Mention any ACE counter, and you'll probably get a repulsive response. This is to be expected because most if not all, the ACE counters at Bursa have been performing poorly even before the recent downturn. Nonetheless, there is one stock in this category that has caught my fancy. It's Smartag.
The company has just successfully completed its pilot trial with the Royal Malaysian Customs. The article appended below is a must-read if you believe that RFID is the right technology of the present and the future:
Smartag Solutions and Customs completed successful pilot trial
- -
Security and Trade Facilitation using Radio Frequency Identification (“RFID”) deployed in Royal Malaysian Customs’ Checkpoints nationwide
Pilot commercial trial was successfully conducted from 1 June till 31 August 2011, achieve cost saving to the industry, and increase efficiency of Customs process by 9 times.
Pulau Pinang, Malaysia: 26 September 2011 – Total RFID solutions provider Smartag Solutions Berhad (“Smartag”, the “Group”, “智能电子标签解决方案有限公司”) together with Royal Malaysian Customs (Jabatan Kastam Diraja Malaysia or “JKDM” or “Customs”) announced the successful completion of the trial run of the RFID-based Security and Trade Facilitation System at Royal Malaysian Customs Checkpoints in the country.
Speaking at a press conference during the soft launch of the Security and Trade Facilitation System (or the “System”) at the Second Air Cargo Complex Penang, Smartag announced that JKDM jointly with Smartag have successfully completed the trial run of the Security and Trade Facilitation System and have obtained positive results and feedback from the industry users.
Under the trial, the users will be able to use the RFID seal to secure their containers when entering, leaving, and moving within the country. With the usage of the System, the users will be able to automatically identify the containers’ movement electronically via the RFID seal to the RFID readers that are set up by Smartag at the various Customs checkpoints across the country.
During the trial run, participants were able to achieve 50% reduction on time taken for customs clearance, and have obtained cost savings from the usage of the system. During the trial run, JKDM is able to increase its efficiency by 9 times as compared to using the manual process. At the same time, the system deployed is able to solve “hanging” K8 forms.
According to the Chairman of the Air Freight Association of Malaysia, Mr. Walter Culas “The industry welcomes the usage of the system as we value speed, efficiency, and time. The system demonstrated its potential to increase customs clearance's efficiency, and paperless clearance and processes. The industry is fully supportive of the project, and the nationwide implementation."
“Based on our internal cost and benefit analysis has shown that the trial demonstrated that TNT will be able to have at least 50% reduction of time taken for customs clearance and all these benefits will create multiplier effect to the economy in the country", according to Mr. Dinesh K. the Regional Network Manager Asia Road Network for TNT Express Worldwide N. V.
“PEMANDU is pleased that the Security and Trade RFID Facilitation System will be used commercially at Royal Malaysia Customs checkpoints throughout the country. This is a clear indication that the ETP is being implemented, since its launch in October 2010,” said Dr. Fadhlullah Suhaimi Abdul Malek, Director Communications, Content and Infrastructure NKEA and Business Services NKEA.
This project was one of the 12 initiatives announced by YAB Dato’ Sri Najib Tun Razak at the fifth Economic Transformation Programme Update in April. Amongst other objectives, the implementation of the project is targeted at improving the efficiency of container clearance using paperless RFID approach, enabling automatic detection of compromised or tampered containers, and facilitating faster and more transparent trade.
About Smartag Solutions Berhad (ACE: 0169)
Smartag Solutions Berhad (Smartag) is a track and trace solution provider that utilizes Radio Frequency Identification (RFID) and other wireless technologies to enable users to have visibility, transparency and security. For more information on Smartag, go to www.smartag.my
Smartag was lasted traded at 26 sen per share. At this price, the stock is an excellent bet. I have this intuitive feel that this stock has the potential to be a ten-bagger over time.
As usual, please remember, that whatever action you take, you do so at your own risk absolutely.
马 到 功 成. Success is when the horses come. Success goes only to those who dare and act, it seldom goes to the timid. The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails.
Tuesday, September 27, 2011
Friday, September 23, 2011
Gold, silver and other commodities tumbled
The Associated Press, On Thursday September 22, 2011, 4:37 pm EDT
NEW YORK (AP) -- Gold, silver and other commodities tumbled amid a global sell-off in financial markets.
Gold fell $66.40, or 3.7 percent, to finish at $1,741.70 an ounce on Thursday. Silver, a precious metal that has wider demand for industrial production, plummeted $3.89, or 9.6 percent, to $36.58.
Analysts said that much of the selling was driven by margin calls for hedge funds and other big investors. "We're seeing hedge funds that have to raise cash, and to do that they have to sell what has been working for them so far this year," said Ryan Detrick, senior technical strategist at Schaffer's Investment Research.
Analysts also said that silver had a harder fall because about half of its demand comes from industrial uses. "If the economy contracts at all, there's going to be a lot of excess silver that's sitting in the supply chain," said Phil Streible, senior market strategist at MF Global.
Gold is up about 22 percent for the year. Silver is 16 percent higher than at the start of the year.
Copper, a metal that closely tracks the economic cycle, fell 27.6 cents, or 7.3 percent, to $3.4885. It is down 23 percent for the year.
Oil, wheat and other raw materials fell significantly because of increased fears that a recession would cut demand. Benchmark crude fell $5.41, or 6.3 percent, to $80.51. It was the biggest drop for oil since Aug. 8, when it fell 6.4 percent after Standard and Poor's downgraded the credit rating of the U.S. Oil has dropped 29 percent since April as global growth has slowed.
Wheat contracts fell 33 cents, or 5 percent, to $6.3375 a bushel. Corn lost 35.75 cents, or 5.2 percent, to end at $6.50. Sugar dropped 1.1 cents, or 4.3 percent, to 24.81 cents. And soybeans fell 37.5 cents, or 2.8 percent, to finish at $12.83.
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NEW YORK (AP) -- Gold, silver and other commodities tumbled amid a global sell-off in financial markets.
Gold fell $66.40, or 3.7 percent, to finish at $1,741.70 an ounce on Thursday. Silver, a precious metal that has wider demand for industrial production, plummeted $3.89, or 9.6 percent, to $36.58.
Analysts said that much of the selling was driven by margin calls for hedge funds and other big investors. "We're seeing hedge funds that have to raise cash, and to do that they have to sell what has been working for them so far this year," said Ryan Detrick, senior technical strategist at Schaffer's Investment Research.
Analysts also said that silver had a harder fall because about half of its demand comes from industrial uses. "If the economy contracts at all, there's going to be a lot of excess silver that's sitting in the supply chain," said Phil Streible, senior market strategist at MF Global.
Gold is up about 22 percent for the year. Silver is 16 percent higher than at the start of the year.
Copper, a metal that closely tracks the economic cycle, fell 27.6 cents, or 7.3 percent, to $3.4885. It is down 23 percent for the year.
Oil, wheat and other raw materials fell significantly because of increased fears that a recession would cut demand. Benchmark crude fell $5.41, or 6.3 percent, to $80.51. It was the biggest drop for oil since Aug. 8, when it fell 6.4 percent after Standard and Poor's downgraded the credit rating of the U.S. Oil has dropped 29 percent since April as global growth has slowed.
Wheat contracts fell 33 cents, or 5 percent, to $6.3375 a bushel. Corn lost 35.75 cents, or 5.2 percent, to end at $6.50. Sugar dropped 1.1 cents, or 4.3 percent, to 24.81 cents. And soybeans fell 37.5 cents, or 2.8 percent, to finish at $12.83.
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Saturday, September 10, 2011
The Trading Doctor - Master Yourself Master the Markets
We come nearest to the great when we are in great humility... Rabindranath Tagore
Traders and investors alike—we are all guilty.
We have all committed the cardinal sin of exhibiting arrogance towards the markets. We must never ever think that we know more than the markets or that we can predict or that the markets care what we think. The markets do not even know who we are—let alone what we think.
If we approach the markets with pride, we will be punished swiftly and without compassion. The markets have no compassion. They want our dramas, our overconfidence, our rat-brained thinking and our money. They will gladly take our needs to suffer, be accepted, be loved, be hated or be punished--- and fulfill them without mercy and with often brutal consequences. The result is a shattered emotional and financial landscape of wealth distribution where the few take from the many. Read more.
Traders and investors alike—we are all guilty.
We have all committed the cardinal sin of exhibiting arrogance towards the markets. We must never ever think that we know more than the markets or that we can predict or that the markets care what we think. The markets do not even know who we are—let alone what we think.
If we approach the markets with pride, we will be punished swiftly and without compassion. The markets have no compassion. They want our dramas, our overconfidence, our rat-brained thinking and our money. They will gladly take our needs to suffer, be accepted, be loved, be hated or be punished--- and fulfill them without mercy and with often brutal consequences. The result is a shattered emotional and financial landscape of wealth distribution where the few take from the many. Read more.
Thursday, September 08, 2011
Tuesday, September 06, 2011
Current estimated 1-to-16 ratio will narrow
M'sia's Iskandar plan may aid S'pore housing market 12 AUGUST 2011 , BY CHANNEL NEWS ASIA
Malaysia's ambitious Iskandar development in southern Johor may have a spin-off effect that would eventually aid Singapore's crowded housing market.
It may even help cool prices, as foreign investment meets increased demand for services and homes.
A plan for seamless connectivity from Johor Baru, Malaysia, to Woodlands in Singapore by 2018, is an attractive allure for investors.
Funds are pouring in, in the hope the development will yield economic benefit.
Singapore has invested some US$153 million (RM 463 million) into the services, education and health sector of the Iskandar Malaysia development, and analysts say further down the line, this will have a positive impact on the Singapore economy.
CIMB Research economist Song Seng Wun said: "If we do have at our doorstep an increased pool of qualified knowledge based labour force, we may be able to tap on that pool, bring them to Singapore and add to Singapore's productivity growth prospect, going forward.
"So if those two investments in those two areas were to work out over the near term, I think it could lead to more significant investment from the Singapore side.
"So I think while the outlook is positive, there are still perhaps many hurdles along the way before we can say we are going to get a significant upgrade with regard to property being moved to a higher plain in Johor.
"That could mean the pressure on property in Singapore could be alleviated because there is certainly now a much more viable option in Johor as a result of the improved communication, logistic network, the whole landscape as an alternative for Singaporeans to base themselves in Johor either for home or for business."
Singapore has already implemented measures to cool booming property prices, and the government may get some help in calming the market, now that the Iskandar project is open for investment.
Credit Suisse analyst Tan Ting Min said Malaysia will benefit from stronger investments from Singapore while Singapore could operate out of Iskandar, which has good infrastructure, and relatively cheaper land and labour.
"Hence, we expect the land price arbitrage to narrow from the current estimated 1-to-16 ratio.
"How quickly this land price arbitrage narrows depends very much on how quickly Singaporeans adopt the idea of moving their manufacturing bases to Johor," Tan added.
"I think we are realistically talking about something that is still in the works, perhaps a decade or more before we can really talk about Johor as a real hinterland," Mr Song said.
KPMG corporate finance partner Vishal Sharma said: "I think in terms of the land price arbitrage I expect you would see the Iskandar land prices going up.
"I don't particularly envisage Singapore land prices... coming down so the arbitrage will narrow but I don't think that it is ever going to go away. But yes, I expect that the arbitrage is going to narrow."
Malaysia's ambitious Iskandar development in southern Johor may have a spin-off effect that would eventually aid Singapore's crowded housing market.
It may even help cool prices, as foreign investment meets increased demand for services and homes.
A plan for seamless connectivity from Johor Baru, Malaysia, to Woodlands in Singapore by 2018, is an attractive allure for investors.
Funds are pouring in, in the hope the development will yield economic benefit.
Singapore has invested some US$153 million (RM 463 million) into the services, education and health sector of the Iskandar Malaysia development, and analysts say further down the line, this will have a positive impact on the Singapore economy.
