Is Ant Group An Overhyped

Is Ant Group An Overhyped?

Ant Group IPO has been halted! Does it have problem with the Chinese government or does it present us more time to understand the company?

Is Ant Group an overhyped? Ant group announced that it would want a market valuation of USD $200B and later raise it to USD $313B. In the latest valuation I can find, Ant is going to be listed at HKD$80 on 5 Nov 2020. It will be listed on Hong Kong and Shanghai and will be the largest IPO of all time. We aim to find out if Ant Group is an valuable company to invest in.

Disclaimer. Please read. To set the context right, in the 6 Levels Wealth Karate, investing in an excellent business at an overvalued price is a lousy investment idea.

Is Ant Group An Overhyped

Is Ant Group An Overhyped



Ant Group is started as Alipay created by Alibaba in 2004 as a payment tool of online market place. Besides logistical issues, there was a lack of something important in the internet space: Trust. It is not hard to imagine people losing their money via scams. Hence, people were generally more skeptical towards online payment at that time (probably even today). To create trust, Alipay did something different. Alipay held the buyers payment first. They then released it to the sellers after the buyers confirmed that they have received and are happy with the purchases. This deterred fraud and scams.

To further build trust, Alipay launched a campaign in 2015. If a user were to suffer a lost due to an online fraud/scam while using Alipay services, Alipay will compensate them.

Today, Alipay has 1.3B active users with a 55% Chinese Market Share for mobile payments. The only significant rival: Wepay and QQ Wallet with 40% combined.

Is Ant Group An Overhyped Overview

Is Ant Group An Overhyped Overview

It has also gone from being a digital payment (wallet) to having digital solutions (place to spend money). Ant Group is a middle man who is working with service providers (bank/insurance companies/investment funds). Consider this an expansion of the current application at Alibaba where people buy products from companies. With 1.3B active users, I cannot imagine the amount of transactions going on with this application.

Today, I present the following reasons why I think Ant Group is an excellent company to be invested in.


#1 – Ballie Gilford is invested in them

Call me bias. Ballie Gilford has been investing in growth opportunities since 1908. They are an early investor into some of the world’s most valuable private and public tech companies, boasting a roster of portfolio companies that includes unicorns from nearly all generations in modern tech, including everything from Amazon, Google and Salesforce to Tesla, Airbnb, Spotify, newly public Lyft, Palantir and even SpaceX.

I got to know about this company when it first made its’ appearance when it partner with AIA. After looking at Ballie’s growth investing strategies and its’ track record, I am more confident of Ant Group.


#2 – They are profitable

This speaks volumes. In the current trend where people don’t mind investing in non-profitable companies, Ant demonstrated that there is real demand and there is REAL money being made. There is so much to interpret from this table and I hope you can look closer at it.

Is Ant Group An Overhyped Profits

Is Ant Group An Overhyped Profits

Ant Group has been in profits since 2017. Though it has not been a consistent trend, it is unlike the other unicorns who are not in profits yet.

Secondly, digital payment and merchant service has seen increasing revenue. However, the percentage of revenue has been reducing. This means not only digital payments (their original bread and butter) has been growing, their new technology platform has been picking up even faster! People are starting to get credit, investment and insurance using Alipay.

Thirdly, who knows what other businesses they can complement with which leads us to point 3.


#3 – They do not compete. They complement.

Ant Group is a middle man and the ultimate place to do business. Instead of starting a bank or insurance company, Ant Group partners them to provide their services. Ant Group takes less risk and yet is able to command a profit whenever someone needs a service with a bank or an insurance company.

They are the ultimate middle man that is impossible to remove because you would need to do your trusted payment using Alipay. In many investment courses, we call this an efficient scale moat.

Their only direct competitor is Wechat. The good news is that there is a tread that Alipay has been chipping away Wechat’s market share slowly.

