Wilmar at $3.00 per share. More on Alibaba.

Quite a few readers and viewers have been asking me on and off this year whether I was adding to my investment in Wilmar.

I think more people asked me when Wilmar's stock price went down to $3.20 and $3.10 per share.

I kept saying that I was waiting for $3.00 per share.

Briefly in August, I thought I might get it but it didn't happen.

Well, it finally happened.

My overnight BUY order at $3.00 per share was filled.

Wilmar International is very undervalued if we were to look at the sum of its parts.

Its majority held YKA in China has a larger market cap than Wilmar in Singapore.

So, buying Wilmar today, we are getting the rest of its businesses for free.

This is something I have said for a long time.

Of course, a stock could stay undervalued for a long time too.

Those of us who track the counter know that insiders are consistently adding to their positions.

Historically, at $3.00 per share or lower, we have seen even more insider buying.

Wilmar's business in China is not performing as well as before as the Chinese economy is still suffering from the meltdown of its property sector.

Consumers are still cautious and are not spending as freely as before.

Historically, Wilmar also did share buybacks during times of lower earnings as its share price got punished as a result.

At current prices, downside is probably limited.

I also like that Wilmar has been consistent in paying dividends through good and bad times.

They did not suspend dividends during the pandemic, for example.

The dividend per share of 17c isn't demanding as expectation is for earnings per share to be about 30c in 2025.

Buying at $3.00 per share gives me a dividend yield of 5.66% and an earnings yield of about 10%.

Of course, readers who have been watching my  YouTube videos on the banks would be familiar with the concept of earnings yield. 

Wilmar is still one of my larger investments and it fits my primary strategy to invest in bona fide income generating assets which will pay me through good and bad times.

I thought I would end 2024 without buying any equities but after initiating a position in Alibaba Group last week, I have added to my position in Wilmar today.

Many regular readers were curious why I invested in Alibaba Group last week.

I have made videos about Alibaba and how I thought it was trading like a value stock.

Despite that, I wasn't ready to jump on the bandwagon because of policy risk in China.

Alibaba also didn't use to pay a dividend but not too long ago, they started to pay dividends, very little in dividends.

The dividend yield is less than 2% with a payout ratio of about 20%.

So, it is a very sustainable dividend.

Alibaba has very healthy cashflow and very strong balance sheet.

Instead of paying more dividends, Alibaba has decided to do share buybacks.

I must agree that doing share buybacks at such depressed valuations is probably a good idea.

Alibaba has already bought back some 10% of its outstanding shares, if I remember correctly.

All else being equal, share buybacks will lead to earnings accretion and we should see a lower PE ratio.

Paying HK$80 per share today is a better deal than paying HK$80 per share two years ago.

Having said this, Alibaba is a small position in my portfolio and although I could add to my position if the stock price declines another 5%, it will probably remain small.

Why 5%?

There is some support for a mild uptrend if we connect all the lows in its stock price seen this year.

Even if there is another 5% decline in its stock price, this mild uptrend would still be intact.

If the support holds, the worst could indeed be over for Alibaba.

When a viewer asked what the stock price for Alibaba is going to be like in future, I said I didn't know how the price is going to move.

However, I know that the 13 years median PE ratio is about 30x which means that if Mr. Market decides to like Alibaba again, all else being equal, its stock price could double from here.

Well, I wouldn't hold my breath.

Undervalued can stay undervalued for a long time and it certainly seems to be the case for Alibaba.

Whether stocks or socks, just like Warren Buffett, I like to buy when they are marked down.

Merry Christmas!

Related post:
Wilmar: Free stuff!

Largest investments updated (mid 2024): Never run out of money in retirement.

It has been quite a while since I last blogged about my largest investments.

The last time I published such a blog was in January 2023.

So, it has been a year and a half!

Apart from being lazy, I didn't do very much to my portfolio and, hence, I did not see the need to publish any updates.

However, I think it is about time I do this even if it is just to take into account changes in market prices.

Many things have changed in the past 18 months.

Before we start, I want to share a YouTube video I produced on how not to run out of money in retirement which I feel is an important topic:

Anyway, here is the update.

