Saturday, August 13, 2005

Virtual Portfolio -[Red Star] - Update

{Current return is about -4%. }

What went well so far:

CH SP rocketed up along with the good sentiment towards shipping plays. Shipping is one of the cyclical sectors available for play on SGX. Most counters are fully valued or fairly valued currently. Have to take note to CH SP and buddies to position for the next cycle.
ZPI SG also holding up due to fairly low entry price of $0.22. Sentiment towards it has dampened after recent results were hit due to slippage due to factory move as well as harsh weather conditions in China. However, will still continue to hold on to it with a view to adding up if price slides further.

What remains unsure?

WFG SP A boutique lead manager for IPOs. Whilst running IPOs does not contribute to all its revenue, they are doing noticably less this year. Note that their head honcho has been on a purchasing spree.

What didn't go according to plan?

CFLX SP, FAPX SP assaulted by escalation in crude oil prices [appx US$65 per barrel for Brent]. I expect oil prices to remain high and thus hurting the businesses as they rely on an petroleum by product as inputs. Decent companies but monitor with a view to cut-loss. Lesson learnt: Must monitor prices of inputs.

MEGH SP recent results were not to expectations. Will look to dispose. Lesson learnt: Don't jump into IPOs. Do allow for a year of operating record first.

UFH SP sank after news of pig flu in China. Poor sentiment towards coy with related business - PFOOD not helping. Added on the basis that China's pork consumption is high despite apparent weakness of results over time. A candidate for disposal. Lesson learnt: Insufficient research.

LFBZ SP has stuck its fingers in "branding" the Cannery, a new development headlined by the iconic Ministry of Sound club. Also tied up with other big names like Dashing Divas etc. Can LFBZ SP succeed? Don't intend to stay around to find out. Shortlist for axe. Lesson: Don't be suckled by flashy fads. Slimming pills did sell as a hot cakes but where's the sustainability in business model? Had branded it as a classic Lynch pick initially as one could sell its products flying off the shelves. On hindsight, I am not doing Peter justice as I didn't see the drop in demand subsequently. Also expensive to hire TV stars for its advertisements. Was LFBZ SP one of the candidates that was primed for IPO?

Missing the boat:

Not acting on Osim. First mentioned in column when price was S$0.965. Has acquired Global Active and intends to wrap up acquisition of Brookstone to get foothold into USA. Price has run up quite a bit recently. Has not done valuations but doubt it is attractive today.
SRAY SP was outlined too. Failed to understand the attractiveness of its cervical cancer dianogistic instrument.

KIV Substitutions:

FEH SP [$0.365, yield in last FY: 4%] A food and beverage company with a big footprint in Russia, Eastern Bloc countries like Ukraine, Vietnam. Strongest product is MacCoffee. Reportedly even sold in Australia but reigns supreme even ahead of Nescafe in Russia and its former republics. Good financials. I'm positive about RTD MacCoffee sales.

  • Affected by raw material prices - coffee, sugar, etc.
  • May lack pricing power as it positions itself as affordable in less developed markets.
  • Had failed to watch advertising costs once.
  • Was embroiled in legal suit once with MacDonalds over MacCoffee names (outcome was in its favor).




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