IGG (799.HKEX) released a positive profit announcement after trading hours on 7 February
(On paper, it looks great as profits grew by 3600%. But in real, it was really expected if anyone had seen the 1H 2024 Financials)
As such, using 1H 2024 Financials to reference to see if there are any improvements
Positives
1) App Business Revenue went from 409 million in 1H 2024 to 691 million in 2H 2024. Representing a good 68% increase and a positive traction is seen.
2) Doomsday and Viking Rise both performed better in 2H 2024 compared to 1H 2024.
Doomsday 2H 2024 = 507m vs 1H 2024 = 493m
Viking Rise 2H 2024 = 391m vs 1H 2024 = 309m
3) Revenue is up as well compared to 1H 2024.
2H 2024 = 3.005 billion vs 1H 2024 =2.735 billion
Negatives
1) Profit from Core Business in 2H 2024 is lower than 1H 2024.
2H 2024 = 294 million vs 1H 2024 = 356 million
Conclusion
Scorecard: 6.5/10
Lords Mobile Revenue likely have decreased which led to the drop is core business profit as it is the game that has the least reinvestment of revenue into marketing and ads (and as such better gross and core profit margin)
It is not a bad result from the looks of revenue but in terms of profit it definitely is not as ideal.
At $4.51 HKD , it represents a PE of 8 which is not expensive when compared to index but is relatively expensive for small and mid cap hk games coy.
Much attention will be on the growth target and profitability of its App Business for 2025.
If they can pull off another 50% Revenue Growth from 2H 2024 to 1H 2025, this probably means 2 billion revenue(in 2025 for App Business) It would represent a good growth driver if profitability follows.
I think it will likely retrace again on market open on Monday.
Much attention will turn towards the earnings call in March as management would have data of 1st 2 months of 2025 to share as well as their view of 2025 prospects.
Lastly, in Citi's research report, it predicted net profit of 673 million and revenue of 5.94 billion with a target price of 4.50 HKD. The net profit of 580 million and revenue of 5.74 billion both missed their estimates.
First off , sorry for the delay as it is the Chinese New Year period.
Happy Lunar New Year to the readers.
January is a surprising month actually. With Wee Hur, Centurion , Haw Par and Moneymax leading the gains.
Centurion quickly announced the news of a Reit Spin-off. I would probably have to wait till the prospectus is released before evaluating the whole spin-off as a whole then. I think this would be a good time for a spin-off actually, with the next good time being in 2030 after the dormitory rules have set in and market forces readjust the prices of dormitories depending on the construction demand then.
A stock idea had flashed past my head in the early days of January. I was thinking about how this stock would be placed in the portfolio and rather what i had to remove if i were to add this in.
After some consideration, i have made the following change heading into the Crucial February Earnings Season.
Please refer to the image below for the changes
I made the tough decision to exit SUTL Enterprise and made the speculative play into adding Samudera Shipping.
A slight worry would be the hotel situation in Sentosa as there has been the oil spill in June and the increased competition of rooms in Sentosa. This can be seen in the results of CDL Hospitality Trust. The hotel business although a small part of SUTL Enterprise, would serve as a good driver of revenue still.
While the marina business will be stable in Singapore....the concern will be the start-up operating cost for the Phuket Marina.
Adding both concerns, i have decided to switch out of the position as i don't anticipate any exciting happening from its results.
Samudera Shipping is a company that has traditionally lagged behind the freight rates and seems to have been forgotten
With stronger rates in Q3, i think there could be some positive momentum for this to be the same or sustain.
Given the valuations seems attractive on the back of a strong q3 might be spilled over to q4 and beyond for at least 12 months......my view would be that it is worth to hold this thru the earnings season and monitor again from there.
We will evaluate again as the companies in the portfolio report their earnings in Feb.
Folks who have seen the previous post on Previewing 1H 2023 , FY 2023 and 1H 2024 would not be stranger to such a post. Dream International 1126.HK has been on my portfolio for some time.
(Thumbnail Pic) Please wave the wand and bless the Dream
Writing the Conclusion First: 2H 2024 should outperform 2H 2023 in terms of both revenue and profit.
(This picture describes my feelings exactly when i think about the FY 2024 Results)
After being wrong when i thought that revenue growth is likely in 1H 2024 but revenue turned out to be -8%, it really takes some guts or being bonkers to write such a previewing thought/prediction.
