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This is like what we see in some Chinese drama.
"I have good news and bad news. Which one do you want to hear first?"
Yes, I know!
Bad AK! Bad AK!
As usual, I just zoom in on what matters to me.
Regular readers know that AK is too lazy to do complete analyses.
In my defense, I would say that it is like putting together a jigsaw puzzle.
We do not need to have every single piece to be in place to see the picture.
We just need to put the most vital pieces of the puzzle together.
In the case of Wilmar, I mostly focus on their operating cash flows and the capital expenditure or CAPEX.
Why?
Wilmar is still growing its businesses.
Wilmar is still growing its businesses.
Yes, in the plural.
They have many businesses which are growing and they are constantly investing in them.
So, if they have strong operating cash flow but use all the cash in CAPEX, there would be nothing left to pay dividends.
See why I look at operating cash flow and CAPEX now?
As a retiree investor for income, dividends are vital to me.
In 1H2023, Wilmar generated US$3.19 billion in operating cash flow while CAPEX was US$1.16 billion.
They also used US$142.2 million for the acquisition of subsidiaries, joint ventures and associates.
So, if we do the sums, Wilmar could easily pay a dividend even though its profit reduced 10%.
6c DPS amounts to US$542.6 million.
After all this, Wilmar is still free cash flow positive!
Any investor would love to see this.
As Wilmar is one of my largest investments, I am looking forward to the dividend which would be paid on 30 August.
Huat ah!
If you are curious how much my 3Q 2023 passive income is going to be, you are not alone?
If AK can do it, so can you!
P.S. A new YouTube video I produced today will go LIVE at 7pm this evening.
You can go to my YouTube channel and set a reminder under "Notify Me" if you would like to watch the video together with me.
AK's YouTube channel: AK71SG.
Bloggy Award
28 comments:
Hi AK, could you please talk to yourself about Capitaland China Trust? I'm contemplating to sell and loss before it goes lower.
Hi Ann,
I have not added to my investment in CLCT in a long time even when its unit price sank and formed a double bottom in October last year.
At the time, I said that it was getting increasingly hard to read the Chinese economy and leadership.
However, I was OK with holding on to my position to wait and see as I was still being paid.
It now looks like a retest of the said double bottom could happen which is around 93c a unit.
If you have decided to cut loss, you must have a reason and I hope it is not simply because the unit price is falling.
Hi AK,
Few reasons, firstly being that the dividend received is not enough to cover for the falling price, I rather put it into T bills and get risk-free returns. (Ok, not a fair comparison as they belong to different categories) But it is an opportunity cost to me. As you have said, it is increasingly difficult to read the Chinese economy and leadership. If I were to put the money into REITs, IREIT and AA Reit would be a better choice, no? Else I could put the money into bank stocks. Too many better choices and too little money 😑
Hi Ann,
Obviously, you have given it a lot of thought. :D
One good reason for selling a stock is if there are better things to invest the money in.
So, please do what you feel is the best thing for you.
Don't have to follow other people.
I give you spiritual support! :D
Dear AK
Completely agree with your post on Wilmer
In fact, I added at 3.68 buying price this afternoon and will add more if it drops further
The results, negative sentiment on China consumption and the Adani Weimar news from India will keep price down
I will not be surprised if the CEO makes purchases this week
Even if he dies not, I will add at further declines slowly and steadily to average down
The fundamentals are sound but sentiment is weak
As regards CLCT, I am likely to add at circa 95c taking the risk and I hope that eventual recovery with rates peaking imminently will ensure good dividends plus also capital price appreciation
Regards
Garudadri
Hi Garudadri,
My war chest is still recovering. (TmT)
If Wilmar ever goes to $3.50 or $3.00 a share, I hope I would be smart enough to buy some. ;p
I agree that Wilmar has good fundamentals and if Mr. Market continues to feel depressed, we would likely have opportunities to buy more on the cheap. :)
I agree with your view that interest rates have probably peaked.
