Fasten Your Seatbelts

 A currency carry trade is a strategy that involves borrowing from a low interest rate currency and to fund purchasing a currency that provides a rate. A trader using this strategy attempts to capture the difference between the rates, which can be substantial depending on the amount of leverage used.

USD Index on 4 Feb 2022 was 95.48 and it has gone up by 8.11% in just about 3 months. The USD index measures the dollar value against the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc. Singapore dollar has weakened against USD relatively lesser within the same period due to the MAS' stance in deliberately appreciating the Singapore currency to combat inflation.

US 10-year Treasury yield was 1.916% on 4 Feb 2022 and it is now 3.142%.

This is a double whammy to those speculators who did a USD carry trade 3 months ago. They stand to lose more from the strengthening of USD than from the surge in interest rates. And the loss will be more if there is leverage. Look at the gradient of both charts from 4 Feb till now, the speed of surge is just too fast for them and all stock markets in the world to swallow.

This also explains why USD is flowing back to the US due to the fear and this is only the start. Those countries who are slower in raising interest rates will have more exodus of funds to the US. 

Both stock markets and property markets will bear the brunt. I estimate that Nasdaq can go down to 6094 in this impending market crash. 

NASDAQ: 6094 is waiting

I estimate Singapore Property Index will be down by 30% from now to 2024. This is almost certain that it will come if history is anything to go by. Singapore Government cannot help as the whole world will suffer when the US government and the Fed raise interest rates. The Fed has to do it so as to purchase back the old bonds at a great discount to the prices they sold to sovereignty funds and rich investors. In so doing, they can reduce their debts and the money they make through this interest-rates-hike exercise can be used to support the US economy again.

What about other countries like Singapore? Too bad, they can no longer print money to prop up their economy like what they did during the initial Covid-19 pandemic stage from mid-2020 to end 2021 now that the US stops printing USD or their countries will have even higher inflation and more exodus of funds. Jacking up interest rates at a speed comparable to that of Fed's action is the way forward to prevent exodus of funds.

Fasten your seatbelts, spend less and save more to buy the dip.

Prescientsuperphang
http://superphang.blogspot.sg

Acquisition of Excelpoint Technology by WT Microelectronics

 

Refer to my two previous posts on Excelpoint:

http://superphang.blogspot.com/2021/05/excelpoint-potential-multibagger.html of 22 May 2021

http://superphang.blogspot.com/2021/08/excelpoint-up-29609-in-day.html of 7 Aug 2021

 

Excelpoint announced on 13 April 2022 that WT Microelectronics Co., Ltd. (TWSE: 3036) (“WT”), through its wholly owned subsidiary WT Semiconductor Pte Ltd and Excelpoint have entered into a definitive agreement pursuant to which WT, through the Acquiring Entity, will acquire 100% equity in Excelpoint by way of a scheme of arrangement at a cash consideration of S$1.93 per Excelpoint share. The transaction, which values 100% equity of Excelpoint at over S$232.2 million, is expected to close in the third quarter of 2022, subject to the approvals of Excelpoint shareholders and relevant regulatory authorities as well as the sanction of the Scheme by the Singapore High Court.

The Excelpoint founder and CEO, Mr. Albert Phuay, will reinvest part of the cash consideration due to him under the Scheme in 20% equity of the Acquiring Entity, with the balance 80% stake owned by WT. Mr. Albert Phuay will continue to be the CEO of Excelpoint.

With the xd date for the 8.8 cents dividend set for 28 April, the price per share will add up to $2.018. This is some gap to my original target of $2.33 set in last May. Anyway, my ROI is easily more than 188% in less than a year. Solid!

The next challenge for me is to find another multibagger to maintain my solid ROI.

Prescientsuperphang
http://superphang.blogspot.sg

Xinte Energy (HK.1799)

I believe Xinte Energy (HK.1799) will be a multibagger. The company just announced its stupendous earnings for FY2021 after market close on 25 Mar 2021.

The Group is principally engaged in polysilicon production, rendering of engineering and construction contracting (“ECC”) service for solar and wind power plants and systems and solar and wind power plants operation (“BOO”).

Solid financials

It closed on 25 Mar 2021 at $16.68. Based on the closing price, the solid financial ratios of the company for FY2021 are as follows:P/E = 3.45x

P/B = 1.114x
Dividend = HK$4.8339 based on exchange rate of 1RMB=1.23HK$
Dividend yield = 8.11%
Dividend payout ratio = 28%
ROE = 32.29%

Some important highlights according to the earnings announcement:
• For the year ended 31 December 2021, the Group’s total profit showed an increase of 608.08% over the corresponding period of last year.
• For the year ended 31 December 2021, the Group’s net profit attributable to shareholders of the listed company showed an increase of 680.88% over the corresponding period of last year.
• For the year ended 31 December 2021, the basic earnings per share amounted to RMB3.92, representing an increase of RMB3.39 over the corresponding period of last year.

Earning Capability

EPS in billion RMB
4Q2021 1.754
3Q2021 1.973
2Q2021 0.98645
1Q2021 0.24155

Strengths

R&D with lots of patents
In line with the world and China government policies
Capacity increases

My avg price is $16.02 and my my target price is $48 within a year for it to hit p/e of about 6x.

