Tuesday, May 10, 2016

Random Thoughts: CMPH's delisting

This is a random thought series. No analysis, just observations and my thoughts.

I read at various forums lamenting another good dividend counter delisting and some bloggers congratulating others for capital gains.

Personally, this episode just show that it is more important to be lucky. 

A number of of the assumptions I made about CMPH are wrong. FCF of 1.5-1.8 billion not met. With the economic slowdown in China and the lower trading numbers, the lucrative "goods carriers" should be reduced and I expect operating numbers to worsen.

I intended to sell CMPH into strength as stated in my previous post. When it is trading at 87 cents CD and 84 cents XD, I am thinking seriously to either sell partial or all my stake. 

Well, luckily for me, my procrastination brought me some "Ang Bao money".
Obviously, the owners do not think the operating numbers is going to get worse. If they think it will, why not let it get worse, the price get a wacking and offer a "good premium" to exit at lower price? (Think Osim) 

I also find it amusing that some forummers are all talking about the potential of the business and how they are now "worse off" since they have one company less to invest. They are either very accurate with their "long term assessment" of the company's potential or they are hindsight riders, now that someone willing to pay $1 so it must be worth more. I however like to think that the major shareholder have been fair to minority shareholders and is taking a risk by itself to privatize it. Relisting it a HK at higher valuation is not a given, IMHO 

It is seldom that 2 wrongs make one right. I always feel that my prospecting skills and analysis is Amateurish at best. So, with humility, I hope Lady Luck continue to shine on me. 

I am doing some active prospecting to find an replacement, and while I have a few potential, none seem to meet the cut. Any recommendations? LOL

Thanks CMPH. I had a wonderful ride. If buy and sell within 6 months is call short term trading, it is my best trading counter and dividend payer rolled into 1. 

24 comments:

  1. Hi SI

    Like you, i am also baffled by why there are so many people thinking that they should fetch a better price than $1.02. I think the company has the potential to go beyond the offer price but thats taking into account all the risks which i think a lot of people did not really think of at this moment.

    I'll be personally glad to take this off at $1.02 right now, even though i never mind higher price that is, but it's a closed chapter now and the high return from this counter is attributed to more lucky than skill in my opinion.

    Vested and glad to be vested on hindsight.

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    Replies
    1. Hi B,

      I remember CMPH form a significant of your portfolio, u should be thinking about where to deploy your cash now.

      Indeed, 1.02 should be a fair price or even a good price in the short term lol

      Delete
  2. Gong xi gong xi SI.

    Lucky buy or good call doesn't matter for now. What's impt is that you have ur ang bao and u're satisfied with it:p

    Anyway some hindsight analysis will be good. Perhaps we'll learn a thing or two out of this and get more ang baos in future:D

    Btw, just curious. what are you planning to do with the ang bao? Warchest or to scope up other shares?

    Cheers,
    PP

    ReplyDelete
    Replies
    1. PP,

      I am looking around more actively now. But I doubt I can find anything at current validation since my radar not very big.

      So most prob war chest, but if I do find something that is a good enough replacement for CMPH, at least 6% yield that is non-reit trust, I might just bite

      Delete
    2. Hmmm. 6% non-reit trust?

      Shipping! O&G! Lol. Just kidding.

      Are u also of the view that the market will fall further in the coming months? So that more counters with 6% yield will pop up in ur radar?��

      Delete
    3. Hmm... PP,

      Actually I dun know how market will go. But my war chest unlike some
      Seasoned players is just perhaps 20% of portfolio. I do think I can afford to wait.

      Shipping and O&G I am not adverse in investing too. I already burnt in sembcorp industries; but think I will accumulate if ever it break new low. YZJ is quite attractive too, but in my opinion, it margins compression is yet to show and under-appreciate by mr market.

      I will settle for 4% dividends of growth drivers are visible. And in the case, I am looking at Kingsmen, UOB kayhian

      As for 6% non-REIT? Reits like business like telco? M1 is also in my radar. I wonder if investors are too pemmistic. Can the 4th telecom snatch 10% share from M1 and cost margin to drop 5%? Looking at M1 price, Mr market is saying yes,it would ....

      Delete
    4. Wow SI,

      Thanks for sharing ur view!:)

      Yup. I do also think that it might be a good time to enter O&G if we're taking a longggg term approach.

      Sembcorp ind is certainly enticing and its one of the few counters that I've an easier time in understanding its nature of business. Think mr market kinda whack it a lil hard when it fell to its last low of $2.16, giving investor quite a discount to its NAV and entry to its other aspect of business (utility,etc). Will certainly buy in again if it's ever falls below $2.16.

      Kingsmen! Been hearing that name and read some reports on it some times back.

      Understand that kingsmen has been providing an attractive ROE for many years now and it's price has dropped significantly in recent month. But, isn't the MICE and retail sector gonna remain challenging for the foreseeable future? Would you think that it's recent price offers a good discount t to its business?

      will certainly relook it again and would love to seek ur view again soon:p

      Errrr. Honestly speaking.. Hahaa. Yup, I would think that the 4th Telco would be able to capture 10% of M1 biz. Telco biz in SG is competitive enough as it is and the entry of another telco would probably affect the margins of the others.

      Oops! so sorry for being so pesky SI. Hope I've not bothered you too much with my noobish view. Hahah


      Delete
    5. No worries PP,
      Not at all, feel free to banter. Lol. The thing is if M1 is going to be thy bad and market is accounting for it now. What is the downside? When it does go that low and people will start to think perhaps it's more than 10% market share.

      I don't think the 4th telecom and snatch more than 10%, and u have to divide that share between star hub and Singtel.

