Investing in Thailand – BDMS.BK

January is already proving to be a challenging month, with COVID still in full expansion mode. This means that we still follow all the protective measures and restrictions which have been put in place to protect the public, including full or partial lockdowns, travel restrictions, mask mandates etc.

Thailand managed the outbreak pretty well so far, but in the last 3 weeks, things also escalated here a little bit with lots of new infections and putting public life once again under pressure.

But every crisis can also be an opportunity, and as promised, I’d like to present one such potential opportunity in the investment world of Thailand on my blog.

The leader in medical services in Thailand

Things need to get worse before they can better, and for investors with some cash on hand, this is a good time to look for undervalued companies that will either recover after the crisis or which might even profit further from it. And one such company is Bangkok Dusit Medical Services (BDMS.BK).

You can find more information and investor relations for BDMS right HERE. The company operates hospitals, clinics, and other medical facilities, including the production of pharmaceuticals. The “About Us” section of BDMS describes the company as follows:

“Bangkok Dusit Medical Services (BDMS) is one of the most prestigious hospital networks in the Asia-Pacific region, with 26 hospitals and/or clinical programs out of a total of 48 hospitals across the BDMS network that have been accredited by the Joint Commission International (JCI). We are ranked in the top five private hospital groups globally in terms of Market Capitalization. BDMS offers world-class medical care and treatment to both local and international patients, complemented by the latest medical technology. Our team of qualified doctors and nurses consists of specialists in every field. These health professionals have received training from top medical schools around the world, and they are passionate about providing only top-tier health services to every patient.

I can confirm that the company has not just the reputation of being the best in Thailand, they are the best. I am living in Thailand for almost 10 years now, and I can confirm that whenever I get sick, I wouldn’t consider any other hospital than a BDMS operated hospital or clinic. And it’s the same for every single expat here that I know.

They are modern, clean, the staff is professional, the service amazing, and while they are more expensive than other medical facilities in Thailand, the value is still reasonable. Especially if you have insurance.

The Stock

The stock suffered during the crisis as you can see on the chart, but it’s already on track to recover and I expect it to thrive once the vaccinations across the country begin to take place, probably around March and April this year.

While the hospital will certainly benefit as one of the main distributors for future vaccinations, its business is currently also affected by consumer sentiment, and the lack of medical tourism, which is a very strong contributor to the companies top-line. People from all over the world are coming to Thailand to undergo essential and non-essential treatments, thus the current travel restrictions are a serious drag on the companies revenues. Once the restrictions are lifted, the stock should continue its recovery and get back to a level of around 24 THB, thus implicating a 12% upside on this factor alone.

BDMS is also a dividend payer, with the dividends usually being distributed twice a year in April and in September. In 2020 however, there was only one payment. The last dividend came in at 0,25 THB per share, so the yield was not impressive, and overall the dividend history is not showing any real care for dividend-growth or even small growth consistency.

Stability for your depot and long-term benefits

Overall I regard this stock as a good, but not very exciting opportunity. It’s a solid company with good long-term potential and a boring dividend. But boring is good. Long-term potential sounds great to me. And as it’s slowly making its way back up, for me it definitely is one of those SWAN (sleep well at night) stocks that puts stability and trust in my portfolio.

DISCLOSURE: I am managing a portfolio which owns BDMS.

Will stocks crash if Biden wins?

The presidential election in the US is just around the corner. November is only 3 weeks away. And while early voting has already started in the largest economy in the world, markets around the globe are in full speculation on who might win and how this could effects stocks. The loudest faction is of course the one that is stronger invested. The Republicans. And their argument is the same every four years: If the Democrats win, the economy and stocks will suffer.

Of course we cannot predict the future, but if the past is any lesson, then it’s safe to assume that the comments shared by Republicans are at least misleading, and this is easy to proof. Let’s look at the economies of the last presidents in the US:

Blue stands obviously for Democrats, and red for Republicans. The full article can be found HERE with my thanks to Fortune.com

These numbers give a very clear indication on what kind of leadership inspires growth and success. And it’s not a Republican leadership. Looking at these facts as an investor I certainly support the Biden campaign to emerge victorious, to help the US economy to get back on track, and I don’t worry about my portfolio if Biden gets his turn. If anything, I expect things to improve significantly.

