Averaging up - Hovid

After coverage initiation by RHB Research Team, Hovid has been on a steady uptrend. With the 20k cash injection, my hand got itchy and today I bought another 20000 units of Hovid @ RM0.43. This stock should be ripe for harvesting in a few years time.

Due to the 20k cash injection, calculation of the return rate of Huat Fund will be based on 70k instead of 50k. Thus, the return rate will be adjusted from 60% to 43.1%. The Huat Fund looks like this after this transaction:

Financial assets at 16.07.2014
	Name	Purchase Date	Purchase Price	Current Price	Unit	Current Value	P/L ex Dividend (%)	Dividend	P/L inc Dividend (%)
Cash	Hle-Broking			16725.88
	Inari	24/02/14	2.30	3.26	10000	32600	41.9	270	43.1
	Sunreit	04/10/13	1.40	1.44	5000	7200	3.1	282.75	7.1
	Cypark	22/10/13	2.17	2.75	3000	8250	26.7	147.5	28.9
	Jaya Tiasa	24/04/14	2.74	2.56	2000	5120	-6.7		-6.7
	Westport	09/05/14	2.77	2.79	1000	2790	0.8		0.8
	QL	07/07/14	3.60	3.5	3000	10500	-2.7		-2.7
	Hovid	14/04/14	0.38	0.425	40000	17000	10.5		10.5
Total Stock				83460.00	83.3	%		700.25
Total cash				16725.88	16.7	%
Total				100185.88
Capital				70000.00
Current paper gain				12562.86
Total profit including current paper gain				30185.88	43.1	%
Total dividend				889.18

Huat Fund grows - capital injection

After investing in QL last week, the cash holding in this fund was quite low and stood at about RM 5k . At the moment I do not intend to sell any stocks in the portfolio since these stocks still have quite some upsides in them. Some comments on these stocks:

Inari - this company is still growing very fast organically. The recently in Oct 2013 completed factory #5 in Penang is now almost fully utilized at 85%. The rights issue announced will be used to fund another expansion and the rights issue is at reasonable price. Will buy more to average up.

Sunreit - this company is quite undervalued due to the impending launch of renovated Putra Place. Earnings and dividend will improve once it is operational.

Cypark - the renewable energy quota for this year will be released soon. Will be interesting to see how many Megawatts this company wins.

Westport - One of the long term buys. Proxy to the economic growth of Klang Valley industries.

Jaya Tiasa - One of the long term buys. Proxy to the palm oil consumption worldwide.

Hovid - One of the long term buys. Proxy to increasing healthcare cost in Malaysia and its' export markets.

QL - New addition.

Since the cash holding in this fund is low, I decided to solicit some extra capitals and expand the fund size in order to grow it further. Starting 15th of July 2014, Sister Ying will inject RM 20k into Huat Fund with the same return rate i.e. guaranteed 10% annual return with capital protection. After this capital injection, the cash holding increases to RM 25k. This could come handy in the next few months if and when the market corrects.  

QL Resources

QL Resources is a company that I wanted to invest for a long long time. Back then in 2009, there are tips circling around that the price would double within a certain period. Being a skeptic, I chose to forgo this information as these types of rumours are usually obsolete by the time they reach normal investors like us. Boy, I was wrong!

At that time, the share price was RM 3.50 with 330million shares and the current price is RM3.58 with 1.248billion shares. This means the stock value has quadrupled in about 5 years. The list of corporate exercises that QL have undertaken in these 5 years:

The QL financial highlights for the past 5 years:

The pulling factors:
1) Resilient business model
QL is involved in common staples like eggs, poultry, meat and surimi that is supported by rising consumption locally and overseas. Even in economic downturn the demand for staples will only be slightly affected. As QL aggressively expand it's production, it stand to benefit from ever larger economy of scales.

2) Good management team that are hands-on and have a defined vision: 
Their vision is to become a global agro-based enterprise. It is very important for a company to have a vision and implement it. For me, QL is slowly working towards achieving it. We might be seeing Datuk Chia Song Kun be a "Tan Sri Teh Hong Piow" in food sector in a decade's time. QL's strategy towards it's vision are:
      - regional expansion and business model replication
      - strengthening and further integration of the value chain
      - development of a stronger presence in the consumer food market
QL's board of directors might be filled with the Chia family members but this is not a bad thing as they are united and are very experienced in this field.

3) Increasing presence in China, Vietnam and Indonesia:
QL has just acquired Zhongshan Food (ZF), a company that produce and sell various kinds of frozen minced fish fillets and other flavoured foods to China's domestic market. QL plan to expand ZF's range of products to build a presence in the China market that is estimated to be USD30 billion by 2015. Meanwhile the contribution from Indonesian and Vietnam operations are steadily increasing : RM250 million in FY2013 from RM109 million in FY2012. Although the profit margin from these operations are still marginal, it will improve as the production volume increases. As the middle class population in Southeast Asia and China continues to grow, the demand for protein food will increase and QL will stand to benefit.

4) Imminent Contribution from Palm Oil sector:
The maturing palm oil segment will contribute more to the bottom line once the CPO recovers.

Risk:
1) Rising raw feed material
2) No successor in sight


Today I bought 3000 units @ RM3.58. Guess the reason?

Huat fund looks like this after this transaction:

Financial assets at 07.07.2014
	Name	Purchase Date	Purchase Price	Current Price	Unit	Current Value	P/L ex Dividend (%)	Dividend	P/L inc Dividend (%)
Cash	Hle-Broking			5072.23
	Inari	24/02/14	2.30	3.11	10000	31100	35.4	72.5	35.7
	Sunreit	04/10/13	1.40	1.42	5000	7100	1.6	282.75	5.7
	Cypark	22/10/13	2.17	2.86	3000	8580	31.7	147.5	34.0
	Jaya Tiasa	24/04/14	2.74	2.58	2000	5160	-6.0		-6.0
	Westport	09/05/14	2.77	2.7	1000	2700	-2.5		-2.5
	QL	07/07/14	3.60	3.54	3000	10620	-1.6		-1.6
	Hovid	14/04/14	0.34	0.41	20000	8200	20.0		20.0
Total Stock				73460.00	93.5	%		502.75
Total cash				5072.23	6.5	%
Total				78532.23
Capital				50000.00
Current paper gain				11106.71
Total profit including current paper gain				28532.23	57.1	%
Total dividend				889.18