3.28.2011
Performance - 03/24/11
Return % Comparison as of 03/24/11: (2010 YTD, vs peak, 6 yr average) · Bilibala (0.8%), (1.2%), 20.8% · USA up 4.1%, (16.9%), 1.2% · Canada up 4.4%, (7.4%), 6.9% · HKG up (0.5%), (28.3%), 7.9% · China down 4.9%, (51.9%), 14.5% Recover a lot slower than the market, because 2 of Bilibala’s top holding China Mobile & China Life are still deep under water, as their earning release has no surprise to investors. Top 5 holdings by sectors: · Insurance 26.1% · Banking 16.3% · Telecom 15.4% · Information Technology 10.0% · Energy 9.1%
America - 03/25/11
America (53.6% of asset mix) (with net present value in 1 year) 1. Manulife Financial (MFC) CA$31.4 STRONG BUY 2. Google Inc. (GOOG) US$754.6 BUY 3. Wells Fargo Financial (WFC) US$43.8 STRONG BUY 4. General Electric (GE) US$23.5 HOLD 5. TD Bank (TD) CA$92.3 HOLD 6. American Express (AXP) US$48.6 HOLD (pending to update) 7. Suncor Energy (SU) CA$50.0 BUY · Mar 11 major transactions: switch Imperial Oil (IMO) CA$52.0 to Suncor Energy (SU) CA$41.3; add Canadian Pacific C$61.20; add Manulife (MFC) between C$15.8-C$16.2 · Manulife Financial: no revised adjustment on $1.2B reserve change due to Japan earthquake. Claims cost increase as # of death rise will offset by equity market recovered. The actual reserve # may be lesser. · Research in Motion release its 4q10 earnings, above expectation but lower its 1q11 sales, trigger the shares down 11% on Friday. Its blackberry continue to grow in # of sales, however, to lots of individual customers, Apple & Google are a much better choice. Its Playbook launch too late, again, no one think it will win the battle. On the other hand, the share price is just $55, with P/E ratio lower than 9. Is this a opportunity or not? To Bilibala who has already hold Google, I won’t consider it. # Bilibala personally uses fair value @ 2016 to do all investment, however, I think for most small investors, net present value @ 2011 (fair value multiply by discount factor), would be more relevant. · STRONG BUY with NPV over MV above 30% · BUY btw 15% to 30% · HOLD btw (15%) to 15% · RE-RE-RECONSIDER below (15%)
Asia/Europe - 03/25/11
Bilibala Finance’s 7 Top Holding by Region: (with net present value in 1 year) Asia / Europe (46.4% of asset mix) 1. China Mobile (0941/CHL) HK$101.2 STRONG BUY 2. China Life (2628/LFC) HK$43.3 => HK$41.5 STRONG BUY 3. China Construction Bank (0939) HK$9.0 BUY 4. Total SA (TOT) US$61.6 HOLD 5. Siu On Land (0272) HK$6.7 STRONG BUY (pending to update) 6. HSBC Holding (0005/HBC) US$67.3 BUY (pending to update) 7. IFSE A50 China Fund (2823) HK$22.4 STRONG BUY · Mar 11 major transactions: add Honda Motor (HMC) US$36.93; add MTR (0066) HK$29.1; add China Resource Power (0836) HK$13.0 · China Life 2010 earnings up 2.3% to RM$1.19 meet expectation. However, as I kept mentioned, earnings is irrelevant to the valuation of an insurance co. Let’s read those meaningful data · Analysts concerns about loss ratio, let’s look at it 1st, it up 1.5% to 88.5% (mainly because of addition reserve on higher premium) to me, it looks reasonable. Combine ratio up 0.6% to 108.8% (which means every dollar of premium China Life received, it loss about 8.8 cents if excluding investment). Premium earned up 15.6% to RM$318B while value of business up 22.5%, looks great with strong growth. Sales to VNB up by 3.2% to 16.2 times, VNB up slightly slower than premium growth · Future sales growth continue looks great, as interest rate continue to go up while equity market is recovering and should back to peak in 10 years, China Life is in nice growing pace · Embedded value up 4.9% to RM$10.6 & based on all estimation & assumption, I will calculate China Life’s value at 4.05 times of its embedded value & discounted by 25.3% (instead of 21.6% previously) to come up with Bilibala’s new NPV of HK$41.5. · Japan Economy: Japan 1q11 GDP for sure will be hurt by the earthquake & the fall of the national electricity capacities, but most of the analysts think it will pick up in 3q & 4q (Bilibala think it will pick up even earlier than that) · Japan government estimate the damage will be US$0.3T and death may end up close to 30,000. · Bilibala believes in Keynesian Economic Theory, the damage may help Japan to have more meaningful & useful construction development. Given the following fact: 1. Japan’s debt will top 213% of total GDP (after counting the damage, the highest among G7), however, its net debt is only 120% (similar or bit lesser than the PIIGS), 94% of all debts are holding within Japan (means the government do not have interest rising pressure from foreign investors nor force to cut expenditures). 