$500,000 or more

1. CPF

2. OCBC

My CPF savings is a constant.

Being risk free and volatility free, it provides peace of mind.

I have not done any voluntary contributions to my CPF account in the last 18 months.

Instead, I have used that money to buy Singapore Savings Bonds and I shared the reason why here and also in my YouTube channel, of course.

I have also used money in my CPF OA to buy T-bills which grows my CPF OA savings at a faster clip.

In dollar terms, it is quite meaningful as I have quite a large amount of money in my CPF OA.

So, my CPF savings has grown in size in the last 18 months despite lacking mandatory or voluntary contributions.

Next is OCBC which is my largest investment in equities.

Since the last update on my largest investments, I added to my position in OCBC at about $12.30 a share in the middle of 2023.

The market value of my investment in OCBC has gone up significantly as its share price has also appreciated quite a bit.

This is very nice but as an investor for income, I am more interested in the passive income generation.

OCBC has become and will continue to be the most important passive income generator for me.

$350,000 to $499,999

1. AIMS APAC REIT

2. DBS

3. UOB

4. SSBs and T-bills

Unlike the top bracket, there are some changes in the second highest bracket in my portfolio.

DBS and UOB have both moved upwards to join AIMS APAC REIT in this bracket.

The spectacular increase in the share prices of DBS and UOB resulted in their promotion in my portfolio.

There is also the fact that I added to my investment in UOB in the middle of 2023 at about $27.90 per share.

I also added to my investment in DBS in November of 2023 at about $31.80 per share.

Together, OCBC, UOB and DBS account for more than 45% of my portfolio's market value.

Then, there are SSBs and T-bills.

Together, they jumped two brackets upwards from 18 months ago.

Yes, together, they were in the lowest bracket 18 months ago.

I can save money relatively quickly since my passive income exceeds my expenses rather significantly.

I have been socking away money in SSBs and T-bills in the last 18 months.

Money which would have gone into my CPF account was instead used to buy SSBs.

Excess money was used to buy 6 months T-bills, strengthening my T-bill ladder.

This provides me with more passive income without any price risk.

The money in T-bills also come back every 2 weeks which is useful if there are investment opportunities presented by Mr. Market.

$200,000 to $349,999

1. IREIT Global

For readers who have a keen eye, they would have wondered what happened to IREIT Global which was in the higher bracket 18 months ago?

The large decline in unit price since the last update means IREIT Global has fallen in its position in my portfolio.

Having declined more than 40% in the last 18 months means IREIT Global is no longer my largest investment in the REIT universe.

It briefly replaced AIMS APAC REIT as the largest REIT investment in my portfolio 18 months ago.

I made a video about IREIT Global several months ago and the decline in unit price is not unexpected.

Here is the video for anyone who might be interested:

I am still holding on to the investment and will be adding if its unit price declines further.

I find it easier to value IREIT Global because it isn't holding something amorphous.

It is deeply undervalued and more so now that Mr. Market is feeling very pessimistic about it.

In fact, I am getting a bit of that Saizen REIT vibe.

Readers who have been following my blog for many years would know what I mean.

Still, same same but different.

So, do not throw caution to the wind.

I made a video about this recently too:

$100,000 to $199,999

1. Wilmar International

2. ComfortDelgro

3. Frasers Logistics Trust

Membership in this lowest bracket of my largest investments has changed.

Wilmar dropped one rank as its share price declined significantly.

I know Mr. Kuok and Mr. George Yeo added to their investments recently.

However, I am still waiting for $3.00 per share before adding.

Wilmar is very undervalued if we look at the sum of its parts.

However, conglomerates always suffer from conglomerate discount.

So, buying with a larger margin of safety for a person of limited means like myself is not a bad idea.

Wilmar is still profitable and pays a meaningful dividend which means I am being paid while I wait.

This is true for all my investments.

ComfortDelgro and Frasers Logistics Trust are both chugging along fine.

Nothing much to say there.

Sabana REIT and CapitaLand China Trust have dropped out from this bracket.

I reduced my investment in Sabana REIT substantially not too long ago and I blogged about it too.

Don't like how the internalization process seems to be fraught with speed bumps.

