked out as the cleanest, for what reason I am not sure, since all the restaurants looked the same. It was quite expensive really, considering all other dishes had a total of RM33, whereas the crab dish alone cost RM48. That doesn't make sense to me no matter how I try to look at it. How can crab meat be so precious at an island where there are full of crabs.

Then my Dad called to meet up with one of his colleagues, Steven Tan, whom was already there on the island because it was his hometown. So we met up and he treated us to some o jien at another restaurant and we just chit chatted for a few hours. I could tell you that on that day, my stomach was just so full of o jien, that I couldn't eat anymore even if I wanted to, but it tasted that good. He was telling us all kinds of stories of his CNY gatherings with his family, like how his grandmother had 8 brothers and all brothers would come home during CNY, and they had tonnes of grandchildren so they all cramped into one house. Going to the bathroom often meant waiting in line of up to 3 people at any time. It makes me think of the luxury I have at my home(or anyone for that matter) that if we wanted to go to the toilet, we wouldn't need to queue in lines of up to 3 people at any one time.

We also got a look at some of the houses there, and they were quite simple but nice. Apparently they cost about RM70,000 per house, which is very affordable. And considering the small community they have, it seems a pleasant place to live. The only drawback to this place is that it is a Bhuddist community with a big temple in the middle of it. I would only ike to retire next time in a Christian community. Oh how lovely that would be.

Finally, after basically exploring the entire island, we decided to head home. The journey back took 45 minutes this time because we took the slower ferry. This time it was only RM7 per person one way. This time though, I was more prepared, and was reading my storybook the whole way back so I wasn't bored nor thinking of stupid things again. I would always remember Pulau Ketam as a relaxed, community-ful, no worries in the world kind of village just by the Strait of Malacca.

Joshua's visitor recommendation rating of the island: 6 out of 10

Some things are just funny

Over the past few days, there were just some things that really made me crack up.

Circumstance #1:

My colleagues and me were having breakfast over at the 4th floor. One of my colleagues, Sharizan, had his wife make him a sandwich from home. Nigel, my other colleague, was complaining how come his wife didn't make him a sandwich. Then he pretended to be furious and then actually called his wife, whose conversation went something like:

Nigel: Honey, you see my colleague's wife got make him very nice sandwich in the morning, how come I don't have leh?
Wife: Because you never ask me mar. Why suddenly now complain?
Nigel: No la, just joking, just joking. Don't take it seriously, honey, I still love you. Ok la, will chat with you later.
Tee: Eh Nigel, when you go home, tomorrow morning sure got sandwich for you in the morning.
Nigel: Just hope no bad time from wife can already.
*Everyone laughs*

Circumstance #2:

(In my church)

My pastor, Phillips Koh, was preaching and at the introduction was talking about his name.

Pastor Phillips: Do you all know why my name is Phillips instead of Philip? It is because my dad was holding a Phillips screwdriver when he decided to give me a name.
Me to Lesley: Eh, luckily it was not the TV, Phillips. If not he could have been called Toshiba or Panasonic. 0.o
*Laughs*

Circumstance #3:

(whilst having dinner at Oversea Restaurant with family)

(waitress suddenly breaks a glass)

Dad: You know last time we were in another restaurant, and when the waitress broke a glass, everyone in the restaurant clapped.
Me: Whattttt?? *Laugh out loud*
Me: Why would they all laugh?
Dad: Tradition.
Me: Who started it?
Dad: No idea. My guess is the manager and some other waiters. Then everyone followed.
Me: Oh, good idea! So that she will feel embaressed and won't do it again. So we should clap now right?
Dad: No, only happens over there.

I found this last one funny. LOL.

CIMB Part II

Lately, I have gone through a very steep learning process as well as having a very fun two or three weeks since I blogged. Life has been pretty balanced out lately, and some could say I am living the "adult working life", although not so dramatic as that sounds. It is because I work everyday now from 7.30am to 5.30pm and after that I go out with friends or come home. I go out about twice weekly in weekdays, so thats 3 times at home and 2 times out, and on weekends I tend to spend one out of two days with friends and the other with family.

Anyhow, in CIMB it has been truly enjoyable. The first marked the entry of my buddy intern Lionel into the equity research department as well. The story of the time we met is a funny one. That's because just two days before the day he came in(Monday), we were both at Sky Bar at the same time on the Saturday before, just that, we didn't know each other. And then when we got introduced on Monday, only then did I find out. But such irony, the world is a small place after all. It's really good to have another intern working with you because there is much opinions we could share from the same perspective about internships and university, etc.