2. Also, Japan’s citizens are rich, having US$14T saving, while there are only US$7T government debt. Meaning Japan still have room to borrow from its nation to spend in order to boost up economy 3. In normal time, Japan can’t change much, where’s now, I hope the government will be able to try something “new”, instead of holding the money supply tie to control inflation, it should let inflation grow a bit to stimulate consumption and economic activities · Corporation like Automotive Toyota, Honda, Nissan etc, lol, you may think they are in big trouble cuz few of their plants have been damaged badly. Production line stopped till end of march, may affect global auto sales. But is it really bad for Japanese auto makers? Think again!! 1. insurance will compensate all the damage in the plants 2. parts can be produced in all other unaffected plants around the world 3. while lots of cars are total loss, people have to buy brand new cars in the coming 2-3 years, and they will most likely buy their own nation’s cars · I will talk about the impact to China economy later. # Bilibala personally uses fair value @ 2016 to do all investment, however, I think for most small investors, net present value @ 2011 (fair value multiply by discount factor), would be more relevant. · STRONG BUY with NPV over MV above 30% · BUY btw 15% to 30% · HOLD btw (15%) to 15% · RE-RE-RECONSIDER below (15%)
3.21.2011
Performance - 03/21/11
Return % Comparison as of 03/17/11:
(2010 YTD, vs peak, 6 yr average)
· Bilibala (3.1%), (4.1%), 20.3%
· USA up 1.7%, (18.8%), 0.9%
· Canada up 2.6%, (10.0%), 6.6%
· HKG up (3.2%), (30.2%), 7.5%
· China down 3.6%, (52.5%), 14.2%
ð Bilibala portfolio took the hit in Mar 11 as four of its top holding fall mainly trigger by the Japan earthquake - China Mobile (4.8%), China Life (3.5%), Google(8.5%), Manulife (8.3%).
ð Manulife down was directly impacted as 6% of its account value & 4% of its sales come from Japan. As I mentioned in the previous sharing, I think the max claim will be $1B (assume unclear leaking situation will not get any worse). China Mobile & China Life fall were due to funds being pulled from Hong Kong to Japan or to those who invest in HKG by borrowing from Japan. That’s the reason why HKG stock market fall even crazier than Japan. As the situation get stabilize, I think HKG stock market will recover by that time.
Top 5 holdings by sectors:
· Insurance 26.5%
· Banking 16.5%
· Telecom 15.6%
· Information Technology 9.8%
· Energy 9.2%
(2010 YTD, vs peak, 6 yr average)
· Bilibala (3.1%), (4.1%), 20.3%
· USA up 1.7%, (18.8%), 0.9%
· Canada up 2.6%, (10.0%), 6.6%
· HKG up (3.2%), (30.2%), 7.5%
· China down 3.6%, (52.5%), 14.2%
ð Bilibala portfolio took the hit in Mar 11 as four of its top holding fall mainly trigger by the Japan earthquake - China Mobile (4.8%), China Life (3.5%), Google(8.5%), Manulife (8.3%).
ð Manulife down was directly impacted as 6% of its account value & 4% of its sales come from Japan. As I mentioned in the previous sharing, I think the max claim will be $1B (assume unclear leaking situation will not get any worse). China Mobile & China Life fall were due to funds being pulled from Hong Kong to Japan or to those who invest in HKG by borrowing from Japan. That’s the reason why HKG stock market fall even crazier than Japan. As the situation get stabilize, I think HKG stock market will recover by that time.
Top 5 holdings by sectors:
· Insurance 26.5%
· Banking 16.5%
· Telecom 15.6%
· Information Technology 9.8%
· Energy 9.2%
America - 03/21/11
Bilibala Finance’s 7 Top Holding by Region:
(with net present value in 1 year)
(53.7% of asset mix)
1. Manulife Financial (MFC) CA$31.4 STRONG BUY
2. Google Inc. (GOOG) US$754.6 BUY
3. Wells Fargo Financial (WFC) US$43.8 STRONG BUY
4. General Electric (GE) US$23.5 HOLD
5. TD Bank (TD) CA$92.3 HOLD
6. American Express (AXP) US$48.6 HOLD (pending to update)
7. Suncor Energy (SU) CA$50.0 BUY (pending to update)
· Mar 11 major transactions: switch Imperial Oil (IMO) CA$52.0 to Suncor Energy (SU) CA$41.3; add Manulife (MFC) between C$15.8-C$16.2 add Berkshire Hathaway (BRK.B) US $85.0
· Warren Buffett pull the trigger to buy Lubrizol, a lubricant maker for $9B. Can’t tell whether it is good or not, but global demand on lubricant are rising. Also Berkshire Hathaway held 10% share in Munich Re (10% SwissRe is preferred shares only, will have no impact), It sure took the hit from Japan earthquake
# Bilibala personally uses fair value @ 2016 to do all investment, however, I think for most small investors, net present value @ 2011 (fair value multiply by discount factor), would be more relevant.
