The culprit without any doubt would be Dream International. Clocking in a -16% for the day amidst the news of a record breaking tariffs imposed on Vietnam.
This brings my portfolio returns down to 8.34% from 22% before today's developments.
I feel fine actually. i would rather have a 46% tariff than a 46% drop in Disney Thempark Visitorship due to reasons like natural disaster.
No, i have not sold out any shares of Dream. I still feel that it is too soon to sell as the developments are too fluid. Also revenue from US has fell to 42% only where as in 2018 it was 64%. Unless there is convincing weakness seen in asia theme parks, i think i will wait to see how the developments unfold.
In a recent communication with IR, i have asked if 2H 2024 represents the peak in Asia Theme Park as EBITDA and Revenue is the highest in recent years. The reply i got was
Of course with the tariffs and all, macroeconomy can change.
The company still has more than enough cash to cover its liabilities and still have 15% of its market cap being in cash. I believe they are more well positioned than smaller toy factories.
With regards to shift in production to other countriers.... Mexico has higher staff cost than Vietnam.
How about moving back the toy production to US?
Unless productivity is 8 to 12 times higher ..... i am not sure if it actually make sense.
How about ASEAN?
The only close competitor will be Indonesia and Phillippines. With 14% lesser tariffs and 29% lesser tariffs respectively.
If we look at labour cost, both countries are higher actually. As such, i have doubts if any of the other countries can pick up the manufacturing.....unless we are moving production to peru , brazil or argentina which also have higher labour cost.
Lastly, it will be the demand factor.......well we just have to monitor companies earnings release and the export figures which will be seen in May and subsequently i guess.
Ending TMI: -11.4% is around 16 months of my take home salary