Like I said in the blog, it is very different from my experience with Croesus Retail Trust.

CapitaLand China Trust has seen its unit price plunged.

Unfortunately, its fate is tied to that of the Chinese economy which is not in a good place now.

Specifically, the Chinese property sector which accounts for 30% of the economy will be a dead weight for many years to come.

So, this is the update.

Although there are a couple of investments which are underperforming, overall, the portfolio is doing well.

That is what matters to me.

Performance on a portfolio level.

Of course, all of us have different beliefs and we should all do what we feel is right for us.

If AK can talk to himself, so can you.

Related posts:
1. Sabana REIT divestment.
2. Largest investments (4Q 2022.)

Wilmar to pay 6c DPS as 1H2023 profit down 10%!

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.

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.

Wilmar Int'l: Record dividend! VICOM steady pom pi pi!

2023 started out well for my investment portfolio with Volare Group offering to buy units in one of my largest investments, Sabana REIT, for 46.5c a unit in January.

As my investment in Sabana REIT is made up mostly of units bought in December 2020 and January 2021 at around 35c a unit, the offer was good news to me.

I last blogged about this just a few days ago:

Sabana REIT: Sell at 46.5c a unit to Volare Group?

Then, earlier this month in February, DBS announced stellar results and higher dividend.

A special dividend of 50c a share was also declared and because DBS is one of my largest investments, larger, in fact, than my investment in Sabana REIT by a good measure, it was fantastic news to me.

It will have a relatively significant impact on my quarterly passive income.

That led me to wonder if OCBC and UOB might do the same as their results are expected to be relatively robust too.

See:
OCBC and UOB to follow DBS with special dividends?

Still luxuriating in the news of a rather generous special dividend from DBS, I read that Wilmar International has declared a final DPS or dividend per share of 11c.

Together with the 6c interim dividend paid earlier, total dividend is 17c per share which is a record for Wilmar International!

As one of my largest investments, Wilmar International is in the same bracket as DBS and UOB in my investment portfolio.

See:
Largest investments updated (4Q 2022.)

Good news all around!

Although I am telling myself don't let it go to my head, I am feeling a little giddy, to be quite honest.

I have to be careful because I tend to make mistakes when I am feeling high.

I know this for a fact because it has happened a few times before.

Making mistakes when I am on medication is unfortunate but making mistake when I am feeling high is shameful.

I already gave myself a little treat when DBS announced its special dividend.

I think it is OK to give myself another little treat.

Must be nicer to myself.

Wilmar International and our local lenders are all cyclical businesses and the weather isn't always going to be sunny.

I am not being a wet blanket.

It is just the hard truth.

So, socking away a big chunk of the bumper dividends in preparation for rainy days is the sensible thing to do.

I alluded to this when I shared my 2022 full year passive income at the beginning of this year.

This is not being pessimistic.

It is just being pragmatic.

See:
Passive income: More resilience.

Still, rain or shine, I expect Wilmar International and our local lenders to continue to bring home the bacon for many more years to come.

I also remind myself that I have not always been right and that I have been wrong too.

I have also said many times that as long as I am right more often than I am wrong, I should do well enough.

Peter Lynch famously said that if we can be right 6 times out of 10 when investing our money, we are not doing too badly.

However, I should also say that unlike Warren Buffett who has money pouring in constantly so that he can invest and compensate for mistakes, we don't have that luxury.

So, by socking away cash whenever we get a boost in passive income allows us to do a mini mimicry of Warren Buffett's cashflow which will allow us to compensate for mistakes more easily.

Of course, if you are someone who is able to mimic Warren Buffett's cashflow without having to do what I do, then, good on you!

If you are a new reader or cannot remember, I blogged about this in 2014:

How to make recovering from investment losses easier?

Moving on to VICOM which reported higher earnings and declared a final DPS of 3.32c, long time regular readers know that this is one of my larger smaller investments.

This means that the position is larger than $50,000 but smaller than $100,000 in market value.

Unlike its parent, ComfortDelgro, the price of VICOM's common stock is very much above my buy price since I added it to my investment portfolio in 2015.

I would say that VICOM is similar to ST Engineering, another one of my larger smaller investments, in the way that a big portion of its income is assured because of our government.

