LVMH private equity fund eyes Asian brands

Most of us would probably have came across this piece of news in the papers over the past few days that a private equity fund that's part of luxury goods maker LVMH Group is aiming to invest $650 million in quality lifestyle brands in Asia.

The fund, L Capital Asia, has already invested $90 million in minority stakes in watch retailer Sincere, shoe store Charles & Keith and Chinese jeweler Emperor. It will likely invest another $200 million in companies this year, including a women's clothing chain in China and another in India within the next 60 days.


It was also mentioned that Ravi Thakran, the Managing Partner of L Capital Asia, expects the fund to eventually have investments in 14 companies that fall below the level of top global luxury brands but are above mass consumer goods.

Putting on our Kiasu Analysis hat, we tried to speculate on whether any of the counters listed on SGX could potentially be a target for some injection of funds.  In our opinion, we felt there were no compelling reasons to suggest L Capital Asia might be interested in any counters listed on the SGX, other than perhaps Hour Glass (why not, since they had no qualms about investing in rival Sincere Watch) and FJ Benjamin (often cited huge potential of company's RAOUL brand in US and Europe). Both counters have exposure to the Asian consumer retail segment which is expected to be well poised to benefit from increasing retail spending in the region.


Below is a link for your reading pleasure:

UOB KayHian starts FJ Benjamin at Hold; RAOUL the key
Tuesday, 22 February 2011

© 2011 - The Edge Singapore

Sabana REIT: Declares Bumper "Maiden" Distribution!

Sabana REIT announced first quarter results tonight after market closed. Management certainly did not disappoint as new shareholders were amply rewarded with a "maiden" distribution of 3.04 cents. As predicted in our earlier post on 17 Apr, this works out to be the highest distribution (in percentage terms) among all S-REITs this time round. With ex-dividend date set on 10 May, shareholders certainly have something more to look forward to in the coming weeks.

"Hot" on Hotung (Part 2): Countdown to 12% Dividend Payout

Hotung supporters can collectively breathe a sigh of relief today. The company announced improved FY11 1Q results after market closed today. However, it was probably the other announcement that got shareholders "excited". After having been made to "wait long long", shareholders can finally countdown to the book closure date for the NT$0.47 dividend payout, which is on 10 May (XD on 6 May next week). As mentioned in our earlier post, this translates to a "mouth-watering" payout of almost 12% based on last traded price of $0.17.

Ms. Tsui-Hui Huang, MD Hotung

For the benefit of fellow kiasu investors who are not already familiar with this counter, we have extracted a few statistics from the Q1 results announcement today:


Last Traded Price: $0.17
NAV: $0.326
Cash per share: $0.08
Short-term Borrowings: Nil
Long-term Borrowings: Nil


We are certainly looking forward to more "hot" trading action in the days ahead!

"Lock"-ing our sights on Wheelock Properties

Orchard View @ Angullia park

Based on the pathetic average daily trading volumes of this counter, one could easily have surmised that a lot of investors (and traders) out there have probably already dismissed the potential of Wheelock properties and switched their attention to more "popular" property plays like Keppel Land and Capitaland. 


However, this counter came to our attention at Kiasu Investors (KI) while we were carrying out our routine run through of Kiasu Investing Rule #3 & Rule #4 (more on Kiasu Investing Rule #4 in a subsequent post).


While applying Kiasu Investing Rule #3, we noticed that this counter is giving out a dividend of 6 cts per share. Ex-div date is on 6 May next week (a shortened trading week due to Labour Day holiday on Monday). Based on last traded price of $1.87, this translates to a dividend yield of 3.21%. (which is much higher percentage-wise than most of the quarterly distributions of REITs listed on SGX).