· STRONG BUY with NPV over MV above 30%
· BUY btw 15% to 30%
· HOLD btw (15%) to 15%
· RE-RE-RECONSIDER below (15%)
(with net present value in 1 year)
(53.7% of asset mix)
1. Manulife Financial (MFC) CA$31.4 STRONG BUY
2. Google Inc. (GOOG) US$754.6 BUY
3. Wells Fargo Financial (WFC) US$43.8 STRONG BUY
4. General Electric (GE) US$23.5 HOLD
5. TD Bank (TD) CA$92.3 HOLD
6. American Express (AXP) US$48.6 HOLD (pending to update)
7. Suncor Energy (SU) CA$50.0 BUY (pending to update)
· Mar 11 major transactions: switch Imperial Oil (IMO) CA$52.0 to Suncor Energy (SU) CA$41.3; add Manulife (MFC) between C$15.8-C$16.2 add Berkshire Hathaway (BRK.B) US $85.0
· Warren Buffett pull the trigger to buy Lubrizol, a lubricant maker for $9B. Can’t tell whether it is good or not, but global demand on lubricant are rising. Also Berkshire Hathaway held 10% share in Munich Re (10% SwissRe is preferred shares only, will have no impact), It sure took the hit from Japan earthquake
# Bilibala personally uses fair value @ 2016 to do all investment, however, I think for most small investors, net present value @ 2011 (fair value multiply by discount factor), would be more relevant.
· STRONG BUY with NPV over MV above 30%
· BUY btw 15% to 30%
· HOLD btw (15%) to 15%
· RE-RE-RECONSIDER below (15%)
Asia / Europe - 03/18/11
Bilibala Finance’s 7 Top Holding by Region:
(with net present value in 1 year)
(46.3% of asset mix)
1. China Mobile (0941/CHL) HK$96.4 => HK$101.2 STRONG BUY
2. China Life (2628/LFC) HK$43.3 STRONG BUY
3. China Construction Bank (0939) HK$9.0 BUY
4. Total SA (TOT) US$61.6 HOLD
5. Siu On Land (0272) HK$6.7 STRONG BUY
6. HSBC Holding (0005/HBC) US$67.3 BUY (pending to update)
7. IFSE A50 China Fund (2823) HK$22.4 STRONG BUY
· Mar 11 major transactions: MTR (0066) HK$29.1; China Resource Power (0836) HK$13.0; ESpirit Holding (0330) HK$37.1. I have to admit my mistake to invest in MTR & ESpirit Holding too soon, if I wait for one more day, I could have save a lot more, even though the unrealized loss was partially offset by the gain from China Resource Power
· Bilibala has increased China Mobile’s NPV by 5% after 2010 full year earnings release.
· 2010 profit up 3.9% to RM$120B
· 2010 EBITDA up 4.5% to RM$239B
· 2010 Revenue up 7.3% to RM$485B
· 2010 ARPU down 7.3% to RM$73
· Growth slowdown compare to prior years mainly due to 1) ARPU down; 2) sales & marketing cost; both because of competition from China Union Com & China Telecom
· Even if China Mobile’s growth slow down to 5.0% per year, its price over earnings ratio should still at 15. So I think its price is significantly under valued.
· Bilibala will write a sharing about Japan economy forecast.
# Bilibala personally uses fair value @ 2016 to do all investment, however, I think for most small investors, net present value @ 2011 (fair value multiply by discount factor), would be more relevant.
· STRONG BUY with NPV over MV above 30%
· BUY btw 15% to 30%
· HOLD btw (15%) to 15%
· RE-RE-RECONSIDER below (15%)
(with net present value in 1 year)
(46.3% of asset mix)
1. China Mobile (0941/CHL) HK$96.4 => HK$101.2 STRONG BUY
2. China Life (2628/LFC) HK$43.3 STRONG BUY
3. China Construction Bank (0939) HK$9.0 BUY
4. Total SA (TOT) US$61.6 HOLD
5. Siu On Land (0272) HK$6.7 STRONG BUY
6. HSBC Holding (0005/HBC) US$67.3 BUY (pending to update)
7. IFSE A50 China Fund (2823) HK$22.4 STRONG BUY
· Mar 11 major transactions: MTR (0066) HK$29.1; China Resource Power (0836) HK$13.0; ESpirit Holding (0330) HK$37.1. I have to admit my mistake to invest in MTR & ESpirit Holding too soon, if I wait for one more day, I could have save a lot more, even though the unrealized loss was partially offset by the gain from China Resource Power
· Bilibala has increased China Mobile’s NPV by 5% after 2010 full year earnings release.
· 2010 profit up 3.9% to RM$120B
· 2010 EBITDA up 4.5% to RM$239B
· 2010 Revenue up 7.3% to RM$485B
· 2010 ARPU down 7.3% to RM$73
· Growth slowdown compare to prior years mainly due to 1) ARPU down; 2) sales & marketing cost; both because of competition from China Union Com & China Telecom
· Even if China Mobile’s growth slow down to 5.0% per year, its price over earnings ratio should still at 15. So I think its price is significantly under valued.
· Bilibala will write a sharing about Japan economy forecast.
# Bilibala personally uses fair value @ 2016 to do all investment, however, I think for most small investors, net present value @ 2011 (fair value multiply by discount factor), would be more relevant.
· STRONG BUY with NPV over MV above 30%
· BUY btw 15% to 30%
· HOLD btw (15%) to 15%
· RE-RE-RECONSIDER below (15%)
3.17.2011
review Manulife on impact due to Japan earthquake
I try not to analysis for terrible events, cuz I think in certain degree that is unethical.
