Multico Poised to Move Higher

Multico gapped up at the opening bell. It closed at 1.42 after a high of 1.43. The chart clearly shows that sentiment in the stock has turned positive. Volume in the last 4 days shows an upward trend. A golden cross is also displayed in the chart. All these mean that the stock is likely to move higher. Once the resistance at 1.47 is cleared, new high is expected.
(The opinion expressed is that of the writer. If you disagree with him, don't tell him. Just unfriend him.)

Wishing all my readers Merry Christmas and a Prosperous Happy New Year.

The Best Way to Stock Market Success

The more I am involved with the stock market, the more I am convinced that the best way to build up wealth is to, first and foremost, master the skill to identify great stocks. Buy them at bargain prices and hold them for the long term is the best strategy. This is the surest way to financial freedom for your golden years.

Easy as it may sound, it is, in actual fact, not that easy. If you don't know how to read an annual report and understand the figures there, you will never be able to become a good stock picker.

So the first you need to do is to arm yourself with some accounting knowledge. You must at least be able to understand the Balance Sheet, Cash Flow Statement and the Income Statement. Once you know these, you can go on to calculate the key ratios such as:

PER, EPS, NTA, Current Ratio, PSR, PEG, PBV, Debt-to-Equity Ratio and others.

Knowing how to calculate these ratios is not enough. You must understand their meanings and implications. Once you have learned and understood these key statistics, looking for a winner becomes a possibility.

obviously, there is an awful lot of work to do before you can say, " I found a winner".

Once you have decided on a stock you wish to invest, don't rush in to buy. Have a good look at its daily chart and weekly chart. This will clearly show you how the stock has been performing. With the charts you can easily see the highs and lows of the stock. Pay special attention to the latest transactions of the stock to figure out what is happening.

Buying at major support level is generally safe.

For those who wish to see quick money, buying at upside breakouts at low level is advised.

At high levels, upside breakouts are extremely dangerous but can be extremely profitable as well. If you are an inexperienced player, you should never attempt to buy at high level breakouts.

While there should not be a limit to your gains, there must be an absolute limit to your losses.

Never bet without a stop-loss in place.

This blog is a monarchy and I am the monarch. If you don't like what is written here, don't tell me. Just unfriend me.

Keck Seng Cash-Rich and Asset-Rich

Keck Seng is cash-rich and asset-rich as well.

After a long period in the doldrums, Keck Seng's hive of activity last Friday came like a bolt from the blue. Its traded volume improved substantially at 1, 372,900 shares. The stock was up 14 sen. It closed at RM4.01.

Normally, it used to be around a few thousand shares transacted daily.
This sudden turn of sentiment is most likely to be a reflection of some bullish news known only to some insiders at this stage.

The company made a gain of RM259 million in 2010 from the disposal of its investment in Parkway Holdings Limited. Instead of giving out some currency notes to its shareholders, it chose to give out only a piece of paper (a bonus issue) and keeping all the cash. As at 31.12.2011, it has net cash of more than RM700 millions. I wonder what it intends to do with the money.

Most of its landed assets are in the Iskander Region. In KL, it has the Menara Keck Seng and the Regency Tower. If a revaluation of all its properties is made, the company will be worth many times more than its present book value of about RM5 per share.

Is the heavy volume transacted last Friday a prelude to something important about to happen at Keck Seng? I sincerely hope so, and I intend to hold on to my shares.

TMCLife has turned the corner

TMCLife appears to have turned the corner. It has been losing all along until the last two quarters.

According to the StarOnLine, Vincent Tan has increased his stake from 30.78% to 31.06%. The other big shareholder, Lim Eng Hock has 32.59%

A battle between the two is likely to happen. And if it does happen, the stock is bound to head north.

At the last traded price of 33.5 sen per share, the stock looks a good buy.

Palm oil to drop 7%

Palm oil, the world’s cheapest available cooking oil, must drop 7% in the next four to six weeks to attract demand and lead to a decline in record stock levels, top vegetable oil analyst Dorab Mistry said Friday. To read more, go to: www.palmoilhq.com/

Presently, crude palm oil is around RM2370 per ton. Keep a close watch to see if Dorab is right.

Time Is Everything

You can't do anything without time. If time and money are on your side, you will eventually win.
To make money in 12 months is much easier than to make money in 12 weeks
Here are some clichés that refer to time:

• Time will tell: This means that something will revealed or become clear over time
• In the nick of time: This means something happened just in time
• Lost track of time: This means you stopped paying attention to the time or to how long something was taking
• Lasted an eternity: This refers to something that lasts for a very long time (or that feels like it does)
• A matter of time: This refers to something that will eventually happen or eventually become clear
• A waste of time: This refers to something that was silly or not valuable to do
• Rushed for time: This means you do not have sufficient time to do something
• In a jiffy: This means something will happen soon
• The time of my life: This refers to a really great time
• At the speed of light: This means something done very quickly.

The cliches stated above are from: http://examples.yourdictionary.com/examples-of-cliches.html

Where ignorance is bliss, 'tis folly to be wise

I am not a software vendor promoting TA (technical analysis). So whether people believe in charts or not is not my concern. In fact the more people believe that charts do not work, the better for those who believe in them. I believe charts are useful; I always refer to them before I buy or sell.

If you don't like charts and think of them as useless, I have no qualms about that. You have every rights to your own belief. I agree to disagree. So let us not quarrel over that for nothing.

I said in my previous article that the best way to stock market success was to choose good stocks and hold them for the long term. Buy and hold is a good strategy only when you buy the right stocks. However, I think that strategy can be improved to: buy, hold, monitor and switch.

To do this, you have to be on your toes all the time. You have to be on the lookout for something good to switch to. As soon as you find one, you let go the weakest stock in your portfolio and replace it with the new stock. This process has to go on and on and on. There is no end to it.

You must have full confidence in yourself. If you need to discuss with somebody before you buy, that is a sign of weakness. It shows that you are not ready yet to be an active investor.

The Best Way to Stock Market Success

The more I am involved with the stock market, the more I am convinced that the best way to build up wealth is to, first and foremost, master the skill to identify great stocks. Buy them at bargain prices and hold them for the long term is the best strategy. This is the surest way to financial freedom for your golden years.

Easy as it may sound, it is, in actual fact, not that easy. If you don't know how to read an annual report and understand the figures there, you will never be able to become a good stock picker.

So the first you need to do is to arm yourself with some accounting knowledge. You must at least be able to understand the Balance Sheet, Cash Flow Statement and the Income Statement. Once you know these, you can go on to calculate the key ratios such as:

the PER, EPS, NTA, Current Ratio, Quick Ratio, PSR, PEG, PBV, Debt-to-Equity Ratio and others.

Knowing how to calculate these ratios is not enough. You must understand their meanings and implications. Once you have learned and understood these key statistics, looking for a winner becomes a possibility.

There is an awful lot of work to do before you can say, " I found a winner".

MNRB Moving Higher

Every trade is a battle between a bull and a bear. The bull wins if the price moves up after the opening price; the bear wins if the price moves down. This should be easily understood.

Volume signifies interest. The higher the volume transacted, the more interest is shown in the stock. Thus big volume means more bulls and bears are participating in the fight.

The closing price of the day is the one to note. If the closing price is higher than the opening price, a white candle will be shown in the chart. If the closing price is lower than the opening price, the candle shown is black. Thus,a white candle means the bulls have the upper hand and a black candle means the bears are stronger.

MNRB opens at 3.09 with 10 lots traded. As a continuation of yesterday's run, the price promptly moves up to a high of 3.22 by 9.20 a.m.

