Daily Bamboo Innovator Insight: Tues 2 Dec 2014 – Cirque du Soleil’s Next Act: Rebalancing the Business As Growth Prospects Slow; ‘The Rarity Was Gone’


Nobel Peace Prize Albert Schweitzer: “I don’t know what your destiny will be, but one thing I do know: The only ones among you who will be really happy are those who have sought and found how to serve”

Why Everything You Think About Aging May Be Wrong; As We Get Older, Friendships, Creativity and Satisfaction With Life Can Flourish: WSJ

Cirque du Soleil’s Next Act: Rebalancing the Business; As Growth Prospects Slow, Company Seeks to Beef Up Non-Circus Business; ‘The Rarity Was Gone’: WSJ

Evergreen Lessons From Buffett And Munger: IrrelevantInvestor

TV Stars From Italy Flock to Low-Cost Albania as Ad Market Sinks: Bloomberg

18 Tricks To Dramatically Increase Your Productivity: BI

Take it from a software engineer: learning code can be a nightmare: Quartz

Searching for Burmese Jade, and Finding Misery: NYTimes

Learning Our Roots, Inside and Out: ‘The Invisible History of the Human Race’ Provides Transparency on Our Genetic Heritage: NYTimes

Why Our Memory Fails Us; Just because you think you recall something doesn’t mean you do. NYTimes

‘Leadership goes far beyond just being a boss’: AsiaOne

Sleep Deprivation Is Killing You and Your Career: Forbes

How to Train Your Voice to Be More Charismatic; Scientists Analyze Public Leaders’ Voices to Discover the Basis for Charisma: WSJ

Annual Thai festival honours descendants of monkey god: AsiaOne

Greater China

Hong Kong IPOs Become Losing Bets for Investors: WSJ

Interest in China’s civil service declines with continuing anti-corruption efforts; “In the past, people liked to work as civil servants because they thought they could get a lot of ‘invisible welfare’ through their posts”: AsiaOne

Macau’s junket model breaks down as gamblers walk away: Reuters

China’s Ban On Puns Comes Straight Out Of ’1984′: BI

The new Silk Road: Stretching the threads; Impoverished south-west China seeks to become an economic hub: Economist

Why China keeps throwing trillions in investments down the drain: Fortune

Hong Kong Gold Sales Fall as China Tackles Corruption: WSJ

Mini Electric Cars Give a Jolt to China’s Market for Green Autos: WSJ


‘Government Must Improve Cold Chain Infrastructure’: Danfoss CEO; Niels B Christiansen, chief of energy services firm Danfoss, says India trails the world when it comes to food safety and preservation. And that needs to change: Forbes

India Aims to Shed Its ‘Fragile’ Label; Investors Bet That New Prime Minister Will Jump-Start Economy: WSJ

Gold Hidden in Underwear Shows How India Curbs Distort Rupee: Bloomberg

Japan & Korea

Samsung modest reshuffle disappoints: FT

Inside Takata, tantrums but little sense of crisis over air bags: JapanTimes

Softbank’s Pepper robot debuts as coffee machine salesman at Bic Camera: JapanTimes

Samsung Electronics exits fibre optics amid sharper focus on reviving smartphones: Reuters


The Securities and Exchange Commission has a five-year plan to make the Thai capital market a regional leader by introducing new rules allowing Asean companies to raise funds in this country’s market. Nation


Hedge Funds Shut as Managers Struggle in Year of Two Percent Returns: Bloomberg

Capital controls feared as Russian rouble collapses; Russia intervenes as crumbling ruble echoes 1998 debt crisis: Telegraph

Saudi regulator suspends Deloitte from auditing listed firms due to a case involving an unidentified firm: Reuters

As Indonesia expands oil storage, fewer opportunities for graft: AsiaOne

MOL Global shares tumble on Vietnam accounting glitch, profit slump: Reuters


To Gain the Upper Hand, Amazon Disrupts Itself: NYTimes

Naspers Offers Tencent and Change: WSJ

Tim Cook has created as much value as Steve Jobs: Quartz

Working the Land and the Data: Technology offers some family-owned farms an opportunity to thrive and compete with giant agribusinesses. NYTimes