I changed my mind, read details from the following link:
http://bilibala-life.blogspot.com/2011/03/blog-post_16.html
Ok, how’s the earthquake impact Manulife? & is Act of God need to pay claim?
Summary
To me, it is over-react just like what most ppl do in history when bad news happen.
Life insurance need to pay claim for Act of God. P&C insurance may not, depends on the type of policy.
Analysis
Yes, from a growth perspective, Japan’s sales growth is huge in 2010, but from the corporate Japan business is tiny.
Japan’s Premium & Deposit is about 3.5% of the entire corporation (you can’t just look at 1st year premium growth when you calculate the benefit & claims in earthquake)
Japan’s asset under management (included insurance reserve) is about 5.9% of MFC’s AUM - US$28B ($11B in insurance & $17B in variable annuities)
Assume 15,000 dead (+4000 confirmed dead & +9000 missing) with general 8% market shares & 80% insurance penetration and each with a coverage of said C$1M, Manulife may set asided $1.0B addition reserve, after tax, will be about $0.7B.
C$0.7B is about 2.6% of Manulife’s book value while 2011 original estimate earnings after tax are C$2.0B.
Manulife’s book value (before dividend) will still go up by 5.2% to C$28.2B after this addition reserve.
Compare to its share price, down by 8.6% to C$16.0 since the earthquake.
Other concerns
· Since the earthquake has triggered a downside in equity market and a potential slow down in economy in 2011, if market fall 10% (another 5% from today’s), Manulife will loss $0.7B.
· Partially offset by $0.2B on reserve release as government debt interest rate go higher by 20 bps
· Usually, premium & deposit growth rate will go up, lapse rate will go down, claims will go down…..in the next 3 years after earthquake. But I will not take those benefit into account
Conclusion
Overall impact of $1.2B to net earnings or C$0.67 per share.
Bilibala’s previous NPV for Manulife Financial is C$31.4, and based on all the above calculation, it will reduced to C$30.7
If you think that’s too good to be true. Then take the overall wall/bay street 12 month’s target price (which is C$19.27) and reduced by $0.67 will be C$18.6 (around 15% above current market value).
PS:
In theory the nuclear plant keep cooling down every second, right at this moment, the situation still ok, and market will rebound soon. What if the nuclear plant finally & completely meltdown? It is not the meltdown ppl worry, but the worry trigger the hearts & the market to meltdown, until either 1) the nuclear plant really meltdown; 2) it's under control. Either way, the market will recover (a lot greater & much more supportable if it is under control).
I changed my mind, read details from the following link:
http://bilibala-life.blogspot.com/2011/03/blog-post_16.html
Ok, how’s the earthquake impact Manulife? & is Act of God need to pay claim?
Summary
To me, it is over-react just like what most ppl do in history when bad news happen.
Life insurance need to pay claim for Act of God. P&C insurance may not, depends on the type of policy.
Analysis
Yes, from a growth perspective, Japan’s sales growth is huge in 2010, but from the corporate Japan business is tiny.
Japan’s Premium & Deposit is about 3.5% of the entire corporation (you can’t just look at 1st year premium growth when you calculate the benefit & claims in earthquake)
Japan’s asset under management (included insurance reserve) is about 5.9% of MFC’s AUM - US$28B ($11B in insurance & $17B in variable annuities)
Assume 15,000 dead (+4000 confirmed dead & +9000 missing) with general 8% market shares & 80% insurance penetration and each with a coverage of said C$1M, Manulife may set asided $1.0B addition reserve, after tax, will be about $0.7B.
C$0.7B is about 2.6% of Manulife’s book value while 2011 original estimate earnings after tax are C$2.0B.
Manulife’s book value (before dividend) will still go up by 5.2% to C$28.2B after this addition reserve.
Compare to its share price, down by 8.6% to C$16.0 since the earthquake.
Other concerns
· Since the earthquake has triggered a downside in equity market and a potential slow down in economy in 2011, if market fall 10% (another 5% from today’s), Manulife will loss $0.7B.
· Partially offset by $0.2B on reserve release as government debt interest rate go higher by 20 bps
· Usually, premium & deposit growth rate will go up, lapse rate will go down, claims will go down…..in the next 3 years after earthquake. But I will not take those benefit into account
Conclusion
Overall impact of $1.2B to net earnings or C$0.67 per share.
Bilibala’s previous NPV for Manulife Financial is C$31.4, and based on all the above calculation, it will reduced to C$30.7
If you think that’s too good to be true. Then take the overall wall/bay street 12 month’s target price (which is C$19.27) and reduced by $0.67 will be C$18.6 (around 15% above current market value).
PS:
In theory the nuclear plant keep cooling down every second, right at this moment, the situation still ok, and market will rebound soon. What if the nuclear plant finally & completely meltdown? It is not the meltdown ppl worry, but the worry trigger the hearts & the market to meltdown, until either 1) the nuclear plant really meltdown; 2) it's under control. Either way, the market will recover (a lot greater & much more supportable if it is under control).
