Friday, January 15, 2021

Building a 100K portfolio from HKSE dividend stocks

I have been looking at investing in dividend stocks listed in HKSE as a form of increasing my geographical diversification. As US corporate bond price hit a record high and SGX REITs run up in the last one month, I started to spend more time researching HKSE dividend counters for alternative passive income. HKSE market capitalization greatly exceeds that of SG due to many China H shares listing and this increases my pool of opportunities to buy undervalued stocks. Currently, China economy is the least impacted by covid due to good control measurement by its government. Its domestic economy should be large enough to help Chinese companies to cushion the blow of this global pandemic.

Since US govt started to blacklist China companies and delist China ADR stocks on NYSE, many Chinese stocks with parallel listing on HKSE have plunged significantly. I took this opportunity to build my HKSE dividend portfolio with 100K allocated buying some local HK and China H Shares. Due to the sharp run up in share price during January, I manage to invest about 94.5K which will produce about $6.2 K dividend annually.

 

Financial summary of counters invested:

1) LINK is one of the largest REIT in the world with a market cap close to 20 billion USD. Its current price is still about 20% below pre-covid high. It has one of the best balance sheet among all the REITs that it is unlikely to cut dividend or raise cash via right issues.

2) Fortune REIT has low gearing of about 20% and unlikely to raise cash via right issues.. Its current price is still about 24% below pre-covid high.

 

 3) CNOOC is victim of US govt blacklist. However, its business is 100% based in China and won't be impacted by US delisting. Its current price is about 41% below pre-covid high.

 

4) China Mobile is one of largest wireless carrier in term of subscribers.It has one of best balance sheet especially when you compare against Singtel. Its current price is still about 33% below pre-covid high. China Mobile is also a victim of US govt blacklist. However, its business is 100% based in China and won't be impacted by US delisting.


 

5) Sinopec Engineering has one of the highest yield among H shares with excellent cash flow and little debt. Its current price is still about 26.5% below pre-covid high. Its parent company Sinopec is one of the largest listed company in China.

 

6) ICBC .. All 3 Chinese banks below have low P/B , P/E and sustainable dividend yield of > 5%.

7) CCB

8) BOC


9) Power Assets . Its current price is still about 30% below pre-covid high.


4 comments:

  1. Any thoughts on why the China banks are having a much lower PE 4 to 6 as compared to Sjngapore banks? And the China banks are giving higher dividend than Singapore's.

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    1. The big 4 banks of China are giving higher dividend than Spore banks. The lower PE has been a result of share price sliding over last 3 years due to Trump trade war..

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  2. Hi, what are your thoughts on power assets prospects moving forward?

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    Replies
    1. I believe all utilities companies will be laggard for a while until the real economy recover. Power Assets have huge business in Europe/UK and most of the countries are hard hit with covid. The only reason I bought this counter is because it has hit rock bottom with good yield (even accounting for near term reduction). I bought at its low and have a safe margin of safety collecting yield and waiting for its price to recover. At current price, I would not recommend a buy but good to hold if you bought earlier.

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