Friday 8 December 2023

Dec 2023 Portfolio Update: Increasing Stake in Ping An and Alibaba While Divesting Others

Due to the constant bad news coming out of China, share prices of Alibaba and Ping An have taken a hit. What made it worse is that in the latest quarter financial results, Alibaba has struggled to grow its cloud business, while the communist owned companies of Huawei and China Telecom are gaining market share

Tencent, the previous no 2 in the cloud business is now in distant 4th place and have decided not to report its cloud business as a standalone. This highlights the possibility that the cloud business in China is now tilted to the communist owned companies of Huawei & China Telecom.

Personally I expect Alicloud will be allowed to participate in the China Cloud Business soon but no longer as the market leader. In a few years time, Alibaba should be ceding its position to Huawei. lExpectations of the growth of Alicloud has to be recalibrated. I personally feel Alicloud is no longer a US$55 billion worth company. This segment's fair value should only be about US$20 billion. While this lowers my counted Alibaba overall valuation to US$360 billion (Target Price US$140), the current market value of US$185 billion still values Alibaba conservatively. Hence I have decided to accumulate my stake in Alibaba.

Ping An too is another addition due to the news of it bailing Country Garden not yet cast in stone. Ping An is now valued at 8% dividends, hence why I have bought it. However, should Ping An start to move up, I would consider divesting a partial stake.

How the Purchases Were Financed

A portfolio rebalancing was done where 10% in my stake in Keppacoak REIT was sacrificed (25,000 shares) and Sea Group (170 shares). I see less prospects in Sea Group due to the struggles in Shopee to maintain its margins. Below is the overall portfolio composition. 

In terms of dividend yield, the current portfolio is at an expected 8.6% yield. Despite its focus not revolving around REITs, the dividends rivals any S-REIT ETF. Mainly due to the contribution from YZJ Finance, Ping An insurance and the US REITs. Sea Group and Yanlord are speculative plays with 0% expectation of dividends

Sign up as a new to Webull User, Fund $1, put it for 30 days and get US$40. Register through this link; legitimate link which ends on 26 December 2023.

No comments:

Post a Comment