3.16.2011
分析不斷
每逢遇上天災人禍, 做分析都變得有點監介, 怕被人指指點點, 說要發災難財, 就連自己也不自覺地為自己的滿身銅臭感到內疚.前 3日為日本地震/核危機, 雲南地震, 以及中東局勢祈禱, 和主耶穌討論當今局勢. 主給了 Billy & Bilibala 好好提醒:「你為何因為分析感到內疚?」Bilibala:「因為遇上天災人禍嘛!」主:「你是分析人, 在什么情况下, 做好分析是你的職份. 在平日是, 在艱難的日子更需要. 不是為了冷手執熱煎堆, 乃是為了讓人明白當今時勢和明天仍有盼望與否. 經濟金融分析不是牧師的專長, 不說財經演員, 時事評論/金融分析員不懂聖經. 要有兩套本事才可做好你的職份, 懂嗎?」就這樣, Billy & Bilibala 就重返岡位, 繼續如常分析, 就如每一天一樣.
3.14.2011
Bilibala Finance Performance - 03/10/11
Return % Comparison as of 03/10/11:
(2010 YTD, vs peak, 6 yr average)
· Bilibala up 1.3%, 1.7%, 21.2%
· USA up 3.0%, (17.8%), 1.1%
· Canada up 1.4%, (10.0%), 6.4%
· HKG up 2.5%, (26.1%), 8.4%
· China down 5.3%, (51.7%), 14.5%
(2010 YTD, vs peak, 6 yr average)
· Bilibala up 1.3%, 1.7%, 21.2%
· USA up 3.0%, (17.8%), 1.1%
· Canada up 1.4%, (10.0%), 6.4%
· HKG up 2.5%, (26.1%), 8.4%
· China down 5.3%, (51.7%), 14.5%
Top holding - America 03/11/11
Bilibala Finance’s 5 Top Holding by Region:
(with net present value in 1 year)
American
1. Manulife Financial (MFC) CA$31.4 STRONG BUY
2. Google Inc. (GOOG) US$745.1 => US$754.6 BUY
3. Wells Fargo Financial (WFC) US$43.8 STRONG BUY
4. General Electric (GE) US$23.5 HOLD
5. TD Bank (TD) CA$92.3 HOLD
6. American Express (AXP) US$48.6 HOLD (pending to update)
7. Suncor Energy (SU) CA$50.0 BUY (pending to update)
· Mar 11 major transactions: switch to Suncor Energy (SU) CA$41.34; add Berkshire Hathaway (BRK.B) US $85.0; add American Express (AXP) US$43.2
· Why Bilibala buy Suncor? Bilibala sold Petro Canada in 2008 at $37.0 when it announced it will merge with Suncor. At that time Suncor’s debt to equity ratio was high at 54%. Given the uncertainty of whether the “marriage” will be a success or disaster, I sold it and bought Imperial Oil, lower debt, better management & technology support by Exxon Mobil (XOM), by given up the potential growth opportunity of what Suncor & Petro Canada have. In 2 years, I can see the huge improvement in Suncor by lowering its debt to equity ratio to 34% with a promise by management they will lower it further before 30% in 2011. While Imperial Oil has already ran above my expectation & fulfill its mission, I will now switch to Suncor. The reason why Suncor fall short while oil price up is cuz it has investment in Libya and have higher uncertainty of potential losses & damage. I think the political issue can go on for a long period, but who ever gain power will not destroy the energy business
· Why Bilibala add Berkshire Hathaway? I’ve reviewed the whole 2010 annual report. Looks great as usual!! Add back cuz I found out Todd Comb (the one I don’t like or do not impress) only replace Liu in GEICO who manage a portfolio of $3-4B. Looking forward, its investment income growth may slow down, given the fact General Electric & Goldman Sech will most likely buy back the preferred shares on a 10% redemption fees this year. By that time, Berkshires Hathaway will have lower before tax dividend/interest income by $0.8B, which is a lot of $$.
# Bilibala personally uses fair value @ 2016 to do all investment, however, I think for most small investors, net present value @ 2011 (fair value multiply by discount factor), would be more relevant.
· STRONG BUY with NPV over MV above 30%
· BUY btw 15% to 30%
· HOLD btw (15%) to 15%
· RE-RE-RECONSIDER below (15%)
(with net present value in 1 year)
American
1. Manulife Financial (MFC) CA$31.4 STRONG BUY
2. Google Inc. (GOOG) US$745.1 => US$754.6 BUY
3. Wells Fargo Financial (WFC) US$43.8 STRONG BUY
4. General Electric (GE) US$23.5 HOLD
5. TD Bank (TD) CA$92.3 HOLD
6. American Express (AXP) US$48.6 HOLD (pending to update)
7. Suncor Energy (SU) CA$50.0 BUY (pending to update)
· Mar 11 major transactions: switch to Suncor Energy (SU) CA$41.34; add Berkshire Hathaway (BRK.B) US $85.0; add American Express (AXP) US$43.2
· Why Bilibala buy Suncor? Bilibala sold Petro Canada in 2008 at $37.0 when it announced it will merge with Suncor. At that time Suncor’s debt to equity ratio was high at 54%. Given the uncertainty of whether the “marriage” will be a success or disaster, I sold it and bought Imperial Oil, lower debt, better management & technology support by Exxon Mobil (XOM), by given up the potential growth opportunity of what Suncor & Petro Canada have. In 2 years, I can see the huge improvement in Suncor by lowering its debt to equity ratio to 34% with a promise by management they will lower it further before 30% in 2011. While Imperial Oil has already ran above my expectation & fulfill its mission, I will now switch to Suncor. The reason why Suncor fall short while oil price up is cuz it has investment in Libya and have higher uncertainty of potential losses & damage. I think the political issue can go on for a long period, but who ever gain power will not destroy the energy business
· Why Bilibala add Berkshire Hathaway? I’ve reviewed the whole 2010 annual report. Looks great as usual!! Add back cuz I found out Todd Comb (the one I don’t like or do not impress) only replace Liu in GEICO who manage a portfolio of $3-4B. Looking forward, its investment income growth may slow down, given the fact General Electric & Goldman Sech will most likely buy back the preferred shares on a 10% redemption fees this year. By that time, Berkshires Hathaway will have lower before tax dividend/interest income by $0.8B, which is a lot of $$.
