The Matthews Pacific Tiger Fund (Trades, Portfolio), part of Matthews Asia, disclosed it started one new position and exited another when it reported its second-quarter portfolio last week.
Managed by Sharat Shroff and Rahul Gupta, the fund invests in Asian companies, excluding Japan, in order to achieve long-term capital appreciation. The fund managers look for companies that are capable of sustainable growth.
The fund established a stake in Wise Talent Information Technology Co. Ltd. (HKSE:06100, Financial) and closed its PT Astra International Tbk (ISX:ASII, Financial) stake during the quarter.
Wise Talent
The Pacific Tiger Fund invested in 8.8 million shares of Wise Talent for an average price of 32.50 Hong Kong dollars ($4.14) per share, allocating 0.4% of the equity portfolio to the position.
Shares of the Chinese employment services company, which operates an online job recruitment site, closed at HK$28.85 on Friday with a price-earnings ratio of 1,422.50 and a price-book ratio of 30.92. The company went public in late June.
According to the price chart below, the stock has fallen since its initial public offering.
While limited financial data is available for Wise Talent currently, its revenue for the trailing 12 months stands at HK$977.2 million, an increase from HK$415.36 million in 2016.
Matthews is currently Wise Talent’s only guru shareholder.
PT Astra International
The fund sold its 49.9 million remaining shares of PT Astra for an average price of 0.23 Indonesian rupiahs (0.000016 cents) per share, impacting the equity portfolio by -0.27%. According to GuruFocus, the fund has lost an estimated 27% on the investment since the third quarter of 2015.
The Indonesian conglomerate, which is involved in automotive, financial services, heavy equipment and mining, agribusiness, information technology, property and infrastructure and logistics activities, has a market cap of 288.45 trillion rupiahs; its shares closed at 7,125 rupiahs on Friday with a price-earnings ratio of 15.35, a price-book ratio of 2.24 and a price-sales ratio of 1.36.
The Peter Lynch chart below shows the stock is trading close to its fair value.
PT Astra’s financial strength and profitability and growth were both rated 6 out of 10 by GuruFocus. While the company has issued new long-term debt over the past several years, it is still at a manageable level. The Altman Z-Score of 2.9, however, indicates the company is under some financial pressure.
The company is also strengthened by good margins and returns. For example, the operating margin outperforms 86% of industry peers. Further, the Piotroski F-Score of 6 suggests operations are stable.
PT Astra also has a business predictability ranking of one out of five stars. GuruFocus says companies with this rank see, on average, a gain of 1.1% per year.
No other gurus are invested in the stock.
Other trades
During the quarter, the Pacific Tiger Fund managers also expanded several positions, including Naver Corp. (XKRX:035420, Financial), Inner Mongolia Yili Industrial Group Co. Ltd. (SHSE:600887, Financial), Sun Pharmaceuticals Industries Ltd. (BOM:524715) and Guotai Junan Securities Co. Ltd. (HKSE:02611). Holdings the fund trimmed included Shandong Weigao Group Medical Polymer Co. Ltd. (HKSE:01066), AmorePacific Corp. (XKRX:090430), Tencent Holdings Ltd. (HKSE:00700) and Hengan International Group Co. Ltd. (HKSE:01044).
The fund’s $9.1 billion portfolio, which is composed of 66 stocks, is largely invested in the financial services and consumer defensive sectors. According to its website, the fund posted a 39.96% return in 2017. Its benchmark, the MSCI All Country Asia ex Japan Index, posted a return of 41.72%.
Disclosure: No positions.
