ad astra per alia porci

KXD Digital Entertainment Ltd (SGX: K07)
December 25, 2007, 2:59 am
Filed under: companies analysis | Tags: , , ,

KXD Digital Entertainment Ltd

As of 25 December 2007

  • 1 SGD : 5 RMB
  • EPS: 0.00513/share
  • P/E ratio: 10.721
  • Earnings Yield: N/A
  • 52 Week High: 0.200
  • 52 Week Low: 0.055

The One Minute Story

KXD designs and supplies home entertainment equipment, which includes DVD players and home entertainment systems.

Financial Analysis (in SGD)







Book Value Per Share






Cash Per Share






Cash Flow Per Share






Earnings Per Share






Dividend Per Share






Dividend Payout Ratio






Net Profit Margin






Return on Total Assets






Return on Equity






Current Ratio






Long Term Debt of Capitalisation






Why Buy

  • At the current price of 0.055, it is at a massive discount to BV/share (0.1599) of 65.6%. It means assets can be bought at massive discount. The question that needs to be answered is whether the assets are worth this amount and whether prospects are good.
  • The CEO owns 75% of the company and has not been divesting his share.
  • The current ratio as of 3Q ’07 is very healthy (3.1787)
  • The company carries zero long-term debt.

Why Not Buy

  • There is a continuing lack of profitability over the years, which indicates a weak competitive position.
  • KXD doesn’t seem to have a visible brand, as opposed to other manufacturers.
  • Cashflow has been negative for at least two consecutive years.
  • Commodity business.
  • KXD admitted in its annual reports that it is facing strong competitive pressures, and that it will channel cash toward R&D efforts. As investors, we want companies to have little competition and to spend as little cash as possible on hit-or-miss research.


  • Watch for unlikely turn in fortunes.
  • Currently, based on an aggregation of 1Q to 3Q ’07 results, the company does not seem to be on course to replicate ’06 performance. Total revenue for this 3Qs stands at 397.129 RMB Mil while ’06 had 952.796. Total profit for ’06 stands at 19.778 but the total for this 3Qs is only 3.67.
  • Assets go for cheap and the price seems to indicate that the company is going for a good price, but it is all based on historical data.
  • Looking forward, the company seems to be priced correctly: future results seem to be substantially weaker than the year before.
  • Classic value trap.

Disclaimer: The author bears no responsibility for any financial losses caused by reliance on the author’s views. Investors are advised to do their own research before making their investment decisions.

thought-provoking documentary: The Century of the Self
December 24, 2007, 3:08 pm
Filed under: miscellaneous | Tags: , , , , ,

I am currently into psychology and I have read books on how techniques that take advantage of inherent human psychology can and are employed for personal gain and corporate profits. These include books on body language (Barbara and Allan Pease), reading people (David Liebermann is a good choice for Machiavellian techniques) and advertising (Robert Cialdini’s Influence: The Psychology of Persuasion is a must-read classic).

Recently I stumbled upon an interesting documentary by Adam Curtis, The Century of the Self on (where else?) Youtube. The documentary traces the development of the use of academic psychology (specifically Freud’s studies) in the world of consumerism and political persuasion. It puts what I have learned from my reading in a historical context.

The central figure in this documentary is Edward Bernays, who is often seen as the father of public relations. He applied Freud’s theory of the ego, super-ego and id to his various propaganda and advertising jobs to great success. I must admit that prior to watching this documentary I had no idea who was Edward Bernays. He played a crucial role in transforming what used to be a economy of need to a economy of desire, in which corporations manipulate and capitalise on the inherent psychological desires of humans for their own profit. Consumers now buy on the basis of desire instead of needs, and this trend seem to be a permanent feature of our consumer landscape.

Super Crunchers: Why Thinking-By-Numbers is the New Way to be Smart
December 21, 2007, 5:25 am
Filed under: investments/finance/economics, Law

A book written by a law and economics guru, Professor Ian Ayres of the Yale Law School. The central thesis of the book is that there is a growing trend for the common people, academics and businesses to utilise statistical predictive models in making decisions, instead of relying on pure intuition. This trend is partly due to the inadequacies and inaccuracies of utilising intuition and relying on “experts” and the development of powerful computers that can crunch numbers quickly. Concomitantly, statistical methods seem to be much better predictors than the naked human mind.

