Follow Up On JAPFA

Follow Up On JAPFA

This post is drafted for a friend who followed me on JAPFA

My Message to him is as follow:

1. I have not sold any of my 25 lots of Japfa. And I will formal post a performance review if I ever sell it.
   
   
2. Japfa reached a height of 94cents before plunging back to current price, and I see 2 main reasons for this:
   
   
• Japfa posted 34% decline in profit in 1H. This is pretty much expected for a newly listed firm. Most business prior to listing would manage their earning to secure the best possible valuation after which they will take a big bath to write down all previous losses. But longer term wise, this is still a profitable business due to a favorable industry setup. More analysis on the industry is available from this article .
  
  
• Fear of Fed might be hiking interest rate, which might cause a currency crisis in developing countries. A few nations and Indonesia who have weak reserve become the likely target. I have already mentioned this risk in my earlier assessment of Japfa (refer to it here). Despite the fact that Indonesia was attacked several times in the recent years, I do not foresee a full scale currency flight happening in Indonesia as Fed is pretty responsible this time round. At least it has the courtesy to announce the date at which QE program would be tapered. According to Economic Theories, such announcement allows investors in developing nations to retreat orderly instead running for exit.
  
  
3. I am usually a longer term investor with time frame ranging from 3 months to 1 year. Thus shorter term fluctuation usually isn't much of a problem to me.
   
   
4. I am a price taker:My portfolio size is small and diversified, that means I can't move the market. My strategy only entails the following:
• Trying to foresee possible prospects which the market fails to foresee. 
• Picking the right counters
• Wait for the market to see what I saw. (usually only when news start to report)
• Let the market push the price to where I am aiming
• I take the profit.
  
  
5. Short term market fluctuation tend to base upon sentiment which I have no control on. Take First Sponsor as an example, I have shorted at $1.44 and expected it to fall till $0.94 within 2 weeks (You can refer to my call on First Sponsor here). As soon as the counter got listed, price indeed moved down quickly and decisively. The management soon came in to shore up confidence by buying shares from the market. While First Sponsor's bad fundamental does not improve just because of their actions, they do improved the market sentiment and prevented the share price from falling further. As a result price now stuck at $1.27 and the only thing I could do is to wait for market to return to its rationality.

Fundamental always prevail in long term.

Cheers