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| Actual amount made over 4 months |
ICap is now trading at a discount of 19.5% from its last week's NAV. Its major holdings remain to be PetDag, Padini, Parkson, F&N and Boustead.
Among the holdings, these are how I see it.
Petronas Dagangan
I like PetDag despite we seeing more and more oil and gas companies moving into the upstream side of the market. We saw BP letting go of the retail business many years ago and if I am not mistaken I am seeing many of Exxon-Mobil's branded stations changed to a brand called Petron. The letting go of the retail side of business could be good for PetDag in the longer run.
Padini
I have mentioned of my liking for Padini before, hence not repeating.
Parkson
As I like AEON and Tesco, I do like Parkson as well but the Malaysian operations only. Parkson is however heavily dependent on its China's income. For its China's operations, I am not able to reckon the position it is in. My guess is that the competition is getting really stiffer with Wal-Mart, Carrefour, Tesco fighting really hard in the hypermart business. Parkson's positioning is different but it is bound to affect Parkson no matter what. The 3 players are the largest retailers in the world ranking 1, 2 and 3. Where is Parkson? That could have affected the Malaysian owned retailer.
As for Parkson's venture in Indonesia and Vietnam, it is too early to tell the impact it is going to have onto the retailer.
F&N
Good company but its competitors are better brands and much bigger. I see its price as expensive although it does try hard diversifying into properties the next few years to cushion the negative impact.
Boustead
Great assets but I always have doubts on armed forces running companies. If you happened to be in Damansara, just compare One Utama (private owner, See Hoy Chan) against The Curve (Boustead). They are not far from each other. Which one you think has more potential or already is on the home run? This reflects management capabilities, in the eyes of an investor.
I always have the feeling that since most plantation, banks, properties stocks were doing well, Boustead will of course do well. Warren Buffett used to say, "Only when the tides are down, we will know who has been swimming naked."
Out of the largest 5 holdings, I like 2-1/2, hence may not suit my taste for now.
19 comments:
OK now I found out that Petron is actually the largest oil refiner in Philippines and majority owned by San Miguel.
I own Padini, but looks like it is hitting speed bump already...
Most stocks are. Maybe time to diversify overseas...
Seriously, I prefer The Curve over One Utama, maybe because it is more diverse. My portfolio consists of mainly stagnant stocks, NTPM, IGBREIT and DELEUM... ROI not even 3% this year, worse than FD (due to loss in rubbish counter, INSTACO, if only I discover your blog earlier)
NTPM is going to be stagnant for a while cause TH is selling out, hence the company is currently picking up.
I have a good proposal to solve ICAP's problem. Laxey to buy aggressively to lift up the price to the NAV and close the gap. This aggressive purchase will force ICAP to buy more to sustain controlling interest. So the cost to do this is shared by ICAP and Laxey still own these shares at lower average price to NAV. It is like hypermarket buying and selling at large volume and selling to earn a small to medium profit margin. It has to be that way to use additional millions to save the entire billion with good return.
Hi Felicity, NTPM share keep dropping due to TH disposing, cant really understand why TH wan to dispose so much, just worry if it wil touch RM0.4 soon, is it buying a bit then average down price is better?
The same as Bonia, where PNB was disposing, for NTPM - TH is disposing. I do not think it means anything. Sometimes, these funds are just taking profit or changing portfolio.
If we are confident on NTPM, buy more - it will come back.
This is what makes longer term investing much more stable than short term as we have options.
I have no concern with ICAP trading at a discount.
I have concern with certain counters hold by ICAP not growing within my expectation.
BOUSTEAD is sitting on valuable assets that the management are not capable of unlocking.
PARKSON's growth have slow down to an extent it is not really a growth stock anymore.
Both BOUSTEAD and PARKSON are extremely promising companies but with their current management team, they will remain promising forever !
Hi Felicy,
What would you think about APM? If Tan Chong is trading at 4.30 then APM should be relatively attractive at 4.70~4.80.
1. I don't know why there is a sell down of shares by the directors as the business outlook is good. I guess there might be some other reason which is not related to the business profitability.
2. No matter what crisis happens in Euro and US, the middle class in ASEAN countries is growing and I believe Nissan and APM would grow together with them. What is your opinion in this?
3. Do you really think that APM is among the good ones to invest at current price? I guess that if there is limited down side possibility due to intact fundamental then it means a good chance for positive return.
I have already invested 6.8% of my total capital (with a little gearing) in this counter at average price of 4.7x. This is the way I learn, getting opinion after the action, never before. I want to act according to my own understanding, but I would like to learn if I did a mistake.
Hi felicity,
Good to hear that u cashing out to wait for opportunity.
I cashed out of the lollapalooza after the AGM ended as well. While I am fairly confident that the cash hoard sitting on the balance sheet will be more valuable over time, the poor corporate governance of the business and other "partners" who seem blatantly ignorant about the problem concern me a lot. And to me, that is one big red china flag flying against holding the stock long term.
On the investments of iCap, I think its top five holdings are fine, well managed businesses that are going to do well five or ten years to the future. The stocks may seem fairly valued or slightly over valued at this point but if iCap were to sell these holdings, what are they going to buy? Also, iCap has a very low entry point for those holdings.
The ugly side of its portfolio, in my opinion, are the cyclical stocks which it is holding. In the past two or three years, iCap has got burnt in a few cyclical stocks already. If iCap were so bearish about the long term outlook of the economy/stock market, I wonder why it did not sell away some of its cyclical holdings.
APM is a quality company. The only thing is that under Tan Chong, one can get frustrated holding a stock that sometimes could possibly not move.
Anyway, if you are holding long term, the NAP is very important as we do not know how competitive APM is when in comparison against the foreign players when comes to being parts manufacturers.
Its venture overseas have yet to see much success. hence, this is still a local success.
I don't mind if it doesn't move. I always imagine my stocks as porridge ticket, ayam tanduri ticket, beef steak ticket, etc. to feed my mouth with good food and pay the installment of my dream home one day later. I don't really mind the price movement but I mind the sustainable profit, current and future dividend yield. I am not buying shares. I am buying cash flow.
But what is NAP? News After Purchase? Would you please enlighten me?
Further to that, when I say I don't mind the price movement it doesn't mean that I do not care the buying price. I don't want to buy it at prices deems too expensive. Buying things at high prices are just like having the meat burnt on the barbecue grill, which is a irreversible damage. What I mean is as long as I buy it at fair to attractive prices, I don't mind a little fluctuation say -5% in short term.
NAP is National Automotive Policy. It basically says what are the government's policies to promote the automotive sector. Currently, APM's largest customers are Nissan, Proton and Perodua. Hence, its success is very dependent on these brands as well as the NAP.
The next few years is quite critical for the automotive sector. As I have said, APM's market is mainly Malaysia. I do not see it penetrating Thailand the largest parts market in this region.
That could be a factor although APM seems cheap now.
Oh, thanks for the info. I hope that one day I am able to own a Nissan by using the dividend from APM to pay for it. It's harder to make money from stock investment compare to 3 years ago. Those days I can buy wonderful businesses at fair price. Now I can only buy second class businesses at fair price. Soon there will be nothing left to hunt. Now is the season when I think a dentist job is more attractive.
After u sold for 2 years, the share price actually almost the same as today!
Hugging loads of cash is not helping iCap in the long run.
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