My Malaysia investment portfolio has increased by 4.50% since the beginning of the year. During the same period, the KLCI, FBM100 and FBMEMAS have increased by 1.01%, 2.22% and 2.60% respectively. My portfolio’s return in 2018 was -6.02%, I have yet to recover from my losses.
Cash position of my Malaysia investment portfolio remains high at 55.93%. The reason why I am not 100% invested is because I think a correction is long overdue. This is me timing the market and we shall see whether I am right or wrong 1 or 2 years down the road. This will be my ammunition when there’s blood in the streets when the stock market goes south.
Many companies announced their quarterly report during the past few weeks. Alcohol stocks such as Carlsberg and Heineken performed well during the last quarter, Carlsberg in particular declared record dividend which caused its price to increase. I remain very optimistic in alcohol related stocks because it is a duopoly between Carlsberg and Heineken. Unlike cigarettes, people are not going to stop drinking as alcohol remains one of the best social lubricants. As society progresses and become modern, more and more people from different faiths will start drinking alcohol even though they are not allowed to do so in their religion.
I expected United Plantation’s earnings to plunge due to the weak CPO price. However, to my surprise, United Plantation managed to sustain its earning thanks to its forward sales policy. Moving forward, I expect next quarter’s earning to drop because forward sales policy will work against them as they will need to book CPO sold at low prices. Overall, I remain very confident in United Plantation’s future because they are one of the most efficient palm oil producer in Malaysia. With their latest purchase of lands, they showed willingness to expand their operation at the right cost. They are very cautious with their approach, which is another positive sign for me. With ample cash in their war chest, I expect United Plantation to continuously search for new opportunities to expand their business.
Recently, the government announced its plan to abolish tolls by buying back the concessionaire. This announcement affected Ekovest and WCE but I think it is an overreaction. The government will have to compensate Ekovest and WCE appropriately if the government wants to take over Duke and WCE. Hup Seng under performed despite proclaiming they will reign in the cost and expand their operations in China. At this point, I am just holding tight as this is a company with brand value and I hope they will manage to improve its situation.
Lotte Chemical and Petron Malaysia went into negative earnings in their latest quarter, I bought into this stock by looking at its PE ratio and some comments on I3 forum. Such a dumb move, lesson learned. Luckily for me, I bought these two companies at a low price hence my portfolio did not suffer huge losses. I will hold on to Lotte Chemical and Petron Malaysia, I will see whether there are improvements in the next quarter. My investment philosophy dictates that I will hold on to new purchases for at least a year before selling them, this will force me to not simply buy any counters. I must think and re-think before buying anything, any buying decision must have solid reasoning and logic.
In another negative surprise, AirAsia had a terrible quarter. They over expanded and overestimated demands for their service. At the same time, cost of fuel spike up resulting in huge losses. Will they be alright? Probably. Airlines business are extremely difficult but history shows that AirAsia did the right things to become what they are today. I will not give up on them as they are an extremely well-known brand and are still expanding in the region.
This is the end of my first monthly report on my Malaysia investment portfolio!