# Bilibala personally uses fair value @ 2016 to do all investment, however, I think for most small investors, net present value @ 2011 (fair value multiply by discount factor), would be more relevant.
· STRONG BUY with NPV over MV above 30%
· BUY btw 15% to 30%
· HOLD btw (15%) to 15%
· RE-RE-RECONSIDER below (15%)
Top holding Asia/Europe 03/11/10
Bilibala Finance’s 5 Top Holding by Region:
(with net present value in 1 year)
Asia / Europe
1. China Mobile (0941/CHL) HK$96.4 STRONG BUY
2. China Life (2628/LFC) HK$43.3 STRONG BUY
3. China Construction Bank (0939) HK$9.0 BUY
4. Total SA (TOT) US$61.6 HOLD
5. Siu On Land (0272) HK$6.7 STRONG BUY
6. HSBC Holding (0005/HBC) US$67.3 BUY (pending to update)
7. IFSE A50 China Fund (2823) HK$22.4 STRONG BUY
· Mar 11 major transactions: n/a
· Japan huge magnitude 8.9 earthquake & 33 feet high Tsunami. Boats, cars and trucks were tossed around like toys in the water after a small tsunami hit the town.
· Pray that the government can save as many survivors as possible promptly.
· Geopolitical risk & concerns in Middle East and North Africa are still heating up, can u imagine few strong, powerful governor (for years) fell down at the same time within just 2-3 months?
· No one can tell what will happen next and who will rule those countries. Some think about the movie 2012 or Jesus’ 2nd coming…..
· to me, I think of one scripture: “And in the days of those kings, the God of heaven will put up a kingdom which will never come to destruction, and its power will never be given into the hands of another people, and all these kingdoms will be broken and overcome by it, but it will keep its place for ever.” (Daniel 2:44)
· All the kings are full of power, and all those can gone in a second, who is the real ruler in history?
· If our LORD is the true ruler in all time, should we set aside a time with Him, do a prior to 2010 performance review and set our post 2011 objectives for Him??
· If our LORD is the true ruler in all time, who should we afraid of? Our boss? The government? Recession?
· Lol, I know it is easy to say than do….
· Lots of financial release will be on late March or early April, I will comment more by that time.
# Bilibala personally uses fair value @ 2016 to do all investment, however, I think for most small investors, net present value @ 2011 (fair value multiply by discount factor), would be more relevant.
· STRONG BUY with NPV over MV above 30%
· BUY btw 15% to 30%
· HOLD btw (15%) to 15%RE-RE-RECONSIDER below (15%)
(with net present value in 1 year)
Asia / Europe
1. China Mobile (0941/CHL) HK$96.4 STRONG BUY
2. China Life (2628/LFC) HK$43.3 STRONG BUY
3. China Construction Bank (0939) HK$9.0 BUY
4. Total SA (TOT) US$61.6 HOLD
5. Siu On Land (0272) HK$6.7 STRONG BUY
6. HSBC Holding (0005/HBC) US$67.3 BUY (pending to update)
7. IFSE A50 China Fund (2823) HK$22.4 STRONG BUY
· Mar 11 major transactions: n/a
· Japan huge magnitude 8.9 earthquake & 33 feet high Tsunami. Boats, cars and trucks were tossed around like toys in the water after a small tsunami hit the town.
· Pray that the government can save as many survivors as possible promptly.
· Geopolitical risk & concerns in Middle East and North Africa are still heating up, can u imagine few strong, powerful governor (for years) fell down at the same time within just 2-3 months?
· No one can tell what will happen next and who will rule those countries. Some think about the movie 2012 or Jesus’ 2nd coming…..
· to me, I think of one scripture: “And in the days of those kings, the God of heaven will put up a kingdom which will never come to destruction, and its power will never be given into the hands of another people, and all these kingdoms will be broken and overcome by it, but it will keep its place for ever.” (Daniel 2:44)
· All the kings are full of power, and all those can gone in a second, who is the real ruler in history?
· If our LORD is the true ruler in all time, should we set aside a time with Him, do a prior to 2010 performance review and set our post 2011 objectives for Him??
· If our LORD is the true ruler in all time, who should we afraid of? Our boss? The government? Recession?
· Lol, I know it is easy to say than do….
· Lots of financial release will be on late March or early April, I will comment more by that time.
