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.