Is Groupon Travel Deal Worth A Try?

I rarely look into groupon's deal in my email. About 90% of the time I'll just delete them straight away from my mail box.

Nevertheless, I came across a groupon travel deal which caught my attention in early May.

It is a trip to Shanghai for 6 days 4 nights, inclusive of Airasia X return air tickets, airport tax & fuel surcharge, 4 nights accommodation in 5-stars Sheraton hotels, daily meals and sightseeing in China.

What should be the fair price for this type of travel package?

The groupon price for this deal is RM1,738 for 2 adults, or RM869 per person.

Normally a 2-way Airasia X flight including airport taxes between KL & Shanghai will cost more than RM1,000 per person unless you are lucky to get a really good promotional deal at around RM700.

However, groupon also listed out other fees or surcharges that are not included in this deal.

This is the detail of this groupon travel deal:

It is fair enough that baggage allowance, in-flight meals, travel insurance and visa are not included. The compulsory tipping for local your guide is RM15 a day per person or RM75 for 5 days in this tour package.

After inquiry with groupon staff, younger children who are much less than 12 years of age who wish to share bed with adults are not required to buy groupon. However, they need to pay RM700 for air tickets and RM88 for tour fee per child. This is not stated in the groupon deal.

For a child below but close to 12 years old, the child has to get a groupon and pay a surcharge of RM488. This means if a couple travel which their child with age close to or above 12 years old, they need to buy 2 groupons and pay another RM488 surcharge, which is more expensive than travelling for 4 adults.

So for me with 4 adults and 2 young children who share beds with adult, the amount of money that I need to pay initially is RM5,052 consist of:

• Two groupons for total RM3,476
• Two extra return flight tickets for 2 children for total RM1,400
• Two extra tour fee for 2 children for total RM176

Earlier I have inquired about a 7D6N Taiwan trip from a local travel agency. The tour fee is approximately RM3,000 per person in school holiday season. The price is the same for children.

So, to bring 4 adults and 2 children to Taiwan, I have estimated about RM20,000 of bleeding. So this groupon deal of about RM5,000 looks really attractive even though the trip is 2 nights less.

Initially our plan for a family trip was in September, we then decided to try out this groupon deal and bring the travel date forward to end of May.

That's why I need more cash and my credit card bill swells.

For this groupon Shanghai deal, before looking into the full itinerary, I am pretty sure that there must be quite a lot of "shopping stations" within this tour. True enough, there are as many as 7 shopping stations listed in the itinerary.

Though the hotels mentioned are Sheraton, but it is also stated that equivalent hotels might be given, and I think this must be the case.

It is also not hard to imagine that the daily meals provided must be cheap and ordinary, other than the buffet breakfast at those 5-star hotels.

This trip to China covers 4 cities in Jiang Nan which are Shanghai, Suzhou, Wuxi & Hangzhou.

Besides, there are highly-recommended self-paid tourist spots that cost RMB450 per person. 

Overall, does this groupon travel deal worth a try? Will there be:

• other hidden fees?
• changes in hotels?
• changes in tourist spots?
• "forced-buying" at shopping stations? etc

I will share my experience HERE.

YOCB: Slow & Steady

YOCB FY14Q3 Financial Result

YOCB	FY14Q3	FY14Q2	FY14Q1	FY13Q4	FY13Q3
Revenue	47.2	50.7	46.5	40.6	45.1
PBT	7.8	9.8	7.1	5.2	7.6
PBT%	16.5	19.3	15.3	12.8	16.8
PAT	5.9	6.9	5.2	3.9	5.6
Total Equity	154.2	148.3	144.6	139.3	138.4
Total Assets	195.6	195.6	178.9	177.9	165.4
Trade Receivables	49.7	56.5	41.1	40.0	46.8
Inventories	69.2	68.6	62.3	57.2	50.1
Cash	32.6	31.8	36.4	41.4	28.8
Total Liabilities	41.4	47.3	34.3	38.6	27.0
Trade Payables	8.2	14.0	8.0	11.6	8.7
ST Borrowings	29.0	29.0	23.2	24.1	15.1
LT Borrowings	0.0	0.0	0.0	0.0	0.0
Net Cash Flow	-8.7	-9.6	-5.0	11.5	-1.1
Operation	-0.8	-10.9	-0.7	12.6	8.9
Investment	-6.4	-0.3	-0.2	-2.0	-1.8
Financing	-1.6	1.7	-4.1	0.9	-8.1
EPS	3.68	4.34	3.27	2.44	3.51
NAS	0.96	0.93	0.90	0.87	0.87
Net D/E Ratio	Net Cash	Net Cash	Net Cash	Net Cash	Net Cash

As YOCB's business is seasonal, it is better to compare the results YoY.

From Jan-Mac 2014, both revenue and profit after tax improve marginally about 4-5% YoY, while profit margin remain almost the same.

For its balance sheet, the worrying part of fast increasing trade receivables in previous quarter is eased slightly, and the pace of increase in inventories also reduces.

Operation cash flow improves QoQ but overall cash flow year-to-date is still negative, mainly because of expense in investment. It is still in a net cash position though.

An interim dividend of 2 sen is declared. I expect another 2 sen dividend for FY14, with total 4 sen similar to FY13. The dividend yield will be 3.3% at RM1.20 a share.

There is nothing to shout about regarding this set of financial result. Next quarter will be YOCB's weakest quarter. However, there should be a slight improvement overall in FY14 compared to FY13.

Perhaps I should sell YOCB now, as it seems fully valued and the growth is slow. 

However, I can see more of its brands and products in the market compared to 2-3 years back, mainly in Aeon which is currently expanding its presence in Malaysia aggressively.

I think with this reason, I will continue to hold YOCB's shares until I need cash one day.

