Some purchase for late FY2022
And getting the engine started for 2023
I am trying to get things started for the year and would be touching a tad on some of the ideas that have been floating around since late 2022.
Opening of China:
The simplest way is to play the re-opening of China is to default to companies which I am familiar with. And that means that I am back buying one of the names I had sold out at the start of the pandemic.
Pico Far East 0752.HK purchased at HKD 1.14 is one of the bigger event management player in China and should benefit from having more events organised within China. Normalised earnings should be around HKD 250m - 300m. Valued at HKD 1,770m, this would be valued around 5.9x to 7x PE. With HKD 1,300m in cash and HKD 700m in debt, this looks cheap to me. The only potential worry is the write down of their intangible (HKD 500m) which will indicate that management is kitchen sinking for the year. Otherwise, the coming year should be a better year for them.
Activation Group $9919.HK purchased at HKD 0.99 is the event management company that works only with luxury brands. The opening of China meant that Chinese consumers will start travelling and spending which also meant that the budget for luxury event marketing within China will rise. The management has shown an inclination to continue returning cash to shareholders by share buybacks and dividends. The return of event should bring them back to profitability next year. With a potential to earn a return of ROE > 20% and good earning growth, there is a chance to hold this for a longer term.
China currently constitute 40% of my portfolio.
“Mining” in Australia:
After selling out of AMP Limited, I am basically stuck with tons of AUD which have depreciated significantly against the SGD. I have not done the sums but I may be slightly negative on the trade despite recording decent gains for AMP Limited.
Instead of mining for resources play, the idea is to look for companies servicing the resource sector.
Fleetwood Ltd $ASX:FWD purchased at AUD 1.44 seems to be right smack within the sector to provide for the booming mining sector. They provide housing for the mining sector (Searipple Village in Karratha) and is a manufacturer of modular building. They had overbid for their previous projects and have failed to deliver them with profitability. The new CEO Bruce Nicholson has worked on bringing in a new team, moving towards a manufacturing mindset (instead of a construction mindset) and is only bidding for simpler projects. They also have a RV solution division which have been rolling in the buck during the pandemic due to the increase in travel within Australia. That division should be the dampener this year since everyone could now travel abroad now. Market cap of AUD 136m, coupled with AUD 55m in cash meant that the commitment to payout 100% of their FCF would looks like a homerun if the business could be turned around.
Codan Ltd $ASX:CDA purchased at AUD 3.90 develops, manufactures, and markets metal detection equipment, such as handheld metal detecting technologies for recreational, gold mining, de-mining, and military markets. Their main profit driver is the artisanal mining in Africa. With political headwinds within the parts of Africa and the end of covid, the sales of high end handheld metal detector had dropped. Their recreational division could also be affected as more people goes back to work. Codan have recently started to build up another division known as the communication division. This division supplies critical communication equipments for companies and the military. With conflict potentially brewing all over the world, the communication business should be satisfactory? Overall, there is some risk that there is diworsification but the new CEO Alf Ianniello is taking over a company which have been very well managed and he seems intend to continue doing so. Valued at 10x PE, this may be the chance to pick up a high ROE, decent growth company for the long term?
Australia currently only constitute 3.54% of my portfolio thou I continue to hold a large amount of AUD.
Do your own research and I may buy and sell the above mentioned stocks at any time.
as artisanal mining is no longer as attractive as traditional work?