Is Ant Group An Overhyped Overview Wechat Pay VS Alipay

Is Ant Group An Overhyped Overview Wechat Pay VS Alipay


#4 – Valuations are reasonable

I wanted to get into an Pre-IPO deal. However, my broker from CGS-CIMB wasn’t able to get a retail placement for us. Being >800X oversubscribed, that is understandable.

Currently, Ant Group profits are USD$3B for the first 6 months. If we assume that their profits will be the same in the second half of the year, it will mean that their profits are USD$6B in 2020.

In a simple analysis, the PE ratio for Paypal (02 Nov 2020) is 86. This gives a valuation of $516B. The current valuation is $313B.

For some of the advanced folks who have been following my blog and webinars, you know that I use the discounted cashflow frequently to valuate companies. Using a discount rate of 10.5% and the growth rates assumptions, my 20 years DCF shown a figure of $88HKD.

All these points to that fact that the valuations are reasonable.

Is Ant Group An Overhyped Discounted Cashflow

Is Ant Group An Overhyped Discounted Cashflow


Final thoughts by Wealthdojo

It is always fun and exciting when a company IPOs. Please treat your investment seriously. My wish is for everyone to invest wisely. If you have not started investing, there are basically 2 ways to do so.

  • Do it Yourself (DIY) – Learn about investing successfully and invest on your own.
  • Do For You (DFY) – Get someone who can invest successfully to invest on your behalf

We wish you good fortune for the rest of 2020. It is not too late to start.


Join my Telegram Channel for a tip a day! In Wealthdojo, we dedicate a small amount of time daily for learning new things. Continuous learning is one of the greatest secrets of success.

For those of you who want to turbocharge your journey, contact me at I would like to hear from you what your experiences are currently and from there, we develop a plan specially catered just for your journey.

We wish you all the best! Stay Safe and Take Care!

Chengkok, Sensei of Wealthdojo.

Potential 50% Gain Boring Company SBS S61 Old Bus

Potential 50% Gain Boring Company: SBS S61

SBS (S61) first caught my eye in December 2018. At that time, the public transport counsel announced that fares will be going up soon. It soon lead to a 50% increase in share price at that time. An opportunity came again during COVID-19, share prices has came back to Pre-Dec 2018 levels. I will be sharing why I think there will be a potential 50% gain in this boring company.

If you are new here, please look at my disclaimer section and also my 6 Levels Wealth Karate Methodology before continuing.

Potential 50% Gain Boring Company SBS S61 Old Bus

Potential 50% Gain Boring Company SBS S61 Old Bus: Source


What do SBS do?

SBS is a boring business. Basically, they run the following routes in Singapore. They run basic bus services, Chinatown direct bus, services, Express bus services, Nite Owl bus services, City direct bus services, North East Line, Downtown Line, Sengkang LRT, Punggol LRT, advertisement on bus, trains, bus hubs, train station and management shop and road show space.

It is pretty much an essential services and they have a market share of 61.1% market share as a public bus operator in Singapore.

Bus services comes under the BCM (Bus Contracting Model). SBS have to obtain the license to run the bus fleet. You can see from the link that SBS has the license to run the fleet in different areas with the immediate upcoming renewal in 2021 all the way to 2026.

*As the provision of bus services now comes under the BCM, the fare revision (in Dec 2018) affects only on their rail revenue.


Why is it an opportunity now?

The effects were felt during circuit breaker as we were forced to be at home. We probably go to our nearest supermarkets and shopping centers. This affected bus ridership heavily and can be seen in the H1 financial report. The circuit breaker started on 7 April 2020 and ended on 1 June 2020. The circuit breaker lasted for 1 month and 3 weeks. However, this does not include any prelude and also the after effects of the circuit breaker where people were still asked to work from home if possible. After the circuit breaker, rail ridership was at about 50 per cent of what it was during the pre-pandemic period.

