Wolf Money(portfolio update end Sept 2025)part 2 long post

 

(Bala’s curve)

Ho Ho Ho!!…. Santa has no gift

Mdm. Ho Ching reminds new buyers of older HDB flats not to expect generous benefits from government policies when the VERS is launched. They shouldn’t expect leases on the flats to be extended at a favourable term too. A 99-years leasehold will expire without value. In my opinion, she is correct about the lease decaying, but trying to manage expectations is difficult because HDB was seen by many not only as a roof over their head. It also act as a retirement nest egg for many. The status of HDB decaying leases had been vague for many years before 2015. The commingling of HDB as a retirement tool has the potential to stork public discourse among retirees who can’t cash out at a reasonable price for their retirement. The government of the day will need to face the consequences of having to make a populous decision vs losing the popularity vote, as HDB has been seen as the prime retirement asset of many retirees. When survival is at stake. Voters wouldn’t take it lightly. There are about a decade before the VERS kicks in. There are plenty of time to come out with a plan acceptable for the majority owners of those lease decaying flats. It is not just an expectation problem, but a retirement one too.

Market Musings

Some corporate news that captured my attention during Sept. ComfortDelGro buying CityCab. The price paid is expensive in my opinion given they had majority control. It is not necessary to gain full control given CDG is running the CityCab fleet on behalf of ST Eng. CDG is paying more than 3x books in CityCab it does not own. I suspect they might booked a paper profit on their own stake in CityCab due to the acquisition. It is a “brilliant” financial move, but at 3.1x price to book, I am not too sure. The acquisition pushes CDG gearing towards the low 0.2x vs net cash position just over a year ago. Debt is heading towards the 0.3x due to capex for UK bus contracts. The UK business, especially the underperforming Addison Lee should be their core focus. With the high business rate, poor economic growth and frequent industrial action in the transport sector in UK. Is the UK losing its appeal as a top investment destination? There were news on CDG consortium having qualified as one of the candidates to run Copenhagen Metro. We will see how the news develops. SBS Transit just lost the Tampines bus package, which came as a shock to me. It is likely to affect their results going forward. My concern for CDG lies in the way they deployed their capital. Even though basic fundamentals of the company remain sound. 

Caveat Emptor

The SGX Chairman was giving a speech during the AGM on the need for investors to take ownership of their share investments. “Do your own research, take your own risk, don’t come crying to us if you lose money” in layman terms. I fully agreed one should man up to their own investment decision, but I wouldn’t go as far as putting full responsibility squarely on investors. MAS and SGX are the first line of gatekeepers. They play a significant and critical role in ensuring those undesirable listings are kept out of our market. I reinforced my view, Regco should be housed under the branches of MAS to keep the regulatory functions of the stock market separate from the commercial activities of SGX. Even though it was communicated many times, the independency of the Regco is not in question under the wings of SGX. Since SGX has been propagating good corporate governance among listed companies. It should set an example for the rest of the listed companies to follow. The market review is a once in a lifetime opportunity to set our stock market on the right path. Let’s not waste this opportunity to ditch the legacy baggage for a more vibrant market. I have no doubt, with a separate regulatory body under our central bank(MAS), SGX is going to make more money with quality listings.

Lone Wolf Fund(LWF)

Portfolio as at end of Sept 2025

1.) Cash

2.) CH Offshore Ltd

3.) Thai Beverage PCL

*Stocks are not rank in accordance to capital invested. 

*Just for sharing. Not an inducement to buy or sell.

Commentary

Lone Wolf Fund’s return stays at YTD 16.5% (unleveraged, excluding dividend and cash yield). There were some fund deployments. Two new purchases were made in Sept, Thai Bev and a small speculative punt on CH Offshore. I continue to act prudently with my capital.

The market passed Sept with distinction. It is one of the rare occasions where Sept manages to be a positive month. I keep my position small with an eye on the exit door just in case there are any negative market events. I continue to observe the yield curve of some G7 members. With France and UK bonds yields at uncomfortably high levels. As for the local market, the EQDP fund has certainly helped our equity market, especially in bringing the much-needed liquidity to the small and mid cap companies. I like to look beyond the current situation. What is going to happen when the $5b fund runs out? Will it cause the market to drop back to the pre-EQDP era? The fund shouldn’t be seen as a band-aid. A comprehensive plan should be hatched to provide the market with a constant flow of capital. The family office rule should apply to all instead of just newly set-up offices to provide the market with a constant flow of liquidity.

