Portfolio companies’ results for 1H/2018 are mostly positive

SILKKITIE FUND

Now, most of our portfolio companies have reported their results. I general, the results have been very good, as the portfolio weighted 6m/2018 results increased by more than 40% YoY. Some exceptionally good results  from for example Erajaya (+200%) and BAIC Motor (+180%) were the main reason for large increases in profits, but even the median net income growth for Silkkitie portfolio companies was above 30% YoY.

 

In the Philippines, Cebu LandMasters – the company highlighted in our July report – posted 1H/2018 YoY revenue and net income growth of 45% and 30%, respectively. Also the country’s leader in express package delivery, LBC Express, posted 1H/2018 revenue growth of 18%, while its net income rose 136% due to FX and some other gains (gross profit was up 18%).

 

In India, Capital First and J. Kumar Infra both posted a very good result for Q1/2019: net incomes were up by around 50% YoY, and exceeded market estimates. Despite good performance operationally and cheap valuations, the share prices have lagged this year as the Indian rally has been driven mostly by large caps, so far.

 

The portfolio companies in China mostly exceeded the estimates, while the net incomes for 1H/2018 increased from +10% to more than +180% .  Given the high growth rates and very low valuation levels after the violent declines of the summer months, most of our holdings have plenty of upside to reach even mid-June levels.

 

In Vietnam PNJ’s net income was up by 34% while Savico’s net income was up by 42%. In Indonesia, the result season was somewhat masked by the volatile IDR and BI’s rate hikes. However, Erajaya, Bank BTN, Sritex and Kresna, among others, posted net incomes that rose between 20%- 200%. With some smaller Indonesian companies the net income levels were hit by the volatile IDR. Some of our Pakistani companies have not yet posted their results.

 

KOMODO FUND

As mentioned in Silkkitie comments above, the Indonesian companies posted also good results, but there were some negative surprises due to the  volatile IDR. On average, the Komodo companies posted +40% net income growth for 6m/2018. The portfolio weighted increase in profits was even higher at +50% due to various turnaround cases within the portfolio; the median net incomes rose just by +12.6% YoY.