Lately, Raymond, who is my true mentor in CIMB, has been teaching me alot about shipping. Turns out that the shipping market is not simple at all, with it mostly being a global market. I started off by learning about the different types of ships. Raymond introduced to me the 3 main types of ships: bulkers, tankers and containers. For a graphical representation, please google it up. It is always good to know how the things we are talking about actually looks like. And then I continued to learn further that there are many types of tankers such as the crude tanker and the product tanker. Crude tankers carry oil mainly, and product tankers carry processed oil, there is a distinguishing difference.

Further, tankers vary in sizes. First of all, the largest of the lot is called the VLCC, which stands for the very large crude tankers. It is then followed by the Suezmax, so called because its width can fit the Suez canal, and then the Aframax, not so sure why it is called but it is the smallest of the lot.

Then there are also the bulk carriers or bulkers. Mainly they are the Capesizes, which is the largest, and then followed by the Panamax, and sub-panamax. They mainly carry physical goods to be exported/imported to various locations all over the world.

Technicals aside, the whole shipping market consists of a big supply chain. First of all, there are the ship builders, then there are the ship owners/operators, then there are the port operators and also the ship repair/demolition markets. A ship owner/operator would request shipbuilders to build ships by putting their orders in an orderbook, waiting for their respective turns. Ships normally take about 2 years to build. Then the ship owner or operator would, as part of their main business, get cargo on board and charge the charterer a fee. Ports are the places where cargo is obtained/dropped off usually. And finally when ships are old, they are demolished in the ship demolition market.

People in the shipping industry like to call their ships liners, for a reason I don't know why. Perhaps it just sounds more cool. Then for ship sizes, there are two main types of measurements, typically the TEU or twenty-foot equivalent unit and also DWT or deadweight-tonne. Its just shipping technicals which I don't want to go into too detail because it is abit boring. But the shipping industry so far has delighted me because of its complexity. There is even a shipping "stockmarket index" known as the BDI, or Baltic Dry Index, which measures the demand for goods in the shipping industry. Supply in the shipping industry is a straight line, so it is very inelastic. It is because ships are very hard to store away and even docking them in a harbour takes months, and so supply is mostly fixed. Demand, however, fluctuates according to the economy. Hence, when there is strong demand, prices skyrocket, but when demand is low, prices crash. Raymond said that it is the closing thing to a perfectly competitive market in the real world.

Of late, I heard news that every ship owner/operator are making losses. That is because the BDI has crashed 98%. Shipping rates at its peak used to be about $300,000 per day. Now it is only about $6000 per day, which is below breakeven cost.

To be a shipping expert, one must know intricately all the details about shipping in this big, big market. Shipping demand is a kind of derived demand. For example, take iron ore. There has to be demand for houses first. Then there is demand for construction, followed by demand for iron ore, followed by demand for exports and finally demand for ships. I was introduced to many shipbuilders and ship owners/operators. The big giants in the ship building industry are mainly the Chinese, Korean and the Japanese. They basically make up easily 90% of market share. There are about 151 Chinese shipyards, 33 Korean yards and 28 Japanese yards. However, the ship owners/operators are vast, with big names such as Maersk(Danish), CMA CGM(French), Rickmers group(German I think) and Hanjin Shipping(either Chinese or South Korean).

Right now, Raymond is teaching me alot of it bit by bit, and there is much to learn for me. I also managed to do an analysis for tankers and bulk carriers, where I had to see where fixtures(word for contracts in the shipping industry) were made and their destinations in 2008 for each ship in each country. Once you have done that, you can know where your demand is coming from and you can conduct a sensitivity analysis. For the supply part, it is easier because you can look at shipyard's orderbooks to see which ships are due in which year. In current markets right now, there is an over-tonnage, meaning there are too many ships that can carry a specific amount of dwt, but the demand in dwt is much less than that. So that, as one of the reasons, caused the fall in shipping freight rates.

It will definitely take me more than 2 months to master the shipping industry, but slowly, over time if I continue persisting, then I know I can be a master of the shipping industry one day. Not easy, but it will take time. So far there are great sources like Lloyd's List(shipping newspaper) and also worldyards.com(shipyard database) that is of much use and also very expensive, but luckily CIMB has subscriptions to those. I think I've covered mostly everything I've learned in the shipping industry so far, and would continue to update you on more.

