Straits Times Index Fund -15.82%
Tracker Fund of Hong Kong -11.13%
My Portfolio +5.63%
Transactions made this month:
-Complete divestment of remaining shares in Xinghua Port at 2.0 HKD
-Purchase of Comfortdelgro in the CPF account.
------------
Divestment of XHP was taken into consideration that it is currently selling at a high multiple to past earnings. I think it is reasonable to expect that the port business will be resilient but not outstanding enough to warrant a high earnings multiple. The latest result from XHP is out just as I wrote:
Earnings of 7 cents HKD a share, at $2.1 HKD, that is 30 x earnings.
Cash of 161.7m RMB with a debt of 578.8m. Market cap is 1.71B HKD. Translating all to HKD, that is 461.7 HKD of net debt, the enterprise value is 2.171B HKD.
Enterprise Value = Debt - Cash + Market Capitalization
The latest operating cashflow suggest 56m RMB of FCF this half, annualizing bluntly, that is 112m RMB or 123m HKD this year. That is about 17.7 times cash flow, or a cash yield of 5.6%. Not too exciting.
Of course the buyer can be very generous, but I can only deal with that is within reasonable estimates...
Initial Investment in Comfortdelgro. I do not have big mathematical models to tell you why CDG is a sound idea. It is a conglomerate, and earnings are therefore hard to predict. The market pays too much emphasis in the growth of a company. CDG is not a book value play: it is now, imo, selling at a reasonable cash yield of about 8% over a average of the last 10 years or so.
I going to stick my neck out and predict a couple of things:
1) It is likely that the business would not be killed by the likes of Grab.
2) Its dramatic price fall from 1.7x to 1.3x was largely brought about by COVID-19 and it getting dropped from the index, forcing pseudo-funds managers to follow suit.
Looking forward: There is a substantial uptick in ChangShouHua's price in recent weeks. It could possibly mean that the company have found a buyer, or that the market is giving it its due.Regardless, I do not have a huge amount invested in this sum to feel upset if this idea do not work out.
OKP's lawsuits are still on-going. I do not believe the company will be substantially damaged by the outcome due to a couple of reasons, which I am not going to share. I do have a huge amount riding on this idea. Hopefully the dorms will be clear of COVID screening soon and work can resume. It is quite obvious that the grass at my area are not getting cut, which says something.
That is all for now.
