Alistair Bean & Assoc’s Financial Services Limited QuarterlyNewsletter– to
30 September 2017
“Making Decisions for you, so you don’t have to!”
Record Returns Performance for all
ABAFS Limited Clients
for the June & Sept. quarters and since inception!!!
This Newsletter is created specifically for existing Clients of
“Alistair Bean & Assoc’s Financial Services Limited”
Please feel free to share with any prospective Clients that you feel may benefit from our services
Hello
Welcome to the latest Newsletter of
“Alistair Bean & Assoc’s Financial Services Limited”
For those of you who receive electronic copies… press ctrl + click on the below link to view the Alistair Bean & Assoc’s Financial Services Limited commercial.
I am extremely delighted to advise of record results for all
Alistair Bean and Assoc’s Financial Services Limited Clients
not only for the quarter but also since inception
I am often asked by Clients and Colleagues alike, what my Investment Style is? The approach I take, is as follows…
“To invest across diversified asset ranges relative to current Global economic circumstances by using Highly Convicted positions for Portfolios of Longer-term, Lump Sum Investors, while offering access to funds as and when required…”
“Highly convicted positions” means taking a longer-term view with a significant percentage of funds held within Investments that I believe (after much care, prudence and due diligence)have potential to perform significantly well over the longer-term, at the right purchase price.
For example, I have held A2 Milk since their share price was 47 cents - it has grown by almost 1,300%. The Premium Asia Fund is proving to be another excellent choice as well as,Maple-Brown Abbott Global Listed Infrastructureand Genesis Energy to name a few, all of which I have performed up to two years of due diligence before deciding to invest funds on your behalf.
Sometimes I get this right and sometimes I get this wrong, the good news is, I am getting a lot more right than I do wrong - No Adviser or Fund Manager in the world is right 100% of the time, not even, Warren Buffet.
It has been just over 4 years and 7 months since ABAFS Ltd was established and returns per Client, since inception are now at record levels, with the last two quarters in particular, achieving stellar performance, greatly assisted once again by the rapid increase in the A2 Milk Share price.
You will be receiving your Quarterly monitoring reports before months end as usual for the June ‘17 to Sept ‘17 quarter. If you can’t wait to find out your latest results before then, please feel free to contact me.
Comment on this performance further on in this edition. Thank you for your continued faith, trust and support in my services and please feel free to share the good news with family, friends and colleagues, should I be able to be of assistance to them.
In this Issue….
•The Lay and The Technical
•Brief Market Summary
•ABAFS 10
•The FMA is participating in the inaugural World Investor Week, from Monday 2 October – Sunday 8 October – Commentary on using licensed providers
•Conclusion
The Lay and the Technical
As always, my intention is that I will use as much of “The Lay” as possible. I’m required for Legislative and Compliance reasons to also use “The
Technical.” Please feel free to come to me if you would like a definition of any Technical Term or phrase that I include in any report.
Brief Market Summary
A2 Milk has skyrocketed from NZ$4.00 on 30 June 2017 to NZ$6.43 per share on 30 Sept. 2017 (and currently NZ$6.55 as I write)
This issignificantly due to obtaining confirmation of their registration (through Synlait Milk Limited) on 28 September 2017 from the CFDA (Chinese Food and drug administration)
It will allow exports of The A2 Milk Company Limited’s Chinese labelled infant formula to China to continue and likely increase current markets.
All manufacturers of infant formula are required to register brands and recipes with the China Food and Drug Administration (CFDA) in order to import products into China, through traditional import channels, from 1 January 2018.
The latestAnalysts view from FNZC is as follows and they now have A2 Milk at a 12-month Target price of $7.65 which is a further 17% increase.
The A2 Milk Company - China registration received – A New Beginning…
A2 Milks’ (ATM) infant formula (IF) business further de-risked: With ATM’s Chineselabel IF products having received registration, the company is now better positioned to push forward and accelerate its in-market initiatives.
“We think this registration adds to ATM’s in-market credibility in China and may add to the ongoing support for the product from Daigou’s (a current regular channel of commerce in which a person outside of China purchases products for citizens inside China) in Australia as they continue to promote ATM’s English label products to end-customers in China.
Our circa 15% above-consensus estimates in Full Year18Forecast and Full Year 19Forecast, and also our long-term forecasts remain unchanged. On our earnings growth projections in FY18F and FY19F, we see further room for expansion in ATM’s trading multiple. OUTPERFORM rating retained with a revised NZ$7.65 target price (from NZ$6.01).”