This may take a little longer

A few of us were looking forward to seeing the stock markets recover during the last quarter of 2020, which started only 12 days ago. But as we are moving into the 38th week of this year, there is little reason to believe that the markets will start to rise again any soon.

Many businesses have been scaled down, people furloughed, budgets cut, investments deferred, assets repurposed. A vaccine for the virus seems still far off, but even if we would get it tomorrow, it will take more than a few months to get to where things were before. How long? Nobody knows.

Be greedy when others are fearful

Following the advice of Warren Buffett, investors should get greedy when others are fearful. The meaning behind this is of course that when stock prices are in free fall, it usually is a good time to be looking out for good bargains. But is the market now really already fearful? Is it a good time to be looking out for bargains?

The truth is that nobody really knows. Some shares may fall again. Others may rise. Some may be easier to analyze than others. But the universal rule remains valid in good and in bad times: There is no such thing as a bad time to invest in good companies.

My approach during this time remains the same as previously. I keep investing. I am buying companies that I believe to have a solid business, that will survive the current and future challenges, that continue paying dividends, and which I believe to continue doing all this for years to come.

While looking for the right companies at a good price, I also stick to my split-investment strategy. I am not putting all my money immediately into one stock, but invest only a limited amount first, and add to the position again a few months later on.

Following this strategy, I may not fully benefit from a stock price increase, but I limit my risk and have the opportunity to purchase more shares at a lower price in the event the stock price may fall.

Being greedy has never been good advice. Not being scared and having a strategy is in my opinion a better approach.

Nobody knows what the future holds

When you wake up in the morning, you never really know what the day will bring you. You might have a schedule. Some appointments. Places to go. People to meet. Things to do. But there is no guarantee that all these things will indeed happen.

A person you wanted to meet might cancel the appointment. The place you wanted to go might become not accessible for some reason. And the things you wanted to do might become less of a priority as the day evolves.

The same goes for any business, and of course, for stock investments.

We never know what will happen in the stock market. While promising news about some stocks you bought might have prevailed in the market during the last week and made you feel very confident of future gains and profits on your investment, a single unexpected event can turn everything around.

Hope can turn to fear. Smiles to tears. And instead of counting your imaginary wealth, you might scramble to think about how to manage the next rent payment.

Benefits of having a plan

This is where strategy and planning comes into play. Of course we cannot predict the future. Nobody can. But we can put systems and strategies in place to help us mitigate potential challenges and at the same time offer us the chance to take advantage of potential opportunities.

Those strategies to name a few include:

  • Having an emergency fund of 3 months or more of your regular income/expenses
  • Having an investment thesis, an investment plan
  • Diversifying investments across countries, industries, and currencies
  • Having a good mix of dividend-paying stocks and growth stocks
  • Being calm
  • Being patient
  • Having some investment cash ready on the side
  • Not being scared to sell a stock at a loss when the story behind it doesn’t match your investment thesis anymore
  • Not being scared to buy more shares of a company that is losing value, but that perfectly fits your investment thesis

Taking the time to plan ahead, and to continue working on this plan as we learn, as markets and industries develop, and as challenges arise while opportunities pop-up on unexpected fronts makes all the difference between successful investors and gamblers.

Investing in space

I mentioned it somewhere before, but I like to point it out one more time: Investors are in general positive people. Especially those who focus on the long term prospects of the world. We might be in a pandemic that is devastating economies across the globe right now. But most investors know that we will pass this, that the economy will come back, that new jobs will be created, and that this is not the end for humanity.

So naturally, every crisis is an opportunity, and when things turn doom and gloom for many, investors are trying to look beyond that, always on the look-out for some fresh straws of grass that start to (re-)grow from the ground.

Where does humanity go from here?

One such straw of grass for me is a future trend that is gathering tremendous momentum. The space industry.

I know: Space stations, space mining, space exploration, it all sounds like crazy stuff. And if you are not actively researching about it you might believe that this is something still far beyond our reach.