Prescientsuperphang
http://superphang.blogspot.sg

Privatisation of C.P. Pokphand (43.HK)

I bought C.P. POKPHAND (43. HK) about 11 months ago at 65 cts apiece because of its solid financials. The Group is a leading agri-food industry player in both China and Vietnam and its businesses range from feed milling, animal farming to food production. The Chairman and Executive Director Soopakij Chearavanont is the richest manin Thailand.

C.P. POKPHAND (43. HK) announced on 4 Oct 2021, Monday, after 4 days of trading halt, that it would be privatised at about 20 percent premium over the last trading price of 96 HK cents. This is solid news to me as I bought the stock about 11 months ago at 65 cts apiece and I received 7.6 cts dividend on 6 July 2021. It closed at HK$1.11 today, up 15.63% over 96 cents. My ROI based on the closing price is about 81.7% within about 11 months. Simply solid.

Interim dividend of HK$0.025 per share was declared and xd is on 11 Oct. The trailing p/e at the current price of HK1.11 is about 4.5x and the dividend yield at this current price was 10.27% for FY2020.

I would likely wait for the price to hit about $1.14 before I sell it. If not for this privatisation, I would have owned this stock for the long haul based on the solid dividend yield, solid financials, and low price-earnings ratio.

Anyway, it is good that most other stocks on HK Exchange are not doing well and the sale proceeds from C.P. Pokphand can be re-invested with good ROI again.

Prescientsuperphang
http://superphang.blogspot.sg

Mewah -- a potential multibagger

 A confluence of positive factors for this potential multibagger:

Solid financials:
Solid growth:
EPS in US cts
2H2020 3.92
1H2020 1.85

2H2019 0.59
1H2019 0.19

*For FY 2020, the Group generated strong operating cash flows of US$161.2 million which contributed in reducing the net debt by US$133.1 million to US$206.0 million. The Group’s balance sheet remained strong with gross debt to equity ratio of 0.47 and net debt to equity ratio of 0.34.
*ROE for FY2020: 15.3%
*Operating margin in FY2020 improved by 128% over FY2019.

Rampant insider trading
The exec chairman, CEO and COO bought the shares in the period of 16 Apr to 23 Jun 2021 at an average price of $0.431667 for a total outlay of $1.016 m. I believe they would have bought more if not for the barring period due to the earnings announcement.

Good Management and Good Future Outlook
Mewah is reaping the rewards from prior investments and has been growing its capital base.
The Company noted in its results announcement, “With economies in two largest markets China and Indiacontinuing to bounce back from Covid-19 and the demand for vegetable oils expected to double in the next 30 years, the Group remains confident about the long-term outlook of the industry. The Group’s good performance amid unprecedented Covid-19 conditions is a testament to its resilient business model and strong fundamentals built over past six decades. The Group is strategically very well placed to embrace the opportunities as they arise.”

Conclusion
Mewah will release its 1H2021 earnings on 13 August. Given the rampant insider trading, solid CPO price and the momentum of its growth, I believe the earnings announced will be superb. We all know inflation will be coming and Mewah will be the beneficiary of inflation.

The current price for Mewah is $0.425. My target price is at least $1.28 within a year.

Prescientsuperphang
http://superphang.blogspot.sg

The Hour Glass -- You cannot miss it!

Refer to my previous post of 26 Jun 2021 on The Hour Glass:

http://superphang.blogspot.com/2021/06/the-hour-glass-rampant-buybacks.html

The Hour Glass kept buying back their company shares and the last that it bought back its own shares was on 4 Aug 2021: 342300 shares at an average price of $1.51 apiece with a total outlay of $518,200.70. $1.51 is so far the highest price they paid since they started the buyback spree from 16 Jun 2021.

It will likely release its 1Q earnings on 11 Aug 2021. From their rampant buybacks, it is logical to deduce that the result will be solid. It is also likely that the management would reward themselves and shareholders with a 3-for-1 or 4-for-1 bonus issue as they did many years ago.

Prescientsuperphang
http://superphang.blogspot.sg

Excelpoint: Up 29.609% in a day

Refer to my previous post of 22 May 2021 on Excelpoint:

http://superphang.blogspot.com/2021/05/excelpoint-potential-multibagger.html

When I recommended it in InvestingNote on 12 May 2021, the price was $0.69. It closed on Friday at $1.16, up 29.609% within just a day. The ROI based on my recommended price is 68.1% in less than 3 months. 

Stellar Q2 financials
EPS in US cts
2Q2021 6.32
1Q2021 3.66

This is stupendous. I only expected Excelpoint to maintain its EPS at 3.66 US cts, now the EPS is growing strongly with respect to the already super-strong growth in 1Q2021. I will need to raise my previous target price of $2.33 to $4.02.

Prospect of the company
"With the strong demand coming from the accelerated adoption of technologies for automation and intelligence in the consumer, commercial and industrial sectors, we will continue to see a rising need for semiconductor chips and solutions," said Excelpoint's chairman and chief executive Albert Phuay.

"There are also new opportunities such as sensorised intelligence for the built environment, where Excelpoint's solutions in AI and the Internet of Things play an important role.
The pandemic, alongside existing geopolitical tensions, will continue to impact the business environment. Despite these uncertainties, we believe that with a resilient foundation and team, Excelpoint is well-positioned to grow its business," said Mr Phuay.

This company has never failed to give you yet another pleasant surprise. With this prescient shot that hits the bull's eye, my paper-ROI now is more than 6 figures. I am confident that my new target price of $4.02 can be hit in about a year.

Prescientsuperphang

http://superphang.blogspot.sg