Wednesday, May 29, 2013

Beware of Red Flags

When you do a fundamental analysis of a company, always be on the lookout for Red Flags. Red flags are signals that signify trouble ahead. When you see a few Red Flags show in a company, that company is not good for investments. Some Red Flags to be awared of are as follows:-

01. Two consecutive quarterly reports of lower profits when compared to the corresponding periods of the previous year.

02. A rise in revenues that is not accompanied by a rise in profits.

03. Account Receivables go up but revenues remain the same or have become lower.

04. Current Ratio is less than 1.5, and Quick Ratio below 1.

05. Stock price trending down even though the main market is trending up.

06. Debt to equity ratio is greater than 0.5

07. Goodwill of more than 8% of capital

08. A cut in the dividend payment

09. Venturing overseas to go into business that the management is not familiar with

10. When the company is buying back it shares while insiders are selling.

Red Flags are important signals. If you choose to ignore them, you do so at your own peril. 

Sunday, May 19, 2013

PRK Corp

Perak Corporation Berhad is engaged in property and investment holding, real property development and provision of management services. The Company operates in three segments: Infrastructure engaged in maritime services in respect of the development of an integrated privatized project and encompassing operations of multipurpose port facilities, operation and maintenance of a bulk terminal, sales and rental of port related land and other ancillary activities; Township development, which is engaged in township development of real property and ancillary services, and Management services and others that provides provision of management services and other business segments, which include property investment and distribution. The Company's township developments include government offices, shop lot, bungalow, semi detached and other type houses. In October 2011, the Company disposed of its associate, West Coast Expressway Sdn Bhd.

For the financial year ended 30.12. 2012,  the key statistics of the company are as follows:
Paid capital: RM100 million
Par Value: RM1 per share
EPS: 38.10 sen
Reference Price RM2.02
NTA: RM4.68 per share
Dividend Paid: 8.5 sen less tax and 1.1 sen tax free
Current Assets: RM511,455,796 of which RM184.95 million is in cash
Current Liabilities:RM135,427,648
Major Shareholder: Perbadanan Kemajuan Negeri Perak

Most of the earnings in 2012 came in the last two quarters. (3Q = 12.58 sen and 4Q = 15.93 sen)

The above figures show that the company is fundamentally strong and solid.

As at 31 December 2012, PRKCorp has sufficient credit in the 108 balance and balance in the tax exempt income account to pay dividends amounting to approximately RM19,642,000 (31.12.2011 : RM21,892,000) out of its retained earnings. The Company may distribute the balance of the retained earnings of approximately RM50,064,000 (31.12.2011 : RM43,069,000) as dividends under the single tier system.
Technically speaking, the stock is now in an uptrend and undergoing a small correction. 

I am long on the stock and intend to buy more.

As usual, you buy, sell or hold at your own risk.

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Saturday, May 18, 2013

ECS Highlights of 2012

Expanded tablet PC range
Appointed by ASUS to distribute the Google Nexus 7 tablet PC in Malaysia
Now a major tablet PC distributor to the local market, with extensive product model portfolio from Apple, Samsung, Asus and Lenovo

Established new smartphone distribution channel
Signed distribution agreement with China’s Huawei to distribute the Huawei Ascend P1 smartphone

Enhanced Enterprise Systems portfolio
Appointed by Huawei to distribute its full range of enterprise systems products and solutions
Undertook 1-for-2 Bonus Issue
Implemented on 31 October 2012
Group’s share capital increased to 180 million shares of 50 sen each (from 120 million shares of 50 sen each previously)

Investment Merits (as at 30 Apr 2013)

Market leader in ICT distribution in Malaysia 

Domestic ICT market continues to be growth industry 

Cloud computing and mobility devices to be growth catalysts 

Net cash position allows for future expansion Dividend policy of 30% payout Single-digit PE valuation an affordable entry into ICT growth proxy

Source: ECS Annual Report

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Saturday, May 11, 2013

TDM eyes higher profit this year


KEMAMAN: TDM Bhd (TDM) expects to record a higher profit this year, contributed by its healthcare segment and its oil palm
plantation arm.

Chairman Datuk Roslan Awang Chik said of its 40,000 ha landbank in Kalimantan, Indonesia, 11,000 ha of planted area is expected to mature next year, and TDM is building a RM80 million palm oil mill there.

TDM expects its 30,000 ha oil palm plantation in Terengganu to also contribute to the profit.

"We also expect profit to come from our four healthcare centres, which are operating here and in Kuantan and Kuala Lumpur," he told Bernama when met at the handing over of house keys to TDM staff at Kompleks TDMB in Padang Kubu here.

Roslan said last year the company posted a profit for the third year in a row of RM149 million, compared to RM220.6 million in 2011 and RM197 million in 2010.-- Bernama

Thursday, May 09, 2013

The casino always wins

When you go to a casino to gamble, you are more likely to lose than to win. More fortunes have been lost than won by people who frequent casinos. This is evidenced by the fact that casinos rake in billions of dollars year after year. Look and Genting as an example.

Do you know why casinos always win? Actually, the answer is quite simple. Casinos always win because you have to play the games accordingly to their rules. And you can be sure that the rules are always made in favor of the house. In other words, the odds are always against you. That's why you lose.

In the stock market, things are different. You don't have to trade or invest accordingly to anybody's rules except your own. Thus, it is imperative for you to set up your rules if you want to win.

My rules are as follows:

01. Insist on value when you buy.
This means you will only buy stocks that promise safety of principal and an adequate or at least a moderate return. The company behind the stock must have strong fundamentals and growth.

02. Never catch a falling dagger.
When a stock is in a downtrend, you must avoid it until the downtrend ends before you buy.

03. Always buy in an uptrend.
When a stock that you like is moving in a tight narrow side trend, keep a close watch on it. Buy in the upside breakout. If you miss that, then buy in the pullback.

04. Write down the reason as to why you buy a particular stock. If you don't have a good one, don't buy.

05. When you are ahead, don't allow fear to control you. A premature sale is a most common mistake. You can never become rich making pennies. Most people cut profit early and regret later. Don't be one of them.

06. Never buy liabilities.
A rubbish share is a liability. A stock with high debts and no earnings or dividend payouts are rubbish shares. These must be avoided.

Every one of us is different in character and financial standing. If the above rules are good for you, follow them. If you don't like them, choose your own.

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Wednesday, May 01, 2013

Hell has no fury like people scorned

Upper most, In the mind of everyone, is the GE13. Never in the history of Malaysia has the opposition a better chance than now to wrestle control of power from the ruling party. Not only the young and educated are firmly behind the opposition, the older generation and those who know how to use a computer, ipad or smartphone are in the same boat.

The wind of change has commenced. The spirit of righteousness is awaken. Like wild fire, it is spreading quickly far and wide; its intensity severe and demanding.

Ubah! ubah! ubah! Reformasi! reformasi! reformasi, these are being heard loud and clear. The people's power is in action now.

Hell has no fury like people scorned. Corruption, cronyism, crime and violence have angered the people. They are now bent on change, and change of the government is what they want.

By the May 6, 2013, we shall come to the end of the tunnel. Who's going to rule Malaysia from then? At the moment, it is still anybody's guess. The opposition appears to be the underdog, but its strength should not underestimated. It has a very good chance to surprise and surprise immensely.

What's going to happen to our stock market if PR wins? I believe that foreigners will like it because corruption will not longer be present, at least for the time being.

I would not be surprised if the market jumps some 20 points to create a new high immediately after the change of guards.

God bless Malaysia.