Tuesday, December 16, 2014

Why Oil Has Fallen and What It Means To You

The price of oil has fallen by nearly half in just six months, a surprising and steep plunge that has consumers cheering, producers howling and economists wringing their hands over whether this is a good or bad thing.
The price of a barrel of oil is just under $58, down from a summer high of $107, and lower than at any time since the U.S. was still in recession in the spring of 2009.
So what's going on? A global imbalance of supply and demand that is rippling across the world economy, for better and worse.

Monday, December 08, 2014

MMSV A Hidden Gem

MMSV was established as the investment holding company of MMSV Group in conjunction with the listing of MMSV on the ACE Market (Formerly known as MESDAQ Market). Currently, MMSV has 2 subsidiary companies namely Micro Modular System Sdn Bhd ("MMS") and Evolusys Technologies (Malaysia) Sdn Bhd ("Evolusys"). MMS is designing and manufacturing industrial automation, as well as designing precision die sets, jigs and fixtures. Evolusys is developing hardware and software for automation and test solutions. For more information, click here.

For the 9 months ended 30.09.14, the EPS of the company is  5.36 sen. In the corresponding period of the previous year, the EPS was 2.46 sen. This is an improvement of 117%. 

The company is progressing well. The Board of Directors expects the result for the remaining quarter to be reasonably good. Assuming that the last quarter comes in at 2.88 sen which is the same as the third quarter, then the EPS for fiscal year ended 31.12.14 will work out to be 8.24 sen. At the last traded price of 53.5 sen per share, the forward PE works out to be 6.49 which is undemanding. 

For the fiscal year ended 31 Dec 13, some key statistics of the company are as follows:
Net Profit Margin: 22.17%; Return on Equity: 31.09%; Current Ratio: 2.09; Quick Ratio 1.61. 
EPS: 3.08 sen. Total debt to total equity: 0.0012. These statistic figures are expected to be further improved for fiscal year 2014. 

Dividend per share was 1 sen last year. In view of the improving result, I expect dividend for this year to be 2 sen. 

My overall view is that at 53.5 sen, this growth stock is a buy.

Investment is not without risk. Be aware of the forwarding-looking statements in this article and buy at your own risk. You are fully responsible for your own action. 

Friday, October 24, 2014

ECS Moving Higher

The trend at ECS has reversed. It is now on track to move higher. The stochastic is in a strong momentum.

Wednesday, October 22, 2014

CBIP On track to move higher

The 4th golden cross is performing to expection. Hold on to your shares.

Saturday, September 06, 2014

CBIP at its 4th Golden Cross

The above daily chart of CBIP shows 4 golden crosses. If you examine the chart closely, you can see that the first golden cross appeared on May, 20 (closing price 4.55); 2nd golden cross was on Jun 13 (closing price 4.42); 3rd golden cross was on July 21 (closing price 4.61) & the 4th golden cross was on Sep 9 (closing price 4.82). 

Now,  assuming that you had bought at the closing price of all these golden crosses, you are still okay, considering that the last traded price was at 4.82. 

Please bear in mind that TA (technical analysis) is not a science. So, if you are looking for certainty, you are sure to be disappointed and frustrated time and again. 

It's true that many chart users throw away their charts after having been at them for some time, but sooner or later have come back to them for reference. And each time they come back, they have become more efficient and wiser in reading charts. 

In the olden days, there were no clocks. People depended on cockerels to herald the arrival of dawn. It is said that when the cockerels crow for the 4th time, then dawn has actually arrived.

Whether you may use this analogy here is left to be seen. I shall give CBIP the benefit of doubt and buy more of it at this golden cross.

Investment is not without risk. You listen to me at your own risk. 

Friday, September 05, 2014

Lodge Your Complaints

If any one of you is aggrieved in any way by misleading or irresponsible statements, please complain to SC or Bursa.

The addresses are as follows:



As small investors, we must cooperate and do our best to protect our own interest.

Unite and move forward for a better tomorrow. 

Tuesday, September 02, 2014

We All Got Cheated

In the 3rd quarter ended March 31, 2014,  SEAL made RM117.339 before tax. EPS after tax = 24.84 sen. 

In the announcement made to Bursa on May 30, 2014, the Management of SEAL said as follows:

"Barring unforeseen circumstances, the Board expects continued improvement in the Group's performance in the remaining quarter. The Group continues to focus on and enhance its main core business, while exploring for new resources to generate sustainable income."

Then on August 27, 2014, the company announced that in the 4th quarter ended June 30, 2014, the company lost RM2.487 million for the quarter.

What a wonderful turn around!!! What happened? Ask the management.

Can we trust them again? What are they trying to do? Pump and dump in the 3rd quarter? And then depress and buy in the 4 quarter? You decide.

Misleading and irresponsible statements should be construed as part and parcel of fraudulent accounting which is a serious crime.

Tuesday, August 26, 2014

Latitude All Set To Move Higher

Latitude is all set to move higher. The stock is now at its all time high. The chart shows a strong uptrend which is likely to continue.

For the 9 months ended 31.3.14, the EPS equal 47.66 sen. Thus, the average EPS for each quarter work out to be 15.88 sen (47.66 / 3)

EPS for the 3 Qtrs are  follows: 1Qtr = 15.02 sen; 2Qtr = 19.52 sen; 3Qtr = 13.12. Traditionally, the 4 Qtr is better than any of the previous quarters.