Potential 50% Gain Boring Company SBS S61 H1 Results

Potential 50% Gain Boring Company SBS S61 H1 Results

On the top line, revenue dropped by 14.9% as compared to the previous year. This is to be expected as most of us spent around 2 months at home during the circuit breaker. (Just think about it, are you taking more bus rides as compared to the circuit breaker period?) Therefore, I expect the Next Half Year report will show a strong growth.

Depending on how they report it 2nd Half Year, they probably will report ~75% growth of operating profits as compared to 1st Half 2020.


What other reasons?

SBS is in a strong cash position. As of 30 June 2020, it had short-term deposits and bank balances of $94.5 million. After accounting for borrowings of $75 million, it was in a net cash position of $19.5 million.

It pays a good and sustainable dividend yield of ~4.5%.

It is currently undervalued based on a simple discounted cashflow model.

It is a stock that is position nicely to be normalized and the public transport section remains to be disrupted.


Any downside?

Very simply, there is little/no growth story to this company.

Secondly, new contracts might be awarded to new competitors to create competition. Recently, Tower Transit edges out SMRT to win $1.03b Bulim and Sembawang-Yishun bus packages. Tower Transit bidded $1.03B as compared to SMRT $1.19B. Personally, I find this will become worrying if this becomes a price war. SBS and SMRT may no longer be good cash cows in future.


Final thoughts by Wealthdojo

Most people will not entertain any investment ideas if it doesn’t have SaaS or Data in their business model now. However, I find that there are many opportunities in good old boring businesses that are positioning themselves to recovery and SBS is one of them. If things normalised, I expect prices to return to $4 region early 2021 with an upside of 50%.

Potential 50% Gain Boring Company SBS S61 Share Price

Potential 50% Gain Boring Company SBS S61 Share Price

I think it is understood that this should not be taken as a buy/sell recommendation. Please do your own due diligence in your investment.

PS: Here is a video on an explanation of BCM.


Join my Telegram Channel for a tip a day! In Wealthdojo, we dedicate a small amount of time daily for learning new things. Continuous learning is one of the greatest secrets of success.

For those of you who want to turbocharge your journey, contact me at I would like to hear from you what your experiences are currently and from there, we develop a plan specially catered just for your journey.

We wish you all the best! Stay Safe and Take Care!

Chengkok, Sensei of Wealthdojo.

Should you buy DBS Group Holdings Ltd (SGX D05) now

Should you buy DBS Group Holdings Ltd (SGX: D05) now?

Should you buy DBS Group Holdings Ltd (SGX D05) now? $19 seems to be a popular price that people will talk about DBS Group Holding. In wealth management, investing in good companies are essential to build up the capital to achieve our financial freedom. This article will hold some of my thoughts I have regarding DBS Group and some of it will shock you. Is it a mistake or will we have regrets? (Read all the way down).

Should you buy DBS Group Holdings Ltd (SGX D05) now

Should you buy DBS Group Holdings Ltd (SGX D05) now? Introducing the cat indicator. Meow~


Is DBS Group a Good Company and Undervalued?

Should you buy DBS Group Holdings Ltd (SGX D05) now numbers

Should you buy DBS Group Holdings Ltd (SGX D05) now?

These are the numbers that I look for in a banking stock. You can find this numbers from the annual report of DBS Group. We want to analyse whether the bank is first a profitable and efficient bank.

To look at profitability, we want to look at the Net Interest Margin (NIM) to be as high as possible. Banks earns a spread by borrowing money from people like me and you and giving them out as loan. We also want to see non-performing loans (NPL) to be as low as possible. There will be people who will default on their loans given various situation, we want to see it as low as possible.

Next we want to see the efficiency of the bank in terms of operations and per dollar invested. We have used the cost to income ratio which we want as low as possible. A lower cost to income ratio means their expense is low as compared to the revenue. Return on equity (ROE) we want it as high as possible.

Personally, I think it is quite a good company based on these set of numbers.

The valuation is also attractive at PB 0.99. This means you are buying it at 99 cents for every dollar it is worth. On dividends, it gives a 6.95% dividends based on previous dividends.



