Following the recent rally in Kwan Yong after its positive profit announcement, i have divested it and held only 5000 shares to attend the AGM if i am free.
To begin with, Kwan Yong is about 2% of the whole portfolio so it has never been a core position.
It has been a company that paid a dividend, is flushed with cash and has shown excellent margin control and profit ability with its recent profit announcement.
The recent divestment came after the lack of contract wins in the past 6 months.
At the end of previous financial year, they have around 66m of contracts that can be fufilled after 1 year more or later. They won a 96m contract during this FY. Apart from that, it has been quiet and most recent tenders have not been awarded yet.
As always, there is 2 sides of camp to the story of having a long duration fufillment and short duration fufillment on the orderbook.
Long = prices are fixed and you are more likely to be susceptible to future price increase if the measurements are done wrongly during the contract tender
Short = Able to factor in recent price increase and also lock in potential cost as contracts will be completed in a short period of time
Kwan Yong operates on short time frame which requires order book replenishment quickly. Their execution though, has been improving and they have been winning projects outside of schools / nursing home which is laudable.
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