Volume transacted is above normal. Because the price is moving too fast, profit-taking sets in. This pushes the price down. At the close of this morning's trading, the priced ends at 3.14, up 5sen. Total volume comes to 5174 lots which is above average for MNRB.

I notice that there is a lot of support at 3.10. I think this level should not be breached by the end of the day. Action to take is to average up if you have bought when the price was lower.

As usual, you listen to me at your own risk. The opinion expressed is that of the writer. You have your rights to disagree.

MNRN ON TRACK TO CHALLENGE PERVIOUS HIGH AT 3.39

MNRB put on 13 sen today with 3696 lots traded while the FBM KLCI is down 2.09 points.

The bullish candle displayed in the chart is likely to prompt shrewd investors/traders to buy in. Whether there will be a pull back or not is difficult to say.

In the last few trading days, it volume has been improving. The overall view at MNRB is positive. The stock should move on to better things.

As usual, you buy at your own risk.

The market is most dangerous when it is most attractive

“Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.”
Sir John Templeton puts it aptly. I fully agree with him.

The problem is that you may have to wait 10 years before you see a time of maximum pessimism. What about maximum optimism, maybe another 10 years?

When stocks are being sold ex-hope and cum-despair; when no one wants to talk about stocks, and when remisers are looking for another job, that is a good time to buy. During such time, professionals are accumulating at their own leisurely pace. You should be there to join them.

On the contrary, when people are rushing in to buy; when stocks are being the talk in coffee shops, restaurants, and wet markets among the hawkers, barbers and shoe-shine boys, that is an excellent time to sell everything.

You see new comers everyday and all the seats in the broker firms fully occupied. You will also hear lots of people bragging about their gains. During such time, the rewards are fantastic, but the risk is extreme. If you can't stand the heat, don't get close to the fire.

Patience is a must, an important ingredient, in the recipe of success.

Know the market, know yourself, and you win.

It's Best To Be Flexible

The Chinese has a saying: 随机应变. In English, it means: change with the circumstances, or set your sails accordingly to the direction of the wind.

The world is forever changing; we need to change with it. He who does not change when there is a need to change, is sure to be left behind.

What about a stop-loss you placed in a trade? As with everything, there are exceptions, this is one of them.

A stop-loss is a device you use to limit your loss. A trade without a stop-loss is equivalent to driving a car without brakes.

If your stop-loss is usually triggered, obviously something is wrong. Probably, you are not as good as you think.

After you have bought a stock, the share price moves up fast. It reaches the overbought level. The price is moving ahead of the fundamentals. What is your next move? Average up or take profit?

Different people have different opinions. Some will average up while others will take profit.

Smart traders will use a trailing-stop to lock in their gains. This is how they do it:

When the price moves up to a certain level, they will place a trailing-stop a small percentage below the price. And as the price moves up further, the trailing-stop moves up as well. As soon as the trailing-stop is hit, they will sell. This strategy is to ensure that they do not sell prematurely.

The stop-loss and the trailing stop-loss are devices designed to minimize your losses and maximize your gains. Using them gives you the competitive edge.

Are You Fit To Trade

Are you fit to trade?

ABC bought a stock at $1. He placed a stop-loss at 95 cents. The stock dropped to 96 cents. He said, " I will give the stock a little more room". He moved his stop-loss to 90 cents. He has breached his discipline; he is not fit to trade.

To be a successful trader, you must have ironclad discipline. Once you set your stop-loss at 95 cents, what does that mean? Does it mean you should place your sell order at 95 cents? In my opinion, it is not. It means that as soon as a trade is done at 95 cents, you should sell at the next bid. This next bid could be at 95 cents or lower, maybe 94.5 or 94. You must not delay; you must sell it immediately.

Ask yourself, can you do this? If you can't, you are not fit to trade.

The only way to convince a fool is to let him have his ways.

The person who likes to ridicule others out of envy or jealousy or for whatever reason is doing a great disfavor to himself. What he does not realize is that by trying to pleasure himself (shock sendiri), he is creating bad blood; he is not doing himself any good or to anybody.

This type of personality is not limited to the uneducated. Well-educated men or women also have these kind of traits.

They are mean in their praise and generous in their criticism. They are always on the lookout for the bone in the egg.

Criticism is okay provided that it is constructive and logical, and expressed in a euphemistic manner. The person who cannot do this should refrain himself from making any comment at all.

A wise man speaks because he has to; a food speaks because he has to say something.

How do we deal with this kind of people? The best way is to avoid them. It is no use trying to change them.

You can alter the mountains or rivers, but you can't change the inborn character of a person. A leopard never changes its spots.

Thus, the saying: The only way to convince a fool is to let him have his ways.

If you are interested to upgrade your trading or investing skill, join my Super Telegram Group, Intelligent Investing, by using the link below:
https://telegram.me/joinchat/BO0NxTua7NZ57y2pV6Mzrg

Gold or Silver

Gold or Silver

Historically, the ratio of gold to silver is 16 times to 1. This means, if gold per ounce is USD1700, then silver should worth US$106.25 per ounce.

A quick check at the prices reveal that gold is now selling at around US$1720/oz whereas silver is traded at around US$32/oz. So the ratio now is 53.75. This disparity is not logical.

Silver has hundreds of uses, maybe a thousand. It can kill bacteria, and is used in water filters. Your computers, smart phones, i-pads and other ICT products all use silver. In fact what gold can do, silver can do. But what silver can do, gold may not be suitable to do it.

The price of gold is about to explode, come Jan 01, 2013, If this happen as predicted by some experts, the price of silver will shoot up as well.

Silver is so low now because some large banks are controlling the price. Once the government step in and changes the rules, you will see silver shoot up easily to US$100/oz.

What is the best way to invest in silver? My opinion is to buy stocks whose core business is mining silver or involving in silver. If this is not within your reach, you can open a gold account or a silver a/c at a local bank.

Should you be interested in silver stocks listed at the NYSE, Click here.

Japanese Candlestick How Good

A Successful History

"Knowing the history of the formations inevitably imparts confidence in the Japanese Candlestick technique. Japanese rice traders developed the system over a 400-year period. Logic dictates that a system that has persevered that long must have credible features. The history of the rice traders that developed the signals reinforces that assumption. With its 400 years of development, the Candlestick methodology got its major refinement in the mid-1700s.

Kosaku Kato (1716—1803) was born in the city of Sakata (now Tamagata Prefecture) during the Tokugawa Period (Eighth Shogunate). Adopted by the Honma family, he became known as Sokuta Honma. His successful interpretation of the candlestick formations made him the most feared and respected rice trader in Japan, and the wealth he produced for his family became legendary."

Success is a ladder that cannot be climbed with your hands in your pockets. Japanese Proverb

Among the few TA books I have read, the best is: Profitable Candlestick Trading by Stephen W.Bigalow. This book is sure to change your mentality about TA. I strongly recommend it.

Stemlife

The First Wealth is Health (R.W.Emerson)

StemLife has a proven track record of success in releasing stem cells for treatments, especially in young patients with leukaemia, thalassaemia and cerebral palsy, and adults with knee injuries, chronic wounds, heart disease and more.

StemLife is a FULLY LICENSED cord blood and peripheral blood stem cell banking facility, under the PHFS Act 1998, Ministry of Health Malaysia.

More than 40,000 clients have already stored their stem cells with StemLife, what are you waiting for? Store today!

Stemlife has announced that it has fallen out of favor to acquire Tonik Asia Group because it cannot come to terms with the vendor on certain matters after a due diligence is carried out. The bonus issue of 1 for 2 is on track. It will be interesting to watch how investors react to the news.

