A series of Trump tweets.

24 August   2019

Dear Fellow Investor,

On Friday, the Dow Jones dropped 623 points on fear induced panic selling initiated by a series of Trump tweets. These tweets announced increased tariffs on China goods. The Chinese retaliated by setting increased agricultural tariffs in Trump swing states which are crucial for Trump to win in the 2020 elections.

To put things in a longer term perspective, I exhibit a weekly Dow Jones chart overlaid with a 50 week moving average.  The 50 week moving average on a weekly chart is used by institutions and the down move was halted right at the 50 MA as professionals came in to support the market. Last weeks drop was 257 points.

Expect some weakness early next week  but our quality companies should hold up.

The important thing to remember is not to get caught up in the media hype about impending recession, yield curve inversion  and market collapse.

Much of this hype and hysteria is to induce a recession so Trump will lose in 2020. The establishment,  and opposition party and some traitors in his own party are doing all in their power to unseat Trump.

Invest well and grow your wealth, Bill

This weeks critter is the American eagle weighed down by a tariff ball  I hope Trump can get the message of this cartoon. If he wants to keep power he will heed the message. This will benefit all markets.  

Genting Malaysia

10 August   2019

Dear Fellow Investor,

Today I will review Genting Malaysia a share we hold for our managed accounts. On 6 August they announced they were buying a 35 % stake in Empire Resorts, a US casino operator in New York.  It was a related party transaction by Genting as they are an  owner of Empire Resorts.  The market reacted by panic selling  dropping at one point from RM 3.60 to 3.02.  

A related party transaction  is usually viewed negatively as it means the owner of the shares is offloading a personally owned bad asset and dumping it on existing shareholders  REITS run by crooked managers are known for this as they dump personally owned unproductive property into the REIT and the existing  shareholders are cheated.  

The perception by the crowd was extremely negative so panic selling resulted but in my opinion I do not see any material impact on Genting Malaysia or Empire Resorts.

Genting Malaysia has 7.9 billion cash on their balance sheet and the investment cost of the Empire Resorts  shares is USD 128.6 million not much more than the USD 126 million paid for the Equanimity acquisition . When the Equanimity purchase was announced, Genting Malaysia shares did not react. (For our foreign clients, Equanimity was a super yacht owned by Joe Low seized by the Malaysian  government to help cover losses  sustained in the 1MBD fraud case)  Genting intends to charter the Equanimity to rich tourists but in my opinion I do not think it has the cash flow potential of Empire Resorts.

 I reviewed the financials of Nasdaq listed Empire Resorts  and they had losses in the last financial year reflecting  extensive renovation of their property. Moving forward this renovation should attract more customers.

This was noted by TA securities on a research note.  For this reason I am currently neutral on Genting Malaysia  as Empire Resorts/ Genting Malaysia  continue to generate strong cash flows.

One positive item was that in early March 2019 Genting CEO Lim Kok Thay bought 7.341 million and 6.090  million Genting Malaysia shares.  

If there was a problem with the company, he would have sold not bought. A few days after he bought the shares it was announced Genting  had made a resolution with Fox and Disney to drop their theme park law suit. Insiders tend to know more about their company then the public.

On Wednesday- Sunday next week  I will be in Sandakan and Kota Kinabulu for company visits but you can always email/ whats AP  me should you have any questions.

I will not publish this report next Saturday .

Invest well and grow your wealth
Bill

 

 

Critter of the week is in a wildlife tourism center in Sandakan: Hopefully we can visit.

 

A supermarket chain holdings in Singapore review - Sheng Siong Group

3 August   2019

Dear Fellow Investor,

Today I will review one of our Singapore holdings Sheng Siong Group, which is a supermarket chain.

When I visited Singapore a few years ago. I noticed prices at a Sheng Siong market were cheaper than supermarkets in the shopping malls  The fruit  vegetables and meat  were fresher, cleaner and better presented  than other markets and they had a wide selection of well displayed fish and meat. I decided to put the share on my watch list and after reviewing their financials decided to buy for our managed accounts.

They have performed reasonably well, are net cash and just raised their dividend now about 3.3 %.

Sheng Siong Group 2nd Quarter 2019   earnings update: 

Growth is picking up.

State of the business now

The following shows some of the key numbers to track for Sheng Siong from Motley Fool Research Singapore: 

·      Revenue grew 11.8% year on year to S$238.2 million.

·      Gross profit margin inched up by 0.1 percentage point to 27.4%  

·      Net profit climbed 7.6% year on year to S$18.4 million.

·      Earnings per share (EPS) were S$0.0123, up 7.9% compared to 2018’s second-quarter EPS of S$0.0114.

·      As of 30 June 2019, Sheng Siong had S$82.9 million in cash and equivalents and no borrowings. That is an improvement from a year ago where the supermarket retailer had S$75.7 million in cash balance with no debt.

·      For the reporting quarter, operating cash flow was S$33.8 million while capital expenditure was S$6.0 million. Sheng Siong generated S$27.8 million in free cash flow, up around 20% from S$23.2 million in free cash flow raked in a year ago (operating cash flow of S$29.2 million and capital expenditure of S$5.9 million).

·      Sheng Siong has increased its interim dividend by 6% from S$0.0165 per share to S$0.0175. 

Despite the world stock market turmoil, they have held steady now at SGD 1.15 per share.   For the current environment, Sheng Siong is a good space to be in.  It is super defensive and well managed with a management who are cost conscious and share holder friendly. They have not been effected by the trade war.

Our portfolios have weathered the on going storm of volatility and emotion driven price action and we need to remain defensive, value orientated and patient for the pessimism and gloom cycle to turn. While we wait we collect our dividends

On 14-19  August we will be visiting clients in Sandakan and Kota Kinabulu. as well as enjoying nature, the seafood and the laid back environment . I will keep my eyes out for a profitable investment

Invest well and grow your wealth,
Bill

Critter of the week is a lion in a famous painting by Leonardo De Vinci which is exhibited in the National Museum in Kuala Lumpur. The exhibition will run until 15 August and is FOC. The 12 Leonardo paintings are reproductions which appear real. For some reason am unable to rotate the image to get a better view of the lion.