After all, i do see many mixed indicators that means that making a prediction is difficult.
I have based my prediction based on the following factors
1) Smartkarma Research Report (In a post on 10 Dec, they mentioned they met the management and summarize the majory takeaways)
- Mentioned that there is decent growth momentum for Plush after slow H1 FY 24(-5%). FY24 could be record year for Plush.
- Mentioned that de-growth could be seen due to prolonged destocking cycle in NA and lack of a hit movie lineup resulting in lower action-figure sales
- Not much clarity on margins as usual
- Not much concerns on dividend currently
- Apart from Indonesia Plant (Small Plant that contributes additional 3-4% max revenue) there is no other expansion plans
2) Oriental Land Q3 Results and Looking Ahead
-Weaker than expected Merchandise Sales coupled with weaker expected visitorship
-Surprisingly, inventory did pick up , showing some promise as Toy makes up 48% of Merchandise Revenue
-To put things in retrospective, inventory levels were as follows (in Million of Yen)
Q2 2023: 16724
Q3 2023: 16523
Q4 2023: 12893
Q1 2024: 9381
Q2 2024: 12621
Q3 2024: 16300
- Looking forwards, figures from Yosocal and other sources suggest that Q4 2024 of Themeparks are stronger than Q4 2023. With Disneysea being the main driver. Figures can range from +10% to +28% depending on various sources.
(Plush Factory in CN hiring due to expansion of production)
Along with the guidance seen in the research report, i think it forms up a credible link / story. 2H 2024 would have to be much higher than 2H 2023 given that 1H 2024 is
3) Funko Q3 Results
-After 7 Quarters of Reduced Inventory, Q3 2024 finally has seen an increase in inventory to service demand during peak shipping months
-Despite a -2% reduction in revenue, according to the earnings transcript, COGS was reduced as freight cost and duties came down . Fortunately no mentioned of lowering of cost due to production
-On the issue of tariffs, 1/3 of products are manufactured in China and will continue to work on plans to further diversify away. (Dream's Vietnam and upcoming Indonesia Plant might come to play)
4) Export to US (Toys)
-Based on official custom sources, export of Toys and Sports Requisites to US is up 22.6% in 2H 2024 compared to 2H 2023. This actually represents an increase since 2022 vs 2021.
- In previous semi-annual results, the decrease in exports has also seen a decrease in Dream's US Revenue. Therefore, this seems fairly accurate
- In a much less accurate statistics of toys imported into US from Vietnam, there has been an increase of 26% from Jul 24 - Nov 24 vs Jul 23 - Nov 23. This is less accurate as in some years it could show an increase but Dream's revenue still decreased. It could be things like time lag between shipping etc or just items moving past Vietnam into US but not actually produced there.
5) Spinmaster's Monster Jam Positive Growth
-16.5% Growth Pos Metric in Q3 a positive amidst a high revenue mark in 2H 2023 for Monster Jam.
- However, new products e.g remote controlled car is produced in China and not Vietnam, indicative that full growth might not seep down and benefit Dream as Dream does not do die-cast in China.
(Made in China)
Why i might be very very wrong
1) IIP Production Down
Index of Industrial Production (IIP) of Vietnam for Manufacture of Toys, Games is a rather accurate indicator thus far.
When the IIP is down YOY, revenue of Dream is also down YOY. With the index down 5.96% for 2H 2024 vs 2H 2023, this is one of the biggest stumbling blocks.
Fortunately, this tends to reflect in the Plastic Figures more compared to the Plush.
2) Management Self-Guidance of Plastic Figures Growth Down
-Despite the other factors looking well, this still holds much credibility although we are not sure when the meeting was actually done and as such we still have to keep a watchful eye over a lower revenue from Plastic Figures.
3) Unexpected Weakening of China Themepark Consumption Figures
-The weakening of consumption might linger or play a part although we still have to go back to management guidance as the 'likely indicator'
4) HK Disney Visitorship Down
-Consumption Downgrade. HK Retail Sales down 7.3% in November
-Visitorship likely down 9% in 2H 2024 vs 2H 2023. Considering Revenue from HK in 2H 2023 is high at 180 million, makes up 13% of Plush Revenue.