For more information about Stemlife, click here: http://www.stemlife.com/malaysia/stem_cell/index.html

Fat Cats are harmful to companies

There are many kinds of animals in the stock market. We have the bulls, bears, stags, ostriches, pigs and fat cats. Among them, the fat cats are the most harmful to a company.

Literally speaking, a fat cat is a cat that eats too much and sleeps too much. The result is that it has become very fat. In stock market jargons, a fat cat is a different thing.

Investopedia defines a fat cat as:

Definition of 'Fat Cat'

A slang word used to describe executives who earn what many believe to be unreasonably high salaries and bonuses. These top executives also receive generous pensions and retirement packages, consisting of extra compensation not available to other company employees.

Investopedia explains 'Fat Cat'

This term conjures up the image of cats that consume more than an appropriate amount of food and become grossly overweight. 

Publicly-traded companies are required to disclose the amount of compensation that their top five executives receive. As a result, companies have been under a lot of scrutiny for excessive executive compensation, especially in the face of floundering revenues.

A real-life example of a fat cat would be former Disney CEO, Michael Eisner. For a period of five years in the late 1990s, Eisner received over $737 million in compensation, despite the fact that the company's five-year net income shrank an average of 3.1% each year.

Charts Can Be Misleading

Charts were initially designed to monitor the big boys long before you and I know about charts. Nowadays, charts are available to anyone who knows how to use a computer. 

Apple, Google, Microsoft and SamSung have all contributed to change our lifestyles. What was once used to check the big boys are now used by the big boys to trick and trap us. It is for this very reason that charts have false breakouts, both up and down. 

Many people after having read a book or two about charts thought they know how to read charts. They start using them to time their trades. For a while they may find them to be useful. But as they go deeper and deeper into charts, they find that charts are really not so easy to understand. 

One thing you need to know is that the big boys are very strong financially and much smarter than us. They are so strong that they are able to manipulate the charts, the news and one or two quarterly reports as well. So you have to be very careful with what you see or read. What appears to be bullish may actually be a Pump and Dump situation. That's why we have bull traps and bear traps.

Of course, not all charts are manipulated. So you have to use your own judgement when you make an assessment. Every chart has a personality of its own. This is because the people behind it, are different.

Remember, the big boys know what you are looking at. 

If you like the above article, please tweet and link it to Facebook. Thanks.

PW Root is moving in the range of between RM1.08 and 0.975. The pattern appears to be one of distribution. I understand that FGV, a major shareholder of the stock has been selling PW Root for some time. It has not sold everything. So obviously it does not want the stock to go down.

The formation of the last two candles is called a Harami.  If this formation appears at the bottom of a chart that has a long downtrend, it's a bullish sign. But it is now at the top although it is at the bottom of a range. I think the stock can only be considered to be bullish after 1.08 is beached. If the price breaks down to below 95 sen, the stock has turned bearish. 

When a major shareholders sells, institutions may be buying, hence you see the large turnover. In such a scenario, whether the stock breaks up or down depends on who is the stronger and how keen other buyers are. Buyers will rush in to buy when the quarterly report is better than expected. This is true the other way round.

PW Root is about to announce its 2nd quarterly report, the latest being the end of this month. Watch out for this report. It will determine the direction of the trend. In the meantime, should you buy or sell?

It's your money, you make the decision.

Feng Sui Matters

When you invest in properties, be they lands, condos or landed properties, the first thing you should look at is the Feng Sui of the place.

The most important thing to man is fresh air and water. Man can live without food for 3 weeks. They can't live without water for 3 days and they can't live without air for 3 minutes. Therefore air is your first priority.

A place without fresh air can never be an ideal place to stay. To have fresh air, you must have greens all around you. Dumpsites and factories which produce offensive smell and pollutants must not be nearby. 

When we talk of water we think of rivers. Thus rivers and mountain streams are part and parcel of good Feng Sui. Once you have identified a place that has good Feng Sui, you have to look at many other things as well. The designs of the buildings must be in accord with the Feng Sui. The atmosphere of the place must be calm and serene and yet lively with birds flying about. The feel-good feelings must be there.

There is a residential project in Bentong that has all the basic principles of good Feng Sui. This site has a school nearby. It is only about 2 km from the town. Constructions of the buildings are presently underway. I understand that there are not too many units left after the commencement of booking.

Click here to have a good look. It may serve your purpose well. 

Remember: Opportunity neglected seldom returns.

YONG Privatisation $6.60

YONG, a China-based company and listed at Nasdaq has received an offer from its chairman to privatize the company at US$6.60 a share. The stock is presently traded at around the $5.50 level. 

Here is an opportunity to make a 20% profit within a short period of maybe 3 months. In my opinion, this is low risk and high reward.

Many China-based companies are going private because of their low market value.

If you are interested in these companies, click here: http://seekingalpha.com/article/925621-6-china-stocks-going-private-since-september-2012

There was interest in PW Root as indicated by the fairly large volume shown in the chart. Unfortunately, the tock moved down. This is not a good sign.

At the close, there were  24,819 lots traded. Support is likely to come in at 95 sen. If that level is decisively breached, the stock is likely to trend lower.

The quarterly report for the period ended Aug 31, 2012 may be announced today or tomorrow. The corresponding period for last year was announced on Oct 25,  2012.

As usual, you trade at your own risk.

Why you will not win as a small trader

I understand that at OSK, the minimum commission for a trade is RM40 if you go through your remisier. If you do it online yourself, the minimum commission is RM12.

Assuming that you are a small trader and you do not know how to trade online. That means that every trade you do, you have to go through your remiser. 

Suppose Tom bought a stock for RM6000 and made a 15% profit. That means he made RM900. From this trade, he a has to pay commission, stamp duty and clearing fees. Both ways, the amount works out to be: roughly RM40 + 40 + s/duty 13 and clearing fees 4.80. The total is 97.80. And don't forget that if his fund is financed by the bank, he has to paid interest which has to be factored in as well but is not included here. 

Thus his profit of RM900 shrinks to RM802.20. 

Now let's see what happens if he loses RM900. Plus the expenses stated above, his loss of RM900 inflates to RM997.80.

To sum it up ( for this case),  if Tom wins, he wins RM802.20 and if he loses, he loses RM997.80. From this calculation, you can see that the odds are heavily against him.

What is the odd against you when you play roulette, soccer betting, and 4D?

If you really want to bet, find out what is what before you wagger or very soon your cash will just say: Bye bye!

Never overestimate your own ability to survive in the gambling world.

FBM KLCI from 1997

The 13th GE........??? (Must be held latest by June 27, 2013 according to Wikipedia)

The 12th GE: Mar 28, 2008; The 11th GE: Mar 21, 2004; The 10th GE: Nov 29, 1999

The 09th GE: Apr 25, 1995; The 08th GE Oct 21, 1990. The 7th, 6th, & 5th, find out yourself.

The chart shown above dates back to 1997. The primary trend of the chart has been on the uptrend since 1997. This is a trend in motion and is likely to continue in the same direction. How the market will behave just before and after the 13th GE is anybody's guess. If you know TA, the above chart may be of some use to you. Please remember that TA is an art, not a science.

The only certainty in the stock market is uncertainty.

Good luck, and may God bless your every trade.

CBIP one to note

CBIP has been trending up. It is likely to continue trending higher.

For a comprehensive study of CBIP, click here: http://journeytowealth88.blogspot.com/2012/09/cb-industrial-product-holdings-bhd.html

What is Value Trap?

It's all right to walk into a trap provided you know the way out.

