Monday Finally, even with jet lag, I now know what a Samsung Octa-Core processor does. Whilst I initially thought it was overkill for 2013, the key point from this year’s BNP Paribas’s Technology conference in Hong Kong was that processor technology advancement equates to improved battery life and performance. Something we can all relate to. With my Google Nexus tablet sporting a matching keyboard all blue-toothed together, I wave goodbye to the pen and paper. The last speaker of the day cemented my views that 4G is certainly the future, but not essential right now. 2G to 3G was revolutionary, enabling us to access email and Facebook on the go, but 4G is an upgrade and therefore, in my view, will be a slow roll out. We have actually had 4G in the UK for a while now, but does anyone really care?
Tuesday Eventful day, meeting with 6 companies; most of whom I hold. Interestingly, whilst consumer sales in China have slowed to the early teens level, sales of smart phones and tablets are seeing much faster growth. China only has a 25 per cent penetration in smartphones and, with the recent introduction of the £100 smartphone, sales have now exceeded the basic feature phone. This bodes well for my fund, as the majority of my Information Technology exposure is smartphone and tablet related. Sadly, I revert back to the trusty pen and paper during my last meeting, as the battery in my Google Nexus dies, still five hours use is pretty good. Apparently, Bluetooth and Wi-Fi kill the battery.
Wednesday I visit Times Square, which is a major shopping location in Causeway Bay. Owned by Wharf Holdings, it has been one of my top performing stocks over the last couple of years and it is always interesting to check foot traffic, where mainland tourists currently account for about a third of revenue. Whilst the watch shops are seeing slower sales, no doubt due to China’s clampdown on corruption, the jewellery shops seem steady with shoppers taking advantage of the recent fall in the price of gold. Taking the MTR tube back to my hotel, which is mobile signal friendly, I am amazed how Samsung has taken over; the majority of tube travellers are now sporting their new Galaxy Note II and, oddly enough, a 5.5” screen just seems normal now. As I pass through a supermarket in Central, I discover it is true that canned baby milk formula is limited to one tin per person. I cannot wait to see what happens when China relaxes its single child policy.
Thursday China field trip where we cross the border into Shenzhen to visit a phone and tablet retail mall. As we meander through the endless rows of outlets, which are reminiscent of Hong Kong’s street market, I am astounded by the sheer number of domestic tablets and phones, all touch screens and in varying sizes. The average consumer in China is becoming increasingly price sensitive; consequently, I maintain my strategy of investing in companies who supply all of them, such as TPK Holdings and Qualcomm.
Our factory visit this year takes us to China Wireless, one of China’s up and coming home grown mobile phone companies. China Wireless has been very successful with their ‘Coolpad’ branded smartphone. An impressive site, with both accommodation and tennis courts for its thousands of employees. It is the first time I have ever seen a mobile phone being put in a fridge, oven, twisted, dropped, and then of course sat on. Now that is quality control.
Friday Site visit to one of Mapletree Greater China Commercial Trust malls, Festival Walk, this being a recent addition to the Premier China Enterprise Fund where I was attracted by the strong rental reversions and 5 per cent yield. This mall attracts local Hong Kongers primarily; having an indoor ice rink definitely helps. Busiest parts were the food court and, of course, the Apple store. A quality company and I have no-doubt its mainland China visitors will continue to increase, which currently accounts for approximately 18 per cent of revenue.