Here we are for yet another monthly update. This has been an interesting month, hope you did read the earlier posts on my realised gains.
Let me get straight to the portfolio update:
- My allocated capital for this portfolio remains at RM 250,000.
- Over the month of October, I have sold shares belonging to 10 companies to free up some capital. I bought shares in 3 companies from the capital that I managed to free up.
- Let me make something clear, I did not sell the companies for any other reasons apart from freeing up some capital.(There were no major shift in fundamentals).
- I want to observe the outcome of USA elections, Malaysian Budget (2021) and the Malaysian political situation before making further moves.
- Almost all the companies were sold for a minor gain or loss, with the exception of Pecca which gave me a capital gain of RM 6,490 and Mahsing with gain of RM 13,463.
- I am now keeping around RM 58,000+/- for reinvestment purpose, after considering the shares I sold and bought throughout October.
- Out of this, RM 30,000+/- belongs to my initial capital, RM 20,000+/- belongs to my realized capital gain since I started this portfolio, and around RM 8,000++ belongs to dividends collected so far.
- The portfolio is down with an UNREALISED capital loss of RM 18,973. I have no issues, and will hold on to the loss making shares for the long term, as the economy is still battered by the covid-19 pandemic. (I am expecting more knock out punches in November)
- Based on records in my CIMB I-trade account. My REALISED capital gain amount for all the transactions I carried out since the start of this portfolio is $ 20,017. (again, mainly due to Mahsing and Pecca)
- I did not get any dividends this month
- So my total dividends collected remains the same as September at RM 8,609 (RM 4,225+RM 4,384).
- RM 4,225 in dividends belong to the shares that I am still holding.
- RM 4,384 in dividends belong to the shares that I have sold.
Top ups for October.
I bought shares in 3 companies.
- First, I bought 18,000 shares in Jaycorp at a price of RM 1.18 per share. (Total RM 21,240).
- Jaycorp is primarily in the business of furniture manufacturing and sales..
- It is a very good dividend pay master and in my opinion, is currently slightly undervalued
- Catalyst for investment includes a good performance for the quarter ended July 2020, and a proposed dividend of 0.065 cents per share, translating to 5.5% dividend yield. The balance sheet is also very, very strong.
- It has already declared and paid a dividend of RM 0.035 cents in July, so the total yield for anyone invested since the beginning of the year is projected to be more than 8% for the whole 2020.
- The prospects for furniture business also looks good with the work from home culture and to a certain extent, trade war between China and USA.
- As per the latest quarterly report, there were higher demand for its furniture from the local and Oceania market.
Apollo food holdings
- I bought 5,000 shares at RM 4.22 per share, totaling RM 21,100
- This co manufactures and sell chocolates and cakes.
- Malaysians would definitely have eaten a chocolate or cake produced by this company at least once, in their life time.
- This co, similar to Hup Seng, (one of my previous holdings), is defensive, and is a so called a retiree’s counter.
- It doesn’t have much growth, pretty much mature, cash rich, with a solid balance sheet and as usual, a good dividend paymaster.
- Catalyst for investing includes a good quarterly performance, and it has declared double dividends.
- It has declared a dividend of RM 0.20 dividend per share final dividend for the year ended 30th April 2020, and also its first interim dividend of RM 0.10 per share for year ending 30th April 2021.
- What makes this weird is the total dividend of RM 0.30 per share will paid on 12th Jan 2021. (Ex date on 10th Dec 2021). This actually translates to a yield of 7.1%.
- Please treat the yield with caution because its includes dividends for 2 different periods, and I strongly believe this will not happen again in the future. (I might be wrong)
- Nevertheless, I am ready to hold this stock for the long term, even though future yields are unlikely to be this high.
- I will also be on the look out for any sudden price surge nearing 10th Dec 2020, and will sell the shares if the price hike can give me more than 10% capital gains.
- I bought 4,500 shares at RM 9.695 per share, totaling RM 43,628.
- It’s selling gloves, masks and other related products globally
- For the first time, I am going against the objective of this portfolio and investing in a so called growth company.
- Supermax does not provide good dividend yields because it reserves cash for growth purpose, so capital gain is my hope.
- I am sure you would have noticed, there are two extremes when it comes to glove investing.
- One group of investors (bearish investors) will claim that glove counters in Malaysia are over valued and all the future growth has been priced in to the share.
- There will be the other group (bullish investors) which still believes in the growth of glove companies. (You can roughly guess I belong to which category)
- Warning !!! Anyone with a low risk appetite and cannot take short term volatility should think many times before investing in glove companies. (And never go all in !!!)
- I have invested in glove companies in my private portfolio (much earlier) and for the first time, I am holding supermax in two portfolios.
- Catalyst for my investment includes,
- Demand for glove exceeds supply currently due to Covid 19 cases
- More growth in plans for the future.
- Latest quarterly earnings is way better than Hartalega,(but Harta has a more premium valuation in terms of PE).
- Future expansion of factories into USA and U.K and
- Very unique business model which is giving extraordinary profit margins, with a global customer base.
- Negative catalyst include
- Global stock market crash,
- Successful development of a vaccine, oversupply of gloves in the future and
- Reduction in average selling price of gloves in the future.
- Talks about a potential windfall tax on glove companies.
- Over supply of gloves with new players considering to enter the industry.
- Yes, I am taking a huge risk in investing in this company, but I strongly belief in its long term growth potential. (I might be wrong though, and sorry I am not going to do a detailed analysis because my theme for this blog is to keep things simple)
- The one thing I am always wondering is why the market is not attaching the same valuation (i.e PE ratio) to Supermax, as compared to the top 3 players, Top gloves, Kossan and Hartalega.
- Perhaps Supermax needs to do more work in proving itself to be worthy of a more premium valuation (higher PE)
Future (Remaining 2 months)
I will be looking forward to collecting my dividends from Favelle Favco, Jaycorp and Apollo food holdings. This will help me achieve a TOTAL dividend collection of RM 10,0000, for 2020.
I am also observing Syarikat Takaful Malaysia (EPF is buying now after selling a lot of its shares), Bank Islam Malaysia and Tenaga Nasional(taken a big bashing recently).
Scientax is also under my radar, as advised by my peers and friends.
I may revisit some of the companies I sold earlier too.
The RM 20k gains from my portfolio has given me the buffer and freedom to play around with my portfolio.
This is also a reason why I daringly sold a number of companies in my portfolio at very small losses.
I was very particular about keeping my realized gain at above RM 20k so that I can invest in “free” shares soon.
Furthermore, I realised its very unlikely for me to reach my dividend target of RM 12,500 for this year. (Standing at RM 8k now).
I hope to reach at least RM 10k in dividend by end for this year.
This means I will have RM 30,000 in realized capital gain plus dividends for reinvestment.
Looking forward to utilize the POWER OF COMPOUNDING in this long term portfolio.
Thank you for reading.
(Disclaimer: Please do not attempt to copy my portfolio. I make a lot wrong moves with some occasional right moves, so kindly do your own research before investing.)