Definition of 'Value Trap'

A stock that appears to be cheap because the stock has been trading at low multiples of earnings, cash flow or book value for an extended time period. Stock traps attract investors who are looking for a bargain because these stocks are inexpensive. The trap springs when investors buy into the company at low prices and the stock never improves. Trading that occurs at low multiples of earnings, cash flow or book value for long periods of time might indicate that the company or the entire sector is in trouble, and that stock prices may not move higher.

Investopedia explains 'Value Trap'

Companies, and even sectors, can be doomed, because of situations such as the inability to survive competition, the inability to generate substantial and consistent profits, the lack of new products or earnings growth, or ineffective management. Often, a value trap appears to be such a good deal that investors become confused when the stock fails to perform. As with any investment decision, thorough research and evaluation is recommended before investing in any company that appears cheap when reviewing its relevant performance metrics.

Read more: http://www.investopedia.com/terms/v/valuetrap.asp#ixzz29i1z2OP5

Public Bank shows the way

For companies whose FYE 31.12.12, the 3Qtr result announcement has commenced.

As usual PBB is the first off the mark. It has reported an EPS of 28.08 sen. This is a shade better than its 3Q11 result of 25.66 sen earnings per share.

 Now that the earnings report season has kicked into gear, the market should be more active from now.

Selected Quotes

Love all, trust a few, do wrong to none. 

William Shakespeare 

By three methods we may learn wisdom: First, by reflection, which is noblest; Second, by imitation, which is easiest; and third by experience, which is the bitterest. 

Confucius

A successful person is one who can lay a firm foundation with the bricks that others throw at him or her.  Confucius

“Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.”    Warren Buffett

"Know what you own, and know why you own it." - Peter Lynch

Do your homework before making a decision. And once you've made a decision, make sure to re-evaluate your portfolio on a timely basis. A wise holding today may not be a wise holding in the future.

Adventa moving into healthcare

Adventa has proposed a special dividend of RM1.30 and capital repayment of 40 sen per share.

 After these one-off payments, the NTA of the stock is lowered to 82 sen per share. The company will then no longer be in the glove business. It is moving into healthcare. 

At the present traded price of RM1.86 per share, the stock looks a bargain to me. 

Pantech (Stock Code: 5125) Website: http://www.pantechPantech (Stock Code: 5125) Website: http://www.pantech-group.com

For the fiscal year ended 29.2.12, Pantech paid 3 times dividend totaling 3.5 sen per share. 

For fiscal year ended 28.2.13, it should pay more. This is because the company is doing very well. Its 1Q ended 31.5.12 shows earnings of 2.77 sen per share. In the corresponding period of the previous year, the EPS was 1.38 sen. This is an improvement of over 100%!

Assuming that it pays a total dividend of 5 sen per share for the current fiscal year, the dividend-yield works out to be 8%. This is based on the present price of 62.5 sen per share. 

The stock is now traded on a cum-basis of 1sen dividend, The x-date is Oct 5, 2012. If dividend is your priority, don't miss on this one.

As usual, you buy at your own risk.

Tip of the day

"The individual investor should act consistently as an investor and not as a speculator. This means ... that he should be able to justify every purchase he makes and each price he pays by impersonal, objective reasoning that satisfies him that he is getting more than his money's worth for his purchase."
-- Benjamin Graham

One way to interpret this is to take advantage of the market when it wants to sell $1 worth of value at $0.50. Within our portfolio, we look at this quote a little differently. We want to invest $1 worth of capital in companies that can ultimately deliver $5 or $10 worth of value over the years.

MNRB Merits Attention

For fiscal year ended 31.3.2013, the 1Q result EPS is reported to be 23.7 sen per share. This figure when annualized, works out to be 94.8 sen per share. At the just traded price of 3.19, the forward PE is 3.19. This is indeed very cheap for a stock like MNRB. 

What's more enticing is that the company is paying a dividend of 17 sen less tax on Oct 26, 12. The x-date for this dividend is Oct 02,12. 

The NTA of the stock has improved to RM5.35 per share as at June 30, 2012. I have just bought in  some shares of this stock at 3.19. I believe the price will move up in the near future.

CMSB PROFIT SURGES

CMSB's Q2 2012 EPS come in at 14.29 sen. For Q2 2011, the EPS was 8.44 sen. (The figures are after tax) This is an improvement of 69.31%. The MD is very pleased with the result. An interim dividend of 5 sen less tax has been declared. In the previous years, there was no such dividend. This is a sign of confidence. The stock is likely to trend higher. It closed at 3.28 today.

This stock was highlighted on 26.7.2012 under the heading: Should we follow smart money? Please refer back. 

Is TDM going the way of EPIC?

For the half year period of fiscal year of 2012, TDM made 11.35 sen per share. This compares dismally with the EPS of 26.58 sen made in the corresponding period of 2011. Indeed TDM will be hard pressed to maintain its 2011's single-tier dividend payment of 21.5 sen per share for fiscal year 2012. I doubt it will pay more than 15 sen dividend for fiscal year 2012.

Many plantation counters have reported poor result for the first 6 months of 2012. TDM is among the worst. I wonder why this is so. I mean why should it be among the worst. Is TDM trying to depress its share price? Whether it did that or not, the stock is down 21.98% from its high of 5.05 set on May 03, 2012. The stock closed at 3.94 last Friday (Aug 10, 2012)

Last year EPIC was privatized by the Terengganu government (TG). Presently, TG owns 63.17% of TDM. Will TG privatize TDM as well? Most likely it will. If it decides to do so, probably it will offer RM4.75 for each share of TDM. This being the amount it values for each share issued to acquire a piece of land for RM16.9m. 

I don't think privatization for TDM will happen in the near future. Perhaps it will happen next year. Really, it is anybody's guess.

If you are about to dispose of your TDM shares, don't forget to consider the above factors before you decide on a price you wish to sell.

As usual, you listen to me at your own risk.

TDM Disappoints

For the quarter ended June 30, 2012, TDM's worse-than-expected result is a cause for concern. EPS for the quarter was 3.88 sen. This compares dismally with the result of corresponding period of the previous year. EPS then was 13.86 sen.

In spite of the bad result, TDM is optimistic for the whole year. Its commentary on prospects reads as follows:

"Based on the prevailing CPO and PK prices, the outlook for the financial year ending 31.12.12 remains favorable. Baring unforeseen circumstances, the Group is expected to continue to record satisfactory performance in the current financial year."

I wonder whether TDM is speaking what's on its mind. Maybe it was trying to soothe the frustration of the shareholders. Or maybe it was trying to prevent a free fall of the stock. Anyway the stock slumped 33 sen and closed at 3.96 at the close of trading this morning. 

So, is it a good time to buy the stock now? I believe more downside is on the card. My prediction is that it will hit below 3.70. 

Please have your own prediction. And please remember that you always buy, sell or hold at your own risk absolutely.

Multico gets RM44.19 million.

The High Court has ruled in favor of Multico against 11 defendants, including its former directors.

The defendants are Gordon Toh Chun Toh (first defendant), Datuk Abul Hasan Mohamed Rashid (second defendant), Kalwant Singh (third defendant), Elliott Gordon Singapore Pte Ltd (fourth defendant), Elliott Gordon & Co International Ltd (fifth defendant) and Ace Prelude Holdings Sdn Bhd (sixth defendant).

The other defendants were Lily Chong Kui Foh (seventh defendant), Teng Sin Pyng (eighth defendant), Westcape Investments Ltd (ninth defendant), Wong Jit Kiang (10th defendant) and Liew Then Boh (11th defendant).

Multico has a small paid-up capital of only RM44.4047. The par value of its stock is RM1 per share. This means that for the fiscal year ending July 31, 2013, the NTA per share as well as the EPS of the company will be boosted by 99.5 sen. This is in deed a windfall for Multico!

