Oriental holdings and Hup Seng industries. Both well run & cash rich companies. I wont call them value traps, but they fit your description of legacy businesses built by founder and next generation sitting on it and not doing much. Good investment for defensive play, but wont excite the growth investors.

Had a chat with Mdm Kerk Chian Tung once about Hup Seng’s long term prospects and about reinvesting the huge pile cash to bring Hup Seng to greater heights instead of giving 100% profits as dividends. Had a very conservative answer.

we might not be getting a coronavirus vaccine anytime soon

https://www.theguardian.com/world/2020/may/22/why-we-might-not-get-a-coronavirus-vaccine?fbclid=IwAR2fx-zsQcpTdNwf4ZZ_5Lgi5x8ersF6iSaIv-j2onoMwM_XNwaxPwTun5Y

PetChem’s foray into speciality chemicals is the right move to escape the volatility of crude oil prices. The management guided that speciality chemicals would eventually contribute up to 25% of the group’s earnings in the future. PetChem became my largest holding this year and I will continue to accumulate.

the warrant with a negative premium is an illusion. look back at comments in Vsolar thread in 2015, same story.

GPacket share price RM1.51, market cap RM1.4 billion. Will review in one year.

The top 30 shareholders control most of the shares. Their balance float is extremely low. Based on last year’s annual report, just by holding 100k shares one will be in the top 10% of the shareholders. This might deter big funds coming in, but I’m happy to hold and monitor.

Hi gemfinder, i am unable to copy and paste from the Edge’s digital page. Hopeful and gohku have summarised the content. In addition to that:
- Demand from medical cables have been strong, order volumes doubled since outbreak.
- Strong USD and low copper price will provide tailwind for increased profits.
- Their cables are FDA approved which provide an edge against competitors.

harta's market cap will soon overtake nestle

theedge malaysia published a good write up on supercomnet this week.

studying gpacket gave me an investing idea in another company.

@universeck : thanks for the reply. I agree with you, Harta has always been one step ahead of their rivals and by far the best glove company to hold. Although I’ve sold off my portion to raise cash, my family continues to be long term shareholders. I’ve been fortunate the companies I chose to buy went up by a considerable margin as well. Whether or not they end up as good an investment as hartalega is yet to be seen. To those still holding on to Hartalega shares, remain invested. Their growth story hasn’t ended yet.

how about square root shaped?

the "new normal" will be nothing like the old normal. people will postpone plans to travel, meetings/functions at hotels will be cancelled, restaurants could end up closing if their takeaways are not profitable to sustain them.

our war against Covid19 has not ended. Singapore has 300,000 migrant workers. In comparison, we have an estimated 6 million legal+illegal migrant workers. I wonder if we have tested enough? The construction and plantation industry would suffer if there's an outbreak among the migrant workers.

thanks philip, appreciate your thoughts as always.

qqq, thanks for the reminder. i dont think any of us are in philip’s league. i only own 2 china based companies (Baba and Feihe). Sold vitasoy, felt feihe has higher growth potential. yah, need to be careful with china companies. Cant monitor so many, need to pick and chose the best.

the transaction fees is negligible if you just buy and hold. one of the reasons i use local broker (HL) is because it is easier to structure the will/inheritance.

hi philip, the luckin coffee accounting scandal makes me a little worried about feihe. starting to be wary China companies with high profitability but unable to payout dividends. what do you think?

Just a year ago, Aireen Omar mentioned that their digital business would some day overtake their airline business. Even if one was buying into that vision, it is hard to buy convincingly with with so much uncertainly in the airline industry.

Many airlines are set to collapse around the world. But if there’s any regional airline that will survive this crisis, i would place my bet on Air Asia. I might invest in AA one day, this is a great opportunity to be a part of a travel & lifestyle giant with a huge addressable market.

https://www.thestar.com.my/business/business-news/2019/05/30/airasia-aims-to-expand-ecommerce-beyond-selling-plane-tickets/

IoT, Fintech, artificial intelligence technologies, big data.. all the tech buzzwords with lots of promise. I wonder why investors value this company with market cap 600 million+?

warren buffett is right. i find it hard to buy with a lot of conviction when there’s so much uncertainty surrounding the airline business. it will be a long road to recovery. time to be less adventurous.

