Portfolio cumulative gains higher at 48.1%
My portfolio continued to perform well this week. Total portfolio value rose 2.1% compared with the 0.1% decline for the benchmark index, FBM KLCI. Much of investor interest remains focused on smaller cap stocks, with daily trading volume averaging nearly 4.2 billion shares.
There were a few notable gainers for the week in my portfolio, including Kerjaya, Superlon and Willow.
Willow’s share price hit limit up and an all-time high of RM1.32 on Monday with over 10 million shares changing hands. That’s many times above its average volume over the past 200 days. It also earned the company an unusual market activity (UMA) query from Bursa Malaysia.
I have no specific insight as to why its share price and volume surged the way they did. The company in a reply to Bursa said it is unaware of the reason behind the unusual trading of its shares.
I think what’s important though is why InsiderAsia liked this company in the first place – a good underlying business with growth prospects, solid track record and governance. That has not changed.
The stock is one of InsiderAsia’s Top 10 Stocks for 2017. At the start of the year, its price was RM0.755. That means its shares are up a hefty 70% year-to-date.
For readers who are unfamiliar with this relatively low-profile company, Willow provides systems and solutions (through in-house research and development) for Supervisory Control and Data Acquisition (SCADA) as well as integrated video surveillance systems. Essentially, computerised systems for gathering (often from remote and inaccessible locations) and analysing real time data.
SCADA and Integrated Monitoring Systems are widely used across industries such as transportation (railways, MRT, LRT, highways) and utilities (gas transmission/distribution pipelines, power stations, port facilities, water and waste water treatment, etc) as well as municipal and housing estate projects.
Given the critical nature of such systems, reliability and brand reputation are crucial. In this respect, Willow has a good record.
The company’s main market is Singapore (which accounted for roughly 68% of sales in 2016) where its customers include the Housing and Development Board of Singapore (HDB), Singapore Power, Public Utilities Board of Singapore, etc.
It is actively pursuing projects in new industries such as transportation and environment. Last September, the company entered into a JV with Secura Group Ltd, one of the leading providers of integrated suite of security products, services and solutions in Singapore. Secura is listed on Singapore’s Catalist board. Its biggest shareholder is Peter Lim.
Willow has also been expanding its customer base in Malaysia, targeting 3 sectors – power, highway and hospitals.
Last year, the company clinched a contract to provide Intelligent Transport Systems (ITS) – to supply and install a traffic control and surveillance system – for a highway project.
In March 2017, Willow secured its first contract from Tenaga Nasional Berhad (TNB), for the supply, installation, testing and commissioning of Secondary remote terminal unit (RTU). This bodes well as TNB is one of the biggest users of SCADA systems in Malaysia.
It is also expanding its geographical footprint. Willow has a team in Indonesia and most recently set up a subsidiary in Vietnam, to tap the potential in this rapidly growing country.
Apart from projects, the company earns some 22% of its revenue from the maintenance of installed systems, a steady income base.
Willow has a high Fundamental score of 2.55 of the maximum 3.
Its valuation score has fallen to 0.5 from 2.4 at the start of the year following its price run up. This is as it should be – an under-researched company will see valuations rise once investors discover its potential.
The stock is now trading at roughly 15 times forward earnings – which is, notably, still lower than that for most solution provider companies listed on Bursa.
Incidentally, most of the InsiderAsia Top 10 Stocks for 2017 have done quite well. The 10 stocks are up 21.4%, on average, in 3.5 months.
You can check out all of InsiderAsia’s stock recommendations on www.absolutelystocks.com.
I made no transaction this week. My portfolio remains about 91% invested.
Cumulative total portfolio returns now stand at 48.1% since inception.
I continue to outperform the FBM KLCI, which is down 5% over the same period, by a long, long way.
Source: http://www.theedgemarkets.com/aa/tong/portfolio
