[INVESTMENT] MEMO – 22.11.2021

"Alibaba continued to firmly invest into our three strategic pillars of domestic consumption, globalization, and cloud computing to establish solid foundations for our long-term goal of sustainable growth in the future"

~Alibaba chairman and CEO, Daniel Zhang~

Hello! Not much update for this month of November 2021. Last week, I added my position in ALIBABA. Reasons will be given below.

ALIBABA

$BABA (Alibaba) released its quarterly results last week and below are the earnings highlight:-

 Revenue was RMB200,690 million (US$31,147 million), an increase of 29% year-over-year (excluding the consolidation of Sun Art). Aggregate revenue of its international commerce retail and international commerce wholesale was RMB15,092 million (US$2,342 million), an increase of 34% year-over-year. Cloud computing revenue was RMB20,007 million (US$3,105 million), an increase of 33% year-over-year.

 Annual active consumers (“AACs”) of the Alibaba Ecosystem across the world reached approximately 1.24 billion for the twelve months ended September 30, 2021, an increase of approximately 62 million from the twelve months ended June 30, 2021. 

 Income from operations was RMB15,006 million (US$2,329 million), an increase of 10% year- over-year due to a RMB15,690 million decrease in share-based compensation expense related to Ant Group share-based awards granted to our employees. The year-over-year decreases were primarily due to increased investments in key strategic areas that have exhibited robust growth in operations, as well as support to merchants. These investments in key strategic areas within our commerce segment, such as Taobao Deals, Local Consumer Services, Community Marketplaces and Lazada, increased by RMB12,575 million year-over-year. 

 Net income attributable to ordinary shareholders was RMB5,367 million (US$833 million) and net income was RMB3,377 million (US$524 million). Non-GAAP net income was RMB28,524 million (US$4,427 million), a decrease of 39% year-over-year.

 Diluted earnings per ADS was RMB1.97 (US$0.31) and diluted earnings per share was RMB0.25 (US$0.04 or HK$0.30). Non-GAAP diluted earnings per ADS was RMB11.20 (US$1.74), a decrease of 38% year-over-year and non-GAAP diluted earnings per share was RMB1.40 (US$0.22 or HK$1.68), a decrease of 38% year-over-year.

 Net cash provided by operating activities was RMB35,830 million (US$5,561 million). Non- GAAP free cash flow was RMB22,239 million (US$3,451 million), a decrease compared to RMB40,540 million in the same quarter of 2020, mainly due to a decrease in profit as a result of our increased investments in key strategic areas.

Alibaba cited a "regulatory environment that affect Alibaba's business operations" and "privacy and data protection regulations and concerns" as some of the uncertainties it was facing

AFTERMATH

After ALIBABA reported disappointing quarterly earnings, Alibaba dropped 10.7%, the steepest decline since its listing in Hong Kong $9988.HK (Alibaba Group Holding Ltd (Hong Kong)) in November 2019. The fall in Hong Kong followed a similar plunge on Wall Street. According to CNN, so far this year, Alibaba's stock has dropped 40%, wiping about $234 billion from the value of the company. 

WHAT I SEE / LIKE

1. Alibaba's giant cloud business continues to post impressive results. Revenue rose 33% from a year ago for that unit. Alibaba Cloud has helped the company expand beyond China to South East Asia region.

2. The disappointing earring was mainly due to slowdown in consumer spending and also the uncertainties of regulatory crackdown. In the short term, Alibaba’s regulatory headwinds maybe temporary.

3. Alibaba is still the leader in Chinese e-commerce, payments and fintech, and the cloud. Given the long term growth prospects of China and its rising middle class, coupled with the its investment in their domestic consumption, globalization and cloud computing for sustainable growth, I still think it is safe to see Alibaba to grow steadily in the years ahead.

MY UPDATE

With the negativity in Alibaba's earnings and the plunge of its share price, I wanted take this rare opportunity to add more position in ALIBABA. Last week, I have added significant position in Alibaba. 

PORTFOLIO PERFORMANCE 

Portfolio has been flat staying for the month of November 2021. Solely for the month of November 2021, my portfolio performance is up 0.96%. Overall, my portfolio performance currently is up at 34.17% since its inception in May 2021.

Stay safe.

MNMLH

22.11.2021

[INVESTMENT] MEMO – 30.10.2021

Just a quick update on what I think lately.

CRYPTOCURRENCY

Currently my investment in Cryptocurrency is minute. It only contains 1.38% out of my current portfolio value. However, I am opened mind with this relatively new “product” (as arguable that whether or not it is an asset class). 