Deciding when and how to exit the MCO is not easy. Looking at the recent trends, i'm afraid our numbers will continue to go up in the coming days. To be honest I don’t know which is better choice : keep the MCO, and let the economy suffer. Or lift it to restart the economy, and just hope the numbers dont overwhelm the healthcare system. But balancing both ends, it is hard to justify continuing MCO in the green zones.

this has a powerful message. everyone should watch this

hi wai lock, i have concerns about that as well. Will have to wait until AGM to hear what the management has to say. Their recurring income from property investment will take a hit due to the Covid19 outbreak. Hospital occupancy rates have also been low during this MCO period as many non-urgent cases get deferred and reduced medical tourism, so their healthcare segment would likely report reduced profits as well.

one of the shareholders questioned the management in the previous AGM about the rationale regarding the massive share buybacks when the cash could have been used to pare down borrowings. The management mentioned that they would buy back shares when they feel it is undervalued and had an option to distribute them as dividends to shareholders later on. anyhow, i believe Sunway has taken care of their long term shareholders well and will continue to hold.

went through the annual report. near term headwinds for sunway. but still happy with the progress as a long term shareholder.

this was published yesterday. experts predict there could be up to 2 more years of Covid19 activity:
https://www.cidrap.umn.edu/sites/default/files/public/downloads/cidrap-covid19-viewpoint-part1.pdf

i think kawan’s business is resilient, and they are a beneficiary of this outbreak. the schools remain closed, pity companies eg Sasbadi/Pelangi didnt take advantage to build up their online learning platforms earlier. I would have bought into those companies if they had good and popular elearning platforms.

hi rainT, i’ve been following the Covid19 pandemic closely. felt that there could be a shift in consumer behaviour towards more convenient frozen food/ready to eat food as social distancing becomes a new norm. Their pulau indah plant is up and running, and there’s a lot of room for expansion. If you realised, their products sold out at hypermarkets and in their online stores during MCO. However, exports make up about 60% of their revenue. It remains to be seen if the same consumer behaviour patterns are shown there. I dont know how to predict EPS. But i dont think i’ve much to lose, i picked it up at rock bottom prices.

@universeck : you must b the person acknowledged by the management during their AGM as one of their long term investors. i have great admiration for you. hope you could contribute some articles on i3 to provide insights on how you spot these multi baggers.

mengniu milk seems quite pricey as well. Feihe astrobaby (step 1) sells at ￥46/100g, mengniu organic milk (step1) priced at ￥49/100g. but yes, parents of newborns, particularly if they have their first child tend to be less experienced and buy the more expensive formula. I believe the consumer psychology in china would be similar. many mothers who are unable to breastfeed for the recommended period would just buy the "best" (ie the most expensive) infant formula on the shelf. Feihe would benefit from the increased sales of high end formula.

you're right about them being a supplier to edward life sciences. the gem in scomnet lies in smp, their ctos report shows good profit margins. pressure transducers and ecg leads would be of high demand in the ICUs due to the Covid19 outbreak and are single use items which are disposed after each patient.

i wish i read your articles 10 years ago. you're a blessing to this forum. keep up the good work guiding the new ones :)

Feihe seems to be very popular among the parents judging from the number of reviews on ecommerce platforms vs competitors. I believe there’s some moat in the business and their growth will come at the expense of international brands, looking at how the younger generation have shown an increasing domestic brand bias and some degree of “nationalism”. Their expansion in Canada would be another growth trigger.

Thank you once again. I like the business and have decided to invest in Feihe as well.

Dear philip, thank you for your generous sharing. I had reservations about the infant formula industry in china but changed my mind after reading your article.

I was intrigued by their extremely high gross profit margins. The purchase of fresh milk accounts for 85% of their cost of goods sold. They receive their milk supplies from YST group, who also supplies to Mengniu. From my checks on ecommerce websites, the retail price of Feihe and Mengniu milk are comparable. Yet Mengniu only achieves a 37% GP margin. Perhaps Feihe is able to procure fresh milk at much cheaper rate (sslee might be right about supply chain bullying)

thanks for sharing. i've not been on i3 for some time. but found many good articles here which I've missed.

lc titan QR out

I personally bought Vitasoy in the past few weeks. Dali foods seems better from a quantitative standpoint, i'm not sure why they command much lower PE value compared to peers. Would be grateful if anyone here could give their input. Tq