American law schools are the biggest proponents of interdisciplinary approaches to the study and advancement of the law and law and economics is probably the hottest of the palette of mixtures available. This approach is just starting to take root in Singapore with the offering of double-degree programmes in law and business, law and life sciences and of course, law and economics of which yours truly is in one of the pioneer batches, amongst other combinations. Reading this book gave me the impression that American law professors are much more broader in their thinking and they have a wider intellectual range that encompasses the ability to blend issues from other disciplines into the law and allows them to write outside of the narrow legal academic circumference.

I am of course a biased observer but I do believe that an interdisciplinary approach is the right way to go. Currently my impression is that the law is unhealthily focused on language, interpretation and argument; the rigour of applying empirical techniques that once belonged to the domain of science and the “harder” social sciences would serve as a complement. It would be great if courts accept economic arguments and statistical analysis when deciding cases that primarily turn on “intuitive” issues like public policy and morality. The law exist to govern human actions and promote the social good; adopting methods that aid decision-making helps the law achieve its aims.

The application of mathematical methods will serve to remove much of the vagueness and uncertainty of intuition and allow the courts to come to more definite answers. For example, in determining compensation when a victim of a car accident sues in tort, cash flow analysis that takes into account inflation and growth in earnings capacity can lead to a fairer prediction of the amount that the victim is allowed to recover compared to a purely intuitive, arbitrary number determined by the judge.

As suggested in the book, regression analysis can be used to test the effect of laws that are implemented. For example, the current big issue here pertains to Article 377A of the Penal Code and whether it is archaic and should be abolished. Any Tom, Dick and Harry can say whatever they want about the arguments for and against the abolition of 377A, but to me, the argument ends there. The argument that abolishing 377A will lead to more homosexuals in society to me is as appealing on a logical level as the argument that abolishing 377A will lead to more equal rights for all members of society. It’s really anyone’s game and anyone can make a perfectly acceptable argument against and for the abolition without any real proof of whether one side is better than the other.

Applying empirical statistical methods to the situation will help decisions. It provides a means of testing the validity of a statement. Of course, it sounds Machiavellian and crazy but one way to test if abolishing 377A will indeed lead to more gays in society is to abolish it, collect data subsequently and apply regression analysis to see how this one factor affects the number of gays. Alternatively, bearing in mind that social situations differ between different countries and cultures, one can utilise data from other countries which have done the same and do an analysis of it.

The point here is that crunching numbers allows decision makers to weigh options and test statements. It does not totally remove the role of intuition and choice and reduce the decision-making process to a purely mechanical one, but it does lend a degree of objectivity that can weed out and expose opinions made solely on emotive grounds. Rather than merely speculate in one’s mind the impact of a decision of a court of law in ruling in a particular way, more weight can be given to options that are proven statistically to work better.

Moving on to less dreary stuff, here are some interesting ideas and trends that I have picked out from the book:

1) The rise of data crunchers – Data gets more expensive

Companies that aggregate raw data and help businesses crunch data will become more numerous and profitable, with the change in the way businesses make decisions. Data will become more valuable as consumers and businesses alike start to recognise the usefulness of crunching numbers and pay good money for it.

2) Economic efficiency

I am a bit iffy about whether crunching numbers can lead to overall social benefit and economic efficiencty. The jury remains out on this issue. Consumers seem to be exploited by companies that utilise these methods to maximise profits. One example stated in the book that of a airline company that calculated the “pain level” of service that will lead to a customer switching to other airlines; once the optimal level is arrived at, the company can just pitch their level of service to that particular standard and keep the maximum number of passengers without being required to continually improve services, which is desirable from a consumer point of view.

Conversely, the argument that consumers themselves can utilise these techniques to protect themselves against businesses is not as strong because consumers are less equipped intellectually and resource-wise to crunch numbers and predict prices to aid themselves. Even though the book provides the examples of how some organisations and websites have gathered information and crunched data on the best time to say, book flights for the lowest rates, the problem remains as these entities remain organisations and not individuals. One cannot expect an individual consumer to spend the time and effort to crunch their own numbers to avoid being duped at the cash counter.

