Monday, 21 August 2017

Portfolio Update - ComfortDelGro & Wilmar

Extremely grateful to wise seniors for providing me with advises and insights along the way, as well as to Miss Niao for the feature! Appreciate it very much.

Quick update - Recently, over the past week. I've utilized a portion of my war chest to initiate a position in Wilmar & ComfortDelGro.

I've bought 200 shares of ComfortDelGro on their first day of XD, 17/08/17 at $2.17. Prior to XD they're trading at 2.24 and they've fallen below the price they've giving out their dividends.
CDG has been on a bear mode for months and have been fighting the war with Grab & Uber.

ComfortDelGro operates through 7 segments - Taxi Business, Public Transport Services, Bus stations, Automotive Engineering Services, Inspection & Testing Services, Car Rental & Leasing and Driving Centers.

Recently, CDG has released their FY2017 Q2 results, by which they've reported a decline in revenue which is caused by the decrease in revenue and more than half is contributed by the unfavorable currency translation and the remaining from 5 of their operating segments.

Taxis has been a very significant contributor to ComfortDelGro's business and revenue for taxi business has dropped by 10.7%. The damage is however slightly mitigated by the Public Transport Services and Driving Center business.

At $2.17, I feel that they're decently priced at about 15x their earnings. I'm also impressed by their ability in maintaining themselves in this demanding environment, fending themselves from the disruptive technologies. Knowing that, as well as being a regular customer of CDG in their public transport segment, I'm happy to initiate a position with Comfort. I'll be looking forward to their opening of DTL3 on 21 Oct later this year. In an event whereby their share price were to continue dipping, I will be more than happy to accumulate more of CDG's share.

After the great correction of October 1987, the end of the world and the end of the banking system were widely predicted.
Peter Lynch 

CDG's Q2 financial can be found here.

After queuing for several days, on 18/08/17, I've finally gotten 300 shares of Wilmar at $3.10. Similarly, Wilmar has released their 2Q2017 report recently.

Wilmar's business activities includes oil palm cultivation, oilseed crushing, edible oils refining, sugar milling and refining, specialty fats, oleochemical, biodiesel and fertiliser manufacturing, consumer pack edible oils processing and merchandising, soy protein manufacturing, rice and flour milling, and grain merchandising.

That's a very extensive range of services that they're providing.

In the report, they've reported a net profit of US37.3 million, improvements driven by recovery of Oilseeds division. The earnings is however affected by the losses incurred by the sugar division. Healthy balance sheet can be seen with total assets at US 37.33 bilion.

NAV of Wilmar at US 238.2 cents (1 USD = 1.3662 SGD), Wilmar's NAV is standing at S$3.254.
As such, I'm paying about 5% discount to the NAV at my entry price of $3.10. This provides me with a small margin of safety.

Wilmar has been under my watch-list for awhile and noticing them falling sharply below their 50D and 200D MA sharply after their release of results, I believe that there is too much pessimism factored in. It's also good to note that there is some support below the 3.10 level.

I believe that Wilmar will be performing well in the future and by any chance that it continues to fall, or should that support be broken, I will be happy to accumulate more shares of Wilmar at a lower price.
It's also good to note that the CEO/Chairman is very optimistic about their growth prospect.

 Mr. Kuok Khoon Hong, Chairman and CEO, said,
“We expect Tropical Oils to perform better in 2H2017 on the back of improvements in production yields and better margins from downstream operations. Oilseeds crush margins are expected to remain positive for the rest of the year and Consumer Products will improve as it enters its seasonal peak period. However, Sugar will continue to
be affected by the volatility in sugar prices. 
“While the Group may face short term challenges, we remain very optimistic about the tremendous growth prospects of our various businesses and will continue with our expansion plans, especially in China, India and Indonesia.”

Wilmar's Financial Statement can be found here, and news release here.

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