Feb 2021 Portfolio Review

Update on 22-Feb-2021

Straits Times Index Fund: +0.43%
Hong Kong Tracker Fund: +11.41%
S&P 500 Index Fund: +4.59%

My Portfolio Returns: +16.41%

Transactions:
-Modest increase in Perfect Shape holdings at the start of this month
-Modest selling in Perfect Shape holdings after it enjoyed a 50% increase in less than two weeks.
-Significant increase of OKP for CPF portfolio
-Complete divestment of Haw Par (29.4% profit)

Comments:
The stock for Perfect Shape went on a tear, shortly after significant insider purchase were observed recently. As I have commented in my previous post, at 3.1x a share, a buyer isn't paying a lot for growth. But that is my opinion.

Perfect Shape is now about 28% of my entire portfolio, and has return over 100% without dividends considered.

OKP would be releasing results this coming Monday (in a matter of two days at the time I wrote this post). I don't expect results to be fantastic, and there shouldn't be anything to worry about as long as its net asset is intact.

Genting Singapore released results recently. Even though earnings are dramatically reduced, it is still cash flow positive. It might sound delightful until the following disclosure:

"During the financial year, the Group fully redeemed its investments in quoted debt securities, which resulted in a decrease in non-current assets. The net proceeds from the redemption have been included in the proceeds of $205.6 million recorded in the Group’s Statement of Cash Flows for the financial year ended 31 December 2020."

Book value has been reduced to 64 from 68 cents. I don't see significant decrease in debt despite the above redemption.

Also noted is that Genting Singapore is still pursuing the IR opportunity in Japan.

"In relation to the Group’s geographical diversification strategy, we are encouraged by the steps taken by the City of Yokohama to launch a formal bidding process for the development of an Integrated Resort (IR) which will transform the City to become a gateway to Japan for inbound visitors and contribute towards Japan’s tourism growth strategy. We remain committed to our vision of creating a world-class IR destination that is uniquely positioned and sustainable, and anchored on strong local partnerships. We will continue to engage the relevant stakeholders in this process."

I had a quick look at the budget announced by our DPM/Finance Minister recently. It seems like the support for wages would be significantly tapered off, even for the worst hit sector: tourism and aviation. This Support will drop from 50% (till Mar 2021) to 30% (Apr-Jun 2021) and then 10% (Jul-Sep 2021). As such, I expect Genting to be close to breakeven or slightly more for 2021.

Given that it will bid for Yokohoma as well as going ahead with the 4.5B expansion in coming years, I am not sure if the book value will hold.

I own only token amount of stock in Genting (for my mum), but should be thinking of liquidating this holding in the coming days.

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My personal opinion of the market is that it is simply too optimistic now, especially with how many and how high first day IPO performed. There was even a survey on business times, quoting that most investors in America are motivated to take risk with equities. When more and more people are using relative valuation (e.g. coy A in this sector sells for 10x PE, and coy B sells for 5x, so coy B must be cheaper), the worrier I got.

When the crowd swings one way, I am motivated to go the other. Hence, I will pay attention to going-private deals. I have no ideas and plenty of capital to deploy. 

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Update on 22-Feb: OKP's result appeared to be decent but it was largely bolstered by the Job Support Scheme (COVID-19 stimulus by Singapore government to support wages). Without it, it would be a 4m loss instead. Still, this is enjoyed by the market as a whole and perhaps should not be discounted or pessimistically looked at.

Dividends held steady at 0.7 cents a share, giving it a 3.9% yield based on the last traded price of 0.176.

Divested Haw Par prior to earnings release, as it is about fair value given that UOB had risen by some margin. Results were out just hours ago, it didn't look too great but at least dividend is held. Haw Par is a holding I bought for my dad, and it was based on simple Sum-of-the-Parts valuation.