On a conservative estimate, I shall take the 4Qtr EPS to be 15.88 sen. Thus EPS for the full fiscal year ended 30.06.14 will come in at 63.54 sen. At the last traded price of RM3.65, the PE is at an undemanding low of 5.74.

Latitude has a very strong balance sheet with little borrowings. If the stock is traded at a PE of 7.5, the price would be RM4.76!!!

My recommendation: Hold on to your shares or buy more at the present price.

You listen to me at your own risk.

Sunday, August 24, 2014

A Gambler Can Be An Investor

The beauty of the stock market is that you can either trade or invest. To make money by trading is much harder than to make money by investing. I wouldn't say you can't make money by trading. Actually you can, but you have to learn the skill first. So, unless you have the skill, do not trade.
To trade means to buy and sell shares with the intention and hope to make a profit within a few days to a few weeks. 
Most of these traders generally do not make any research themselves. They buy and sell based on tips from friends, remisers and analyst recommendations in the media.
They are usually small players with small amount of capital. Most of them lose money. They lose money because they lack the necessary skill to trade intelligently. Their transaction cost is high because they can't get special rates. Their cost of fund is probably high as well because they probably play on margins and a bank loan. 
With time constraint, high cost of transaction, high cost of fund, and a lack of knowledge, is there any wonder that the odds of winning are heavily against them? 
When you place a bet with the odds against you, you are  gambling. For example, when you go to bet in a casino, you are a gambler because the odds are against you. 
Can a gambler be an investor? Yes, a gambler can be an investor.
Peter Lynch, a well-know and successful investor, puts it this way. He said, " A gamble is an investment if you can tilt the odds to favor you." So in this context, a professional trader or gambler can be called an investor. Whether you agree with him or not is up to you to decide. 
A common mistake of traders, is that they take small profits and suffer big losses. When they have a winning stock, they sell when they have a small profit, but when they have a  losing stock, they will hold until there is a big loss before selling. This is what we call, "Eating like a chicken, and pooping like an elephant."
You can't win without skill. So if you wish to trade, learn the skill first. If you know a winning trader, get close to him, and learn from him. If you know of none, then you have to self-taught and learn from experience. 
Our present bull market is now well into its 6th year. It stared at the end of the bear market in March 2009. 
If you can't make money in a bull market, obviously something is wrong with you. You need to revise your way of play completely to turn around.  
You can't expect a different result if you have been doing the same thing again and again. You need to change; you need to find a better way to play the market. Otherwise, when the bears finally take over, your chance to make money is zero, and you are likely to suffer substantial losses.
Your need a license to drive, but you don't need any license to play in the market. Do you know why? 
Simply because, your mistake in the stock market is somebody's gain. So, the more inexperience or unskillful you are, the more welcome you are.
Think well before you speculate in the stock market. Do not borrow money; speculate only what you can comfortably lose. 
Better still, don't speculate at all. Just invest, invest and invest. 

Friday, August 15, 2014

3 Signs of a Market Top

When euphoria is gripping the markets it can be hard to stand back from the frenzy and see that things may be heading for a reversal. This is why vigilant investors must dismiss emotions and remain focused on what the market is saying. A rising market will eventually correct and there are often early warning signs before the fall occurs. An investor who is aware of these signs can take profits in a rising market and then be on the sidelines for the correction, waiting patiently for prices to rise again. 

Can We Predict Market Tops?
Markets are dynamic and as such, the chance of picking an exact top (or bottom) is unlikely and also not required in order to profit from the markets. Capturing the bulk of atrending move will provide substantial reward; therefore, there's no need to try to squeeze out every penny. Such attempts will likely result in the trader hanging on for too long, and then giving up profits when panic selling kicks in. 

If you wish to read the full article, click here.

Wednesday, August 06, 2014

SEAL it with a kiss

Seal Incorporated Berhad (SEAL) is Malaysia-based companies engaged in property investment, building contractors, project managers for property development, trading of goods and extraction and sale of timber.

Financial quarter ended 31.03.14 shows a huge improvement over the preceding quarter and the corresponding quarter of the previous year. EPS of 24.84 sen for the quarter is unprecedented. Some key statistics of the company are as follows:

Paid-up capital: RM88.56m
Par value: 40 sen
Current assets: RM295.66m
Current Liabilities: RM88.16
Current ratio: 3.35
Borrowings: RM1.101m
Cash in hand and in banks: RM113.63m (This amount is part of the current assets)
NTA: RM1.16 per share

From the above figures, it is easily seen that the company is cash-flushed and solvent. 

The management expects continued improvement in the group's  performance in the remaining quarter. 

At the last traded price of RM1.37, I rate this stock a buy. 

The above chart shows that the stock is in correction mode. For those who have idle money, they can buy now. For short-term players, they should wait until the chat turns positive,

As usual, YOU BUY AT YOUR OWN RISK. Please do not make any comments. I don't read them.

Tuesday, August 05, 2014

Bullshit may propel you to the top, but it will not keep you up there

There was a wild cock that was trying to fly up to a high branch of a tree. It tried and tried, but it was not successful. 

A bull nearby saw what the cock was trying to so. 
The bull said to the cock, "hi! cock, since you do not have enough energy to fly high, I suggest you take some of my shit. My shit is full of energy. It is sure to help you to fly high." 

