Singapore wins back Evergreen Marine

On 2002, Evergreen Marine (长荣海运) completely pulled out of Singapore and settled down in Port of Tanjung Pelepas in Malaysia, as said due to cost issue.

Recently, the Taiwanese founder of Evergreen Group, Mr. Chang Yung-Fa (张荣发) appeared in Singapore and announced the opening of Evergreen Marine (Singapore) Pte Ltd, a newly formed company for the reentrance of Evergreen Marine back to Singapore.

Evergreen is expected to have 13 ships presently flying the Panamanian flag to move to Singapore and raise the Singaporean flag to take advantage of the Singapore's Approved International Shipping Enterprise (AIS) scheme which provides 10 years renewable tax exemption for qualified international shipping companies. In fact, one of their vessel already flying with Singaporean flag on 10 March 2009, which is their first vessel ever flying the flag of Singapore.

Mr. Chang also announced that Evergreen will expand their Singapore operations and plan to have about 50 Singapore-based fleets in the near future. This is considered significant, as Evergreen Marine has a total of about 180 vessels now.

Meanwhile, Evergreen does not have any expansion plan for their operations in Tanjung Pelepas.

This shows that Singapore has learnt their lesson, responded fast, and succeed in winning back this marine big player to their port. This move from Evergreen is expected to contribute positively to their economy and labour market. Congratulation.

Assessing company financial health with Altman Z-Score

In early 60's, Dr. Edward Altman (Professor and Vice-Director of New York University's Salomon Center, Leonard N. Stern School of Business) has used Multiple Discriminant Analysis to combine a set of 5 financial ratios and developed the famous Altman's Z-Score.

Nowadays, Altman's Z-Score is being used by many to assess a company's financial health. For instance, investors use it to determine if the company is worth for investment, bankers use it to determine loan risk, etc.

The 5 financial ratios used are:

• A = Return on Total Assets = EBIT / Total Assets
• B = Sales to Total Assets = Net Sales / Total Assets
• C = Equity to Debt = Market Value / Total Liabilities
• D = Working Capital to Total Assets = Working Capital / Total Assets
• E = Retained Earnings to Total Assets = Retained Earnings / Total Assets

Different weight factor is applied to the above 5 financial ratios, and the formula to calculate Altman's Z-Score is:

Z = 3.3A + 0.999B + 0.6C + 1.2D + 1.4E

The final result will yield a number between -4 and +8. The higher the score is better.

According to the Altman's Z-Score analysis:

• When Z is less than 1.8, the company is very likely to have financial trouble
• When Z is between 1.8 and 2.7, the company's financial situation is fair, and there is risk of getting into financial trouble
• When Z is between 2.7 and 2.99, the company is not likely to have financial trouble in the near future
• When Z > 3, the company is financially strong

Note that C which includes the market value of the company, is determined by its share price, and very much influenced by the investment market sentiment. However, C also carries the least weightage, and Return on Total Assets is the most important factor, which I think most fundamentalists are agreeing with.

Over the past 30+ years, Altman's Z-Score was found to be pretty usable to assess company financial health, with accuracy of above 70%.

Altman's Z-Score is a good tool to predict for investment safety, but bear in mind that it is not a tool designed to predict for investment profitability.

The Ching Ming Festival

The Ching Ming Festival (清明节) in year 2009 falls on 4th April.

Ching Ming Festival is the 106th day after the Winter Solstice Day (冬至), and falls around 5th of April of the Gregorian calendar (solar calendar), which is also the 15th days from the Spring Equinox (春分).

Ching Ming is an important traditional Chinese festival celebrated by the Han Clan (汉族) for over 2,500 years. Today, this festival is also celebrated by other Chinese clans as well.

Ching (清) in Chinese translated to "Clear" or "Pure", and Ming (明) translated to "Bright". Therefore, Ching Ming Festival is also known as Clear Brightness Festival or Pure Brightness Festival.

The ancient Chinese is an agricultural society. Ching Ming Festival indicates the time to start farming for the year. When Ching Ming arrives, the cold weather from previous winter begins to turn warm, there will be more rains, plants and animals show their active sign of life again. Therefore, Ching Ming is the day of transition from Ying (阴) back to Yang (阳), which brings more "clear" and "brightness" to earth.

During the ancient time, the Chinese will take bath in the river to wash away unfortune and evil from the body (祓除畔浴). It was also a tradition for married women who wish to get pregnant to pray at the riverside for fertility.

Today, the Chinese has 2 major traditional activities for this festival. One is spring hiking (踏青) which can be family outings, young couples start courting, swinging, flying kites, kicking ball, planting trees, etc. Another major activity is tomb sweeping (扫墓), which is to visit the grave of departed family members or ancestors, sweep and clean the tombs, pray and offer the ancestors.

The activities might not be carried out on the actual day of Ching Ming, and can be any days within a month (normally within 2 weeks) from the actual day.