CIMB Research economist Song Seng Wun said: "If we do have at our doorstep an increased pool of qualified knowledge based labour force, we may be able to tap on that pool, bring them to Singapore and add to Singapore's productivity growth prospect, going forward.
"So if those two investments in those two areas were to work out over the near term, I think it could lead to more significant investment from the Singapore side.
"So I think while the outlook is positive, there are still perhaps many hurdles along the way before we can say we are going to get a significant upgrade with regard to property being moved to a higher plain in Johor.
"That could mean the pressure on property in Singapore could be alleviated because there is certainly now a much more viable option in Johor as a result of the improved communication, logistic network, the whole landscape as an alternative for Singaporeans to base themselves in Johor either for home or for business."
Singapore has already implemented measures to cool booming property prices, and the government may get some help in calming the market, now that the Iskandar project is open for investment.
Credit Suisse analyst Tan Ting Min said Malaysia will benefit from stronger investments from Singapore while Singapore could operate out of Iskandar, which has good infrastructure, and relatively cheaper land and labour.
"Hence, we expect the land price arbitrage to narrow from the current estimated 1-to-16 ratio.
"How quickly this land price arbitrage narrows depends very much on how quickly Singaporeans adopt the idea of moving their manufacturing bases to Johor," Tan added.
"I think we are realistically talking about something that is still in the works, perhaps a decade or more before we can really talk about Johor as a real hinterland," Mr Song said.
KPMG corporate finance partner Vishal Sharma said: "I think in terms of the land price arbitrage I expect you would see the Iskandar land prices going up.
"I don't particularly envisage Singapore land prices... coming down so the arbitrage will narrow but I don't think that it is ever going to go away. But yes, I expect that the arbitrage is going to narrow."
Thursday, September 01, 2011
Why only palm oil?
By Zaidi Isham IsmailPublished: 2011/08/31
THE next time you go to the shopping mart to buy a food item, take a look at the ingredients label.
Chances are it will say the generic term vegetable oil rather than soyabean, rapeseed or palm oil.
Labelling of vegetable oils in the US, Europe and Malaysia has been accepted as the industry norm due to health reasons.
However in other parts of the world, such as Australia and New Zealand, the vegetable oils labelling is not carried as there are no laws requiring food manufacturers to do so.
Since 2009 however, some of Australia's lawmakers have been taking steps to change all that. They want to ask food manfucturers to specify the vegetable oil content, especially palm oil.
This has riled up Malaysia, which sees the move as unfair and discriminatory and can be seen as a non-tariff barrier on palm oil.
Plantation Industries and Commodities Minister Tan Sri Bernard Dompok said it is okay to label palm oil on food products but Australia must compel other vegetable oils to do the same.
The playing field must be fair.
"Why just palm oil? What about the other oils? if you just single out palm oil, people will be asking, what's wrong with this product? We want to put things right from the start. Palm oil poses no danger to health at all."
Isn't it good to label palm oil? The oil is already known for its health benefits. So what is there to fear?
No problem, if the labelling is based on health grounds.
But Malaysia sees the whole labelling issue as a front by the non-governmental organisations to weed out which food manufacturers use palm oil and which do not.
Once it is able to identify the company which uses palm oil, it will launch an attack on the food company to stop its imports, like what they did to Cadbury and Kit Kat.
Their campaigns were so intense that both companies have stopped using palm oil.
NGOs will also link palm oil to forest degradation and the destruction of orang utan habitats.
It is because of this, Dompok led a 10-day trade mission last July to woo Australian parliamentarians not to support the initiative.
The Australian Parliament is due to convene this September to debate the "The Truth in Labelling - Palm Oil Bill", passed last month by the senate and is now on its way to the house of representatives.
The Bill is spearheaded by the independent senator Nick Xenophon and has received strong support from the Greens, the World Wildlife Fund, Zoos Victoria and Greenpeace as well as crucial backing in the senate from the coalition.
Dompok said the Malaysian Government will continue to negotiate with Australia's lawmakers by sending envoys in the coming months to talk them out of it.
Dompok said the Bill threatens the livelihood of 570,000 smallholders in plantations and a further 290,000 in downstream industries.
Out of the four million hectares of oil palm estates in Malaysia, 40 per cent is handled by smallholders.
"The industry has helped a lot of our people to come out of poverty. We have almost reached the point where we can't go much further with palm oil plantations," said Dompok.
He said Malaysia, which has national parks and world heritage sites, is very conscious of its need to preserve its own forests, which cover 55.7 per cent of its total area, well above the 50 per cent it guaranteed to retain at the 1992 Rio de Janeiro Earth Summit.
Besides arguments by NGOs that it destroys the habitat of Malaysia's 11,000 orangutans are baseless as the primate can only be found in Southeast Sabah and Southern Sarawak, which has been gazetted as forest sanctuary and are far from oil palm estates.
There are no orang utans in Peninsular Malaysia.
Malaysia's land used for agriculture, including for palm oil, is governed by strict laws and must be registered and licensed by the Malaysian Palm Oil Board.
"The move to label and and penalise palm oil has the potential to reverberate globally," said Dompok.
He said the labelling will also be cumbersome to Australia's food makers which can cost up to A$60,000 (RM186,000) just to label palm oil on a single food item.
Dompok said the government is deeply disappointed that the Liberal, National and Greens parties and Senator Xenophon have chosen to put politics ahead of the mutually advantageous relationship between Malaysia and Australia.
"This legislation undermines the spirit of our co-operation, especially now when our two countries have forged an asylum seeker deal."
All is not lost for Malaysia however. Should the Bill be passed, Malaysia can take up the battle at the World Trade Organisation where Malaysia can present its case against Australia's discriminatory move on palm oil.
Malaysian Palm Oil Council chief executive officer Tan Sri Dr Yusof Basiron said Malaysia has to fight all the way as NGOs are using Australia and New Zealand as their testing ground to see whether the Bill can be passed.
"Should it be passed, the NGOs know that if they can do it in Australia, it can also be done in the US and Europe," said Yusof.
THE next time you go to the shopping mart to buy a food item, take a look at the ingredients label.
Chances are it will say the generic term vegetable oil rather than soyabean, rapeseed or palm oil.
Labelling of vegetable oils in the US, Europe and Malaysia has been accepted as the industry norm due to health reasons.
However in other parts of the world, such as Australia and New Zealand, the vegetable oils labelling is not carried as there are no laws requiring food manufacturers to do so.
Since 2009 however, some of Australia's lawmakers have been taking steps to change all that. They want to ask food manfucturers to specify the vegetable oil content, especially palm oil.
This has riled up Malaysia, which sees the move as unfair and discriminatory and can be seen as a non-tariff barrier on palm oil.
Plantation Industries and Commodities Minister Tan Sri Bernard Dompok said it is okay to label palm oil on food products but Australia must compel other vegetable oils to do the same.
The playing field must be fair.
"Why just palm oil? What about the other oils? if you just single out palm oil, people will be asking, what's wrong with this product? We want to put things right from the start. Palm oil poses no danger to health at all."
Isn't it good to label palm oil? The oil is already known for its health benefits. So what is there to fear?
No problem, if the labelling is based on health grounds.
But Malaysia sees the whole labelling issue as a front by the non-governmental organisations to weed out which food manufacturers use palm oil and which do not.
Once it is able to identify the company which uses palm oil, it will launch an attack on the food company to stop its imports, like what they did to Cadbury and Kit Kat.
Their campaigns were so intense that both companies have stopped using palm oil.
NGOs will also link palm oil to forest degradation and the destruction of orang utan habitats.
It is because of this, Dompok led a 10-day trade mission last July to woo Australian parliamentarians not to support the initiative.
The Australian Parliament is due to convene this September to debate the "The Truth in Labelling - Palm Oil Bill", passed last month by the senate and is now on its way to the house of representatives.
The Bill is spearheaded by the independent senator Nick Xenophon and has received strong support from the Greens, the World Wildlife Fund, Zoos Victoria and Greenpeace as well as crucial backing in the senate from the coalition.
Dompok said the Malaysian Government will continue to negotiate with Australia's lawmakers by sending envoys in the coming months to talk them out of it.
Dompok said the Bill threatens the livelihood of 570,000 smallholders in plantations and a further 290,000 in downstream industries.
Out of the four million hectares of oil palm estates in Malaysia, 40 per cent is handled by smallholders.
"The industry has helped a lot of our people to come out of poverty. We have almost reached the point where we can't go much further with palm oil plantations," said Dompok.
He said Malaysia, which has national parks and world heritage sites, is very conscious of its need to preserve its own forests, which cover 55.7 per cent of its total area, well above the 50 per cent it guaranteed to retain at the 1992 Rio de Janeiro Earth Summit.
Besides arguments by NGOs that it destroys the habitat of Malaysia's 11,000 orangutans are baseless as the primate can only be found in Southeast Sabah and Southern Sarawak, which has been gazetted as forest sanctuary and are far from oil palm estates.
There are no orang utans in Peninsular Malaysia.
Malaysia's land used for agriculture, including for palm oil, is governed by strict laws and must be registered and licensed by the Malaysian Palm Oil Board.
"The move to label and and penalise palm oil has the potential to reverberate globally," said Dompok.
He said the labelling will also be cumbersome to Australia's food makers which can cost up to A$60,000 (RM186,000) just to label palm oil on a single food item.
Dompok said the government is deeply disappointed that the Liberal, National and Greens parties and Senator Xenophon have chosen to put politics ahead of the mutually advantageous relationship between Malaysia and Australia.
"This legislation undermines the spirit of our co-operation, especially now when our two countries have forged an asylum seeker deal."
All is not lost for Malaysia however. Should the Bill be passed, Malaysia can take up the battle at the World Trade Organisation where Malaysia can present its case against Australia's discriminatory move on palm oil.
Malaysian Palm Oil Council chief executive officer Tan Sri Dr Yusof Basiron said Malaysia has to fight all the way as NGOs are using Australia and New Zealand as their testing ground to see whether the Bill can be passed.
"Should it be passed, the NGOs know that if they can do it in Australia, it can also be done in the US and Europe," said Yusof.
Wednesday, August 31, 2011
Good money for good governance
By Adeline Paul Raj
Published: 2011/08/31
Share
Kuala Lumpur: Institutional investors are keen on companies with good corporate governance (CG) and are willing to pay top dollar to invest in them but sadly, few fit the criterion in Malaysia, says Aberdeen Asset Management, one of the country's top investment firms.
"We care about things like GCG because a company with sound governance policies will outperform over the longer term. We don't mind paying a premium for CG because we know there'll be a board that will always be watching our backs," said Abdul Jalil Rasheed, its head of equities, who helps manage US$2.5 billion (RM7.5 billion) of assets at the firm. He said CG is a key criterion for Aberdeen when analysing companies to invest in. "If it fails our CG test, we won't invest in the company," he remarked. Jalil, who has been with Aberdeen for eight years, said the firm visits at least 100 companies a year in each key country in its quest to find undervalued stocks with good fundamentals to invest in.
"It's not as easy as you'd think," he shared. "We're long-term, fundamental, bottom-up investors ... so investing in the right company is key."
In Malaysia, Aberdeen's major investments include AEON Co (M) Bhd (15 per cent stake), Public Bank Bhd (5 per cent), CIMB Group Holdings Bhd (5 per cent), British American Tobacco Malaysia Bhd (5 per cent), Guinness Anchor Bhd (about 7 per cent) and Pos Malaysia Bhd (6 per cent).
Aberdeen has some RM11 billion invested in 29 companies here, Jalil said.
At a recent accounting-related conference held here, he shared his views on what institutional investors like Aberdeeen want to see in companies, especially on the matter of CG.
"We ask if a company will still be in the same business in 20 years' time. And if it's got a good track record, is it run fairly for all shareholders, and are they transparent? How independent are the board of directors?
"What we want are directors that are knowledgeable of the industry. We want experienced and really independent people. There are some companies out there where the independent directors are former employees of the company - it's not wrong, but it's not right in the spirit of corporate governance," he remarked.