-Tourism seems strong though, 7.2% growth in November 2024 vs 2023 for overnight stays
5) Funko Guidance still bad
Not unexpected as guidance was already crap at the start of 2025 but its still a lingering factor.
6) Export to Japan
-Based on official custom sources, export of Toys and Sports Requisites to Japan is lower by 21% in 2H 2024 compared to 2H 2023.
-This cast a doubt to whether revenue to Japan will actually be up like mentioned in the research report.......
Conclusion
The indicators are all over everywhere......its a meme fest really. The results in March 2025 will be a rollercoaster one as most of the indicators will get refreshed and some of them will either become less useful or much more useful.
The smartkarma report definitely was somewhat helpful although the information on the plastic figures segment got me scratching my head for sure.
Lastly, it is very rare that a company's share price has grown since showing a 17% drop in profit......Dream has shown this and probably indicates that it is still cheap despite a 17% drop in revenue or folks are positive towards its results being good for 2H.
K-POP Pictures Spam Time.
Wild Predictions Time (Something i usually do after putting K-Pop Pictures Spam)
Plastic Figures Revenue Increase: 8% vs 2H 2023
Plush Figures Revenue Increase: 30% vs 2H 2023 (Assuming record breaking revenue for Plush)
Slight reduction in Margin across both segments.
Overall 17.6% Increase in Net Profit in 2H 2024 vs 2023
86.3 cents EPS in 2H 2024.
Along with 41.2 cents EPS in 1H 2024, a total of 127.5 cents in FY 2024.
Bear Case: Record FY for Plush is not true(0% Growth vs 2H 2023), Plastic Figure Revenue Growth Negative(-8% VS 2H 2023). Margins Shrink as Economies of Scale not achieved
25% Chance of Happening
Normal Case: Plush Growth (8%-10% vs 2H 2023) , Plastic Figure Slight Negative (-3 to -5% vs 2H 2023). Margins perhaps 100 basis point lower / 1% lower.
40% Chance of Happening
Bull Case: Record FY for Plush. Growth (25% to 30% vs 2H 2023), Plastic Figure Slow Growth (3% to 8% vs 2H 2023). Margins 50 basis point lower to 150 basis point higher)
30% Chance of Happening
Wild Crazy Bull Case: Record FY for Plush. Growth (30% to 40% vs 2H 2023), Plastic Figure recovers(15% to 30%) along with recovery seen in export figures to US and Funko. Margins improve 50 to 300 basis point higher due to economies of scale and improvement in production due to increased use of automation etc.
5% Chance of Happening
For myself, if the results in FY 2024 is the same or higher as FY 2023, it would be good enough.
2024: Returns: 48.08% (If 2023 is a miracle run, 2024 would be a demigod run)
Year End Thoughts
Overall the cold hard truth is that a lot of time in 2024 is spent on monitoring the business environments of the positions i have held this year and i did not have to make too much changes (with the exception of rotating Huationg Global out)
The toughest year will be the year ahead and 2025 is probably a year where i have to think about what would be the right stocks to hold / what would be good replacement if stocks in the portfolio are not performing as well.
Other than that, if they do continue to perform well, i don't see any need to rotate them out.
Its safe to say i don't expect my returns in 2025 to be anywhere near 2024.
Motivation wise.........i think it is the same as previous years (Which is low). In fact in August when my portfolio was at +4.52% returns when it was 27% in May...i had flash backs of 2018 again when i went from +20 to -10. Fortunately things worked out well. I wrote more about it in a previous post here
Portfolio Related
Fortunately, the main bulk of ideas worked out (Dream and Centurion) while the new additions (IGG , Wee Hur ) turned out great.
Bought Dream at 3.98 and 4.1 in Feb and March. Closed 4.98 at end 2024.
Bought Wee Hur at 0.25 , 0.305, in Sep and 0.42 in Dec. Closed 0.42 at end 2024
Still, some alpha capture plays such as Kwoon Chung Bus and Saint Mig HK backfired.
Huationg Global largely unimpressed with its announcement that it did not manage to renew the tender for the dormitory resulting in a 20% intraday loss.
Selling out took a period of time considering the trading volume , the stocks i held (which put me in the top 20 shareholders namelist).
Centurion has been rotated out of the portfolio for a more short term value play which i think it is in Wee Hur.
This was before i saw the D&D video which mentioned the KPI of 4 billion aum from ard 2.1 billion (which increases the likelihood of corporate actions in 2025).
