First quarter of the year and I am pleased with the latest set of results from my core holdings. Amid a challenging final quarter (except Valuetronics), all have recorded growth in revenue and/or net profit for the year. Notwithstanding any unforeseen circumstances, I expect all to remain profitable in the coming year.

A

Arista Networks [6.0% @ US$263]

Another solid performance with 2018’s revenue growing by 30% and non-GAAP net income growing by 42%. GAAP income dropped from US$5.35 to US$4.06, mainly attributed to one-off legal cost. The group guided a 25% growth in revenue for 2019 Q1. At current price, I think it is fairly value and I am confident that the management will bring the company to greater height.

I am pleased with the results and am also happy that I had held on to my shares when its price plummeted last year. Now, it is slightly higher than my purchase price. I have pared down my stake slightly  as my knowledge of its business is really superficial. With the reduced stake Arista Networks will drop out of my core holdings.

iFAST [9.6%@$0.92]

Another solid quarter by the group bringing a 21% growth in net revenue and 42% net profit for the year. The only damper is that the company is not shortlisted for Hong Kong’s virtual bank’s license.

No impetus to buy more at the moment and am still happy with its growth. So will just continue to hold on to my current stake.

B

Raffles Medical Group [9.7%@$1.28]

A stable quarter and year that it eking out a small growth in revenue and net profit while expanding on three fronts. Balance sheet has become weaker due to the increase in loan. It in a net debt of $10.5 mil as compared to $19.1 mil net cash last year.  Moving forward, it will continue to grow its revenue and is expected to stay profitable, notwithstanding the anticipated start-up loss of RafflesHospital Chongqing.

I might pare down slightly if I need the cash for other growth counters.

Valuetronics [8.1%@$0.60]

Revenue decreased by 7.5%, primarily due to the drop in CE revenue by 26%. Mitigated by the 12% growth of ICE revenue. Despite the drop in revenue, quarterly net profit is up by 2.6%, resulted in a high net profit margin of 8.2%.

It was reported that analysts are concerned about its CE segment due to US-China trade tension. So going forward, CE revenue might drop further. At the same time, it is also reported that the company is considering setting up manufacturing plant in South East Asia and US due to the above. I take it as a positive outcome as the growth in ICE segment which is of a higher margin should be able to mitigate the effect and the situation has forced the company to venture beyond its base which should bode well for the longer term.

Assuming the year’s revenue and net profit is flat, after accounting for the HKD 13.6 mil impairment loss, I believe the management would declare at least HKD 0.20 dividend in Q4, given its large cash hoard of $0.30 per share,

I am pleased with its performance and am confident that it will be able to maintain its HK$0.20 final dividend.  Likely to hold to what I have at the moment.

Food Empire [7.0%@$0.67]

Food Empire continues to grow but booked revenue and profit is as usual affected by currency fluctuation in Russia, Ukraine region. Revenue is up by 5.5%, while net profit jumped by 33%, largely attributed to the absence of one-off impairment charge.

Indochina growth is interesting, with revenue growing at 33%. Hopefully when they reduced the amount of advertisement and promotion activities in time to come, they company can benefit from the enlarged market share. Its ingredient plant should be operating near capacity and revenue has stagnated after the past few years’ growth. Looking forward to the completion of its second plant at Andhra Pradesh plant in 2020 for the next boost.

Slightly disappointed with its $0.0068 dividend but I guess they need to preserve cash for the above plant.

I might pare down slightly if I need the cash for other growth counters.

VICOM [CPF@$6.06]

Revenue grew by 3.1% for the year, reversing a 3 years trend of decreasing revenue. Excluding one-off item, net profit grew by 1.7%. Including the re-location gain, net profit jumped by a whooping 30%. Another record dividend of $0.2317 with a special dividend of $0.0862. Definitely beat my expectation and with the strong balance sheet, it looks like they might be able to maintain a recurring $0.36 dividend for the next few years. Even it just gives out $0.30 dividend, that’s a 4.8% yield at current price of $6.28.

Will hold on to my current stake and might add more after XD and when I have sufficient fund in my CPF-IS account.

[position size, average price]