Wolf Money(portfolio update end April 2022) Long post!
Portfolio as at end of April
1.) Cash
2.) Singapore Medical Group(SMG)
Commentary
Straits Times Index in face of multiple challenges was surprisingly resilient. Index was down marginally in April. Nasdaq was down more than 17% ytd . A bloodbath was lashed out among the tech stocks in April. LWF had a quiet April. Cash yield was at 0.08% per month. I was pretty bearish since March after Fed changed their dovish view on interest rate policy. There is market talk of a bigger 0.75% jump in interest rate in May.😮I am expecting Fed fund rate to hit 2% by end of the year if the stock market can withstand that kind of increase without the pain. Given all the negative vibes coming out from me, I did contemplate whether to share my view on a particular company last month but withholding it at the very last min. Now I have decided,I am taking a chance on it. These are the missing paragraphs.
“Preaching is one thing, resisting and sticking to one’s belief is another. If you may ask, shouldn’t I be out of the market right now given my bearish view on the market? 😅 Wrong!
I bought a small position of a former Lone Wolf favourite, Singapore Medical Group. Readers of my blog would have known I own the shares in the company for a brief period last year before I sold out a couple of months later at a small loss. Now I am back again for the second try. Company’s share price had done nothing over the past year with trading range between 30c-33c. The small deployment of my capital was in conjunction with our government relaxing travelling rules. No VTL, no quarantine and no pre flight pcr test are required when flying into Singapore. Business person and medical tourist are likely to be the trailblazer of post covid travelling. Singapore Medical Group is likely to be a beneficiary of the new open door policy.
Singapore Medical Group had a great FY 2021, revenue reached 100m and net profit came up 78 percent higher to 15.6m. They had performed a miracle for FY 2021 given the result had no contribution from foreign tourists seeking medical treatment at their centre in Singapore due to partial covid lockdown. Cash flow improved over the course of the year. Net margin is at a healthy 15%. Management mention foreign patients contributed about 15-20 percent of revenue pre covid during a recent result briefing. Valuation had gotten cheaper since my last cameo at SMG(10x p/e vs 8x p/e forward now). It compare favourably against Raffles Medical at 30x p/e. It is still one of the cheapest medical play in Singapore with excellent growth story outside of Singapore. Management indicated they are exploring ways to enhance shareholders’ value during a shareholders meeting. A potential M&A had not factored into the price of share. Medical services should be able to increase their fees in line with inflation. I have not known of any patient who try to negotiate their medical fees in the operating theatre. The company is also expanding aggressively into Vietnam. Vietnam economy remind me of China in their initial years of strong growth early 2000s. Just think of Vietnam as the next China on steroid. Their economy is likely to be bigger than Singapore within the next decade. Fertility rate of 2.0 is an Asian high and population is young with more than 50 percent under the age of 35. SMG represents a play on the growth of the Vietnamese economy. SMG services will be in demand with rising affluence in the country.
I passed Mt.Elizabeth and Paragon medical centres recently, road leading towards Mt.E and Paragon carparks are starting to experience heavy traffic. Medical tourism seem to be showing sign of an uptick. Base on my channel check, Indonesian and Malaysian which are large traditional source of foreign patients are back. Singapore Medical Group is probably the only stock which I am comfortable at the moment given all sort of problems facing the world economy. SMG doesn’t have a China slowdown problem as most patients are base in Singapore and ASEAN, it doesn’t have an inflationary problem(pricing is likely to be inline with inflation), it doesn’t have a global supply chain problem(service industry), it doesn’t have Russia-Ukraine war problem, it doesn’t have a demand problem due to pent up demand from neighbouring countries, backlog will keep them busy over the next 12 months. It doesn’t have a debt or rising interest rate problem due to the company in net cash position. It doesn’t rely on price of certain commodity to be high or low to generate a decent profit. If there is any problem facing SMG, there is a general lack of doctors in Singapore especially in private practice as private clinics are not allow to engage services of foreign doctors unlike public hospitals. Given all the niceties said about the company, I wouldn’t hesitate to act if market take a big turn on sentiment. I don’t have visibility beyond next month. I am in the camp of US facing a recession within the next 6 to 12 months. US GDP was down 1.4% for first quarter. The weakening Chinese economy is another top concern of mine. Technically 33.5c represent a strong resistance for the past year. A break above this level may ushered in a sustainable higher trading range. Support can be seen at 30c. Dividend of 0.9c will be given in May. Company might be providing a corporate update early May. I will be observing their growth trajectory.”
LWF still holds a high level of cash or cash equivalent to be ready for any situation. Cash do have a calming effect to enable one to sleep soundly at night. Yield on cash are likely to gain strength over the next 12 months due to spike in rates. Some banks had stop offering fixed rate mortgage in anticipation of rising rates and fixed deposit rates had hit the magical 1% rate for 12 months tenure recently.
Remember all financial crisis always start with interest rate risk, follow by liquidity risk and finally credit risk. My “faang” opinion, it might be better to be sitting tight with cash than to be in some overvalued hype stocks. Sell away in May, go away in June may just be what the doctor ordered, coincidentally travelling restrictions had just been lifted, a great time for travelling. Happy Travelling! Wishing all a Happy Labour Day and Selamat Hari Raya to all the Muslim readers of my blog.
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I promised my friend Joshua Tan, Singer/Songwriter based in Perth to give him airtime in my blog to spread the message of peace. Below is his new single inspired by the war in Ukraine. Please visit his YouTube channel. God bless humanity.🙏
Ordinarily - A song for Ukraine - by Joshua Tan, Singer/Songwriter
Hi, I’m Joshua Tan, singer/songwriter by passion, stock investor by trade, full-time husband and father.
When the invasion of Ukraine broke out, many people doubted the togetherness of the Ukrainian people to hold out. Some giving the country just a few days before crumbling. But it was inspiring to see them pull together, from young to old - helping in so many ways from volunteer soldiers to making meals, transport, sewing camouflage, running essential infrastructure and services, this list goes on. It is out of this that the words of this song was inspired. Indeed we are all humbled and inspired, and it makes us think, “what would we do in their shoes”? And also, “they are standing up for our way of life too…”.
Those of us in liberal democracies know that they are putting their lives on the line for our way of governance, having struggled about this for over a hundred years - yes, this did not happen overnight. From its first war of independence from Russia 1917-1921, to the struggles against Russification thereafter, the Ukrainian Genocide (The Holodomor) by Stalin 1932-33 where over 4mil died by starvation, its second declaration of independence 1991, Euromaidan 2014 - the overwhelming weight of history shows that Ukrainians are a people who have struggled for more than 100 years from Russia’s influence. To reduce this narrative to just a power struggle between east and west is a denial of a wider history of self-determination which we have to acknowledge.
I hope that this song can serve to honour their heart and sacrifice, which speaks to all humanity’s need for self-determination. I hope that all great powers can take heed to this - western and eastern - that with their great power, it is to uphold everyone’s self-determination, and not to make vassals or puppets to their own interests or insecurities. Blessed are the peacemakers, for they will be called children of God.
If you find this song meaningful, pls help me share it on, especially to friends in #Ukraine and #Europe.
#Ordinarily is song #1 of 5 in my upcoming EP titled The Experts. So please subscribe to my youtube channel and facebook page (Joshua Tan, Singer/Songwriter) as I’m just starting out and need your support!
Thanks for listening, and blessings,
Joshua Tan
PS: I also hope to sing a Ukrainian version of this if someone could translate!
#Ukraine, #StandUpForUkraine, #StandWithUkraine
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