      Kingsmen latest results is horrible. I am holding off for now ...

      Anyway, looks like CMPH is not going to trade at 1.015 or 1.02 anytime soon. So my cash is minimum anyway

      Delete
    6. Wa. Did I just jinx kingsmen?

      Did not even realise that they are releasing their result and it dropped the moment I put it on my watchlist yesterday. WTH.

      To be frank, I really dun know much abt the telco. But I'm just thinking if M1 price dropped by this much recently even before the 4th telco released its offer, what happens once the 4th telco release a much superior product since it's a new entrant to the market? Has mr market alrdy factor this in?

      And so it would appear that the price for M1 would really depend on the 4th telco plans, which seems really murky as of now.

      But then I could be utterly wrong though. Do correct me yea😄

      Delete
    7. Hi PP,

      Seriously no idea, I am following the discussion on value buddies, with both camps giving very robust points.

      I shall not parrot it.

      I however are thinking of it in a very simplified form. Could data pie get bigger to offset some of the sharing?

      Given it is a high investment of at least 300
      Mio expected, do u not think they would want a decent return? Can prices be slashed by half?

      Also, M1 will be most affected because it has the most revenue generated from data and mobile services. It did not have other segments like pay TV etc.

      This is a mathematical calculation. My gut feel is the bundling "effect" had taken consumers for a ride more than enough. It is not necessary M1 that will ceded the most shares to republic or whoever. I do think most people are pissed with star huh bundle

      Delete
    8. Lol, if u are so jinx, then u open a CFD and short those u want lol

      Delete
    9. Trueee..

      Quoting "Given it is a high investment of at least 300 Mio expected, do u not think they would want a decent return? Can prices be slashed by half?"

      This is something I've not thought about. Hahah. Thanks for pointing it out ya.

      Glad to have this banter with you SI;)

      Delete
    10. Hahah. Okay.

      But first let me test out my jinxing prowess again by placing Far East hospitality on my watchlist. Let's see what happen next week. Lol

      Delete
    11. Why Far East hospitality? Not in my radar, Willing to listen

      Delete
    12. Hi SI,

      I'm just looking for a REIT counter to fill up the position Saizen used to take in my portfolio.

      So far only FEHT and OUE hospitality trust caught my eyes due to their yield and my simple understanding of their biz.

      And between FEHT and OUEHT, FEHT has the higher yield, lower gearing and better price compared to its NAV.

      In fact, FEHT gearing of abt 32% means that they might not need to undertake dilutive placement or rights to raise cash in this climate, and they might even take this opportunity to increase their debt so as to load up on a few more accretive properties. This will put FEHT in a good position when the hospitality sector recovers in time to come.

      I'm of the view that the recent depression in their price is due to the cyclical challenges the SG hospitality sector is facing right now and it offers a good opportunity for me to buy in.

      Things going against them are probably their relatively young history, with not much track record to speak of.

      As always, these are just my thoughts and I'll definitely do more study of it when my exams are over.

      Feel free to burst my bubble though. I welcome it for I have much to learn:D thanks!

      Delete
    13. Yield? Hospitality? How about ascendas hospitality? Quality hotel at Australia

      Delete
    14. Hahah. Hi SI,

      I knew it. Chatting with u is certainly a wise thing to do.

      Thanks for pointing out Ascendas hospitality. The yield is certainly attractive enough. But most of their assets are based in Aus though and I know nuts about Aus hospitality sector or Ascendas assets quality in Aus.

      But it's certainly worth nibbling at, given its yield:p

      Delete
  3. New Toyo? Potential turnaround story (Disclaimer: Vested personally)

    ReplyDelete
  4. Well I have few stock in my watch list
    aalibaba , sgx, Bank of America and SingPost

    I think e-commerce is good in the Long term in the next 10 to 20 tears

    ReplyDelete
    Replies
    1. Hi Yeh, sgx and signpost are indeed on my watchlist too ...

      Hope u get your price u are waiting for

      Delete
  5. Well SI, I remember both of us stood by CMPH.

    Just analyzing the results alone does not always give us the correct outcome in business. WB not just know the analysis but he did know many macro plans in the country because of the people he knew. He always have a bigger picture which too many followers of him neglected and he is smart enough not to say, otherwise how to sell his koyok that he is a value investor.

    CMPH future is definitely brighter. U can read how much toll is a losing business in China. But man.. I can tell u so many times I been to china and witness it with my eyes.

    with the backing of china merchants, one of the strongest SOE in china, they sure know the big plans ahead over long term. And I think this is why the management think that CMPH is undervalue staying in SgX!

    Maybe CMPH will say: Not only Ang Moh do not understand us, many Singaporeans even though Chinese also do not truly understand China!

    ReplyDelete
    Replies
    1. Lol, I have been to China many times too, I use to go nanjing also every year. I do not get the same confidence as you though. The expressway connecting jiangnan major cities are hardly crowded and I dun see a lot of goods vehicles ...

      If economic activity is slowing, I do think in the short term-- 1-2 years it's results is going to be bad. But we will not get to see that

      Delete
    2. Hi SI,

      I am saying u r wrong. The economic activity is slowing and it is not nec a bad thing.

      No offence....

      Going China few times a year does not tell a lot about China. Even many Ang Moh who actually stay there for a year or two does not understand China due to Chinese not willing tell them all the truth.

      But if u have truly worked with the people asking thru projects, good times and bad times and have friends there for a long time and manage to amalgam with them then u can truly understand them.


      Delete
    3. No worries,Rolf

      Right and wrong seldom matter a lot to me. If rather be wrong and make money and be right and lose money lol

      Delete