Songs ports could be motivated by the songs itself, along with by a specific band, vocalist or entertainer. It does not truly matter just what type of songs you such as since with this kind of port video games the enjoyable is constantly assured. The exact same puts on the good fortunes as well as the amazing functions.

Rock Celebrity attributes 5 reels as well as 30 paylines. This BetSoft video game attracts gamers in with the appeal of ending up being a rock celebrity. This video clip one-armed bandit video game will certainly take wagers from just EUR0.02 each spin approximately EUR0.50 for every single spin. The signs gamers will certainly see in this video game array from band participants, publications, and also the one that gamers have to keep an eye out for is a recording agreement.

Needs to a gamer obtain 3 guitar symbols on any kind of made it possible for payline, this will certainly turn on the perk round function, which is the solo round. Getting a platinum as well as gold document supplies gamers with 10 multipliers.
Plumbo is among the most recent BetSoft vending machine video games. This video game supplies gamers a various spin, in this video game gamers will certainly be attracted right into the globe of Norwegian rock. This sort of songs is a mix of people as well as rock-and-roll. As well as the symbols are additionally various from the typical one. Gamers could bank on this video game from a minimum of EUR0.02 each spin approximately EUR1.00 for every single spin.

And also the pot is a trendy EUR10,000. Plumbo has a scatter, wild as well as multiplier icons. Along with cost-free rotates. This video game showcases online clips on the rock band, along with which when a gamer obtains matching signs the songs will certainly be matched to the symbols revealed.
X Element Tips to Fame
X Aspect Tips to Fame has 5 reels as well as 20 paylines. It includes complimentary rotates, spreads, courts bonus offer, and also an online last reward video game. This amazing IGT video game could be appreciated completely free, or genuine cash, wagers begin with EUR0.01 each wager payline to EUR3.75 for every single wager payline. The optimum wager approved is EUR75.00 each payline.

This video game is freely accordinged to the hit tv program The X Aspect, winning mixes pay from entrusted to right, and also need to remain in successive order, with the exemption of the target markets as well as courts spread bonus offer icons, these will certainly pay in any kind of order.
Elvis the King
Elvis the King will certainly never ever should be presented. Nonetheless the port video game may. This IGT video game has 5 reels and also 25 paylines, and also much like the king himself has a great deal of personality.

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Gamers could position their wagers for just EUR0.40 each spin or upto a shocking EUR200.00 each spin. The pot is something not also the king would certainly sneeze at, an enormous EUR250.00.

This video game has a number of benefit functions such as the viva Las vega wild reel, which uses gamers 6 totally free rotates. The various other incentive is the jukebox bonus offer, which gamers will certainly turn on by getting 3 incentive signs.
Vivaldi’s Seasons
Vivaldi’s Seasons is loaded with very heaps, wilds as well as cost-free benefit video games. It includes 5 reels as well as 40 paylines. Gamers could appreciate this video game on such gadgets as computer systems, Macbooks and also laptop computers. The Vivaldi’s logo design is the wild sign, and also will certainly replace all others with the exemption of the complimentary video games icon.

The extremely heaps function is the one for gamers to keep an eye out for, must a gamer obtain any one of these icons on a reel, with will certainly change all the others. This IGT video game is accordinged to the 4 Seasons make-up, which is a concertos showcasing 4 violins, from the fantastic Antonio Vivaldi, that is an Italian author.
Elvis Multi-Strike
Elvis Multi-Strike video clip port video game has 5 reels as well as a tremendous 60 paylines. Which suggests gamers have much more opportunity to produce winning mixes. Gamers could appreciate this ready cost-free, or wagers begin with EUR0.01 each payline upto EUR5.00 for each and every payline. The optimum wager a gamer could position is EUR1,500 each spin. The optimal payment anticipated is 10,000 credit reports for each wager line.

This preferred IGT video game has scatters, multipliers, wilds and also 4 picture incentive rounds. All these pay from entrusted to right in order, with the exemption of the picture benefit and also the wild scatter signs which pay anyhow.

DJ Moo Cow
DJ Moo Cow is a video clip port video game used by the gambling enterprise as well as pc gaming software application company RTG. The video game showcases a modern prize that makes it extremely appealing to gamers worldwide.

The style of the video game stands for a go crazy club, where all type of pets could be located. The major personality is the cow DJ. Aside from the low-valued icons carried out in the video game’s user interface, there is likewise a Wild as well as a Scatter icon. Striking 3 Scatters anywhere on the First, Third and also Fifth reel of the port opens the complimentary spin reward attribute, which naturally, could be re-triggered.

DJ Moo Cow supplies a dynamic prize that is opened randomly and also does not call for any type of details winning mix.

