(October 2024 Results) How i would invest in the singapore stock market if i had 100k of spare money

October 2024 Returns: 3.48%

Year to Date Returns: 27.84%

Since Inception (9 Sept 2020) Returns: 122.87%

October remains a muted period. 

There are changes that are being made and the new portfolio will be as follows. 

Exits: 

Huationg Global: As previously mentioned , I have decided to exit the position in-line with what i have done for my personal finance and after thinking through. I remain unsure how the company's costing structure will be for the 4 months after the dormitory operations has ceased as there will be fixed cost that might balloon depending on corporate decisions.

If they control the costing well, i might want to re-enter if the margins for other segments hold up / show improvement. There is also the factor that they are stronger financially and still might be able to have dormitory gigs as they mentioned that they are still on the lookout.

But i rather be on the safer side of things and wait till the full year results to reassess.

Fun TMI(Too much Information): Barring any positive upside developments, the top 20 Shareholders will see a change from the AR in 2024 to 2025.

Entry:

Far East Orchard: UK PBSA Part looks interesting. Explorative Stake . Will do more research in depth when i probably have some additional time i hope.

Straco: Usually would do well for Q3, so some speculative adding here. Tourist Numbers look ok.

Added:

Wee Hur: A sudden spike(to 50+ cents) and retracement(to 42 cents) after the announcement on a potential sale but it turns out to be early discussions.

Definitely I think adding more here is some what risky as it still is under a period of retracement following the initial hype and there might be more downside as the hype dies...but with the portfolio being up by around 27% this year. I guess i could afford to have some leeway to take some short term losses. There is also other positions that i can slowly divest off to add should it trend lower in the next few months if there is no announcements.

The risk to reward at current price is reasonable.

With the above actions, this brings my total exposure to stocks that has worker / student accomodations to 47%.

November should see some Q3 Updates from companies like Straco and Centurion

Concluding Thoughts

It has been close to.....4 years since this imaginary portfolio has been set up.

As i took a look at the initial positions and the positions now.....only 2 stocks have stayed there

They are Centurion (which i have added more in Aug 2023) and UMS (which i have not added or removed).

The initial other 8 stocks have all been removed. 

I think this is testament to how serious i think about things and how i rotate things around...lol.

Thesis on 306 HKEX. Kwoon Chung Bus Holdings Limited . (My Latest Purchase)

Company Introduction

Kwoon Chung Bus Holdings is a transport operator in HK and China. Its main line of business are as follows

1) Operating of Public Bus Service in HK (Under New Lantao Bus 'NLB')

2) Operating of Non-Public Bus Service in HK (Under the Kwoon Chung Brand)

- An example of this would be providing bus services to transport kids to school and from school to a stop near their home.

3) Operating of Cross-Border Transport Services (Bus / Private Vehicle) (HK - Macao - China)

-An example can be from Hong Kong to Shenzhen / Macau / Zhuhai / Qian Hai / Zhongshan

4) Operation of the Bipenggou Tourism Site and a Hotel in China.

-Bipenggou is a tourism site in Sichuan. 

Company Financials

A look at financials and folks can tell that it has not been good for them in the past years

Revenue (2.1B in 2024 vs 2.97B in 2019) is still lower than pre-covid and profitability (32m in 2024 vs 253.6m in 2019) is far lagging behind. 

Thesis

A turnaround play riding on an interesting theme. It is worth betting that the half year result ended 30 September 2024 would surprise on the upside.

This theme is known as 北上 . It is a phenomenon that has hit Hong Kong in recent times , which is HK Folks heading up to parts of China during weekends and even on normal days to spend time / money there.

The reason for heading up to parts of China can be broken into 2 parts. 

Part 1: Things are cheaper there and are more value for money. 

(Dentist and Food is much cheaper there)

(Even meds is much cheaper there)

I am sure folks from Singapore will resonate to this because of neighboring effect.

Part 2: Accessibility has greatly improved

There are now many ways to go into China. With the HK Macau Zhuhai Bridge as well as the Zhongshan Shenzhen Bridge, these has improved accessibility for folks to go into China.

Reasons for Buying into this Thesis.

1) Cross Border Numbers has greatly increased.

Macao Crossing Data from April 2024 to July 2024 is the highest since Covid.

(Shenzhen Bay Crossing Traffic has increased in general the past 4 months as well.)

(Lok Ma Chau Crossing Traffic has increased in general the past 4 months as well.)

(Trend still going strong)

2) NLB Bus Ridership has recovered.

While it is not back to 2019 levels, it is getting close. From April 2024 to July 2024, the numbers are much higher than the same period in 2023 as well.

3) Price increase still seen in Non-Public Bus Segment. International School Population in HK has hit record high.

(23/24 $17810)

(24/25 $18830) An increase of 5.7%

It is good to see that there is still price increase in the services each year. Although the company does not provide a breakdown to which how much does transport services for student make up for this sector.

(While it might not be a strong link, it is good to hear that there has been higher amount of students in the segment that the non-public bus segment operates in)

Conclusion

I think it will be a better half for Kwoon Chung. But it might be really difficult to estimate the revenue because how much it will be able to capture in the cross-border demand.

