Portfolio Review May 2020



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Bench marking myself against STI and World Index:

For last month's portfolio review click here 

Year to date:
STI Index: -18.83%
World Index: -9.13%
My Portfolio: -7.72%

Three years trailing:
STI Index: -17.48%
World Index: 6.06%
My Portfolio: 9.58%


Year to date, I outperformed STI by 11.11% and World Index by 1.52%. Three years trailing, I outperformed STI by 27.06% and World Index by 3.52%.

Portfolio composition:
Transactions:

Sold off my Prada(HK:1913)(20% gain) 
Purchased Fu Shou Yuan(HK:1448) and Alibaba(HK:9988). 
Added more Sinopec(HK:386) and APT Satellite(HK:1045)

Commentary:

Apt Satellite(HK:1045) will be launching their Apstar-6D satellite into space orbit by mid June 2020(link here and here). In April 2020, The Long March 3B launcher, that will be used to launch Apstar-6D, failed to launch an Indonesian satellite en-route to space(link here). Apstar-6D is the first HTS satellite optimized for satellite broadband mobility service in the Asia Pacific region, this is a "growth satellite" that APT needs in order to diversify out from the competitive transponder market. Interesting to see how it pans out.



Took an initial position in Alibaba(HK:9988) at HK$187.60. Alibaba has a 7 years FCF CAGR of 33.23% with current trailing FY price to fcf of 18.5x. Trustworthiness of Chinese accounting aside, its valuation is still cheap. Its cloud computing segment top line is growing at 62% yoy and is currently the largest in China. Alibaba is putting a large portion of their cash into scaling their Ali Cloud technology(link here). They are trying to play catch up with Amazon and Microsoft. Why are all the tech giants scaling their cloud business at such a fast rate? Large scale integrated cloud and data services give access to quantum processing and ultimately AI machine learning. This might be the direction they are heading.



Hong Kong has done everything right so far in controlling the spread of Covid19. Businesses are now reopened with social distancing rules loosened(link here). Resurgence of large scale protest is still a possibility. 

The probability of a hostile trade war between US and China may be reduced, due to the fact that the unemployment rate in America is staggering and businesses there are struggling to keep themselves afloat. With the presidential election coming and with the virus still spreading actively in the country, it is unlikely that US would wants to further strain its own companies. 

A global effort to sanction China cannot be ruled out, due to their refusal to let any international body into the country for investigation.(link here)

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