But you might get surprised how this is, in a sense, not a new industry at all, and how many players are already actively working in this field. I recently stumbled upon this amazing infographic from a company called “Seraphim Capital”, a specialist investor group:

The most recent launch of a SpaceX shuttle was a moving moment for me. It went so smooth and stable, one would even wonder how it was a special moment at all. But for those who don’t appreciate the significance of this: Sending people into space in such a safe and controlled manner, is like setting foot on a proper boat to cross an ocean for the first time. It opens up a new world for us. For an investor, this is an entirely new frontier opening up. Literally, a new world to discover.

Personally, I am invested in two companies that focus on this future business: One is Virgin Galactic (SPCE), and the second one is Hexcel Corp. (HXL). The first one is focusing on bringing people to space. Whether as tourists, future astronauts, or general space flight training and transportation. The second company is developing structural materials that can be used for various kinds of vehicles and protective systems, like for example hulls for planes and space ships, or possibly protective walls for a moon base.

There are endless options and the race is on

As you can see from the infographic, there are plenty of companies for investors to choose from. For those who prefer ETFs. I also found some which are focusing on space investments, but I can’t trade them in Europe so I also won’t talk about them here just yet. But whether it’s computer software or hardware, engines, communication systems, satellites, drones, navigational systems, data crunchers, launch services, protective equipment, … the opportunities seem endless… and the race is on!

Disclosure: I own SPCE and HXL.

Keeping investing in difficult times

There is a lot of “happy talk” from governments around the world promising a swift recovery and promoting a way back to a “new normal” on the immediate horizon. However, when listening to politicians we always need to keep in mind what their incentives are. Politicians have a vast interest in painting positive pictures because their positions and their re-elections might depend on it.

In times of crisis, it is better to listen to other voices, and in particular to businesses. Not to their press releases, which are also often overly positive to keep investors patient and calm. The more relevant information is flowing in the background: Are they hiring people or did they freeze their payrolls? Are research and development projects being continued? Did they request their financial partners to extend credit lines? Are assets being sold off or do they continue to add value with acquisitions? Are they scrambling to get through the crisis, or do they take the opportunity to eradicate weak-points in their business models?

You don’t need to DO the research

For large companies, you can trust that somebody is doing this research for you. Financial magazines, newspapers, analysts, online blogs. There is a lot of work being done by many people out there. All you need to do is to find this research, to read it, to evaluate it, and after reading a few of these sources, to form an opinion based on the information you received.

You can do this for individual companies, but as an investor, you definitely should do this for entire markets. The world’s most famous and successful investors read a lot, and the majority of what they read are assessments, opinions, and evaluations of products, services, trends, and opportunities.

People like Warren Buffett, Bill Gates. You don’t need to like them or to necessarily agree to their ideas and positions. But you should acknowledge that they have a significant amount of knowledge about what is happening in the world. They use this knowledge for their decision-making process, where to invest, which project to support. Which idea or business model, or charity offers the best chance of success, adding value to the market, to investors, and to potential customers or recipients of the product or service.

The picture is pretty bleak

Looking at what is happening in the markets right now, the picture is pretty clear. And pretty bleak. We are in a recession, one that might last a few years.

Almost every colleague of mine is on a salary cut, furloughed, or anxious that he might get into a challenging situation in the next few months to come. Companies in the travel sector are obviously heavily impacted, but also other sectors experience similar challenges. Job cuts, sales of assets, and project delays are mentioned daily basis in newspapers around the world. And while some economies started to slowly re-opening, cash-flows are still very far away from where they were in 2019. The numbers for the first half of 2020 will come in and will be reported in the next weeks to come, and it’s pretty safe to say that there will be some shocks ahead to those who kept listening to the happy talks of politicians.

All this doesn’t mean that you should stop investing

As I mentioned in a previous article, this could nevertheless be a great opportunity for investors. Every crisis has survivors and losers. And survivors usually come out stronger every time when they are challenged and pushed to improve, to re-invent, and to innovate. From my point of view, this crisis has pushed us into new investment territories by emphasizing the importance of sectors that were neglected in the past.

