Monday, April 03, 2023

1Q 2023 Investment Strategy Update

What a curveball that history throws at us. Just when we thought we have seen the last of COVID-19 crisis, the world is opening up, economy is picking up, interest rate is rising to tamp the hot economy, then came the sudden news of the collapse of the Silicon Valley Bank after a bank run, marking the second-largest bank failure in United States history and the largest since the 2007–2008 financial crisis. 2 days later, Signature Bank also failed, and followed by Credit Suisse crisis 7 days later, with UBS taking over the company to save it from failure. This cast jittery repercussion around the world. Is this the start of another crisis? Or is this just a blip in the market? Only time will tell. As of now, investors are staying on the sideline, waiting to see how this situation will play out.

DJI ended at 33274, an increase of 127 points (+0.38%) compared to 4Q 2022. For Singapore, STI ended at 3258, an increase of 7 points (+0.21%) compared to last quarter. Singapore market has the 3 big banks (DBS, UOB, OCBC accounting for 43.5% of STI weightage) to thank for, keeping the index stable due to their strong fundamentals.

For this quarter, not much action from me, except trying to play out if Glazer indeed will call an end to their relationship with Man United. I personally think at the end, they will leave Man Utd, but not before getting the highest bid for their shares:

Transaction 1: Bought 1 batch Man Utd shares in January. Sold 1 batch in February. Bought 1 batch in March.

Buying in thinking Glazer will set a dateline for initial bid submission, which came true. Amid rumors of the amount of initial bid (4.5B pounds), sold them in February after news emerge that Glazer might not be selling after all as the bids are way below their expectation (6.0B pounds). Glad did not make a loss. Buy in again in March before the second bid submission. I highly think Glazer will narrow down to 2 preferred bidders and go for a third round. Personally, I think if Glazer do decides to sell, the final price will be between 5.5-6 billion pounds (6.6 - 7.2 billion USD) which translates to $40 - $43. We shall see in time what is the outcome.

Transaction 2: Bought 1 batch Grab in February. 

Grab is adjusting their customer incentives system to make the business more profitable - Lesser discount on delivery fee (drop from $4 to $3 discount), lesser discount on self pick-ups (drop from 20% to 15% discount), lesser points awarded from using GrabPay. I guess these streamlining results will start to show in the subsequent quarters as they do their adjustments. Plus GXS bank is now fully operational! 

That is all for now. See you all in Q2 2023 update and thank you for reading thus far.


Anonymous said...

how did you reach a valuation of 40 USD? based on enterprise value?

Azure1984 said...

No.. purchase of Man Utd cannot be based on enterprise value, it will depend how much premium the buyer wants to pay. Glazer wanted 6B pounds (widely reported) but I doubt the top 2 bidders now are willing to pay that price. Current bids for the 2nd round is around 5B pounds and if Glazer is willing to sell, I will think likely they will push the final 2 buyers to up their bids for the 3rd round bidding, which I think highly will settle around 5.5-6.0B pounds. For the $40, I use the Google Finance which give a live update of the stock current total value. You convert the pounds to USD and you will arrive at the $40 valuation