On 2/6/17, I bought into ISEC Healthcare at a price of $0.34. International Specialist Eye Centre (ISEC) is a comprehensive medical eye care service provider based in Malaysia and Singapore, whose vision is to provide high quality, compassionate, world-class eye care at affordable level. It is a net cash company (~$21m) with no debts, and is currently trading at a PE of 26x FY16 earnings. This may seem high at first glance, but I like the management’s opportunistic acquisitions at pretty decent prices, eg. the acquisition of JLM GP and aesthetic clinics at a PE of 12 to complement its current operations. From my interactions with medical professionals, eye surgery is seen as a lucrative business, and this is reflected in ISEC’s strong net margins of ~20% compared to the estimated industry average of ~13%. The company has seen increasing revenues in the past 5 years, but this has not necessarily resulted in rising profits due to the firm’s loss-making Mount Elizabeth Novena Specialist Center. With the cessation of operations in 2015 along with contributions from new acquisitions like SSEC (Southern Specialist Eye Center Sdn Bhd) in Malaysia, profits in 2016 rebounded strongly from $2.8m in 2015 to $6.4m in 2016. ISEC intends to continue expanding in Malaysia and into the region. Countries like Vietnam, Myanmar, Indonesia, Taiwan, Philippines and China are targets. At an annual dividend of $0.011 per share, the company is trading at a 3.23% dividend yield at my purchase price of $0.34.
On the same day, I bought more of QAF at a price of $1.355 as I still felt it presented value, especially with the ongoing strategic review of its primary production business underway. With the purchase, QAF is one of the more significant holdings in my portfolio.
On 12/6/17, I purchased shares of Valuetronics at $0.765 after its shares were sold off sharply, possibly due to the drop in US tech shares the night before. I have been eyeing Valuetronics for some time, but its recent gains have made it hard for me to pull the trigger, especially from the valuation perspective. Valuetronics is an integrated electronics manufacturing services (EMS) provider with key businesses in consumer electronics (CE), and industrial and commercial electronics (ICE). Honestly, I still feel I lack the competence to understand the semi conductor and electronics industry, and these include my investments in Micro-Mechanics and InnoTek. However, I find comfort in their management, especially Micro-Mechanics’. As for Valuetronics, I am optimistic as I believe it is a beneficiary of two major trends in IOT and autonomous driving. In 2016, there was a steep fall in revenues and earnings due to the exit from the low margin CE LED business. This used to be a big business for the company. However, it was not long lasting, as management steered the company back to growth with the introduction of new products, like smart lighting with Internet-of-Things (IOT) features. I must admit that the comeback and return to growth was indeed quick. At my purchase price, the company is trading at a PE of ~12 and a yield of 5.2%, based on a FY17 dividend of HKD$0.20. The company is net cash, with around ~$130m in cash. Valuations are not exactly compelling for an OEM provider, Let’s see how this company performs in the coming quarters.
With the recent purchases, I am around ~80% invested based on my investment portfolio, and around 60% invested based on my total portfolio, which includes my emergency savings. I am still building up my cash cushion, so I will need to save more in the coming months.
Disclaimer: The author owns shares in the abovementioned company. The ideas expressed in this blog should not be construed as an enticement to buy or sell the securities, commodities or assets mentioned. The accuracy or completeness of the information provided cannot be guaranteed. Readers should carry out independent verification of information provided. No warranty whatsoever is given and no liability whatsoever is accepted for any loss howsoever arising whether directly or indirectly as a result of actions taken based on ideas and information found in this blog.