Purchase of AEM, Nordic, China Sunsine and Sale of AP Oil, Memtech, Best World, ISEC

                                                                                   
On 15/1/18, I added to my stake in AEM Holdings at $3.27 and Nordic Group at $0.57. AEM has been my biggest winner so far, with my initial purchase at a ex-rights price of $0.58. I sold the bulk of my stake at $2.63, but decided to increase my position again due to its strengthening fundamentals. This experience really goes to show how a stock can keep on rising as long as its business keeps growing stronger. The recent sharp jump in its stock price has made its valuations less attractive, but I’m still looking at accumulating more of AEM in the future. Hopefully, there will be an opportunity to do so at a more attractive price. In the same manner, I hope to continue increasing my stake in Nordic at attractive valuations, as I feel it is a very well-run business in the hands of Chang Yeh Hong.

On 19/2/18, I purchased a stake in China Sunsine at $1.25. I feel China Sunsine has a competitive advantage in the rubber accelerator space, where it is the world’s largest producer. Its competitive advantage stems from its ability to adhere to China’s environmental regulations, something which its competitors have been found flouting. This has resulted in a closure of their factories which has seen supply tightening and subsequently a rise in the prices of rubber accelerators –  a chemical needed in the making of tyres. As a result, China Sunsine has seen its sales and profits increase significantly this year. As compared to its nearest rivals, China Sunsine is trading at a discount despite having greater revenues and being more profitable. I believe the stock can continue to re-rate as it expands through the adding of more production lines. At my purchase price, it is trading at a ex-cash FY17 PE of ~7 and a dividend yield of 2.4%. A lot of information regarding the company can be found online. Although my scepticism regarding S-chips has largely stopped me from investing in them (after China Minzhong), China Sunsine is my first exception. I will be watching this space closely in the coming few quarters.

                                                                 
On 9/1/18, I sold off my shares in AP Oil at $0.26, giving me a a loss of 1.99%, with dividends included. I sold it because I wanted to raise funds to focus on my better ideas – a goal which I set out for myself to do this year. Moreover, AP Oil is a value stock that requires time for the market to recognise its undervaluation. In this regard, I found myself more suited to value growth investing where I focus more on the company’s economic moat and management’s capabilities as compared to the traditional cigar-butt investing.

On 16/1/18, I also sold off my stake in Memtech International at $1.20, giving me a gain of 22.9%. Similar to AP Oil, I wanted to raise funds to focus on my conviction picks and I didn’t have as much information as I had with regards to AEM. On hindsight though, I missed out on alot more gains, as Memtech surged shortly after my sale to $1.85 as of 18/3/18. Hindsight is always 20/20, and I will have to be content with my gains instead of mulling over my potential profits. On 20/2/18, I also sold off all my shares in Best World at $1.3, pocketing me a gain of 32.02%, dividends included. I sold it off because I felt that its Taiwan business was deteriorating, which turned out to be true, but its China business more than made up for its drop, resulting in its share price surging to $1.82 as of 18/3/18. Both my stakes in Memtech and Best World would have been one-baggers if I had held on just a little longer. Nevertheless, I treat it as an experience or rather an opportunity to be responsible for my own decision-making as I felt there were legitimate reasons for my sell transactions. On the same day, I sold off my stake in ISEC Healthcare at $0.325, giving me a loss of 1.13%, dividends included. I sold it off for the same reasons as AP Oil and Memtech.

* From the sales proceeds, I followed up my purchase in AEM on 20/2/18 at $5.56, on 23/2/18 at $6.35, in Nordic Group on 20/2/18 at $0.585, and in China Sunsine on 27/2/18 at $1.26. Currently, all the three companies occupy the top three largest positions in my portfolio. 

 

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.

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Sale of AEM Holdings and Purchase of QAF Limited

On 9/5/17, I sold off most of my stake in AEM Holdings at a price of $2.63. Due to the 1 for 2 bonus issue, my average cost was $0.58. This gave me a return of ~352% in a span of approximately 4 months. AEM had a really good run, and was my first 4-bagger. I sold most of my shares off as it made up a significant proportion in my portfolio and I wanted to rebalance it. With that, the remaining shares in AEM are free-of-cost.

On the same day, I bought a small stake into QAF at a price of $1.38. Not many would know of the company, but I’m sure many would have heard or eaten its “Gardenia” brand of breads. I have always wanted to own a piece of QAF, having been a consumer of its products since young. However, I have always steered away as I was not comfortable with its business in primary production. Rivalea, its business unit, is the largest producer of pork meat in Australia, and also a large exporter of pork products internationally. I admit there are economies of scale being the largest in the country and also by having a vertically integrated operation, but I feel that the business is afterall a commodity business. It is still a price taker, and the volatility in feed and sow prices can make or break a quarter. Returns on agricultural businesses aren’t fantastic, as usually huge assets (land, machinery) are required to make such an operation sustainable. Thus, when the company announced that it was conducting a strategic review pertaining to Rivalea through a full sale or a listing, my eyes lit up. I believe QAF would be a leaner and stronger business if it focuses more on the expansion of its bakery business in the near future. Competition is intense, but I’m confident the strong brand of its Gardenia products would help it grow. At my purchase price of $1.38, the company is trading at a PE of 13 and yielding 3.62%, assuming a yearly distribution of $0.05. I nibbled for this stock, as it is still not considered cheap to me. Nevertheless, I’m sure the bread would taste even better now. 🙂

 

 

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.

Purchase of AEM Holdings and CapitaMall Trust

aemOn 03/01/17, I purchased AEM holdings at a price of $0.865. I was reading through some of the reports about the company on NextInsight and felt that it presented a favourable risk-reward opportunity. Their sales orderbook has been increasing at a rather strong yet surprising pace, from $24.5 million in Mar 2016, to $45.5 million in Nov, then $66.7 million in Dec, and now $84.5 million in Jan this year. Majority of its sales have been attributed to its equipment sales division, in particular, a new generation of high density modular testers which it also owns the intellectual rights to. Recently, the company has turned around and started to make profits after many years of losses.The company possesses a strong balance sheet as well and is trading a low TTM PE of 4.35. The company has been buying back its shares frequently over the past year, which has greatly pushed up its share price. Its management also has a significant stake in the business. Recent buybacks at $0.85 could indicate that management still thinks the company is undervalued at this price. I will not go into more details as a lot of in depth analysis regarding this stock can be found online.

Note: This is a short-term speculative play, which I do not intend to hold for long as I do not possess the competence to analyse the semiconductor industry deeper. 

 

cmt

On the same day, I also bought into CapitaMall Trust at $1.885. The Reit has always been under my radar for the past few years, as I feel that the management of CapitaMall Trust is one of the best in its line of business, as shown by its strong fundamentals and innovativeness in positioning its malls. The business also owns many heartland malls all over Singapore, which I’m sure have become a daily go to place for many Singaporeans. Although the state of the retail industry has been looking rather bleak in recent years, I believe that all of us will still patronise shopping centres for entertainment purposes, especially the malls under CMT’s charge. In the near future, growth areas would be the repositioning of Funan IT Mall, which is expected to open in 2019. At my purchase price, the PB ratio is 1, and TTM dividend yield is 5.95%. This recent dip in its share price has presented me an opportunity to pick up some shares.

 

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.