Obtain Shaken
Obtain Shaken is interesting video clip port that offers 5 reels as well as 30 paylines. Powered by Microgaming, it showcases the prevalent motif of Rock-and-roll, so if you are a follower of this kind of songs, you will absolutely value this enjoyable port. The coin religion varies from EUR0.01 to EUR0.25 and also the optimum wager each spin is 300 coins. The wild icon is stood for by the Vocalist and also it gives the greatest pot payment of 5,000 coins.

When you obtain this sign anywhere on reel 2 as well as 4 concurrently, you set off the reward video game that shows up on a 2nd display. The scatter icon is the Phase as well as 2 or even more of these signs that show up anywhere on the reels, supply scatter payments.
Heavy Steel
If you are a follower of traditional Vegas-style ports that showcase a sci-fi style, Heavy Steel Port will certainly be an actual enjoyment to play. Powered by Microgaming, it offers 3 reels and also 3 paylines as well as it is especially appropriate for port gamers that like simpleness as well as fast video gaming. Although that there typically aren’t wilds or spreads it supplies an optimum prize payment of 4,000 coins and also you struck it when you have 3 online women showing up on the 3rd payline. The normal icons in the video game consist of cyber lady, one bar, 2 bars, 3 bars as well as 7s.

Gamers could wager from EUR0.25 to EUR5 and also the winning mixes within Heavy Steel Port are 9.

Rock ‘n’ Roller
Rock ‘n’ Roller is Las vega design port that features 3 reels and also 5 paylines as well as it includes enjoyable songs style. It has actually been created by Playtech and also it is flawlessly appropriate for those port gamers that like fast pc gaming as well as routine payments. Amongst the normal icons you will certainly run into Guitars, Harmonicas as well as Drum icons. The Platinum documents icons use the greatest payments when you struck 3 of them on the 5th payline you get the leading prize of 500 coins.

Gamers will certainly likewise have the opportunity to take advantage of various other additional pays throughout the gameplay and also to take pleasure in the ideal state of mind produced by this exciting songs port. In situation you wish to stay with the conventional ports yet you look for even more variety in pc gaming, this port is the best one for you.

Fund Team: Oil & Gas Update

Tom Law: Oil & Gas Sector Leader 2015-16

Market Report

It is no secret that the oil and gas market is extremely volatile at the moment. Following the drop in price of crude oil to below $30 a barrel, many related firms have taken a significant hit to their share prices. We advise to steer clear of purely upstream firms – that is firms that are involved solely in the extraction of crude – as these firms are most exposed to the price of oil.

With most analysts forecasting a higher long-term oil price, we feel the market is urging this increase, maybe prematurely, in order to realise the potential upside profits. However, concerns over China’s economy and a Federal Reserve rate hike following the upcoming US employment report, are slowing any bullish momentum. In addition, Iran and Iraq are currently increasing output, offsetting reductions in US rig counts and maintaining the supply glut.

Following this confliction, the market is moving significantly based on little more than rumours, particularly concerning an OPEC production cut. OPEC is very much an unpredictable quantity, with some members in favour of cutbacks, but most notably main producers Saudi Arabia standing by their market share for now. Saudi Arabia has been forced into economic cutbacks for the first time in several years as it has seen it’s heavily oil-dependent national revenue decline considerably. Thus, tension surrounds this issue, as investors know should it agree to scale back production, the price of oil will rise sharply.

To watch:

Exxon Mobil offers a certain ‘safe’ appeal for investors on the back of its integrated business operations and exceptional balance sheet. With limited downside appeal, and a dividend policy that has seen annual payouts increase for the last 33 years, its current low share price is yielding an attractive dividend rate – particularly given the floundering fundamentals of similar firms, e.g. BP, Chevron.

However, those looking for maximum capital gains will not be best served. Its stock price has recently diverged its trend with earnings, showing an increase in earnings per share of 12.40 last July to 16.46 presently. Simply, investors have already priced in its expected rebound. The risk lies in whether depressed oil prices persist long enough to dent its long-term profitability and threaten future dividends.

Proposed Trade: Short Sterling Energy (SEY)

Company Profile:

Sterling Energy is based in the UK but focuses on material exploration in Africa (specifically Mauritania, Madagascar, Somaliland, and Cameroon). The company reports that it is debt free, although concedes that its projects are only fully funded to the end of 2016 presenting significant liability.


Recently reported results:

  • For the six-month period ending 30 June 2015, the company reported a post-tax loss of $1.5 million.
  • This contrasts with the first half of 2014, which saw a $4.7 million profit.
  • Offshore drilling in Mauritania has consistently declined since the beginning of 2015. The firm plans to decommission this asset within the near future, and withdrew from Block C-3 in late January (29/1/2016).
  • The firm’s Somaliland project has been held up due to government restrictions over the level of security required to allow seismic and drilling operations to be conducted safely.
  • The firm acknowledges that the current low price of oil puts many of its existing projects in jeopardy.
  • The firm has seen the departure of its CEO and a director within the last year.