3) The distinction between forward and backward crunching

Backward crunching is when historical data not purposely gathered and created by the user is statistically analysed. This analysis is much more difficult given the lack of control groups and the myriad of factors that can affect variables.

Forward crunching is when the user actively engages in “experiments” with control groups and surveys and gather data for analysis. This is what happens with Google when they send out random ads to test which arrangement of words lead to the greatest clicks. Information is gathered in a structured way and the impact of changed variables is analysed through the data.

word games
December 15, 2007, 7:57 am
Filed under: diary, Law


One disturbing yet fully understandable observation I made while studying the law is the unavoidable reliance of the law and our common law system at least on word definitions and interpretation. Legal concepts are at theirs roots abstract creations, and by embodying it in language the problem of interpretation and definition arises in such a way that it creates uncertainty and much room for exploitation. The inherent slipperiness of language lends itself to judges interpreting words in the light of their own moral values while hiding behind the cloak of objectivity that the law itself is suppose to stand on.

I contend that in this aspect at least, the law necessarily stands on wooden stilts. However the limitations of language and practical reality make it impossible to ever provide definitive and unambiguous legal rules.

Being just a first year student, I naturally cannot make any substantive and well-informed comment on the law outside of what I have studied. Hence my focus here is on contract and tort law. Even though I have studied these substantive law subjects, I can scarcely be considered to be well-versed and what comment I make must be seen in this light. That said, I do believe that a law student, as with any other student of other disciplines, is in a position to make at least a personal and rational observation of what he or she studies. While my main concern here relates to language, my comments will inevitably flow into other concerns.

The inherent ambiguity of language leads to uncertainty and offers room for conflicting interpretations that might lead to unfairness and the bane of subjectivity.

The concept of a duty of care in the tort of negligence is a prime example. As far as I am concerned, the fact that I cannot find a single sentence that defines what is a duty of care in any textbook that I have consulted is a indication of the inherent abstract and amorphous nature of this concept. The evolution of the various tests for a duty of care is evidence of the law’s struggles in coming to a precise definition and framework for determining a duty of care.

Even with the new test established in Spandeck Engineering Pte Ltd v DSTA, the ambiguous nature of what is “proximity” and “policy” remains. While the learned CJ did point out the factors stated by Deane J in Sutherland Shire Council v Heyman like “assumption of responsibility”, “reliance”, “causal proximity” and “circumstantial proximity” as some factors that might be seen to fulfill the requirement of proximity, it remains that firstly the factors are inexhaustive and not definitive, and secondly the issue of word interpretation still remains. What is “reliance”? What is “causal proximity”? Such concepts are totally reliant on how the judge perceives a particular set of facts to entail. What seems to be reliance to one is not to another.

The concept of proximity is largely ambiguous largely because this concept involves subjective questions of value and morality. To say that a person assumed responsibility is to state a value judgment. One of my lecturers was dead right when he commented that the reason for the confusion over the test for duty is that proximity necessarily overlaps with concepts of fairness, justice and policy. Lord Denning got it right when he stated that issues of causation, duty, the standard of care and remoteness are at root questions of policy and value judgments in Spartan Steel & Alloys v Martin & Co.

Even though the court in Spandeck saliently pointed out that the requirements of policy and proximity should be clearly delineated and judges should clearly express reasons separated into the two categories so as to not leave lawyers wondering whether a judge has unexpressed motives behind a judgment which is cloaked under the banner of proximity, the same problem remains because such decisions are made from a subjective, unconscious level. Proximity remains a question of both fact and value.

The crucial question is, what can be done to make things clearer? Can better words be used to enunciate and give life to a concept? I doubt so. I think that what can be realistically done is to show what is NOT within the ambit of a concept through the development of case law. Take the modern “radical difference” test for the doctrine of frustration to operate in contract law. The phrase is open to a multitude of interpretation, but the existing case law gives solid insights into what is not frustration. Reduced profitability (Glahe International Expo AG v ACS Computer), onerous performance (Davis v Fareham UDC) and the possibility of alternative methods of performance (Tsakiroglou v Noblee Thor) are not frustrating events. But we still do not know for sure what IS frustration, within the context of the “radical difference” test. It remains an open-ended question. The question still remains one of linguistic interpretation of what is “radical difference” within the framework of facts. Giving more words or different words for the same test will only lead to the same question and ambiguity.