Looking at the history and the average chart move of Cryptocurrency for the past years, it is no doubt that it is a HGIH RISK and speculative to invest in Cryptocurrency.

MY STRATEGY

Given the volatility of the Cryptocurrency, my take is that I will still increase your portfolio's diversification with Cryptocurrency and, at the same time, manage it below 3 to 5% out of my current portfolio value. 

Currently, I have XRP in my portfolio which is 1.38% out of my current portfolio value.

PORTFOLIO PERFORMANCE 

For the month of October 2021, my portfolio performance is up 6.49%. Overall, my portfolio performance currently is up at 32.09% since its inception in May 2021.

Stay safe. 

Norman Liew 

MNMLH 

30.10.2021

[RESTAURANT] AVOCBAR Malaysia (Saradise Kuching)

Avocbar Malaysia (Saradise Kuching)

Address: Lot 52, Ground Floor, Block D1 Saradise, 93350 Kuching, Sarawak

Google Map: https://g.page/AvocbarKuching?share

[APPLE PROJECT] Performance as of 20.10.2021

PERFORMANCE

Since the inception of this fund in September 2021, this fund is up 4.2%. Overall, this fund is above the the US’s S&P 500 which stands at -1.72% and also the Dow Jones Index which stands at 1.69%.

HOLDINGS

Currently we are holding 8.2721 shares of APPLE in eToro CFD.

[BOOK] THE RICHEST MAN IN BABYLON 巴比伦致富圣经（漫画版）

If you dislike reading lengthy type of book, probably this comic is the best recommended book you can try for beginner. I found it interesting and easy to read.

如果你不喜欢阅读闷长的书籍，这漫画可能是就适合你。漫画要传放达的理财讯息简单易懂。

[INVESTMENT] MEMO – 18.10.2021

INVISIBLE HAND

The disconnection between economic realities and performance of the stock market in the past 1-2 years is somewhat perplexed.

To me, most of the companies are now overvalued. Countless unicorn companies are given record valuations despite not making any profit year after year. Some unicorn companies used heavy leverage to fund expansion in order to achieve the growth that they projected. This action is, to me, quite madness and dangerous especially in times of uncertainty.

One may ask what and who cause all this madness? I think, this is not easy to explain. The government and central banks around the globe promised and committed to provide unlimited quantitative easing, lower the interest rate, buy corporate bonds and even giving direct payment grant to businesses. Basically, they injected liquidity to these unicorn companies. The government and central banks around the world intervened substantially in the free market changed the rules of economy. In other words, the economic rules which would naturally correct the situation is unable to react accordingly.

  

A good example is the 2008 global financial crisis and the recent Covid-19 global pandemic driven recession. The consequences of default and bankruptcy or winding-up were negated but INFLATION is now inevitable. Another enemy would be the economic inequality - wealth disparity.

INFLATION

Let’s talk about the scariest: INFLATION. I will leave the topic of economic inequality to the next memo. 

We all understand the basic of inflation. According to Investopedia, inflation is the rate at which the value of a currency is falling and, consequently, the general level of prices for goods and services is rising. In simple words, inflation means the price of goods and services are increasing. The same volume of food you eat costs USD2 five years ago may now cost USD2.5.

Scary, right? What scarier is the rising prices of energy and raw and building materials. At the same time, the disruption in the supplying chain cannot meet the surge in demand amid the easing of Covid-19 lockdowns. This is exactly what happen right now. When goods and service providers are faced with higher prices, they often pass those costs on to end consumers like you and me. Think about it, we all need energy utility, food and shelter in our daily life to survive. If the price in one or two of these items are rising to a irrepressible level, the value of our currency will become less and we will be paying more for less. Not to mention the wealth disparity will once again be widening.

RISK & OPPORTUNITY

My take: 1. The constantly interference of central bank and also stimulus packages grant from the government, all these actions cause a lot of liquidity in the stock market. The short-term bumpy ride may continue for a period of time and also still brace for volatility. 2. The overwhelming sales of the new Apple iPhone 13 worldwide, especially in Asia countries, shows sign of growth amid the pandemic. Hundreds of photographs showed people are crazy about new iPhone and even rushed to get one or to queued to be the first owner. They gave us an illusion that whether the economy is really in the bad shape? 3. Every crisis comes with an opportunity. If we look at each individual company, I always believe that a company with strong fundamentals and who can creates consistent earnings are the only reason you buy the shares of that company.

