Feb 25 Update

Purchases

Meituan: Bought a minor stake at $150, due to exercise of sold put options

My view on Meituan is found in earlier post.

Trip.com: Added more at $65 (before 4Q results release) and $60 (after results release)

It's a direct play on Asia online travel agency (OTA), which should see continuous growth in coming years, as Asian countries become more well-off and increase their travel expenditure. 

Marco Polo Marine (listed in Singapore): Start a small stake at $0.053. 

- It should see better earnings in 2H 2025 onwards, as it leases out its newly built CSOV (commissioning service operation vessel) and its 4th shipyard in Batam starts to contribute to proifts. The higher income should lower its 2026 PE to 6.x times.

- Downside is that offshore marine industry tend to have uncertainties / unforeseen events. 

- After buying, I realise that I may have bought at too high a price for my liking. Will keep the stake for now. 

Bosideng: Start a stake at $3.88. 

- China brand on down jacket / apparel, with brands for mass market and high-end

- At acceptable valuation with ~6.7% dividend and possible growth of 10% annually over next few years. 

Sales

LVMH: Sold my minor stake at ~$700. 

- Sold probably because luxury sales may be flattish in next few years, given weak China sales, slowing EU / US economy. 

Dream International: Sold a minor stake at $5.70 to lower my position size. 

- I am probably worried that US may impose tariffs on Vietnam one day. Thus I reduce my position a little. Dream Intl has factories in Vietnam.

Oiltek: Sold half of remaining stake at $1.30 to take profit

- Still has 1/4 of my original position left. Will let it run and wait for its 1H 2025 results

Sino Land: Sold all my position at $7.88. 

- A minor profit, as cost price is $7.50

- Sold to raise cash to buy Bosideng. 

China Aviation: Sold all my position at $0.885 (around my cost price)

- Sold after its poorer than expected 2H 2024 results and disappointing dividend payout. 

- While it has low valuation (EV / EBIT < 1.5), I prefer it to provide higher dividend payout and not hoard its cash and do nothing. BP owns 20%; yet it allows CAO to pay disappointing dividends. This suggests that BP is not good in capital allocation; which explains partly the disappointing BP results in recent years. 

Macro Thoughts

Deepseek's release has improved investors' perception of China tech stocks. The future trajectory of China/HK stocks will depends on the upcoming China NPC meeting in March. If there's more supportive policies to boost China consumption, we will see more sustained positivity around China/HK stocks. 

Meanwhile, US President Trump seems to use tariffs to raise tax revenue for US government. As such, we are likely to see more US tariffs on China as well as other countries in 2025. This increases uncertainties in global economic growth for 2025 and 2026. 

 

Jan 25 Update

Purchases

Barrick Gold: Bought small stake due to exercise of sold put options. Sold all subsequently, as it was a mistake to buy Barrick Gold at the current 'not cheap' valuation.

Atour: Bought a small stake at $25. 
- It is a capital light hotel operator (in China), with double-digit growth. 

- At time of purchase, valuation is close to 21x PE LTM, not cheap.

Henlius Biotech: Bought a small stake at $16.26

- It is a biopharma company, specialising in biosimilar. Its majority shareholder, Fosun, wants to take it private at $24 but failed. Given that Fosun wants to privatise it at $24, Henlius should have good prospects.

- At time of purchase, valuation is reasonable at around 12x PE LTM. 

KE Holdings: Bought at minor stake at $17, due to exercise of sold put options

- It is an online property brokerage in China. It's net cash is around 40% of market cap. Its business may improve if China property market recovers.

- At time of purchase, valuation is not cheap --> around 34x PE LTM, 18x PE NTM.

Meituan: Bought a minor stake at $148, due to exercise of sold put options

- It is market leader in local services in China. Basically, it gains a pool of customers via local services and sell higher margin services (e.g. merchant marketing, hotel booking) to its pool of customers. 

- At time of purchase, valuation is not cheap --> around 40x PE LTM, 16x PE NTM.

- I had very small stake prior to purchase, due to Tencent distribution of its shares in 2023.

Sino Land: Bought a small stake at $7.5. 

- Solid dividend play. It has net cash comprising 2/3 of its market cap; 7.7% dividend yield. 

Sales

Stella International: Sold all at $17.40

- Exited with some profit, as it was bought at $14.60 in Aug 2024. 

- Sold, because it may have limited growth moving forward, even though its dividend yield (incl special dividend) may be close to 10% for next 3 years. 

Stoneweg European Reit: Sold all (bought using cash) at $2.19

- Exited due to disappointment with its recent bond issuance at higher than expected interest rate. This may affect its dpu (dividend per unit) in 2025. 

- Did not sell the holdings bought via CPF-OA, as its 2025 dividend is still worthwhile compared to other Singapore Reits. 

Pentamaster HK: Sold all at $0.96

- An arbitrage play. Bought small stake in Dec 2024 at $0.93, as its majority owner wants to privatise it at $0.93 + $0.07 dividend. 

-  Sold all at $0.96 at a small gain, so that the cash can be deployed to buy Henlius. 

Louis Gave positive on China

In video below, Louis Vincent-Gave (from GaveKal Research) is positive on China. He noted that China now is similar to US at 2010-11 when US is doing QE. 

At 20.00: "These are the valuations you get a few times in your career: very cheap valuations, very low interest rates and massive policy support."

https://www.youtube.com/watch?v=HeggT6dSR60 

Notes on Mapletree Logistic Trust (MLT) and Mapletree Pan Asia Comm Trust (MPACT)

 MLT released its 3Q FY2025 results yesterday. The Edge has an article on it. What catch my notice:

- 32% of portfolio expires in FY 2026. 47% are in China. MLT expects -ve double-digit rental reversion in China to last another quarter, and then followed by negative high-single digit rental reversion

- OCBC Research: MLT's borrowing cost will rise from 2.7% (current) to 2.9% in FY2026.

MPACT released its results today. Same as last quarter, negative double digit y-o-y decline in DPU. Its non-Singapore properties continued to face headwinds. 

I compare Sino Land (listed in HK) and MPACT below, as they both own properties in Singapore and HK/China.  

MPACT (listed in Singapore)

Owns: Retail and commercial properties (office, business parks) in Singapore, HK / China, Japan and Korea. Crown Jewel is Vivo City in Singapore. 

Share Price: $1.19

Leverage: 38% of NAV.

Price to Book: 0.69

Yield: 6.8% (assume DPU of 8.09 cents)

Sino Land (listed in HK)

Owns: Retail, commercial and hotel properties in HK / China / Singapore. Also develop properties in HK / China / Singapore.

Share Price: $7.45 (hits 52 week low)

Leverage: None. Net Cash comprises 2/3 of market cap. 

Price to Book: 0.39

Yield: 7.8% (based on last year's dividend of 58 cents)

Other than not having a crown jewel like Vivo City, Sino Land seems better than MPACT. Sino Land has higher yield and high cash amount (i.e. not affected by interest rates going higher). 

Not vested in MLT and MPACT. Vested in Sino Land.