2024 Week 18:

Tracker Fund of Hong Kong, Tencent, TK Group, AEM,

HKEX: Tracker Fund of Hong Kong, Tencent

This has to be the best week for the HKEX. Most stocks are up 20% from the year low? But if you look at the broader market, using 2800.HK, Tracker Fund of Hong Kong the fund is only up a measly 8.88%.

The fund's top holdings include financials stalwarts like HSBC and Technology behemoth like Tencent, and Alibaba. 

If we were to pull out the YTD chart for Tencent, it looks like a great 20% YTD return, but if you pull out the 5-year chart, maybe the Chinese stock may have more legs to run...

Dividend Yield: TK Group 

On April Week 15, I wrote

TK Group, selling at HKD 1.49 is a manufacturing company valued at HKD 1,240m with HKD 1,158m in cash on its balance sheet. They are proposing 7.5 cents in final dividend and 10 cents in special dividend. If we include the 2.8 cents in interim dividend, TK Group would be HKD 0.203, which gives it a 13% yearly dividend. If we just use the 17.5 cents, then you would get an 11% dividend in 2 months’ time. I like the idea of receiving 11% in 2 months for an operating company. 

Since the re-rating by the stock market, the company currently trades at HKD 1,570m on HKD 1,158m in cash on its balance sheet. With a dividend of 17.5 cents, we are getting slightly below 10% dividend yield in a few weeks time. This still look like a steal to me if Chinese manufacturing recovers. 

There are still tons of HKEX companies who are spotting high 8-10% dividend. There is still time to find those that you are comfortable with before they go XD in 2-4 weeks’ time.

The countdown begins…

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AEM:

On April Week 16, I wrote

If you force me at gunpoint to invest in either one of them, I will think that AEM looks the most attractive since it seems to have a technological moat and the most amount of negative news of late.

You do not need to point a gun at me. 

With a 1-year chart looking like this I am am planning to spend some time on it.  

It has the recipe for the bottoming of a stock. 

• Majority shareholder abrdn Holdings Limited sold down recently and could be selling more…

• The stock price seems to have baked in all the negative news…

• Finally, the company is releasing some positive news!

• Their recent announcement on AEM being selected by a Major Fabless Provider to provide Advanced Thermal Control Solutions for Next-Gen AI Devices piqued my interest. 

Maybe there is really something there to rerate the company. 

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Hong Kong:

I forgo the Singapore AGMs schedule and decide to hop on a trip to Hong Kong with Swen Lorenz from Undervalued Shares.

The companies we met include

• Anta

• Bank of East Asia

• Galaxy Entertainment

• HKEX

• HypeBeast

• Lion Rock and Left Field

• Leverstyle

• Natural Food

• Ploverbay

• Perfect Medical

• Shineway

• Sino Land 

In this list, there are a few outstanding companies with great operating metrics. I will be writing more about some of these companies in the coming weeks.