The cock agreed to the proposal, where upon, the bull pooped out some shit on the ground which the Cock devoured. After eating the shit, the cock felt itself steaming with energy. With one leap and flipping its wings, it flied to the highest branch of the tree. It was very proud of its achievement and gave out a loud crow. 

The crowing attracted a hunter who was nearby. The hunter quickly took aim of the cock. With one shot, he was right on target. He shot the cock down. 

Next time, when you are about to bullshit, remember this: bullshit may propel you to the top, but it will not keep you up there. 

Monday, July 28, 2014

Be Prepared Or Prepare To Lose

The stock market is a battlefield.
It's a good place to look for good yields.
But unless you know how to play
You may not be able to make it pay.

Do not over estimate your own ability.
If you are not careful, you will soon realize your folly.
Many venture in like a dragon, but come out like a worm
Shattered with debts, losses and a lost home. 

Think well before you trade. 
Don't trade before you think. 
Know there is much to learn.
Don't simply trade and get your fingers burned.

The aim in life is to live happily and die happily.
In the stock market, learn to win comfortably and confidently.
Once you have learned about trends,
You are better off than many of your friends. 

Selling your winners and keeping your losers,
Are blunders to avoid.
Selling in an uptrend and buying in a downtrend
Are the mistakes to amend.

To survive in the stock market,
There are much to learn.
Just send me a "friend request" at Facebook.
And soon you will know the best approach.

(I am known as Ben Gan at Facebook)

Saturday, July 05, 2014

Success Poised for Success

1Q14 result of 6.41 sen per share vs 1Q13 result of 5.25 sen per share is commendable. The daily chart above shows that the stock has been in a very gradual uptrend. In my opinion, all this is about to change for the better. Once the overhead resistance at RM1.67 is decisively breached, the stock will be at the start of a new uptrend. At the last traded price of RM1.65, there is a lot of value for the stock. Click here to learn more.

Saturday, June 07, 2014

From an Ugly Duckling to a Golden Swan

GPAROS (GP), stock code 5649 hit the limelight with a big surprise when it reported EPS of 14.84 sen for 1Q14 on 26.05.14. The stock jumped limit-up the following day from 30 sen to 60 sen after the announcement. 

The next day, it quickly went up to 80 sen before profiting-taking surfaced and pushed the stock down to a low of 61.5 sen. The quick correction appears to be over after stock rallied back in the last three days to close at 79.5 sen. Its overhead resistance is now at 80 sen. This resistance is likely to be breached, come Monday morning. Keep a close watch on it.

Fundamentally speaking this stock is a rare gem. Over the past years, it had nothing to show except losses and mediocre earnings year after year. But things are beginning to look attractive now. Revenue for 1Q14 at RM46.34 million and profit RM26.802 million before tax are indeed something to crow about. EPS after tax = 14.84 sen. (Note that its profit margin is exceptionally high.)

In the corresponding period of the previous year, revenue was only RM19.32 million and loss was RM379,000. And in the preceding quarter, revenue was RM20.92 million and loss of RM1.835 million. The big turnaround is indeed a big surprise. How it was done, I have no idea. I believe a change in the management did the trick. 

It appears to me that GP has been transformed from an ugly duckling to an elegant swan. 

In 1999, I made RM100k within 3 months investing in this stock. Here is my chance to repeat that feat and make it better. 

GP has a paid-up capital of RM67.273 million. Its par value is 50 sen per share. So the number of shares issued is 134.546 million. This is considered to be a small-cap stock. 

The jewels in the crown of this stock are the Dungun Timber Complex Concession Forest and the Cherul Forest Concession it gotten from the Terengganu government. Together they cover some 190,134 ha of good timber forest. This is a huge area to the company as its paid-up capital is small.

The main income for the group comes from the harvesting of timber, saw milling and kiln drying. The other segments of manufacturing and trading of wooden doors and tempered glass do not contribute much to earnings presently. 

What is so attractive about this stock is that it timber forest concessions have obtained the FSC (Forest Stewardship Council) endorsed certification.This means the company can sell their logs, timber or wooden products to any country including the European countries without any problem. 

My main concern for this stock is whether its earnings are sustainable. Timber prices and the production of logs are the deciding factors. 

Lets us have a look at its log productions. For this year, productions are as follows: For Jan: 2525 hpt; for Feb: 4680 hpt; for March: 4625 hpt and for April it was 5328 hpt. ("hpt" refers to hoppus tone = 64 c.f.tonne). 

For May and June, productions are expected to be good because weather condition is expected to be favorable. As for the price of timber, demand is not expected to slow down because world economy is slowly being nursed to good health, especially Europe, US and China. The company also exports timber and timber products to the middle east. 

As at May 21, 2013, Terengganu Inc held 63.807% and Lembaga Tabung Amanah Warisan Negeri Terengganu held 8.526% of the company. Together, they control 72.333% of the paid-up capital. To me this is an added advantage. You need only to look at KPJ and TDM to understand this. 

For the next two quarters, I expect the company to do well. For the last quarter of the year, logging will probably be curtailed because of monsoon rain. 

Assuming that in the first three quarters, earnings remain the same and the in the last quarter there is no earnings, the annual earnings will come in at 44.52 sen per share. Barring unforeseen circumstances, this estimation is reasonable, in my opinion. 

JTiasa and TAAN are presently being traded at  PE of 109 and 17 respectively. The two counters are partially involved in the timber business. While they have high borrowings, GP has close to zero borrowings. As at 31.03.14 its borrowing is only RM1.070. Please compare the earnings of their latest quarter. 