Jalil noted that boards play a key role in setting the CG tone for the company, and so directors shouldn't be sitting on boards for too long as investors would then find it difficult to see them as being truly independent.
"Changing board members is a good thing ... it brings a rejuvenation of the board. Younger board members would bring in new perspective," he voiced.
Another problem commonly seen by investors is companies providing sparse information in their quarterly financial reports.
"They should at least have a performance commentary on how the company has done in the past quarter. We see similar words being used in almost every quarter," he lamented.
Jalil said institutional inves-tors like Aberdeen would also like to see a more transparent voting process at shareholder meetings, like a poll voting system.
He noted that Singapore has made it mandatory to vote by poll and have the results audited by an independent auditor. "I hope this is something we can move to," he said.
Jalil said it would also be good for independent directors to be given a few minutes to explain the operations of the company to shareholders at annual general meetings. "We have seen this in Thailand, and to a certain extent in Singapore.
"In Malaysia, they are rather quiet ... it would be nice if they were given a bit of airtime," he suggested.
Jalil opined that in Malaysia, companies do the bare minimum when it comes to CG. "It's more about form than substance, a mere box-ticking exercise, and I think that's wrong. If you want to adopt CG, you've got to do it in the right spirit," he said.
Published: 2011/08/31
Share
Kuala Lumpur: Institutional investors are keen on companies with good corporate governance (CG) and are willing to pay top dollar to invest in them but sadly, few fit the criterion in Malaysia, says Aberdeen Asset Management, one of the country's top investment firms.
"We care about things like GCG because a company with sound governance policies will outperform over the longer term. We don't mind paying a premium for CG because we know there'll be a board that will always be watching our backs," said Abdul Jalil Rasheed, its head of equities, who helps manage US$2.5 billion (RM7.5 billion) of assets at the firm. He said CG is a key criterion for Aberdeen when analysing companies to invest in. "If it fails our CG test, we won't invest in the company," he remarked. Jalil, who has been with Aberdeen for eight years, said the firm visits at least 100 companies a year in each key country in its quest to find undervalued stocks with good fundamentals to invest in.
"It's not as easy as you'd think," he shared. "We're long-term, fundamental, bottom-up investors ... so investing in the right company is key."
In Malaysia, Aberdeen's major investments include AEON Co (M) Bhd (15 per cent stake), Public Bank Bhd (5 per cent), CIMB Group Holdings Bhd (5 per cent), British American Tobacco Malaysia Bhd (5 per cent), Guinness Anchor Bhd (about 7 per cent) and Pos Malaysia Bhd (6 per cent).
Aberdeen has some RM11 billion invested in 29 companies here, Jalil said.
At a recent accounting-related conference held here, he shared his views on what institutional investors like Aberdeeen want to see in companies, especially on the matter of CG.
"We ask if a company will still be in the same business in 20 years' time. And if it's got a good track record, is it run fairly for all shareholders, and are they transparent? How independent are the board of directors?
"What we want are directors that are knowledgeable of the industry. We want experienced and really independent people. There are some companies out there where the independent directors are former employees of the company - it's not wrong, but it's not right in the spirit of corporate governance," he remarked.
Jalil noted that boards play a key role in setting the CG tone for the company, and so directors shouldn't be sitting on boards for too long as investors would then find it difficult to see them as being truly independent.
"Changing board members is a good thing ... it brings a rejuvenation of the board. Younger board members would bring in new perspective," he voiced.
Another problem commonly seen by investors is companies providing sparse information in their quarterly financial reports.
"They should at least have a performance commentary on how the company has done in the past quarter. We see similar words being used in almost every quarter," he lamented.
Jalil said institutional inves-tors like Aberdeen would also like to see a more transparent voting process at shareholder meetings, like a poll voting system.
He noted that Singapore has made it mandatory to vote by poll and have the results audited by an independent auditor. "I hope this is something we can move to," he said.
Jalil said it would also be good for independent directors to be given a few minutes to explain the operations of the company to shareholders at annual general meetings. "We have seen this in Thailand, and to a certain extent in Singapore.
"In Malaysia, they are rather quiet ... it would be nice if they were given a bit of airtime," he suggested.
Jalil opined that in Malaysia, companies do the bare minimum when it comes to CG. "It's more about form than substance, a mere box-ticking exercise, and I think that's wrong. If you want to adopt CG, you've got to do it in the right spirit," he said.
Friday, August 26, 2011
TM commits to returning excess cash, sees jump in UniFi take-up
Tags: First half results | Telekom Malaysia Bhd | Zamzamzairani Mohd Isa
Written by Cindy Yeap
Thursday, 25 August 2011 13:55
KUALA LUMPUR: Telekom Malaysia Bhd (TM) announced an average interim dividend with its 1HFY11 earnings release yesterday, but group CEO Datuk Zamzamzairani Mohd Isa promised the company will return any excess cash it has after assessing its needs. “It’s expensive to keep extra cash. We’ve always said we would return any extra,” Zamzamzairani told The Edge Financial Daily on the sidelines of its earnings briefing. “Active capital management will continue,” he told reporters earlier. Expectations TM would make a special payout rose after the company fattened its coffers by some RM468.3 million (about 13 sen per share) last month with proceeds from the sale of its remaining stake in Axiata Group Bhd. TM’s cash pile stood at RM2.7 billion as at June 30, 2011, down from RM3.5 billion at end-2010, having just made a RM1.04 billion (29 sen per share) capital distribution in May. That was on top of the 26.1 sen per share dividend (13 sen interim and 13.1 sen final) paid for FY10. In FY09, TM made a 98 sen per share capital repayment, on top of 23 sen in regular dividends (10 sen interim and 13 sen final) Analysts are forecasting dividend per share to be between 20 sen and 49 sen for FY11, averaging at 26.5 sen per share. TM has a policy of distributing at least RM700 million cash back to shareholders a year, or up to 90% of its normalised profits, whichever is higher. TM announced an interim dividend of 9.8 sen per share yesterday, which represents a RM350.6 million payout. This was after saying earnings for 1HFY11 ended June 30 fell 18.5% to RM311.7 million from RM382.4 million in 1HFY10, even as revenue rose 2.5% to RM4.38 billion over the same period, shored up by higher revenue from Internet, multimedia and data services.
Take-up of the UniFi service has exceeded TM's expectations.
The reduced bottom line is primarily due to higher operating costs and lower foreign exchange gains on translation of foreign currency borrowings, which fell to only RM49.5 million in the current period against RM180.5 million in the same period last year. Net profit of RM137 million in 2QFY11 was smaller than the RM174.7 million booked in 1QFY11, but 4.2% above the RM131.5 million booked in 2QFY10. Excluding non-operational items like translation gains, 2Q earnings would have increased by 20.8% year-on-year and be up by 10.4% quarter-on-quarter, TM said. “Overall, we’re very pleased with the performance, which shows continued operational improvement,” Zamzamzairani said, adding that strong demand for its UniFi high-speed broadband (HSBB) service “has exceeded expectations and the momentum we saw at the beginning of the year”. UniFi’s subscriber base jumped from 63,541 in 1Q11 to 109,019 in 2Q11 on the back of 904,000 premises passed. As at Aug 18, TM has installed UniFi to more than 142,000 customers on the back of more than 973,000 premises passed covering 76 exchange areas with 46 IPTV channels. “This shows a ramping up of the take-up rate from 12% as at June 30 to 14% to date, exceeding our initial expectations of 8% to 10% take-up for the first two years, Zamzamzairani said. TM is on-track with its plan to cover 1.1 million premises by end-2011 and 1.3 million premises by end-2012, it said. While capital expenditure to revenue ratio improved from 18.8% to 17.1% in 1HFY11, with total capex falling from RM804 million in 1HFY10 to RM749 million in 1HFY11, group CFO Datuk Bazlan Osman said capex on HSBB is likely to be higher in 2HFY11. “Overall capex was about RM1.6 billion last year. This year’s capex will be about the same, if not slightly higher,” he said. Foreseeing a challenging outlook ahead, Zamzamzairani said TM will continue to spend where necessary while keeping a tight watch on costs. “We hope the momentum of revenue growth we are seeing will continue,” he said. Based on its headline KPI guidance for FY11, TM is expecting 2.5% revenue growth this year against 2.1% in FY10, with momentum picking up further to 3.5% to 4.5% in FY13. Guidance on earnings before interest, tax, depreciation and amortisation (Ebitda) margins, however, is at 32% for FY11 against 33.1% in FY10, before rising to the “mid-30s” in FY13. TM rose eight sen or 1.95% to RM4.18 yesterday, after trading between RM4.11 and RM4.18. At press time, it had nine brokers calling it a “buy” against 13 “holds” and seven “sells”. Target prices range between KAF Seagroatt & Campbell’s RM3.23 and CIMB Research’s RM4.92. This article appeared in The Edge Financial Daily, August 25, 2011.
Written by Cindy Yeap
Thursday, 25 August 2011 13:55
KUALA LUMPUR: Telekom Malaysia Bhd (TM) announced an average interim dividend with its 1HFY11 earnings release yesterday, but group CEO Datuk Zamzamzairani Mohd Isa promised the company will return any excess cash it has after assessing its needs. “It’s expensive to keep extra cash. We’ve always said we would return any extra,” Zamzamzairani told The Edge Financial Daily on the sidelines of its earnings briefing. “Active capital management will continue,” he told reporters earlier. Expectations TM would make a special payout rose after the company fattened its coffers by some RM468.3 million (about 13 sen per share) last month with proceeds from the sale of its remaining stake in Axiata Group Bhd. TM’s cash pile stood at RM2.7 billion as at June 30, 2011, down from RM3.5 billion at end-2010, having just made a RM1.04 billion (29 sen per share) capital distribution in May. That was on top of the 26.1 sen per share dividend (13 sen interim and 13.1 sen final) paid for FY10. In FY09, TM made a 98 sen per share capital repayment, on top of 23 sen in regular dividends (10 sen interim and 13 sen final) Analysts are forecasting dividend per share to be between 20 sen and 49 sen for FY11, averaging at 26.5 sen per share. TM has a policy of distributing at least RM700 million cash back to shareholders a year, or up to 90% of its normalised profits, whichever is higher. TM announced an interim dividend of 9.8 sen per share yesterday, which represents a RM350.6 million payout. This was after saying earnings for 1HFY11 ended June 30 fell 18.5% to RM311.7 million from RM382.4 million in 1HFY10, even as revenue rose 2.5% to RM4.38 billion over the same period, shored up by higher revenue from Internet, multimedia and data services.
Take-up of the UniFi service has exceeded TM's expectations.
The reduced bottom line is primarily due to higher operating costs and lower foreign exchange gains on translation of foreign currency borrowings, which fell to only RM49.5 million in the current period against RM180.5 million in the same period last year. Net profit of RM137 million in 2QFY11 was smaller than the RM174.7 million booked in 1QFY11, but 4.2% above the RM131.5 million booked in 2QFY10. Excluding non-operational items like translation gains, 2Q earnings would have increased by 20.8% year-on-year and be up by 10.4% quarter-on-quarter, TM said. “Overall, we’re very pleased with the performance, which shows continued operational improvement,” Zamzamzairani said, adding that strong demand for its UniFi high-speed broadband (HSBB) service “has exceeded expectations and the momentum we saw at the beginning of the year”. UniFi’s subscriber base jumped from 63,541 in 1Q11 to 109,019 in 2Q11 on the back of 904,000 premises passed. As at Aug 18, TM has installed UniFi to more than 142,000 customers on the back of more than 973,000 premises passed covering 76 exchange areas with 46 IPTV channels. “This shows a ramping up of the take-up rate from 12% as at June 30 to 14% to date, exceeding our initial expectations of 8% to 10% take-up for the first two years, Zamzamzairani said. TM is on-track with its plan to cover 1.1 million premises by end-2011 and 1.3 million premises by end-2012, it said. While capital expenditure to revenue ratio improved from 18.8% to 17.1% in 1HFY11, with total capex falling from RM804 million in 1HFY10 to RM749 million in 1HFY11, group CFO Datuk Bazlan Osman said capex on HSBB is likely to be higher in 2HFY11. “Overall capex was about RM1.6 billion last year. This year’s capex will be about the same, if not slightly higher,” he said. Foreseeing a challenging outlook ahead, Zamzamzairani said TM will continue to spend where necessary while keeping a tight watch on costs. “We hope the momentum of revenue growth we are seeing will continue,” he said. Based on its headline KPI guidance for FY11, TM is expecting 2.5% revenue growth this year against 2.1% in FY10, with momentum picking up further to 3.5% to 4.5% in FY13. Guidance on earnings before interest, tax, depreciation and amortisation (Ebitda) margins, however, is at 32% for FY11 against 33.1% in FY10, before rising to the “mid-30s” in FY13. TM rose eight sen or 1.95% to RM4.18 yesterday, after trading between RM4.11 and RM4.18. At press time, it had nine brokers calling it a “buy” against 13 “holds” and seven “sells”. Target prices range between KAF Seagroatt & Campbell’s RM3.23 and CIMB Research’s RM4.92. This article appeared in The Edge Financial Daily, August 25, 2011.