This manifest uncertainty has gone quite a bit to inculcate a profound weariness and cynicism in me about whether the law can provide a framework of certainty to human relations and offer justice at all. It seems that the law is basically an exercise in wordplay and subjective opinion. Crucial words like “proximity” are interpreted and applied to facts to decide cases but they offer no certainty. Judgments that are made based on the private emotions and values of judges cloaked by a veneer of objectivity through concepts embodied by words like “proximity”, “assumption of responsibility” and “policy”.

The unnecessary overuse and verbosity of language in judgments is a serious yet laughable problem. Generations of law students, practitioners and academics spend hours and hours poring over and dissecting the speeches of judges to uncover slivers of truth in the mountains of inanity and unnecessary words. At the root of this problem is the inherent inscrutability of what is being said, the excessive use of words to express what seems to be intended, and even if the speeches are clear, there is significant room for diversity of interpretation.

At the risk of sounding flippant and disrespectful, I believe that much pain and inconvenience can be obviated by teaching judges to consolidate their judgments into one, clearly expressing and identifying their opinions as personal opinions when they are, and practising self-editing and summarising. I sincerely believe that the same can be said with a lot less.

This is especially evident in the English cases that I have come into contact with in my studies. At best, all judges agree and there is one leading speech. At worst, 7 judges do not agree unanimously and when they do agree, they agree on the same holding through different reasonings. At many instances, judges say similar or identical things. I believe the Singaporean way in which one judge gives a consolidated judgment that is succinct and appropriately summarised leads to greater efficiency and better justice. Simply put, being clear makes better law.

Don’t get me wrong, I am not a fan of narrow thinking and sterility of thought. The dialectic nature of the law, especially common law, is the beauty of it. It adapts and changes through distinguishing and applying cases. However, my contention is that this same purpose and goal can be achieved much better through a consolidated, one judgment system where conflicting counterarguments can be incorporated into the single judgment.

The cult of hero-judge worship is to me a unhealthy corollary of this problem of excessive language. One need not look further than Lord Denning as an example. There is no doubt that he was a brilliant man and a great judge that had served to improve and develop the law, but perfection is not a human trait. While his speech in Miller v Jackson might exude poetic airs, realistically speaking it serves no purpose in developing the law.

In my perspective law is practical philosophy, and philosophy is arguably a linguistic exercise in which we as humans are limited not so much in thought but in the words we can possibly use to express ourselves. Wittgenstein probably hit the nail on the head in his summary of his famed Tratatus-Logico Philosophicus, where he opined that what can be said can be said clearly while what cannot be said must be passed over in silence. Applying this truism to law, it follows that what can be said in a judgment can be said clearly and succinctly within the limitations of language used to express abstract legal concepts. Language is all that we have and its inherent ambiguity and inadequacy are characteristics that we have to live with.


something meaningful from a (probably) meaningless movie
December 12, 2007, 3:04 pm
Filed under: diary


It is unusual for one to derive some sort of deeper meaning and significance from a phrase or even worst a song in a dated Hongkong movie starring Stephen Chow and Andy Lau but this is exactly what happened to me with regard to this short clip from a movie that I have not even watched in full before. I quote the particular portion of the song which I found to be of great personal meaning:

young man has to work hard
I have to be decisive
with my strength
to cure my sadness, and be happy

This song was performed by Stephen Chow and Andy Lau who are presumably playing the roles of young yuppie upstarts trying to build their careers with the help of various anonymous background “dancers”. I have to say that given that I have not watched the entire movie, I cannot describe for sure what the characters are but this is rather immaterial as to what I feel was meaningful in the song, which is embedded in the words that I have quoted above.

The deliberately mousy and geeky way in which the song was performed did affect my response to the lyrics but I have to say that the words touch my heart. It sort of reflects my current situation and my aspirations simply yet accurately.

It reflects the situation that most young men starting out working life or trying to get something started in their lives find themselves in, doesn’t it? At least from an Asian, Singaporean perspective, we are expected to work hard and bury our noses in our work in order to achieve something in our lives and provide for ourselves and our families, future or current. We need to make decisions and be firm in our beliefs and our actions.

