Market Update

30 May 2020

Dear Fellow Investor,

One of our holdings is Wellcall which is a manufacture of rubber hoses. They have been effected by the MCO and were forced to shut down their  production  lines. They have now re opened and are running extra shifts to meet demand.

Most of their rubber hoses are supplied to the oil and gas industry and they were hit by the oil price collapse.

Oil  is since slowly recovering. Should recovery continue this will benefit Wellcall.  Wellcall has a strong balance sheet with zero borrowing and 10.5 sen per share in cash as of 31 Dec 2019.  They also export 90.5 % of their production to USA, Canada, Asia, Europe, Australia and Africa.  They benefit from the weak ringgit. At current price dividend is 5.7 %

Another share we hold is Kellington, The company is a provider of Ultra-High Purity (UHP) gas and chemical delivery solutions. Apart from Malaysia, its revenues are derived from Singapore, Taiwan and the People's Republic of China.  They supply UHP gas to the electronics and semi conductor industry. They have regional offices in China, Taiwan, Singapore and Malaysia. Revenues have been slowing in the last 12 months due to  Covid and trade issues. Price has recovered from the March panic low of RM 0.65 to RM 1.09  due to   supply lines opening up and improvement on the virus front. I look for more gains as the virus problem improves.

This morning I attended a virtual seminar by the I Capital research group.  I am pleased to report Tan Teng Boo had some positive words to say about PM Muhyiddin and how he is handling the Covid virus in Malaysia. 

The PM is very humble and does not give medical advice unlike some world leaders but delegates to the medical experts in the  health ministry.  Infection and death rates in Malaysia are dropping while recovery rates are increasing.  

Mr Tan also continues to be bullish on China and Hong Kong. Valuations are reasonable and the new Hong Kong security law will restore   stability to society. The government needs to use an iron fist to restore order and stop chaos.  Macao passed a similar law 10 years ago and has not had any problems with protestors since. The reason was that then the Western media was not actively promoting political change or trying to attack China .  The vast majority of Hong Kong citizens want stability and do not support the demonstrators.  The business of Hong Kong is business and that formula has worked for 150 years and will continue to work. 

On the investment side, our positions in Heim and Carlsberg are well supported as they have restarted their brewery operations.  Prices advanced last week anticipating the opening of the pubs and nightclubs.  

Life is getting back to normal, Bill

Critter of the week is a monitor lizard.

KUALA LUMPUR: A man who overcame his fear of monitor lizards to rescue one has become an internet hero. A video has gone viral showing him still clad in Baju Melayu for the Hari Raya Aidilfitri celebrations, tentatively putting out his hand to free the lizard's head which was stuck in a sardine can. I love these creatures as they perform a public service by eating small pests.