Thai Beverage PCL

(BeerCo Ltd website)

I bought the position while on staycation. Wasn’t expecting the shares to hit my order, given STI was hitting a multi-year high this month. The underperforming of Thai Bev was a staggering 29% against the STI index this year. One can only be hopeful, at least one of the BeerCo, FoodCo or SpiritCo can realise their ambitions for an IPO listing. They recently refreshed their website for BeerCo Ltd. One of subsidiaries looking for a listing on the Singapore exchange. With a better IPO market in Singapore recently, more companies are seeking a listing. BeerCo listing is of a greater possibility than anytime since 2021. If the listing does happen, it will be a significant market event for Thai Bev. At this juncture, it is my pure speculation. There are rumours of other F&B companies like BreadTalk and Fei Siong seeking a listing. In the shorter term, shareholders can look forward to improvement in Thailand as the recent ban on afternoon drinking has been lifted in selected tourist placess like hotels, pubs and airports to help the Thai tourism sector. 

Thailand recently lost the crown of the most popular destination among Chinese tourists in ASEAN to Vietnam. I am quite positive on Vietnam economy as a whole after their sweetheart deal with the Trump administration. Thai Beverage has significant investments in Vietnam via Sabeco and Vinamilk, both companies are the largest beer and milk company in Vietnam respectively. 

(BeerCo website was recently updated)

In the meantime, shareholders will have to make do with a 5.3% yield. The other reason why I am looking at Thai Bev was the rise in F&N. To be honest, I did fancy F&N when it was trading nearer to $1. Since the stock had moved, buying into Thai Bev is the alternative way of getting into F&N without paying the premium. By buying into Thai Bev, I am getting a discount on F&N since the p/e of the mothership is lower than the sister company. Thai Bev owns 69% of Fraser & Neave Ltd. 

Thai Beverages just raised a huge amount through dentures to refinance current debt. The issue has an average interest cost of 1.89%, which is much lower than the current cost of debt. 

(Thai 10 year government bond dropping substantially over the past 1 year)

The refinancing will lower interest payable on debt. The lowering of business rates will boost profit, since Thai Bev does have a ton of borrowings. The lower financing rates, combined with the lower input cost due to strong Thai Baht will be accretive to earnings.

(The average interest rate is at a low 1.89% from recent issued dentures is to refinance existing debt of 3.6% and 4.16%)

The performance of Thai Beverage share vs Thai Set 50 index has widened quite a bit. The Thai stock market has recovered around 30% from its low in June. If one believes Thai Bev will be trading in lockstep with the Thai market, a potential narrowing of that gap could happen. At current market price, the value of spirit business is almost the whole of Thai Bev market cap. Literally, the market is discounting the beer and f&b businesses as free. All things being said, I am going to try out the position for the next 3 to 6 months subject to condition of the market. I hope this stock can set a base for LWF in 2026. Immediate support can be seen at current level and at the 44c mark.

(The Thai Set 50 index moved closely with Thai Bev until recently, the gap is the widest in a year(yellow)

Cash

Cash and cash equivalents continue to dominate Lone Wolf Fund. I invested some capital into MariBank saveplus. It is a hybrid of a bond and a money market fund. The management fee is a low 0.25%. The fund is yielding a return of slightly under 1.8%. It is a stop-gap measure against falling interest rates. Some capital were deployed in Thai Beverage and CH Offshore.

CH Offshore Ltd

This is the first purchase after my break. CH Offshore fundamental wasn’t as bad as many other micro penny. With a net cash position and a profitable business, it does deserve a better airing. At this juncture, I will treat it as a warrant without expiry date. I will assess their performance for the next couple of months. No crazy money was involved which then gives me the flexibility of reversing my position when needed. This company is not suitable for most people. 

Summary 

The US Fed has resumed rate cuts. Based on my previous observation, a rate cut brings short-term relief to the market, but it might be signalling a weakening economy. When interest rates were up, stock market moved higher, in lockstep with the rising interest rate. When the Fed holds rates steady, the market continues to power up. With the rate cutting cycle, will the market be going up or down? It doesn’t matter, opportunity is always present for those that are well prepared. 

The US economy is on a downward trajectory. Job growth has slowed to a trickle. The slowdown in employment growth is not confined to the US. Our job market was weaker with graduates needing more time to secure a job. 

With AI and robotics going mainstream, job openings, especially those dealing with entry level positions like call centres and waitering jobs, will be most affected. The job opportunities are in the area of traditional blue collar positions. Plumbers and electricians have a stronger moat than some white collar job in a disruptive job market. AI is also disrupting the fund management industry. Although AI applications in fund management industry is at its infancy. There are signs they are outperforming the traditional fund managers. 

The US stock market by any measure is overstretched in terms of valuations. I wouldn’t be surprised if there is a pull back. In the meantime, LWF is threading carefully in the market. God Bless!

Link to part 1

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