Having said that, I believe the growth would come from their goat milk formula segment
- Goat milk formula gaining popularity because of benefits eg easier to digest, less likely to cause lactose intolerance, and a whey:casein ratio that is closer to human breastmilk compared to cow milk formula.
- Goat milk formula consumption could increase in EU because many of their population there are lactose intolerant.
- They have the highest whey:casein ratio in their formula compared to competitors in Europe. Whey:casein ratio in human breastmilk is 7:3. (Kabitra 5:5, Holle 2:8, Nanny care 2:8)
- Kabitra also has DHA which the other 2 formulas lack
- But many parents (including myself) have traditionally fed our kids with cow milk formula. It might be hard changing these habits.

Dear teoct,

Had a look on Ausnutria as well after you recommended it. But I personally didnt invest in it for the few reasons below :
- They only command a 5% market share for infant milk formula in China. Competitors eg Nestle, Feihe, Danone, Abbott, Junjebao collectively have 50% market share. I think competition would be stiff.
- The infant formula industry in China looks like reached a mature growth stage, dont think there would be exponential growth in this area.
- China has been having a slowdown in birth rates despite the relaxation in the one child policy. The birth rates have declined since 2017, and fertility rates in women have dropped. Many women now marrying later/ not marrying at all, so less babies are born.
- The rates of exclusive breastfeeding for 6 months in China is still much lower compared to other countries dt heavy marketing of infant formula. China are taking steps to encourage exclusive breastfeeding for their infants eg increasing babycare rooms in public spaces, breastfeeding flash mobs, extended maternity leave in some provinces. They might tighten the rules on infant milk formula advertisements. Demand for infant formula will reduce if there is a shift towards exclusive breastfeeding for the first 6 months of life.

The MOH has procured rapid antigen test kits from South Korea. i think they would start mass testing as soon as the kit arrives, hence the extension of the MCO to weed out all positive cases as much as possible. We could possibly see a surge in cases after this as more mild/asymptomatic ones are picked up from mass testing.

https://www.thestar.com.my/news/nation/2020/04/16/health-dg-new-covid-19-rapid-test-kits-procured-from-south-korea

Thought that indonesia made the right move to suspend all sea and air travel until 31 May. The number of Indonesians travelling to and fro Indonesia for the hari raya period would dampen the efforts to contain the outbreak.

From this model, the Covid19 outbreak might taper off by mid May in most countries.

https://ddi.sutd.edu.sg

Thought this was interesting. Mathematical modelling used to predict the end of the Covid19 outbreak. We’ll know how far it is true in the next few weeks.

https://ddi.sutd.edu.sg

AA has always been innovative. They need to consider if seats in airplanes can be rearranged to practice social distancing or if physical barriers eg curtains or partitions can be used to reduce the risk of infection in the plane.

sad to see the aviation, tourism and hotel industry suffer like this

Went through their annual report. Management still basking in the past glory. My kids grew up eating Munchy/ Julie/Jacob biscuits. Their growth would taper off unless the management becomes more aggressive with new products and marketing strategy.

>>>

"When people talk about biscuits, they naturally think of “Hup Seng Cream Crackers”. They often say that “Hup Seng Cream Crackers” are their favourite biscuits they have eaten ever since they were young and was bought and eaten by their great-grandparents”.

by carrying out more tests, Australia was be able to detect more mild/asymptomatic cases in the community. They were able to identify and isolate those cases quicker, putting a stop to new cases emerging. On the other hand, we likely have some mild/asymptomatic cases lying around in the community due to the lack of testing who continue to spread the disease to others. Therefore, our number reduction dont look as great as theirs.

the bull market will usually mature on optimism and a bear market will end during great pessimism

the oil palm best plantation company by far. used to own them for a while but readjusted my portfolio to take advantage of the many other bargains out there.

oil price crash, Covid 19, extended MCO.. Dialog is resilient in the midst of storm.

i participated in a few online polls. looks like the majority expected extension of the MCO actually.

l wonder how insurtech players will disrupt the insurance industry in the future?

I foresee good quarters ahead for kawan

our per capita testing is about 5x lower than singapore's. we have potentially many more mild or asymptomatic cases in the community