My Investment Portfolio (March 2021)
STI ended this month at around 3165 points, closing around 8% above last month. Approval of another round of US stimulus package had cheered the market but concerns on raising US Treasury yields had capped further upside, especially for tech stocks. Value stocks continued to outperform this month.
For my top 30 holdings, the major movers include Hong Fok, Stamford Land and UIC. Most of the stocks in the list performed well this month, as the market is beginning to appreciate some of these value stocks. Hong Fok in particular, did well after a newspaper report on its undervaluation. Yeo Hiap Seng also returned to the list after it announced a new product to the market.
For my top 5 US$ denominated holdings, Jardine Strategic is to be acquired by Jardine Matheson via amalgamation.
I have bought the following companies from the market this month - AF Global, Amara, Asia Vets, Bonvests, Brook Crompton, Captii, Chuan Hup, Dairy Farm, Delfi, F&N, Far East Orchard, Heeton, Hiap Hoe, Hong Fok, Hong Leong Finance, Indofood Agri, Khong Guan, Kingsmen, Koh Brothers, LHT, Lion AsiaPac, Mandarin Oriental, Metro, OUE, Sin Ghee Huat, Sing Investment & Finance, TTJ, Wing Tai, Yanlord and Yeo Hiap Seng. No sale trade was done.
I have accepted the following voluntary delisting/cash offers this month - CEI, GL and Transit Mixed Concrete.
It had been a good month in terms of performance for my portfolio as markets are beginning to re-rate value stocks. However, it is still a long road ahead for some of these stocks to recover back to pre-Covid levels. With companies announcing their April AGM dates together with the release of their annual reports, I will be busy going through some of these annual reports next month. I will also continue to re-invest some of those M&A proceeds back into the market prudently.
My S'pore Stock Portfolio - Top Holdings, cash investment only (correct as at 31 March 2021)
Top 30 Holdings (Sing$ Denominated shares)1. iFAST
24. Hotel Royal
1. Jardine Strategic
2. Mandarin Oriental
3. Hongkong Land
4. Jardine Matheson
5. Dairy Farm
Top Holdings (HK$ Denominated shares)
1. Tan Chong International
2. Shangri-La Asia
Top Holdings (Aust$ Denominated shares)
1. AV Jennings
Top 5 Holdings (CPF OA investment)
1. Streettracks STI ETF
2. CapitaLand Integrated Commercial Trust
4. Keppel Corp
5. Challenger
My Hong Kong Stock Portfolio
1. Peace Mark Holdings - Under Voluntary Liquidation
2. Alpha Professional Holdings Ltd (formerly known as Z-Obee Holdings Ltd)
My Australia Stock Portfolio
1. GPS Alliance Holdings Limited
My Unlisted Company Portfolio
1. Iconic Global Limited
2. Dongshan Group Ltd (formerly known as Greatronic Limited)
3. General Magnetics
4. Fastech Synergy
5. Memory Devices
6. Jurong Tech - In liquidation - Compulsory winding up (Insolvency)
7. FM Holdings
8. Zhonghui - In liquidation - Compulsory winding up (Insolvency)
9. FerroChina - Under Liquidation
10. FirstLink Investments
11. NEL Group
12. Jets Technics
13. Guangzhao Industrial Forest - In liquidation - Compulsory winding up (Insolvency)
14. Hongwei Technologies Limited (In Provisional Liquidation)
15. FDS Networks Group
16. Aussino Group - In Liquidation - Creditors' voluntary winding up
17. China Oilfield Technology
18. China Milk Products Group - Under Liquidation
19. Pacific Healthcare
20. Eratat Lifestyle - In Liquidation
21. Fung Choi Media - In Liquidation
22. K1 Ventures - In Liquidation
23. DMX Technologies - In Liquidation
24. Europtronic Group
25. China Sun Bio-chem Technology
26. Attilan Group
27. Winas - In Liquidation
Labels: Portfolio
posted by ghchua at 7:22 PM
19 Comments:
Hi Mr Goh,
What's your view on Thaibev listing of beerco? From the price reaction, seems like Mr.Market doesn't cheer for it?
Hi Unknown,
I guess market reaction to news is always unpredictable. Long term wise, I do see why they wanted to list their beerco, which is a low margin business. However, I don't quite like Thaibev business on a whole as their gearing is quite high. I also don't know why they continue to hold a stake in Frasers Property, which seems non core to me.
