随心笔： 应该不应该

生活应该幸福？

你想着“应该”,可能幸福就会远一点。

我们在“应该”的背后，要加一个“做”,

把精力放在应该做的事，

不去问应该发生的结果。

没有人应该得到幸福，

能做应该做的事，

就是幸福。

Random thoughts: Still betting on recovery?

 STI is near 3200. It is at or near pre-covid levels. My initial gameplay is to start to offload some counters to increase cash holding as STI goes 3200. I did not. 

Whenever I made a sale, I would have redeployed funds back rather quickly. I struggled with an inner voice that is shouting "greed is creeping in", and cognitive dissonance that claimed there is still much to recovery.

1)  STI recovery is lead by banks

A quick look at my companies under my radar, only the banks and YZJ are back to pre-covid level (in terms of price), many counters are still at 5 years low. 

If you are thinking of "reversion to mean" as a way to play the recovery theme, I would think there are still meat out there. 

Of course, each and every company has a different story, but CDG and CDL are both contemplating a sale of assets (Australia assets or in the case of CDL, injection to a reit), in normal time, these should act as a catalyst of sort for short term price gain. 

2)  The worst is over and yet no reflected in the share price.

CDL has fully impaired the investment on Sincere, Europe is opening up (Think Euro 2020), while CDL has plenty of issues and problems, I would think it would have put his worst behind it.

I am not talking about Covid, but China Tech companies. Alibaba in particular. Yes, ANT will no longer command an lofty valuation if ANT does a future IPO (a BIG IF), but the impact on Alibaba earnings is small, as ANT contribution to alibaba core commerce in low. 

The fine on monopolistic practices is more of a closure than a harbinger of worse to come. If there is no exclusive clause for vendors and suppliers to be locked into a platform, how big will the damage be? I seriously do not see an exodus of merchants, since suppliers will be mindful of potential loss of customers. However, as an insurance, I also bought into JD, so together, there could be no hiding place if a supplier would like to participate in the e-marketplace.

Yes, margin for Alibaba e-commerce business is falling, and China e-commercial penetration might be at saturated point. There are the international wing (SEA penetration rate is nowhere near China), and the whether Cloud business can continue to stay profitability and grow it will be a key factor to watch. 

3) Restructuring to capture the new economy. 

How successfully companies captured new growth opportunities will determine how the market will start to rerate this companies as "growth" companies. There are plenty of examples, MIT increasing the percentage of data centers as a part of its portfolio, Olam, demerger followed by new IPO, Capitaland transformation into a lodging and fund manager, Tianneng Power increasing focus on New Energy Batteries for PowerPlant Storage and EV. 

Most of the above mentioned counters have price well below their 52 weeks high. Tianneng Power is growing in double digits for a few years now, with earning visibility still good, yet it is commanding only a PE of 5. Its PE will compressed further if growth continues to materialize. I believe the company has the ability to increase dividends and put the shadow of the short selling report behind it, sooner than later. 

Conclusion  

I feel there are still opportunities abound for companies. However, market risk has increased for me, since I am almost fully vested with cash only at 10%, although I won't be losing too much sleep over individual company hit or misses since I am a proponent for diversification.

Disclosure: I have a position on the all the mentioned companies in my post except for CDL, yet. 

 

Random thoughts: tang ping (躺平)

 

Source: Image from Yahoo news

Read about this "silent protest" against the mad rat race or/and harsh working conditions(996) in China. It definitely resonates with me. 

My few thoughts:

1) It is definitely not about laziness, but helplessness. If someone is just plain lazy, it is very unlikely to become a rallying call. So much so that censorship happens. 

2) When we all started, most of us, would have dreams, ambitions and would like to try to climb the ladder, win the rat race. If we are starting businesses, I guess the dreams are even bigger, such as changing the world, making an impact on other lives.

There are others, who did not want a race at the very beginning, and opted to walk their own path. I believed these people will not bother to even write about “Tang Ping" or join the "protest"/ Movement.

These are people are not lying down, they are walking a different path. "Tang Ping" as the word suggests, is a protest or call out for help. Much like a tired child asking for parents to carry them when they are tired.