Just like ST Engineering, VICOM also pays out 90% of its earnings as dividends.

Not an exciting investment but a steady one for income, I expect it to continue paying for my car inspections (and more, of course.)

VICOM steady pom pi pi!

Very apt Singlish phrase if we were to imagine cars honking.

I think I have rambled long enough in this blog.

To all fellow Wilmar International, DBS and VICOM shareholders, congratulations and huat ah!

References:
1. Accumulating Wilmar.
2. Wilmar: Free stuff...

Wilmar International: Free stuff with every purchase.

I increased my investment in Wilmar, averaging up in the process, as it seems to fall out of favor with Mr. Market once again.

The last time I increased my investment in Wilmar was in August last year at a similar price level.

Back then, I said I was pretty happy to add to my investment at a price much lower than what Mr. Kuok paid in June in the same year.

Now, I feel the same way, especially when Wilmar has been doing share buybacks constantly even at much higher prices.

Wilmar has been undervalued for a long time and it is still deeply undervalued today.

The case for investing in Wilmar is even more compelling today especially if we believe that heightened inflation is here to stay for a longer time.

If we believe that there is going to be stagflation, then, companies like Wilmar will likely be the ones which do better as they provide essential goods and services.

If you are interested in my little ideas on Wilmar, I will provide links to my past blogs on Wilmar at the end of this blog because I am too lazy to rehash.

However, here are a couple points which I might or might not have mentioned before, off the top of my head:

1. Wilmar's subsidiary in China, Yihai Kerry Arawana Holdings (YKA) in China has a market cap that is about three times that of Wilmar's market cap in Singapore and Wilmar still holds a 90% stake in YKA.

2. Wilmar's 50% joint venture in India, Adani Wilmar Limited, has achieved similar success in its public listing as its market valuation has tripled since listing in February this year.

Wilmar is a profitable business and is reliable when it comes to paying dividends.

Wilmar paid meaningful dividends even during the COVID-19 pandemic bear market.

Wilmar can easily unlock value for shareholders by reducing its stakes in the abovementioned businesses alone.

Undervalued can remain undervalued for a long time, of course, which makes Wilmar a decent choice for investors who are pretty happy to be paid while waiting.

Investing in Wilmar today or at even lower prices, if we are lucky, is to get big chunks of good income producing businesses for free.

Whether it be stocks or socks, we like buying when they are marked down but what about having some pretty cool stuff thrown in for free with our purchase?

AK is being mental again. (TmT)

Recently published:
1. Centurion Corp.
2. Chinese tech stocks.

Related posts:
1. Wilmar's interim dividend.
2. Wilmar was $7.11 a share.
3. Wilmar: Target reacquired.
4. Accumulating Wilmar on price weakness.

Reallocate as interest rate rises in a slowing economy.

Interest rate is rising.

PM Lee recently warned of a possible recession in the quarters ahead.

Put rising interest rate and a slowing economy together, we get a rather gloomy picture.

The evil which is inflation is preferred to the evil which is deflation.

Although inflation is the lesser evil, it isn't as benign when it is heightened which is what we are seeing now in the world.

We can reduce inflationary pressure either by increasing supply of goods and services which are in demand or tempering demand for such goods and services.

As it is difficult to increase supply right away, central banks are trying to tame inflation by increasing interest rate in an effort to reduce demand.

Increasing interest rate increases the cost of debt.

Credit is the lifeblood of commerce and most businesses are leveraged to some degree.

If the economy is healthy, businesses can pass on the higher cost of doing business to their customers and higher finance expense that comes from higher interest rates are naturally a part of such cost.

However, it becomes more difficult for many businesses to pass on such higher costs to customers if the economy is suffering from malaise.

Heightened inflation, rapidly increasing interest rates and low economic growth is not a good mix.

In such a situation, even very strong companies will not be spared a slowdown as most entities would be less ready to part with their money.

Already, we see some big name MNCs both in the old and new economies warning of very difficult quarters ahead.

Only the fittest will survive but even they might not emerge unscathed from such a toxic cocktail.

