In today’s briefing:
- Shortlist Of High Conviction Ideas: Income, Value, and Margin of Safety – April 2024
- Fu Shou Yuan (1448.HK) – Due to the Pain Points, Investment Logic Changes
- ETFs Held by BOJ with No Prospect of Sale Are Unfortunate for Shareholders
- China Consumption Weekly (8 Apr 2024): BYD, Li Auto, Trip.com, Alibaba
Shortlist Of High Conviction Ideas: Income, Value, and Margin of Safety – April 2024
- We compile our selection of small and mid-cap names with our desired characteristics of high dividend yields, value, and margin of safety.
- Our top picks are Perfect Medical Health (1830 HK), Water Oasis (1161 HK), Taste Gourmet (8371 HK), Uchi Technologies (UCHI MK), and Ginebra San Miguel (GSMI PM).
- We recently added Dream International (1126 HK). Read: Dream International (1126 HK): Dream Valuation of 3.7x PE and 12% Div Yield, >40% of Mkt Cap In Cash
Fu Shou Yuan (1448.HK) – Due to the Pain Points, Investment Logic Changes
- Fu Shou Yuan’s 2023 performance was indeed not good, with negative growth in 23H2.Shanghai alone has limited market capacity.No matter how strong it is, it cannot drive the national market.
- Fu Shou Yuan has encountered difficulties in external expansion and M&A, so it chooses to increase dividends. However, this means the Company may have to say goodbye to high growth.
- The founder’s “past bad record” and uncertain business outlook hinder the upward potential of valuation, which requires a high margin of safety.It’s better bought at low price to collect dividends.
ETFs Held by BOJ with No Prospect of Sale Are Unfortunate for Shareholders
- ETF sale is pie in the sky if the dividend income from ETFs held by BOJ is used to cover the interest payments associated with lifting of negative interest rates.
- ETFs held by the Bank of Japan, which account for 7% of prime market capitalization, are actually reducing the number of actual tradable shares and hindering trading liquidity.
- Furthermore, ETFs held by BOJ, which don’t indicate their intention to be shareholders, may be voting in favor of the company’s proposal as new silent shareholders in place of cross-shareholdings.
China Consumption Weekly (8 Apr 2024): BYD, Li Auto, Trip.com, Alibaba
- In March 2024, BYD’s Sales volume increased by 46% YoY and Li Auto’s sales volume increased by 39% YoY.
- AliPay announced that foreigners’ consumption amount in China in March was ten times of last year.
- Facing stagnancy and competition, Alibaba’s Taobao removed service charges from its retailers.
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