The King Of Online Gambling (Is 34): Forbes

One in 10 iPhone owners ‘very likely’ to buy an Apple Watch: Fortune

DreamWorks’ Nightmare Shows No Sign of Ending: Barron’s

C.H. Robinson to buy Freightquote.com for $365 million: Reuters

Wanda Holds Talks to Buy Lions Gate, MGM in Hollywood Push: Bloomberg


The Virus Detectives: Sifting Through Genes in Search of Answers on Ebola; Inside the world’s most powerful factory for analyzing genes from people and viruses: NYTimes

A Smart Watch To Manage Epileptic Seizures: Forbes

Energy & Commodities

Banks’ $650bn bet on oil backfires as Brent prices slump; Lenders sitting on billions in losses after rise in risky debt to oil and gas companies raises prospect of impairments: Telegraph

Lubrizol’s Bolt-On Energy Deal A Priority For Berkshire’s Warren Buffett: Forbes

Yergin and El-Erian Analyze the Oil Rout: Barron’s

Malaysia Crudely Treated By Oil Slump: Barron’s

Malaysian tycoons see their O&G investment value cut by almost half: Star

As crude tumbles, oil drillers seek to temporarily idle more rigs: Reuters

Beware the Vulnerable Oil Debt That Lurks in Your Junk-Bond ETFs: Bloomberg

Bamboo Innovator Weekly Insight – Even a Billionaire Makes “Mistake” – and Quickly Rectifies It!

 “Bamboo Innovators bend, not break, even in the most terrifying storm that would snap the mighty resisting oak tree. It survives, therefore it conquers.”
BAMBOO LETTER UPDATE | December 1, 2014
Bamboo Innovator Insight (Issue 61)

§  The weekly insight is a teaser into the opportunities – and pitfalls! – in the Asian capital jungles.

§  Get The Moat Report Asia – a monthly in-depth presentation report of around 30-40 pages covering the business model of the company, why it has a wide moat and why the moat may continue to widen, a special section on “Inside the Leader’s Mind” to understand their thinking process in building up the business, the context – why now (certain corporate or industry events or groundbreaking news), valuations (why it can compound 2-3x in the next 5 years), potential risks and how it is part of the systematic process in the Bamboo Innovator Index of 200+ companies out of 15,000+ in the Asia ex-Japan universe.

§  Our paid Members from North America, Europe, the Oceania and Asia include professional value investors with over $20 billion in asset under management in equities, some of the world’s biggest secretive global hedge fund giants, and savvy private individual investors who are lifelong learners in the art of value investing.

 Dear Friends,

Can You Guess This Asian Wide-Moat Company?

Even a Billionaire Makes Mistake – and Quickly Rectifies It!

In March 2013, a secretive Southeast Asian billionaire made a “mistake” – he pulled out of a $750m investment to acquire a 30% stake in a leading Asian-listed company whose share price later shot up 240%. He managed to paint a deal to acquire a 15% stake instead in February 2014 in the company whose share price subsequently doubled.

We are a long-time admirer of this low-profile Bamboo Innovator who picked up his knowledge in the business when working as an apprentice to support the family while his mom did laundry and his sister sold Teochew “soon kweh”, a traditional street food. The tycoon started his business in 1955 and his entrepreneurial talents and capital allocation skills is impressive in transforming his private family business from a product supplier to service provider by continuously integrating modern technology into the business model and he sets an exemplary example for Asian entrepreneurs.

This billionaire’s listed investment and family business is a beneficiary of the sharp fall in crude prices to below $70 per barrel in recent months from an oversupply situation which has resulted in a positive tailwind in lower raw material costs to boost profit margins for the industry that the company is operating in. Saudi Arabia’s decision to refuse to cut output on Nov 27 signals its intent to keep oil prices lower for longer to get rid of its shale rivals in a who-blinks-first brinksmanship.

Our latest monthly Moat Report Asia for December examines another North-Asian entrepreneur Mr. C who started a similar business in 1951, four years earlier than the Singapore tycoon. This Asian-listed company has since grown to become the #1 company in its home market with domestic market share leadership of 30% and 50% in the consumer product and industrial product respectively under its own brand. The intangible asset in the trust and support that Mr. C’s family business enjoys in the community amongst its customers and long-term business partners has resulted in the listed company to generate free cashflow for 19 consecutive years since 1995, even during the 1997/98 Asian Financial Crisis and 2007/09 Global Financial Crisis.

