Friday 31 May 2019

Portfolio Actions/Review April and May 2019



As May comes to an end, things look to be a carbon copy of what is happening last year, where STI
peaked in May and fell in the subsequent months.

I think the next few months will once again be tough.

Nevertheless, i will have to continue investing as i still have to continue to work towards the new unrealistic aims set.

Year to Date STI returns: 3.59%
Year to Date HSI returns: 4.08%
Year to Date Portfolio returns: 25.75%
Cash : Portfolio ratio is Roughly 50-50

Actions Done in April and May

1) Added AAG Energy(Hkex: 2686) to the portfolio
-Coal-bed methane extractor in China with a relatively small portfolio of 2 concessions.
-IPO price of $3, however quickly went southwards in the following 3 years
-Partial takeover of 50.5% of shares in 2018 by Xinjiang Xintai Natural Gas Co Ltd (SHA: 603393) at the price of $1.70 Hkd, current price is at least 10% below that takeover price
-Industry seems to be suffering in margins but AAG Energy is one of the companies who has decent margins and is profitable even if the subsidies and vat refunds are not included
-China a net importer of Natural Gas, the demand for natural gas would be present. Furthermore a depreciation of currency would likely result in a more expensive import rate
-Results in 2018 plenty of one-offs in ceasing of credit loan facilities as well as relocation of staff
-Currently debtless as of 31 December 2018, net cash 15% of market cap
-Estimates roughly 10% increase in productions, should bring in higher income via subsidies and vat refunds.
-Key risk: 2020 5 year plans might not be accommodating, company risk involved with extraction

2) Increased holdings in Uni-Asia Group (Sgx: CHJ)
-Will come out with a post hopefully in the next week about the counter after attending the Q1 results briefing.

3) Sold Dongyue Group (Hkex: 189)

-One of my 2 biggest losers in 2018, the other being PC Partners, can be found in an earlier post
-Spectacular rally from start of year to April prompted a relook at the counter's valuations
-Turns out that there has been an analyst report with a buy rating of 14 dollars
-However the assumptions used such as earnings per share predictions are unlikely to happen as majority of peers operating in Dongyue's industries had 50% fall in earnings in the 1st quarter. On the other hand, Dongyue does not report quarterly earnings.
-At $4, its below book value and the PE ratio if earnings are to be halved would be roughly 8, which is reasonable. But at $7 the PE would be 14.
- My earnings predictions has been fairly accurate previously in this counter, trusting my own instincts and research that results would likely flunk, the decision to sell came about.
-As a result cash: portfolio ratio becomes equal.

3 Stocks on my watch-list that i might add but are not in my portfolio as of 31 May 2019 (will come out on a post if i have time)

*Disclaimer, some ideas might have been inspired by others and are definitely not 100% my ideas.

1) LHT Holdings (Sgx: BEI)
2) Starland Holdings (Sgx: 5UA)
3) China Motor Bus (Hkex: 0026)


As usual, at the end of the post there will be a k-pop picture.







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