The Premium Asia Fund(Further detail in “The Technical” Below) which has been part of ABAFS Limited Portfolio’s since June 2016, provided a significant reinvested distribution and returned an equivalent 25.84%pa gross return for the June-Sept. quarter.(20.25%pa net in AUD for the 12 months to end of August 2017)
Some of the Companies included in the Top 10 Companies of The Fund are;
Alibaba Group Software & Services
Samsung Electronics
Tencent Software & Services
The Allan Gray Australian Equities Fund(that I wrote about in my June Newsletter) has also had a Stellar month achieving an equivalent 19.00%pa gross return for the quarter, also with a significantly reinvested distribution. (23.40%pa net in AUD for the 12 months to end of August 2017)
Some of the Companies included in the Top 10 Companies of The Fund are;
Woolworths
Newcrest Mining
Alumina
ABAFS Limited Index
The ABAFS Limited Index represents the total of the individual current values of the top 10 holdings of all investments that I manage for Clients, and their percentage asset allocations as charted below to 30 September 2017.
(The Investment names held, are commercially sensitive and the information is available to Clients of ABAFS Limited.)
The current cumulative net value as at 30 September 2017 was
$23.01
30 June 2017 - $21.25
(up 8.28%net for the quarter, or an equivalent 33.13%pa.)
FMA urges investors to use a licensed provider
The Financial Markets Authority (FMA) is encouraging investors to become familiar and aware of the risks of investing with unlicensed offshore providers, and is reinforcing that selling financial products by cold calling is illegal.
The FMA is participating in the inaugural World Investor Week, from Monday 2 October – Sunday 8 October, run by the International Organization of Securities Commissions (IOSCO), to promote global investor education and protection.
As part of its protection message, the FMA is highlighting the case of “Diana”, who lost $7,000 after trading in unregulated binary options. Her case reflects many of the issues raised with the FMA by investors in this area, such as: click-through internet advertisements about “making easy money from home,” aggressive sales tactics, companies refusing to return money, cold calling and get-rich-quick schemes.
FMA Director of Investor Capability Paul Gregory said some basic protections for investors are “baked” into the FMA licensing process.
“Investors should expect to be communicated to clearly about the benefits and risks of a product. They can complain to a dispute resolution service if they have any issues with a financial service provider. Licensing also means we are able to hold providers to account for the way they treat their customers,” Gregory said.
The FMA said it regularly receives complaints from consumers who have been caught out by “slick websites and promises of high returns from offshore (companies)”. These complaints centre on products such as binary options and foreign exchange trading. The FMA warned it’s hard for it to help New Zealanders get their money back when they’ve invested in unlicensed, unregulated offshore companies.
To prevent Kiwis from losing their investments, the FMA urged investors to do their homework before committing money by checking the FMA’s lists of individuals and businesses to be wary of, and checking the FMA’s website for lists of providers, markets and individuals that are licensed and authorised to operate in New Zealand.
The FMA is a member of the IOSCO, and has licensed more than 200 financial services firms in New Zealand since 2013.
World Investor Week (WIW) is a global campaign to raise awareness about the importance of investor education and protection, and to highlight the various initiatives of securities regulations. WIW said this campaign offered a unique opportunity for IOSCO members to work in collaboration with all investor education and protection stakeholders at local and international levels.
Conclusion
As I write, we are still waiting to find out who the new Government is.
Markets are efficient and have already likely priced in the various outcomes, so if there is any movement it may affect values for a few hours or maybe a day or two and then it will be old news.
Our currency is far too high for NZ to grow, we must let more people in and we have been doing much to improve the environment since the early 1970’s. How do I know this? Well if you drive past the Mataura River South of Gore, the river is still brown due to the sediment on which it flows. The Pulp Plant between Mataura and Edendale on the way to Invercargill, use this river water and has a constant flow of white steam coming out of its Chimney stack (my daughter has called this the Cloud Factory since she was around 10 years old – she was convinced, thanks to her Mother, that this factory-made clouds) This steam coming out is cleaner than the water that goes in, due to Resource consent.
I have visited Italy once again for a significant anniversary and there is a traffic-jam of Gondolas in Venice, just outside of Piazza San Marco, in the Photo below.
Italy has a population of around 60 million, its land size is around the same size of New Zealand. Their economy thrives on Tourism and Agriculture, like New Zealand and when you travel in their super-fast trains(300kms per hour, from Florence to Rome in two hours) you see nothing but green paddocks full of Grape Vines, Olive Groves and Sunflowers, amongst other arable crops. Their economy would perhaps be in a better state if they actually paid their full taxes, apparently.