Share Price Performance:

The firm has seen a consistent decline in its share price over the past year. The 52-week range is 12.25–19.50 with a current price of 14.00. The past year has seen a decline in share price of 21.13%.

Today (30/1/2016), Sterling performed significantly more poorly than the energy sector on the London Stock Exchange (-1.75% across a sector average of +0.25).

The moving average convergence divergence (MACD) also exposes the stock as being over valued (net value of -0.02, divergence of -0.07) (note this is across the most recent 3 month period).

Sterling Energy also represents an attractive trade for the investment fund due to the relatively low value of its shares (£14.00 per share, relative to £159.75 per share for SOCO international, and £34.08 per share for Victoria Oil & Gas).

Fund Team: Pharmaceuticals Update

Rayane Achich, Pharmaceuticals Sector Leader 2015-16

Pharmaceuticals companies manage a risky business. Drugs in the development pipeline might not come out (e.g. Alkermes (NASDAQ:ALKS) depression drug unsuccessful trials leading to a $4bn market value day-loss on January 21st) or regulators might not approve them. After this long and costly production process, the success of the drug on the market is not even certain. This is the main reason why pharmaceutical companies live from their patents and why M&A has a significant influence on the industry to keep revenues growing as fast as investors’ expectations.

2015 was a frenetic explosion of M&A activity for pharmaceuticals (over $350bn vs. $250bn in 2014) but not only for companies acquiring each other but for companies to divest slower-growth businesses and restructure their businesses (Allergan (NYSE:AGN) selling its $40.5bn generics business to Israel’s Teva Pharmaceutical Industries (NYSE:TEVA) and negotiating at the same time a $160bn takeover of Pfizer for tax inversion purposes and other synergies). Most of the activity was a result of earnings’ losses due to patent expiries, declining R&D productivity and low interest rates.

Late in the M&A cycle, purchase prices escalate as more bidders enter the takeover market, leading many buyers to overpay. According to the annual report from PwC’s Health Research Institute, in 2016, “high-profile” mergers and acquisitions are likely to continue with “drug companies looking beyond traditional M&A by acquiring “beyond-the-pill” products and services to bolster their portfolios and pipelines of drugs”. This should provide significant returns for investors monitoring and anticipating these mergers while avoiding already-inflated stocks (e.g. Baxalta’s stock (NYSE:BXLT) increasing by 24% in 2 months at $41.62 after announce of a potential $32bn takeover by Shire (NASDAQ:SHPG), or $46.50-$48 offering per share).

To watch:

  • Prominences in pharmaceutical awareness and share price momentum were previously observed during the outbreak of the Ebola crisis. Currently, Zika Virus seems to be at the forefront of world medical attention. Inovio Pharmaceuticals Inc. (NASDAQ:INO) is trying to capitalize on this by patenting advanced DNA-based vaccines. The stock currently trades at 6.04 up 12% for the day and climbing (28/01/16). The share has a 52 week high of 10.83. Whilst it may have a negative long-term trend, this may be an investment to watch, as patenting a vaccine for Zika Virus, currently affecting over 2 million people and slowly becoming a global issue, may result in significant profits for the firm.
  • Johnson & Johnson (NYSE:JNJ) has announced a $10bn share buyback program financed by debt (cheap with current interest rates) that could lead in profits for investors

Fund Team: Transport & Leisure Update

Oliver Palierakis: Transport & Leisure Sector Leader 2015-16

So far so good for Transport & Leisure. From figure 1 you can clearly see that, YTD, the sector has been performing strongly compared to the FTSE ALL SHARE. This has largely been due to a demonstrated consumer preference to spending their disposable income on activities like eating and drinking out, or going to the cinema.

It is an easy-ish sector to grapple with. One of the most attractive aspects of this sector, from the perspective of a non-professional investor is its tangibility. That is, we are seeing and intereacting with these brands constantly in our everyday lives. Which student hasn’t at least heard of Ryanair Holdings PLC (RYA.L) for example?

Keep an eye on Greene King (GNK.L). One of the UK’s most well known pub and beer businesses and the owner of Hungry Horse. Over 50% of their geographical positions are in the South-East and East of the UK. They aggressively target value seeking customers, offer a consistent brand experience across their stores and are also showing a transition into the technological age. Downside risk is largely from the aggressive growth of craft beer that we have seen in the last 12-24 months. Being an owner of pubs as well as a producer of beers does potentially provide some defence against this threat but be careful.

What about restaurants … hey-Prezzo (PRZ.L), here’s your answer. Casual dining restaurants have been an enormous success. We have been reading particularly good things about Prezzo who are may potentially be about to receive earnings upgrades. If this is the case then now is potentially a good time to grab a slice for ourselves. Downside concerns: This is obviously a HUGELY competitive market and markets are turbulent at the moment. This might be a slow burner but definitely not a bad company.