Anyway, I hope that it can make a breakthrough in local hypermarkets as well as overseas market.

Latitude: US Home Sales Is The Key?

Latitude Tree FY14Q3 Financial Result

LATITUD	FY14Q3	FY14Q2	FY14Q1	FY13Q4	FY13Q3
Revenue	146.8	184.4	177.1	124.4	107.2
PBT	14.8	26.0	20.7	9.4	5.8
PBT%	10.1	14.1	11.7	7.6	5.4
PAT	12.8	19.0	14.6	5.9	4.3
MAS Rev	32.3	31.6	28.9	23.2	22.5
MAS PBT	3.0	2.1	1.2	-1.0	-0.7
VIET Rev	108.1	147.7	142.2	96.1	79.4
VIET PBT	10.9	24.9	20.0	12.0	8.4
THAI Rev	6.4	5.1	6.0	5.2	5.2
THAI PBT	-0.1	-0.3	0.02	-0.5	-0.7
Total Equity	296.8	270.1	249.8	232.1	222.7
Total Assets	475.5	530.1	478.6	449.8	408.5
Trade Receivables	49.1	58.2	55.4	33.8	38.4
Inventories	90.7	95.4	81.8	89.7	73.0
Cash	109.0	147.4	116.1	96.1	65.8
Total Liabilities	179.3	205.5	179.3	173.4	144.7
Trade Payables	77.7	95.7	85.1	72.9	52.3
ST Borrowings	91.4	95.5	78.9	85.1	75.5
LT Borrowings	8.9	11.1	12.3	13.5	15.3
Net Cash Flow	11.5	48.2	14.6	41.9	12.2
Operation	55.5	42.2	20.3	52.9	30.6
Investment	-34.0	-4.1	-1.2	-3.1	-2.4
Financing	-5.8	5.0	-8.6	-7.4	-14.8
EPS	13.12	19.52	15.02	6.12	4.43
NAS	3.05	2.78	2.57	2.39	2.29
Net D/E Ratio	NC	NC	NC	0.01	0.11

For its latest FY14Q3 result, Latitude's revenue and PBT rise 37% and 155% respectively YoY. This is mainly due to higher order, higher production capacity and higher margin products.

However, if compared to preceding quarter of FY14Q2, revenue and PBT in latest quarter drop 20% and 43% QoQ respectively.

Besides seasonality reason (lower order after Christmas & New Year), higher cost of raw material also contributes to lower margin and thus lower profit.

Cash & equivalent reduces by RM38mil, mainly due to expense on group restructuring (RM34mil on acquiring remaining shares of LTIG). Overall, its cash flow is still positive.

Balance sheet is still favourable with positive cash position, while net asset per share has increased to RM3.05.

This set of result is widely expected and there is no surprise. So I think this is the reason its share price drops after result announcement.

The riots in Vietnam earlier has caused a loss of 8 production days for Latitude. So we might expect a "poorer than expected" result for the next quarter.

If there are 72 production days in a quarter (6 days a week), then 8-day loss of production will be a potential 11% lower revenue. However, not all factories are affected. If the factories are running 7 days a week, then the negative effect will be even lower.

What is more important to me is whether the demand of Latitude's products is still there. 

As Latitude exports almost all of its products to the US, it is essential to know how US property market perform as furniture sales should be closely related to it.

The charts below show US new & existing home sales since year 2010.

       US new home sales 2010-2014

       US existing home sales 2010-2014

Both new and existing home sales in the US are generally in the uptrend for the past 4 years. However, they do drop a bit in recent few months.

I always read that US and Europe economies are still in the process of recovery, but Asian and emerging markets seem to be in danger of major collapse.

So does this mean that US will only grow in the next few years?

How was the US doing in the era before 2007-08 Global Financial Crisis?

The charts below show new & existing home sales in the US since year 2000.

       US new home sales 2000-2014

       US existing home sales 2000-2014

It seems like current level of home sales is still far below the highest level in year 2006. If the home sales can climb back to pre-2006 level, then it can only be good to Latitude.

Besides, it is also good to know the consumer spending & sentiment in the US at the moment. Generally they are not declining.

       US consumer sentiment 2008-2014

       US consumer spending 2000-2014

In summary I believe that US demand of furniture will increase in the near future. Latitude may benefit from this trend unless its production capacity is "maxed out" or it is not competitive enough.

So, I will continue to hold its shares, while waiting for its next quarter's result.

My Portfolio May14

Summary for May 2014

May 2014
Numbers of stocks	7
Cash/Share ratio	0
Share Bought	Latitude @ 3.03
Share Sold	Asiapac @ 0.275 (all)
	Tropicana @ 1.55 (all)
Overall 2014
Portfolio Return May14	4.3%
KLCI Return May14	0.1%
Portfolio Return YTD14	40.6%
KLCI Return YTD14	0.34%

Portfolio calculation method here

Stock Portfolio @ End Of May14

Core Portfolio

Stocks	Average	Latest	G/L (%)
TAMBUN	0.77	1.98	157.1

Satellite Portfolio

Stocks	Average	Latest	G/L (%)
GTRONIC	2.43	3.95	62.6
INARI	0.73	2.88	294.5
LATITUD	2.09	3.05	45.9
MATRIX	3.13	4.05	29.4
SCIENTEX	5.47	5.77	5.5
YOCB	0.69	1.21	75.4

Comment:

• Better than expected 40.6% portfolio return year-to-date.
• Topped up a bit of Latitude in early May, just before the Vietnam crisis. Wrong timing...
• Sold all Tropicana & Asiapac shares, as cash is needed quite urgently in the end of May.
• Another buy on Latitude will see it promoted to core portfolio.

Plan:

• Expecting another net sell of shares in June, as more cash is needed (to pay the ballooning credit card debt)
• Watch Bumitama closely.