Thursday, August 12, 2021

Quick Updates on portfolio and follow up actions

Most if not all, Singapore companies under my portfolio has report their results. In general, I expect better results or at least stable results for most companies, except Koufu due to heightened alert phase that prohibit dining in. 

So there are 3 categories of companies. Below expectations, which should be followed by a stop loss limit imposed, and a sell action when price stabilizes. Within Expectations means earnings are stable, or growing as expected. Hold, will suffice. Above expectations, look for opportunities to add when market pull back.

Pretty much most of the companies are in Cat 2

Cat 1   

Diary Farm. 
Multiple disappointments in various fronts. The reasons behind buying is the groceries business will turnaround, and the pandemic will make the business even more resilience or even sticky. When the reopening the starts, the healthcare and beauty segment will then pick up the pace of recovery, and it will be firing at both cylinders.

To be fair, the groceries business turnaround is still intact, and I accept the reasoning that the panic buying create a high base for YOY comparison (Is the same for Sheng Siong). However, Yong Hui swing to loss is not properly explained. It could be something structural about this associate. I mean goods can be flying off the shelves less quickly, but how did you swing to a loss?

I also wonder aloud if HK beauty and Healthcare business is ever going to recover. It is one to the major contributor to bottom line although it is light on the topline. I wonder when will mainland tourists flock to HK again, and even if they did, are they welcomed such that they would want to come back

Numbers wise, they did the nuclear option of cutting the dividends AGAIN, and the double whammy is the cut dividends of 3 cents is still lesser than net profits. 

CSE
Order book is on a downtrend. Topline and bottom line too. Oil price recovery did not lead to more contract wins, although they made some improvements in the infrastructure.

I believe there is a lag time between actual oil price and commitment to CapeX. But with Biden trying giving mix signals on his renewable energy agenda (promising to spend big and go big in renewable, and yet asking OPEC to increase production), the future of "brown" energy is questionable in the longer run. I wonder if the tide will come that will lift a subcontractor like CSE.

Cat 3.
 
Hotung
Hotung already has a record earning year last year, riding on the technology rally wave. So 1H results is already almost equals to 2019 earnings.

Hotung yield is above 10% based on dividends given out last year. It is likely that Hotung will do as well or better (if 2H is as good as 1H).

Even if Hotung sustainable earnings is that 2019 earnings (which is the lowest in the last 5 years), the yield is still above 5%. Hotung investments in Tech and the home ground advantage in Taiwan which is experiencing a tech industry resurgent, puts it in a sweet spot for 2021.

Kayhian 
Similar to Hotung, this company could continue its good performance into 2021 despite the high base. And the reason why it is in Cat 3, is the odds of increased dividends payout. 

HOtung gave most of its earnings back as dividends, 2020 is the year where they gave less than 90%. Kayhian gave 50% of NP.

Given Singapore is a major market for commission income, tracking the SGX announcement on trade velocity and volume is a easy to "project" Kayhian future earnings. 1H turns out well as expected. 

Cat 2 companies are mostly hold companies. which I shall not labor.

I will do a HK review after their earning session is over.     

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