Mr chua
Would like to hear ur views regarding fnn. With the ongoing situation in myanmar, do u think a write down in myanmar assets is possible n will this affect 2021 earnings?
Hi 1,
I think it is possible for F&N to do a write down of their Myanmar assets. However, I do not know how much the impact will be. Assuming that they do a full write down of all their Myanmar assets, F&N will still be profitable based on last FY earnings.
So, the short answer to your question is, yes, it will affect their 2021 earnings. However, it does not affect my long term view on the company. It still holds decent brands and products across growing Southeast Asia markets, with their Dairies business still doing very well. Their stake in Vinamilk will also provide them with decent recurring dividends, which could be used to fund dividend payouts to shareholders. Most importantly, the stock is still trading below NAV.
Hi Mr Chua,
I noticed you have been buying Captii and Brook Crompton recently. May i know what is your investment thesis around this 2 other than fairly low P/B and decent yields?
Hi Ghim Hock, congrats on the rise for Hong Fok, Stamford Land and UIC - I have shares for the latter two as well!
Anyway, what are your thoughts on KSH Holdings?
Hi bamboo,
I think both companies fits the profile that I like among small cap under researched stocks. That is, they are profitable, trading below book value, having a net cash position with little or no debt.
Captii is a very underappreciated stock in my view. They have been paying dividends for 11 years and profitable for quite sometime. With developments in big data and analysis recently, I think the stock is poised to benefit as they are serving telcos and having their niche products. They are a bit like Sliverlake, whereby they serve a niche market in their software development that is not growing fast enough. But despite flat and decreasing revenue plus lower profit margin, they have been able to keep the company lean and cash conversion level is decent. I think with time, the market might re-rate the stock as it is trading at very low valuation.
Brook Crompton (formerly known as LJ) is another stock that is underappreciated. I guess the same reason applies. Flat and declining revenue with lower profit margin. FY2020 they have actually stopped paying dividends, which is puzzling to me despite a higher cash level. Since their transformation many years back after the current controlling shareholder had taken over, they have been running on a tight ship, closing down a lot of excess capacity and realizing cash. I guess the risk is that much of their revenue is associated with their controlling shareholder, which might not be able to see much growth in their business. The flip side is that they have more control now on their cash conversion and receivables, unlike last time when they have to write off a lot of their assets. Recent selloff might be because they have halted dividend payout, which I found a good opportunity to increase my stake in it.
Hi Jem,
I think KSH Holdings is ok as they are an established player in the construction industry. This can be seen from their recent win in Biopolis Phase 6 development in one-north. It is also trading below book value, though the discount is not as huge as some of the other construction stocks that I like.
For construction industry as a whole, it will take quite sometime for them to recover due to Covid and manpower issues. So, if you wish to invest in this sector, you have to be patient to wait for the market to re-rate them.
Hi Mr Chua, tks for the selfless sharing. It feels like a kopi session with a full time experienced investor who is willing to share with his knowledge. I am benefitting from yr generosity :)
Hi bamboo,
You are most welcome. This blog was set up for sharing of investment ideas. Do keep your comments coming.
Shifu Chua
Just received Delfi 2020 report but don't know where/how to start? Wish you can shed a light here to guide me, thanks first.
https://delfilimited.listedcompany.com/newsroom/20210412_065405_P34_WYJU8AHD7H8II7D0.1.pdf
Looking at Pg 87, Earning per ordinary share, 2.86 but 2019's 4.62 that is much better. However, still positive.
Looking at Pg 89, cash & cash equivalent, 64790, better than 2019's 55689
Looking at Pg 91, cash flow generated from operations is 57159, better than 2019's 48968
But not sure how to read liability, CR & QR, will they issue new shares?
Thanks
Hi Sunny,
For Earnings per share, I think we need to take into account Covid disruption in FY20 as compared to FY19. Also, we need to take into consideration currency depreciation, since they have major revenue generation from rupiah. Rather than comparing just year on year, it is good to track quarterly numbers as well. And the numbers did show that 4Q20 is getting better as compared to the earlier part of the year.
Besides earnings, cash flow generation is also important. As you have pointed out, the numbers are better which means better efficiency in their operations which allows them to maintain their dividend payout in FY20 despite lower profit.
For me, I will also look at EBITDA and gross profit margin. They show some numbers and ratios on Page 13 in their annual report so you might wish to go through them.
