- 0494.HK (Li & Fung) - what is a strong MOAT? And buying cheap doesn't mean good buy. Something that came from $15 to $4 doesn't mean it's a good buy. Something Martin Lau buys doesn't necessarily mean it's a good buy. Strong FCF doesn't necessarily mean it's a good buy. Lesson: (1) when you're ignorant about the industry, do yourself a favor, go for low debt level (or better still net cash). (2) understand the company's source of (or lack of) pricing power. Li & Fung lost their pricing power not only because of weak demand which is cyclical, but also structural due to more transparent pricing from ecommerce and internet (the likes of Alibaba). (3) I read the book about Li & Fung history. So it followed naturally that I "knew" something about it and fell into that confirmation and/or availability bias.
- 0902.HK (Huaneng) - Monopoly doesn't mean guarantee straight line upwards. The microstructure of Power generation sector is different between China and HK. Just because you made money from HKE doesn't mean you can make money from Huaneng. In a regulated industry, the company's MOAT can be deceptive given lack of pricing power. Interest alignment in SOE is dubious as govt uses SOE as policy tool. SOE is used primarily to drive policy rather than for shareholder return. Lesson: (1) false sense of security about monopoly and MOAT without good understanding of the different microstructures. (2) cheap can become cheaper, PE=8 can goto PE=5. High dividend will come down. (3) ultimately, high debt is not ideal, judge the company's requirement to raise external capital (placement). (4) be cognisant about SOE interest alignment. (5) need to have a basic picture/understanding about supply and demand.
- 2883.HK/ 0883.HK (CNOOC) / Gazprom - PE=8 doesn't mean it's cheap. And for cyclical industry, it's a contrarian indicator meaning PE is lowest at cyclical peak.
- 0603.HK (China Oil & Gas) - Lesson: (1) followed Joe Zhang in his book. So stop listening to other people. (2) Sizing - too heavy an exposure in this small cap cyclical name. (3) Buying laggard - laggard lags for a reason. (4) failed to act on first red flag - namely the purchase of Canadian oil assets. (5) Debt - sensitivity to leverage is numbed when all is going well (pay attention!!!). Only when the tide goes out we'll know who's swimming naked.
- 1083.HK (Towngas China) - this is not HKCG all over again, don't kid yourself! Should always be wary of a story of the next XXX. Lesson: (1) Lack of understanding of the structure of the company. The fact that the crown jewel projects are all residing still with HKCG (the mother) and Towngas is just holding the greenfield projects. Towngas is just a step son. HKCG always has a higher pegging order. ALIGNMENT OF INTEREST!!! The question of holding mother or son, and the bias about buying a "potential" duplicate.
- 0010.HK (HLG) - a good company doesn't mean a good price. PB=0.8 doesn't mean it cannot go to PB=0.5. The key to buying NAV discount names? When the insider is buying. Ronnie Chan paid bottom price in 2016. Lesson (2): the Liking bias. Just because I liked (used to) Ronnie Chan doesn't mean I should buy his company (at any price). The switch from Kam Ping Mansion to HLG was flawed without understanding historical PB band and where we are wrt to that band. (3) Rationality: I wanted to buy something in the bull market and it felt safest to buy HLG due to NAV discount. It was an emotional decision, not a rational decision.
- Want Want (00151.HK) - Lesson: (1) didn't buy cheap. Big absolute PE and PB. Just because they trade near the lowest of the recent band doesn't mean it's cheap. Cheapness is measured on an absolute basis, not relative. (2) Lack of analysis: what was the free cash flow yield? What's their strength, product / distribution / brand / pricing? Martin Lau sold it because mgmt wasn't investing in the brands but focused more on cost/efficiency
