Sold out of Kingboard Holdings at HK$20,2 net of charges taking a 8.9% loss and added to my positions in Link Reit and Alibaba on 3^rd March 2020.

While Kingboard Holdings was a balance sheet play; its stock price valuing the company at just half the value of its assets with no financial stress to its balance sheet, a multi decade track record of generating earnings, with an experienced management team trained in corporate governance and financial management in Hong Kong; the business simply lacks the earnings power on its assets to enable a material re-rating of its stock.

Its announcement last night indicated barely more than a 4% return on its assets for last year and this is before the negative impact of the coronavirus to its operations in China this year.

In contrast, its subsidiary, Kingboard Laminates generates, even at the lower end of its earnings cycle, 12% on its assets with gearing at less than 20% and even though it will also take a further hit in 2020 due to the coronavirus impacting its operations, this is a good cashflow company with its products partly exposed to the future growth of China’s electric vehicles and 5G. My reason for holding Kingboard Laminates was for its dividend income and that is why unlike Kingboard Holdings, I am maintaining my position.

Part of the disposal of Kingboard Holding has let me add further to Link Reit and Alibaba today while enabling me to build further my cash reserves for future stock additions.

My portfolio page has been updated.