Posted by: donmihaihai | February 5, 2021

Random

Talk about companies that I have invested and unlikely to invest more in the near future because of the valuation.

Micro Mechanics

My first 10 baggers and still holding on to a smaller holding after recent further selling.

The company future is certainly bright especially the consumable tools. While it is good to know that the company believe semiconductor industry may be entering a supercycle of multi-year growth, it is even better to know that the company goal is to become a leading next generation supplier within a handful of suppliers. In short, it means Micro Mechanics intend to beat all competitors during the supercycle going forward. Isn’t that exciting?

How high can the ROE go from close to 30%? I don’t know but I don’t think it will double as this is a manufacturing company and it is constraint by pricing and capacity. So, the current share price isn’t cheap and I am not of the view that just because of the future is so bright, rich valuation is justifiable and share price will keep going higher. But then, I will likely hold on to the last few shares as it is hard to totally sell out on a good company.

My initial purchase was sometime after IPO with my CPF monies and my last was during GFC. So over 17 or 18 years, Micro Mechanics alone funded more than half of my FRS.

Sarine

Initial purchase in 2007 and bought more during GFC. Managed to sell most in 2014 for multi baggers gain after Sarine price jumped. Then Sarine, dominate the equipment side of the processing segment of diamonds supply chain and was trying to enter retail segment. The sale was mainly on valuation ground.

On hindsight, my timing was almost prefect as Sarine share price staged a multi-years drop there- after and I started to repurchase about 6 years later, ie in 2020 and bought more as it head lower. My current average cost is even lower than 2008 and waiting for a second ride, hopefully.  

Diamond industry that Sarine operate in has certainly changed somehow in the past 14 years or so, it seen to be less attractive now compare to before, but I am not so certain because I can come out with views that it is even more attractive now for company like Sarine. And Sarine continue to dominate the equipment side of the processing segment and working (looking good) to combine processing and retail segment and dominate both.

Out of the blue, Sarine share price jumped again recently, reaches close to 3X NBV from below book. While the current valuation is certainly not the elephant in the room on whether it is cheap or rich, I would want to continue riding it base on the Sarine domination.

Penguin International Limited

Building one of the leading brands in vessel for crew and security boats, Flex, locally and managed to be decently profitable as well. While I believe their lead is by no mean secure, the management is pretty good and I like the way they are communicating with shareholders.

Now the management make an offer to take the company private at $0.65. $0.65 is really a good premium from my cost price and what a short holding period but my fate depends on other shareholders.

No complaint on whatever the outcome will be. It is not because of my gain but rather it is part of investing. Why complain?

Penguin International Limited certainly worth more than $0.65.

Jardine Matheson

A decent conglomerate with lot of businesses and mainly in Asia. Most of the businesses range from average to good. Even if some lines are not in top condition, they are not in worrying state. The ROE is reflective of it as well. Management remain consistent but recent years acquisitions is somehow on the expensive side, especially those in China.

Why don’t you wait on your ass? Perhaps the down cycle of some businesses push the management to jump the gun. I don’t know. Really hope JMH is as discipline in acquisition as in share buyback.

I believe JMH have conducted the biggest share buyback for all locally listed co.(primary and secondary listing) since COVID-19 and I believe at this point, buyback already crossed over USD1B. I was hoping that the share price keep depressed longer at USD40 to USD45 but well, share price jumped and JMH is still buying back at around USD55 to USD57. At a price where I still support.

My thoughts on their share buyback is a reflective on what I should do.


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