 If it is able to go back to its pre-covid profitability or even exceed it, it is definitely cheap  as i think the trend of folks going up to China to spend will continue. 

I think there might be some concerns because of its balance sheet being some more levered as it is a business that has high operating leverage (buses) and it is funded via borrowings as well.

 As such, the execution might not be as easy as it seems but i still see it as a business with high operating leverage that should benefit much more from increased ridership.

Considering the above factors and my portfolio as a whole, i have decided to allocate some % to this stock. 

I am capping my exposure for this stock at a max of 15% of my assets. But as of now, it is not at double digits in terms of weightage.

Other stocks that could ride this theme that i have considered are as follows.

Travel Expert (1235 HKEX) - Tour Package Operator. However, unsure how much it benefits from cross-border travel even though it runs a platform that sell cross-border related packages. Its packaged tour has recorded good growth and September Tour Group is a record high.

Faces problems of ultra low liquidity and 1H / 2H 's revenue and gross profit margin has high variations. As such I am unsure if it would benefit from higher revenue.

Transport Intl (62 HKEX) - Operator of KMB. While KMB does serve cross border, it still has a much larger focus in domestic operations

Hans Energy (554 HKEX) - Recent acquisition of Citybus in HK makes it a relevant play. However, gearing becomes rather inflated after the acquisition of Citybus and Citybus falls under the same category as KMB so the cross border exposure is smaller.

MTR Corp (66 HKEX) - Considering this stock is up 20+% in the past months and also a large cap that is related to the market sentiments. I had my reservations. However, its patronage data does indicate a better 2H and it also has a good pipeline of property revenue to recognize.

At 18 PE.......it is almost priced for growth in the 2H as well. Though I have to say this is definitely a much direct beneficiary from the 北上 theme and it is a safer company (structure of shareholding , ease of tracking the patronage data etc)

HSI PE.

(MTR Patronage Figures) As you can see, Jul and Aug Cross boundary and HSR figures have improved. I believe Sept figures should be much higher due to golden holiday effect.

K-Pop Pictures Spam Time😂

It has been way too long since i saw this group.

Also some spam of photos from my recent trip

(IN-N-OUT is really good)

(Panda Express is decent)

(BCD Tofu at where it started.......LA)

Seems like a photo spot for many

As usual, if you can stand the Pictures spam and reach here.....i would provide my non accurate prediction of the revenue of the company

I think the China tourism segment should see around 10% growth. 

Limousine and Non-franchised bus should see around 20% growth.

Franchised Bus would see slight decline of around 3-5%. 

The hardest to predict would still be Nonfranchised Bus and Limousine as well as how much of this increased revenue seeps into profit.

With the opening of Shenzhen -Zhongshan bridge on 30 June 2024 and the strong outbound travel from HK to China figures seen in Sep.....it makes the forecast difficult.

Short Thoughs on Recent HK Market Rally

 

HK and China Markets have gotten a lot of interest / writing and video coverage in the past weeks.

2800 HKEX the tracker fund has rised by 22% in the past month. There has been many reasons given for this increase..........from fiscal stimulus / under allocation to HK / China to covering of short interest and buying power increased as China Financial Institutions are given the 'free-pass' to buy stocks / golden holiday strong demand...... the list goes on

My personal thoughts are that the focus should still be on individual stocks. Perhaps one should ask if there is a fiscal stimulus, does that affect your company.....if your company is Link Reit for example, will fiscal stimulus affect the HK Property Demand?

Or maybe another example will be Mainland Holdings where at least 85% of revenue is from US. It is unlikely to benefit from any fiscal stimulus from China

I think trying to understand the link between policy to individual companies will be more key.

I think it is rather scary if you have a company that trades at 20 PE and after a 30% rally now it trades at 26 PE. There is more focus needed to think about the link and whether this company can deliver growth because if it does not, the sell down will likely happen.

However if you have a company that is 4 PE...a 30% rally gives the stock a 5.2 PE....which will probably be cheap if it is not cyclical or still represents a lesser risk compared to a 26 PE. 

The level of growth being priced in for both cases are likely to be different.

From a more abstract POV, China's PE after the recent increase is still 10% lower than the 10 years average

But if you look at HK PE, it seems to be slightly overvalued around 8%

In my watchlist, there is still companies that show negative share price performance this year while the tracker fund has rallied 29% this year

(The green figures on the right indicate the negative share price performance year to date)

Perhaps i will start some dumpster diving for some stocks that have underperformed the market this year and might show good results.

As a whole, the rally is good and perhaps some small cap stocks might catch the eyes of investors who wants to invest in the hk markets but does not want to go into the large caps like the rest

But on a company business / financial performance level, policies have to be actually in place , well articulated and approved before we know if they will see growth from the policies.

(September 2024 Results) How i would invest in the singapore stock market if i had 100k of spare money

 

September 2024 Returns: 9.22%

Year to Date Returns: 23.54%

Since Inception (9 Sept 2020) Returns: 115.37%

Main Drivers of Returns in September....basically close to the whole portfolio, which lead to a 9.22% returns.

The main drivers are Wee Hur, Money Max, Centurion , China Sunsine.

Overall, nothing much to be unhappy or to change apart from probably Huationg Global which i would rotate out this month to indicate a more reflective thought on the whole situation.