As an investor for income, I believe that businesses which are able and willing to pay a meaningful dividend should be favored.

To make sure that dividends are sustainable, these businesses should also provide necessary goods and services and have stronger balance sheets.

They too will take a few punches during hard times but they should be able to roll with the punches.

I think staying invested is still the way to go but, like I said, I should mostly be invested in businesses which are able and willing to pay dividends even during hard times.

So, with this in mind, I have taken a hard look at my largest investments since they impact the performance of my portfolio the most.

The strategy to increase my investments in DBS, OCBC and UOB during the COVID-19 induced bear market has turned out well and sticking with this strategy makes sense to me especially with interest rate rising.

I am also interested in increasing my investments in ComfortDelgro and CLCT on weakness as they seemed to have lagged in price recovery while their businesses look more attractive to me in recent times but for different reasons.

I am leaning more towards ComfortDelgro which has a stronger balance sheet and also because looking at the numbers which have improved, there is a fairly good chance that future dividends will be higher and could even go back to pre-pandemic levels.

CLCT's plan is to increase the proportion of new economy assets in their portfolio and I foresee more fund raising in the future.

So, I will increase my investment in CLCT slowly and not bulk up in a hurry.

REITs are required to pay out at least 90% of their operating cash flow to investors to enjoy tax benefits and this is a source of comfort to me.

The REITs in my portfolio are rather conservative when it comes to debt and in the case of IREIT Global, some of their rental income is linked to the German consumer price index and higher inflation could see a greater increase in income.

In my list of largest investments, the only entity which did not pay a dividend during the last bear market was Centurion Corporation.

Amongst my largest investments, Centurion Corporation also has the weakest balance sheet apart from Wilmar International.

However, Wilmar International is in the business of food production and distribution which, in my opinion, is recession proof. 

Given their size and market dominance, they should be able to charge higher prices.

Wilmar also has good options available to unlock value for shareholders and they were paying dividends even during the pandemic.

I increased my investment in Centurion Corporation as Singapore decided to live with COVID-19.

For those who are interested in my thoughts on the matter, read:

1Q 2022 passive income.

In an environment of rapidly increasing interest rate and slowing economy, however, with a rather weak balance sheet, it could be harder for Centurion Corporation to bring home the bacon.

In my original blog on why I invested in Centurion Corporation, I crunched some numbers on how rising interest rate could impact Centurion Corporation's interest cover ratio.

For those who are interested, read:

Added Centurion Corp to portfolio.

Of course, if they are able to increase asking price per bed meaningfully to balance the increase in the cost of debt, then, they should be OK.

Although they would be able to do so easily in a healthy economy, it might not be so easy during times of economic malaise.

Wait, didn't Centurion Corporation do quite well even when the economy was unhealthy?

Yes, they did but they didn't have to deal with rapidly increasing interest rates.

I don't know everything and I might be missing a few things here.

So, I have decided to only reduce my exposure to Centurion Corporation and not go to zero.

As my total passive income held up quite well during the two years when Centurion Corporation suspended dividend payouts, I doubt reducing my investment would have any meaningful impact in terms of passive income generation which makes this decision an easier one for me.

Although Centurion Corporation still looks undervalued to me as it trades at a huge discount to NAV, to be honest, this discount could reduce as valuation of their assets could take a hit.

It would be interesting to see how the management navigates the challenges ahead and how they might unlock value for shareholders.

They are trying to sell some assets in the USA now which if successful should help in reducing leverage and unlocking value.

To this end, I believe they should ramp up their effort and sell more assets.

Like Phua Chu Kang said at the onset of the COVID-19 pandemic, "Things different already."

In the grand scheme of things, this is a relatively minor shift of resources but because I am more inactive than active as an investor for income, it might seem like a big event.

Remember, mentally unstable AK is just talking to himself, as usual.

Have a plan, your own plan.

Recently published:
Avoid this in a rising interest rate environment.

Related posts:

1. Rising interest rate flashback... 

2. Largest investments 1Q 2022.

3. Investing with peace of mind.

Sabana REIT's lesson and Wilmar's interim dividend.

A few years ago, I blogged about lessons from my journey as an investor with Sabana REIT.

