Monday, November 13, 2017
November 2017 Portfolio Update
The reporting season for 3rd Quarter is finally almost over and all my holding companies have reported:
(1) Sunningdale's Q3 result is good and inline with my expectation. This company is my top favourite company so far and it happens to be my biggest holding too. What i like about this company is the way they operate their business in a predictable manner. The management does not seem to over promise to their shareholders, yet they have shown their confident in putting the best interest of their shareholders. They are careful and full of strategy in executing their business plan. So far i can see this is the only counter i am willing to hold for a very long time for both capital growth & dividend. Unless it is taken offer private, or it meets my Selling Criteria as i have mentioned some time ago in my blog, i am willing to continue holding. However, i will need to monitor their result Q by Q, Y by Y.
(2) Best World's Q3 result is still inline with my expectation. Their Taiwan revenue has dropped in double digits rate, and China revenue has also increased in double digits rate, with a higher profit margin. I am still comfortable with my current holding with Best World, although the market always likes to speculate in this counter. It can be down more than 10% in a single day and it can be up more than 10% in another single day, or it can be down consecutively in a couple of days, and vice versa. Personally, i am not really shaken by the day by day market reaction once i have set up my mind on a certain counter on why i bought them in the first place and why i am still holding them until today. I am looking forward their FY result in February and will decide from there.
(3) 800 Super's Q3 result is also inline with my expectation. A recession free, quite a capital intensive but good in generating cash flow kind of business. Now i am looking forward the commencement of their biomass boiler in the first quarter of 2018 and the completion of the sludge treatment facility. This company is also a long term holding for me, as long as it meets my holding criteria.
(4) Avi-Tech just released their Q1 result yesterday. It is progressing good with increasing top & bottom and about 35% of their current market capitalization in their working capital.
(5) Frencken's Q3 result is good and i am looking forward their FY result in February 2018.
(6) Ellipsiz - Ellipsiz has been turning out to be quite different from their past since they decided to sell off their core business in Probe Card and the retirement of two of their key main management (CEO & CFO) recently. I am looking forward their new business plan and will decide from there.
(7) Cogent - was offered private by Cosco Shipping International about 2 weeks ago at $1.02 per share. I had divested all my Coget shares last week at $1.01 per share and giving me a return of about 28% from my cost of 78.80cts including broker's fee and after minus off the 3.13cts of dividend. I am quite happy to be divested because of their business valuation is higher about 25% from my purchasing valuation at about 390mil. Although the minority shareholders seem trying to push the share price up, and it might end up higher than the current offer price by Cosco, i will still be contented with my selling price at $1.01. I will not pursue for higher price as i think this could be a good offer for Cogent's shareholders to divest their shares.
(8) Trek 2000 International - i made my purchase of Trek 2000 International last Wednesday (a day after they released their Q3 result) at an average price of about 27.50 - 28 cts per share.
The following are in a very brief form why i invested in this company:
(1) My purchase valuation is about 89mil. Their 9 months business has generated net profit of about 7.5mil. I think i am buying with the PE of about 10 or less.
(2) Trek 2000 International has positive working capital of about 68.1mil (net cash & equivalent of about 45.7mil and quoted investments of about 22.4mil).
(3) They are operating in asset-light business model with a low capex. Net cash used in capital expenditures is only about 43.5k for 9M2017, and about 2.1mil for 9M2016.
(4) The bottom line has been increasing YtoY.
(5) They are an innovative company which has invented ThumbDrive, FluCard, & i-Ball, currenly striving into medical technology industry.
Some of the points worth my consideration when purchasing this company:
(1) Trek 2000 International is currently in phase two of a review, conducted by forensic accountant RSM Corporate Advisory about certain transactions between one of its subsidiaries and a customer.
(2) The topline has been declined 33.4% YoY, although Trek mentioned it was as the result of the disposal of Racer Technology Pte Ltd in Q1 this year.
(3) Electronics industry which they are in, is very competitive and cyclical.
* Above are just my thoughts. The accuracy or completeness of the information above cannot be guaranteed.