3) Before we pass any judgements that these people are "pampered" or "sore losers", I do think, most of us, and especially myself, "tang ping" at different points of time. 

Tang Ping @ Investing

I remembered just perhaps years ago, I really would like to blog about a sizeable portfolio, and given how many bloggers who are much younger already had bigger portfolios, it is easy to feel disappointed or inferior. Truth to be told, although such thoughts are few and between and never as intense, it does still popped out now and then.

Tang Ping @Work

It is just in recent years, that I decided to walk in the rat race. I am still in the race, but walking instead of running, does give me more energy. I have tried my best to run in the last decade (I did more than 996 for a few years too) and did manage to get ahead.

But after a while, I realize I not interested in running ahead anymore. Hence, I am sort of also "tang ping"ING. 

Tang Ping @Social life

I really do not feel like meeting friends, relatives and the sort. I know about balance of life and etc, but truth to be told, while I enjoy having a quick chat with my friends, f2f or online, I really did not like to visit or do any meals. Don't ask me why, maybe I am a hermit. CB or heightened phase 2, really has no impact on me, I kind of enjoy it, reading and sleeping. Tang Ping again

Conclusion:

I hope all those who are reading this, you never feel the urge to "tang xia", but if you do, I hope you take it as a rest, but stand up soon enough. You might decide that you do not wish to run, and would like to take a walk instead. You might start seeing people whom you overtaken earlier, overtaking you, but keep walking, until you are ready to run again. 

You might also decided that you had enough of that race, and decide to disqualified yourself and walk off without reaching the end. Find a meaningful journey, and walk, run, play along the way. If you find companions, good, if not, I hope you find solace in the journey alone. 

I think I didn't Tang Ping for too long in my life. Sometimes, some "gui ren" gave me a hand, and pull me up. Sometimes, I just can't stand the stepping on by others as I lie down, and hence I just got up. 

There are also occasions, where like a little child, hoping to hitch a hug and "ride", I protest by "tang ping".

Its Ok to be not to OK all the times.

Its not Ok to be not OK all the times. 

  

Random thoughts: I no longer feel happy being kind...

 Hi all,

My sister alerted me to a facebook group page known as "blessing for those in need". 

She told me many people posted things that are still useable, and anyone can ask to collect these items for free. Some kind souls also offer to transport the goods at cost price. 

I was invited by my sister to join the group. Recently, as we are doing some spring cleaning, I decided to try posting some items, such as jucier, vaccum flask etc. When happened over the next 2 days triggered a lot of thoughts, and I hope to organize them by writing a post. 

When I first posted the items, I am quite surprised that within 1 hour of approval by Admin, someone did want to collect the items. I thought to myself "Great, things will not go to waste, and someone get help" The lady ask for my contact and arranged for Courier to pick my stuff. My thoughts that surfaced (I am cynical person) "Why is a person who is so efficient and resourceful in getting a courier (I didn't know Q express provide such CtoC service) asking for free item? Is she trying to resell the items? Isn't there a cost involved if courier service is purchased?" Nonetheless, I felt that even if she do resell the items, it is to her resourcefulness, and I still fulfilled my goal of reducing wastage. (Doesn't matter that when you first joined the group, one of the rules is no reselling of the items). 

When I was posting another batch of items to be collected, I look through what are the items that are available for collection. I am quite surprised to find TV, furniture given away. On the other end of the spectrum, there are very cheap items such as a stuff toy and clothes hangers to be given out too.

I was looking at one post, where a lady is trying to help a friend give away old furniture. Another person claimed to be interested, but unable to pay for transport. I then offer to sponsor the transport and ask the owner if she could arrange. The lady insisted that I settled the transportation on my own, and hence I went about coordinating between the two. It is through this coordinating that I learnt about gogoX and LalaMove, and how transport cost has dropped. 

I did not have a good experience, as I realized the person asking for furniture also start to ask for food, and mentioned several times her plight. I did some fact finding, and found out that she is real, and is helped by GiveAsia before. The sum raised is small. 

When I left a comment on the post, saying that I am willing to pick up the tab for the person on the transport, to get her the coffee table that she wanted, another commenter who is queuing for the same item earlier, bring forward the possible date of collection. I felt quite uncomfortable about "fighting over" item. 