It really looks not bad isn’t it.


The Forgotten Track Record

As investors, we like to talk about track record. I realised that this only applies to numbers, valuations and also share prices. There are numerous things we forget and we are more forgiving and tolerant to these companies who have better numbers. Let’s talk about the forgotten track record that DBS Group has.

2020: Hin Leong Trading

DBS has the highest loan exposure to HLT at US$290 million, while OCBC and UOB are owed US$220 million and US$100 million, respectively. The sharp plunge in oil prices, along with the COVID-19 pandemic, had brought one of Asia’s largest oil traders to its knees. (Source: The Business Times: DBS, OCBC, UOB faced with over US$600m total exposure to Hin Leong)

The exposure is considered immaterial to DBS Group’s Profits.

2017: Energy Saga

DBS Group Holdings Ltd. reported a surprise drop in third-quarter profit as Southeast Asia’s largest bank boosted bad-loan allowances more than sixfold in an effort to deal with its problem lending to the regional oil and gas services sector. (Source: Yahoo Finance: DBS Profit Sinks as Bank Tries to Put Bad Energy Loans Behind It)

Allowances for bad assets of S$1.66 billion compared with S$261 million in the year-earlier period.

This would easily be blamed on the cyclical energy market when oil and gas services first got the worse hit.

2007: Lehman Brother Mini Bonds

Following the collapse of the Lehman Brothers, about 10,000 retail investors in Singapore lost all or a large part of their investments total-ling over S$500 million in structured investment products linked to the American investment bank. They were mis-sold these relatively high-risk products to investors, many of whom were the elderly and less educated. (Source: NLB: Lehman Brothers Minibond saga)

There are perhaps many more examples but forgotten with time.


The Way Forward

This section is my own personal opinion. While it may or may not contribute to the bottom line of DBS Group, I strongly believe it will contribute to a great brand which is largely intangible.

$500 minimum deposit of a fine of $2 will apply

I struggle to accept that DBS bank, our people’s bank have such a rule. The people who are most needy will be those with less than $500 as their minimum deposit. These people are from the lower income group and would need as much liquidity as they can get. I also struggle to accept that additional dormant accounts would cost the bank money. In my limited knowledge, I can only guess it will take extremely huge number of dormant accounts to really make a dent in the bottom line of the company.

Legacy Issues

DBS remains the bank to have the longest queue for its’ ATM or for bank tellers. I can only guess vast amount of paperwork that still continues to be done today. I’m also unsure of any technological advance in the company as we are only exposed to the mobile app and internet banking features which largely remains the same since 3 years ago.


Fintech has disrupted lives around the world. I haven’t seen much in this space for DBS Group. The one that is most impressive on their website is was dated July 2018 for projects in 2017. (Source: Case study: DBS – the edge)

Negative Interest Rates

With the world moving towards negative interest rates, will we follow suit? Will our NIM will be affected in the future.


No one will care about your money as much as you do.

Before you invest in any company or popular investment opportunity, be sure to do your own due diligence. If you wish to learn more about investing, I hope to nurture genuine relationships with all of my readers. Please feel free to contact me on my Instagram (@chengkokoh) or Facebook Page or my Telegram Channel! Or subscribe to our newsletter now!

USANA Stock Analysis

Investing Mistakes I wished I knew

I want to start off this post “Investing Mistakes I wished I knew” with vulnerability. I have been investing for more than 5 years and I still make mistakes when it comes to investing. For those of you who are angry at yourself for losing money in the stock market, I want to assure you that you are not alone. Even the Founder of Value Investing, Warren Buffett makes mistakes. (Read More: Buffett Investing Mistakes).

If you want to learn more, drop us an email to subscribe to our website (at the bottom). Or write a comment and tell us what you think about my thought process.

This article is not a buy/sell recommendation of the company.


