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

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

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

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.