Strikingly, Mr. C’s listed family business has the highest reward/risk ratio in the industry that is riding the tailwind of sustainable low feedstock costs. Its EV/EBITDA of 8.9x is substantially lower than its Indian rivals 24.7-33.9x and US peers 13.4-18.1x. It has the lowest Price/book value at 1.76x, substantially lower than its Indian rivals 10.9-15.5x and US peers 6.3-13.1x. Its short-term downside is protected by its healthy balance sheet with net cash (~13% of its market value) and an attractive dividend yield of 5.3%.

Mr. C was so passionate towards his work that he was still working just a day before he was hospitalized when he fell sick and passed away suddenly in 2006. However, this has also resulted in succession issues as the founder has not named any successor at that time and there was some internal family conflict. Mr C’s second son took over the leadership helm. The company received takeover offers from both its giant US rival and domestic industrial customer when Mr. C passed away but the controlling family rejected the offers.

Since the company managed to resolve its internal family conflicts in a saga that lasted nearly three years by mid 2009, profits are up 83% in four years between FY10 and FY13 and long-term growth initiatives are executed, including introducing service innovation, launching innovative new products and making bolt-on acquisition in US. Yet, the company has lagged behind significantly in share price performance both in the longer-term (last 5 years) and recently in the past 3 months to a year as compared to its peers. With the renewed focus in service innovation in its domestic market and strong growth momentum in its overseas development strategy in China and Vietnam, the company could potentially double its profits in 3-5 years, sparking a potential doubling in share price.

Underlying the company’s unmatched wide-moat distribution franchise that resulted in its domestic market share leadership is the corporate culture that takes pride in service excellence for its customers. The culture is fostered by the founder Mr. C who was passionate about delivering the best product and service because he understood keenly the frustrations, struggles and challenges of the customer, a role he started out when Taiwan was under Japanese rule. Mr. C had delivered one unit of the product to a customer by long-distance taxi after receiving a call from the customer when the day has closed, as a demonstration of customer service. This spirit of service excellence has been carried on throughout the years and is rare – and therefore valuable – in an Asian company.


When asked what is his guiding philosophy all these years in conducting business and life, Mr C’s second son commented: “It is important to bear compassion in mind and to do good deeds, which are beneficial to everyone.”

Who is Mr. C and his listed family business?

Warm regards,


Managing Editor

The Moat Report Asia


SMU: http://accountancy.smu.edu.sg/faculty/profile/108141/Kee%20Koon%20Boon

PS: We will be traveling away from 7 Dec till 16 Dec on the SMU Accounting Study Mission to Myanmar, which is an official course in the university curriculum. We have carefully researched and arrived at a list of outstanding companies for our visits. Our group of students will learn business strategies from leaders of successful companies and institutions. We will resume our Weekly on 22 Dec. And we will be back in 2015 with unique value-added content from Accounting Frauds in Asia, an official course in the SMU curriculum that we will be teaching in Jan 2015.

A new monthly issue of The Moat Report Asia is now available!

Access the in-depth idea presentation:


Daily Bamboo Innovator Insight: Mon 1 Dec 2014 – Murata makes it big in small components: The Murata Manufacturing chief discusses a post-smartphone future


“Stumbling your way to greatness: One reason people who spend a lot of time thinking about and working on a problem or a craft seem to find breakthroughs more often than everyone else is that they’ve failed more often than everyone else.”: SethGodin

Akihiko Otsuka, the chairman of Otsuka Holdings Inc. and creator of such signature products as Pocari Sweat, died on Friday. He was 77.: WSJ

Mental illness: Caregivers are forgotten collateral damage: AsiaOne

Inventions for a better world: Star

How To Sell Almost Anything: Forbes

Math Anxiety: Why Hollywood Makes Robots of Alan Turing and Other Geniuses: NYTimes

Why We Needn’t Fear the Machines; A Basic Truth: Computers Can’t Be Replacements for Humans: WSJ

Eight Ways to Say No With Grace and Style: Farnam

Investing Process

The Difference Between a Good Company and a Great Company: ClearEyes


Reality check: Challenges face VR technology in China: WantChinaTimes

Eight Innovative Industries China Does Better Than Anywhere Else: Forbes

China: Fear of a deflationary spiral; Falling prices for manufacturers plagued by overcapacity present a problem for Beijing’s policy makers: FT