I particularly liked the last line, where I sense a tension between overt and superficial happiness expressed and achieved through the fulfillment of what one thinks is supposed to be the conventionally and socially-accepted “right” and “accepted” thing to do and the underlying unhappiness and emptiness that one is left with at the end of the day.

Presumably we work hard in order to achieve all the things that conventionally anyone would want in life; cash, a house, good food and a car are prime examples. However clearly one must question what is the point of it all. There is something existentially meaningless about working in a 9-5 job and going through the motions of conventionality; I can draw a parallel between my study of the law and my purpose for it and the idea of existential meaninglessness. There is some conflict between one’s actions and one’s inner feelings; somehow my actions do not measure up to what I expect or truly want in my heart of hearts.

That, I think, underlines the essential meaning of that line. On the surface one pursues the good things in life earnestly and with full heart through honest hardwork. However, there is this niggling and persistent feeling that something is missing, that there is an emptiness under the veneer of rationality and conventionality. I cannot say that I have fully resolved this question myself and I feel that perhaps I can never stop grappling with this issue in my life; I wonder if this is true of many others too.

The Atheism Tapes
December 11, 2007, 2:15 pm
Filed under: diary

Fantastic series by the BBC, with Jonathon Miller as the presenter/interviewer.

First interviewee – Colin McGinn

Essential viewing for just about anyone with an interest in religion and is capable of standing back and contemplating his deepest-held beliefs, regardless of his religious inclination.

The Law School Rules
December 11, 2007, 1:30 pm
Filed under: Law

Notes from The Law School Rules by Martion T.D. Lewis Continue reading

Forbes – 26/11/07 + 10/12/07
December 8, 2007, 2:47 am
Filed under: current affairs

Forbes – 26/11/07 + 10/12/07

Insight into the Chinese stock market boom

  • Some companies have taken stakes in stock brokerages.
  • This creates a circular relationship that inflates stock prices.
  • When investors pay more and trade more, these companies have increased earnings due to the increased profits of the stock brokerages they have a stake in.
  • This increases the price of the company which in turn encourages people to trade more.
  • It doesn’t help that liquidity is pretty much restrained by the government; Chinese investors cannot invest their money in overseas markets.

P/S ratio

  • James O’Shaughnessy says that the price-sales ratio is a better measure than the traditional price-earnings ratio.
  • The idea here is that a low P/S ratio is an indicator that the stock is relatively cheap and poised for higher returns. Investors tend to overpay for growth and glamour and underestimate businesses’ tendency to regress to the mean; buying low P/S stocks capitalises on this.
  • P/S ratio should not be more than 1.5, which is the average for the S&P500, and there must be an upward trend for earnings.
  • Earnings can be easily manipulated and companies on the rebound may have earnings that are temporarily depressed.
  • Price-book value ratio is most useful with companies that have hard assets, but does poorly when measuring companies with intangible assets

Ken Fisher’s Portfolio Strategy

  • Continue to buy stocks at good prices; events like the credit meltdown, American elections and Iran will either not happen or have little effect.
  • What he is concerned with is the possibility of the yen rising, because American and European markets are being propped up by speculators borrowing in yen.
  • Interestingly, he recommends Flextronics from the Singapore market.

semester one is over, holidays are here (for a while)
December 7, 2007, 2:40 pm
Filed under: diary


The last of my papers for this semester was concluded a day ago and this brought to a close my first semester as a law student. After a long hiatus from maintaining and updating this blog due to the exigencies of studies, it would be apt to restart my rusty blogging engines by opening with a recollection and reflection on the last semester and examine what was not done well and what I should do to improve in the next semester.

The past semester

1) Competition

I have said it before in a previous post and I reiterate here that the competition is pretty strong. It is amazing how people are interested in knowing each other’s grades and are willing to (and did) invest time and effort into finding out how well their peers are doing. I was pretty shocked when in this one instance students from another class pointed me out and recognised me for my grades.

How does knowing your peers’ grades help in one’s personal performance? I personally do not know the reasons why people maintain such an interest, unless it could be explained as a result of a healthy interest in the affairs of friends. I have no doubt that there are people who are like that but I doubt this applies to everyone.