The stock was up 38 sen yesterday. It closed at RM1.60. Another good rise is expected today.

My congratulations to Multico and all its shareholders.

Should we follow smart money?

The KLCI retreated 11.18 points today. In spite of the weak market, CMSB advanced 9 sen to end the day at 2.91. Those who have been paying attention to this counter know that company-buy-back activity is the reason behind the rise. 

In today's transaction of 1,994,200 units, 939,900 were company-buy-backs.

Its prices ranged from 2.83 to 2.91 according to filings with Bursa.

Insiders know the company best. This is an indisputable fact. So, is something bullish going on in the company? Logically speaking, its looks likely. 

CMSB is a quiet stock with a strong balance sheet and good earnings. But because of its connection with someone whose image is not that good, the stock has been ignored. Will the insiders continue to push the stock higher? I don't think we have come to the end of the music yet. 

Kfima / FimaCorp

FimaCorp is 59.55% owned by Kfima. Both companies are doing well. The former is hardly traded while the latter is thinly traded. However, of late, both stocks are moving up well. FimaCorp is lasted trade at 6.50 and Kfima at 2.30. It seems that a merger between them is on the card. Don't miss the boat!

ECSB has Present Values and Future Potentials

ECS ICT Berhad ( ECSB) has more cash in the bank than its paid-up capital. As at 31 Dec 2011, the company has RM66.577 million cash while is paid-up capital is only RM60 million. It has zero borrowings.

ECSB distributes ICT products of the most popular brands in the world through its 2500 resellers. It also provides value-added product support and technical services. 

Because of its small-cap and ill-liquidity, the stock is hardly covered by any analyst. Thus the majority of investors hardly pay any attention to it. To me, this stock is a rare gem. For the fiscal ended 31 Dec 11, it pays a single-tier dividend of 8 sen. At the last traded price of RM1.56, the dividend yield is 5.128.

With so much cash in the bank and a commendable first quarter result for this year, the stock is likely to improve its dividend payment. A bonus issue may also be in the offing. The stock certainly merits an upward rating.

ICT products are no longer luxury items. In fact, they are now necessities in life. The i-pad, for example, is now an educational toy for the very young to the very old. Children from as young as two years are using it. Old folks use it as a toy and a tool for business and pleasure as well. Needless to say, the i-phones and computers are just as important. 

For the reasons mentioned above, demands for ICT products are set to grow over the years. ECSB is certainly set to benefit from this trend. Hence, the stock is an excellent stock to buy and own at the present price of below RM1.60 per share. 

Read more at www.ecsm.com.my

SC does a good job

Rigging, price manipulation, insider trading, accounting fraud and misleading statements are not uncommon evils in the stock market. It is the Securities Commission (SC) to unearth these activities and bring to justice the crooks who are involved. Once they are proven guilty, appropriate sentences must be meted out to fit the crime. If they are allowed to escape unscathed, investors will eventually shy away as more such crimes will occur. The result is that the Capital Market will suffer a severe blow.

Some of the companies that are involved in such crimes are:

Fountain View, Suremax Group Bhd, Actacorp, Kenmark, Granasia, Idris Hydraulic, Ekran Bhd and Aokam Perdana. 

In the case of Kenmark, its Taiwanese CEO is still at large after he gone missing in May, 2010.

Read more here:

http://biz.thestar.com.my/news/story.asp?file=/2012/6/28/business/11562641&sec=business

Buy in May and Hold all the way

The saying: "Buy in May and go away" certainly does not apply to the Malaysian stock market. Since September 2010 to the present day, the lowest point of the FBM KLCI is 1526.60.  It was established on May 18, 2012. At the time of writing this post it is hovering at 1610 with an uptrend bias.
So the saying should be changed to: Buy in May and Hold all the way.

STOCK MARKET INVESTMENT THE WAY TO WEALTH

We must throughly clear our minds of winning easy money through good luck. The stock market is not designed to make money for you through good luck. It is not a lottery game. You want to make money, you have to work for it.

When you see someone makes money by just a few clicks of the button, you may feel that you can easily do that yourself. What you don't know is the amount of work put in before those few clicks.

"Investment is most intelligent when it is most business like."  Remember and follow this adage. Know what it means and know it well.

The stock market is never efficient. This means the price of a stock is not reflexive of its value.  Many people make the mistake of thinking that a low priced stock is cheap, and that a high price stock is expensive. In reality, a $10 stock may be cheap, whereas a 50 cents stock can be expensive. It all depends on what value the stock has.

Savvy investors buy stocks for capital gains and dividends. Thus dividend-yield is of utmost importance to them. A stock that has a high dividend growth will always command a better price than one that has no growth. Dividend growth is dependent on earnings growth. When you look at earnings, always look at earnings per share (EPS).

The quality of the earnings must also be assessed. Ordinary earnings from the business is quite different from extra-ordinary earnings made. The latter is often a "one night stand" and probably will not happen the following year. This, you have to factor in when you value the stock.

Why are some stocks traded at high PERs and some at low PERs? The former is generally thought of as being better than the latter going forward. While this is true in theory, in reality there are many miscalculations. It is these inefficiency that present opportunities for intelligent investors to exploit.

Ill-liquid counters are normally unloved. Analysts often leave them alone. Fund managers leave them alone as well. As a result many remain as undiscovered gems for a long time. These counters are known as "Sleeping Beauties". Unless you have the patience and the cash, you will not care about them. But these beauties can actually make you rich if you have cash and know the ways of dealing with them.

Anyone who sees only the bright side without preparing for the dark side is bound to encounter financial difficulties. In a bullish market, making money is easy. You simply buy and you simply gain. But when the market turns bearish, things are not the same. If you don't know when to get out, you will be trapped. When the water  receded, those swimming naked will be exposed.

When you are overbought and your cost of fund is high, fear alone will cause you to become impetuous and irrational. This will cause you to sell out at the wrong time. To avoid this kind of disaster,  never borrow at high cost to trade or invest.

Every time you trade, you give money to the broker firm and the government. Don't overlook these expenses. They are real and they eat into your profits. Anyone who trades on thin margin will find difficulty to keep afloat over a long period of time.

After you have made some profit, don't imagine the next trade is going to be easy.

If you are not careful, you can easily go back to square one.

Whether you trade or invest, the target is the same, to make money. If you failed to do that, it means you have failed. It pays to review your past actions. If you constantly lose money, you will have to change your strategy. If you can't do that, expect more failures. You can't expect to get a different result doing the same thing the same way all the time.

Big money is only made in the long term. Look around to see if you know of anyone who has consistently made money trading short-term. Chances are that you can find none.

What's Brewing at TDM?

What's brewing at TDM? The stock is among the top ten gainers today. It closed at 4.55 for a nett gain of 54 sen or 13.47 percent. This kind of action has not been seen at TDM for a long time. There must be something in the stock that others know that we don't. Keep a watchful eye on it.

China-based companies at Bursa are dirt cheap?

KStar (5172) 24 sen; PE 2.27

Maxwell (5189) 41.5 sen; PE 2.38

MSports (5150) 38.5 sen; PE 2.47

Sozo (5187) 54 sen; PE 2.24

XDL (5156) 24.5 sen; PE 2.01

Xinquan (5155) 87.5 sen; PE 2.27

The above stocks are all China-based, and they are all being traded at PE of under three. The Chinese should find out why their stocks are being so lowly rated not only at Bursa but in Singapore and America as well. 

Investors do not like stocks that do not pay any dividend. They think that a stock that does not pay any dividend is not worthwhile to invest in. They are doubtful about their accounts and the integrity of the management. So, no matter how good a report is in the media, investors take no notice of it because their mentality is that China-based companies cannot be trusted.