Domino’s Pizza (DOM.L) has had a stunning year. Currently trading at close to £10.00 per share with a 52wk range of £6.52-£11.21 and we think that this company is only going to keep on growing. It has developed a tried and tested product that consumers love, it has shown good earnings growth over the last year, and most importantly it has proved that it can innovatively engage with technology (Google: “Domino’s easy order button” for more details on this). Downside concerns: For earnings growth to continue, Domino’s will likely need to diversify its menu as well as attempt to steal market-share in categories that are not pizza. These if not handled correctly over the next few years could be dangerous. However, overall it looks like a strong stock.

Fund Team: Financials Update

Bill Jung, Financials Sector Leader 2015-16

Oxford Technology Venture Capital Trust (OXT)

Oxford Technology 2 Venture Capital Trust Plc is a United Kingdom-based venture capital trust. The principal activity of the Company is to invest in start-up and early-stage technology companies in general located within around 60 miles of Oxford. The Company is focused on investing in early-stage and start-up technology companies. The Company’s investment portfolio includes OC Robotics, Select Technology, Telegesis, Plasma Antennas, Orthogem, Inaplex, Arecor, Insense, Oxis Energy, Immunobiology and DHA. The Company is managed by Oxford Technology Management.

Shareholders of record on Thursday, January 21st will be paid a dividend of GBX 10 ($0.15) per share on Friday, February 19th. This represents a dividend yield of 16.13%.

The dividend yield of OXT is very high, and it signals to the market that several investee companies show significant progresses or positive signals to the markets (e.g. Austin-based Silicon Labs has acquired Telegesis (incubated by OXT), a privately-held supplier of wireless mesh networking modules, for approximately $20 million).

OXT shows more volatile but profitable pricing patterns over around 5 years. It also signals that FTSE 100 plays like bottom line of OXT so that we could hedge the risk in the worst scenario.

Therefore, the volume is not too big, but the stock itself is volatile enough to take technical approach, despite the fact that it seems promising even in terms of fundamental analysis. I would suggest that we go long based on MACD rules.

MACD rules are exactly align with the trends of stock, so we could reap some profits as long as we go long position.

Fund Team: Real Estate & Construction Update

Thomas Hogg, Real Estate & Construction Sector Leader 2015-16

The year ended with the announcement that UK house building reached its highest level since the financial crisis as The National House Building Council registered 156,140 new homes in 2015. Although this is still short of the government’s target of 200,000 new homes, it is a rise of 7% on the previous year and may indicate that the recovery from the housing crisis may be turning a corner. However, the 2015 General Election created uncertainty in the sector as the prospect of a change of government led many to be cautious about its future. Nevertheless, with a return to the Conservative government, the sector has responded well with an 18% rise in house building since May.

Since the beginning of the previous parliament stocks of house builders have risen 270% and many look to continue to have a prosperous future in the current economy. Rises of 46% from Taylor Wimpey (TW.L), 32% from Barrett Developments (BDEV.L) and 24% from Persimmon (PSN.L) have placed them as some of the top performers on FTSE 1OO in 2015. In spite of this rising construction costs are beginning to insert pressure on operating margins. As a result the sector analysts have been looking to seek out value, which we believe can still be found in some UK house builders such as The Berkeley Group (BKG.L), Bellway (BWY.L) and Taylor Wimpy (TW.L). Analysts are also watching the emergent online estate agent PurpleBricks (PURP.L). The group is currently in the process of an aggressive recruitment drive and is looking to gain a hold in the £4bn estate agent market. This potential disrupter to the market and the traditional estate agent business model has seen year on year revenues rise 777%, yet having recently published a loss as a result heavy capital expenditure.

Looking forward, 2016 looks to continue the sustained growth from the previous year. Construction has slowed in the capital with the exception of Prime Central but the government’s incentive ‘London Help to Buy’ is seeking to be as successful as its namesake nationwide policy. The possibility of a Bank of England interest rate hike may knock on to mortgages, however this is estimated to be slight with lenders recording strong demand with approvals in 2015 being 19% higher than the previous year.

Fund Team: Technology, Media & Telecoms Update

Devin Zhang, TMT Sector Leader 2015-16

Technology, Media & Telecoms Sector Analysis Report

1. Introduction

It seems to be unrealistic in this case to implement the full-scale financial analysis of companies, considering the required length of time and professionalism it may ask during the process, taking into account academic commitments. In light of this reason, I decided to change my strategy from completing the detailed financial analysis to giving reasonable trading ideas based on concise analysis. This change could be still helpful in the sense that I think we may focus on making a good profit on our investment more than hitting a target price.