Thursday, August 25, 2011
EPIC Offered 3.10 a share Not a fair price
Shares of EPIC belonging to Ahmad Zaki Resources were sold to the Trengganu Government at RM3.10 a share on Nov 4, 2010. At that time, EPIC was traded at around RM2.10 per share.
EPIC was last traded at RM2.93. Thus the offered price should be higher than RM3.10. In my opinion RM3.30 per share would be a fairer price.
EPIC was last traded at RM2.93. Thus the offered price should be higher than RM3.10. In my opinion RM3.30 per share would be a fairer price.
Wednesday, August 24, 2011
The Hidden Dangers in Safe Havens
by Paul Sullivan
Monday, August 22, 2011
As Europe's debt troubles intensified earlier this month and United States debt was downgraded, many people rushed into gold and Treasury securities as a safe haven. It was the latest sign that in uncertain times, investors act in ways that can hurt them in the long run.
"They fled the perceived risk of falling stock prices right into the assured risk of overvalued assets," said G. Scott Clemons, chief investment strategist for the wealth management division at Brown Brothers Harriman.
What drove those decisions was not logic but fear — fear of a repeat of September 2008. And that fear may only have intensified when markets dropped again late this week, sending yields on 10-year Treasury notes to record lows and the price of gold above $1,800 an ounce.
Even if the fear is understandable, however, acting on it may not be the best long-term strategy.
"If you were right about the timing decision to get out, you're going to have to be right again about when to get back in," said Joseph W. Spada, managing director at Summit Financial Resources in Parsippany, N.J. "Even professionals have trouble doing it. If that's not going to be your strategy, then don't do it once."
But now that people have done it once, what are the risks of holding on to large positions in gold and Treasuries?
TREASURIES While the economy may seem bad to many people, it would not take much improvement for investors to lose money quickly on their investment in Treasury bonds.
A week and a half ago, the 10-year Treasury note was yielding only 2.10 percent, after Standard & Poor's downgraded the United States' credit rating. Since the yield of a bond moves in the opposite direction of its price, this meant demand for 10-year Treasuries was high.
If over the next six months, the yield were to move up another half of a percentage point to 2.60 percent, however, investors owning those bonds would have a negative 6.25 percent return, said Barbara Reinhard, chief investment strategist at Credit Suisse Private Banking in New York. If the yield curve were to move up a full percentage point during that time, the loss would be 14 percent.
She said such a quick increase could easily happen, as it did from October 2010 to January 2011 when the Federal Reserve began its second round of large-scale purchases of government debt, the program known as quantitative easing.
Now, plenty of people buy bonds with the intention of holding them until maturity. In doing that, it would seem that they would earn a return of 2.10 percent. But they would actually lose 1.5 percent, when the most recent inflation rate of 3.6 percent is factored in.
"That's assuming inflation doesn't rise," Ms. Reinhard said. "Right now, you're betting inflation will fall below 2.10 percent. You're betting against history because inflation has been around 3 to 4 percent historically."
This is not the brightest picture for people who added to their allocation of Treasury bonds. But many felt it was the only safe place.
J. D. Montgomery, a managing director at Canterbury Consulting, an investment consulting firm in Newport Beach, Calif., said he had a client who wrestled with where to put $5 million that he needed to keep safe. The client chose a three-month Treasury note, even though the interest was only $1,000.
There was at least some logic behind this. Most people who bought Treasuries were abandoning their investment strategy, and wealth advisers say that is more troubling than paltry returns.
"The risk of changing your strategy when it's being tested as opposed to changing it when it's not being tested is you risk derailing your long-term investment plan," said Gregg Fisher, president and chief investment officer of Gerstein Fisher, a wealth management firm in New York.
So what should nervous investors have done? Selling Treasury bonds when everyone else was buying them would have been a start. But that might have taken too much discipline. Moving to cash was the top option because at least investors would have money ready when they felt comfortable returning to the markets.
GOLD Investors in gold are a different breed. They often have a passion for the metal that goes beyond returns. And they are not going to be swayed by arguments that gold, hovering around $1,800 an ounce, is overvalued.
"When you buy gold you're saying nothing is going to work and everything is going to stay ridiculous," said Mackin Pulsifer, vice chairman and chief investment officer of Fiduciary Trust International in New York. "There is a fair cohort who believes this in a theological sense, but I believe it's unreasonable given the history of the United States."
As for the nonbelievers who piled into gold, they need to think practically now. Only about 11 percent of gold has an industrial use. While gold can get lost or buried, it does not get used up like oil or natural gas. And its actual cost is between a third and half of where it is trading. Dan Denbow, co-manager of the USAA Precious Metals and Minerals Fund in San Antonio, said it cost about $600 to produce an ounce of gold, but that rises to about $1,000 when all the costs of mining are factored in.
Yet a bigger risk may come from exchange-traded funds for gold. While they let small investors buy gold easily — the price of one share of the GLD exchange traded fund is roughly one-tenth the price of an ounce of gold — that same ease of buying means investors can just as quickly sell their shares in a panic.
No one I spoke to would venture a guess as to how high gold would rise before it hit its peak. But most stressed that people forgot that gold's value was driven by sentiment.
"Gold doesn't have any intrinsic value," said Larry M. Elkin, president of the Palisades Hudson Financial Group in Scarsdale, N.Y. "It's this era's wampum. At one point you could buy Manhattan for beads."
(Mr. Elkin said what bothered him the most about investing in gold was how irrational it was, unlike buying a blue-chip stock whose value rises and falls based on what the company produces.)
That said, having gold in a portfolio is still a good buffer against swings in other markets. Mr. Fisher calculated that over a 43-year period ending in June 2011, the average annual increase for gold, accounting for inflation, was 3.82 percent compared with 4.92 percent for the Standard & Poor's 500-stock index. Gold, however, was 28 percent more volatile.
"The smoother the ride, the more likely the investor is going to stay in his strategy," Mr. Fisher said. "That produces a better result."
He said that from the perspectives of both return and volatility, a better strategy would have been to put 10 percent in gold and split the rest 60-40 between stocks and five-year Treasury bonds. Rebalancing the portfolio to maintain those ratios would have meant an average annual return of 4.66 percent, with more than half of the volatility of gold alone.
For those who fled to gold and Treasuries, the hardest part will be deciding when to get back into other securities. The best way in uncertain markets may be to go slowly in small chunks — a practice known as dollar-cost averaging.
"There are real and psychological benefits to it, because getting someone to take that first step is the hardest," said Christopher Wolfe, chief investment officer for the private bank and investment group at Bank of America. "With a five-year time horizon, it makes a big difference. You might get one of those wicked big down days you could benefit from. But if you have a 30-year time horizon it doesn't matter."
Of course, if people had thought on such a long time horizon they might not have rushed to buy gold and Treasuries in the first place.
Tuesday, August 16, 2011
Is the generosity of Genting at the expense of the minority shareholders? You be the judge
Genting gives big payout to directors published: 2011/08/16
KUALA LUMPUR: Genting Bhd topped the list with a big payout of RM111.48 million to its board, up 21 per cent from RM92.11 million previously.
The company also has the highest remuneration band of RM106.65 million to RM106.70 million for a single director, says the Malaysian Business in a statement today.
The company, however, did not name who the director was. The top executive listed is its executive chairman and chief executive Tan Sri Lim Kok Thay.
According to the business magazine's annual survey of the "Highest-Paid Directors", listed companies paid out substantially higher remuneration to their directors last year compared to 2009 on the back of an improved economic climate.
Some companies, however, lowered their boardroom remuneration last year, including CIMB Group Holdings Bhd.
The second largest bank paid RM18.51 million or 13 per cent less to its board members and lower remuneration to its group managing director and group chief executive officer Datuk Seri Mohd Nazir Razak.
He received RM12 million last year as opposed to RM14.5 million in 2009.
IOI Corporation Bhd came in second with a total payout amounting to RM56.29 million, 71 per cent more from a year ago, said the Malaysian Business.
Meanwhile, with three companies -- YTL Corp, YTL Power International and YTL Cement -- Tan Sri Yeoh Tiong Lay received a combined remuneration of RM13.10 million.
Interestingly, out of 630 companies, 95 companies with huge losses are still rewarding their directors with huge payouts.
The survey lists a total of 630 companies with a remuneration band of RM300,000 and above as stated in the company's annual report.
Of these, only a handful of the companies were transparent in stating the exact remuneration of their top executives. -Bernama
Read more: Genting gives big payout to directors http://www.btimes.com.my/Current_News/BTIMES/articles/20110816165524/Article/index_html#ixzz1VBO8toXp
KUALA LUMPUR: Genting Bhd topped the list with a big payout of RM111.48 million to its board, up 21 per cent from RM92.11 million previously.
The company also has the highest remuneration band of RM106.65 million to RM106.70 million for a single director, says the Malaysian Business in a statement today.
The company, however, did not name who the director was. The top executive listed is its executive chairman and chief executive Tan Sri Lim Kok Thay.
According to the business magazine's annual survey of the "Highest-Paid Directors", listed companies paid out substantially higher remuneration to their directors last year compared to 2009 on the back of an improved economic climate.
Some companies, however, lowered their boardroom remuneration last year, including CIMB Group Holdings Bhd.
The second largest bank paid RM18.51 million or 13 per cent less to its board members and lower remuneration to its group managing director and group chief executive officer Datuk Seri Mohd Nazir Razak.
He received RM12 million last year as opposed to RM14.5 million in 2009.
IOI Corporation Bhd came in second with a total payout amounting to RM56.29 million, 71 per cent more from a year ago, said the Malaysian Business.
Meanwhile, with three companies -- YTL Corp, YTL Power International and YTL Cement -- Tan Sri Yeoh Tiong Lay received a combined remuneration of RM13.10 million.
Interestingly, out of 630 companies, 95 companies with huge losses are still rewarding their directors with huge payouts.
The survey lists a total of 630 companies with a remuneration band of RM300,000 and above as stated in the company's annual report.
Of these, only a handful of the companies were transparent in stating the exact remuneration of their top executives. -Bernama
Read more: Genting gives big payout to directors http://www.btimes.com.my/Current_News/BTIMES/articles/20110816165524/Article/index_html#ixzz1VBO8toXp
Sunday, August 14, 2011
Malacca becomes Malaysia´s first smoking-free city
KUALA LUMPUR: The Malaysian world heritage city of Malacca will be smoke-free from June 15, a first for the country, the health minister said Monday.
The move was to bring in more tourists and help stamp out smoking in a country where the habit is widespread, Liow Tiong Lai told AFP, insisting it would also help preserve the city.
"The idea is to create fresh air and a clean environment for tourists and Malaysians alike to enjoy the historic city," he said.
