March 2023 Portfolio Review

 

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Portfolio year to date continues to outperformed S&P, HKSE and STI albeit crazy volatility. 

70% of my portfolio comprises of Alibaba, Tencent and Kingsoft. The rest is sprinkled with mostly value counters.

1) Alibaba: I have written quite extensively on this stock. So I won't write more. You can read about it here and here. In essence, I think Alibaba as a holding company is very cheap in term of its sum of parts. 

If the management is determined to unlock the holding level discount it may play out even better than Wheelock and Co(Hkse:20).Why better? Because the discount is more and the components are not just property assets but businesses with network effect that can grow faster if the condition is right. Wheelock and Co is a privatized HK listed holding company. Can read more about it here. Its a thread on valuebuddies which I have contributed.

2) Tencent: Performed well so far up 17% ytd. Lets analyze the company in terms of cash dividend, share distribution and share repurchase. 

In 2022 it has a cumulative return of HK$181.6 billion to shareholders, equivalent to HK$19 per share. In 2021 it has a cumulative return of HK$125 billion to shareholders, equivalent to HK$13 per share. The total return in 2022 increased 45% year-on-year, which is quite impressive.

If you hold Tencent for 2 years or more, the equivalent cost of ownership is reduced by 19+13=32 HKD. 

3) Kingsoft: Performed well so far up 16.63% ytd. Wrote about the value proposition of this counter recently. Can read about it here.

4) AAG: Currently undergoing voting for its scheme of arrangement. Year to date up 22.26%. 

Privatization price: HK$1.85. The average gas price of Mabi Block in 2022 is 2.05 yuan, 1.67 yuan in the first half of the year, and 2.22 yuan in the second half of the year. In 2023, the production capacity and output of the Mabi block will be greatly expanded (planned to increase from 284 million cubic meters in 2022 to 536 million cubic meters), which is worth looking forward to. 

So this privatization attempt by the parent is a low ball offer as even at HK$1.85, the pe next year will be low single digit. 

Currently it doesn't work well for opmi, buying the shares now gives me a potential 10% gain if the scheme is successful or a potential reversion back to pre scheme announcement at 1.30-1.40 region, which equates to a 20% drop. As I don't have any insider info on how this scheme will pan out. I will just hold and wait.

The other counters are quite small in sizing, will expand more on them once I accumulate more.