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Transactions For Sept 17:
1. Goldpac: Added more at lower price than initial purchase price after the analysis of the half year results
Reasons for purchase:
- Taking the opportunity in weakness of share price to add more after sell down in the aftermath of its first half results. Revaluation gains/losses are non-operating in nature. Operationally, its results seem satisfactory
- Management announced more details in its future plans to develop its Fintech business. The Fintech and smart payment wearable businesses could be a wildcard for future growth
- Strong innovation capability and leadership. Read Goldpac: Scored Double First As Selected Provider for New OTO Initiatives To Improve the Banking And Payment Ecosystem
- Trading at around 2x ex-cash PE. Valuation updated HERE
What I might not like:- The overseas revenue contribution is still small
2. Hopefluent: Added more at higher price than initial purchase price an analysis of the half year results
Reasons for purchase:- Better than expected half year results despite the property cooling measures imposed by the local government
- All business segments are growing well
- Huge increase in interim dividend. I love it!
- Co-founders continued to purchase large quantities of shares from open market at higher price
- Still high MOS with Net cash/share at HK$2.18. Valuation updated HERE
What I might not like:
- Possible increase in credit risks exposure from its growing Financial Services business. However, management expressed optimism in this business and the risks are controllable. Need to watch this business carefully going forward.
- Possible more property cooling measures? But I ready to accept this risk since this is to make the market growth more orderly and sustainable over long term. Share price weakness from such measure may even offer opportunity to buy the shares at cheaper price.
From the above two transactions during the month, it seems that I have averaged down on Goldpac and averaged up on Hopefluent. Does dollar cost averaging work? Well, I like to find out too. We shall review this strategy in time to come.
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