CIMB Part I

It has been around 3 weeks working in CIMB so far, and I have much more to learn. But so far I have already learned alot. To document my what I have learnt so far in CIMB, I have dedicated this series towards writing down and sharing my experience with my readers(you) about what I have learned so far and how it is to work in CIMB.

Coming into equity research for the first time I didn't really know what to expect. The thought in my head was that research analysts are all big experts in their industry and that they must know quite in depth about their specific sectors that they cover to be able to write up reports in their industry. Meeting the people is quite different to actually knowing what they do and don’t. If only there was an easier way to tell how much they actually knew by being able to read brains. But sadly, the best way to know, I found out, was to actually work with them.

Raymond Yap. This person was my true mentor in CIMB. He is the analyst responsible for transportation covering airlines and shipping in the research house. He also got voted the best transport analyst in Malaysia by the recent Edge newspaper polls. He would be the first to give me an assignment and actually teach me about the aviation industry. I learnt that the aviation industry comprised mainly of two main businesses which were passenger and cargo. So basically, airlines can carry passengers or cargo. That is their main source of revenue. Their costs can be broken up into fuel cost and non-fuel cost. But there are many airlines in the world with different cost structures and management, so they are all run differently. However, they produce results and as the analyst we would want to compare the different airlines to see which is in the best position. Since airlines fly distances and have a specific number of seats in the airplane, a reasonable measurement is the ASK, which is available seat kilometres, measured as number of seats multipled by kilometres flown. So we find units for revenue and cost. The basic breakdown is:

Revenue/ASK – Cost/ASK = Unit profitability

We can then compare the different airlines in the world to see which has the highest unit profitability. There is so much to tell that it is virtually impossible to voice out all my knowledge into a single blog post. Basically when you buy your ticket, you are giving the airline its main source of revenue. The airline also has admin costs, staff costs, handling charges that it has to continually expend to run the airline. As it flies from one airport to another, it also pays the airport charges levied against it. It also has to buy jet fuel from a supplier at whichever airport it lands.

Talking about fuel, as an analyst, we need to know where does the fuel come from that goes into the airline because fuel makes up about 50% of the airline’s cost. So it is worthwhile studying fuel cost. Basically, fuel comes from crude oil which is then refined to jet fuel. The cost of jet fuel is the main fuel cost of the airline. But it is expensive, and airlines are susceptible to rises in fuel costs, so what management can do is to engage in two types of defences. The first is fuel hedging, and the second is fuel surcharging. Fuel hedging involves buying options to buy/sell fuel at a certain price at or before a certain date so as to hedge fuel price movements. Fuel surcharging is passing on a portion of the increase in fuel charge to the customer so that the customer bears a bit of the cost. The equation is:

Crude Oil + refining margin = Unhedged jet fuel price
Unhedged fuel price – Hedging gains – Fuel Surcharge = Effective fuel price
Looking at the airline industry, it is also important to note how much gearing the airline company has. Airplanes depreciate every year, and so they need to replace those airplanes one day with newer, more efficient ones. Expenditure on airplanes is their main capex. Basically if earnings from operations after tax does not cover capex, then financing needs to be arranged for the deficit. It could involve either taking on more debt or issuing more shares. Since airplanes are so expensive to acquire, and usually their capex is high, operating cash flow is not enough to cover capex. Hence airlines usually would have high debt in their balance sheets. The successful airlines are able to maintain their core business and steal market share away from competitors and able to finance their capex using only operating cashflow. The fact that there is high capex also restricts dividend payments to shareholders.

After seeing many reports done in the industry about different airlines like Singapore airlines and Air asia, I would kind of know that airlines compete based on price of their fares. The successful airline would always be the airline that gets the most passengers and still makes money. In times of boom, the premium airlines do enjoy more passengers flocking to business class seats, but the low cost carriers also do enjoy a higher proportion of growth as poorer people suddenly have the income to fly. As there is more poor people than rich people, I conclude that the low cost carriers will benefit more in boom times. In recession times, the low cost carriers will actually be more resilient as demand first falls in business class seats, so the premium airlines will suffer a hit.

Looking already at the economics of the airline industry, and there is also many more ways in analysing an airline including looking at its passenger load factor growth, yield growth and cost growth, if I had to choose an airline anyway, I would certainly pick the one that has the highest growth potential, the lowest cost to run, a brand that people actually trust and would recommend their friends to go on, low or no borrowings in its balance sheet, has a good supply of aircrafts coming in and has already secured financing for them, a visionary management team, would have short-haul trips as their core business and long-haul trips as secondary(because the profitability is higher short-haul) and last but not least, makes at least 12% return on its equity invested in the business.

