05 July, 2018

Analysis: Mid Value in Current Holdings

The recent weeks have been rather interesting. There are lots of doom in the markets as well as surprises in the World Cup tournament. I am glad that one of my Cup winner bet is still kicking alive, after the exit of first bet Germany. Been also quite busy spending my free time catching up on books, TV shows/ 8 Pool game and fitness. It makes me wonder if I am a greedy person wanting to do so much.

Portfolio movements has been rough. My SG stocks are pulling down my overall performance,with Singtel as the main culprit. US shares are somehow doing fine. Thus, there are not much transactions made in June. I have also sold my IRobot shares at a 20% gain as it went up higher too fast.

As mentioned earlier, I have replaced Valuetronics with Bumitama Agri. On 28th May, Valuetronics corrected up to 6% despite a good earnings report. I am not sure what is the public thinking, probably its large exposure to China. Nevertheless, the chart was really ugly and I just do not want to risk it. Looking at it now, it was a good call.

Bumitama Agri

Bumitama Agri is my sole mid value investment on the basis of forward-looking upward Crude Palm Oil (CPO) prices. Although dividends had been unstable and trading float is low, I choose not to ignore their double-digit revenue growth. This is despite the 29.5% rise in deferred tax in 2017.


Since SGD is strong, we can see IDR/SGD currency relationship all-time low as a possible tailwind.
From 2016 to 2017, total assets have increased while total liabilities have fallen leading to a healthier balance sheet.
Of course not all is good, net margins have been falling year on year as it was similar in Wilmar’s case. The bright side is Bumitama Agri’s net margin is a lot thicker than Wilmar (14.68% vs 2.78%) but let’s not forget Wilmar’s 2.78% is based on a larger capitalization size. Bumitama may have more potential upside along with better dividends (3.21% in 2017) but Wilmar has a better dividends stability and clarity. The risk which sets Bumitama Agri apart (from Wilmar) is having its revenue source coming entirely from Indonesia while Wilmar is better diversified regionally on this front.

On the bright side, Indonesia is a developing country and should grow extensively as compared to the developed countries. From the below tables, we can see clearly the different types of businesses which both companies are venturing in.

Bumitama Revenue Streams

Wilmar Revenue Streams


No comments:

Post a Comment