"It will also aid in preserving the old monuments and buildings as the ban will reduce pollution in the area and promote a healthy lifestyle."
The no-smoking area covers the entire 4.2 square kilometres (1.6 square miles) of the city and four other areas in the southern state of Malacca.
"These areas will be free from cigarette smoke and make Malacca city the first smoking-free city in the country," said the minister.
"Those caught will be hit with a fine of 300 ringgit (100 dollars) although the maximum penalty is 5,000 ringgit."
Malacca chief minister Mohamad Ali Rustam told the Star daily that the state was also serious about declaring more tourist destinations in the state smoke-free zones.
With more than 500 years of trading and cultural exchanges between East and West, Malacca's multi-cultural heritage is seen its ornately designed government buildings, churches and forts.
It is where the Malay sultanate originated in the 15th century, before being invaded by the Portuguese and Dutch in the early 16th century.
In 2008, UNESCO included Malacca and Georgetown, on the resort island of Penang, in its world heritage list but there have been recent concerns that the southern port city could be de-listed because of redevelopment in its historic quarter.
Malaysia is hoping the heritage listing will boost tourism, which is a key foreign exchange earner.
The move was to bring in more tourists and help stamp out smoking in a country where the habit is widespread, Liow Tiong Lai told AFP, insisting it would also help preserve the city.
"The idea is to create fresh air and a clean environment for tourists and Malaysians alike to enjoy the historic city," he said.
"It will also aid in preserving the old monuments and buildings as the ban will reduce pollution in the area and promote a healthy lifestyle."
The no-smoking area covers the entire 4.2 square kilometres (1.6 square miles) of the city and four other areas in the southern state of Malacca.
"These areas will be free from cigarette smoke and make Malacca city the first smoking-free city in the country," said the minister.
"Those caught will be hit with a fine of 300 ringgit (100 dollars) although the maximum penalty is 5,000 ringgit."
Malacca chief minister Mohamad Ali Rustam told the Star daily that the state was also serious about declaring more tourist destinations in the state smoke-free zones.
With more than 500 years of trading and cultural exchanges between East and West, Malacca's multi-cultural heritage is seen its ornately designed government buildings, churches and forts.
It is where the Malay sultanate originated in the 15th century, before being invaded by the Portuguese and Dutch in the early 16th century.
In 2008, UNESCO included Malacca and Georgetown, on the resort island of Penang, in its world heritage list but there have been recent concerns that the southern port city could be de-listed because of redevelopment in its historic quarter.
Malaysia is hoping the heritage listing will boost tourism, which is a key foreign exchange earner.
Friday, August 12, 2011
Warren Buffett buying in down market
NEW YORK - Warren Buffett has been buying amid this week's sharp declines in the market, and has not yet seen anything that suggests another downturn is emerging, the legendary investor told Fortune magazine.
In an interview published on Thursday, Buffett also told the magazine he understood why Standard & Poor's lowered its outlook on the credit rating of his conglomerate Berkshire Hathaway, but said he disagreed with the underlying premise - the downgrade of the United States' credit rating.
The 80-year-old "Oracle of Omaha" is known for his love of a good deal, which is why his company made an unsolicited offer below book value for reinsurance company Transatlantic Holdings last weekend, and why Berkshire sold $2 billion of senior unsecured notes this week at historically low rates.
In that vein, Buffett told Fortune Managing Editor Andy Serwer the market declines have not fazed him.
"The lower things go, the more I buy. We are in the business of buying," he said, adding that he had "never been better."
Buffett also told the magazine that he was not seeing fresh indications of the economy turning bad again, though things could change if market conditions do not improve.
"Up until right now, all of our businesses have been coming back - even Europe isn't doing that badly - except for businesses relating to home construction which is on its rear end," Buffett said.
In an interview published on Thursday, Buffett also told the magazine he understood why Standard & Poor's lowered its outlook on the credit rating of his conglomerate Berkshire Hathaway, but said he disagreed with the underlying premise - the downgrade of the United States' credit rating.
The 80-year-old "Oracle of Omaha" is known for his love of a good deal, which is why his company made an unsolicited offer below book value for reinsurance company Transatlantic Holdings last weekend, and why Berkshire sold $2 billion of senior unsecured notes this week at historically low rates.
In that vein, Buffett told Fortune Managing Editor Andy Serwer the market declines have not fazed him.
"The lower things go, the more I buy. We are in the business of buying," he said, adding that he had "never been better."
Buffett also told the magazine that he was not seeing fresh indications of the economy turning bad again, though things could change if market conditions do not improve.
"Up until right now, all of our businesses have been coming back - even Europe isn't doing that badly - except for businesses relating to home construction which is on its rear end," Buffett said.
Thursday, August 11, 2011
TDM Doing Well
TDM, considered one of the cheapest plantation stocks in Malaysia, closed up nearly 3 per cent to RM2.92 yesterday. Its net profit more than doubled to RM32 million for the quarter ended June 30 2011.
The improved stock performance of the Terengganu state government outfit was in line with other plantation stocks on the market, which collectively increased by 121.54 per cent yesterday.
Plantation stocks are in the limelight this results season as companies like TDM post stellar profits on higher crude palm oil (CPO) prices.
TDM posted a net profit of RM32 million on revenue of RM126.9 million for its second quarter due to higher crude palm oil production, which increased 26 per cent.
Hong Leong Investment Bank said TDM is one of the laggard plays within the plantation sector and was worth a second look due to a clearer business strategy, improving financial performance and standing, as well as continued dividend payouts.
"We are projecting TDM's net profit to rise from RM92 million in 2010 to RM129.1 million, RM105.2 million and RM100.2 million in 2011, 2012 and 2013 respectively, mainly on the back of higher CPO price assumptions of RM3,200 a tonne in 2011 and RM3,000 a tonne in 2012-2013," it said in a research report.
The above article is an excerpt from Business Times
TDM posted a net profit of RM32 million on revenue of RM126.9 million for its second quarter due to higher crude palm oil production, which increased 26 per cent.
Hong Leong Investment Bank said TDM is one of the laggard plays within the plantation sector and was worth a second look due to a clearer business strategy, improving financial performance and standing, as well as continued dividend payouts.
"We are projecting TDM's net profit to rise from RM92 million in 2010 to RM129.1 million, RM105.2 million and RM100.2 million in 2011, 2012 and 2013 respectively, mainly on the back of higher CPO price assumptions of RM3,200 a tonne in 2011 and RM3,000 a tonne in 2012-2013," it said in a research report.
The above article is an excerpt from Business Times
Wednesday, August 10, 2011
Sweet Victory for Malaysia
By Rupa Damodaran
KUALA LUMPUR: Palm oil industry players, in lauding the move by the Australian Senate committee to reject a mandatory palm oil labelling bill, say the battle is far from over for the commodity to gain wider market access in international markets.
The decision from Canberra spelt a sweet and significant victory for Malaysia's important commodity against the unjust and misleading anti-palm oil campaigns by environmental non-government organisations (NGOs), they added.
Malaysian Palm Oil Council (MPOC) CEO Tan Sri Yusof Basiron said while the report is seen as a significant repudiation of environmental NGOs' anti-palm oil campaigns, the industry must continue to fight against global efforts to require mandatory labelling.
Efforts must continue to ensure producers retain market access across the globe and consumers, such as those in Australia, continue to benefit from the use of a low-cost vegetable oil.
"We appreciate the committee's professionalism, especially taking into consideration a rigorous scientific evaluation instead of relying on the NGOs (in drafting a bill), which if allowed, can lead to zero trade," he said yesterday.
Yusof led a team when presenting Malaysia's case to the Senate hearing in Canberra on the mandatory labelling of palm oil proposed under the Truth in Labelling - Palm Oil Bill in April.
In Malaysia's case, Yusof pointed out, the palm oil industry has been a pillar of economic growth and societal advancement as smallholders account for 39 per cent of palm oil production, while producers enjoy incomes four times above the national poverty level.
The industry is also committed to conservation efforts through initiatives like the Malaysian Palm Oil Wildlife Conservation Fund.
Meanwhile, United Plantations executive director of corporate affairs Datuk Carl Bek-Nielsen welcomed the news, saying it was a decision made based on facts and figures and not "emotional exaggeration".
"It's a positive development for Malaysia in terms of how palm oil is viewed abroad - which not everything thrown by the NGOs are swallowed hook, line and sinker.
"We consider it a fair and just decision, not only to the industry, but to smallholders. Had it (the Bill) gone through, it would have put in more wind to the detractors out there to tarnish palm oil," he commented.
Bek-Nielsen, who was also present at the Senate hearing, said some of the comments from the organisations on the planting of oil palm were based on wild exaggeration.
He said palm oil producers in Malaysia and Indonesia should not be afraid to take on battles (against the crop) as long as there is injustice taking place and counter them.
KUALA LUMPUR: Palm oil industry players, in lauding the move by the Australian Senate committee to reject a mandatory palm oil labelling bill, say the battle is far from over for the commodity to gain wider market access in international markets.
The decision from Canberra spelt a sweet and significant victory for Malaysia's important commodity against the unjust and misleading anti-palm oil campaigns by environmental non-government organisations (NGOs), they added.
Malaysian Palm Oil Council (MPOC) CEO Tan Sri Yusof Basiron said while the report is seen as a significant repudiation of environmental NGOs' anti-palm oil campaigns, the industry must continue to fight against global efforts to require mandatory labelling.
Efforts must continue to ensure producers retain market access across the globe and consumers, such as those in Australia, continue to benefit from the use of a low-cost vegetable oil.
"We appreciate the committee's professionalism, especially taking into consideration a rigorous scientific evaluation instead of relying on the NGOs (in drafting a bill), which if allowed, can lead to zero trade," he said yesterday.
Yusof led a team when presenting Malaysia's case to the Senate hearing in Canberra on the mandatory labelling of palm oil proposed under the Truth in Labelling - Palm Oil Bill in April.
In Malaysia's case, Yusof pointed out, the palm oil industry has been a pillar of economic growth and societal advancement as smallholders account for 39 per cent of palm oil production, while producers enjoy incomes four times above the national poverty level.
The industry is also committed to conservation efforts through initiatives like the Malaysian Palm Oil Wildlife Conservation Fund.
Meanwhile, United Plantations executive director of corporate affairs Datuk Carl Bek-Nielsen welcomed the news, saying it was a decision made based on facts and figures and not "emotional exaggeration".
"It's a positive development for Malaysia in terms of how palm oil is viewed abroad - which not everything thrown by the NGOs are swallowed hook, line and sinker.
"We consider it a fair and just decision, not only to the industry, but to smallholders. Had it (the Bill) gone through, it would have put in more wind to the detractors out there to tarnish palm oil," he commented.
Bek-Nielsen, who was also present at the Senate hearing, said some of the comments from the organisations on the planting of oil palm were based on wild exaggeration.
He said palm oil producers in Malaysia and Indonesia should not be afraid to take on battles (against the crop) as long as there is injustice taking place and counter them.
Sunday, August 07, 2011
Understanding S&P's downgrade of the United States
NEW YORK - The United States lost its top-tier AAA credit rating from Standard & Poor's on Friday, a move that will affect the country's borrowing costs and investor opinion of U.S. assets. Here is a Q+A on what the downgrade means for investors, consumers and to the country.
WHAT IS A DOWNGRADE?
Standard & Poor's, one of the three major credit rating agencies that assign scores to debt issued by institutions, municipalities, and governments, said there is a heightened degree of risk in holding debt issued by the United States. So it lowered its rating from the AAA, the highest possible level, by one notch to AA+. It also said the outlook is negative.
WHY DID IT LOWER THE RATING?
The credit rating agency believes the outstanding debt of $14.3 trillion and projected deficits for coming years in the United States no longer warrant the top-tier rating that it had assigned to the United States since 1941. It also said that the political environment does not build confidence that the United States can agree on how to lower the deficit in a meaningful way any time soon.
