September 2021 Returns: -2.55%
Year to Date Returns: 53.57%
Since Inception (9 Sept 2020) Returns: 69.51%
A negative performance is recorded in September. Thankfully it is a negative performance as i believe it has been rising way too much in the previous months.
Quick Thoughts about the major detractors of the portfolio
1) Yanlord Land - Showed slowing sales and with the Evergrande fears this has resulted in a sell down in china property counters.
Personally i have spoken about my dim prospects of China Property Development.
However, the current exposure in the portfolio is around 10% which is acceptable and Yanlord has property management arm that is growing as well as investment properties on its balance sheet.
These would serve as sufficient buffer for the company in the event of any firesale needed. The balance sheet is still very healthy and they have also tendered for land in the 1st half of 2021 which signals they are not in distress.
This is supported by its 2026 bond trading at a steady price and at a relatively low coupon rate considered to the industry.
2) Powermatic Data - All eyes on the results release in November.
With record inventory as of previous financial results, will be interesting to see if it converts into revenue and profit. A delay in the distribution of the shares has affected its valuation a little in recent weeks.
However, company still trades at a good valuation if the growth of 10-20% in the wireless business segment can be sustained and continued. The main risk will be the price increase of Qualcomm products from 26 September 2021 and whether the price increase will affect demand for Powermatic moving forward.
1 Counter on the list I expect to have a strong finish to the year
Uni-Asia Grp - Being a laggard in dry bulk rates, some relief can be seen that dry bulk rates have continued to be strong from July to September. As such it should finally be able to catch up to a higher rate with its renewals. With the 3Q update to be released in November, a 3Q rate that is below 20k will be considered as unacceptable.
The key risk will be any investment losses it might incur from Hong Kong Property not selling as well and any possible dark holes like ship fair value losses from demand shocks that can drive rates down towards the end of the year.
Barring that, management should have a healthy problem of what to do with the profit and cash flow from the segment.
Other than that, i am currently quite bearish with service sector of Singapore in general. The frequent switching of phrases would definitely put them on the front foot and it is 1 sector that i would not be looking to invest in based on a covid view on Singapore.
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