# Bilibala personally uses fair value @ 2016 to do all investment, however, I think for most small investors, net present value @ 2011 (fair value multiply by discount factor), would be more relevant.
· STRONG BUY with NPV over MV above 30%
· BUY btw 15% to 30%
· HOLD btw (15%) to 15%RE-RE-RECONSIDER below (15%)
3.07.2011
Bilibala Finance performance Feb 11
Return % Comparison as of 03/04/11:
(2010 YTD, vs peak, 6 yr average)
· Bilibala up 2.8%, 3.6%, 21.5%
· USA up 5.0%, (16.2%), 1.4%
· Canada up 6.0%, (6.0%), 7.2%
· HKG up 1.6%, (26.8%), 8.3%
· China down 4.8%, (52.0%), 14.4%
(2010 YTD, vs peak, 6 yr average)
· Bilibala up 2.8%, 3.6%, 21.5%
· USA up 5.0%, (16.2%), 1.4%
· Canada up 6.0%, (6.0%), 7.2%
· HKG up 1.6%, (26.8%), 8.3%
· China down 4.8%, (52.0%), 14.4%
Top Holding - US/Canada
1. Manulife Financial (MFC) CA$31.4 STRONG BUY
2. Google Inc. (GOOG) US$745.1 BUY
3. Wells Fargo Financial (WFC) US$41.1 => US$43.8 STRONG BUY
4. General Electric (GE) US$19.7 => US$23.5 HOLD
5. TD Bank (TD) CA$83.8 => CA$92.3 HOLD
6. American Express (AXP) US$48.6 HOLD
7. Imperial Oil (IMO) CA$47.8 HOLD
· Mar 11 major transactions: add Berkshire Hathaway (BRK.B) US $85.0; add American Express (AXP) US$43.2
· TD Bank report great results!! Compare to 1q10:
· 1q11 adjusted EPS up 8% to CA$1.74; net interest income up 11%, fee income up 5%, loan provision down by 20%, book value down up slightly by 3%
· 1q earnings usually the highest among all quarters (cuz more investment & underwriting activities) so I don’t think this result will repeat in 2q-4q
· As interest rate may rise in 2H2011, it may hurt TD’s interest margin
· Regulatory change on mortgage (from 35 year to 30 year start from Apr 11) may hurt real estate market’s activities, but should have no impact on TD’s interest income
· Even the interest rate may rise & higher gas price offset with the lower unemployment rate & slow economy pick up, I think loan provision will stay flat for 2011 compare to 2010
· 2011 adjusted EPS expectation is CA$6.46
· Great reminder from Warren Buffett in 2010 annual report: http://bilibala-life.blogspot.com/
# Bilibala personally uses fair value @ 2016 to do all investment, however, I think for most small investors, net present value @ 2011 (fair value multiply by discount factor), would be more relevant.
· STRONG BUY with NPV over MV above 30%
· BUY btw 15% to 30%
· HOLD btw (15%) to 15%
· RE-RE-RECONSIDER below (15%)
2. Google Inc. (GOOG) US$745.1 BUY
3. Wells Fargo Financial (WFC) US$41.1 => US$43.8 STRONG BUY
4. General Electric (GE) US$19.7 => US$23.5 HOLD
5. TD Bank (TD) CA$83.8 => CA$92.3 HOLD
6. American Express (AXP) US$48.6 HOLD
7. Imperial Oil (IMO) CA$47.8 HOLD
· Mar 11 major transactions: add Berkshire Hathaway (BRK.B) US $85.0; add American Express (AXP) US$43.2
· TD Bank report great results!! Compare to 1q10:
· 1q11 adjusted EPS up 8% to CA$1.74; net interest income up 11%, fee income up 5%, loan provision down by 20%, book value down up slightly by 3%
· 1q earnings usually the highest among all quarters (cuz more investment & underwriting activities) so I don’t think this result will repeat in 2q-4q
· As interest rate may rise in 2H2011, it may hurt TD’s interest margin
· Regulatory change on mortgage (from 35 year to 30 year start from Apr 11) may hurt real estate market’s activities, but should have no impact on TD’s interest income
· Even the interest rate may rise & higher gas price offset with the lower unemployment rate & slow economy pick up, I think loan provision will stay flat for 2011 compare to 2010
· 2011 adjusted EPS expectation is CA$6.46
· Great reminder from Warren Buffett in 2010 annual report: http://bilibala-life.blogspot.com/
# Bilibala personally uses fair value @ 2016 to do all investment, however, I think for most small investors, net present value @ 2011 (fair value multiply by discount factor), would be more relevant.
· STRONG BUY with NPV over MV above 30%
· BUY btw 15% to 30%
· HOLD btw (15%) to 15%
· RE-RE-RECONSIDER below (15%)
Top holding - Asia/Europe
Bilibala Finance’s 5 Top Holding by Region:
(with net present value @ 2010)
Asia / Europe
1. China Mobile (0941/CHL) HK$96.4 STRONG BUY
2. China Life (2628/LFC) HK$43.3 STRONG BUY
3. China Construction Bank (0939) HK$9.0 BUY
4. Total SA (TOT) US$61.6 HOLD
5. Siu On Land (0272) HK$6.7 STRONG BUY
6. HSBC Holding (0005/HBC) US$67.3 BUY
7. IFSE A50 China Fund (2823) HK$22.4 STRONG BUY
· Mar 11 major transactions: n/a
· Are you qualify to get $6k from HKG government? It has lots of arguments on:
· How should government deal with the HK$2.3T reserve?
