| Latest Forum Topics / Others |
 Post Reply
|
|
$10K to $1M in 5 years
|
|
|
lg_6273
Elite |
19-Nov-2006 21:10
|
|
x 20
x 0 Alert Admin |
Catering to this demand is Raffles Education, which has built for itself an enviable footprint across Asia - from China to Vietnam, South-east Asia to India. Its success is nothing short of phenomenal. Group profits have grown more than tenfold in five years - to $32.3 million last financial year from less than $3 million in 2001. Investors who bought into the then Raffles LaSalle would have seen their money explode by a factor of more than 90. In other words, $10,000 invested in Raffles LaSalle nearly five years ago in early 2002 would have a market value of some $1 million today if one had reinvested all the dividends paid back into the company. Excerpt from below. Published November 18, 2006 Breaking things down for a clearer picture An e-mail takes on new light against the backdrop of a booming Asian economy By TEH HOOOI LING SENIOR CORRESPONDENT Email this article Print article Feedback THE world is a very complex place so to get a better understanding of things sometimes, one has to break down a complex issue into a simple representation of it. A roof overhead: As China develops and incomes increase, the demand for more comfortable housing will rise so a company which caters to that need and which is in the market at the time when that need explodes is likely to do well Yesterday, I received an e-mail from a colleague. The e-mail has made its rounds a few times and I vaguely remember having seen it before. But the human mind is such a curious thing that what one comes across will only resonate if one's mind happens to be open to the idea at that point in time. Previously, I found that posting interesting but it didn't lead me to any particularly enlightening moment. But this time round, against the backdrop of a booming Asian economy and the hunt for the next big idea to cash in on, that e-mail has taken on a new light. Here's how it goes: 'If we could reduce the world's population to a village of precisely 100 people with all existing human ratios remaining the same, the demographics would look something like this: There would be 60 Asians, 12 Europeans, five Americans and Canadians, eight Latin Americans and 14 Africans; Of these, 49 would be female, 51 male; 82 would be non-white; 18 white; 89 heterosexual; 11 homosexual; 33 would be Christian, 67 would be non-Christian; Five would control 32 per cent of the entire world's wealth, and all of them would be US citizens; 80 would live in substandard housing; 24 would not have any electricity (and of the 76 per cent that do have electricity, most would only use it for light at night); 67 would be unable to read; Only one would have a college education; 50 would be malnourished and one dying of starvation; 33 would be without access to a safe water supply; One would have HIV; One near death; Two would be near birth; Seven would have access to the Internet.' Among the statistics, the ones that jump up at me are how 60 are Asians, 80 are living in substandard housing, 67 can't read, only one has a college education and 33 would not have a safe water supply. Housing needs The first number points to what the market has come to a consensus about - that the growth is in Asia. The other statistics point to where in the Asian markets companies can make money. For example, housing is one of the most basic human needs. As countries like China and India develop, and income of the people increase, the demand for more comfortable housing will rise. A company which caters to that need and which is in the market at the time when that need explodes is likely to do well. So if one buys that argument, then one company which is serving that market need is Sunshine Holdings. The company is a Henan-based property developer specialising in mass market residential and commercial properties. According to Guo Yinghui, chairman of Sunshine Group, whom I met this week, the plan is to have 60 per cent of Henan's 97 million population living in the urban area by 2015. Currently, the proportion is about 30 per cent. Meanwhile, economic progress has raised the per capita disposable income of urban residents in Henan province by 9.5 per cent a year to 7,705 yuan in 2004, from 4,094 yuan in 1997. Sunshine now is building up its land bank in anticipation of the demand. This week, it issued convertible bonds of US$32 million to Forum Asian Realty Income, a real estate private equity fund managed by Forum Partners in the US. Sunshine's advantage is its knowledge of the local market. CapitaLand, too, recognised the potential in the mid-tier market in second-tier cities. Last month, it announced that it had agreed to buy a 29.8 per cent stake in a Henan developer for 601 million yuan (S$119 million). Of course, the market can be booming but if management is not up to par, a company will not do well. The numerous awards and certificates won by Sunshine speak well for it. However, recent questionable claims and accounting practices by China companies like China Food Industries and Biotreat may cause investors to doubt China companies more. When asked, Mr Guo was frank enough to say: 'It's common (for such things to occur in a market that is transitioning into a market economy).' And when asked how investors can tell whether a company is telling the truth or not, he said: 'There's no way of telling.' But he added that companies which have laid out their long-term plans are likely to be genuine. Education Other shocking statistics from the e-mail - assuming they are correct - is the fact that some 67 per cent of the world are still illiterate and that 99 per cent per cent do not have a college education. Given that education is the biggest income equaliser, many parents in more progressive emerging countries will want to give their children the best education their money can buy. Catering to this demand is Raffles Education, which has built for itself an enviable footprint across Asia - from China to Vietnam, South-east Asia to India. Its success is nothing short of phenomenal. Group profits have grown more than tenfold in five years - to $32.3 million last financial year from less than $3 million in 2001. Investors who bought into the then Raffles LaSalle would have seen their money explode by a factor of more than 90. In other words, $10,000 invested in Raffles LaSalle nearly five years ago in early 2002 would have a market value of some $1 million today if one had reinvested all the dividends paid back into the company. And the growth is not over yet, says Raffles Education's chairman and chief executive officer Chew Hua Seng. The establishment of Raffles University will significantly boost the profit per student of the group. A number of its colleges which were established in the last one to two years will begin to contribute more significantly. 'We now have 8,000 students. It's not inconceivable to have 50,000 students in 10 years,' said Mr Chew. Meanwhile, its existing network is already looking attractive to Western education groups keen to expand into this region. The reputation and brand name built up by Raffles Education, its relationships established in China, and the market knowledge of its staff appear to be a big enough moat to ensure its continued growth. Safe drinking water will also see great demand. But as can be seen from many of the water treatment stocks, the barriers of entry may not be great enough. Final thoughts Now back to the e-mail. It said: 'Looking at the world in this condensed perspective, the need for acceptance, understanding and education is evident . . . 'If you woke up this morning with more health than sickness, you are luckier than the million that will not survive this week. 'If you have never experienced a war, the loneliness of imprisonment, agony of torture or famine, you are happier than 500 million people in this world. 'If you are able to go to church, mosque, temple or synagogue without fear of harassment, arrest, torture or death, you are happier than millions of people in this world. 'If there is a meal in your refrigerator, if you are dressed and have got shoes, if you have a bed and a roof over your head, you are better off than 75 per cent of the people in this world. 'If your parents are still alive and still married, then you are a rarity. 'If you have a bank account, money in your purse, you belong to 8 per cent of the well-provided people in this world. 'So work like you don't need money, love like you've never been hurt, dance like nobody's watching, sing like nobody's listening, be surprised like you were born yesterday, tell the truth and you don't have to remember anything, and live like it's heaven on earth.' Indeed. The writer is a CFA charterholder. She can be reached at hooiling@sph.com.sg |
| Useful To Me Not Useful To Me | |