Alex Klein Tank of DK Capital outlines a 10-stock portfolio that is 70% weighted towards property and construction due to valuation and previous trading levels.
The Thai-focused Elite Fund is managed by PYN Fund Management. It has a 10-year annualised return of 22.1%, ranking it third on Morningstar’s fund performance list after the top two of Russian Prosperity Fund and East Capital Russia Fund. The fund was up 109% in 2009 and is up 47% year-to-date.
The Elite fund stands at €62 million ($79 million), its assets having fallen to €30 million at the end of 2008. It also has a sister fund, the Asia regional Populus Fund. In all, 99% of investors in both of the funds originate from Finland. There is a 1% management fee and a 12% performance fee on the funds.
Representing the funds in Bangkok is Alex Klein Tank of DK Capital, who notes that the Thai-focused fund is up 880% since inception in 1999 compared with the Stock Exchange of Thailand (SET) Index increase of 146%.
“We have a concentrated 10-stock portfolio that is 70% weighted towards property and construction due to valuation and previous trading levels,” he says. “Our portfolio has a 6.4 times P/E ratio and 7.73 times dividend yield.”
The Elite portfolio’s top holdings are Sansiri, Property Perfect, Major Development and Noble Development.
Since the Asian financial crisis of the late 1990s, the differentiation between the SET Index and the Thai property developer index has widened from approximately 15% to 60%. But with developers’ underperformance during that period, their improved cashflow and better trading conditions, that gap may close some.
Klein Tank also perceives a resurrection to the infrastructure capital expenditure cycle, with the Democrat/Bhum Jai Thai Party coalition government starting to roll out multi-year infrastructure projects.
These include further development to the Bangkok subway, with five contracts for the Blue line having recently been handed out, and further movement on an intra-Southeast Asia high-speed rail link.
The land value by the side of the Bangkok Mass Transit System (BTS) railway has doubled in price since 2000, while land alongside the subway has increased by 50%.
source – www.asianinvestor.net