Technology is already a clear winner (again), but it’s worth taking a deeper look into it. Some areas of technology will shift into a stronger focus than others. Cybersecurity for example is such a sector. Work and freelance platforms are another.

Producers of hygiene products and business which focus on health & safety can expect long-term benefits for the years to come. But the same goes for companies which not many had on their radar like waste management systems, and water supply and filtration technologies. You know where all your germs go to every time you shower or visit the toilet, right?

Plenty of opportunities in every crisis

When you read enough, gather a sufficient amount of information and knowledge, and adapt your thinking to understand that there are opportunities in every challenge, then you will quickly realize that, crisis or not, there is no reason to ever stop investing.

The only limitation I would see is when you are running out of time. When you get old. But by that time, your portfolio should be the last worry you have. By that time, I would hope that you have had a successful investment history and that you can happily retire on your monthly dividend income.

Doing the right thing – with conscious investments

There is lot’s of discussions about whether investing in a company does anything to support it, hence whether purchasing shares of a company puts you in a position of responsibility for what the company stands for and for what it does. Let me address this today and tell you my point of view on this highly debated topic.

If you buy stock in a company you become, to a tiny part, owner of that company. As a co-owner of a business, you obviously take on some responsibilities of that business.

The most obvious one is that you receive votes to influence major company decisions, which you can exercise once a year at the annual general meeting of shareholders. The other responsibility you take on is the financial responsibility in relation to the share price. If the company goes bust, your money will be gone. However, should the company keep succeeding, you are entitled to participate in that success through a rising share price and/or dividends.

Does your investment have an effect on the share price?

Your purchase may increases the share price, or support in stabilizing it. The effect that you as an individual with only limited purchasing power might have on the share price will be very small in most cases. Some might say it’s negligible. But, there is certainly an effect.

If you purchase shares which are rising in value, you support the move up by showing confidence in the company through your willingness to pay more for it. When the share price is falling, your purchase also supports the company. This is due to a stabilizing effect that it will have on the sellers. If you wouldn’t buy the shares at the lower price, then the seller would have had to lower the price further, thus increasing the down-turn for the shares price of the company.

So whenever you buy shares, to a tiny amount you either contribute to pushing the share price higher, or help stabilising it on it’s way down at a certain level.

How does that influence the company?

The share price of a company determines the companies value. Based on the value, the company receives a range of financial options, including loans, debt issuance, credit lines and guarantees to grow or improve its operations.

Furthermore, as mentioned above, your voting rights are a benefit and a responsibility you have as an investor.

Admittedly, with only these two main points, your influence is an individual investor is very small. With limited purchasing power and therefore a small amount of shares you might purchase, your voice doesn’t get too loud. But it doesn’t mean it isn’t there.

Your part is comparable with let’s say a presidential election. Your vote alone might not appear strong, but the more people follow those same ideas and convictions you hold and exercise their rights, the more of an impact it will have on the company.

You get a voice

Looking at the points above, the process of becoming an investor is another version of a democratic system on an enterprise level. You get actively involved in it by purchasing shares of a company, and to a tiny amount, you do influence the company by purchasing shares.

Once invested, it will be up to you whether you continue holding the shares, thus contributing in keeping the share price stable. And whether you will exercise your voting rights, thus contributing to steering the company in the direction you believe to be the right one.

Do the right thing

In my opinion, investing is the only way to get a voice and a say with even large companies. For many it doesn’t sound like much, but I see it otherwise. It’s a great opportunity to have influence beyond the small bubbles of our own lives.

For example: Just imagine, if all members of an environmental NGO would unite and purchase shares of a company which is responsible for environmental pollution.

With enough shares and votes on hand, they would very likely receive the opportunity to change the direction of a company. They would receive the rights to support or to reject decisions on who runs the company, where money is being invested, and which policies are being drawn going forward. With only as little as 10% ownership they already could assemble veto rights, and insights into the companies internal processes and decisions which they won’t get in any other (legal) way.