Personally the race for me is solely an individualistic one, akin to that of a solitary climber and a non-competitive marathoner: the person one is trying to better is always oneself at previous instances. Checking out the competition will only serve to breed discontent or engender unnecessary hubris and false confidence.

Competition should truly only be based on keenness of intellect and effort.

2) Work work work

Simply put, I have not been working hard enough. It is not very nice to go for tutorials and end up flabbergasted and guilty about the piles of unread cases that one has not went through when tutors mention and talk about the particular holdings and arguments in the cases. To prove this point further, my tutor advised my class to study 18 hours a day. That is deemed by her to be sufficient to be up to par (note: above average, not proficient).

3) Futility?

That said, I have to be fair to myself also. In the event where I do read cases and work real hard for a particular topic of law, I find myself unable to distill the meaning and fully appreciate the importance of cases in the reading lists. It is either 1) my reading techniques are wrong and I have not been reading closely enough or 2) reading cases really do not help.

I am inclined at times to believe in the latter, especially when I find myself putting in an inordinate amount of time into one particular case (Alfred McAlpine v Panatown is one very good example) only to end up with pretty much what I already knew from reading the textbooks or lecture notes.

4) Balance, not required

Law really takes up one’s life. It is a subject that one should (preferably) live, breath and eat with. After tutorials, readings and lectures, there is precious little time left to devote to other pursuits and hobbies. This is unless one sacrifices quality in school work and thoroughness (even though it is highly doubtful and debatable that one can ever be truly thorough in one’s understanding in the position of a student).

That said, this is what I signed up for. Honestly speaking, I have to say that there are times when the going gets really boring and meaningless due to the dryness of the subject matter; this makes me question why I even started this endeavour of studying for a law degree at all.

But there are also times where the subject did piqued my interest intellectually. However the existing judgments and rules of law leave much to be desired so much so as to make me really cynical as to whether the law can achieve justice in the first place. But this is an issue deserving of an entire separate blog post.

The new semester

Here’s to the new semester. Life in Law is still pleasant enough and I remain optimistic about the next semester, primarily because I will be studying criminal law and an introduction to legal philosophy. Criminal law has this emotive and glamorous allure to it. Just imagine John Grisham novels and the countless movies with legal battles in them: most involves the criminal law. As for legal philosophy, I have always held an interest in philosophy in general and now that I have studied substantive legal topics, it would be interesting to understand the underlying basic philosophical foundations of law itself.

Some points to note and resolutions for next semester:

  1. I will work harder to compensate for my lack of natural ability. This involves reading and summarising all cases on time for tutorials and actively creating notes for each subtopic I cover way before the exams.
  2. I must reduce the amount of distractions in my life. I was too distracted this past semester. These distraction includes computer games, influences from the opposite sex and Youtube videos (which are horribly addictive).
  3. I need to sustain my reading diet, specifically on finance, economics and fiction. I need to learn more about finance and applying my knowledge to my trading and investments. I have neglected this aspect of my interests due to bad time management and various distractions

A proper term for this would be to be a “machine” for the next semester, which is exactly what I told my friends I would do at a dinner gathering a few weeks ago. It might be inhuman, but I am not in university to waste my life away. Some things are important and others are not, and if push comes to shove I know what must go.

Moving on to a more light-hearted topic, I need to sort out the specifics and chores for the the holidays.

  • Books to read:
    • Fiction: The Brothers Karamazov, Brighton Rock, Lord Jim. At least.
    • ¬†Loan books on the following topics:
      • Card games, especially poker. Fascinating.
      • Body language
      • Argument, especially in a legal context. I suck at making legal arguments.
      • Spanish!
      • Public speaking
  • Study finance and investments: I need to know at least the mechanics of warrant trading by the end of the holidays.
  • Read up on criminal law and legal theory, print notes and do whatever preparatory work that is possible before term starts so as to save time during the actual term.
  • Catch up with my backlog of the Economist
  • Clean my computer and computer table: dusty. very dusty.
  • Clear my cupboards to make space for my law files and textbooks.
  • SHOP. ‘Tis the holiday season, after all.

Suddenly, the 1 month break seems very very short.

Joseph Conrad’s 150th anniversary
December 1, 2007, 5:58 am
Filed under: the arts,,2219723,00.html

Time for a little bit of hero worship since it’s his birthday today.

I will write more once exams are over.