Dear fellow readers,
Once
again, these writings are just my humble highlights (not
recommendation), feel free to have some intellectual discourse on this.
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Many are looking back at 2018 wondering what went wrong and how could things be so bad? For Tradeview, we recommended significantly lesser stocks in 2018 and was very prudent in our investment due to the uncertainties. Apart from QL, Poh Kong and a handful of public calls, we didnt do much public calls. This was because we did not have a clear direction.
We also suffered losses like many fund managers and investors. We also held certain stocks like MYEG, Eforce, Layhong which plummeted tremendously. However, thankfully these are only a small proportion of our holdings. In fact, our cash holding was the largest and we will publicly admit we actually made significant numbers of calls to our private group members in the month of November and December. We called close to 8 stocks in the month of November and December. These 2 months collectively has more stock picks than others. We finally saw the opportunity especially to collect some of the stocks which was in our watchlist for a long time. Our cash holdings was aggressively poured into these stocks.
We would like to share with all that our picks are mid term to long term and definitely we will hold it into 2019. It also a collection of stocks which can weather the storm and turbulence. Amongst those, we would like to share are the following and at the price of entry as below :
1. TM
We called TM earlier during the selldown at around RM3+ and when it was sold down, we waited until RM2.40 and below to call a further entry to average down. YB Gobind definitely rock the telco industry after becoming minister. Of course this is in the best interest of the people and users, which we have no objection. However, this severely impacted the related sector and companies of which EPF, KWAP, PRS funds are among the key investors in these companies. Indirectly, we may benefit from lower monthly telco fees but the losses from the holdings in these blue chips is far greater. Having said that, we know the actual valuation for TM is much higher than RM3 and this was a good collection opportunity. We therefore called and collected.
2. PPHB
Similarly
for PPHB, our initial valuation for the stock will be RM0.70 at least.
The company continued to outperform and severely undervalued when
FBMKLCI mid cap index fell close to 25% for the year. This was a good
opportunity to collect at around 55 sens and below. The downside to this
stock is because there is no dividend policy and may appear as a value
trap. Nonetheless, the whacked down share price far below its actual
value provide a good opportunity to enter a mid term value investment
3. DKSH
When we first called DKSH at RM3+, our estimated would be around RM4.60. When the share price fell to RM2.50, we further averaged down. Many have asked us why are we so bullish with DKSH and the purpose behind. Well, for one DKSH fell along with other blue chips and even out of the Syariah list. However, this company has very strong management and the international clientele which is the foundation of their distribution network gave us the confidence to hold. Whilst the margin is this, the valuation is cheap compared the mother company and regional players. It's book value is RM3.79 and the PER is trading at 6.9x hence it is a stock that will definitely rebound in the long term and one that we are willing to hold through the storm.
4. BJ Food
To be honest apart from the Starbucks franchise, we actually dont really like the other brands under BJ Food. The money churner is still Starbucks and it is Msia's market proxy to the US's global brand. We are also no particularly impressed with the management of Berjaya group management as a whole. A strong management would be able to do way better than the current valuation. However, we note that the company has disposed of their loss making Kenny Rogers business in Indonesia and starting to return to black. Additionally, substantial shareholder is buying to support the share price. We think this year will be turnaround year for BJ Food coupled with the consistent quarterly dividend of 3% full year, can look to collect at below RM1.35.
5. Perstima
Our
old favourite is back in the radar as the valuation for it should be at
RM6 due to the high dividend yield, stronger revenue growth and opening
of new markets and manufacturing facility in Philippines. Should the
company declare dividend this year to be 20 sens, the yield at current
price would be about 4%. Even the PER is undervalued based on the
revenue growth and improvement in profit margin. When the market is as
weak as it is, we advocated to our readers to consider buying on
weakness. It remain was one the steady quiet mover that has rebounded
for the year from a low of RM3+. There is still upside to RM5+ in the
mid term.
6. Elsoft Research Bhd.
https://www.bloomberg.com/news/articles/2018-02-07/buying-the-dip-works-nicely-a-30-year-history-of-routs-shows
There
are definitely others to the list of stocks we have watched, observed,
consider, and called. Mostly with the market continuously being
volatile, when the time comes, opportunity knocks, and value surfaces,
what would you do? The above link demonstrates the beauty of buying on
dips and weakness over chasing rallies.
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Food for thought:
