Friday, April 9, 2021

Accumulated more Capitaland

There have been much written about Capitaland split into a listed CLIM, an investment manager with an lodging arm. There is an 10% discount to the "offer price" of about $4.1. I think the 10% discount is an opportunity for me, as I see value in the new CLIM entity. This 10% is not an mispriced opportunity. The deal will only be closed by the end of the year, a lot could have happen. Also, it is not an cash offer, and the value if CICT could go up or down, making the deal sweeter or more sour. Hence, the 10% discount is justified. However, I took a longer term look at what would be the value of CLIM, and I believe it is not too shabby. The proposition for this deal is that valuation should improve, as investment managing business has NAV of 2.6, and yet CLIM is valued at NAV (1). I do not think CLIM would traded anything near 2.6, at least not soon after the split without the company proving it execution records. Yet, I hardly think such a business model should trade at a discount to NAV. So the odds of losing is low. (Not to mentioned the discount of 10% should provide a bit of buffer)

Let me restate some.numbers u can find online.

Investment and management fees in 2020 is around 700 Mio.

We know management fees for reits and funds are very stable as wth the case of ARA (before delisting) records, but there might be some volality with Ascott lodging business, althought the margin for Ascott lodging managing business is better.(70bps compared to 40 bps.) ARA before it delisted is doing 45 bps.

Using NP margin of about 50 percent from fees collected. I estimate EPS of around 8.5 cent to 10 cents, so in terms of PE, CLIM is hardly attractive. ( If u think 3 dollars is attractive price post demerger and 4 dollars is good exit price)

I assume 3 billion of capital injection to improve is funds or REIT business, and the growth to 160K keys materialize ( read the edge article) on this.

Assume 0.5 percent asset acquisition fees, 15 Mio + Increase in AUM management 12 Mio + 60 mio (increase of 30 k keys management )
for easy calculation, let's just assume 90 Mio (calculation is to get a sense, nvm to be exact,imho) and 50 percent of it will become profits so is 45 Mio.

We are looking at predictable high single digit growth of Clim EPS over the next 2 years or 3.

Nothing exciting, but reasonable again.

In all, if u look at PE growth, neigh...
If u believe in PB alignment Swee.

In totality, is a reasonable deal if u pay below 3.5 ( which u will be doing if u have been buying in the last 5 years, since not it is not often that it goes above 3.5 and stay there) 

Finally, the deal is hardly the deal of the century, but is it better than no-deal? 

I believed it is better than no-deal for most people with investment horizon of not more than 2 years, and are vested in the last 5 years.

You might not agree with me. Investors seldom agree with each other. But, pitching this as a dumping of troubled assets and comparing it to Sembmarine is pushing it too far 
https://www.theonlinecitizen.com/2021/03/30/mas-sgx-need-to-scrutinise-capitalands-latest-restructuring-plan-protect-retail-investors-from-its-troubled-assets/

So what are your thoughts? 


Friday, April 2, 2021

Random thoughts: What I crave since a child?

Think I am getting old, keep thinking about the past. As i watch my son grows, I often had memories of myself coming back to me.

When I was child, I was the youngest. I wasn't from a well-off family, but neither were we poor. I crave riches. I am envous of my cousin who had the latest toys. He had a store-room of mask (thunderbirds transformed vehicles).I spent long time looking at kids playing video games (rental of 1 hours sega genesis, and my favourite was golden axe)

I remembered I was looking at toys with a neighbor and commenting insensitively that "u have money, you buy lor" 
 
I remembered pestering my mum to fulfilled a causal remark to buy me a toy. 

When I become a teenager, I didn't shake that off. But added to that, I craved attention and adoration. 

I hide my envy better, but had not come to terms with them. I always wanted recognition from others, friends, teachers and particularly girls. 

I remember doing a lot of "unique and idiotic" stuff just to get friends' attention and praises. Like painting with my hands although I know nothing about it. Waiting eagerly for my friend to praise me when I perform a song with my friends at a elderly hospital. 

During secondary and college days, I have insecurity with money. Looking backwards, I wondered why I always break out in cold sweat and having this crazy thoughts that we were bankrupt and my dad has to go snatching a 50 cents coin from others. (Maybe I am crazy)

As I become a young adult, I have all these too. Envy, comparison with others make me suffer from inferior complex. Secretly comparing myself with my secondary friend who is doing much better than me. But one thing did progress. While I feel inferior, I no longer habour any unkind thoughts against my friend, I just respect and admire his status and capabilities.

As I crossed over to my 40s. I understood that these sins are still with me. As human perhaps, they would always be with us, and we need to be constantly come to terms with them and keep it in check.