In view of the above, what PE should GP be trading at? Let's give it a big discount. Five to six is reasonable. So lets take it to be 5.5. On a PE of 5.5, GP should be worth (5.5 x 44.52 sen) RM2.448!!! 
Actually, I think a higher PE is not unreasonable. GP was last traded at 79.5 sen. I expect it to be rated differently in the near future.

Looking at the balance sheet, the company had a current ratio of 1.539 as at 31.3.14. It cash position of RM29.89 million was much better than previously. 
Another thing that I like is that though its revenues have gone up, its receivables have gone down. 

Some extracts from the annual report of 2013 are as follows:

 A recovery could take shape later in 2014.

Tropical log supply will remain tight as Myanmar will ban log exports starting April 2014. Myanmar is a significant supplier, accounting for 17% of the world’s tropical log export in 2011

In 2013, exports to emerging markets for Malaysian timber products particularly Middle-East countries such as Saudi Arabia, Qatar, Oman and Bahrain, showed a positive growth. Mega construction projects in these countries are in favor towards Malaysian timber products, such as sawn timber, MDF and furniture

The outlook for the timber industry remains positive based on the improving housing activities, consumer sentiment and expected improving demand from developed nations in line with the improving global economy.

Our timber management subsidiary has been awarded the Forest Stewardship Council (“FSC”) endorsed certification on 21 April 2008 by Scientific Certification Systems (“SCS”), a leader and pioneer in third-party auditing and certification of forest management operations around the world, for well-managed forests. This certification verifies that the subsidiary’s forests of 108,900 hectares are managed according to the rigorous international standards of the FSC under a selective cutting approach that maintains continuous forest cover and species diversity.
The certification has been recertified for another five years until 20 October 2018. The subsidiary’s concession area is the largest forest in Peninsular Malaysia to have received FSC certification and only the second natural forest in Malaysia to achieve this distinction.
In addition, another subsidiary has successfully obtained the FSC endorsed certification for its 20,243 hectares Cherul Forest Concession on 10 December 2012 as certified by SCS Global Services. The certification is valid for five years until 9 December 2017.
With the FSC certification, the Group would be able to access to an increasing number of markets and customers that demand environmental friendly certified products domestically and abroad.

In addition, the Group’s two sawmilling subsidiaries are Chain-of-Custody (“CoC”) certified by third party certifiers accredited by the FSC since July 2008. With this certification, it means that the wood used in the sawmills come from well-managed forests, independently certified in accordance with the criteria and principles set by the FSC.
This would mean that the subsidiaries are well placed to market their sawn timber and other wood based products in markets which insist on wood products to be sourced from sustainable and well managed forests.

The above extracts show that GP is likely to do well going forward. If 1Q14 earnings are sustainable in the next three quarters, EPS for the full year may come in at 59 sen. 

Please do your own research before you buy this stock. Click here to know more about the company. 

As usual, you buy at your won risk. 

Saturday, May 24, 2014

Vietnam Riot Blessing in Disguise for Latitude

- Riots in Vietnam arising from Vietnam and China dispute over Paracel Islands in South China Sea

Further to our announcement dated 14 May 2014, we wish to inform that the manufacturing facilities of the Company’s subsidiary, Latitude Tree Vietnam Joint Stock Company (“LTV’) has resumed operation today, 22 May 2014.

The shut-down arising from the riot has resulted in a loss of 8 production days. The customers have been informed of the delays in delivery and rescheduling of delivery has been made.   

Asset losses arising from the incident were limited to office equipment and computers, glass doors and windows of the main office building and a small portion of the packing section. The insurance adjusters are in the process of assessing the losses arising from the damages. Claims will be made against loss of business interruption and other damages. The losses are not expected to have any material impact to the financial earnings for the financial year ending 30 June 2014.

This announcement is dated 22 May 2014. (Filing of Lat. with Bursa)

Last Friday, Latitude (Lat) closed at RM3.24 for a gain of 19 sen. In the last 3 candles, there are 2 gaps. These gaps are a reflection of eager buyers. 

The chart clearly shows that the stock has been in an uptrend.  As a trend in motion is likely to continue, Lat in now in a good position to move higher. 

The recent riot in Vietnam is no longer a concern. The above announcement says it all. The Vietnamese government has also assured that all companies affected by the riot will be compensated by way of a tax cut.

Lat is actually a Malaysian-based company. It has three factories in Malaysia, two in Vietnam and 1 in Thailand. The major share owners are Taiwanese, not Chinese from mainland China. 

From an optimist point of view, the souring of relationship between Vietnam and China may turn out to be a blessing in disguise for Lat simply because it does not belonged to the Chinese but to some Taiwanese. 

Lat will announce its third quarterly result, latest by end of this month. If showings in its chart is anything to go by, the result is mostly likely to be good. 

The chart below gives you an idea as to how Lat has been faring when compared to some of its peers in the last one year. Have a good look, it easy to see the trend.

The red line is Lat. The others are: Lii Hen, Poh Huat and Homeriz.

I am long on Lat. I believe the stock deserves a better rating. 

Sunday, May 04, 2014

Latitude, What's On My Mind

In the daily chart shown above, I  see higher highs and higher lows. This means an uptrend is in progress. My focus now is in the last two candles where there is a gap between them. 