A stock is traded at low PE for many reasons. Never invest in a stock just because its PE is low.

IQ not as important as EQ, MQ & BQ

Intelligence Is Overrated: What You Really Need to Succeed

by KELD JENSEN

Albert Einstein’s was estimated at 160, Madonna’s is 140, and John F. Kennedy’s was only 119, but as it turns out, your IQ score pales in comparison with your EQ, MQ, and BQ scores when it comes to predicting your success and professional achievement.

[More from Forbes.com: 10 Steps You Can Take To Become A Successful Young Leader At Work]

IQ tests are used as an indicator of logical reasoning ability and technical intelligence. A high IQ is often a prerequisite for rising to the top ranks of business today. It is necessary, but it is not adequate to predict executive competence and corporate success. By itself, a high IQ does not guarantee that you will stand out and rise above everyone else.

Research carried out by the Carnegie Institute of Technology shows that 85 percent of your financial success is due to skills in “human engineering,” your personality and ability to communicate, negotiate, and lead. Shockingly, only 15 percent is due to technical knowledge. Additionally, Nobel Prize winning Israeli-American psychologist, Daniel Kahneman, found that people would rather do business with a person they like and trust rather than someone they don’t, even if the likeable person is offering a lower quality product or service at a higher price.

[Related: Habits of Highly Productive People]

With this in mind, instead of exclusively focusing on your conventional intelligence quotient, you should make an investment in strengthening your EQ (Emotional Intelligence), MQ (Moral Intelligence), and BQ (Body Intelligence). These concepts may be elusive and difficult to measure, but their significance is far greater than IQ.

Emotional Intelligence

EQ is the most well known of the three, and in brief it is about: being aware of your own feelings and those of others, regulating these feelings in yourself and others, using emotions that are appropriate to the situation, self-motivation,  and building relationships.

Top Tip for Improvement: First, become aware of your inner dialogue. It helps to keep a journal of what thoughts fill your mind during the day. Stress can be a huge killer of emotional intelligence, so you also need to develop healthy coping techniques that can effectively and quickly reduce stress in a volatile situation.

[More from Forbes.com: How To Change Your Brain For The Better]

Moral Intelligence

MQ directly follows EQ as it deals with your integrity, responsibility, sympathy, and forgiveness. The way you treat yourself is the way other people will treat you. Keeping commitments, maintaining your integrity, and being honest are crucial to moral intelligence.

Top Tip for Improvement: Make fewer excuses and take responsibility for your actions. Avoid little white lies. Show sympathy and communicate respect to others. Practice acceptance and show tolerance of other people’s shortcomings. Forgiveness is not just about how we relate to others; it’s also how you relate to and feel about yourself.

[More from Forbes.com: 10 Worst Body Language Mistakes]

Body Intelligence

Lastly, there is your BQ, or body intelligence, which reflects what you know about your body, how you feel about it, and take care of it. Your body is constantly telling you things; are you listening to the signals or ignoring them? Are you eating energy-giving or energy-draining foods on a daily basis? Are you getting enough rest? Do you exercise and take care of your body? It may seem like these matters are unrelated to business performance, but your body intelligence absolutely affects your work because it largely determines your feelings, thoughts, self-confidence, state of mind, and energy level.

[Related: 6 Millionaire Moms]

Top Tip For Improvement: At least once a day, listen to the messages your body is sending you about your health. Actively monitor these signals instead of going on autopilot. Good nutrition, regular exercise, and adequate rest are all key aspects of having a high BQ. Monitoring your weight, practicing moderation with alcohol, and making sure you have down time can dramatically benefit the functioning of your brain and the way you perform at work.

What You Really Need To Succeed

It doesn’t matter if you did not receive the best academic training from a top university. A person with less education who has fully developed their EQ, MQ, and BQ can be far more successful than a person with an impressive education who falls short in these other categories.

Yes, it is certainly good to be an intelligent, rational thinker and have a high IQ; this is an important asset. But you must realize that it is not enough. Your IQ will help you personally, but EQ, MQ, and BQ will benefit everyone around you as well. If you can master the complexities of these unique and often under-rated forms of intelligence, research tells us you will achieve greater success and be regarded as more professionally competent and capable.

Century Logistics eyes regional tie-up with PepsiCo

Century Logistics eyes regional tie-up with PepsiCo 2012/05/05 For a start, PepsiCo, the food division of Pepsi-Cola (Thai) Trading Co Ltd, had invited Century Logistics to be a strategic partner in the latter's supply chain management in Thailand. AYUTTHAYA: Century Logistics Holdings Bhd is eyeing more cooperation with world's largest snack food company PepsiCo in the Asia-Pacific region, after successfully leasing its warehouse facility in Thailand to the latter. Its deputy managing director Dr Mohamed Amin Kassim said for a start, PepsiCo, the food division of Pepsi-Cola (Thai) Trading Co Ltd, had invited Century Logistics to be a strategic partner in the latter's supply chain management in Thailand. It all began when its wholly-owned subsidiary, Century Resources (Thailand) Ltd, in September last year secured a RM7.6 million contract from PepsiCo for the use of the former's state-of-the-art warehouse facility at the Rojana Industrial Park here. The contract was for two years initially, during which PepsiCo would use the warehouse as its main distribution centre country-wide. "Our company did not merely lease the warehouse to PepsiCo, but also help it solve its supply chain management, prompting it to invite us to be its strategic partner in strategic planning for supply chain management in the Thailand market," Mohamed Amin said. He said the actual physical supply chain would be provided by existing local players as Century Resources would be involved only in strategic planning. "For example, if they (PepsiCo) have problems to hit certain target areas, we will draw a plan and solution for them," he said. PepsiCo has already asked Century Resources to build another warehouse as it wants to expand its distribution centre in the country, and the subsidiary company is studying the matter. Century Resources established its presence in Thailand in 2005, with the inception of a third-party logistics contract from Nestle. In 2009, it invested a RM3.5 million in its own warehousing facility here, in line with its regional growth strategy. Mohamed Amin said since Thailand was PepsiCo's distribution centre for Asia Pacific, Century Resources was eyeing to be its partner in strategic planning for its supply chain management for the region. Century Logistics is Malaysia's leading provider of value-added supply chain solutions and total logistics services. Besides Malaysia and Thailand, the company also operates in China, Singapore, India, Sri Lanka and Dubai, he said. Bernama

Centuary Logistics Holdings Berhad

Century Logistic Holdings Berhad (CLHB) is a total logistic services provider. Its services include: Supply Chain Management, Procurement Logistics Services, Oil & Gas Logistics, Transport Management & Distribution, Warehousing and Shipping, Chartering & Bunker Services.

For the year ended Dec 31, 2011, the key statistics of the company are as follows:
Paid Cap: RM 84,136
Par Value Per Share: RM1
EPS: 37.79 sen (Diluted 32.14 sen)
Dividend: Interim 5 sen s/tier; Final 7 sen s/tier
NTA: RM2.49

The company has a strong balance sheet with cash and bank balances of RM 22.615 million. The company didn't perform satisfactorily in the last quarter of 2011 mainly because of circumstances beyond its control. Its FSUs (Floating Storage Units) operating in Pasir Gudung Johor, have to be cut down to 3 vessels from 8 for a period of 2 months because of a directive from the Marine Department.

The worst flooding inThailand from end-July to mid-January also affected revenue and earnings. These unfortunate incidences are now a thing of the past.

In Feb, 2011, the company bought a piece of freehold land measuring 65,340 square feet in Setia City for RM8,820,900 to be developed into a commercial office building.