On a longer time frame, i believe the worker dorm policies will still benefit long lease owners like Centurion.
In End 2024, the larger positions are (>6%)
1) Dream International
- Theme Parks Visitorship in Japan have recovered in Q4 2024 and outperformed compared to Q4 2023. There has also been an increase in inventory for end Q3 2024 which suggest restocking (this was actually not seen in Q3 2023).
- Toys Export to US is actually up (although a report by an individual research firm who has met the management has wrote that plastic figures segment might be weak or weaker than last year which has put some ??? in my thoughts).
-Funko Inventory has slightly increased for the first time in many quarters. Revenue guidance for Q4 remains weak though.
-Shanghai Theme Park remains at similar levels compared to last year. Slight worry maybe is HK which has fell. However guidance by the independent research firm points to possibly a 'record' year for plush.
-Spinmaster's Monster Truck Segment remains strong with 16% growth in Q3.
-I still think the new customer's impact is limited and can only be re-assessed again when the full year results are out.
(Potential New Customer?)
(Made in Vietnam)
(Bread and Butter Business Plush)
2) Wee Hur
-FY Results will be key. The divestment will provide the base for a transition to a cash rich balance sheet.
-Things to look out for. 2H PBSA Profit , Worker Dorm 2H Rev and Profit , If construction will turnaround, Dividends, Progress of New Dorm (Any potential delays or early completion)
3) Infinity Development
-Gross Margins continue to improve.
-New Indonesia Plant likely to assist and in-line with Major Customer Yue Yuen's expansion plans
-Monitor Major Customer's Revenue
With that the 2024 Review has come to an end.
Self Reflections
It seem magical that whenever Lovelyz does a concert, the returns seem to be the highest.
When i saw them in early 2019, it motivated me to want to invest so that i have the chance to see them in future and it has resulted in my highest returns
This is once again eclipsed only in 2024 which coincidentally i had the chance to catch their 10th anni concert (their first live concert since 2019)
It has been a good year for myself as i was glad and blessed to be able to attend much more K-POP Events.
(Never expect myself to go to US to attend a K-POP Tour...but it happened)
(Sending Hearts and Wishing Everyone a Happy New Year)
December is a month where negative returns is seen. Mainly coming from Wee Hur. I have evaluated the divestment news in another post so i would not be mentioning it again.
The only point that i would point out is i am not selling out the position. I don't rule out adding at around this level either but i will reassess the portfolio again as a whole.
Overall for the year, 30.50% returns is pretty good.
The overall returns over the years looks like this
CAGR:16.9% (For anyone interested in CAGR)
Definitely, Bulk of the returns has been driven from Centurion, Haw Par , Wee Hur and Moneymax.
A stock that i want to mention would be Centurion. Which has posted their D&D video 2 weeks ago.
In their video, they mentioned their assets under management is around 2.1 billion and the KPI for 2025 is 4 billion. Also mentioned that they deliberately skipped the number 3.
This will likely be done thru recycling of capital and asset-light strategy.
I found this to be quite amazing and amusing. Definitely it seems like a busy year ahead. Whether or not this is done via JVs or 100% ownership in assets.
As always , thanks for following this series in 2024.
Wee Hur announced that it will be disposing a huge proportion of their stake in the Australia PBSA. The deal values the student properties at A$1.6B which is what was mentioned in the media previously.
No surprises there.
Details of the disposal in brief
-Proceeds of S$320 million or 34.8 cents SGD
-Record a gain of 9 cents SGD
-13% stake retained
-Deal expected to complete sometime in 2025
Is this a good deal based on the current price of 0.475?
Current Price indicates a market cap of 436.64 million
13% of A1.6 billion would be 178.1 million SGD (Student Accomodation)
2H 2024 Profits of Australia PBSA (Estimated around 12M, based on rental revisions and operating profit of $20.6 million in 2023)
117 million of spare cash
95m of receivables
Workers Dormitory (26M Profit in 1H 2024 but only 60% stake so 15.6M)
Bartley Vue Development (TOP 2026)
Since total liabilities is around 320 million as well, this means a clean sweep of the balance sheet to no liablities.
Doing a simple calculation
436.34 million -117 million (cash) - 70 million (discounted receivables) - 12 millions (PBSA Profit) - 178.1 million (Stake in PBSA)
= 59.24 million
This is the current value of the workers dormitory + the Bartley Vue Development which is definitely a big discount.
