I really like your CNOOC write ups. However, there is however country risk (besides company risk and the price of oil&gas). Do you have a second o&g company that you like in Asia?
I think there are very few oil & gas companies in Asia to choose from. Japan's Inpex is a large NOC but their reserves are shrinking, I think. The only stock that I'm keen to do more research on is Thailand's PTTEP, whose reserve replacement ratio has been decent in the past few years. https://www.asiancenturystocks.com/p/upstream?s=w
Elsewhere, I own shares in TGS-Nopec, which is a seismic data provider that's partly a bet on exploration capex and partly a bet that the moratorium on drilling on US federal land will end.
There is a large variation of dividend withholding tax rates among Asian jurisdictions (from 0% - 30%) with usually international tax treaties in place to partly mitigate these tax costs. However, reclaiming taxes in the context of these treaties often involves a lot of cumbersome paper work. Do you attempt to reclaim (partly) the dividend withholding taxes you paid for your personal investments? Does the impact of these taxes influence your decision to make a specific investment in the first place?
Yes that's a good point. I've done this before for previous firms that I worked for. I wasn't involved in the paperwork myself, but I recall it was quite a hassle.
I should probably try to reclaim withholding taxes on say Philippine and Indonesian high yielding stocks, given that the dollar amounts often justify the hours spent.
As to the last question, in my personal investing I don't pay much attention to dividends. The dividend pay-out ratio tells you something about corporate governance, but I have historically been more focused on the quality of the business and other valuation multiples such as EV/EBIT.
If a Philippine stock yields 6% and the withholding tax takes away 1-2 percentage points, then that's a shame. But then again the cost of buying and selling pesos and the trading commissions can easily cost 3% round-trip, if not more. So whether it's about withholding taxes, trading commissions, front-running and poor execution, the Philippines, Indonesia etc are simply high-cost and high-risk markets, and I try to only get involved if the upside justifies all those combined costs.
• Has construction been weak in Taiwan during COVID-19? Perhaps the construction industry will finally recover now that Taiwan has embraced a live-with-the-virus strategy.
• The raw materials for vinyl floorings seem to be petrochemicals. The oil price fell from 2014 to 2016. Is that way Lonseal's margins increased so much? Now that oil prices are higher, perhaps we should assume margins coming back to pre-2014 levels?
How do you think about the attractions and risks of investing in Vietnam? Off the charts in terms of export growth, and still mostly cheap on headline multiples.
Vietnam is experiencing an incredible boom right now. It reminds me a bit of China around 2007-2008? Everyone seems to be getting rich. Trading volumes are up 10x over the past year? Rough numbers/
The thing is, I also remember Vietnam's crash after 2010. On an investor conference, a Vietnamese fund manager said that he hated everything about the country and thought that all banks would go bankrupt.
The contrast between 2012 and today is just incredible. The current boom period probably won't last forever?
Longer-term, Vietnam is the country in Asia that's growing the fastest. Just like China, Vietnam is a communist country with a rule of law that's not totally robust. I've heard many stories about related party transactions and pure frauds. I agree with you that many small caps are cheap, though among the larger companies multiple have come up a bit, at least compared to 2016.
1) How will the election of the Philippines’ new president Bongbong Marcos affect the telco space in the PH? 2) Following PLDT's recent sale of its towers, how do you think its competitor (Globe) will react to this?
That's a specific question that I don't really know the answer to. I've never done research on Philippine telecom stocks.
The key question in my mind is whether the backers of individual companies are on good terms with BBM. Did those backers (tycoons) support the revolution in 1986? Are they now going to be in the crosshairs of the president? And will rising Chinese influence in the Philippines affect the bargaining power of individual tycoons such as Dennis Uy?
I really like your CNOOC write ups. However, there is however country risk (besides company risk and the price of oil&gas). Do you have a second o&g company that you like in Asia?
I think there are very few oil & gas companies in Asia to choose from. Japan's Inpex is a large NOC but their reserves are shrinking, I think. The only stock that I'm keen to do more research on is Thailand's PTTEP, whose reserve replacement ratio has been decent in the past few years. https://www.asiancenturystocks.com/p/upstream?s=w
Elsewhere, I own shares in TGS-Nopec, which is a seismic data provider that's partly a bet on exploration capex and partly a bet that the moratorium on drilling on US federal land will end.