So, if you want to help others doing the right thing. Invest. Invest consciously in good companies to continue supporting them in doing the right thing. And if you want to contribute in bad companies becoming better (or less bad), purchase shares of bad companies and exercise your voting rights, to help the company doing the right thing.

The WireCard fiasko and newspapers

I have been slightly absent from this blog this month as I got busy with the re-opening of my hotel here in Thailand. I am also working with a friend on a tiny online business, and yeah, the day has only 24 hours. But of course, plenty of things happened on the investment front and one topic deserves an honorable timely mention. I am speaking about the German DAX-quickie-candidate WireCard.

WireCard was the latest addition to Germany’s main stock index, the DAX. It joined the ranks of the most valuable German stocks roughly a year and a few months ago. But it has been a very short ride. Just yesterday the company was forced to file for insolvency.

About newspapers

I won’t go into details of what happened, who’s to blame or make any predictions on the future. There are tons of articles on these points out there. But I will say this: Reading newspapers really helps, and a paper like the Financial Times has much more credibility than any internet blog or forum out there.

I am reading and following several blogs and forums that give advice on stocks. I have also subscribed to several newsletters that supply me with daily updates and info about interesting opportunities and market developments. And often I can find some interesting stock picks there that are suitable for both, short and long term investments. WireCard was often cited as a shining star among German most promising tech and growth companies. And while the reports from the Financial Times were frequently mentioned, the narrative was mostly still being spun around to a more positive one.

But let me say this: When a major newspaper like the Financial Times starts to report on dirt about a potential investment and doesn’t back off even when being sued, then you better wait until things get clarified – beyond any reasonable doubt.

WireCard dropped like a stone when all the allegations and suspicions turned out to be true. Within only 3 days the stock dropped 98%, from slightly above 100 Euros down to 2 Euros.

WireCard found the perfect niche

I had a tiny speculative position in the company. 5 Shares which I bought at around 80 Euros apiece. On the day when the internal investigation report was announced, I moved quickly to sell and got rid of them just on time during the first drop at slightly above 50 Euros. I got lucky to get out with a small loss.

Despite the reports in the Financial Times, I also bought into a positive narrative. The propagated business model and the online news cycle for WireCard were very encouraging and promising. Of course, I still had my suspicions which is why I kept only such a small stake. But my hope was that the doubts about the company would have been eradicated during the investor’s conference. The shares would then have probably doubled in value by now and the company would show great potential to become a solid long-term investment.

Keep your emotions at bay

But greed and hope are seldom good advisors. Knowing this, there are strategies to control your risks.

First, you must know yourself and whether you are ready to take on the risk. If so, then control your stake, and have a plan in place to limit your losses. As in my case, I kept my stake at a very low level and made sure to have enough time to react when the news broke. This helped me to reduce my loss substantially.

If you are however not ready for any risk, then it’s pretty simple: Stay out of it. Wait for things to clear and rely on information and quality data. This approach will always serve you as a better advisor in the long-run. Yes, you might miss the opportunity to profit from a potential quick gain in the share price when news brake and the stock jumps to new heights. But if a success story is confirmed and gets in place, then the shares will likely keep rising for some time to come. Long enough to generate substantial gains for you over the years to come.

And the last point to mention is that whenever you are looking for quality information, remember that professional newspapers still have the best value proposition in terms of actual research out there.

Internet research forums, blogs, people like I, we are not really professional researchers. We dig into numbers and reports which are available online. Journalists are the ones who do the real work. Like in the case of WireCard, they got on a plane to Dubai, only to find empty offices. They tried to find connections across Asia, only to return empty-handed and with more questions than answers.

This is much more than any of us regular writers do. And of course it is, it’s their job. So you won’t do badly in putting some trust in them every now and then. Especially when it comes to making decisions that might concern your financial future.

Disclosure: I am not affiliated with any of the companies mentioned in this post.

The next downturn is coming

The last few weeks have been pretty interesting. First the stock market crashed. Then it started to rise and became “the most hated rally” in history. And now it’s back to crash again.