I told the person wanting the furniture that I can cancel the request for the furniture and use the transportation costs to buy groceries for her, if that is "really what she needed" (her own words) She then told me she really wanted the furniture instead, and she could ask her cousin for food instead.

I am not sure about the whole experience. 

How much help is enough, and how to make sure the help goes to the deserving. 

For someone in need of long term help, constantly trying to get help. is it still dignified. I am not passing any judgement here. Just penning my many thoughts that are swirling around my head.

Deep inside me, the feelings of satisfaction and joy whenever I help someone in the past, is missing this time round. Of course, I am mindful my "help" is of little or no significance. 

Just feeling weird that I might have pass the age, where I feel happy, doing a others a small favor. Maybe it is because I realized I might not really make a difference. 

Random thoughts: BT article on "5 investment pitfalls"

 I read an BT article on 5 investment pitfalls. I thought I blog about it to crystallize my thoughts. I hope I will be able to illustrate the various points made by the author with my own examples.

"If something is too good to be true, it probably is" 

I wonder what is considered "too good to be true"? Dividends yield of more than 10%? I remember I used to own APTT, LMRT, Sabana Reit and even SPH at $3.6. Most of them have yield around 10%. except SPH.

Even suspended Qingmei gave an yield of 15% for me, once. 

I think there is big difference here between trailing yield and future yield. Looking back, buying counters with trailing yield of around 10% or more usually does more harm than good to my portfolio. There are indeed years where I harvest the above 10% yield, but it is not sustainable. 

LMRT issues dilutive rights (present tense is not a grammatical error), Qingmei is a fraud, APTT could not sustained the payout. I was receiving about 11% yield from APPT and lucky for me, I got out of this counter before any damage. However,  I wasn't so lucky all the time, and I suffered capital loss in excess of dividends received.

I do currently own counters of yield about 10%, like Hotung, Lung Kee,  MIT. They grow into it, when I first bought them, they yield 6-7%, and it is during market correction that throws out such yield, before that, the yield is even lower. 

In the area of growers, I get very excited when I find a company that grows around 20-30% in both their topline and bottom line for the last 5 years, and yet trading at less than 15 times PE. I am a novice in "grower" criteria and I do not own a single Tech Stock in my portfolio. Hence, I find it hard to come up with hits and misses. I bought into CSCP believing in their pipeline of drugs (More being developed over the years), and Raffles Medical Expansion into China. I have no track records for both yet, so I will reserve judgements.  

"Turnarounds seldom occur" 

My investment school of thought is influenced by Peter Lynch Turnarounds and Cyclical Plays. So, trying to buy a counter when it is out of favor is indeed something I do very often. 

I remembered SIA Engineering, YZJ, Sembcorp Industries, QAF, Singtel, SingPost, Golden Agri and SPH, Pan United are all purchases based on cyclical upturn analysis.

I have both hits and misses. 

Those that faced disruptive forces are counters didn't turn out well. SingPost, new growth area is e-commerce and SPH's property, both companies did not fare well. Both counters are in the red. I deliberately left out Sembmarine but bought into SCI. Nonetheless, I believed SCI will turnaround together with SCM. It is with a stroke of luck that SCM is demerged. I am betting actually on SCI doing infrastructure trusts like Keppel, but it turns out better than I expected. When they are demerged, I sold SCM.

The lesson here is clear, it is difficult to turn ship with a heavy load (baggage). It is easier for companies to outlast an oversupply situation or unfavorable market conditions, than overcome structural disruption. For example, with ESG becoming a corporate culture in boardrooms, I think fossil industry will likely face structural decline in the future.  I think I will swear off fossils plays. (Although I did own SInopec, but China is a different story)  

The next lesson here is management's alignment to shareholders' interest. LMRT is frequently doing highly dilutive rights and buying assets of questionable quality. Sabana bought a 50% occupied high tech building and has problem filling it up. and management Incompetence aggravated the problem. First Reit has the same owner as LMRT, and they also did a dilutive rights issue, but I see management competence the biggest difference between FR and LMRT. Sabana seem to be faring better now after Kelvin, its ex-CEO left.