One of the things I said was:

"I remember UOB KayHian was particularly bullish in 2013 and had a target price of $1.30 for Sabana REIT. By that time, I had turned cautious although I was enjoying a distribution yield on cost of between 10.3% to 11.1%..."

See: 

History with Sabana REIT.

In a nutshell, no one cares more about our money than we do and we must always do our due diligence.

Sabana REIT is pretty generous in dishing out lessons and last year saw ESR-REIT making a low ball offer for Sabana REIT which resulted in a fight led by activist investors to scuttle the proposed deal.

I wrote a piece on why the proposed deal was a bad one for Sabana REIT.

Not only did it grossly undervalued Sabana REIT, "Sabana REIT's investors would eventually have to help bear the cost of the mistake that was the merger of ESR-REIT and VIT." 

See: 

4Q 2020 passive income.

Anyone who said anything to the contrary was either misinformed or malicious.

In a recent article in The Business Times, the writer's one liner summed it up well.

"If the proposed merger of Sabana Reit and ESR-Reit last year demonstrated anything, it is that IDs cannot always be relied upon to act in the interest of unitholders."

Source: 

The Business Times.

I am sure Sabana REIT is worth more today and will probably be worth more in the future as it continues to unlock value in its portfolio.

Of course, a rising tide will lift all boats too and Sabana REIT will be a beneficiary.

Recently, I also replied to comments from some readers on Wilmar's declining share price.

I actually increased exposure to Wilmar, adding on weakness in its share price, averaging up.

I believe that Mr. Market is undervaluing Wilmar even at today's price.

"Wilmar reports higher 1HFY2021 earnings on better selling prices and volumes; to pay interim dividend of 5 cents." 

Source: 

The EDGE.

The cyclical component of Wilmar's business will do well just like other cyclical businesses as the economy recovers.

However, Wilmar is much more than that.

I said this in a blog about Wilmar before:

"There are not many companies in the world like Wilmar when it comes to agricultural products and their distribution. 

"Wilmar has amazing breadth and depth of operations. 

"Its distribution network is extensive, established and still growing."

See:
Accumulating Wilmar on price weakness.

I said that investors in Wilmar must be of the patient variety and I still feel that way.

While I wait for Mr. Market to pay what is Wilmar's true value, I am happy to be paid while waiting.

Will Mr. Market pay Wilmar's true value and if it does happen, when?

Your guess is as good as mine, of course.

Related posts:
1. Wilmar was $7.11 a share.

2. Little book of value investing.

"It may move up toward its real worth today, next week, or next year. It may trade sideways for five years and then quadruple in price. There is simply no way to know when a particular stock will appreciate, or if, in fact, it will."

Wilmar was $7.11 a share and DBS, OCBC and UOB?

This blog is in response to questions by readers, csky and linus.

On Wilmar, DBS, OCBC and UOB:

That price target of $5 for Wilmar which I suggested in November 2019 is outdated as Wilmar's chart pattern was damaged by the price action inflicted by the COVID-19 pandemic.

The chart has morphed since then.

For readers who don't know what we are talking about, see:

Wilmar: Target reacquired.

Wilmar's chart is showing very strong upward momentum right now.

RSI, a momentum oscillator, shows that Wilmar is overbought right now but it could stay overbought for some time.

This is because there isn't any negative divergence in the MACD which is another momentum oscillator.

As the stock price moves higher, the MACD moves higher and this positive momentum suggests price could go higher.

Compared to this, the charts of the three local banks show negative divergence.

Their higher highs in stock prices have been accompanied by lower highs in the MACD.

Softness in the local banks' stock prices is to be expected.

We could see them retreating to test immediate supports.

However, Wilmar's stock price looks like it could go higher.

How much higher?

I don't really do this anymore but I will stick my neck out this time.

You probably remember this blog from 2017:

Accumulating Wilmar on price weakness.

In that blog post, I noted that when Mr. Market was feeling very bullish about Wilmar's prospects (like now), Wilmar's stock traded at a huge premium to its NAV.

It was a really huge premium.

Today, Wilmar's NAV is significantly higher than it was in 2010.