DOES THIS MEAN THAT U.S DEBT IS NO LONGER SAFE?
No. At AA+, the U.S. is still considered to have a "strong" ability to meet its obligations. In fact, only a handful of countries now have the AAA rating - among them Canada, Germany, France and the United Kingdom. In addition, Treasuries have rallied this week, driving the yield on the benchmark 10-year note to 2.34 percent, its lowest level in about 10 months. This suggests people still view the U.S. as a safe place to invest.
BUT WASN'T A DEBT DEAL JUST SIGNED IN CONGRESS?
Yes, but the savings from this are projected at $2.1 trillion. S&P has said that a larger level of savings is needed - at least $4 trillion either through spending reductions or tax increases - are needed in order to start lowering U.S. deficits in coming years.
WHAT IMPACT DOES THE DOWNGRADE HAVE?
Over time, a lower rating will cause investors who buy U.S. government debt to demand a higher interest rate to hold that debt to reward them for the risk. If that is the case, benchmark long-term interest rates will rise. Most major rates, including the debt of corporations, mortgages purchased by investors, and other types of loans, are priced in relation to the U.S. Treasury benchmark. That means borrowing costs across a number of spectrums over time will rise, making loans and bonds more expensive. The more an individual or company is devoting to interest payments, the less they have for other activities.
SO WHAT WILL IT COST?
The downgrade could add up to 0.7 of a percentage point to U.S. Treasuries' yields, increasing funding costs for public debt by some $100 billion, according to SIFMA, a U.S. securities industry trade group.
WHO OWNS U.S. DEBT?
Other than the U.S. Federal Reserve, the most recent data from the U.S. Treasury shows that China, with $1.16 trillion in U.S. Treasury securities, is the biggest holder of our debt. China has repeatedly warned of the unsustainable trend of U.S. deficits and has talked of diversifying its holdings to other economies. But because China maintains the value of its currency through buying of U.S. dollars, it is likely to continue to be a major holder of Treasury securities for some years ahead.
WILL MY MONEY MARKET FUND HAVE TO SELL ITS TREASURY DEBT?
Not likely. The credit rating change affects long-term debt - the short-term credit rating of the U.S. is A-1+, the highest short-term rating. Money market funds with short-term debt are unlikely to be affected.
WILL INVESTORS PREFER DEBT FROM HIGHER RATED COUNTRIES?
This is possible. Some large investors, such as William Gross of PIMCO, have said other markets such as Canada offer more value. But the U.S. market retains significant appeal because its bond market was more than $35 trillion at the end of March 2011, according to SIFMA. No other bond market is close to that size.
NOW THIS HAS HAPPENED, IS U.S. SAFE FROM OTHER DOWNGRADES?
No. To begin with Standard & Poor's has assigned a "negative" outlook to the US long-term credit rating. That means another downgrade was possible in the next 12 to 18 months if it does not see an improvement in debt reduction.
The other ratings agencies, Moody's and Fitch, currently still have a AAA rating on U.S. debt, which they just affirmed. But both of those agencies have suggested the U.S. could also be downgraded if projected government deficits are not reined in. Moody's currently has U.S. debt on review for possible downgrade.
HOW LONG HAS THE U.S. HAD AN AAA RATING?
S&P has maintained a AAA rating on the U.S. since 1941. Moody's has had an Aaa rating on the U.S. since 1917; Fitch's top-tier AAA rating dates to 1994.
WHAT IS A DOWNGRADE?
Standard & Poor's, one of the three major credit rating agencies that assign scores to debt issued by institutions, municipalities, and governments, said there is a heightened degree of risk in holding debt issued by the United States. So it lowered its rating from the AAA, the highest possible level, by one notch to AA+. It also said the outlook is negative.
WHY DID IT LOWER THE RATING?
The credit rating agency believes the outstanding debt of $14.3 trillion and projected deficits for coming years in the United States no longer warrant the top-tier rating that it had assigned to the United States since 1941. It also said that the political environment does not build confidence that the United States can agree on how to lower the deficit in a meaningful way any time soon.
DOES THIS MEAN THAT U.S DEBT IS NO LONGER SAFE?
No. At AA+, the U.S. is still considered to have a "strong" ability to meet its obligations. In fact, only a handful of countries now have the AAA rating - among them Canada, Germany, France and the United Kingdom. In addition, Treasuries have rallied this week, driving the yield on the benchmark 10-year note to 2.34 percent, its lowest level in about 10 months. This suggests people still view the U.S. as a safe place to invest.
BUT WASN'T A DEBT DEAL JUST SIGNED IN CONGRESS?
Yes, but the savings from this are projected at $2.1 trillion. S&P has said that a larger level of savings is needed - at least $4 trillion either through spending reductions or tax increases - are needed in order to start lowering U.S. deficits in coming years.
WHAT IMPACT DOES THE DOWNGRADE HAVE?
Over time, a lower rating will cause investors who buy U.S. government debt to demand a higher interest rate to hold that debt to reward them for the risk. If that is the case, benchmark long-term interest rates will rise. Most major rates, including the debt of corporations, mortgages purchased by investors, and other types of loans, are priced in relation to the U.S. Treasury benchmark. That means borrowing costs across a number of spectrums over time will rise, making loans and bonds more expensive. The more an individual or company is devoting to interest payments, the less they have for other activities.
SO WHAT WILL IT COST?
The downgrade could add up to 0.7 of a percentage point to U.S. Treasuries' yields, increasing funding costs for public debt by some $100 billion, according to SIFMA, a U.S. securities industry trade group.
WHO OWNS U.S. DEBT?
Other than the U.S. Federal Reserve, the most recent data from the U.S. Treasury shows that China, with $1.16 trillion in U.S. Treasury securities, is the biggest holder of our debt. China has repeatedly warned of the unsustainable trend of U.S. deficits and has talked of diversifying its holdings to other economies. But because China maintains the value of its currency through buying of U.S. dollars, it is likely to continue to be a major holder of Treasury securities for some years ahead.
WILL MY MONEY MARKET FUND HAVE TO SELL ITS TREASURY DEBT?
Not likely. The credit rating change affects long-term debt - the short-term credit rating of the U.S. is A-1+, the highest short-term rating. Money market funds with short-term debt are unlikely to be affected.
WILL INVESTORS PREFER DEBT FROM HIGHER RATED COUNTRIES?
This is possible. Some large investors, such as William Gross of PIMCO, have said other markets such as Canada offer more value. But the U.S. market retains significant appeal because its bond market was more than $35 trillion at the end of March 2011, according to SIFMA. No other bond market is close to that size.
NOW THIS HAS HAPPENED, IS U.S. SAFE FROM OTHER DOWNGRADES?
No. To begin with Standard & Poor's has assigned a "negative" outlook to the US long-term credit rating. That means another downgrade was possible in the next 12 to 18 months if it does not see an improvement in debt reduction.
The other ratings agencies, Moody's and Fitch, currently still have a AAA rating on U.S. debt, which they just affirmed. But both of those agencies have suggested the U.S. could also be downgraded if projected government deficits are not reined in. Moody's currently has U.S. debt on review for possible downgrade.
HOW LONG HAS THE U.S. HAD AN AAA RATING?
S&P has maintained a AAA rating on the U.S. since 1941. Moody's has had an Aaa rating on the U.S. since 1917; Fitch's top-tier AAA rating dates to 1994.
Breast-touching Festival is on in China
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The Daily Chilli
Friday, Aug 05, 2011
The Chinese have entered the seventh month of the Lunar calendar, known as the Hungry Ghost month, which began July 31.
This period is considered unlucky for many Chinese as they believe that the ghosts are allowed to return to the human realm as the Hell Gate opens throughout the month.
While the Buddhists and Taoists prepare offerings for the homeless ghosts, a minority tribe in China have their own interesting celebration.
The Yi people in Ejia town of Yunnan province, who are still singles, will head to the streets for Breast-Touching Festival (Monai Jie) on the 14th, 15th and 16th days of the month.
On these days, the men are welcome to touch the women's breasts.
Legend has it that the festival began around the Sui Dynasty (AD 581 - 619) when most of the teenagers of the Yi tribe were forced into the army and died in wars.
The people then carried out prayers to commemorate the dead, and it happened that the ceremony was held in the seventh month.
According to the wizards, the dead were unrest because they had not touched a woman before.
And so, they wanted 10 "pure and untouched" ladies to accompany them in the afterworld.
In a move to prevent them from being chosen, the single women - aged 15 and above - then asked the men to touch their breasts, and the custom is past down for generations.
Share
The Daily Chilli
Friday, Aug 05, 2011
The Chinese have entered the seventh month of the Lunar calendar, known as the Hungry Ghost month, which began July 31.
This period is considered unlucky for many Chinese as they believe that the ghosts are allowed to return to the human realm as the Hell Gate opens throughout the month.
While the Buddhists and Taoists prepare offerings for the homeless ghosts, a minority tribe in China have their own interesting celebration.
The Yi people in Ejia town of Yunnan province, who are still singles, will head to the streets for Breast-Touching Festival (Monai Jie) on the 14th, 15th and 16th days of the month.
On these days, the men are welcome to touch the women's breasts.
Legend has it that the festival began around the Sui Dynasty (AD 581 - 619) when most of the teenagers of the Yi tribe were forced into the army and died in wars.
The people then carried out prayers to commemorate the dead, and it happened that the ceremony was held in the seventh month.
According to the wizards, the dead were unrest because they had not touched a woman before.
And so, they wanted 10 "pure and untouched" ladies to accompany them in the afterworld.
In a move to prevent them from being chosen, the single women - aged 15 and above - then asked the men to touch their breasts, and the custom is past down for generations.
Thursday, August 04, 2011
M'sia, S'pore and HK picked as top spots for investments
SINGAPORE: Pacific Star Group, one of Asia's leading real estate investment houses, says commercial properties in Asia will continue to do well in the second half of 2011.
Within the commercial sector, its top pick is retail real estate, while the top three destinations in the region for retail property investment are Hong Kong, Singapore and Kuala Lumpur.
The group's senior vice-president and head of research and strategic planning Leslie Chua said Hong Kong was supported by tourist spending especially from outbound mainland Chinese visitors.
“Singapore likewise is enjoying a surge in visitors attracted especially to its integrated resorts.
“Over in Malaysia, domestic factors are at play. Strong wage growth and positive retail sentiment have boosted retail spending and real estate fundamentals in Kuala Lumpur,” he said, commenting on the group's biannual Asia Property Outlook and Strategy report here yesterday.
According to the report which highlights its key investment themes in regional real estate markets, the shine of Asian real estate environment continues despite greater global uncertainty, as it is supported by favourable economic fundamentals and positive consumer sentiment in most markets.
It says capital values have risen on the back of solid rental growth as regional economies continue their strong expansion, and the economic recovery in the region is moderating to a more sustainable rate which should provide steady support for Asian real estate.
The key factors supporting retail properties are tightening employment conditions, which are driving buoyant retail spending, and rising tourism inflows to Asia, which are becoming an important source of revenues for some cities.
After retail, the group favours office properties, as the region's rapid economic growth is fueling a steady upturn in the office sector.
Demand for office space in Asia has been driven mainly by corporate expansions, upgrading as well as relocations with financial, insurance, real estate and information technology tenants leading the way.
Pacific Star's top destination for office property investment is Singapore. Singapore continues to exhibit strong fundamentals in several key drivers including services outlook, political stability, and ease of doing business.
Although fundamentals for Asian residential real estate remain intact, the group is less sanguine on the residential sector citing a disproportionate amount of policy risk and rising interest rates as the key threats.
Taking into consideration loan structures, incomes and home prices, the group expects home buyers in Seoul and Ho Chi Minh to be the hardest hit in the region.
It says Kuala Lumpur will be least affected because policy risk is relatively low and economic conditions are generally healthy.
