Quite a bit of movement again, and the portfolio is satisfying me more with the new positions and diversification of cheap stocks.
1-sold Tarczynski . Huge run, fair value reached.
Past Quote: I bought a Polish small cap at 7,5 times 9 month earnings , producing sausages, : Tarczynski. On one hand they may be over earning due to reduced cost of porks in 2020, on the other hand the growth track record is perfect, and they just launched veggie snack sausages, and snack Beef Jerky, and bought a German distributor. So it is exciting to see how the business will grow, and I like ambition.
2-Sold Newlat, Finally not so cheap after I reviewed how some lease payments are treated as capex. It ran a bit. I still like it. However with the current opportunities I wanted to be more in Emerging Markets.
3-Sold my Altria on regulatory risk at no loss (That is what being a value investor is about-buying cheap), I like it but I prefer the geographical reach of British American Tobacco. And less tobacco is not a bad thing. As usual, It ran up after I sold!
4-Sold Shanghai Pharma with a good profit, on news of an important share issuance. I am not so fan of the corporate governance of this company with these developments. Also it is a purely Chinese company, not Hong Kong, and its less transparent what they are doing in terms of governance than HK.
5-Bought back some old stocks of mine to be part of the story, at very affordable prices, well known in the investment community: Baidu (in HK to be safe from the US Govt.) and Bollore (catalysts on UMG group and improvements in African Logistic).
Past quote: I sold my Bollore. I like the stock but, late in the cycle, I am not such a fan of Sum of the Parts including a part needed to have a 30+ PE, or a thesis requiring a business simplification. I think Bollore has a good future and keep it in my watchlist. I would have kept it if not for my next purchase:
.
6-Reinforcements:
Telefonica Brazil: https://superfluousvalueblog.wordpress.com/2021/03/20/telefonica-brasil-the-ultimate-lbo-candidate/ + https://macro-ops.com/telefonica-brasil-viv-one-way-to-play-a-falling-dollar/
British American Tobacco
Petrobras https://superfluousvalueblog.wordpress.com/2021/03/01/emerging-market-risk-revisited-petrobras/
Jiashili (HK, biscuits at 4-5 PE ratio)
7-Bought a basket of Singapore small caps. Cheap, defensive FCF businesses. good
I found that buying a basket of cheap HK smalls in defensive industries worked well.
Same for Poland. I am doing here the same with Singapore. All these businesses are expanding abroad to neighboring EMs.
Singapore medical group:
Market cap of $ 154M, Revenue $ 87M. Profit of $ 9M
Diversified medical Clinics. Health, diagnostics and esthetics.
Good business, growth and good pre covid valuation.
Growing revenue and Ebitda trend. Expanding in Vietnam, Indonesia and Australia.
Business was hurt with the pandemic but remain very cash flow positive.
Debt is low. valuation is also low. Pre covid profit is $ 13M. Cash flow is much higher than net profit with depreciation and amortisation.
Singapore O&G:
Contrary to its name could sound, this is not an oil and gas company.
Medical Clinics, good business, growth and good pre covid valuation
Mostly obstetrics (55%), then expanded to dermatology (17%), Oncology (15%), Pediatrics (12%)..
In 2021 expanding with a first centre in Malaysia.
Constant growth in revenue and profit, but in 2020 it was impacted by covid lockdowns and posted flat revenue. Very FCF generative, with some depreciation and amortization.
Launched its own cosmetics product line locally. Singapore has a very low birth rate but somehow it does not impact the group obstetrics segment, possibly due to high standards positioning.
The company is looking to "pursue new investment opportunities in both developed and emerging markets". with 35 millions net cash, they are ready for the next stage of growth
MONEYMAX FINANCIAL SERVICES :
Market cap of $91M, Revenue $197.15M. Profit of $20M
Started as a Pawn broker by jewelry entrepreneurs. Buys jewelry, luxury items, sells them through various channels. 70 outlets.
Also does business to business resale, and financial services like insurance, car financing, online items valuation,
Very innovative. Expanded to Malaysia. Valuation very low
HC surgical:
Market cap of $72M, Revenue $17M. Profit of $+-7M
This company does endoscopy and stomach procedures with 16 centers in Singapore.
It also owns passive stakes that it acquires in listed healthcare small caps in Singapore.
The annual letter starts without fluff: immediately details the acquisitions done during the year. They also buy clinics, either fully or partially, and It has recently expanded to Cambodia.
Some of the profit declared recently includes fair value gains on these investments so it has to be deducted.
It is very cash flow generative and pays a generous dividend.
It is a bit hard to figure out what their strategy is with all their stakes in listed businesses.
very small cap, interesting business.
Conclusion
my goal in the next few months is further analyse the other Singapore small caps I shortlisted, then review some twitter ideas, and analyse the Turkish stock exchange from A to Z in order to be ready to capture opportunities.
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