The idea of finding potential target companies I mentioned makes me focus on relevant perspectives of a company, which I think are crucial for evaluating stock price on the basis of my financial knowledge and understanding of corporate finance. The prediction horizon is assumed to be 3- 6 months. Sales revenue, profit margin, cash flow from operating activities, growth rate, market environment etc. are selected and considered case by case. This analysis report is probably not that comprehensive, but I believe it at least captures those key numbers that could reflect the main picture of a company. It may be limited by the level of my knowledge and expertise, though.

The philosophy of this analysis is following: sales and profit margin (net income/ sales revenue) are paramount for any companies, so these two features were selected. That being said, I also included the item “Cash Flow from operating activities” in the first part of my analysis. This is due to two reasons. First, companies could “manipulate” their profit by conducting irregular business activities (One example could be Yahoo boosted their profit in 2014 by selling shares of Alibaba after its IPO) and this is legal under the current accounting standard. However, the operational activities could reflect how the main business of a company is going to a large degree. Second, we all don’t want to see that a company with high sales revenue is struggling with profitability due to high bad debt rate (think about the roots of financial crisis. The sales numbers were almost meaningless at that time, albeit looks great. This is simply because they can’t convert those sales number to money). Therefore, I want to look at “Cash Flow from operating activities”.

Accounts receivable and inventory were also considered due to the worry of possible channel stuffing and company’s underperformance in the future. Same concept applies to “Accounts payable” and “long term debt” items. Companies could boost their profit margin sometimes by delaying necessary repayments to next financial year, so a high increase in “Accounts payable” is suspicious. Profitability can be significantly influenced if a company repays its long term debt in that financial year. On the other hand, an obvious hike in long term debt could be interpreted that the company may invest in new business, which is usually a good sign. Also if possible, we can check the relevant borrowing rate. If the rate is low, it means borrowers (who also must have conducted thorough analysis of the company) believe the company’s future is promising.

In addition to these traditional financial analysis, I also tried to incorporate other indicators of a TMT sector company, such as growth potential, market share, and industry environment to name a few. This consideration is based on idiosyncratic features of the TMT sector. Amazon did report financial loss for five years in a row after it went IPO, but its share price was going up most time during the same period.

In this report, I focus on three companies: IBM (as requested by Ferdinand, the Fund Team Manager), JingDong (a highly growing Chinese online sales company) and Alphabet (Google is a more familiar name for most people).

2. Short discussion of IBM

  1. Preliminary analysis: the value numbers are in USD millions
2015 2014 2013 2012 2011
Sales Revenue 81741 92793 98367 102874 106916
Net Income 13190 12023 16483 16604 15855
Profit margin 16.14% 12.96% 16.76% 16.14% 14.83%
Total selling, general and admin. Expenses 20430 21385 22214 23463 22865
Cash Flow from operations 17485 19585 19847 19549

Note: the profit margin of IBM last year is satisfying compared to that of last four years, but it is noted that the increase in profit margin is also contributed by the continuous downturn in sales over last five years. The cash flow number show the consistency in its lousy sales picture. I added “Total selling, general and admin. Expenses” to the IBM analysis because I realised the staff cost was declining most time over last five years. Downsizing sometimes is not for improving efficiency but making the accounting performance nicer when the overall performance is weak.

  1. Changes in proportion of “Accounts receivable” and “Inventory” of Total Asset (value numbers are in millions of USD)
2015 2014 2013 2012 2011
Value % Value % Value % Value % Value %
A/c receivables 28554 25.84 31831 27.08 31836 25.22 30578 25.65 29561 25.39
Inventory 1551 1.40 2103 1.79 2310 1.83 2287 1.92 2596 2.23
Total assets 110495 100 117532 100 126223 100 119213 100 116433 100

Note: Account receivables did not change too much last year, but the trend of lowering inventory is distinct for past five years. It should be noted that the decrease in inventory was not because of the excellent performance of sales but more like efforts to lower its operational cost. If we combine this trend with the sales number, we can conclude that IBM has actually been reducing its production over last five years. Usually, I won’t interpret this as good signals unless the company is shifting their business to other areas.

  1. Changes in proportion of “Accounts payable” and “inventory” of Total Liabilities (value numbers are in millions of USD)
2015 2014 2013 2012 2011
Value % Value % Value % Value % Value %
A/c payables 6028 6.26% 6864 6.50% 7461 5.91% 7952 6.67% 8517 7.31%
long term debt 33428 34.74% 35703 33.79% 32856 26.03% 24088 20.21% 22857 19.63%
Total liabilities 96233 100.00% 105664 100.00% 126223 100.00% 119213 100.00% 116433 100.00%

Note: The Account payables did not change too much las year, but the long term debt is increasing, particularly in past two years. It is worth investigating. I did some research and found the significant debt issuance could be related its buyback program.