Paths Diverge for China ETFs; U.S. Investors Pump Cash Into Funds; Tide Recedes in Hong Kong: WSJ

Japan & Korea

Samsung ‘crown prince’ Lee Jae-yong poised to make mark: FT

Pantech, Korea’s No. 3 smartphone manufacturer, is at the risk of being closed as its going-concern value turned out to be lower than the liquidation value. Maeil

Hyundai Motor cuts new path in chaebol system; The 1997 financial crisis weaned chaebol from its dependency on the government that enabled them to make their incredible growth. KoreaTimes

Amore Pacific puts premium drive on hold; CEO admits flagship products struggle in target markets: KoreaTimes

‘Three arrows’ said half complete as families struggle with ‘Abenomics’: JapanTimes

Sony executive heralds a revolution in virtual reality: FT

Japan Dairies Losing as Abe’s Weak Yen Boosts Corn Costs: Bloomberg

In fading Japan hinterland, skeptics doubt ‘Abenomics’ will cure ills: Reuters


Tax reform the key to making Thailand an attractive place to set up a treasury centre: Nation

Bakrie Set to Win Golkar Fight in Widodo Setback: Bloomberg

Vietnam Delays Plan to Ease Restrictions on Foreign Shareholders: Bloomberg


Bond Funds Load Up on Cash; Portfolio Managers Gird for Volatility Amid Expected Rate Increase: WSJ

Pimco suffers $100bn in redemptions from top funds: FT

American Manufacturing Is Alive and Well; Economic Engine Seems to Be Running Nicely: WSJ

Get the SEC Out of the PR Business; Crowing about prosecutions is inappropriate when the agency is also the one deciding guilt and innocence. WSJ


Apply Pay: Yet another billion dollar business: Asymco

1999 all over again for tech start-ups: BRW

The Algorithm Economy Heads To Amazon: TechCrunch

GrowthStory’s Billion Dollar Dreams; Krishnan and Meena Ganesh, the Bangalore-based entrepreneurial couple, have bet big on a simple mantra: Do what the competition is doing, but do it perfectly. Forbes

Google Unseats Apple In U.S. Classrooms As Chromebooks Beat iPads: Forbes

YouTube stars face authenticity test; Watchdog’s native ads clampdown poses challenge for vloggers: FT

Crackdown on tax abuses by technology companies: FT

Google-Glass Deal Thrusts Intel Deeper Into Wearable Tech: WSJ

Asian shoppers flock to Korean online shops; 72 per cent of Gmarket’s foreign customers are from China or from Chinese-speaking countries like Taiwan: AsiaOne

Energy & Commodities

Saudis risk playing with fire in shale-price showdown as crude crashes: Telegraph

GRANTHAM: ‘US Fracking Is A Very Large Red Herring’: BI

Levelized Cost Of Electricity: Renewable Energy’s Ticking Time Bomb? Forbes

Is OPEC A Toothless Tiger? Forbes

Prepare for a long-term fall in energy prices: FT

The Global Shakeout From Plunging Oil; New supply-rather than demand-is dominating the market, and OPEC has been caught by surprise. WSJ

Wind Power Is Intermittent, But Subsidies Are Eternal; There is no need to extend a program that has cost U.S. taxpayers $7.3 billion over the past seven years.: WSJ

China’s Slowdown Hits Price of Iron Ore; Sluggish Demand, Falling Commodity Prices Reduce Government Tax Revenue and Affect Currency Values: WSJ

Brevan Howard Said to Close Commodity Hedge Fund After Losses: Bloomberg

Iran Wary of Oil ‘Shock Therapy’ as OPEC Vies for Market: Bloomberg

Miners ‘Covering Their Eyes’ on China’s Commodity Cliff: Bloomberg

Oil at $40 Possible as Market Transforms Caracas to Iran: Bloomberg


How Montreal startup BiogeniQ is looking to challenge Google-backed 23andMe: FP

Consumer & Others

Unique products are winning over Korean shoppers: JoongAng

Supermarkets, once the envy of business leaders, are in danger of being left on the scrap heap: Telegraph

Domino’s Pizza sees gold in online orders: JPost

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