This gap signified eagerness to buy at the opening bell. As the day progressed, demand continued  to come in culminating the stock to a high of RM3.08 for a gain of 33 sen at the close of trading. This the best one-day performance of the stock so far. 

Daily skillful traders should have jumped in to buy soon after the opening bell and made a good profit by cashing out at the end of the day. Day traders do not hold position over night. 

The last candle is a bullish Marubozu. The validity of this candle is confirmed by the high volume traded. 

I always sell some of my shares whenever I get that feeling of elation. In fact I sold 5400 shares in Latitude at RM3.08 per share towards the close of trading on Friday. Please do not be misled by this action. These shares were bought in early December 2013 at RM1.60 CD per share. They represent only a tiny fraction of my total holdings of the stock. At RM3.08, the price has gone up by 92.5% in 5 months. I sold simply because I wanted to lock in some of my profit. In the stock market, we can't be sure of what is going to happen next. 

Now, let us have a good look at the chart again. The price shot past the overhead resistance at RM2.85 in style with high volume. As such, RM2.85 has now become the support level of the stock. Because the stock has risen too much too soon, profit taking is bound to set in, come Monday morning. So It will be interesting to see how the bulls react. I think the stock will hold up well because its fundamentals is extremely strong. (Please refer to my post on March 04,2014 under the heading, "Latitude (LT) Too Good To Ignore" on why the stock is worth RM4.83 per share.)

The stochastic indicator is close to its overbought level. Another few percent rise in the price will sent this indicator into the overbought region. This does not mean it will quickly reverse direction, but it does mean that you have to be on the alert for any bearish signal to emerge. 

If you are ignorant about charts then you have to depend on your feel. Intuition, that's what they call it. 

A correction to around the RM2.85 level is an opportunity to buy. 

Whatever action you take is your full responsibility. 

You buy, sell or hold at your risk. 

Saturday, April 19, 2014

What Remains At Hwang-DBS After The Special Dividend

 Hwang-DBS (HDBS) is now known as Hwang Capital (HC). On Monday, 21.4.14, the stock will be traded ex-special dividend of RM2.50. Lets take a look at what remains at HC presently. 

The company has two subsidiaries, namely: 

HDM Capital Sdn Bhd & HDM Properties Sdn Bhd.

These two subsidiaries contributed to the revenue HDBS for the year ended 31.7.13, 11.1% and 28.3% respectively. Whether they contributed to profits or not, I do not know.

Cash in hand is estimated to be about RM775.8 million. 

Total number of shares issued is 255,158,900 after cancellation of 10,686,100 shares on 14.04.14. This works out to cash per share of RM3.04!!!

HC has 2 years to look for a core business from Jan 22, 2014, the date HDBS signed the SPA with Affin, to remain as a public listed company. If it fails to do this, it has to fold, and whatever remains in the company will be disposed off and distributed to the shareholders. 

The company said that it had allocated RM250 million to look for new businesses. I believe it is likely to be successful in this respect and retain its listing status.

In the meantime, HC will probably remain as a quiet stock until Management has something to announce, such as the acquiring of a new business or a reverse takeover or maybe another special dividend. 

For those who have deep pockets, the stock is a value buy at below RM2 per share. Remember its net cash position per share is RM3.04.

I do not vouch that the above figures are 100% correct. Please do your own research before taking any action.

 You always buy at your own risk.

Sunday, April 13, 2014

It's easy to plan a trade, but it's hard to trade the plan. Here's why.

Consider this scenario:

You buy 1000 lots (1 lot = 100 units) of a stock at  Rm1 per share. You place a stop-loss at 95 sen. You say to yourself, " I am only prepared to lose only 5% in this trade if it turns sour. So my loss is limited to RM500. "  

Immediately after you have bought, the price starts to drop. The screen shows: Buy 95sen 100 lots; Sell: 96 sen 500 lots; Last done 96 sen.

Now, are you going to trigger your stop-loss and sell 100 lots to the buyer? Bear in mind that you have 1000 lots to sell at 95 sen.

While you are undecided, the buyer suddenly pulls out. The screen shows: Buy 94 sen 200 lots; Sell 500 lots 94.5 sen. In such a circumstance, what are you going to do? Sell everything at below 95 sen or wait until there's a pullback to 95 sen, then sell. What if there is no pullback, and the price keeps dropping? 

So, you see, you can plan your trade, but you may not be able to trade your plan. 

Here's another possible scenario: Stock AQ has been in an uptrend for sometime and in the last few days, the stock has been hitting new highs everyday. Your remiser whispers to you, " Buy this stock, I have insider news that it will hit RM10 in the next few days. The stock is now selling at RM6." 

Wow! You said to yourself, " Here's my chance to make a lot of money. I shall take the tip and place a stop-loss at RM5.50. My risk is only 50 sen. So there is not much danger." Now what may happen is this:

After you have bought at RM6, the stock really moves up. Higher and higher it goes,
RM6.30,  6.40,  6.50 and still going strong. You become greedy and buy more. The stocks hits limit-up sending you to cloud 7. 

Suddenly, Bursa makes an announcement, AQ is suspended pending an enquiry. After a few days of investigation, Bursa classifies  the stock as a designated security. This means that if you want to buy the stock, you have to put money upfront.

This has a big impact on the stock immediately. When suspension of the stock is lifted the following day, it gaps down at the opening bell. Fear sets in. There is a rush for the exit but only a few can get out before it goes limit-down. 

Before long it was trading at a much lower price than your initial purchases. You are trapped. 