PORTFOLIO PERFORMANCE

Since my last Memo, I have substantially added my position in  $AAPL (Apple) as I believe in its solid fundamentals. My portfolio is strategically allocated and diversified across different business sectors and regions (US, China and Hong Kong). My portfolio performance, so far, for this month is up 4.39%. Overall, my whole portfolio currently is up at 28.31% since its inception in May 2021.

Stay safe.  

MNMLH

18.10.2021

[APPLE PROJECT] My Apple Project

On 14th day of September 2021, Apple Inc. held its Apple event and introduced its latest products, amongst others, latest iPad, Apple Watch and iPhone 13 series. What attracted me the most in this event was its iPhone 13 Pro Max. That maybe purely because of my current iPhone 6S Plus is already too old and its battery has started to fade out anytime in the future.

New iPhone does not come cheap. The iPhone 13 Pro Max (256GB) that I was looking at costs about USD1,199.00.

This event gave me an idea of buying Apple’s shares instead of its products. But of course, if I have enough budget, I will buy iPhone 13 Pro Max as well. And because of this, I have decided to conduct an experiment which I now called it MY APPLE PROJECT.

MY APPLE PROJECT

I set this project for 10 years. The rules of this My Apple Project is simple, I will buy Apple’s share if a new iPhone series is launched. The amount of shares I acquire would depend on the price of the iPhone launched by Apple.  A simple example will be as follows: - 

- Price of iPhone 13 Pro Max =USD1,199.00

- Then I will use this USD1,199.00 to acquire the share of Apple in eToro for same month when the new iPhone series is launched for the next 10 years.

PROJECT EXECUTION

As of today, I have put up the relevant fund to work on this Project, which is USD1,000.00 to purchase the share of Apple in eToro.

Let’s see how it would turn out to be in the next 10 years, which is YEAR 2031.

#AppleProject

[INVESTMENT] MEMO - 29.09.2021

Hello, everyone! Time flies and it is now end of September 2021.  

EVERGRANDE  

One of the largest real estate developers in China, Evergrande sparks fear among the investors worldwide couple weeks ago due to its fears in default on domestic bond.  

Over past years, Evergrande expanded aggressively and also at the same time stretched its financial leverage by borrowing more than $300 billion.  

Back in year 2017, the Chinese government acknowledged that the price of the real estate was just too high due to speculation, so they tighten the real estate market where President Xi Jinping’s comment at the 19th party congress that “houses are for living in, not for speculation.”  

The Chinese government then introduced the the “three red lines policy” on selected developers after an August 2020 meeting in Beijing that occurred against a backdrop of growing debt levels, rising land prices and booming sales.  

What are those three (3) red lines?  

1. 70% ceiling on liabilities to assets (excluding advance receipts) 

2. Net gearing ratio of less than 100% 

3. Cash to short-term debt ratio of at least 1  

In simple term, the Chinese government wants the developer to reduce their financial leverage and to maintain a healthy balance sheet.  

Unfortunately, Evergrande failed to meet most of the metrics above and is short on two (2) of them. Failure to meet these metrics means no access to new loans.  

TOO BIG TO FAIL?  

The serious potential fallout of such heavily-indebted company collapsing has led some analysts and investors to think that it may pose a risk to China’s financial system and also suggest that Beijing may step in to rescue it because it maybe “too big to fail”.  

I am not going to speculate any of the above. I believe Evergrande’s crisis is unlikely to create a shock to the entire China’s financial system. We have to look at the history that just in recent years, an insurance company, Anbang with similar debt burdens was successfully restructured without any systemic shock.  

By imposing the “3 red lines” policy, it clearly had shown that the Chinese government has been actively managing the amount of capital absorbed by the real estate industry. and putting stricter controls in place to ensure a more sustainable future. Such policy directly or indirectly mitigates the risks by preventing its liquidity problem turning into an insolvency problem in the Chinese financial system.  

As long as the Chinese government can create stability in the financial system, I have no doubt that China’s economy will boom.  

MY INVESTMENT  

Meanwhile, I have a made some adjustment and investment to my portfolio. I added my position in the following company in September: -  

1. APPLE $AAPL (Apple)

The Chinese company that I like which I am still holding in them are:-  

1. TENCENT $0700.HK (Tencent) 2. ALIBABA $BABA (Alibaba) 3. MEITUAN $03690.HK (Meituan Class B) 4. PING AN $2318.HK (Ping An Insurance)

PORTFOLIO PERFORMANCE  

Solely for the month of September 2021, my portfolio performance is down 4.65%. Overall, my portfolio performance currently is up at 22.61% since its inception in May 2021.  

Stay safe.  

MNMLH 

29.09.2021