Recap of 2008

So what did I do in 2008? Have I made use of my life? I would certainly say it has been worthwhile. Here are a couple of things I did that I would remember as marked my 2008.

1. Successfully completed my 2nd year in my university degree. I went through 2 whole semesters in university and am very proud of it. For those who know me, I put much effort into getting good results in university. Getting good results is always good, but it’s the effort put in that really counts. For one thing I realised is that work life is like that, no one will really push you to up your standard, it’s really up to you how well you want to do. And that is what makes someone special.

2. Travelled to Brighton and Frankston Beach in Melbourne, Australia. It was my first time there, and thus I got to experience the beaches first hand, it was a wonderful experience. Saw how beautiful a beach could be especially in autumn. Would certainly love to go there again.

3. Joined the JP Morgan Investment Banking competition and came in top 5. I am so very proud of my team: Kelvin, Kim Chew and Wendy. We had to travel far and wide just to meet up. I will always remember the good times we had working together. Good work guys, we deserved every bit of that! I am happy for us.

4. Got elected as treasurer of the Entrepreneurial Investment Club. It was certainly a good experience being with EIC. First of all, it is all about the friends there, I have gotten to meet so many people and appreciate our network. I had lots of fun in the meetings and I certainly hope to be able to educate people more about the sharemarket and investing in general in the coming year.

5. A humbling year for Kenjisan Investments. Before you start investing, you will always feel that you can beat the sharemarket. You will feel confident and ready to take on the world. Although the optimism is always good, be careful not to be overly optimistic. The sharemarket experienced one of its worst years since 1930 and we have gone into a recession which has yet to see its end. Financial markets everywhere have plunged and there is a major deleveraging happening globally, the result that many people have lost their homes and jobs. As the investment officer at Kenjisan Investments, I have tried my best to prevent losses but we ended the year down 20 percent, but still better than the market which is down more than 40 percent. I have to reconsider my thinking and try my best for 2009.

6. Made many new friends from all walks. Throughout the year I have attended many lunches, get togethers, parties, outings, gatherings, and the result is that I have formed lasting relationships if not acquaintances with many of my friends. I will always appreciate you guys!

7. Tried many things, and failed. I would say that this year I have attempted to do many things. Like for instance, I joined the UBS Investment Banking challenge and tried my very best to get into Top 5, however, nothing eventuated. Perhaps we were not good enough and have to hone our skills even more. I have attended many interviews for internships in Australia but didn’t even get one. I tried to achieve even better grades for my subjects but didn’t achieve it. But I know that the important thing is that I have tried, and haven’t given up.

8. Became a personal tutor for university subjects. I decided to try my luck at being a tutor for accounting for first years. Turns out, I succeeded and it wasn’t bad at all. I was actually pretty comfortable teaching the syllabus and found out that maybe I do have some teaching talent.

9. Learnt how to play Frisbee for the first time in my life. Thanks to Kelvin who was really my teacher at the sport. I managed to learn how to throw a Frisbee right and it is actually a very fun sport. Would love to continue playing it in the future. Melbournians love it and it is even in the university games.

10. Bought a new laptop, suit and watch. This year marks alot of expenditure on personal items for me. I have saved a lot of money to buy those 3 things mentioned. But after all, it’s worth it. Up to now, I still find them very useful and surely worth the investment into the future.

11. Got an internship at CIMB. After searching high and low for internships, I finally landed one at CIMB. As of writing, I am still working there at the moment. Thoroughly enjoying it and they have put me in equity research department. There I am learning much about shares, how to value them, the different industries and how to improve my commercial judgment. I will always cherish the fun times I had working there.

12. Celebrated the Nando’s Christmas Party. It was the most fun event of the year, we had booze and fun games. Most of all, almost everyone in Nando’s turned up. They are my good friends by now and love seeing us all as a bunch together. We also had a Christmas kringle where we exchanges presents.

13. Finished reading Warren Buffett’s The Snowball biography. It was certainly a great book, as the author dwelved into the life of the world’s current greatest investor and tells the story of his life. It is about 900 pages long altogether and worth every page of it.

14. Grown closer to my close friends. I would want to put one of the defining moments of this year as getting close to my close friends. They are Kelvin, Nicole, Khim, Jerm, Chan and Jenn. I don’t think I will ever find a closer bunch of friends than them. They have always been there for me and the best of the lot.