Thoughts before investing

USANA Stock Analysis

USANA Stock Analysis

I first stumbled on this company when one of my friend told me about USANA. USANA is a direct selling company based in USA selling health supplements and nutrition products. I began to look at USANA in April this year as someone told me USANA share price has been dropped to a 52 weeks low. Looking at the charts, it is easily a 40% drop in USANA stock price.

That aroused my curiosity and I began to look at the financials of the company. (USANA Key Ratio). Financially, USANA has a fantastic balance sheet of USD$554 million with no long term debt. I like companies with excellent balance sheet as it means the company have the backing to withstand economic crisis. Technically, a company cannot go bankrupt if there are no debts.

I also look at the operating income growth of the company. Over the last 5 years, the company has been growing at around 10%. I feel the 10% is a reasonable growth rate for a company like USANA. Generally, I like a company who is able to grow at a sustainable rate.

There is probably not much capital expenditure for USANA, so I also like operating cashflow growth rate.

Using a simple DCF calculation, I believe the intrinsic value of the company to be around $82. (I will not be going into the details of my DCF calculations. I’m using a 10.5% discount rate for the DCF calculation).

I thought I had a good bargain and so, I bought 100 shares of USANA.


Investing Mistakes USANA Graph

Investing Mistakes USANA Graph: Would you be excited when you see the company you want to buy dropped 40%?

Upon holding onto the stocks

“When I invest into the company, the stock price will drop!”

I hear this very often in seasoned investors. This is also what happened to me after buying USANA. After buying it at $82, the stock price went to $75. What luck. However, I wasn’t very concern about the price as I believed it was an overreaction from the public. 

End Quarter 1

The Chinese Government have been clamping down on Direct Selling Companies in a 100 Day operation to clean up the health food market (Read More: 100 Day Operation). It began in January 8, 2019. I have already expected that the USANA first quarter results to be affected because of this reason. Looking at the results below, net sales decreased from $157 million to $144 million. It represents around a 8% drop in sales. They will a lot to catch up in the following quarters.


Investing Mistakes USANA Q1 Results

Investing Mistakes USANA Q1 Results

We can see 50% of USANA revenue is made up by the Chinese market. I recognized that as a market concentration risk. I believed that this quarter result was an one-off due to the 100 days operation. 

However, I felt disturbed after reading the statement made by CEO, Kevin Guest.


Investing Mistakes USANA Q1 CEO Statement

Investing Mistakes USANA Q1 CEO Statement

I was concern that 2019 operating plan contained very little promotional activity in the first quarter. It might be a strategy as the 100 days review was on-going. However, this suggest to me they are mainly focusing on the Chinese market and there was little plans to have promotions in the other markets. I find this worrying as the market concentration risk was bigger than I thought.



End Quarter 2

I expect sales to pick up during second quarter for 2 reasons. The first reason is the 100 days review was already over and the second reason is that promotion activities would have picked up. It would be an “easy win” for USANA in the second quarter. I couldn’t been more wrong.


Investing Mistakes USANA Q2 Results

Investing Mistakes USANA Q2 Results

Net sales dropped in the 2nd quarter. It turns out it did even worse than the first quarter.


Investing Mistakes USANA Q2 Customers

Investing Mistakes USANA Q2 Customers

We can also see that the absolute number of active customers in their top 2 markets (Greater China and American/Europe) dropped significantly.


Investing Mistakes USANA Q2 CEO Statement

Investing Mistakes USANA Q2 CEO Statement

From what I gathered from Kevin, their “usual promotion and incentive” techniques did not deliver. Kevin was focusing a lot of promotional activities and when it did not work, I can’t help to feel that the management probably didn’t not understand the Chinese market well. That’s might be one reason why the promotion and incentive did not work. At this point, the stock price already reacted and went down to $58 at a point (representing a 30% paper lost on my investment). I cannot foresee what USANA can do to further increase sales.

USANA also decided reduce their EPS guidance in the next quarter. In an attempt to give beat estimate in the 3rd quarter, I believe they will repurchase shares during the third quarter as well to boost their EPS.

