Sale of InnoTek Ltd, Bund Center, Tai Sin Electric & Addvalue Tech

On the 28/12/17, I sold off my shares in InnoTek Ltd at a price of $0.375, giving me a gain of 9.23%. I had bought into InnoTek earlier at $0.37 and added further to my stake at $0.28 when the market reacted negatively to a bad quarter. It eventually recovered in the last quarter, but as I wanted to concentrate my portfolio, I sold because I realised that InnoTek’s business was one of those which I had the least knowledge of.

On the same day, I also sold off my stake in Bund Center at $0.745, netting me a loss of 7.83% after taking into account dividends. Bund Center is a typical value stock, but it requires a catalyst before the market can recognise its value. This will nevertheless, remain in my watchlist.

On 29/12/17, I sold off my shares in Tai Sin at $0.405, netting me a small gain of 4.11%, dividends included. Tai Sin is a stable stock which gives attractive dividends yearly. However, I do not see it growing as fast as I first imagined it would, and thus upside might be limited. I decided to sell it as I believe that there are more attractive stocks out there.


Similarly, I sold off all my stake in Addvalue Tech on the same day at $0.041, netting me a loss of -18.09%. Addvalue Tech was a stock I thought might be the next AEM as it was innovating and creating a new product which could benefit the satellite industry. However, the one thing that was different was that the momentum of sales orders were slow and small and the company was not profitable to begin with. It exists more like a startup where funds are being utilised to bring a product to market. Time is needed before its efforts might pay off. I sold because I feel I did not possess the aptitude yet to invest in such a business.

As mentioned earlier, one of my aims for 2018 would be to build more confidence in concentrating my picks, thus I decided to sell my non-core positions and plough the funds back into my better ideas. Let’s see how 2018 works out and I’m definitely looking forward to the lessons in store for me.



Updates to my Portfolio

During the past few weeks, I have made some updates to my portfolio:

On 10/4/17, I purchased shares of AP Oil at a price of $0.27. AP Oil is a value play to me. Its PE is 12.7, PB is 0.8 and is currently giving me a yield of ~4.6% based on my purchase price. It is net cash, and cash in fact makes up ~86% of its market cap. AP Oil has been looking around to deploy its cash hoard. The CEO frankly mentioned that the company is in a business that has low growth prospects. He also said, “We have grown organically for the past 10 years, and now we are at a stage where we can take risks and not die.” Recently, it invested RMB25 million ($5.1 million) in a joint venture that provides financial leasing services in Chongqing, China. This deal is interesting in that it gives AP Oil downside protection + upside participation. Two key clauses were included in the JV agreement: 1) Put Option: After 1 Jan 2018, AP Oil will have the right to sell-back its stake to Zongshen at an agreed market valuation (determined by an approved valuer) at not less than the initial capital contribution of RMB25m. This creates a sort of capital guarantee for AP Oil. 2) Tag-along rights: That ensures AP Oil is able to participate in the same kind of upside as Zongshen should they decide to sell their stake in the JV to a third party. These are deals which tell us that management is savvy at the negotiation table. Revenues and margins might drop in the coming years due to low growth and volatility in selling prices while management tries to diversify the business. Nevertheless, its huge cash hoard is reassuring.

On the same day, I purchased shares in Alliance Mineral at $0.35. As the company was not profit-making yet, I bought a small amount purely as a speculation play – it is and remains the smallest constituent in my portfolio. To me, the rewards of seeing the company successfully hitting its targets one by one was worth the high risk involved. However, my risk averse nature prevented myself from investing more. Enough has been mentioned about the company online so I will not go into the details. Let’s see how this works out in time to come.

On 19/4/17, I bought more into Spackman Entertainment at a price of $0.152 as I felt that the stock was being unfairly penalised for its CEO’s lawsuit. The tension in the Korean Peninsula did not make things any better. Spackman has issued a positive profit guidance for the upcoming quarter and I believe that the company is slowly making progress forward with its acquisitions. Will its upcoming movie – Golden Slumber be a hit? Only time will tell. What I do know, is that Zip Cinema has a very good track record in its producer – Eugene lee.

Lastly, on 25/4/17, I purchased shares in Bund Center Investment at a price of $0.82. Bund Center Investment is a value-yield play, similar to that of AP Oil. It owns the Bund Center office tower and the Westin Bund Center Shanghai hotel in Shanghai; as well as the Golden Center Shopping Mall in Ningbo. As the company adopts a conservative accounting policy of valuing its properties at cost less accumulated depreciation, the current assets are carried in its books at SGD407m, while the carrying value is around SGD1946m according to an analyst report. This makes my purchase price of $0.82 around 31% of its RNAV of $2.58. It is currently in a net cash of $61 million, and is debt free. It also generates strong cashflows of around $70million a year of which an average of $51million goes to dividends. This is $0.067 a share, representing a yield of ~8.17% at my purchase price.

As my recent purchases have shown, I have been looking more at value stocks, especially now when markets and optimism have climbed. I am currently more averse to investing in growth plays, as I feel my portfolio has enough growth stocks in it. As markets continue to rise, we need to be more careful and cognizant of the risks that lie ahead, one of which I feel is overconfidence – the pride before the fall.



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.