Hotung Investment (和通）

[Curiousparty]

how will political situation impact Hotung?

Geographic Market Penetration

HoTung primarily focuses on Taiwan (74.5% of investments), while also diversifying into other regions (25.5%)​Hotung-Investment-Holdi….
Taiwan remains a strong tech and semiconductor hub, providing steady deal flow in deep-tech and high-value manufacturing.

[Shrivathsa]

Hi CP,

This has been the main concern for at least the last five to ten years on Hotung.

From what has been disclosed in essence the VC investment was mainly in China and not only Taiwan (Money I guess is not exactly political) and used to be 90%. That has come down to 74.5% now

We will probably find out more if or when they disclose more.

My guess is that one has to assume some risk and chances are with the new policy of China being more friendly to Tech companies after Deep Seek and wanting more quality listings, Hotung may have a few more divestments.

At least that was the idea for my investment. Getting paid circa 8% a year while waiting helps to keep the waiting palatable.

[Shrivathsa]

Hotung provided some color and clarity on their investments in the questions answered during the AGM. The link to the AGM minutes is below.

https://links.sgx.com/FileOpen/Hotung%20...eID=846959

Key points

Tariffs Impact

The Investment Department conducted a review of its portfolio companies
in light of recent tariff developments. At present, the impact of such measures on
the operations and industries of the portfolio companies is not considered to be
material. Nevertheless, the Group will continue to closely monitor relevant
developments and take appropriate actions when necessary. In terms of investment
strategy, the Group will maintain a diversified approach. Geographically, to reduce
reliance on any single market, the Group is actively expanding its presence beyond
existing investments in Taiwan, China, Israel, and the United States. Greater focus
is being placed on Southeast Asia and other emerging markets, which are expected
to benefit from global supply chain shifts. In terms of industry diversification, the
Group will continue to focus on the high-tech and innovation sectors, which are
less exposed to geopolitical and trade tensions.

Dividends Exceeding Earnings

The Chairman further elaborated that many Shareholders are long-term investors,
and the Company aims to provide them with reasonable returns. While profits in
the past two years were lower, the Company maintained a strong cash position,
enabling continued dividend distribution. She reiterated that as a venture capital
4
company, the Group typically holds investments for an average period of 5 to 7
years before exiting. In 2020 and 2021, the Group recorded substantial profits over
NT$500 million and NT$600 million respectively, by proactively seizing
favorable market conditions and capitalizing on timely exit opportunities for
portfolio companies. Due to the COVID-19 pandemic from early 2020 to mid 2023, the Group’s investment team faced significant limitations in conducting due
diligence, particularly as in-person factory visits were not feasible. As a result, the
Group adopted a more cautious approach when making new investments during
this period, which led to fewer new investments

Overall, I found the questions and the answers very thoughtful.