Uni-Asia VS FST

Today a friend called and asked me what I think of Uni-Asia. She said her husband is laughing to the bank as the share price rocketed from $0.60 to more than $2 in just 2 weeks.

I told her Uni-Asia does not meet my investment criteria. However attractive it might seem, I will not hold such counter unless there are fundamental changes to its business model and other new growth drivers come into play to support the hefty valuation at this moment.

I just checked the share price performance for today. It shot to new high of $2.75 and dropped to under $2 at closing. At the half year result briefing, the management highlighted that a significant part of the income arisen from the launch of Akebono Fund and one-time disposal of 3 vessels under its finance.

Some investors might interpret these exceptional items as recurring transactions and hence the high profitability can be sustained. That is unlikely to be the case as the Company has not made any other significant announcement so far.

My friend also asked why i did not dump everything into this stock as the Virtual Fund doesn't involve real money anyway. That way, I might be able to reap the returns in the shortest possible time.

I wish to reiterate that despite my stated target return of 50%, I still have more than 1 year to achieve that. I will not be pressurised to punt at this juncture. Moreover, I know that this Virtual Fund has been closely followed by some. Some friends even try to mirror what i buy and sell in using hard earned savings. To this group of followers, despite my disclaimer, I need to act responsibly so not to mislead them into speculating.

For my own portfolio, I bought some First Ship Lease Trust today at US$0.86. FST is in the business of leasing, similar to that of Uni-Asia. It doesn't however engage in any ship operating activities. Uni-Asia, on the other hand, derived half of their revenue from ships investment and management, which arguable can be more risky.

FST has committed to be paying quarterly dividends. The potential payouts could yield more than 10% return at current prices. Its share price has been heading south since listing, mainly due to the weakening USD. I believe FST provides good exposure to the shipping trust sector, which has been under performing so far.