The biannual Pacific Star Asia Property Outlook and Strategy report surveys Bangkok, Beijing, Ho Chi Minh, Hong Kong, Kuala Lumpur, Seoul, Shanghai, Singapore and Tokyo. Bernama
Within the commercial sector, its top pick is retail real estate, while the top three destinations in the region for retail property investment are Hong Kong, Singapore and Kuala Lumpur.
The group's senior vice-president and head of research and strategic planning Leslie Chua said Hong Kong was supported by tourist spending especially from outbound mainland Chinese visitors.
“Singapore likewise is enjoying a surge in visitors attracted especially to its integrated resorts.
“Over in Malaysia, domestic factors are at play. Strong wage growth and positive retail sentiment have boosted retail spending and real estate fundamentals in Kuala Lumpur,” he said, commenting on the group's biannual Asia Property Outlook and Strategy report here yesterday.
According to the report which highlights its key investment themes in regional real estate markets, the shine of Asian real estate environment continues despite greater global uncertainty, as it is supported by favourable economic fundamentals and positive consumer sentiment in most markets.
It says capital values have risen on the back of solid rental growth as regional economies continue their strong expansion, and the economic recovery in the region is moderating to a more sustainable rate which should provide steady support for Asian real estate.
The key factors supporting retail properties are tightening employment conditions, which are driving buoyant retail spending, and rising tourism inflows to Asia, which are becoming an important source of revenues for some cities.
After retail, the group favours office properties, as the region's rapid economic growth is fueling a steady upturn in the office sector.
Demand for office space in Asia has been driven mainly by corporate expansions, upgrading as well as relocations with financial, insurance, real estate and information technology tenants leading the way.
Pacific Star's top destination for office property investment is Singapore. Singapore continues to exhibit strong fundamentals in several key drivers including services outlook, political stability, and ease of doing business.
Although fundamentals for Asian residential real estate remain intact, the group is less sanguine on the residential sector citing a disproportionate amount of policy risk and rising interest rates as the key threats.
Taking into consideration loan structures, incomes and home prices, the group expects home buyers in Seoul and Ho Chi Minh to be the hardest hit in the region.
It says Kuala Lumpur will be least affected because policy risk is relatively low and economic conditions are generally healthy.
The biannual Pacific Star Asia Property Outlook and Strategy report surveys Bangkok, Beijing, Ho Chi Minh, Hong Kong, Kuala Lumpur, Seoul, Shanghai, Singapore and Tokyo. Bernama
Wednesday, July 27, 2011
Buying Stocks When The Price Goes Down: Big Mistake?
Elvis Picardo
Contact | Author Bio
ARTICLE HIGHLIGHTS
• Averaging down involves buying more of a stock when its price drops.
• This strategy works when a stock is truly undervalued.
• Some stocks deserve a price drop and may continue to decline, rather than rebound.
The strategy of "averaging down", as the term implies, involves investing additional amounts in a financial instrument or asset if it declines significantly in price after the original investment is made. It's true that this action brings down the average cost of the instrument or asset, but will it lead to great returns or just to a larger share of a losing investment? Read on to find out.
Tutorial: The World's Greatest Investors
Conflicting Opinions
There is radical difference of opinion among investors and traders about the viability of the averaging down strategy. Proponents of the strategy view averaging down as a cost-effective approach to wealth accumulation; opponents view it as a recipe for disaster.
The strategy is often favored by investors who have a long-term investment horizon and a contrarian approach to investing. A contrarian approach refers to a style of investing that is against, or contrary, to the prevailing investment trend. (Learn how these investors profit from market fear in Buy When There's Blood In The Streets.)
For example, suppose that a long-term investor holds Widget Co. stock in his or her portfolio and believes that the outlook for Widget Co. is positive. This investor may be inclined to view a sharp decline in the stock as a buying opportunity, and probably also has the contrarian view that others are being unduly pessimistic about Widget Co.'s long-term prospects. Such investors justify their bargain-hunting by viewing a stock that has declined in price as being available at a discount to its intrinsic or fundamental value. "If you liked the stock at $50, you should love it at $40" is a mantra often quoted by these investors. (To learn about the downside to this strategy, read Value Traps: Bargain Hunters Beware!)
On the other side of the coin are the investors and traders who generally have shorter-term investment horizons and view a stock decline as a portent of things to come. These investors are also likely to espouse trading in the direction of the prevailing trend, rather than against it. They may view buying into a stock decline as akin to trying to "catch a falling knife." Such investors and traders are more likely to rely on technical indicators, such as price momentum, to justify their investing actions. Using the example of Widget Co., a short-term trader who initially bought the stock at $50 may have a stop-loss on this trade at $45. If the stock trades below $45, the trader will sell the position in Widget Co. and crystallize the loss. Short-term traders generally do not believe in averaging their positions down, as they see this as throwing good money after bad.
Advantages of Averaging Down
The main advantage of averaging down is that an investor can bring down the average cost of a stock holding quite substantially. Assuming the stock turns around, this ensures a lower breakeven point for the stock position, and higher gains in dollar terms than would have been the case if the position was not averaged down.
In the previous example of Widget Co., by averaging down through the purchase of an additional 100 shares at $40, the investor brings down the breakeven point (or average price) of the position to $45. If Widget Co. stock trades at $49 in another six months, the investor now has a potential gain of $800 (despite the fact that the stock is still trading below the initial entry price of $50).
If Widget Co. continues to rise and advances to $55, the potential gains would be $2,000. By averaging down, the investor has effectively "doubled up" the Widget Co. position. Had the investor not averaged down when the stock declined to $40, the potential gain on the position (when the stock is at $55) would amount to only $500.
Disadvantages of Averaging Down
Averaging down or doubling up works well when the stock eventually rebounds because it has the effect of magnifying gains, but if the stock continues to decline, losses are also magnified. In such cases, the investor may rue the decision to average down rather than either exiting the position or failing to add to the initial holding.
Investors must therefore take the utmost care to correctly assess the risk profile of the stock being averaged down. While this is no easy feat at the best of times, it becomes an even more difficult task during frenzied bear markets such as that of 2008, when household names such as Fannie Mae, Freddie Mac, AIG and Lehman Brothers lost most of their market capitalization in a matter of months. (To learn more, read Fannie Mae, Freddie Mac And The Credit Crisis Of 2008.)
Another drawback of averaging down is that it may result in a higher-than-desired weighting of a stock or sector in an investment portfolio. As an example, consider the case of an investor who had a 25% weighting of U.S. bank stocks in a portfolio at the beginning of 2008. If the investor averaged down his or her bank holdings after the precipitous decline in most bank stocks that year so that these stocks made up 35% of the investor's total portfolio, this proportion may represent a higher degree of exposure to bank stocks than that desired. At any rate, it certainly puts the investor at much higher risk. (To learn more, read A Guide To Portfolio Construction.)
Practical Applications
Some of the world's most astute investors, including Warren Buffett, have successfully used the averaging down strategy over the years. While the pockets of the average investor are nowhere near as deep as deep as Buffett's, averaging down can still be a viable strategy, albeit with a few caveats:
• Averaging down should be done on a selective basis for specific stocks, rather than as a catch-all strategy for every stock in a portfolio. This strategy is best restricted to high-quality, blue-chip stocks where the risk of corporate bankruptcy is low. Blue chips that satisfy stringent criteria - which include a long-term track record, strong competitive position, very low or no debt, stable business, solid cash flows, and sound management - may be suitable candidates for averaging down.
• Before averaging down a position, the company's fundamentals should be thoroughly assessed. The investor should ascertain whether a significant decline in a stock is only a temporary phenomenon, or a symptom of a deeper malaise. At a minimum, factors that need to be assessed are the company's competitive position, long-term earnings outlook, business stability and capital structure.
• The strategy may be particularly suited to times when there is an inordinate amount of fear and panic in the markets, because panic liquidation may result in high-quality stocks becoming available at compelling valuations. For example, some of the biggest technology stocks were trading at bargain-basement levels in the summer of 2002, while U.S. and international bank stocks were on sale in the second half of 2008. The key, of course, is exercising prudent judgment in picking the stocks that are best positioned to survive the shakeout.
The Bottom Line
Averaging down is a viable investment strategy for stocks, mutual funds and exchange-traded funds. However, due care must be exercised in deciding which positions to average down. The strategy is best restricted to blue chips that satisfy stringent selection criteria such as a long-term track record, minimal debt and solid cash flows.
by Elvis Picardo
Contact | Author Bio
ARTICLE HIGHLIGHTS
• Averaging down involves buying more of a stock when its price drops.
• This strategy works when a stock is truly undervalued.
• Some stocks deserve a price drop and may continue to decline, rather than rebound.
The strategy of "averaging down", as the term implies, involves investing additional amounts in a financial instrument or asset if it declines significantly in price after the original investment is made. It's true that this action brings down the average cost of the instrument or asset, but will it lead to great returns or just to a larger share of a losing investment? Read on to find out.
Tutorial: The World's Greatest Investors
Conflicting Opinions
There is radical difference of opinion among investors and traders about the viability of the averaging down strategy. Proponents of the strategy view averaging down as a cost-effective approach to wealth accumulation; opponents view it as a recipe for disaster.
The strategy is often favored by investors who have a long-term investment horizon and a contrarian approach to investing. A contrarian approach refers to a style of investing that is against, or contrary, to the prevailing investment trend. (Learn how these investors profit from market fear in Buy When There's Blood In The Streets.)
For example, suppose that a long-term investor holds Widget Co. stock in his or her portfolio and believes that the outlook for Widget Co. is positive. This investor may be inclined to view a sharp decline in the stock as a buying opportunity, and probably also has the contrarian view that others are being unduly pessimistic about Widget Co.'s long-term prospects. Such investors justify their bargain-hunting by viewing a stock that has declined in price as being available at a discount to its intrinsic or fundamental value. "If you liked the stock at $50, you should love it at $40" is a mantra often quoted by these investors. (To learn about the downside to this strategy, read Value Traps: Bargain Hunters Beware!)
On the other side of the coin are the investors and traders who generally have shorter-term investment horizons and view a stock decline as a portent of things to come. These investors are also likely to espouse trading in the direction of the prevailing trend, rather than against it. They may view buying into a stock decline as akin to trying to "catch a falling knife." Such investors and traders are more likely to rely on technical indicators, such as price momentum, to justify their investing actions. Using the example of Widget Co., a short-term trader who initially bought the stock at $50 may have a stop-loss on this trade at $45. If the stock trades below $45, the trader will sell the position in Widget Co. and crystallize the loss. Short-term traders generally do not believe in averaging their positions down, as they see this as throwing good money after bad.
Advantages of Averaging Down
The main advantage of averaging down is that an investor can bring down the average cost of a stock holding quite substantially. Assuming the stock turns around, this ensures a lower breakeven point for the stock position, and higher gains in dollar terms than would have been the case if the position was not averaged down.
In the previous example of Widget Co., by averaging down through the purchase of an additional 100 shares at $40, the investor brings down the breakeven point (or average price) of the position to $45. If Widget Co. stock trades at $49 in another six months, the investor now has a potential gain of $800 (despite the fact that the stock is still trading below the initial entry price of $50).
If Widget Co. continues to rise and advances to $55, the potential gains would be $2,000. By averaging down, the investor has effectively "doubled up" the Widget Co. position. Had the investor not averaged down when the stock declined to $40, the potential gain on the position (when the stock is at $55) would amount to only $500.
Disadvantages of Averaging Down
Averaging down or doubling up works well when the stock eventually rebounds because it has the effect of magnifying gains, but if the stock continues to decline, losses are also magnified. In such cases, the investor may rue the decision to average down rather than either exiting the position or failing to add to the initial holding.
Investors must therefore take the utmost care to correctly assess the risk profile of the stock being averaged down. While this is no easy feat at the best of times, it becomes an even more difficult task during frenzied bear markets such as that of 2008, when household names such as Fannie Mae, Freddie Mac, AIG and Lehman Brothers lost most of their market capitalization in a matter of months. (To learn more, read Fannie Mae, Freddie Mac And The Credit Crisis Of 2008.)