Affirmation takes a different form. Although I need little affirmation from peers or superiors, I realised I still crave a lot of it from my pupils. 

Riches, perhap is one thing I am more contented with. With jealousy of others with bigger portfolio at a younger age abated, I really do not feel much about it now. I am comfortable with my "wealth" and "rate of accumulation". I am at days insecure about my financial well being, but that is intrinsically triggered rather than externally triggered. I believed while money solve a lot of problem, how badly the future plays out depend on the choices made there and then too, and not just what we do now. 

In fact, as I blog, I find the noise of "what's the point" getting louder and louder whenever I feel like blogging about a company and its results.

I hope my son will be at peace with himself as he grows. 

Tuesday, March 30, 2021

Random thoughts: To sell into strength?

Coincidentally, today I received a message from a friend and a broker. My broker advise me to take profit as STI has hit 3200, but I didn't like the fear tactics deployed comparing to Lehman moment, which I think is pure bullshit. My friend ask me why STI hit 3200, when the economy has not recovered.

I did took a hard look at all my counters and I DO Wish to take some profits off the table, yet, when I examine the results to buy, they are still intact, even using a generic reason of rebalancing didn't really make sense, as counters that run the most doesn't really take up a big chunk of my portfolio. Yup, my bigger bets didn't do as well as my smaller bets. I do want to keep a sizable portfolio vested as I believed my entry price is of value.

I am quite sure the market is due for a breather, I am not too sure if there will be a correction (10 percent drop) and I find it unlikely that the market will go to bear 🐻 status. ( That would properly be my break even price and I will likely hit my head again) and I believe it is even more remote for it to reach March low of 2020. I use no leverage and I have holding power if the worst do happen. 

I know there are many schools of thought, some TA investors might make sure of the volatility and earn the gap. I am not in that school.

Some traders also might see resistance or momentum and want to profit from it.

I am rather the boring guy who buy when I see a gap to valuation, and sell when I believe the growth catalysts are all fulfilled or if it is overvalued due to euphoria. 

Looking at the counters I had, I did trim TianNeng Power from HK, but other than that, I see a few more quarters of good reports, and I also see a fundamental shift in business structure for quite a few companies.

Ya.. I, like what some other investors, say, are the subjective opinioned guy.

I think I can sleep with my though process though, as I suffer no cognitive dissonance. 

Hope u be at peace at your choice and huat. I hope I made the right call.  

Thursday, March 18, 2021

Random thoughts aplenty

My Dad Money values

Been missing my dad. He keep appearing in my mind. I remembered once he was hospitalised, I paid for his bills. It was during my NS time. 

He told me he will pay me back. I refused, and told him it is fine. In those days, there isn't easy transfer of money, I refused to take his cash. I said it is fine, really.

I remembered one fine day, when I am checking my balance, I suddenly found a few thousand more. My dad has took my bank book and went to the bank to deposit the money. He told me he can still manage.

Years later, when I graduated. He told me he will pass me 5K. I ask whatever for. He told me he gave 500 a month to my elder brother and elder sister when they are doing their undergraduate studies. He won't be giving me that, but will give me a lump sum. I told him not to worry about that, in fact, I signed a bond with the ministry so that my studies will be fully paid for, and I get a allowance so that he can retired. He doesn't have to hang on there being a hawker just for me.

Anyway, I jokingly told him the sum doesn't add up. I he should keep the money for himself since he is no longer working. Come wedding day, he gave a hongbao of 5 thousand.

My father is a hawker who only finished primary 2 education. Yet, he is a Man of his word when money is concerned. He told me he cannot show favouritism.

In case u think he is just loose with money, or that he is overly pampering his children. He leads a very frugal life. Every year end bonus, I would top up my allowance by a bit for him. One day, he told me that my brother didn't do that, and that it isn't "nice"

I told my brother about it. I believed it is not about the money per se, but being fair in money matters. 

One does not need to be rich to be principled in money matters.

Run your own race

I have my fair share of rat race. Corporate race, self-imposed investment race, trying to beat the investment bloggers and forummers out there.

It is a Zen action. From feeling delusional, jealous, I feel less of a need to prove myself.

I believe when we are young, we should work hard and try our best to climb the ladder, the win the race. But I reached the stage of life where I much appreciate to run my own race, be it in my job or investment returns.

I only hope for 圆满, rather than 美满, in whatever I do. I need closures, not fairy tales 

I know of several people who profited handsomely from crypo investment. This time round, I am honest with myself, but I hardly feel much jealously toward them. I really wish them the best and respect them for their understanding and courage in niche investment. I didn't want to go into them despite one of them asking me to invest with him.