What I did over the recent weeks was observing which shares were rising and falling faster than others, and I did make some purchases. For most parts I bought shares of companies in the tourism and real estate sector, which fell dramatically, but which also show the most promise of rising back up swiftly once the real recovery starts.

The real recovery might take time

But indeed, the real recovery might take much longer than people, and the market, are anticipating right now. Since I work in the hospitality sector, I know very well the projections, and the expectations we are facing in the real world. And the stock market will adjust to these realities at some point.

The swings up and down right now are really extreme and show that many trades are being executed on impulse, on emotions. But in a few weeks these sporadic reactions will reduce, and real data will take over. The crazy daily swings will become moderate, and we will get back into a more stable trend.

The big question is of course whether it will be a positive, or a negative trend. And it’s really hard to determine, but personally I still expect an overall market downturn, because the recovery will take time.

The service industry is crucial – and so are spending habits

The service industry includes hospitality of all kinds. Hotels, bars, restaurants. And these businesses form not only the largest employment sector on the planet. They are also based on the idea of bringing people together. Sitting together. Spending time together.

Given that the behaviour of people has been altered due to the current pandemic, and also that it won’t likely change significantly unless there is a vaccine or cure, it’s therefore probably realistic to assume that a real recovery can only begin when this problem is solved.

Now a workable vaccine may come sometime by the end of this year, more likely during the 1st or 2nd quarter of 2021. Also, there is a high chance that the first generation of the vaccine won’t be as successful as some investors might think. The reason is simple: The first generation of vaccines is usually not the best one.

Given all these details, I would rather see any meaningful recovery to begin around the 3rd quarter of 2021. And until then, people will keep losing jobs, spendings will be marginal, travel will be restricted, and cash-flows will remain on the lower levels. Less spendings means lower revenues, lower profits, lower investments, fewer jobs, … you get the picture.

Good time to start investing

But again, as mentioned in this previous article, it might be a great opportunity for many people to start investing. While the short- and medium-term might look insecure, the long-term prospects are still in favour of investors.

Buying great companies at a fair price

Yesterday I watched an interview with Warren Buffett. It was actually from February this year, but I hadn’t that much time to focus on such a long single video then. The interview went on for over 2 hours. Now, with working from home and my hotel closed, this was an opportunity to seize.

Warren Buffett is a fascinating individual. Humble, simple, outspoken but more than often speaking in riddles. I watched several of his interviews and speeches in the past and what strikes me every single time is that he constantly keeps repeating the same 2 core messages.

His first recommendation for the average investor is to simply purchase an index fund. Not spending too much time with picking individual stocks. Not pretending to be smarter than the market by spending hours and hours analyzing shares with some sophisticated metrics. Especially when this time can be better spent doing something else.

For those who prefer to purchase individual shares, however, he does have a second piece of advice. And he keeps repeating this one over and over for many years.

Buy a great company at a fair price

As people who don’t understand the stock market like to refer to it as just another form of gambling, the fact of the matter is that when we purchase shares, we are actually becoming co-owners of that particular business. We are taking a stake in that particular venture, for the good and for the bad side of it. Warren Buffett puts, therefore, the investment thesis down to a simple formula: Do you believe that the business you want to buy will exist and do better in 10, 20, or 50 years from now?

If the answer is yes, then you should invest in it. Of course, you should still do your due diligence, research some more details about the management, structure, and check on the valuation, but these are not the key factors. The first thing to clarify is whether the company has a solid business model, whether it offers solutions to problems people have and will remain to have, and if it’s smart enough to do it in a sustainable and profitable way.

Obviously, this is not the “get rich fast” approach. And as he once famously stated, his advice is being constantly disregarded or misinterpreted because “nobody wants to get rich slowly“. Nevertheless, this approach is what real investing is all about and how he became one of the richest people on the planet.

There are always great companies at a fair price – but especially so during a recession

Every crisis offers opportunities for smart investors. With markets in panic mode, stock prices of even the best companies are often being dragged down together with the rest of the market. The now expected recession and downturn will be no different. It might be therefore a good idea to put some cash aside, and to closely observe companies that you believe have a bright future ahead. It might be your opportunity, to purchase a great company at a fair price.