During these past two months, I have made a couple of trades in the market. On 08/11/17, I bought into Cityneon Holdings at $1.15. I followed up with this purchase by adding to my stake at $1.03 on 27/11/17 and $0.94 on 14/12/17. I believe Cityneon is bringing entertainment to the people, instead of people having to travel to Disneylands, amusement parks, etc. I like that it has a proven and profitable business model which it can leverage on to grow. It now holds IP rights to Avengers, Transformers and Jurassic Park (recently acquired at a forward PE of 5). Cityneon works with a local operator and earns a share from the licensing revenues, merchandise sales and minimum guarantees. This business model reduces the execution risk of Cityneon. The key here in this business would be the curation of the customer experience. If Cityneon can create an experience that dazzles customers, I believe its best days are yet to come. At my initial purchase price of $1.15, Cityneon is selling at a PE of ~30 which is very expensive to me. However, with a full year’s contribution of Jurassic Park and subsequent installation of more travelling sets in the coming year, we will likely see the PE drop.
On 27/11/17, I bought into Hock Lian Seng Holdings at $0.465. I find Hock Lian Seng’s management to be one of the best in the construction industry. The company is net cash, a quality which is very rare in this industry. Chua Leong Hai, its CEO, once said “With this cash hoard on hand, we need not worry about shortfalls in working capital; or for the sake of a shortfall, tender for a deal that will not turn out well for us,”. “More importantly, our cash pile can open doors for HLS.” I certainly agree with him. The company has been very selective on the projects it undertakes, thus its margins have consistently been one of the highest in the industry. I think it is a prudent move to be picky about your projects, as there have been countless cases of costs overruns by many construction companies, leading to losses. As Singapore continues to build its infrastructure (eg. expansion of Changi Airport, MRT lines), Hock Lian Seng can be a major beneficiary. At my purchase price, Hock Lian Seng is trading at a net-cash PE of <5 and PB of ~1.2, not a cheap valuation, but still attractive enough to me.
On another note, I also sold off my shares in ISOTeam Ltd on 17/10/17 and 27/10/17 between $0.35 and $0.355, with the bulk of it at $0.35, giving me a loss of 9.60%. I wanted to focus more on my best ideas and felt that ISOTeam did not fit in neither the value nor growth basket at its current price. I feel that the management has been dabbling in too many business ventures, the most recent being a joint venture for a bike sharing company and a cockroach spray. I do not think that delving into the bike sharing market is a good decision due to the high competition and immature market. Nevertheless, despite my sale, I still think that ISOTeam is a strong business for the long run, especially with its potential growth in Myanmar.
In addition, I nibbled abit more into HRnet Group at $0.82 on 11/12/17 as I feel it is still an attractive price for a well-managed business.
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.