Thursday 7 April 2022

Rating the Results Release of Stocks in My Portfolio

 It is April and earnings release has passed. Will provide a results rating and short review of the HKEX Stocks in my portfolio. 

To see what are those HKEX Stocks in the portfolio, pls click on the 'here' on the right side>>>>>>

(Which of the coys did the best?)

1) AAG Energy (Hkex: 2686)

- Results is in line. However the dividend cut surprised many as the company has decided to increase capital expenditure and largely expand its drilling operations in its Mabi field that has been a small contributor for the past few years.


Capital Expenditure

Cash + Receivables - Liabilities

Property Plant Equipment


536 million RMB

1944 million RMB

3721 million RMB


526 million RMB

1784 million RMB

3994 million RMB


859 million RMB

1392 million RMB

4478 million RMB

2022 (Projected)

1578 million RMB



- I think this sets up a relatively good platform if the company manages to achieve good drilling results in its Mabi fields and start driving cost down. However, if it does not then i can see the can being kicked for a few years more down the road yet again. Which is bad as this will result in higher depreciation and actually be negative for the results.

-Another reason for the dividend cut was that it had decided to set up a Joint Venture Company with regards to the technology advancement in drilling. While it is uncertain whether this joint venture will be successful, there is no doubt that AAG is currently one of the front runners in drilling effectively and profitably. 

-As such, it will be important to see its results and see what the company reports on the drilling progress in Mabi.

Key Opportunities

- Expansion of Mabi. General Uptrend of Regulated Natural Gas Prices in China (Leading to higher VAT refunds and better revenue) Potential Opportunities arising from JV as the govt is keen to expand the industry as it is an alternate source of natural gas.

Key Risks

-Mabi Drilling Results not desirable. Lockdown in China affecting gas demand.

Rating 7.5/10

2) WKK Intl (Hkex: 532)

-Results a big miss. I had bought into it as the taiwan trading associate has shown good results and sales while 2nd half is usually a good half for EMS businesses. 

-However, the EMS Business in 2021 2H was worst than 2H 2020 which is a surprise and full year 2021 it has showed poorer EMS Results compared to 2020 which had lockdown in China.

-As such, despite a good result from its Taiwan Trading Associate, i have made the decision to divest the position

Rating 3/10

3) Central China New Life (Hkex: 9983)

- Results in line with expectations as the company has delivered a bottom line growth of 48% despite increasing GFA by only 35%

-A key worry will be its receivables to its parent (Central China Real Estate). This makes up 22.5%.

-To make things worst, the receivables has increased by 70% when revenue increase is only 35%

-A key highlight is its Final 33.7 cents dividend, at current price of 4.41 is a yield of 7.6% and the company remains cash rich as it has not engaged in any major acquisitions yet. In a worst case scenario, its cash covers its liabilities and there is still excess cash of around 5% of market cap

In a best case scenario, the receivables can cover all the liabilities and the cash which is excess, is 51% of the market cap.

Rating 5/10

4) Central China Management (Hkex: 9982)

-Results in line with what was guided at Half Year. Company recorded some free cash flow as well.

-Dividend is generous as its final dividend of 9.9 HKD Cents is a yield of 8.1%. Adding to the interim dividend of 8.60 cents, this is a total yield of 15.2%

-A key highlight is that it has cash-liabilities of 54.5 HK Cents. This is 45% of its current market cap.

-A key worry would be that it operates under the 'Central China' Name which is its parent company. As such the business will be affected if Central China Property is under bad name due to debt issues etc. While being asset-light and cash rich, its model relies on helping 3rd party small developers who partner with Central China due to its reputation and name in the Henan Region. 

Rating: 7/10

5) Mainland Headwear Holdings (Hkex:1100)

-Results is a beat, exceeded its positive profit announcement. The share price is also at a 5 years high.

-In a January Positive Profit Announcement conference online, it has guided that its orders are packed for 1H 2021 such that it has stopped receiving orders for 1H 2021.

-It has said that it remains confident of revenue double digit growth and increase in productivity in 2022. Despite increase in raw materials and transportation prices, the company is positive on mitigating these increases e.g by inserting clauses in contracts to increase prices when cost exceeds a certain amount.

-In the form of dividends. Total Dividends for the year is 9 cents. Against the current price of 1.87. It has a yield of 4.8%. Also included is a bonus issue of 1 share for every 20 shares held.

-Revenue increased by 60% but receivables increased by only 8%.

-Key opportunities. Increase in productivity driving sales volume. China Factory in Shenzhen becomes valuable land as production slowly shifts towards Bangladesh and staff in China is reducing year by year.

-Key Risks. Covid outbreak in Bangladesh leading to work restrictions. Major developments in Covid leading to sporting events and demand for caps to reduce. Trading arm continues to deepen losses.

Rating: 9/10

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