In the Port of Tanjong Pelepas, its warehousing capacity of 460,000 square feet is to be expanded by 400,000 square feet.

In the oil & gas logistics activities, a vessel now known as Onsys Century 1 was purchased for RM15 million in October, 2011. The vessel commenced carrying out spot charter voyages in January 2012.

The 3 actions outlined above will bring much growth to the company in 2012 and beyond.

In the business world of today, more and more companies are going global. This means more & more business for logistic companies.

Every year I pick a stock as my best bet for the year. In 2009, it was KPJ; in 2010, it was TDM; in 2011, it was EPIC and now in 2012 it is CLHB.

The stock is last traded at 1.90.
I believe it will be much higher by the third quarter of 2012. A 50% growth should not be ruled out.

As usual, you buy at your own risk.

OIL PALM IS NOT JUST PALM OIL

More to oil palm than just palm oil



2012/03/24

EVERYONE knows that oil palm is grown to produce palm oil. Some 90 per cent of oil palm plantation revenue is derived from the sale of crude palm oil and crude palm kernel oil while the other 10 per cent is derived from other parts of the palm. These figures are expected to be reversed by 2020.
A less well-known fact is that oil only forms about 10 per cent of the total biomass produced by the palm, while the remaining 90 per cent can be further utilised for commercial exploitation in a sustainable manner.

It has been estimated that for every tonne of palm oil produced from fresh fruit bunches, a farmer harvests around six tonnes of waste palm fronds, one tonne of palm trunks, five tonnes of empty fruit bunches, one tonne of press fibre (from the mesocarp of the fruit), half a tonne of palm kernel endocarp, 250kg of palm kernel press cake, and three tonnes of palm oil mill effluent.

Quoting figures from the National Biomass Strategy Blueprint, by 2020, Malaysia's palm oil industry is expected to generate about 100 million dry tonnes of solid biomass.

Currently, a large portion of the biomass from the plantations is left to rot and returned to the field as fertiliser. While this practice is necessary for the healthy growth of young oil palms, there is more than enough biomass that can be used for more lucrative purposes.

The National Biomass Strategy 2020 lays the foundation for Malaysia to capitalise on its biomass by channeling 20 per cent of the solid biomass into higher value downstream uses instead of using it as low value downstream uses like fertiliser. These uses can broadly be divided into energy generation, biochemicals and structural materials.

The biomass from oil palm fronds, palm kernel shells and empty fruit bunches can be used as feedstock for biomass boilers to generate electricity. The renewable energy generated may be used on site or sold to power generation companies, thereby, reducing energy costs and increasing the revenue of mill owners.

According to industry sources, a mill capable of processing 60 tonnes of fresh fruit bunches an hour can also produce 3MW of electricity an hour from the empty fruit bunches once the fruits have been removed.

Furthermore, the anaerobic treatment of palm oil mill effluent produces biogas which can be used as a substitute for natural gas for use in factories and homes.

In contrast to first generation biofuels and bio-based chemicals - using food crops such as sugarcane, cassava or corn as feedstock - emerging second-generation technologies are exploring the use of oil palm biomass. One oil palm trunk produces about 200 to 250 litres of sap which has a sugar content of eight per cent, up to a maximum of 18 per cent with proper ageing. This sugar can be fermented into ethanol which is emerging as an alternative biofuel and bio based chemicals. Further research is also being done to convert the lignocellulosic materials from the oil palm fronds into bio-based chemicals.

Currently, oil palm trunks are used to produce low-grade lumber. Up to 40 per cent of the trunk wood can be peeled for making plywood and about 40 per cent of the frond material can be crushed into dust or smaller particles to make medium-density fibreboard and particleboard.

However, these processes are energy intensive and at FRIM we have found more cost effective processes to convert oil palm trunks into engineered lumber, i.e. MYScrim-OPT which is intended for use in manufacturing furniture, doors, floorboards and interior design accessories.

More intensive research is being conducted to develop the patented MYScrim-OPT technology further to enhance its properties so that the final product is strong enough to be used as building materials. This will not only create added value from by products from the palm oil industry but also reduce our dependence on our fast depleting forests for wood.

Plantation companies with sufficient capital which have invested in downstream activities have benefited from the higher returns gained from moving further up the palm oil value chain. The next step will be to explore and exploit other aspects of the oil palm. The high investment in these large commercial scale technologies will be justified with the right kind of regulatory framework, coupled with incentive packages provided by the government.

Coordination between the plantations and the mills is required to mobilise the commercial part of the oil palm biomass. Biomass utilisation centres will need to be centralised to be closer to the centre of production in order to lower the logistics and handling costs which otherwise can render unprofitable efforts.

While the technology is available, the high investment in these technologies means that only highly capitalised companies, typically, public-listed plantation entities, are able to afford them. The bigger boys with large capital bases and professional management teams like Sime Darby, Felda Holdings and IOI are in a better position to take on the risk and the rest will, hopefully follow.

The writers, Datuk Dr Marzalina Mansor & Dr Wan Tarmeze Wan Ariffin, are from MYScrim Flagship Project, Forest Research Institute of Malaysia.

Foreign investors find gems in Malaysian stocks

By Goh Thean Eu
gohtheaneu@nstp.com.my
2012/04/02

Overseas investors were net buyers of Malaysian stocks for 31 consecutive trading days, a sign that the current stock market rally might still have legs to run, said analysts.
Based on Bursa Malaysia data compiled by Business Times, it was revealed that foreigners were consistent net buyers since February 17 – during which foreign fund managers bought over RM13.72 billion and sold RM9.34 billion worth of stocks, which represented a net buying of about RM4.3 billion.

Last month, foreign fund managers were net buyers of more than RM3.4 billion worth of stocks, making them the net buyers for the
sixth consecutive month.

“This basically means improved risk appetite by foreign investors in anticipation of stronger emerging market economy and stronger ringgit in the second half this year,” said Dr Nazri Khan, vice-president and head of retail research of Affin Investment Bank.

Over the past 31 trading days, overseas investors’ interests have helped to push the stock market by almost three per cent – from the opening of 1,550.49 on February 17 to the alltime high of 1,596.33 point last Friday.

During the period, 195 companies saw their share prices rise to their 52-week high, of which 53 companies had market capitalisation of more than RM500 million. In the same period, 46 stocks were traded at their 52-week low.

Five FTSE Bursa Malaysia Kuala Lumpur Composite Index component companies, namely Maxis Bhd, Telekom Malaysia Bhd, Bumi Armada Bhd, British American Tobacco Bhd and Sime Darby Bhd, also hit their 52-week high over the past 31 trading days.

None of the major banks hit its 52-week high during the period.

The benchmark FBM KLCI has risen by 4.28 per cent so far this year, which is far below what the region has performed.

The stock markets in Singapore, Thailand, Indonesia and the Philippines have rose by between seven per cent and 16 per cent this year. The MSCI Asia ex-Japan Index has gained 12 per cent year-to-date.

“I believe overseas investors are expecting Malaysian stocks to do some catching up after under-performing for some time,” said OSK Research Sdn Bhd head of research Chris Eng.

Although the benchmark index has hit the all-time high, analysts believed that stock prices were still reasonable. Currently, the FBM KLCI is trading at about 16.5 times price earning ratio. It is higher than Singapore’s market of about 10 times PE.

“I think we are still reasonably priced. Indonesia used to trade at about 30 per cent discount to our market, but it is now more expensive than us,” said Eng.

Indonesia’s Jakarta Stock Index is currently trading at about 21 times PE, while Thailand’s benchmark index is trading at about 15 times and the Philippines benchmark index at about 18 times.

