Wolf Money(portfolio update end July 2022)
Portfolio as at end of July
1.) Cash
2.) Singapore Medical Group(SMG)
3.) Comfortdelgro Corporation(CDG)
Commentary
Happy Birthday to my beloved country, Singapore, a place where I call home. If Singapore was a listed company which could be bought and sold like any other securities on the stock exchange, the “Singapore stock” would have made you close to 158x return in 57 years. Singapore GDP per capita started at a mere USD $500 in 1965 had risen to USD 79k by end of 2021. In 1965, a country barely half the size of London with no natural resources and 2m population comprise of mostly the poor and hungry, set out to be a new country with huge odd stacked against us. Our pioneer generation set out the daunting task of creating jobs and attract investments into our country. A miracle was born out of wedlock. The miracle is well documented, I wouldn’t go further.
The challenges over the next few decades will not be much different from the previous. Food, water and energy self sufficiency are high up on the list. I hope we took away important lesson from the chicken export ban imposed by Malaysia. The ban is for chicken now, one can’t be sure it wouldn’t happen with some other important resources in the future. We might not have enough farm land to cultivate our own food but with advancement of technology in lab created food, it can be one of the solution to solve the food crisis. The other solution is to buy farm lands in other countries to grow food which some other countries had done in the past. Our aim to produce 30% of our food we consumed locally is a good start but barely enough. Our relationship with our neighbouring countries have so far been peaceful and cordial. Political climate can changed and it may become unattainable in the future for our neighbours to export food and water to us given they have their own growing needs. We would acquire new suppliers from sources further away from our neighbouring country. Maybe a jv to start farming in Brunei can be consider? The recent project to build undersea transmission cable to import solar energy from Australia is an important milestone to diversify our energy needs. Hydrogen fuel cell remain our best shot of gaining energy independency, given there are abundance of Hydrogen. One other country which set a good example is Israel. Just a decade ago, Israel is both water and energy reliance on other countries. Through advancement of technology, the country is now exporting water and gas to Egypt and Jordan which was unimaginable just a decade ago. If Israel can do it, so can we. There are also domestic issue which our government need addressing. Ageing society, Climate Change and fragmentation of society which want a great voice on inclusiveness, the rich and poor gap are dangerous political undercurrent. As we made an effort to celebrate our achievements, an eye should be cast on future challenges. Here I wish you a happy 57th birthday, Singapore!
The market recovered towards the second half of July as market inflation expectations came down. STI put on close to 3.5% gain in the month of July. The rise in optimism was due to substantial drop in commodities prices and shipping rate. Some companies in US are guiding lower input cost and see inflationary pressures easing off in the second half. I personally think, just my personal view, rate increasing cycle is likely at the tail end for now. I am expecting rate to stay at 3% for a while. The temporary stop in interest hike might give market the legs to run. I am expecting US Fed to stop increasing rate by Sept follow by a period of data watching and waiting before Fed contemplate on the path of rate cycle next year. Next year will be a different ball game. I have no optics beyond the current year. The US economy is definitely slowing down, bellwether like Walmart felt the impact of high food and gas inflation as more consumers are spending more on basic necessities and lesser on non essential. The pain felt by consumers are real. If the economy is not having a recession, the consumers would have been hit by now. I am neither optimistic or pessimistic at this juncture.
Comfortdelgro Corporation
I have more than triple my holdings in Comfortdelgro in July due to favourable ridership data. I am likely to take an eagle eye interest on the upcoming result in Aug to determine my path forward regarding my holding in CDG especially in its guidance pertaining to China and UK Operation. The Tory government had proposed a 4% cut in bus services to London due partially to the opening of the Elizabeth tube line in Central London in exchange for a cash injection to TFL(transport for London) which is running at a huge deficit. The proposed reduction amount to £35m yearly which will be shares by 9 public bus companies unevenly. Metroline a subsidiary of CDG operates scheduled public bus services in London. The extend of the cut impacting CDG UK profit is unknown. I will also zoom in on China operation and its impact on bottomline due to their zero covid policy. Although I am cautiously optimistic they will do well year on year but been in the stock market for more than 20 years one can’t take anything for granted. I have seen my fair share of nasty surprises to presumably predictable, unsinkable businesses. SATS and SIA Engineering are examples where the reopening of our economy had yet to fitter down to bottomline. One suffer a loss and the other a 15% drop in profit. Finger crossed for CDG 🤞. CDG is making good progress in Australia. They just signed a jv with Volve bus and Volgren to establish a manufacturing facility for Electric Buses in its Sydney Bus deport for all operators in that area. This JV give CDG another potential revenue source as a manufacturer of Electric Buses.
Singapore Medical Group
LWF continue to hold Singapore Medical Group. Nothing had change since the last update. Foreign patients continue to make a beeline to specialist clinics along Orchard Road. SMG’s clinics operated out of Mt. Elizabeth and Paragon Medical Centre. They will be reporting 1H 2022 early August. I am hopeful for a record breaking year for SMG.
Cash
LWF still holds a significant level of cash even after tripling my holdings in Comfortdelgro Corporation. As mention in my previous update. The average risk free yield of SSB is attractive at 3%. I am unlikely to get much SSB for the next few issues as the attractive risk free yield catches on in traditional media and some popular YouTube financial channel with more people applying for it. I am expecting one might get 8k-13k of SSB per issue going forward down from my estimate of 15-20k range per issue from previous month. I had made application for Singapore Saving Bonds and got 9k for my effort. I will continue with my dollar yield averaging over the next 3-6 months or even longer.
Lone Wolf Fund had risen back to 10% ytd thank to a small rise in Comfortdelgro share. This year is my 22nd year in the stock market. Most years were good and some years were terrible. During the bad years, ego got brutally crushed but I have never loss my passion for investing after a terrible year. I encourage all to dust yourself off and carry on if you had a bad run this year. Churchill once said ‘Success is define going from one failure to another without the loss of enthusiasm’. I am fortunate and pleased to report, in true churchillian style “I have taken more out of the stock market than what the stock market had taken out of me”. May the good run continue, till we meet again, Hasta la Vista, Baby! God bless!
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