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Sunday, October 19, 2014

This is freshly taken from TheFinance's wall in FB. I made a few comments and I think this is substantial enough to share with readers who do not follow me on FB:




I have to go out in a while.

Have a good Sunday, everyone.

Related posts:
Managing exposure in investment portfolio.

10 comments:

ivan chia said...

Good day Mr AK,

would u mind sharing your views on select group? (:

Big thanks ivan

AK71 said...

Hi Ivan,

Sorry but I must disappoint you here. I have not looked at Select Group. So, I don't have an opinion here. :(

Casey said...

Hi AK,

I don't think we can in any way categorize Yongnam or China MZ with Wilmar. Wilmar's business model is by far more resilient than anyone one of those.

Wilmar is one of the true blue blue chips in SGX, which has a business model that its business segments complimenting each other. Look at its earning report, it is rather consistent and the huge swing of price is mainly due to the speculator and not really on the its results.

To me, Wilmar is a manufacturer that owns plantation, if it owns one more soy planting entity, its quarterly earning will be even more resilient and I wonder why they don't own one?

Casey.

ivan chia said...

No worries! thanks!

FUNKY said...

Hi AK

Can share yr Pyramid Model....Thanks

Funky

AK71 said...

Hi Casey,

Oh, I am not putting Wilmar, Yongnam or China Minzhong in the same class of business whether it is in terms of type or strength.

I was responding to a reader who thought that I am somewhat more open to risk taking. He cited these examples and how he wished he was more conservative.

In my response, I tried to explain why I invested in each of them and how they fit into my portfolio. :)

AK71 said...

Hi Funky,

These are the blog articles you are looking for:

Motivations and methods in investing.

and

Managing exposure in investment portfolio.

:)

Kit Whye Chan said...

The next Osim will be Perennial Real Estate Holdings (formerly known as St James Holdings), where Pua Seck Kuan will inject all the Perennial Assets into it, with cornerstone shareholders to include Wilmar, Kuok Choon Hong and Ron Sim of Osim. Can AK do a thorough analysis of this deal?

AK71 said...

Hi Kit Whye,

Since divesting my stake in PCRT, I have not looked back. I blogged about it and added in the comments sections as well here:

PCRT: St James' RTO.

and here:

PCRT: Full divestment.

Could I invite you to write a guest blog for ASSI on the matter. You are eminently qualified to do so.

I hope you will accept the invitation. :)

AK71 said...

The main takeaways for us from Wilmar’s final results briefing are:

(1) the group’s strategy to build a more stable income stream by venturing into higher value-added products from all the commodities it processes;

(2) its expectation for soybean crush margin in China to remain positive in 2015;

(3) its biodiesel business will benefit from better biodiesel pricing in Indonesia;

(4) it has identified Africa and sugar as potential areas to grow its business in 2015;

(5) the significant progress made since its sustainability pledge has helped the group to improve its market access as well as pricing for its palm products; and


(6) the group’s expectation that its earnings will remain resilient in 2015.

Strategy for 2015. It plans to expand its flour, rice and consumer products
business in China, India and Africa. The group is building its downstream
business further to derive a more stable earnings stream for the group. The group sees good growth potential in Africa and its sugar division. It will slow down its investment in refinery and crushing facilities. It may consider buying some plantation assets if prices are attractive but is not in a hurry in view of the unexciting CPO price prospects, given the lower crude oil price environment.

Lower gearing ratios as at end-2014. Its net gearing ratio and adjusted
net debt-to-equity ratio fell to 0.78x and 0.37x at end-Dec 14 due to lower commodity prices. It has used only 58% of its total credit facilities of US$17.4bn. As such, we believe the group has no problem funding its expansion plans (maintenance capex of US$500m- 600m in 2015) and working capital needs.

Source:
CIMB, 15 Feb 15.

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