After following the company closely for 2 quarters, I was most concerned about the lack of passion in Kevin’s statement. It felt like he was just doing BAU (business as usual).


End Quarter 3

With reduced EPS guidance and also a chance to repurchase shares, the market reacted positively to the results.


USANA Health Sciences EPS beats by $0.22, beats on revenue


To me, this smells like bull shit. When we buy back shares of the company, there is less shares base and so this might increase the EPS as compared to the previous quarter or year. They have also lowered their revenue estimates, “beating” this quarter revenue might be a way to give themselves an “easy win”. 

Let’s look into the actual numbers and what Kevin has to say about this quarter.


Investing Mistakes USANA Q3 CEO Statement

Investing Mistakes USANA Q3 CEO Statement

In summary, Kevin feels that it is a successful quarter because there is modest growth in net sales and active customers, customers are responding positively to the promotion and Chinese market seemed to be doing well this quarter. Let’s look at the numbers.


Investing Mistakes USANA Q3 Results

Investing Mistakes USANA Q3 Results

In this quarter, USANA did have an increase in net sales. The Chinese market gave a 1.5% growth as compared to the last quarter. In Kevin’s words, it is really a “modest” growth. The marketing and promotion i(f any) gave a small growth. With 3 quarters down, we can expect that USANA will not grow as compared to the last year.


Investing Mistakes USANA Q3 Customers

Investing Mistakes USANA Q3 Customers

To interpret this, we add the number of preferred customer and also the active associates. Total number of Chinese preferred customer fall quarter on quarter from 278,000 to 273,000. I do not see how the chinese market is excited about USANA market as what Kevin as said.

I fail to see how USANA is doing well or have the potential to do well in future. As the stock price has rallied till $80, I exited my position getting a 2% realised lost for investing in this company.


What I learn from investing in USANA


1) Management’s Passion

We are on a subjective topic over here so all opinions are mine and mine only. It pains me to read every quarterly earning calls transcript when the CEO lacks passion in what he does. There was simply no life in his words. I suggest that for you to read or listen to earning calls as it gives a indication how passionate the CEO, CFO is to the company. I wished I had read prior earning calls transcript before investing into USANA.


Investing Mistakes USANA Insider Selling

Investing Mistakes USANA Insider Selling

Looking at the insider shares being traded, we can see that clearly there is more shares being sold. There could be many reasons why someone will sell the stocks. However, we can also interpret it as how “valued” the company is to the insiders. I find it hard to convince myself that the management have a skin in the game together with us.


2) Blinded by the numbers

I fell in love with the great track record that they have and did not ask myself whether USANA has a competitive advantage. We also call this a moat. In some cases when the standard moats are absent, I ask myself whether this company can solve a pain point of the existing market. I felt that USANA might have a weak moat of branding (if any at all).

Looking back, I felt that I did not ask myself this question before buying into the company. I was blinded by the great track record and failed at that.


3) Check the numbers. Not just what the new report says

In quarter 3, the reports shows that USANA beats EPS and revenue estimates. Digging into the numbers, we can see that the guidance was lowered and it might be easier for those estimates to be hit. Secondly, there was a share buy back during that period, that could help beat the EPS. Despite what the headlines says, it isn’t a rosy year for USANA .


This sums up my learning over the past 1 year. These are some of the mistakes that I wished I knew earlier and I hope that it can benefit someone out there learning how to invest.


In Wealthdojo, we believe in bespoke financial planning. Whether it is money maximization, insurance or investing, we believe that everyone is different and the planning should be suited for you.

All opinions above are my own. Please view our disclaimer page to understand more.

I hope to nurture genuine relationships with all of my readers. Please feel free to contact me on my Instagram (@chengkokoh) or Facebook Page!

Now that you’ve read about learnt about how to benefit from Investing Mistakes I wished I knew. I challenge you to read this article (Things To Consider Before Investing In Foreign Dividend Stocks )to push your understanding further!

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