Assume a low 8% net profit on proceeds of Bartley Vue = 15.76 million. 75% interest = 11.82 million
The 15744 bed dormitory runs till 2026
The 10500 domitory runs till 2029. Expected to be fully operational from 2025
Both have 60% stake.
Estimating around 16m of Profit for each half for the 15744 bed. Till 2026 this brings in around 80M
The 10500 bed will bring in around 106 million until 2029.
Assuming no extension is provided (it was granted in 2023)
The undiscounted value is around 200 million already compared to current valuation of 59 million
Not to forget the australia land, construction,fund management(45 million) , alternative investment (13 million) are free.
Realistically speaking. I think the company should be worth around 0.75 at least.
We would see what the market thinks of this deal. I think the PBSA Profits in 2H might be decent as well (exceed 12 million estimations).
In the long run, whether this deal goes through or not, it at least ascertains the value of the PBSA.
Forgot to add that their 30% owned PBSA Y Suites on Margaret in Sydney is not included in this deal.
As of 31 December 2023, it was valued at 90 SGD Million. As such, it is another 27 million to Wee Hur. Roughly 2.9 cents per share worth. This PBSA will only come into operation in 2025. Given the positive revisions seen in 2024, it is likely that it is worth more than this figure already.
Using stockscafe, it has been a convenient way for me to see the different statistics provided.
One of the recent table that i have seen was pretty alarming for me although i do feel that it probably is true
In short these past 3 years, i have not been able to inject capital into the portfolio.
Realistically when i see this stat, the first thought that came to my mind was actually how much this amount actually relates to the portfolio in terms of %.
To give an example in portfolio management, if the amount you can inject is 20k while your portfolio is 200k. you are injecting less then 10%. This means that what is in your portfolio is probably more important than what you do with that 20k.
Of course if you only have 5k and you want to inject 20k then these 20k is more important
I guess most folks would know this. Then the question becomes, instead of thinking what new things to buy with these 20k, would it be better to think about how the 200k should be positioned first?
This only applies for mostly stock picking.....if its index purchases and just reaping market returns and volatility then it does not matter much.
This is where opportunity cost probably steps in. However this topic of opportunity cost might get too complex and boring.
1) It depends on how many stocks you have researched, what are your odds of them performing well, how confident you are
2) Versus the current stocks you hold, their outlook based on your research, how much your research is relevant.
To cite a recent example, Powermatic Data is a stock i have talked about often. But i usually say the same thing that i say in telegram.....is a stock that i would recommend my parents to hold but i would not hold it myself.
The holding period for this company to show potential returns is too long (2026). As such, the opportunity cost is probably too large for someone like myself who sees it as being impt. But for e.g my parents would not bother such things so they can have a longer holding period so its totally ok as the balance sheet is still solid.
Of course there is every chance i pick another stock and it does badly while powermatic starts to show value earlier and it makes me look like a big miss but that's stock investing and such things might happens anyway.
Secondly i think there is always the talk about what are your returns .
I think everyone has different risk appetite, different ways of viewing investing so as long as 1 is happy with their returns based on their way of doing things then all is good. But if u are not happy with your own returns then perhaps a change of way of doing things is probably required.
For example , you cannot be putting your money in t-bills and thinking you will get 10% a year.
Another example is 33.1% returns made over 3 years can be seen in 2 ways
a) Year 1: 0%, Year 2: 0% , Year 3: 33.1%
b) Year 1: 10%. Year 2: 10%, Year 3: 10%
People can talk until the cows come home whether a or b is better but end of the day it really depends on how much you inject into the stock/portfolio
Someone who keeps putting in money each year will be better off with (a), someone with a lot in the portfolio already and cannot put as much money in will prefer (b)
Conclusion: Sometimes it is not about whether this company has good cash flow, good balance sheet, good income statement, good prospect that really results in a buy. Opportunity Cost might be a good consideration as well to think about.
But of course if the strategy is just to scatter as many stocks and hope that you pick more good ones than bad ones then opportunity cost might not matter....but still i guess there is a need to have some effort to keep track of the business prospect of the various stocks...at least for me thats how i think of it.
Sharing a photo taken which was part of the concert package in one of the concerts i went this year 😂