Crude oil tankers are likely to benefit from a European ban on Russian oil https://open.spotify.com/episode/4mMQ5l4Kj5Tcc7cOdxk70E?si=14361e43b8434e5d
There is a large variation of dividend withholding tax rates among Asian jurisdictions (from 0% - 30%) with usually international tax treaties in place to partly mitigate these tax costs. However, reclaiming taxes in the context of these treaties often involves a lot of cumbersome paper work. Do you attempt to reclaim (partly) the dividend withholding taxes you paid for your personal investments? Does the impact of these taxes influence your decision to make a specific investment in the first place?
Yes that's a good point. I've done this before for previous firms that I worked for. I wasn't involved in the paperwork myself, but I recall it was quite a hassle.
I should probably try to reclaim withholding taxes on say Philippine and Indonesian high yielding stocks, given that the dollar amounts often justify the hours spent.
As to the last question, in my personal investing I don't pay much attention to dividends. The dividend pay-out ratio tells you something about corporate governance, but I have historically been more focused on the quality of the business and other valuation multiples such as EV/EBIT.
If a Philippine stock yields 6% and the withholding tax takes away 1-2 percentage points, then that's a shame. But then again the cost of buying and selling pesos and the trading commissions can easily cost 3% round-trip, if not more. So whether it's about withholding taxes, trading commissions, front-running and poor execution, the Philippines, Indonesia etc are simply high-cost and high-risk markets, and I try to only get involved if the upside justifies all those combined costs.
Can you do a snap judgement on this stock Lonseal ? (4224.T)
Better ROE than most net-nets, profitable in the last 10 yrs, pays a dividend. Trading at 0,8 x NCAV and 0,41 x NAV (lowest in the last 10 yrs).
Two things that stand out to me:
• Has construction been weak in Taiwan during COVID-19? Perhaps the construction industry will finally recover now that Taiwan has embraced a live-with-the-virus strategy.
• The raw materials for vinyl floorings seem to be petrochemicals. The oil price fell from 2014 to 2016. Is that way Lonseal's margins increased so much? Now that oil prices are higher, perhaps we should assume margins coming back to pre-2014 levels?
How do you think about the attractions and risks of investing in Vietnam? Off the charts in terms of export growth, and still mostly cheap on headline multiples.
Vietnam is experiencing an incredible boom right now. It reminds me a bit of China around 2007-2008? Everyone seems to be getting rich. Trading volumes are up 10x over the past year? Rough numbers/
The thing is, I also remember Vietnam's crash after 2010. On an investor conference, a Vietnamese fund manager said that he hated everything about the country and thought that all banks would go bankrupt.
The contrast between 2012 and today is just incredible. The current boom period probably won't last forever?
Longer-term, Vietnam is the country in Asia that's growing the fastest. Just like China, Vietnam is a communist country with a rule of law that's not totally robust. I've heard many stories about related party transactions and pure frauds. I agree with you that many small caps are cheap, though among the larger companies multiple have come up a bit, at least compared to 2016.
Here's a good book on the topic of investing in Vietnam: https://www.amazon.com/Crossing-Street-success-investing-Vietnam-ebook/dp/B094NNYF1T/ref=sr_1_1?crid=15XD69E7IPGIP&keywords=andy+ho+crossing+the+street&qid=1653043826&sprefix=andy+ho+crossing+the+stre%2Caps%2C351&sr=8-1
1) How will the election of the Philippines’ new president Bongbong Marcos affect the telco space in the PH? 2) Following PLDT's recent sale of its towers, how do you think its competitor (Globe) will react to this?
That's a specific question that I don't really know the answer to. I've never done research on Philippine telecom stocks.
The key question in my mind is whether the backers of individual companies are on good terms with BBM. Did those backers (tycoons) support the revolution in 1986? Are they now going to be in the crosshairs of the president? And will rising Chinese influence in the Philippines affect the bargaining power of individual tycoons such as Dennis Uy?