QAF has a suffering pork business in Australia, Rivea (I hope I get the name right), it dragged the earnings down. I bought it as I believed that is a cyclical business and the high cost of feeds is due to weather factors that might not be recurring. True enough, the business did better, again (It is not the first time it happens, QAF has been trying to sell the poultry business twice without success). QAF is one of my better performing counter in SGX yielding 7% with capital gains. 

Another factor to look at is profitability in the face of downturn. Yes, profits will fall, but keeping company profitability means the chance of permanent capital loss is low. YZJ is the star that comes to mind, having navigating the downturn well with its sideline of HTM business. It is not easy to get a good yield from YZJ and it is difficult to quantified the risk of it HTM business. Nonetheless, I believed these are accounted for in it valuation in terms of PB as compared to industry peers.

Source: DBS research

I also fare better with companies with information on industrial indicators aplenty. For example, in the analysis of Pan United, the price of RMC and construction demand figures are easily available in URA website, this makes modeling of earnings possible. And in the case of YZJ, freight rates, bulk rates, newbuild numbers,  are also easily available in numerous websites.  Even with these information, I am mindful it is still very much a guessing game. So I practiced diversification in investing.

So how do we know if a company competitive strength is intact. In the case of APTT, the last 8 quarters show a consistent fall in basic cable TV subscribers and while premium digital TV subscribers are increasing, the ARPU is falling. It shows a lack of pricing power with the industry. The broadband segment is touted by analysts as a growth area due to 5G rollout. However, ARPU is also falling and the EBITA is not growing. Taiwan at the verge of a possible lockdown, and I assume its premium TV might be do very well in such circumstances, but after looking at it numbers, it did not instill confidence. 

Hence, I believe the better days of turnaround are far from near, although it is worth monitoring.

Selling a winner too early

Well, Venture comes to mind. What would have been a possibly 3 baggers became a 30% gain. For context, I bought Venture at average price of $8, and sold it off at $11

I have also seen Lee metals (Now bought over and merged with BRC Asia)  50% gains evaporated in front of my very own eyes when I didn't sell. 

Lee metals earnings get a bump up due to its opportunistic and profitable EC venture. Given that is is non-recurring, I should have sold when the earnings improved as I expected it. The catalyst is non-recurring and I could not understand why I not sell then.

Cogent, which is privatized by Cosco, is another example. It is another 3 baggers. I didn't believe the rumors of an offer. I bought it at 28 cents, and the offer came 2 years later, iirc at 80 cents.

I think if the operating numbers did not deteriorate too much, it might be wise not to sell too early, unless it is OVER-valued compared to fairly valued. Since if the competitive strength is intact, it should continue to grow or recovers from the down cycle. 

I am consistently tempted to sell some of profitable counters, but I now reminded myself to sell only if operating numbers show loss of competitive edge over a few quarters. 

Buying into false promises

Silverlake Axis comes to mind. Granted, the false promises comes from both management and the delusional myself. I correctly predicted an upturn of earnings as the big projects scored by company seem to be underappreciate by the public and how usually IT system get obsolete after 4- 5 years. I predicted and upturn should come sooner than later. correctly in 2019.

I did make some good money earlier on, buying at 40 cents and selling at 55 cents. But I bought more than I sold, and I average down at 30cent at 24 cents. My thoughts is business will improve after Malaysia MCO is over, and the big projects win will continue. Yet, it is long wait without improvement

I am actually willing to wait it out, given that no one could predicted COVID-19. The red flag is the suspension of dividends. The used to give out dividends in 3 quarters, and while they promised during AGM Q and A that they understand dividends payout is important to investors, they skip an quarter of dividends and blame it Half-Yearly reporting. When is 1H reporting, they have the cheek to skip it again and declare that they will only give year end dividend.

So, I said "GoodBye" to the counter. Doesn't matter if they do better again. if I cannot understand a management or trust it to be aligned to shareholders, then it is a sell. 

Conclusion

If you have reading until here. Thank you. My mind is slightly clearer, I hope you are not too confused. I welcome your thoughts.

