Posted by: donmihaihai | January 1, 2013

Market, activities and comments

Market
STI returned almost 20% in 2012. It was good. Surprise? Depend on who you are asking. But as I am writing this, something hit me that headline news, especially during year end, done lot of bad to ‘investor’ than they realised, maybe more so to so call asset allocator.

Activities

It should be called a year of inactivity(is there such a word?)

For Unit Trust using CPF money, I had done what many will deem as horror. Made few purchases of Europe and Japan as markets dipped before September. Small amounts, wanted to buy more but despite having loads of horrible news, markets refused to move. Here lay another ‘investor’ caged by market news.

In 2013, my thinking is to slowly sell off my Thailand UT if current market momentum continues and Eastspring Investments Global Basics Fund as it really disappointing. For purchase? I have no idea.

In stock investing, other than purchasing a small stake in Willas-Array Electronics (Holdings) Limited and lucky gotten a 10% dividend (joining the hip of dividend investment), my activity was basically zero. Willas Array belong to what I call trading company and base on past results(11 years), its ROE was about 10%, dividend payout and so call free cash flow was about 4.5 to 5%. At 0.5XBV it becomes 20% and 9 to 10%. Pretty good for an average business. I am not worry about it leverage as it is tied with business volume but shout to me when there is a trend of increasing borrowing without the same increase in sale volume. Anyway this is a business of scale, market reach and inventories management.

Comments
Purchased quite a few trading and distributing companies in the last few years. There are Asia Enterprise, YHI International, Willas-Array Electronics and even LHT. There are average businesses while management varies. The return from holding to them is mixed or rather I should say poor which is why I am still holding on to them. They are still being disliked by the market. This is the place I like to search to stock.

Sometime back in 2nd half of 2011, property stock was dumped. Unlike smallish trading and distributing segment, property is a heavyweight in the exchange. I remember I could walk in and purchase stock like Hong Kong Land, UOL, SingLand, Hotel properties, SC Global, Wing Tai, etc at price which I call cheap. I did and rewarded with return from Hong Kong Land, SC Global and somehow Wheelock Properties. The reward is one of the fastest.

What next? Other than looking for quality company in quality industry managed by good management the place to look for is still throwaway. Genting might be interesting because it has lost money for many people. Shipping(other than offshore) might be even better because these companies are not talking about how much profit they generated, they are trying not to goes down.

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Responses

  1. hi dnhh, congrats to your performance. i would just like to find out whether you have enquire if management have learnt from 2009 since it was their worse performing year.

    in your research did that specific year case study raise any red flags?

  2. I do not meet, call or email and I seldom attend AGM.

    Willas-Array?
    I do remember newspaper flooded with news like factory worker released, un pay leave, 4 days a week, 3 days a week because order slow/stop and clearing goods in the supply chain. Just wonder which management will tell investor/shareholder that they have learn nothing from 2009?

    Red flag? Of course and a big one. Right inside 2009 AR in one of the note to financial statement. It is impossible to miss for anyone who does read their AR.

  3. ah i see. thanks dnhh.

  4. Shipping? Any difference from the airline industry?

  5. A big one I guess if talking about airline. Each Country will try to build a national airline for pride maybe and they will almost always be there no matter what and with their planes. Shipping is about demand and supply and management


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