Friday, November 12, 2010

Streamline of Portfolio....again

I have streamlined again my stock portfolio. My core holding reduce to Hartalega, Public Bank and Allianz. All my Topglove has been converted to Hartalega and Public Bank. The reasons i did so are nitrile glove is cheaper than latex glove, there may be foundamental change of latex glove producer because high raw latex price. It look like latex glove going to lose its edge. I dont foresee price of commodities going to drop in the offing. This going to hurt latex producers, especially players are not competitive in their price. Although Topglove is still the low cost producer of latex glove, and nitrile glove capacity is still unable to eat big market share from latex glove, but over time it will. Can you imagine that a premium product (nitrile glove) is selling cheaper than non-premium product (latex glove), what going to happen? Hartalega going to enjoy the wide profit margin and demand increase. I consider Hartalega is "able and lucky" as describe by Phlip Fisher. Bullish on it.

In early of year 2009, i converted my LPI to Hartalega. After that both also flying high. However as on today, net profit of Hartalega is more than LPI. Is a matter of time the market capital of Hartalega will outpace LPI. The distintive difference between the two is LPI paying good dividend, Hartalega is growing faster. Which one you prefer is depend on which camp you in.

For same sector comparison, Allianz is making comparative net profit as to LPI, however it is trade at steep discount to LPI. The market capital of Allianz (inclusive if Allianz PA) is aroung 1.4 billion but the market capital of LPI is around 2.5 billion. LPI is paying good dividend but Allianz is going to pay good dividend after settlement of loan from parent company. Again it depend on which you in. (P/S: Allianz is a low liquidity stock)

As for Public Bank, i knew it not going to fly but it still able to grow and paying good dividend. Again is balancing value and growth stock. It still not trading at the reasonable prospective PE (i peg at 16) of a well run business.

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