For QR and CR, these are actually working capital liquidity ratios. I normally don't compute these ratios. Rather, I look at their current assets and see whether it is more than enough to cover current liabilities. I also look at auditor report on the accounts and see whether they flag any working capital issues.
Looking at their balance sheet, it is highly unlikely that they will issue new shares to fund their existing operations as they are in a net cash position. Unless they wish to acquire something big, I think it is safe to assume that there will be no rights issue.
Hi Mr chua
Would like to hear ur views on crypto. What do u think of crypto coins as an asset? Will it have a place in ur portfolio?
Hi 1,
No. Crypto is too volatile for me and not suitable for my buy and hold strategy. Maybe one could allocate a small part of their portfolio into them, but I rather give it a miss. However, I do have exposure to crypto companies via my investment in some companies. An example would be one of my top 30 holdings, EnGro, which invests in Coinbase via their VC investment portfolio.
Shifu Chua
I got 0 accounts background
Sort of that I need to know by reading the annual report
Revenue growth (pg 13)
EBITDA (pg 13)
Key financial highlights on QoQ (pg 36-37)
Earing per share (pg 87)
Current assets over current liabilities (pg 89), not sure why not using total instead of current?
Operating cash flow (pg 91)
Auditor report (pg 81)
Not sure any other items that I need to know and any passing marks for each of the above items?
Thanks
Thanks
Shifu Chua
Wish to have your view about
F10, the new development of e-commerce? issue shares again & debt level?
Z59, can the company continue business development since Myamia is having unpeace protests daily? debt level?
PRH, what if it is another Healthyway Med?
Thanks
Hi Sunny,
Normally, what I do first is to read the chairman and CEO statements first. And then try to understand the business. After that, then I see whether the numbers presented in the accounts makes sense or not. There are many factors that I took into consideration when shortlisting a company. It doesn't have to pass all the metrics or ratios and I don't have a passing criteria for each of them. Each company is unique by itself. Case in point, I buy loss making companies too. My main criteria is still whether the company is trading at a decent valuation. It can have zero revenue growth, loss making and negative operating cash flow but the most important thing is to understand why. A company can be bleeding cash in its operations, but if they still have a lot cash in their balance sheet due to disposal of assets, it can be a good candidate for me as they might give out dividends.
As for why they are using Current assets over current liabilities, it basically a working capital liquidity ratio as I have explained earlier. Because non current liabilities can wait, whereas the company need working capital to tide over current liabilities.
Those 3 stocks that you have listed here are high risk stocks. I won't recommend them for beginners.
FJ Benjamin had been loss making for quite sometime and e-commerce might help them but their fixed costs is high. Unless they close down some physical stores, I think it will still be tough for them.
Yoma is quite good in raising funds from the market. So, I am not too concerned on their debt level. What they have that I found interesting is their land bank. It is undervalued but yes, political issues in the country had been a huge drag. I think business will still continue but at a slower pace and with disruptions. The stock is cheap though and I am thinking of buying some more but I won't be aggressive in buying it.
For Livingstone Health, it is a direct no for me. I won't even consider it. I don't like medical stocks which holds a series of GPs or specialist clinics. For medical stocks, my criteria for investment is that they must have products or physical assets like hospitals.
Hi Mr Chua, how do you see Asia Enterprise? Do you think they are able to pass on their raw material cost increase effectively to their customers? Also i noticed you are accumulating asiavets. I tried to research more but it seems to have very limited years of reporting and somehow amalgated with Smartflex. what is their relationship and
Hi bamboo,
As you might have known, Asia Enterprise is a steel stockist. Which means, they do not have control over price. The key to this business is actually inventory and credit control, with financial strength to have the flexibility to increase or decrease inventories in response to market demand.
Asia Enterprise had managed their balance sheet well throughout the years with decent amount of cash position in hand as reserve for rainy days. They had been able to pay dividends since IPO every year, even during loss making years. This had shown in their prudent management of the company.
Asiavets is a business that had been injected by the founder after the sale of their Smartflex business. Unlike some other messy RTOs listed on SGX, this company does have a decent business with reasonable amount of cash in their balance sheet and minimal liabilities. They also started paying their first dividend since RTO. Granted, it is still currently a small business but I just added into my holdings during recent selldown a sI owned the stock since Smartflex days.
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