I do not have thoughts like, "is risky, see, I told you" but more of I walk my path, I am happy for you if u make it. I know any investment can be profitable if u know how to "get off" or "milk it"

I do feel like bragging about my returns on my blog, but too bad, there is nothing to brag about. But I dun feel unhappy about it.

Saturday, February 27, 2021

A review of my company prospecting process: More hits than misses

Less than a year ago, after a screening process, I highlight 4 companies

https://sillyinvestor.blogspot.com/2020/05/company-prospecting-process-maxi-cash.html

Of the 4 companies, Maxi-cash, Muti-chem, Hotung, and Overseas Family education,

I only invested in Hotung. 

Maxi-cash and Muti-Chem gives capital gain of 50% and 70% had in invested in them, and Hotung, just 15%, excluding dividends. 

What went wrong? I think I have current yield bias, and aversion to company with high loan to equity ratio. Could I have done better? I am not sure. I guess missing out on gains is better than holding on to losses.

I predicted improving dividends for 3 counters in blogpost here

https://sillyinvestor.blogspot.com/2020/12/merry-chiristmas-here-are-3-companies.html

Of the three, YZJ kept is earnings intact, Kayhian did increase it, and Verdict is not out yet on CSCP. Companies that pay out dividends as a ratio of earnings could see higher volatility of dividends but it might made timing the turnaround more rewarding. BAE system also guided on 50% payout, and with improving earnings (Projected), I hope to repeat the success of it. 

Third, using Free cash flow yield

https://sillyinvestor.blogspot.com/2020/12/merry-chiristmas-here-are-3-companies.html

1) Lung Kee (HK 0255) (15%)

2)Yangzijiang (13%)

3) Lonking (HK3339) (13%)

4) *Diary Farm International (13%)

Closely followed by Silverlake Axis and Singpost in the 8-9 % range.


In terms of capital gains, with exception of lonking, all are in the range of 10%, DFI and Silverlake are loss making and I have exited SIlverlake after they suspended dividends in 1H.

I recently also found another company 0819 TianNeng Power with FCF in excess of 10%, PE in the range of 10, in the sector of making batteries for EV and etc. An growing company in a growing industry should deserve better valuation and due to the min lot size of 2000 shares, it is my biggest HK purchase. However, I am already 10% underwater. 

FCF yield need longer runway before they can appreciated by market? 

The better counters, such as SATS(>50% gain), has nothing fundemental improving, although the outlook is defintely better. 

The concluding thought I have, is hence:

I really hope to count on luck, and hence diversification is important. After I sold off Silverlake, non of my counters hold more than 5% in my portfolio. In fact, most of then are in the 2-3% range. 

Hence, although i do have some counters than are gaining 70% or 50%, as a portfolio, it is just 6% gain based on COST. 

Hope I continue to be lucky. 

 

Friday, February 26, 2021

Random thoughts: Pence wise and Pound foolish, literally

Recently, I bought BAE systems from London exchanges (LSE) 

When I check my balance i saw this my purchase price is 4.735
I ask why 4.735, when the message alert I received is 473.5 

I thought it is a error from kayhian side. I even joked with my broker and fellow bloggers that I got a 100 baggers.

My broker tried to explain to me it is in Pence. He send me the conversion rate, I say I am aware it it is pound. 

I ask why divide by 100. He exasperatedly said it is pence, like cents ... 

And I go oops. 

And I ask, and they allow trading of 1 share?? 

End up I paid double the commission to get the quantity I wanted. 

LOL. Had a good laugh. Sillyinvestor indeed.


Tuesday, February 16, 2021

Sold Silverlake Axis for UOB kayhian

Just a quick update. 

SLA suspension of dividend in 1H is the straw the broke my back. I threw in the towel. Suspension of dividends when profits is still decent, and cash hoard high is a red flag to me. 

They have already suspended Q1 dividend, with 1H reporting as an excuse. I was prepared to give  them the benefit of doubt since during Covid Period, everyone might err  to the side of catious. I would prefer that they give a lower dividend then scrapping it during Q1. So when 1H came and go without dividends, I was aghast. 

Just during the AGM, they told shareholders dividend payout is not something they take lightly and they assured shareholders that there is no imminent acquisition. Hence the suspension of dividends bring back memories of S-chip. SLA is SaaS company that is supposed to less affected by Covid, and the results bored out this fact, while earnings dropped, it is nowhere as drastic as those in transport, hotels or avivation. Yet CDG, proposed an "token" dividend, while SLA scrapped it totally. 

Without taking into consideration Dividends or trading gains from this counter, the loss is about 40%, but I am prepared to move on. 

I made bids for Singtel and Uobkayhian to rotate the fund free up by SLA. They might turnaround later and declare good year end dividends, but I  think I had enough. Is goodbye for now.