Fundamentally, a lot of ex-investors were attracted to Wheelock by its large cash hoard (and some on the extremely "slim" hope that the HK parent might privatize the SG company). However, plenty of hopes were prematurely dashed with management's recent announcement of the purchase and planned development of a new residential site in Fuyang city, Hangzhou. The total development cost for the 1,900 residential units is expected to come to about S$750 million, effectively wiping out the entire cash hoard (and all this coming at a time when the Chinese government is frantically trying to clamp down on investments in its overheated property market.) It is not surprising that many investors are thus giving Wheelock a wide berth.


Nevertheless, we, being the fools that we are at Kiasu Investors, somehow managed to conjure up a rule from nowhere to convince ourselves (and hopefully not others) that this counter is really a good investment. We shall be sharing more on our imaginary rule in our subsequent posting. In the meantime, "we would strongly advise investors to exercise caution and seek professional advice before trading in shares of this company" (our standard but not-too-helpful disclaimer).

"Hot" on Hotung

Hotung Investment Holdings will be holding its AGM on 26 Apr (tomorrow). One of the resolutions to be approve by shareholders at the AGM is the declaration of a first and final dividend for the year ended 31 Dec 2010 of NT$0.47 per share. Based on last traded price of S$0.17 and exchange rate of 1 SGD to 23.4 TWD, this translates to a yield of approximately 11.8%. We note that the share price of Hotung has been pretty much range-bounded for the past weeks (after factoring the adjustment due to the change in trading currency from USD to SGD). Thus we deem S$0.17 to be a decent entry level for a bite of the "dividend" cherry that is almost certainly to be "voted for" by shareholders during the AGM. (Additional notes for Kiasu investors: previous AGM was held on 23 Apr 2010, with Book Closure date for dividend payout on 4 May 2010 - though there is no assurance that the management will stick to similar timelines if the dividend is approved this time round.)

We felt body paint is "hot" too!

Lunch-break Updates: First REIT and Sabana REIT

Share prices of both First REIT ($0.755) and Sabana REIT ($0.945) have steadily firmed up along with the generally positive market sentiment. In fact, for First REIT, the gain in share price since 19 Apr (before result announcement) has already out-paced the amount of distribution declared (2 cts vs 1.58cts). We are still very positive on the prospects of First REIT but will be looking for good opportunities to divest our investment and recycle the capital for even greater returns. As for Sabana, the share price has risen 1.5 cts today but we are optimistic that it will rise even more if the bumper distribution that we are anticipating is to materialize on the 27 Apr (less than two days from now).

Hyflux 6% Class A preference shares - To Hold or to Stag?

Hyflux had announced balloting results for the public portion of the 6% Class A preference shares. As expected, due to the overwhelming demand, the Company had exercised the option to upsize the offering to S$400,000,000. Similar to the DBS preference shares balloting results earlier, everyone who applied was allocated at least some shares, with those applying for higher range being allocated more.


We at Kiasu Investor (KI), had applied for 1100 shares and a quick check of the refund monies in our bank account verified that we have indeed been allocated 180 shares. Trading in the shares is expected to start from 9.00 a.m. on 26 April 2011, and the shares will be traded in board lots of 10 shares. Based on historical performance of DBS preference shares, we expected share price for the first two weeks to be trading relatively close to offer price around the $101 to $102 range. Subsequently, once the short term "overhang" has been cleared, the price may be able to move slightly higher.

With trading expected to start soon, the big question on investors' mind would be whether to "Stag" or to hold on to the shares for its 6% payout (not guaranteed). Even though the 6% p.a. payout looks relatively attractive to the general public who are looking for "fuss-free" investment that are not exceedingly risky, we remained convinced that we should be focusing our funds on investments that yield even higher returns through active monitoring and management (using Kiasu Analysis). Hence we will be looking for an appropriate opportunity to "offload" our allocation. However, we do note that this is just a matter of "preference" (no pun intended) and there is absolutely nothing wrong and that we have many friends who are more than happy to just hold on for the semi-annual payouts. (note the dates 25 April and 25 October for those keen on applying Kiasu Investing Rule #2)