Pantech Group

Rebalancing My Portfolio

Publish date: Mon, 5 May 2014, 08:41 PM 

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1. Exposure to Property Stocks

The past few weeks had been interesting. Property stocks were actively traded and I managed to make some money.

However, since last week, sentiment has turned bearish. Many investors sold down their property stocks to lock in profit, in anticipation of softening of equity market in coming weeks / months.

I also had invested quite a fair bit in property stocks. My biggest exposure is in GOB. My original cost was 79 sen. Over the past two weeks, I bought more and my average cost now is approximately 92 sen.

I have no intention to sell a single share of GOB as I am a long term investor. I believe in GOB's potential.
(I better not say too much good things about GOB. Otherwise it will begin to sound like propaganda and certain readers might suspect I am trying to talk up GOB share price).



2. Rebalancing My Portfolio

However, I feel that I am too lopsided towards property stocks. This morning, I sold some property counters (not GOB), and I bought some Pantech.

Pantech is principally involved in the provision of total solutions for piping systems and flow controls. It is a proxy to downstream oil and gas sector. 

Pantech is a stock widely covered by analysts. As such, there is no need for me to provide too much details. Readers who are interested please go to i3's Price Target section for Pantech to fish out the relevant analyst reports.

Or please refer to link below for latest write up by Insider Asia.
http://www.theedgemalaysia.com/insider-asia/287522-pantechs-growth-prospects-intact.html

The reason I added Pantech is because I believe it will benefit substantially from the upcoming Pengerang Integrated Complex project. The Pengerang project is simply mind boggling. It involved capital expenditure of USD 26 billion, or RM83 billion. In latest financial year, Pantech reported revenue of RM600 mil. That is 0.7% of RM83 billion. So the potential is huge.

Petronas has yet to provide details on timing for implementation of the project. However, as a long term investor, I usually don't mind taking position a bit earlier.

The reason is very simple - if I don't park my money in Pantech, I will end up putting my money in some other stocks.

Since I am relatively familiar with Pantech (I invested in Pantech-WA in 2011), and there is potential catalyst from Pengerang some time down the road, I might as well invest in it.

Afterall, the stock is trading at approximately 10 times PE multiple (which is not overvalued for an oil and gas counter, in my opinion) and has dividend yield of at least 4%.



3. Disposal of Shares by Director

Today, Pantech announced that one of its directors had disposed of 2 mil shares in open market.

However, I am not too concerned about this latest development. Pantech directors / major shareholders had a habit of cashing out every now and then. Some started selling at as low as 60 sen, if I remember correctly.

Based on past expereince, there is no strong correlation betwen the company's financial results and directors / major shareholders' dealing activities, and market had learnt to ignore them (as the company continued to report improved earnings despite the disposals).

Have a nice evening.