My investment philosophy is grounded in diligence, discipline, and patience. At Fidelity, I benefit from a robust, on-the-ground analyst network across Asia that produces in-depth fundamental research. These insights enable me to identify good businesses led by competent and honest management teams, and to invest at valuations that offer a comfortable margin of safety. I deliberately steer clear of untested business models, highly leveraged firms, cyclical companies at peak profitability, and stocks trading at excessive earnings or cash flow multiples.
My focus is on managing absolute risk and minimising capital loss during market downturns – an approach which should help compound returns at higher rates over the long term. Consequently, the Trust maintains a contrarian, value-oriented bias, focusing on mispriced small and mid-sized businesses that have the potential to become the “winners of tomorrow” well before their strengths are widely recognised.
As bottom-up investors, we continue to uncover idiosyncratic investment opportunities across the Asian region. Here are three examples.
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Three overlooked Asian stocks to consider for your portfolio
In Taiwan, we have invested in Pacific Hospital Supply Company (Taipei: 4126), a manufacturer of medical consumables. Despite being a small player, its new management is driving market share growth at a pace faster than the c.US$80 billion industry, which typically grows at a mid-single-digit rate. The business is focusing on higher-margin, more complex products and targeting quality healthcare markets of Japan, the US and Europe to drive sustainable growth. Its well-diversified customer base provides additional resilience to the business. The stock trades at 16 times its projected 2026 earnings and offers a 5% dividend yield.
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In Thailand, we hold a position in Mega Lifesciences (Bangkok: MEGA), a manufacturer of generic medicines. Most of its revenue stems from ‘nutraceuticals’ or wellness drugs, with the remainder from prescription drugs and over-the-counter medicines. The company’s strong distribution network across ASEAN, together with its product pipeline and in-house manufacturing, confers competitive advantages, resulting in higher margins compared with peers. Its management is more agile and flexible than multinational competitors, enhancing its effectiveness in sales and promotions. The stock trades at 12 times its projected 2026 earnings, with a 5.5% dividend yield.
In addition, we have exposure to Hong Kong-listed Tuhu Car (Hong Kong: 9690), a Chinese vehicle-parts retailer that uses its app to direct car owners to its network of franchisee car-repair shops. It is a difficult business, but it is also light on capital and scalable, so companies that find the winning formula have high returns on capital and healthy long-term growth prospects. Tuhu is the market leader in China, where organised vehicle-parts retailing is still in its infancy. The management team is solid, and the firm should be able to grow significantly in the next 10 years. It is an early-stage company with a net-cash balance sheet, and its stock is on 15 times its earnings projected for 2026.
