Note 5: Feb 2018 Investment



Dear Internet,
I made some investment over the 2 months, during the mini turmoil .
1.       Hong Kong Ferry Holdings 0050. HK @ an average price of 8.76 HKD
2.       Lion Asiapac (BAZ. SI) @ an average price of $0.52 SGD
3.       Japan Tobacco (2914) @ an average price of 3160.94 JPY
Purchases (1) and (2) are based on the value approach. The Hong Kong Ferry Holdings NAV is  16.25 HKD and Lion Asiapac is $0.992. I believe that there are significant margin of safety as we speak.
Hong Kong Ferry Holding is a property developer with a side business  ferry services, fuel oil trading, ship repairing and cruises. I generally like businesses with a combination of property plus a stable business. I estimate the share of it’s high quality asset at around 6 HKD. I am also keen to expand on my Hong Kong portfolio in the years coming, as my macro prediction is that the expansion of China will still benefit Hong Kong in years to come. I will talk more on my Hong Kong shares next time.
Lion Asiapac  is in a net cash position of $0.67 per share. While the overall environment for the company don’t seem that great, but it holds strong assets, which I think will be able to let it ride out the turmoil. It has also passed my investment checklist (which I will share next time).
 For Japan Tobacco, it’s actually more of an interest in the vice trade. There’s no value metric for this vice portfolio which I am managing. The problem with using the value metric on the vice business is that most vice businesses are very well managed and quality is seen by all. This results in a situation in which valuations are usually high. For that, I fixed a very simple 4 criteria of PE less than 15, Dividend Yield must be above 4%, 3 years of positive cash flow and 1.2 Debt/Equity. If the share manages to pass 3 out of 4, it’s a buy. Japan Tobacco hasn’t got a good time in their home ground in recent years, businesses are declining due to the innovation by PMI in the next gen cigarettes. At the same time, their new launches and their aggressive purchases overseas have made some investor jittery. As a result, the share has been declining steadily. As much as I do want to adopt a wait and see approach, I had also figure out that putting in a small amount of money will not do much harm for me. Hopefully, it turns out well.
Seeya.

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