In fact, analysts in Morgan Stanley are expecting rate cuts in 1H 2024 which is pretty soon.
Most experts see rate cuts happening from 2H 2024.
REITs with strong balance sheets will live to see the light of day. :)
Kamsia many many 😆
Hi Ann,
AK also kamsiah you plenty plenty for sharing your thoughts! :D
hi AK, thanks for sharing ur thoughts on Wilmar,
I believe it's 10% down on revenue not profits though
https://www.businesstimes.com.sg/companies-markets/wilmar-h1-net-profit-falls-53-us551-million-lower-margins
cheers
Hi AK,
I read this article, I thought of you! https://www.businesstimes.com.sg/wealth/how-dividend-investing-strategy-builds-resilience
Hi zhenling,
Really? :o
Alamak! AK blur. (TmT)
Hi ky,
Aiyoh, don't like that say.
AK shy. ;p
Hi AK,
I've been a silent reader of your blog for many years. I always look forward to reading your posts. The share price for Wilmar has been dropping. My average price is about $4. I'm also holding on to Venture. I'm contemplating to either average down Wilmar or Venture. Could you please talk to yourself if you're in my situation? Take care and huat ah :)
Hi Nana,
Well, if we are just looking at prices, then, the charts tell me that $3.50 a share is immediate support for Wilmar.
If that were to break, we could see $3.00 per share.
If Wilmar was not already one of my largest investments, I could buy some closer to $3.50 a share because I think paying a fair price for a good business is not a bad idea.
As for Venture, I don't have and I am not adventurous enough to look at it. ;p
Hi good morning AK. An article in ST quoted Wilmar as worth only at $2.58 (by Alerheia Capital). What is ur insights on tis article? Thk u for sharing
Hi Aminmin,
I have never heard of Alerheia Capital and had to do a Google on it. ;p
Read the intro by the CEO who was with Credit Suisse for 20 years too.
Well, everybody has a different target price for any stock we might throw out.
So, it isn't surprising that we would have different opinions on Wilmar International.
Personally, I feel that Wilmar International is worth a lot more when we look at the sum of its parts.
It isn't a difficult valuation method because it isn't dreadfully complicated.
Reference:
Wilmar: Free stuff with every purchase.
We are right when our facts and reasoning are right.
Not when everyone else agrees with us.
Of course, I could be wrong! ;p
Thks AK....now tt its xd...monday will see more drop..i have no doubt it can reach 3.50 sooner than later...have a great weekend AK!!
Hi Aminmin,
I am sure there are some who would be very happy to see $3.50 a share. ;p
Have a good weekend. :)
Hi
Thanks for sharing.
I am currently not invested in Wilmar. Sound business fundamentals and the price now is really quite attractive for a first tranche. Might nibble soon.
Hi Yv,
Like I said in my recent YouTube video on Wilmar, I like paying a price lower than what Mr. Kuok paid in recent months. ;p
Link to video:
Singaporean consumers are expecting a downturn!
Hi AK,
If you are early 30s with weak warchest now, would you prioritize CPF topup or accumulating income stocks? Both CPF and income portfolios are still quite "young".
Hi JiakBaVehFree,
For me, it was the CPF first.
To me, that was a bao jiak. ;p
See:
Oh, sexy SA! Oppa AK style!
Of course, if Mr. Market is depressed now, buy stocks. ;p
Thank you AK for your comments :)
Hi Nana,
AK is just talking to himself, of course. ;p
Hi AK,
Although there are some financial improvements in 2H23, the share price is going sideways. Would you be able to start talking again to yourself on Wilmar? Looking forward to your sharing.
Hi Edmund,
Wilmar is deeply undervalued.
My past analyses are still valid.
I am simply waiting now.
If the stock price sinks to $3 a share, all else being equal, I am buying more. ;)
Hi AK,
Thanks for sharing your continued conviction. Let's Huat while waiting!
Hi Edmund,
Investing in undervalued stocks is tried and tested.
However, undervalued can stay undervalued for a long time.
So, it is important to be paid while we wait. ;)
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