In addition to the buyback program, IBM is also shifting from its traditional product and services mix – think mainframes – to faster growing segments such as cloud, analytics, mobile and security. This trend is in line with our discussion of usage of long-term debt in the last section. However, people think IBM is struggling with this shift, although the direction of this change is correct.

  1. My opinion

Overall, I will suggest not to buy IBM. If the stock has been in our portfolio, from a long term perspective, I may suggest a hold because its dividend is still good.

Last, this article is worth reading if you want to get a picture of IBM stock quickly, whose opinion is similar to mine.


3. Short discussion of Inc (NASDAQ: JD): This Chinese B2C online retailer surpassed Amazon China and Dangdang (E Commerce China Dangdang Inc, NYSE: DANG) last three years and has become the second biggest e commerce website in China. started with a focus on online direct sales selling. As it gained popularity, it started accepting other retailers as an e-commerce marketplace. Currently, Alibaba (the world largest E-Commerce website) which made the biggest IPO in history regards as its biggest competitor.

The price of is more volatile. Possible explanation of the price descending movement from May 2015: JD.Com started trading on the NASDAQ back in 2014, when it raised $1.78 billion in its initial public offering (IPO). The company’s stock performance was great in the first half of this year, but concerns around China’s economic slowdown have sent the stock plummeting since.

Preliminary analysis: The value numbers are in millions of CNY.

2015 2014 2013 2012 2011
Sales Revenue 115002 69340 41381 21129 8583
Net Income -4996 -50 -1729 -1284 -412
Profit margin -4.34% -0.07% -4.18% -6.08% -4.80%
Total selling, general and admin. Expenses 17337 6459 4797 2317
Cash Flow from operations 1015 3570 1404 -624

Note: the sales revenue of soars significantly over the course of last five years. This skyrocketing number is probably the best evidence that it surpassed Amazon China and Dangdang (the first listed Chinese e-commerce website in the US) at the same time. The profit margin is still negative, but is not the worst over the same term, so I may more look at its growth potential when evaluating this company. The fact that the staff cost boosted exponentially indicates the strong confidence in its future.

Changes in proportion of “Accounts receivable” and “Inventory” of Total Asset (value numbers are in millions of CNY)

2014 2013 2012 2011
Value % Value % Value % Value %
A/c receivables 4037 6.07% 1301 5.00% 674 3.77% 480 4.54%
Inventory 12191 18.33% 6386 24.55% 4754 26.58% 2764 26.13%
Total assets 66493 100.00% 26010 100.00% 17886 100.00% 10579 100.00%

Note: The most notable pair of numbers in this table is the jump in inventory and the general decreasing proportion of total asset. Considering that more focuses on online direct sales selling, the significant increase in inventory means it is expanding. At the same time, the lower proportion of inventory can be understood that the efficiency of is improving. This is particularly should be noted when its sales revenue ascended very quickly. I won’t worry about the rise in A/c receivables too much because it is not very significant compared to the increase of its sales revenue.

Changes in proportion of “Accounts payable” and “inventory” of Total Liabilities (value numbers are in millions of CNY)

2014 2013 2012 2011
Value % Value % Value % Value %
A/c payable 16364 56.44% 11019 66.10% 8097 70.51% 3636 78.28%
Long term debt 0 0.00% 0 0.00% 0 0.00% 0 0.00%
Total debt 1891 6.52% 933 5.60% 867 7.55% 0 0.00%
Total liabilities 28995 100.00% 16670 100.00% 11483 100.00% 4645 100.00%

Note: the item of total debt was added in this table because has zero long term debt.

Usually, decreasing Accounts Payables indicate the healthy financial status of a company. This is even better in this case because the total liabilities were slowly increasing simultaneously. I won’t worry about the change of total debt too much because:

  1. There is no long term debt. Therefore the total debt mainly comes from short-term debts. This indicates that may need “quick” money to support operations, but it does not need borrowings from a long term perspective.
  2. The increase in total debt is bit of trivial compare to that of total liabilities.

Overall, I think does have a healthy financial status. This is distinct for me because is expanding its business exponentially.

Other information

1. chose Russia as its first foreign market for expansion and intends to become an e-commerce leader in this market within five years. It has already launched a Russian-language website in June and signed a delivery contract with Russian logistics operator SPSR Express.

2. Personally, I think the biggest advantage of is its “own” logistic team. Yes, it doesn’t rely on any third-party delivery companies unless it is a retailer who entered into and chose to use other delivery companies. The delivery service of is probably fastest one of online shopping website you can have. Here is one example.

If your address is in a city/town of eastern parts of China and you submit your order before 11.00 am, you can receive your goods on the same day. If your address is in the rural area, it is guaranteed that you will get the goods next day. This service is free if your order is more than 8 pounds.