Based on this observation, it is probably not irrational to think that Wilmar's stock price could go higher than $7.11 we saw so many years ago in January 2010.

Having said this, there is nothing wrong with taking profit.

So, selling some to lock in some gains is probably not a bad idea.

Trading around a core position?

Sounds familiar.

Buy more, sell some or hold?

You decide.

I anyhow talking to myself only hor.

Wilmar: "Target reacquired" and target prices.

Regular readers know that I have been a Wilmar shareholder for many years.

It is difficult not to find Wilmar impressive as a business entity with its breadth and depth of activities.

Many years of Mr. Market's pessimism towards Wilmar gave believers a big window of opportunity to build their exposure.

In the last two years or more, I have been accumulating shares of Wilmar until 3Q 2018 when I decided to sell into the rally, reducing my investment significantly while keeping a core position.

See:
Largest investments (3Q 2019).

It is a strategy that regular readers should be familiar with.

It is so that I would still stand to gain in case the bull had legs.

Some might call it a hedge as, always, I don't know everything.

Well, as it turned out, the bull grew tired and needed a break.






If you are new to my blog or if you are rather forgetful, to understand why I was building a relatively significant long position in Wilmar,

See:
Accumulating Wilmar on price weakness.

You will see how I did temporal comparative analysis in that August 2017 blog.

To understand why did I buy more when Wilmar's share price went under $3.00 a share instead of cutting losses,

See:
3Q 2018 passive income: Wilmar.

Conviction.

Good reasons make it stronger.

Of course, being paid while I waited made patience more affordable.






I watched the latest Terminator movie recently and Arnold Schwarzenegger (aka Carl) in one scene said:

"Target reacquired."

A man of few words, as always.

OK, no spoilers in case you have not watched the movie.

Anyway, Wilmar was still an investment target for me after the partial divestment exercise to lock in gains earlier this year.

Using my limited knowledge of technical analysis (TA), I waited for what I thought could be the right time to increase exposure again.

Over time, as its share price retreated, I thought Wilmar's chart could form either a falling wedge or a cup and handle pattern.





If it was a cup and handle pattern, share price should find a floor at approximately $3.50 a share (i.e. the lowest point of the handle).

Could be a few cents lower or higher. 

I was also keeping an eye on the rising 200 days moving average (200dMA).

Being a long term moving average and a rising one at that, it should provide a stronger support.

By the time I decided to increase exposure again in a big way, the 200dMA was at $3.54 or so which tied in nicely with the approximate low (of the handle) in a probable cup and handle pattern.

I started buying at $3.60 and bought more as it did eventually hit $3.54.

Wilmar became one of the largest investments in my portfolio once more after that. 

If you do not remember reading about this in my blog, you might want to see related post #1 at the end of this blog.








As usual, I scribbled all my TA on a scrap of paper and, unfortunately, I cannot find that paper scrap now.

However, I remember the measurements I took from charting.

Measurements?

Yes, the measured target prices.

Prices?

Yes, that is not a typo.

In the plural.

If Wilmar's share price were to move higher after forming a falling wedge, the measured upside target would approximate $4.50 a share.

If Wilmar's share price were to move higher after forming a cup and handle pattern, the measured upside target would approximate $5.00 a share.






Take my TA with a pinch of salt because I am an amateur, after all.

I know some of you do not believe me but I am just being honest.

Well, amateur or not, if things pan out like I think they might, I would stand to book a pretty handsome capital gain.

If things don't pan out like I think they might, all else remaining equal, I would still stay invested as I am comfortable with my level of exposure in a business that provides me with both elements of income and growth.

Now, who says we cannot be an investor and a trader at the same time?

Older readers would remember this masterpiece of a pyramid drawing by AK the artist:

See:
Investing for income and dividend yields.

and also:

Motivations and methods in investing.

The former was a blog from March 2017 while the latter was a blog from July 2013. 

Newer readers who wish 

1. to know what the pyramid drawing is about 

and 

2. to understand my investment style 

should find the blogs useful.






Newer readers might also want to read related post #2 at the end of this blog. 

Why do I invest the way I do?

You tell me.

Related posts:
1. Largest investments updated (4Q 2019).
2. Peace of mind as an investor.