Picking durable stocks helps weather the pandemic storm
Durability has become the name of the game for investors as they seek to navigate the COVID-19 pandemic and that is best served by a focus on astute stock selection, according to Premium China Funds Management director, Jonathan Wu.
He said a close examination of the selections underpinning Premium China’s marquee Premium Asia Fund confirmed the value of having sought out companies with both the settings and track record necessary to see them weather something like the current pandemic.
In doing so he cited the Premium Asia Fund’s exposure to Galaxy Entertainment Group which might, at first blush, appear counter-intuitive given the impact of lock-downs on travel and hospitality across the world.
Galaxy is one of the world’s largest resort, entertainment and hospitality groups with which has developed and operates a portfolio of integrated resort, retail, dining, hotel and gaming facilities in Macau.
But, according to Wu, the real value of Galaxy is the durability of its balance sheet which is arguably strong enough to see it through it through any prolonged crisis.
He said the company had a cash position of $6,645 million, representing around 25 per cent of its market capitalisation which was more than enough to see it carry on for more than five years without needing to resort to cost-cutting or other measures.
“So, in that context, survivability is all that really matters,” Wu said.
He said this also added durability to the Premium Asia Fund and the Premium China Fund which, overall, had a net cash to equity ratio of 15.1 per cent and 11.2 per cent respectively. For comparison the net cash to equity ratio of MSCI AC World Average is -51.5%.
ABOUT PREMIUM CHINA FUNDS MANAGEMENT
Premium China Funds Management (PCFM) is a boutique funds management group providing specialist Asian equity and fixed-income funds to both Australian and New Zealand investors.
Capturing the growing economies and influence of emerging Asia, PCFM has developed 4 actively managed funds – the Premium China Fund, Premium Asia Fund, Premium Asia Property Fund and Premium Asia Income Fund.
The funds are managed by a large and experienced team with offices in Hong Kong, Shanghai, Singapore and Kuala Lumpur. The directors and investment managers of Premium and its fund offerings have extensive knowledge in Asian equity and credit markets, wealth management, and other financial services.
For further information, please feel free to contact:
Jonathan Wu – Executive Director | Head of Distribution and Operations | Chief Investment Specialist
Jonathan.wu@premiumasiafunds.com.au
0416 031 676
Derek Paas – Asia Investment Specialist | State Manager (NSW/QLD/WA/ACT)
Derek.paas@premiumasiafunds.com.au
0406 608 388