A good comparison could be Amazon China. Amazon relies on its own logistic team and other delivery companies alike. It normally takes 2 days to deliver the goods to customers if you are in a city/town of eastern parts of China. If you are in a rural area, normally it takes 3 or 4 days. The delivery service is free if your order is more than 10 pounds.

This fast service provides significantly increases customer satisfaction in China where life is indeed “hustle and bustle” in most places.

3. In addition to Amazon China, is another website that continuously sells a large sum of exported goods with a reasonable price by itself.

My opinion

Generally, I highly suggest as a potential choice. A further analysis may be need if we want to make a more cautious investment decision. This advice is consistent with the suggestion from the article that the link below guides to: Inc. (NASDAQ: JD) was raised to Buy from Neutral and the price target was raised to $35 from $27 (versus a $26.69 close) at Nomura. The consensus analyst target is $35.52, and the stock has a 52-week range of $21.55 to $38.00.


4. Short discussion of Alphabet Inc

Preliminary analysis: The value numbers are in millions of USD.

2014 2013 2012 2011 2010
Revenue 66001 55519 46039 37905 29321
Net Income 14444 12920 10737 9737 8505
Profit margin 21.88% 23.27% 23.32% 25.69% 29.01%
Total selling, general and admin. Expenses 13982 10986 8946 7313 4761
Percentage of Staff cost in revenue 62.49% 58.88% 53.83% 50.21% 42.97%
Cash Flow from operations 22376 18659 16619 14565 11081

Note: the profit margin decreases, but the percentage of staff cost in revenue increases at a faster rate. We may argue the higher increase in staff cost is contributed to more R&D expenses because its Cash Flow from operations continues increasing over the course of past five years. Because Alphabet doesn’t disclose R&D expense, this claim needs further investigation. Overall, we see the increase in revenue, net income and CF from operational activities.

Changes in proportion of “Accounts receivable” and “Inventory” of Total Asset (value numbers are in millions of USD)

2014 2013 2012 2011 2010
Value % Value % Value % Value % Value %
Cash 64395 49.37% 58717 52.94% 48088 51.27% 44626 61.49% 34975 60.46%
A/c receivables 10849 8.32% 9390 8.47% 8585 9.15% 6172 8.50% 5002 8.65%
Total assets 130426 100.00% 110920 100.00% 93798 100.00% 72574 100.00% 57851 100.00%
Net goodwill 15599 11492 10537 7346 6256
Long term investment 3079 1976 1469 790 523

Note: Accounts receivable did not change too much over past five years, but cash Alphabet holds were decreasing gradually. On the other hand, total assets arise, so I think the decrease in cash may be “converted” into other assets, such as Goodwill (due to acquisitions) and investments. This is the reason why I included items of “Goodwill” and “Long-term investment”in this table.

Changes in proportion of “Accounts payable” and “inventory” of Total Liabilities (value numbers are in millions of USD)

2014 2013 2012 2011 2010
Value % Value % Value % Value % Value %
A/c payables 1715 6.46% 2453 10.39% 2012 9.11% 588 4.08% 483 4.16%
Accrued expenses 7499 28.23% 6253 26.48% 5497 24.89% 3188 22.09% 2371 20.42%
long term debt 3228 12.15% 2236 9.47% 2988 13.53% 2986 20.69% 0 0.00%
Total liabilities 26566 100.00% 23611 100.00% 22083 100.00% 14429 100.00% 11610 100.00%

Note: The Accounts payables decreased last year, but the accrued expenses keep increasing over past five years. This is maybe related to undecided legal expenses in the future, which could be a pitfall for our investment.

Other information

1. Despite focus on reduced spending, Google still went ahead with some daring acquisitions this year. These include: Pixate, Timeful, Tilt Brush, Thrive Audio, Red Hot labs, Softcard, Odysee, and Launchpad Toys. Alphabet – Google’s new holding company – is now going to be the main acquisition vehicle, at least for major companies. The company has historically killed off all unsuccessful non-core products, which makes an acquisition under its existing umbrella much cleaner.2. In 2015 the company formerly known as Google—Alphabet —revamped its corporate structure to allow further scrutiny of the various efforts (Nest, Google X, Life Sciences) adjacent to its core advertising business. Its dedication to AI spans both its core and experimental divisions and could accelerate the ad business responsible for most of its revenue. (Alphabet is expected to make $85.7 billion in total revenue in 2016.) “Investors can tolerate losses in moon-shot businesses because they’re planting the seeds for longtime growth,” says Colin Sebastian, a senior analyst at Robert W. Baird. Our take: Buy.