Equities The Better Choice

2012 is going to be a great year for equities. Keep cash and not stocks at your own peril. Read more.

SC takes action

Fraud, Fraudulent accounting, misleading statements, criminal breach of trust, and wrongful manipulation of shares can never be completely wiped out in any country.
Malaysia has its fair share of these mischievous activities. Click here to read more.

Lifting the seedlings to promote growth (拨苗助长)

Once upon a time, there was an inexperienced farmer in ancient China who was always impatient. Whenever he did anything he wanted to see result quickly.

One day he planted some rice seedings in his paddy field. He was very eager to see them grow. Day after day he would go to his paddy field to watch how the seedings were doing. Of course there was nothing discernible. He became impetuous. "Why not I do something to promote their growth," he said to himself.

Thinking it was a good idea to lift the seedings a little bit so that they looked taller, he went into the field and lifted all the seedings an inch higher.

He thought he was smart to have done that. He went home happily and bragged to his family about what he had done, little realizing that he had just devastated all the seedings.

The Chinese idiom to this action is called: 拨苗助长.

The stock market is designed to transfer money from the impatient to the patient. So don't become overly impatient or enthusiastic about growing your portfolio and do something as stupid as what the stupid farmer had done.

Mergers & Acquisitions

Mergers And Acquisitions: Understanding Takeovers
June 13, 2010 | Filed Under » Fundamental Analysis , Investing Basics , Investor Relations , Stocks , Venture Capital
Terms like "dawn raid", "poison pill", and "shark repellent" might seem like they belong in James Bond movies, but there's nothing fictional about them - they are part of the world of mergers and acquisitions (M&A). Owning stock in a company means you are part owner, and as we see more and more sector-wide consolidation, mergers and acquisitions are the resultant proceedings. So it is important to know what these terms mean for your holdings.

Mergers, acquisitions and takeovers have been a part of the business world for centuries. In today's dynamic economic environment, companies are often faced with decisions concerning these actions - after all, the job of management is to maximize shareholder value. Through mergers and acquisitions, a company can (at least in theory) develop a competitive advantage and ultimately increase shareholder value.

There are several ways that two or more companies can combine their efforts. They can partner on a project, mutually agree to join forces and merge, or one company can outright acquire another company, taking over all its operations, including its holdings and debt, and sometimes replacing management with their own representatives. It’s this last case of dramatic unfriendly takeovers that is the source of much of M&A’s colorful vocabulary.

Hostile Takeover
This is an unfriendly takeover attempt by a company or raider that is strongly resisted by the management and the board of directors of the target firm. These types of takeovers are usually bad news, affecting employee morale at the targeted firm, which can quickly turn to animosity against the acquiring firm. Grumblings like, “Did you hear they are axing a few dozen people in our finance department…” can be heard by the water cooler. While there are examples of hostile takeovers working, they are generally tougher to pull off than a friendly merger.

Dawn Raid
This is a corporate action more common in the United Kingdom; however it has also occurred in the Unites States. During a dawn raid, a firm or investor aims to buy a substantial holding in the takeover-target company’s equity by instructing brokers to buy the shares as soon as the stock markets open. By getting the brokers to conduct the buying of shares in the target company (the “victim”), the acquirer (the “predator”) masks its identity and thus its intent.

The acquirer then builds up a substantial stake in its target at the current stock market price. Because this is done early in the morning, the target firm usually doesn't get informed about the purchases until it is too late, and the acquirer now has controlling interest. In the U.K., there are now restrictions on this practice.

Saturday Night Special
A Saturday night special is a sudden attempt by one company to take over another by making a public tender offer. The name comes from the fact that these maneuvers used to be done over the weekends. This too has been restricted by the Williams Act in the U.S., whereby acquisitions of 5% or more of equity must be disclosed to the Securities Exchange Commission.

Takeovers are announced practically everyday, but announcing them doesn't necessarily mean everything will go ahead as planned. In many cases the target company does not want to be taken over. What does this mean for investors? Everything! There are many strategies that management can use during M&A activity, and almost all of these strategies are aimed at affecting the value of the target's stock in some way. Let's take a look at some more popular ways that companies can protect themselves from a predator. These are all types of what is referred to as "shark repellent".

Golden Parachute
A golden parachute measure discourages an unwanted takeover by offering lucrative benefits to the current top executives, who may lose their job if their company is taken over by another firm. Benefits written into the executives’ contracts include items such as stock options, bonuses, liberal severance pay and so on. Golden parachutes can be worth millions of dollars and can cost the acquiring firm a lot of money and therefore act as a strong deterrent to proceeding with their takeover bid.

Greenmail
A spin-off of the term "blackmail", greenmail occurs when a large block of stock is held by an unfriendly company or raider, who then forces the target company to repurchase the stock at a substantial premium to destroy any takeover attempt. This is also known as a "bon voyage bonus" or a "goodbye kiss".

Macaroni Defense
This is a tactic by which the target company issues a large number of bonds that come with the guarantee that they will be redeemed at a higher price if the company is taken over. Why is it called macaroni defense? Because if a company is in danger, the redemption price of the bonds expands, kind of like macaroni in a pot! This is a highly useful tactic, but the target company must be careful it doesn't issue so much debt that it cannot make the interest payments.

Takeover-target companies can also use leveraged recapitalization to make themselves less attractive to the bidding firm.

People Pill
Here, management threatens that in the event of a takeover, the management team will resign at the same time en masse. This is especially useful if they are a good management team; losing them could seriously harm the company and make the bidder think twice. On the other hand, hostile takeovers often result in the management being fired anyway, so the effectiveness of a people pill defense really depends on the situation.

Poison Pill
With this strategy, the target company aims at making its own stock less attractive to the acquirer. There are two types of poison pills. The 'flip-in' poison pill allows existing shareholders (except the bidding company) to buy more shares at a discount. This type of poison pill is usually written into the company’s shareholder-rights plan. (To learn more about these and other shareholders’ rights, see Knowing Your Rights as a Shareholder.) The goal of the flip-in poison pill is to dilute the shares held by the bidder and make the takeover bid more difficult and expensive.

The 'flip-over' poison pill allows stockholders to buy the acquirer's shares at a discounted price in the event of a merger. If investors fail to take part in the poison pill by purchasing stock at the discounted price, the outstanding shares will not be diluted enough to ward off a takeover.

An extreme version of the poison pill is the "suicide pill" whereby the takeover-target company may take action that may lead to its ultimate destruction.

Sandbag
With the sandbag tactic the target company stalls with the hope that another, more favorable company (like “a white knight”) will make a takeover attempt. If management sandbags too long, however, they may be getting distracted from their responsibilities of running the company.

White Knight
A white knight is a company (the “good guy”) that gallops in to make a friendly takeover offer to a target company that is facing a hostile takeover from another party (a “black knight”). The white knight offers the target firm a way out with a friendly takeover. (To learn more about white, gray, yellow and black knights, see Bloodletting and Knights: A Medieval Guide to Investing.)

Conclusion
The next time you read a news release that says that your company is using a poison pill to ward off a takeover attempt, you’ll now know what it means. More importantly, you'll know that you have the opportunity to purchase more shares at a cheap price. M&A has an entire vocabulary of its own, expressed through some of the rather creative strategies employed in the process, such as the ones we've touched on above. Hopefully by reading this article you are at least a bit wiser in the wacky world of M&A terminology. By understanding what is happening to your holdings during a takeover or attempted takeover, you may one day even save money.

For more on the basics of mergers and acquisitions, please check out this entire tutorial devoted to the subject: The Basics of Mergers and Acquisitions.

by Investopedia Staff
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