· Whether $6k cash out is helpful to resolve society issue or not?
· Whether government should change its fiscal plan that easily?
· I voted for $6k cash to everyone with HK ID ga, cuz I think that’s the fairest and effective way to re-distribute from “too rich” government
· It is worth to discuss these topics before you plan on how to spend it.
· I am planning to buy MTR because MTR 2010 results looks great.
· 2010 EPS up 24% to HK$2.1, revenue (HKG fare & Others) up thanks to launch of MTR in Australia & Sweden in 2H2010 (even though they can’t make any $ at this stage)
· Growth opportunities are all over the world with continue enjoyment of the transportation monopoly position
# Bilibala personally uses fair value @ 2016 to do all investment, however, I think for most small investors, net present value @ 2011 (fair value multiply by discount factor), would be more relevant.
· STRONG BUY with NPV over MV above 30%
· BUY btw 15% to 30%
· HOLD btw (15%) to 15%
· RE-RE-RECONSIDER below (15%)
(with net present value @ 2010)
Asia / Europe
1. China Mobile (0941/CHL) HK$96.4 STRONG BUY
2. China Life (2628/LFC) HK$43.3 STRONG BUY
3. China Construction Bank (0939) HK$9.0 BUY
4. Total SA (TOT) US$61.6 HOLD
5. Siu On Land (0272) HK$6.7 STRONG BUY
6. HSBC Holding (0005/HBC) US$67.3 BUY
7. IFSE A50 China Fund (2823) HK$22.4 STRONG BUY
· Mar 11 major transactions: n/a
· Are you qualify to get $6k from HKG government? It has lots of arguments on:
· How should government deal with the HK$2.3T reserve?
· Whether $6k cash out is helpful to resolve society issue or not?
· Whether government should change its fiscal plan that easily?
· I voted for $6k cash to everyone with HK ID ga, cuz I think that’s the fairest and effective way to re-distribute from “too rich” government
· It is worth to discuss these topics before you plan on how to spend it.
· I am planning to buy MTR because MTR 2010 results looks great.
· 2010 EPS up 24% to HK$2.1, revenue (HKG fare & Others) up thanks to launch of MTR in Australia & Sweden in 2H2010 (even though they can’t make any $ at this stage)
· Growth opportunities are all over the world with continue enjoyment of the transportation monopoly position
# Bilibala personally uses fair value @ 2016 to do all investment, however, I think for most small investors, net present value @ 2011 (fair value multiply by discount factor), would be more relevant.
· STRONG BUY with NPV over MV above 30%
· BUY btw 15% to 30%
· HOLD btw (15%) to 15%
· RE-RE-RECONSIDER below (15%)
3.02.2011
Top holding in Asia/Europe
Asia / Europe
1. China Mobile (0941/CHL) HK$96.4 STRONG BUY
2. China Life (2628/LFC) HK$43.3 STRONG BUY
3. China Construction Bank (0939) HK$9.0 BUY
4. Total SA (TOT) US$61.6 HOLD
5. Siu On Land (0272) HK$6.7 STRONG BUY
· Hong Kong & China stock market continue to get pressure thanks to China government’s macroeconomic alignment. And as the Middle East Revolution heat up, cash flow was being pulled out from Asian market back to America, that’s why in short term, America stock market experience a higher than expected gains while Asian market looks flat.
· Investment is an art to draw a meaningful picture with the long term value & short term price. If a given new event do not impact long term value but somehow causing a drop in short term price, one should not have to worry.
1. China Mobile (0941/CHL) HK$96.4 STRONG BUY
2. China Life (2628/LFC) HK$43.3 STRONG BUY
3. China Construction Bank (0939) HK$9.0 BUY
4. Total SA (TOT) US$61.6 HOLD
5. Siu On Land (0272) HK$6.7 STRONG BUY
· Hong Kong & China stock market continue to get pressure thanks to China government’s macroeconomic alignment. And as the Middle East Revolution heat up, cash flow was being pulled out from Asian market back to America, that’s why in short term, America stock market experience a higher than expected gains while Asian market looks flat.
· Investment is an art to draw a meaningful picture with the long term value & short term price. If a given new event do not impact long term value but somehow causing a drop in short term price, one should not have to worry.
Investment 201 - oil price
· Why oil price up will not directly trigger the oil companies share price go up?
· Because oil company net present value is calculated based on the 5 years average future oil price (2012-2017) multiple by total oil reserve of the company minus production cost of each oil field and then add the refinery margin multiple # of bbl for refinery.
· As you can see, current oil price, if not irrelevant, it has little affect on oil company valuation unless such price will have a duration impact in long term.
· Because oil company net present value is calculated based on the 5 years average future oil price (2012-2017) multiple by total oil reserve of the company minus production cost of each oil field and then add the refinery margin multiple # of bbl for refinery.
· As you can see, current oil price, if not irrelevant, it has little affect on oil company valuation unless such price will have a duration impact in long term.
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