My point is, a Country almost the same size of ours is doing very well with 60 million people and we are saying that 4.8million is too much for New Zealand.
Morally, we should let more people in (with perhaps a deal from larger countries to assist) and to build our economy, we have no choice but to let more people in and I believe we will. If we allocate as appropriate to the regions, then this planned approach could solve many current requirements and take pressure off Auckland.
India incidentally, has recently completed a road in around 13 weeks, the length of Bluff to Auckland. A few more people could help us complete Christchurch a little quicker, Transmission gully in Wellington and light rail from Auckland Airport to the city centre, not to mention help us with employment shortages in Health, Education and many other areas.
That’s enough of my sermon…
I maintain, the Global future is looking very bright with a continual growth of worldwide investment in particularly infrastructure and all the employment this will offer.
My aim for you, is to do my best, to strive to make you sufficient wealth, so that time is no longer an issue…
Have a Great Spring
Warmest Regards,
AL.
A copy of my Personal Disclosure Statement is available on Request
Disclaimer:Important information
To the maximum extent permitted by law Alistair Bean & Assoc's Financial Services Limited
Disclaim any liability or responsibility to any person for any direct or indirect loss or damage that may result from any act or omission by any person in relation to, or in reliance on, the information supplied in this document (“Document”).
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Nor any of their respective directors, or any other person guarantees, either partially or fully, the capital value or performance of any Investments mentioned in the above document.
Inclusions are already available via public access and may be sourced or viewed using widespread media through the public domain.
This Document is not intended to constitute, does not constitute, and should not be construed as constituting, investment advice nor is it a substitute for commercial judgment or other professional advice. Investors, or potential investors, in the Funds should: (i) conduct independent due diligence on any of the Funds; and (ii) obtain independent investment and professional advice, prior to acting in reliance on this Document.
This Document has been provided for information purposes only and is subject to change. The content of this Document is intended to be of a general nature and does not take into account an investor’s, or potential investor’s, financial situation, investment objectives, or risk tolerance.
Past performance is not indicative of future performance. The actual performance realised by any given investor: (i) will depend on many things; (ii) is not guaranteed; and (iii) may be negative as well as positive. Unless otherwise indicated, returns are shown after Fund expenses and before tax. This is represented by the change in unit price plus any applicable tax credits.
No representation or warranty is given as to the accuracy or completeness of any of the information provided in this Document.
Investments in any of the Funds referred to in this Document are subject to many investment risks including possible delays in repayment, loss of income, or the total loss of the principal invested.
This Document is not intended as, and is not to be taken as, an offer or solicitation with respect to the purchase or sale of any interest in the Funds.
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Christchurch
The Technical…
Investment objective
The Premium Asia Fund aims to generate positive returns, consisting
of both capital growth and income, over a three to five-year period
prior to accounting for movements in currency exchange rates. It will
seek to achieve this objective by constructing a portfolio of securities
which provides exposure to the Asia ex-Japan region. The Fund is
denominated in Australian dollars and typically will not hedge its
currency exposure.
Manager’s commentary
Market review
Positive momentum and the re-rating story remained in play for Asia ex-Japan
stocks in August, the peak season for second-quarter corporate earnings
announcements. North Asia continued to be the key driver of earnings strength.
In China, despite financial deleveraging and control measures in the property
market, the economy delivered a strong set of macro data, which suggests the
profile of its economic growth has improved and is relying less on stimulus.
In particular, the recovery of external demand was one of the highlights, with
exports growth accelerating to 9% year-on-year in the first half of 2017 from -6%
in the second half of 2016.
The major driver for the China market’s strong performance year-to-date was the
upward revision in earnings growth. The consensus 2017 earnings per share (EPS)
growth estimate for the MSCI China Index is currently 17.8% (vs. -0.9% in 2016).
The earnings forecast is supported by a broad set of factors such as growth in sales
(12.3%), growth in earnings before interest, tax, depreciation and amortization
(EBITDA) (10%) and expansion of net margins in the non-financial space (7.1%
vs. 5.4% in 2016).
In South Korea, the economy sustained its steady growth momentum, with
second-quarter gross domestic product (GDP) registering 2.7% growth
year-on-year. Korean export growth continued to improve in August, increasing
17.4% versus a year ago, to mark its eighth consecutive month of double-digit