My opinion

I will regard Alphabet as a good investment choice, especially its current price is lower than three months ago, which has been circled in the first graph. A more important thing I think is investment in Alphabet is “safe” given the possibility of its various and mind-boggling future products. The only concern for me is the unsolved legal investigation and fines, because it may affect the return of our investment if the investment horizon is 3-6 months. A more ideal timing to buy this stock is when it is clear how much European authorities impose the fine, but it is hard to predict when that day will come.

Fund Team: Industrials Update

Carl Meran, Industrials Sector Leader 2015-16

The idea to go long on oil has not paid off yet and it is not clear yet that a bottom has been reached. I believe the idea to short Tesla should still be right as an idea, however the trade has been helped by the general sell off that occurred this January.

This year my plan is to profit from the high volatility and the unsecure market sentiment leading to potentially undervalued companies. I have urged my team to look into European manufacturers and companies that could come out of this crisis stronger, or those that might profit from low commodity prices. I believe that companies like Agrana (an Austrian Industrial company manufacturing sugar and starch) could be one such investment.

However, due to the high insecurity about global growth and to what comes after QE, I will also look into companies that have enjoyed high expectations by investors and might now not hold up to them – this way we could profit from an economic downturn and hedge some of the other bets. For example, we have been looking into various companies producing parts for Wind Turbines and Solar Power Stations.

Fund Team: Metals & Mining Update

Harry Jones, Metals & Mining Sector Leader 2015-16

2015 has been a troubling year for industrial metals and consequently, the Metals & Mining industry has suffered, with big miners such as Glencore, Rio Tinto, Anglo American, Antofagasta and BHP Billiton all seeing their share price tumble. The S&P Metals & Mining Index is down 55.75% on the year, with no significant drivers for a rebound in sight. Much of this is due to bearish views on China’s economy, which has slashed commodity prices. According to Barclays, US commodity futures are currently positioned at a net short ten times greater than in the midst of the 2007-9 financial crisis. In addition, 6% of Glencore shares are out on loan, up from 1.5% in September. Likewise, Anglo American shares out on loan totalled 8.1% in the run up to Christmas, from 1.97% in July (FT and Markit data). Bearish indeed.

China’s recent stock market troubles haven’t helped, compounding weak commodity demand following restructuring towards a service-based economy, shaky export figures and renmimbi devaluation. These factors have diminished Chinese appetite for commodities. The start of the US interest rate raising cycle has seen an appreciation in the greenback, affecting dollar-denominated debt.

As such, the Metals & Mining team have felt it imprudent to invest at this time in the sector, whilst share and commodity prices are seemingly still on a downward trajectory. Whether the market will bottom out in the wake of the ‘supercycle’ of the last few years remains to be seen.

Iron ore prices hovering around $36 will impact many of the big miners, particularly Rio, BHP and Vale, reducing the prospect of dividend payouts. Citi analysts have predicted it to fall beneath $30 in 201

Copper is a metal to look out for in 2016, with mixed market sentiments. Some analysts believe it is grossly undervalued at $4,500 a ton, especially as supply has been cut, whereas others see it as in line with weak emerging market demand.

On a more positive note, rare earths, especially cerium, could increase in price in 2016. A stable cerium price enables other, scarcer rare earths to be mined more profitably. Capital Economics forecast a 6% rise in demand for rare earths in 2016, and the Metals & Mining team will be analysing rare earth miners’ prospects. Another area we have been looking at is lithium, which could become an interesting market over the next few years, especially with the rise of electric cars.

Fund Team: Consumer & Retail Update

Lester Tan, Consumer & Retail Sector Leader 2015-16

For the Consumer & Retail sector, we believe that the industry will enjoy a good year for 2016. Given that unemployment rates in the UK has fallen to a seven-year low of 5.4%, as well as 5.1% in the USA, we expect greater consumer spending for the upcoming year on both retail goods and services.

2015 saw the industry grew by approximately 4.5% compared to the previous year and that momentum is expected to gained further traction led by greater consumer confidence, lower rate of employment and the overall effect of households worldwide benefiting from higher household incomes. Major concerns for the year would include worries of a further slowdown in the Chinese economy as well as the possibility of UK leaving the EU.

In terms of stocks, some of the stocks the team has shortlisted recently are ASOS, Netflix and Seven and I Holdings.

ASOS is one of the stocks the team has highlighted. The firm has an extraordinarily high P/E ratio (66.9 on 20 Jan) relative to its peers like Bohoo and N Brown, which suggests it has high growth potential. This is supported by the company’s plan to expand its warehouse capacity and reach out to more non-UK markets. 58% of ASOS sales are from outside the UK and the company is aiming to increase this further, and especially EU. ASOS has been very focused with their strategy, which has strongly supported its growth and market share. The company’s robust management team has improved their services continuously and kept up-to-date with their customers’ technological demands. Their share price is relatively expensive but is currently far below its peak, so we believe it is a safe pick to BUY.