From the above two scenarios, you can see that it's actually not easy to trade according to what you have planned.

Tips from remisers are actually the most unreliable. When a big boy wants to unload,  whom do you think they will entrust the job to. Remisers of course.

Want to trade? Think again. Do you have the capability to cope with ablest money getters in the world? 

Tuesday, April 08, 2014

Why I like ECS

The reasons are as follows:

It is a small-cap stock; its paid-up capital is only RM90 million.

It has a strong balance sheet with over RM80 million in cash as at 31.12.13

It has no borrowings 

Its current ratio is over 2 as at 31.12.13

Its par value is 50 sen

It has a dividend policy of giving out 30% of its earnings as dividends

It distributes a comprehensive range of ICT products comprising of notebooks, personal computers, printers, software, network and communication infrastructure, servers, and enterprise software from more than 30 leading principals such as HP, IBM, Cisco, Asus, Microsoft, Apple, Dell, Oracle, Epson, Samsung, Buffalo, Adobe, Juniper, Blue Coat, VMware and Lenovo.

It has more than 3000 outlets to sell its more than 3000 products.
In our modem world of ICT, computers, PC tablets and smart phones are no longer luxury items, they are necessities of life. Mobile devices, especially smart phones and PC tablets are increasingly in demands. This trend is sure to continue as new technology comes into play.

High Speed Broad Band 2 (HSBB2) and Budget 2014 will boost the demand for ICT products. 

The company is also involved in cloud computing and enterprise systems which every business needs. Cloud computing is popular in Japan and Hong Kong. Malaysia will be next.

The founders of ECS are still managing the company.

The company is expected is do well this year. Growth will come from its business in smart phones and other mobile devices. 

Keep a close watch on this counter. Presently at around RM1.28, it is a laggard, cheap and lowly priced. 

When it finally moves, drive into the market and load up your truck.

Buy at our own risk. 

Wednesday, April 02, 2014

ECS On Verge of Moving Higher

This daily chart of ECS shows that the stock has strong underlining support since early this year. Today a strong bullish candle is sure to be formed by the end of the day. This is a good sign that the stock is on its way to a higher level.

ECS has a strong balance sheet with RM83.7 million in cash as at 31.12.2013. Its paid-up capital is only RM90 million. The company is predicted to do much better this year than last year. Its new business in mobile devices such as PC tablets and smart phones is bearing fruits. This I think will be reflected in the 1Q2014 earnings which may be reported in the first or second week of next month.

The stock was last traded at RM1.23, but it won't be there for long. I think it will move up pretty fast going forward.

Investing/trading in the stock market is risky, and there is no such thing as a certainty. So please remember this: You always buy at your own risk.

Sunday, March 23, 2014

A Trader is not a Gambler

View InTheMoneyStocks.com's Instablogs on:

  • Five Reasons Why A Real Trader Is Not A Gambler How often have you heard someone say that they just bought a stock because they have a feeling that it is going to move higher? Personally, I hear someone tell me that every single trading day. When I ask them how they know the stock is going to move higher they answer by saying it's a hunch or they heard someone talk about it. Well, in the trading world it is not prudent to take tips or trade on a hunch. There needs to be a sound methodology for taking a trade, otherwise it is just gambling. It is important to note, a good trader has the odds in his favor while a gambler does not. Just think about it, how can a Las Vegas casino stay in business if they do not have the odds in their favor? The answer is they can't. A casino knows that the odds are always in their favor and the longer a gambler plays in the casino the more likely the casino will take their money. As a trader you want to be Steve Wynn, not the guy at the roulette wheel placing bets.
    Here are five reasons why a good trader is not a gambler, but more like a Las Vegas casino owner:
    1. A good trader takes a position when the odds are in his favor, not when the odds are against him. An educated trader will accomplish this task by using charts and understanding the human emotion that is being displayed on a chart. That is why certain breakout and breakdown patterns continue to reoccur throughout history. The chart pattern is simply recording the human emotion that is taking place in that particular equity.
    2. A good trader will know when to cut his loss when he is wrong. The legendary trader Jesse Livermore used to say that a trader should never take more than a 10 percent loss on any position. Even a Las Vegas casino will cut off a hot gambler if they win too much money. When a trader can admit they are wrong on a trade and limit the loss it is much easier to come back from that error. Traders must always use a stop loss.
    3. A good trader does not need constant action in the market. A trader only enters a trade when the chart setup favors that he will make money. If the chart setup does not overwhelmingly support a pattern then the trader does not want to be in the position. A gambler constantly needs action; they continuously need to have some type of bet in place at all times. This gambler mentality is one of the reasons why so many people over-trade and lose money. A good trader patiently stalks out a stock or equity waiting for the right chart setup to appear. One thing I have learned over the years is that the worst thing you can do as a trader or investor is to force your will on the market. Chart patterns make money and you must patiently seek the good charts out.
    4. A good trader does not trade will with capital they cannot afford to lose. It is so important to be calm and keep all of your senses when trading. I have seen traders enter a position hoping that it is going to work out and their heart rate jumps up like they are running a marathon, this is usually a sign that they are trading too much money. A trader should not use capital that makes them feel uncomfortable. A gambler will usually bet the farm on a single bet, a good trader will not. Gamblers are always doubling down after they lose; this is a recipe for disaster, especially if you are a trader. I have seen traders blow up their entire accounts by doubling down and averaging in.
    5. A good trader does not take tips from others, but looks at the chart and decides whether the pattern is bullish or bearish. Have you ever been to a horse track? Half of the bets in a horse race are because someone has given someone else a tip. Good traders do their own due diligence and never listen to the public. Remember, when everyone is looking at the same thing it will rarely happen. Never take tips. Even the legendary Jesse Livermore admitted this to be one of his biggest mistakes as it was usually one of the main reasons for his trading losses.