15. Went through the ups and downs of a relationship. I know how it feels like to go through a relationship, and every bit of it. This year happened to me once. Although it ended, it was not wasted and I see it as a door that opens to a future of possibilities. Nevertheless, I appreciate all that we have gone through.

16. Came in 3rd place in the Melbourne University Entrepreneurial Challenge. After more than 6 months of ongoing competition, we finally came in 3rd. Congrats to our team who worked our butts off and we are just great guys. Cheers to Kelvin, Chiau Lin and Wei Na, we make a great team.

17. Went to a company’s annual general meeting for the first time. Wei Yan and myself both went to BHP’s AGM this year. It was great and my first time experiencing it. It was worth every second of it, and I look forward to going for more in the future. Heck, I think we were the youngest there.

18. Counted down New Year’s at Mont Kiara Plaza. It was really fun having counted down the new year with Chan and Peh Leon. There was fireworks and a live band. So we were dancing and celebrating there the whole night. I only reached home at 3am that night.

There might have been some events that I missed out, but these written here was surely the highlight of 2008. Turns out I had a great year after all looking back. It is already 3 days into 2009 and I can’t wait to experience it with the same enthusiasm as I had in 2008. Here we come 2009!

New Year's Eve Celebration

It’s finally 2009! What a great year ahead of us. So much things to happen, so much to experience, much laughter and sadness to go through, many friends to be made, much to be learned, much to be lived through, watching the fruits of our hard work or laziness come to fruition, and also for me personally, living the soon to come age of 21.

Looking back at 2008, it was an excellent year indeed. From what I had made in 2007, my 4 new year’s resolutions that I have made, I managed to achieve 3 of them. I am glad that I did keep to my new year’s resolutions because it was the best thing I did. The resolutions themselves were perfectly thought of and nothing could have been better than those. Now the question is, what is my new year’s resolution for 2009?

I could be doing so many things in 2009. But I would want to propose the following: successfully getting into finance honours, growing and sustaining Kenjisan Investments, getting an internship at the end of the year, making new friends and getting a girlfriend, and last but not least growing closer to God.

The night of new year’s eve, Chan, Peh Leon and myself went to Mont Kiara Plaza to watch the fireworks and a live band playing. They were very lucky it wasn’t a rainy night. We were dancing into the night and counted down 2009 together. It was amazing and I definitely had lots of fun. Not to mention that sharing a beer with Chan helped get me into the mood. I definitely look forward to 2009 and may it be a great year for those nations currently undergoing a recession, those who really need a step up the ladder of income, those who wishes to have a better life, those who are constantly pursuing after their dreams and last but not least, my own self.

Outing with Lesley & Wen, an unfortunate accident and having fun at work

So lately I've been in work. The hours are crazy like from 7.30am until 6pm. But I heard that the hours would usually extend until 7pm or more later on, depends on the busyness. But I enjoy work alot, it is exactly what I love to do and would continue to do it much more in the future.

On Tuesday night after work, Lesley, Wen and myself met up at Mid Valley Megamall for catch up over dinner. It was really good seeing them again. We had dinner at a malay restaurant that sells Nasi Dagang. Loved the taste so so much. But the price was expensive and the portion small. So no doubt I was unsatisfied after that. We headed off to eat some chendol at a nearby restaurant. That made my dinner. I have not eaten chendol for almost a whole year, and when a person like that eats it again, its like the best taste ever, ever. Then suddenly as we were about to embark home, something unfortunate happened. I lost my car ticket. So I ended up having to pay a princely sum for the ticket. But they said I can be refunded if I find the ticket again within 7 days, but I doubt it though. Nevertheless, the lost ticket didn't spoil my day because I met up with my beloved friends and I had a good day at work.

Work has been fun so far. I got to know most of the remaining staff. Let me try and name them all: Ireena, Julia, Kelvin, Nigel, Heng Guie, Allen, Tee, Vincent, Connie, Ivy, Wei Wern and Priscilla. On new year's eve, it was the best day ever at work. I came in at 7.30am, worked until 9am. Then we all went out for breakfast for dim sum in town, Nigel treated all of us. We came back at 10.15am. Then I had to go to HR to talk to Angeline about my employment. I came back at 11.30am. Immediately they all wanted to go out for lunch early and so we went to Mid Valley Megamall and had lunch at this fancy Thai restaurant. Then we were given some time to shop until we meet up again at 2.15pm. We came back to the office around 2.40pm. Then I worked until 6pm and went home. What a good day. Even though I didn't get much done at work that day, it was one of the better days and I look forward to more.