Wolf Money(portfolio update end May 2025)part 2
Lone Wolf Fund(LWF)
Portfolio as at end of May 2025
1.) Cash
2.) Keppel
*Stocks are not rank in accordance to capital invested.
Commentary
Another month, another flip-flop by the Trump’s administration on trade policy. I have acquired some skills of keeping the noise out of my mind. I did little in May with the exception to a sale in Grab Holdings and a small loss in my test case position at Alibaba. Just before the month is up, I bought in a small position in Keppel.
I personally don’t quite like the rumours of Grab buying GoTo. Big acquisitions rarely work. I continue to draw comfort from the good dividend of ComfortDelGro. LWF was down 3.5% for May due to CDG going xd. Year-to-date unleveraged return stands at a negative 0.5%(excluding dividend and cash yield). LWF are underperforming the STI 3.5% increases this year. I hope for a better performance in the 2H 2025.
LWF has two stocks in the portfolio. I will be searching for good company to add, but I am not desperate. I will take time to make a decision due to the slowing economy. I have been walking the ground talking to people, trying to get a sense of the market. You can read one of my conversations with Kenny Loh, Founder of REITsavvy. In the meantime, Lone Wolf Fund will be a two-stock punt on ComfortDelGro and Keppel for now.
Grab Holdings(sold)
I sold my holdings in Grab in May because the market chatter on Grab acquiring GoTo has grown louder. The rumour price was close to Indo Rupiah 100 per share, which values Goto at more than USD 7b. Personally, I don’t like any mega takeover, and it rarely works most of the time. If the price tag of USD 7b is to be paid. The cash in Grab will be zapped dry, putting the company into a net debt position. I don’t see any merit in buying GoTo. If one has been following Gojek, they have been losing market share to Grab in Indonesia over the last few years. Secondly, the customers who used Gojek are likely to be customers of Grab too. How many of us compare prices before we do ride hailing? If not all, most. USD $7b could go a long way in recruiting drivers directly if the main motivation of the merger is to have a bigger driver’s pool. The incremental benefit from the deal is minimal. I don’t see how the deal benefits Grab shareholders, unless it is to placate certain common shareholders of both companies who are keen to cash out at GoTo. I still believe in the growth potential of Grab without the USD $7b Goto deal. LWF made a return of more than 17% in USD terms and 15% in SGD terms for a holding period of slightly more than 2 months.
ComfortDelGro(CDG)
CDG increased their net profit by 19%. The result was by no means a poor one. There is no shame in this result, but I guess the market’s expectations were higher. The 2nd half is likely to see a clearer picture of their transformation from a sleepy to a growth company. Most of their recently won contracts will be generating profits for them in the 2H 25. The cash flow will increase in Q2 from Q1 after they bought a ton of buses, 570 to be exact, for the Manchester and London contract during the quarter. The purchase is at no risk to CDG with both cities paying for financing costs and depreciation. Both cities also undertake to buy over the buses at market value from CDG if there is a change of bus operator when contracts expired. Overall, I can’t say the result meets my own expectations. I don’t think CDG did badly too. Given the poor results happening to many other local companies, it is always a blessing to have a business growing at mid-teens. It is a work in progress to climb the profit ladder. I estimate CDG, at its current profit run rate, will be earnings somewhere between $228m to $250m or eps 10.5c to 11.5c for FY 2025.
CDG won the contract to have sole exclusive on advertisement on all buses and bus interchanges in Singapore. There are also news on the company forming a partnership to bid for the running of Melbourne metro.
I added a little more CDG from the proceeds of my Grab sale. CDG was down for the month due to the shares going xd. LWF received a 4.25c dividend in May for every share held in CDG. After the turbocharged performance in April. The share price had gone into reverse gear in May. Shares were down 7% for the month.
I am still quite sanguine about their performance for the rest of the year. If there are any suggestions I will like to make, it is for management to consider ways to improve shareholders return. Total shareholders’ returns underperformed for period of 3,5 and 10 years vs the STI. The low return is not acceptable. CDG mentioned they will considered value enhancement exercise to improve shareholders’ return, but it had gone cold since it was first suggested in 2021. I suggest management to consider an IPO for their UK or Australia unit to enhanced shareholders’ value. Just look at SingTel share price after they did a series of non core asset divestment. CDG after spending $750m last year, may want to consider bringing some cash back to the group through divestment.
Keppel
The small position was added just before my monthly update is scheduled to be released. I am taking a shot in the dark, hoping Piyush Gupta can replicate his DBS success at Keppel. He was appointed vice chair of the group. Keppel is looking to divest $2.5b worth of asset by end of 2026.
Cash
Cash increased during the month of May as the “out” department was experiencing more activities. The current cash yield is down as banks are cutting rates for their savings accounts.
Summary
The truce on the tariff by the US and China will be seen as a band-aid to fix a gaping wound. Businesses wouldn’t be investing in both countries without the certainty of the trade rules. A slowdown is already underway in both countries. I wouldn’t be surprised if the 90 days will be extended due to the short-term mentality of the US government. It is hard to do a trade deal in the short term to satisfy both parties’ interests. A trade deal between Greenland and the European Union took 3 years to conclude, which in my view was much less complex. How long will it take for a US-China version? I have no idea. Most markets have rebounded significantly since Liberation Day. Going forward, each company’s financial numbers will drive their share price performance. Economically-sensitive stocks will trade according to the prevailing market conditions. The rise in US and Japanese bond yields is an area of concern. Suddenly, the USD has become a frontier currency with its rising yield and volatility.
There are two things the Trump administration can do to spice up the US economy. First is to trash the dollar to make the export of goods and services attractive. The second is to artificially suppress the price of oil to lower inflation. With low inflation, the Fed has no reason to hold the rates at the current level. The diplomatic overtures by the Trump administration in the Middle East recently were part of his aim of lowering oil prices. In the upcoming June school holiday, I am expecting a quiet month for our local market as more Singaporeans take advantage of our stronger currency to travel the world. Have a safe trip if you are traveling. I will be taking a 2 week break. Till we meet again. God Bless.
Please consider following us on telegram for the latest update on Lone Wolf investor by clicking on the link below. No form filling, no payment required, no collection of data, no data mining, no hard selling, no obligation.
https://t.me/joinchat/oCgkD3sQFRMzMWM1
Disclaimers
All investments is highly speculative in nature and involves substantial risk of loss. We encourage our reader to invest very carefully. We also encourage reader to get personal advice from your professional investment advisor and to make independent investigations before acting on information that we publish. Much of our information is derived directly from information published by companies or submitted to governmental agencies on which we believe are reliable but are without our independent verification. Therefore, we cannot assure you that the information is accurate or complete. We do not in any way whatsoever warrant or guarantee the success of any action you take in reliance on our statements. All information provided are for education only. Buyer beware,do you own due diligence.
Comments
Post a Comment