  • Nicholas Santiago

Thursday, March 20, 2014

Latitude Back On Track

Latitude went up to an intraday high of RM2.82 on Feb 20, 14. A mild correction because of profit-taking brought the stock down to RM2.35 where it found strong support. 

The stock is now back to its uptrend track. Strong resistance is seen at around the RM2.80 area. If RM2.82 is decisively breached, the stock is likely to trend up higher. At the time of writing this post, the stock was lasted traded at RM2.69.

Buy at your own risk. 

Monday, March 17, 2014

CBIP wins RM46 million contract

This daily chart of CBIP is a beauty to behold. The stock has been having a gradual uptrend. Of late, this uptrend is becoming steeper. The company has just announced that it has been awarded a contract to build a palm oil mill for RM46 million in Papua New Guinea. Click here for the article.
The stock is likely to trend higher.

Tuesday, March 04, 2014

Latitude Trees (LT) Too Good To Ignore

LT is in the business of wooden furnitures. Its main raw material is rubber wood which is plentiful in Malaysia and Vietnam. It has 6 factories covering 7.8 million sq feet. That is  about 179 acres. Three of its factories are in Malaysia, two in Vietnam and one in Thailand. Below is a brief history of the company, sourced from its website:

"Latitude Tree Holdings Berhad was incorporated in Malaysia as an investment holding company. Through its subsidiary companies, the Group specialises in the manufacturing and sale of wooden furniture and components particularly rubber-wood furniture for both the domestic and export markets.
The Group has carved out a strong niche in the household furniture segment, specifically dining and bedroom sets. From its humble beginnings as a manufacturer of chairs for dining sets in 1988, the Group has grown into a complete high- and-medium-end dining and bedroom sets manufacturer. About 60% of its raw materials are rubber-wood-based with the remaining being oak, pine wood and other wood-based materials.
The Group has made great advances to position itself as one of the largest rubber-wood furniture manufacturers and exporters in Malaysia and Vietnam. Approximately 99% of the Group's products are exported overseas to the United States of America, Canada, Europe, South Africa, Australia and the Middle East countries. 
Manufacturing / Operating Activities
The Group's manufacturing activities are operated from its three factories in Malaysia, two factories in Vietnam and one factory in Thailand. The total floor area of the six manufacturing plants is approximately 7.8 million square feet. The total current workforce is about 7,500 workers."
The EPS of the company in the last 6 months ending 30.12.13 are just too good to ignore. The latest quarter is 19.52 sen per share, and the preceding quarter is 15.02 sen per share. Assuming that these kind of earnings are sustainable in the next 6 months, the full-year result will be 69 sen per share. 
 In view of its strong showings, especially in the latest 2 quarters, a PE ratio of 7 accorded to the stock is not illogical. This means the stock is worth RM 4.83 per share.
The company has a strong balance sheet with a current ratio of 1.598 and cash in the banks at RM154 million. Its paid-up capital is only RM97.208 million. Borrowings stand at below RM100 million.
At the present price of below RM2.60 per share, there is lots of value for money in the stock. 
As usual, you buy at your own risk.

Thursday, February 27, 2014

One Hundred and Eighteen Percent In Less Than 2 Weeks

" Western Lithium is pursuing the opportunity to be a supplier of specialty drilling additive, HECTATONE™ and potentially other organoclays for the oil and gas industry, and in particular, to support the growth of high pressure high temperature, deep directional drilling applications. The Company is also developing its Kings Valley, Nevada lithium deposit into a strategic, scalable and reliable source of high quality lithium carbonate. The Company is positioning itself as a major U.S.-based supplier to support the rising global demand for lithium carbonate that is expected from the increased use of hybrid/plug-in and electric vehicles."
Western Lithium (WLC.TO) was highlighted in my blog on 14.2.14. The stock had shot up 118% in less than 2 weeks!!! I had bought 30,000 shares at C$0.33 per share. When trading closed early this morning at the TSE, the share closed at C$0.72. Let the good time continue. 

Sunday, February 23, 2014

MNRB Highest In The Last 15 Years

The above chart shows that MNRB has been trending up.In the last few trading days, the trend has become more apparent. At RM4.15, the stock is at its highest in the last 15 years. It is now in uncharted territory.

Going by the chart, the stock is poised to go higher. Attractive but dangerous as well. If you can't stand the heat, don't go near the fire.

Friday, February 21, 2014

The Five Biggest Stock Market Myths

When fiascos like the Libor scandal, London Whale scandal, and analysts' conflict of interest occur, investor confidence can be at an all-time low. Many investors wonder whether or not investing in stocks is worth all the hassle. At the same time, however, it's important to keep a realistic view of the stock market. Regardless of the real problems, common myths about the stock market often arise. Here are five of those myths.

1. Investing in Stocks Is Just Like Gambling.
This reasoning causes many people to shy away from the stock market. To understand why investing in stocks is inherently different from gambling, we need to review what it means to buy stocks. A share of common stock is ownership in a company. It entitles the holder to a claim on assets as well as a fraction of the profits that the company generates. Too often, investors think of shares as simply a trading vehicle, and they forget that stock represents the ownership of a company.