Company Prospecting: China Resources Cement 1313

 I did another round of screening for dividend stock for both SGX and HKEX recently.

The criteria I selected are:

1) PE less than 10

2) ROE >20

2) ROIC >15

3) ROA >10

4) Net margin >10

5) Quick and Current Ratio >1

6) Debt to equity < 0.3

7) Dividend yield > 4%

Of the close to 40 counters that appeared, only 3 came from SGX. (Which is quite sad)

After that, I went on to check for consistency or improving trend of the above mentioned metrics, companies that do not give out dividends regularly, or have earnings that are doing a yo-yo are eliminated. I do allow earnings to drop in 2020, given it is a covid here. 

About 3 or 4 counters are left. 

China Resources cement is the only one that made me pulled the trigger today. First, some numbers 

Source of data are from FSM Screener.

The numbers look great for a 7.5% forward yield company, isn't it, with payout ration of less than 50%, and FCF yield of above 10% if you take the 5 years average. 2020 and 2021 Capex is high at 5 billion HKD, company already guided for 2022 Capex of 2 billion which is more like the norm.

Going forward, Q1 results is good, EPS grow 15$ YOY.  (https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0423/2021042300455.pdf)

It is my speculation, that post Covid, China will spend more on infrastructure, and this is the thesis, that lead me to buy into Lonking, which has pans out well so far. 

 Due to the low base effect of Q1 Covid on China, the numbers show a big jump, while margin is lower.

By QoQ the pace of expansion (Turnover)/ and profitability has decreased, margin has fallen too. 

It is highly likely the reason why the company is trading at such low valuation, as people are betting 2021 will be worse than 2020, and this is indeed a risk.

Overall:

Given the track records of the company, and the emerging theme of "Going Green" and "Going high Tech", “IOT" of the New Economy, I believe any reduction in infrastructure in a bump on the road rather than any structurally decline. 

Hence it is a risk I would take. 

Company prospecting: Tianneng Power 0819

 TianNeng Power is a company that I recently accumulated due to price weakness. It is the only company nearing the Threshold of 5% of my Portfolio now, and is particularly rare, as it is a Hong Kong Counter, but I find it too attractive to ignore. 

First, a few pictures.

Number wise, earning is improving over the last 5 years, FCF is stable over the last 5 years, debt is stable or reducing over the last 3 years. In fact, if you look at the latest Q1 results of TianNeng Battery listed in STAR, which is a subsidiary but form 80-90% of its earning, it is again an impressive Q1 of more than 40% growth. 

Valuation use, PE trailing is 5X, if you expect the earning growth to continue, it will be even lower than this. Dividends is low but decent, 3% with about 20% payout (Hardly punishing.) FCF yield is so-so, in the 7-8% range, but not too shabby, given ROE is 32%. Debt is low, with debt to equity at 0.19. 

Valuation of Tianneng Battery is double or triple of what it is doing in HKEX, which does not make a lot of sense to me. 

So the number part is pretty impressive. 

So the story part? 

It is even more puzzling that TianNeng is flying under the radar. In the years where ESG and EV are all the rage, it is very puzzling than Tian Neng is so grossly neglected by investors. 

Granted its battery is used mainly for light electric vehicle, bicycles etc, which is lead-battery powered, but Tianneng has moved into Lithium-ion Battery business and also in Oct 2020, supplied storage battery for a Power Plant. Both sector has the hottest theme and story of ESG. Granted competition is going to be stiff, but the pie is growing, and its low valuation should provide the buffer. 

The lead battery market is Hugh, and battery need replacement every 0.5 years to 3 years. It is the market leader in these area. 

China is promising to be a carbon peak country at 2030, and neutral at 2060. EVs and renewables are 2 ways which there are moving towards. Tianneng is going to have a bite at both pies, and is not like the core business of lead battery is being disrupted as they pursuit growth. 

They have been growing at 30-40% for that last few years, and for such a grower, you get PE at 5 times?

Yes, it has almost double from its 52 weeks low, this is the only explanation I can find, where traders rotate out of it. However, I find value and is willing to get 3% yield as I wait for capital gain as well as dividend growth. 

It will be a matter of time market rerate this counter if it continues its growth.