Wolf Money(portfolio update end April 2025)part 2
I wish everyone a Happy Labour Day. The enormous challenges of being a modern worker are real. It is my hope and wish for companies Never To Under Cut your workers. Happy workers mean productive companies which led to higher profitability. Here to the hardworking workers around the world. Happy Labour Day. 🍷
Lone Wolf Fund(LWF)
Portfolio as at end of April 2025
1.) Cash
2.) Grab
*Stocks are not rank in accordance to capital invested.
Commentary
April was a volatile month. Let me address the recent changes to my portfolio. I would have preferred not to touch them, but under the dark cloud of trade wars. I am forced to adopt a more defensive position. It might be worth taking insurance by lowering the beta of my portfolio. For people new to my blog, I adopt a more concentrated style of portfolio management. The second reason is that there are not many Singapore stocks fulfilling my buy checklist currently. LWF had a mixed month with portfolio returns unchanged for the month. YTD performance stands at 3%(unleveraged, excluding dividend and cash yield). Wilmar got hit during the volatile month. Grab was slightly positive for the month after a late surge. ComfortDelGro pulled in the gain for LWF.
Grab Holdings
GrabX 2025 introduced some very interesting new features on the app. In one example, the passenger of Grab can turn on AI recorder during a ride for extra security. The voice recorder can pick up abnormality noise. Ai will be able to pick up a tire squeaking sound which was follow by a loud bang. AI will be able to determine if an accident has occurred and contact the authorities about an emergency. Other functions like group order is a way to increase revenue. The customer will also pay a lower delivery fee if more people buy from the same f&b vendor. They also incorporated AI to help businesses in solving their operational problems. Grab was given a license to operate a taxi fleet in Singapore. The company reported Q1 that beats market expectations.
ComfortDelGro Corporation(CDG)
I made my first purchase after the Trump tariff-induced crash. Besides what I mentioned in my previous blog. I would like to add that CDG might experience a tailwind coming from the strengthening of Euro and Pound against the Singapore dollar. I am not hopeful of the geopolitical contestation to be solved in the near term, but I wouldn’t sit around doing nothing. Life is too short to be worrying. ComfortDelGro can provide a safe heaven for my capital. In 2021, ComfortDelGro was trading close to $1.80(chart.square) with lower earnings quality. Fast-forward to today, the company is on its way of recovering some of those lost earnings due to a substantial drop in profitability in their taxi business. I am cautiously optimistic they will achieve their highest earnings post Covid this year. I estimate the earnings to be around 11c eps. With estimated dividend payout of 80% at 8.5c this year, it translates into a yield of more than 5.5%. One suggestion is for the company to slow down their acquisitions. More than $750m was spent on buying companies last year. The management should try to juice out the synergy from those purchases before embarking on more aggressive acquisitions. Among those acquisitions done last year. CMAC, in my opinion will have the highest growth potential. Flight disruptions and delays are common in Europe. CMAC activates transportation for passengers stranded at the airports to their temporary accommodations provided by the airlines. I see a growing demand for their service.
A lot of CDG won overseas contracts will start generating revenue and profit in the 2H of 2025. FYI, ComfortDelGro achieved its highest profit with earnings per share of 14.7c in 2015. The fall in profit over the last decade was due to the substantial drop in taxi unit profitability. The stock price then was trading above $3 (circle). If they can continue their progress, record earnings are within grasp in the next two years. They are slowly replacing earnings loss in their taxi unit by doing more public transport tenders overseas.
The management mention they are not looking to list any of their local or overseas subsidiaries. I would like the management to reconsider their stance. Public transport is an attractive sector for investors seeking safe haven thus a potential good response to the IPO.
A major resistance can be seen at $1.52level(triangle), which has been the tripwire for the past 3 years. Major support can be seen at the $1.34(green line) level. I added CDG over the course of the month. The stocks come with a 4.25c dividend to be paid in early May. Lastly, would anyone change a corporate logo if the company is not doing well? CDG might turn out to be a growth stock. Q1 will provide investors a glimpse of that potential. I added more CDG to my portfolio over the course of the month.
Cash
There was an increase in cash due to the Wilmar sale. Most of the proceeds went into ComfortDelGro. T-bill rates dropped below 2.5%. For people looking for short term safe harbour for their capital. Some banks, like State Bank of India, is offering a 6-month fixed deposit at 2.5% with a minimum 50k during the time of writing. A sum below 100k is guaranteed by SDIC.
Wilmar(sold)
The selling of Wilmar was a hard decision. The trade war with the US is likely to affect consumers’ sentiment in China, which Wilmar derives 50% of their revenue from.
The reply to my AGM questions on the need for debt reduction was less convincing. Doesn’t matter if the borrowing is for trade financing as the net margin for Wilmar was a low 1.7%. The company is still paying interest on borrowing. Last year interest on borrowing alone amounted to 1.2b. Even if you are able to borrow at 1.7% which I doubt their cost of funding is that low. It will only generate revenue with very little flowing down to the bottomline after interest cost. The company needs to cough out more than USD 1b for Adani Wilmar stake by end of this year. With the additional borrowing to fund the purchase. Wilmar total gearing will be closer to 1x. All been said, I wouldn’t rule out buying back the shares if economic conditions improved in China or there is a substantial reduction in debt. Although I didn’t make any profit from this recent trade, the 5 months research on the stock did helped in improving my knowledge about Wilmar.
Summary
The changes to my portfolio were due to the big shift in the geopolitical and trade environment. They are unlikely to reverse in the short term. I will be looking for defensive companies to invest in. I hope to have more candidates for my portfolio.
The Singapore general election in May is a distraction. The government should be putting their effort in tackling the trade war. Given the weak economy outlook. The next government should undertake a similar DOGE exercise to cut wastefulness in public departments as state revenue will be curtailed due to tariffs and trade wars. As the general election approaches in less than 2 days. The competition of ideas can only be good for our country. Singapore is the ultimate winner when the best candidate gets elected to the parliament.
The market is still not out of the woods. Poor economic data and profit warnings are likely to put pressure on the market. I am looking at defensive companies to buy into if the market goes through panic madness, looking far and wide for the deal of the decade. The art of the deal is to keep it simple. Holding on to all the cards are essential to making the portfolio great again. God Bless.
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