In the stock market, investors are constantly trying to assess the profit that will be left over for shareholders. This is why stock prices fluctuate. The outlook for business conditions is always changing, and so are the future earnings of a company.

Assessing the value of a company isn't an easy practice. There are so many variables involved that the short-term price movements appear to be random (academics call this the Random Walk Theory); however, over the long term, a company is supposed to worth the present value of the profits it will make. In the short term, a company can survive without profits because of the expectations of future earnings, but no company can fool investors forever - eventually a company's stock price can be expected to show the true value of the firm.

Gambling, on the contrary, is a zero-sum game. It merely takes money from a loser and gives it to a winner. No value is ever created. By investing, we increase the overall wealth of an economy. As companies compete, they increase productivity and develop products that can make our lives better. Don't confuse investing and creating wealth with gambling's zero-sum game.

2. The Stock Market Is an Exclusive Club For Brokers and Rich People.
Many market advisors claim to be able to call the markets' every turn. The fact is that almost every study done on this topic has proven that these claims are false. Most market prognosticators are notoriously inaccurate; furthermore, the advent of the internet has made the market much more open to the public than ever before. All the data and research tools previously available only to brokerages are now there for individuals to use.

3. Fallen Angels Will Go Back up, Eventually.
Whatever the reason for this myth's appeal, nothing is more destructive to amateur investors than thinking that a stock trading near a 52-week low is a good buy. Think of this in terms of the old Wall Street adage, "Those who try to catch a falling knife only get hurt."
Suppose you are looking at two stocks:

  • X made an all-time high last year around $50 but has since fallen to $10 per share.
  • Y is a smaller company but has recently gone from $5 to $10 per share.
Which stock would you buy? Believe it or not, all things being equal, a majority of investors choose the stock that has fallen from $50 because they believe that it will eventually make it back up to those levels again. Thinking this way is a cardinal sin in investing! Price is only one part of the investing equation (which is different from trading, which usestechnical analysis). The goal is to buy good companies at a reasonable price. Buying companies solely because their market price has fallen will get you nowhere. Make sure you don't confuse this practice with value investing, which is buying high-quality companies that are undervalued by the market.

4. Stocks That Go up Must Come Down.
The laws of physics do not apply in the stock market. There's no gravitational force to pull stocks back to even. Over 20 years ago, Berkshire Hathaway's stock price went from $7,455 to $17,250 per share in a little more than five year. Had you thought that this stock was going to return to its lower initial position, you would have missed out on the subsequent rise to $170,000 per share over the years.

We're not trying to tell you that stocks never undergo a correction. The point is that the stock price is a reflection of the company. If you find a great firm run by excellent managers, there is no reason the stock won't keep on going up.

5. A Little Knowledge Is Better Than None
Knowing something is generally better than nothing, but it is crucial in the stock market that individual investors have a clear understanding of what they are doing with their money. Investors who really do their homework are the ones that succeed.

Don't fret, if you don't have the time to fully understand what to do with your money, thenhaving an advisor is not a bad thing. The cost of investing in something that you do not fully understand far outweighs the cost of using an investment advisor.

The Bottom Line
Forgive us for ending with more investing clichés, but there's another old adage worth repeating: "What's obvious is obviously wrong." This means that knowing a little bit will only have you following the crowd like a lemming. Like anything worth anything, successfulinvesting takes hard work and effort. Think of a partially informed investor as a partially informed surgeon; the mistakes could be severely injurious to your financial health.

Source: investopedia.com

Monday, February 17, 2014

Silver Wheaton Corp Best Of The Pick

Over the last 12 months, silver has dropped from a high of $30.45 to a low of $18.50. This is a drop of 39% which is considered severe. Lately, the price of silver has picked up in tandem with the rising price of gold. Presently gold is at $1318.70 and silver is at $21.40. This means that gold price is 61.62 times higher than that of silver. 

In August 2011, gold reached a high of $1,889.60 and silver was at $50. Thus at that time gold was 37.79 times higher than silver. Many people thought at that time the ratio of 37.79 between gold and silver was too wide and would surely narrow. Obviously, they were wrong. What about now? Will the price of gold and the price of silver drifted more apart.  

Gold experts say that the logical ratio is 16. But the market, more often than not, does not follow logic. Therefore, there is no certainty of what's going to happen next. At best we can only guess. With a chart, this is made easier and more intelligent  than just mere guessing.

The above chart SLW shows that the stock has formed a round bottom. It is now poised for a good run-up. With silver price improving, silver mining companies are the ones that will benefit most.

In Bursa Malaysia, there is not even a single silver stock.  So, if you want to invest in silver, what are the options available to you. You can buy physical silver, open a silver account, or buy silver stocks overseas.

Among the many silver stocks that are listed in the NYSE, I like Silver Wheaton Corporation (SLW) which is the largest silver streaming company in the world. 

A silver streaming company is one that makes payment upfront to mining companies for the right to purchase all or some of the silver produced in the mines at a very low price. Lately SLW has also ventured into gold streaming. I feel this counter has the potential to move up fast. I like the business model of the stock.

There are many articles about SLW at Seeking Alpha. Please do your own research before buying the stock. The last traded price was U$25.38 per share. This is a good entry point, in my opinion.

You buy at your own risk.