Pico Far East Holdings (0752)

[dzwm87]

My observation: The pandemic was already the biggest test for them since they were impacted in almost each part of the world (West, China & SE Asia). It's quite impressive to have emerged from the pandemic bigger than before - they probably won some market share from their smaller competitors. Recent interim DPS already above pre-pandemic interim DPS. Not a lot of other businesses were able to do that. Reflecting back, I would have thought that F&B, retail, tourism etc all were easy recovery play on post-pandemic - turns out most of them are still trailing pre-pandemic revenue.

Of course the common comparison with its SG peer, Kingsmen Creative, who was trying to acquire a good IP before the pandemic and still trying to acquire a good IP after the pandemic. It looks quite clear who the better operator is.

[dreamybear]

2015: price=2.01 closing at 10x PE translates to EPS = 2.01/10 = 0.201 hkd
2024: price=1.85 closing at 7.2x PE translates to EPS = 1.85/7.2 = 0.26 hkd

So over the last 10years, the fact is EPS has grown ~30% 

Thanks weijian & dzwm87 for all the replies.

Given the nature of the business(e.g. brand activation/events industry, 50% of the revenue is deprived outside of China/HK => pretty global, etc) is it realistic to expect its revenue / profit to at least 2x moving fwd ? Granted the mkt expectations is reduced despite the company's recovery to exceed pre Covid-19 but what must happen for expectations to revert back and what is the probability of that happening ? This is esp so if the cause is due to larger macroeconomic conditions at play. I am not an expert & am inclined to think macroeconomic stuff might take years or even decades to play out ?

And given the 30% EPS growth over 10 years, how does Pico compare to say, the following stocks or their underlying business /industry(factoring cyclicality) ?
https://drwealth.com/10-best-performing-...-10-years/
https://www.valuebuddies.com/thread-11221.html

imho, this company is more like a stable evergreen business with dividend yield for OPMIs. It may be a good company to own in the entire stake but as a stock, I am not sure how does it or where does it fall into an OPMI's portfolio - capital gains(short term covid recovery play ?) or dividend yield for retirement portfolio or ??

[dzwm87]

Hi Dreamybear,

I would suppose it has the characteristics of a stable evergreen business. If it's for capital gains, it should have been back then during the pandemic period when you buy alongside with the Chairman

I won't suppose it's an ex-growth. From a quick look, they have been growing presence in the Middle East, something which wasn't in the MD&A during pre-pandemic. The US also seems to be growing larger than pre-pandemic presence - a contention that their pre-pandemic acquisition did work out well for them after all. 

In short, it looks like the cake got bigger and the question is whether steady state post-pandemic DPS will be larger. Interim DPS seems to suggest so.

[weijian]

And given the 30% EPS growth over 10 years, how does Pico compare to say, the following stocks or their underlying business /industry(factoring cyclicality) ?
https://drwealth.com/10-best-performing-...-10-years/
https://www.valuebuddies.com/thread-11221.html

imho, this company is more like a stable evergreen business with dividend yield for OPMIs. It may be a good company to own in the entire stake but as a stock, I am not sure how does it or where does it fall into an OPMI's portfolio - capital gains(short term covid recovery play ?) or dividend yield for retirement portfolio or ??

hi dreamybear,

For those stocks mentioned in the links, I can see a few commonalities:

(a) All of them start from been small caps.
(b) All of them had a business transition - they changed their existing (not working) business model to cater to a new trend, and either onboarded new marque customers or a new blue sea market.

Of course, if there are 10 successful companies with above commonalities, there are another 90 which failed.

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IMHO, I feel it is quite pointless to categorize stocks into buckets.

Investing is relatively counterintuitive. Dividend plays don't come from high yielding REITs but from stocks that grow their business over time. Can we have capital gains from REITS (supposedly dividend plays) ? Of course we can. When interest rates get lower, REITs' DI will increase and together with risk free rates reducing, REIT owners will enjoy capital gains. I believe before rates started rising in 2022, the owners of Mapletree suite of REITs enjoyed as much capital gains (or more) than dividend returns. And in another thread, I had shown that Mapletree's true dividend yield is lower than what it is.

dzwm87 has bought out some good points. Is a transition in progress? Is Mr Market slow in closing improving fundamentals (value) and perception (price)? Is there more legs to run? I don't think both of us start by categorizing Pico Far East into some bucket.