Another drawback of averaging down is that it may result in a higher-than-desired weighting of a stock or sector in an investment portfolio. As an example, consider the case of an investor who had a 25% weighting of U.S. bank stocks in a portfolio at the beginning of 2008. If the investor averaged down his or her bank holdings after the precipitous decline in most bank stocks that year so that these stocks made up 35% of the investor's total portfolio, this proportion may represent a higher degree of exposure to bank stocks than that desired. At any rate, it certainly puts the investor at much higher risk. (To learn more, read A Guide To Portfolio Construction.)
Practical Applications
Some of the world's most astute investors, including Warren Buffett, have successfully used the averaging down strategy over the years. While the pockets of the average investor are nowhere near as deep as deep as Buffett's, averaging down can still be a viable strategy, albeit with a few caveats:
• Averaging down should be done on a selective basis for specific stocks, rather than as a catch-all strategy for every stock in a portfolio. This strategy is best restricted to high-quality, blue-chip stocks where the risk of corporate bankruptcy is low. Blue chips that satisfy stringent criteria - which include a long-term track record, strong competitive position, very low or no debt, stable business, solid cash flows, and sound management - may be suitable candidates for averaging down.
• Before averaging down a position, the company's fundamentals should be thoroughly assessed. The investor should ascertain whether a significant decline in a stock is only a temporary phenomenon, or a symptom of a deeper malaise. At a minimum, factors that need to be assessed are the company's competitive position, long-term earnings outlook, business stability and capital structure.
• The strategy may be particularly suited to times when there is an inordinate amount of fear and panic in the markets, because panic liquidation may result in high-quality stocks becoming available at compelling valuations. For example, some of the biggest technology stocks were trading at bargain-basement levels in the summer of 2002, while U.S. and international bank stocks were on sale in the second half of 2008. The key, of course, is exercising prudent judgment in picking the stocks that are best positioned to survive the shakeout.
The Bottom Line
Averaging down is a viable investment strategy for stocks, mutual funds and exchange-traded funds. However, due care must be exercised in deciding which positions to average down. The strategy is best restricted to blue chips that satisfy stringent selection criteria such as a long-term track record, minimal debt and solid cash flows.
by Elvis Picardo
Tuesday, July 19, 2011
Durian Raja Kunyit
The flesh of the Raja Kunyit is creamy and yellowish like the turmeric (yellow ginger). It has a strong fragrance. The seeds are small, flat and uneven. The origin of the fruit is Gua Musang. Hence the name Musang King. The are many fake Raja Kunyit in the market. The opened ones posted above are the real ones. Have a good look. Don't get cheated.
Saturday, July 16, 2011
Reflexology Path
A Reflexology Path is good to have in any condominium. It enhances the ambience of the place, promotes good health and friendship as well. It's a nice place to meet and to know.
Tuesday, July 12, 2011
Quarterly Report (QR) Vs Half-Yearly Report (HR)
QR is much more desirable than HR. When an investor wants to invest, he needs the latest information. Thus the QR is more useful to him than the HR.
If the HR is to replace the QR, activities in the stock market is bound to drop. This is because investors make changes in their portfolios using, among other things, the QR, to evaluate stocks and make decisions. If changes in portfolios are made once every 6 months instead of once every 3 months, volume transacted at Bursa will drop immensely. This is bad for Bursa, broker firms, the government and the banks as well. The only people who will benefit are obviously, the insiders.
Why is it necessary to change the QR to HR? In fact a monthly report would be much better.
The plantation stocks make known their productions once every month.
Investors need the QR. It would be foolish to replace it with something less useful or informative.
If the HR is to replace the QR, activities in the stock market is bound to drop. This is because investors make changes in their portfolios using, among other things, the QR, to evaluate stocks and make decisions. If changes in portfolios are made once every 6 months instead of once every 3 months, volume transacted at Bursa will drop immensely. This is bad for Bursa, broker firms, the government and the banks as well. The only people who will benefit are obviously, the insiders.
Why is it necessary to change the QR to HR? In fact a monthly report would be much better.
The plantation stocks make known their productions once every month.
Investors need the QR. It would be foolish to replace it with something less useful or informative.
Monday, July 11, 2011
AT 3.19 Jerneh is a good bet
Jerneh looks a good bet at RM3.19 per share. It is paying a dividend of not less that 1.87 per share soon. Later on it is likely pay a capital distribution of RM2 per share. At the present price of RM3.19 per share, you have a good chance to make about RM680 before expenses and tax if you buy 1000 shares now and keep them for the next few months.
As at Dec 31, 2010, its NTA per share was RM3.91 per share. No matter from whatever angle you look at it, there is money at Jerneh at RM 3.19 per share.
Nonetheless, nothing is certain in the stock market. If you like calculated risk, this is a good one for you.
As usual, you buy at your own risk absolutely.
As at Dec 31, 2010, its NTA per share was RM3.91 per share. No matter from whatever angle you look at it, there is money at Jerneh at RM 3.19 per share.
Nonetheless, nothing is certain in the stock market. If you like calculated risk, this is a good one for you.
As usual, you buy at your own risk absolutely.
Tuesday, July 05, 2011
KFima & FimaCorp to merge?
MONDAY, JULY 4, 2011
TheEdgeWeekly just had an article on KFima and FimaCorp of which both of them could be merged under a single entity and could be somewhat similar to the merger between Sunway and Suncity OR it could be via privatization of FimaCorp. KFima is also cash rich with net cash of RM151.2 mil. If KFima is to take FimaCorp private, it has to fork out RM200 mil to take FimaCorp private and might need to borrow additional RM50 mil. TheEdge mentioned that it doesn't make sense for the exercise to be fully paid by cash. It's quite true in the sense that if fully paid by cash, KFima shareholders would benefit more than FimaCorp shareholders as KFima shareholders would stand to benefit from the additional earnings contributed by the extra 39% equity stake in FimaCorp while earnings from FimaCorp would not be diluted by extra share issuance. However, FimaCorp shareholders could not participate in the potential upside of KFima's share price. Perhaps a share swap would be more ideal as FimaCorp shareholders would stand to benefit from potential upside of merged entity's share price. A bumper dividend from FimaCorp could be ("Could be only :p") on the cards to sweeten the deal and could pump in cash from FimaCorp to KFima. Another thing, just to make things clearer as the article could be somewhat vague about the plantation hectarage, they would have a total of about 23,000 hectares of agricultural land (Oil palm and pineapple) if both entities are merged. Usual benefits of merger are economies of scale and elimination of inefficiencies etc etc. The merger would be good for the shares as well as FimaCorp shares are hardly traded, remains illiquid and trading at such low valuations, thus better to be taken off KLSE. On the other hand, KFima's or the merged entity's shares could have a larger share base to enhance liquidity when merged.
Major shareholders of KFima are buying KFima shares over the past few weeks. There should be some good deal in the offing for KFima. Valuation remains very attractive as KFima is still trading at low PE of only 6.4x based on historical earnings while PBV is at about 1x. KFima share price has remained at this level for a very long time, thus it's about time to make a move. At this price, it's still good to go in. Dividend yield remains commendable at 4%. It has strong balance sheet with net cash of RM151.2 mil coupled with cash cow businesses in printing government security and confidential documents in addition to oil palm/pineapple plantations.
Having said all these, the deal remains uncertain as there is no official announcement yet on KLSE. Nonetheless, based on its fundamentals alone, KFima is an attractive share to accumulate.
You might also like:
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LinkWithin
Posted by David Koay at 10:42 PM
Labels: Fima Corporation, Kumpulan Fima
TheEdgeWeekly just had an article on KFima and FimaCorp of which both of them could be merged under a single entity and could be somewhat similar to the merger between Sunway and Suncity OR it could be via privatization of FimaCorp. KFima is also cash rich with net cash of RM151.2 mil. If KFima is to take FimaCorp private, it has to fork out RM200 mil to take FimaCorp private and might need to borrow additional RM50 mil. TheEdge mentioned that it doesn't make sense for the exercise to be fully paid by cash. It's quite true in the sense that if fully paid by cash, KFima shareholders would benefit more than FimaCorp shareholders as KFima shareholders would stand to benefit from the additional earnings contributed by the extra 39% equity stake in FimaCorp while earnings from FimaCorp would not be diluted by extra share issuance. However, FimaCorp shareholders could not participate in the potential upside of KFima's share price. Perhaps a share swap would be more ideal as FimaCorp shareholders would stand to benefit from potential upside of merged entity's share price. A bumper dividend from FimaCorp could be ("Could be only :p") on the cards to sweeten the deal and could pump in cash from FimaCorp to KFima. Another thing, just to make things clearer as the article could be somewhat vague about the plantation hectarage, they would have a total of about 23,000 hectares of agricultural land (Oil palm and pineapple) if both entities are merged. Usual benefits of merger are economies of scale and elimination of inefficiencies etc etc. The merger would be good for the shares as well as FimaCorp shares are hardly traded, remains illiquid and trading at such low valuations, thus better to be taken off KLSE. On the other hand, KFima's or the merged entity's shares could have a larger share base to enhance liquidity when merged.
Major shareholders of KFima are buying KFima shares over the past few weeks. There should be some good deal in the offing for KFima. Valuation remains very attractive as KFima is still trading at low PE of only 6.4x based on historical earnings while PBV is at about 1x. KFima share price has remained at this level for a very long time, thus it's about time to make a move. At this price, it's still good to go in. Dividend yield remains commendable at 4%. It has strong balance sheet with net cash of RM151.2 mil coupled with cash cow businesses in printing government security and confidential documents in addition to oil palm/pineapple plantations.
Having said all these, the deal remains uncertain as there is no official announcement yet on KLSE. Nonetheless, based on its fundamentals alone, KFima is an attractive share to accumulate.
You might also like:
Fajarbaru (RM1.21): Watch out for LCCT award in November
Fajarbaru (RM1.26) 1QFY06/2010 Results: Ok ok, in line
Yee Lee (RM2.53): Big timers accumulating? Liquidity to ...
LinkWithin
Posted by David Koay at 10:42 PM
Labels: Fima Corporation, Kumpulan Fima
Sunday, July 03, 2011
Pessimism, Skepticism, Optimism & Euphoria
Buy during times of pessimism: “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.”
Among the maxims that I know, the one mentioned above is one that I like to commit to my memory.
Maximum pessimism here, means that most people if not all, are pessimistic about the stock market. At this time, the market is very quiet, volume transacted is very low, nobody wants to talk about equities, and more and more remisers are going for their holidays. How long this period will last? Nobody knows. During this period, political news and economic news will be bad not only in your own countries but in foreign countries as well. Most people will be in a state of despair. Some may even be cursing and vow not to touch equities again. But savvy investors will be building up their portfolios. They will buy slowly; they will take their time to pick and choose undervalued stocks. You can be sure that many such stocks will be on offer.
Someday the market will start to move up. But there will be many false dawns. Slowly and quietly, as the market continues to improve, skepticism surfaces. At this stage, many are doubtful, and many are still fearful and critical. From skepticism, the markets moves to optimism. Volume improves and prices move up daily. More and more people are throwing cautious to the wind. Those who have the courage to enter the market make money. They buy high and sell higher.
As the market continues to improve with more encouraging news daily, newbies commence to come in droves. Initially all will make money. They call this: "Beginners' Luck."
The last stage of a bull market is the stage of euphoria. It is at this time that many will say, "this time is different." The sad truth is that "this time is different" will eventually turn out to be the most expensive four-word sentence. I call this euphoria, "Extreme Optimism."
During this period of Extreme Optimism, all the small boys will be involved in the stock market. Hawkers, ice-creme sellers, vegetable sellers, shoeshine boys and even barbers will be talking about the market. Price improvement will be phenomenal and something that is to be expected every trading day. Every tip turns out to be a winner.
"The market is most dangerous when it is most attractive." This is another maxim you should not forget.
Whether you want to buy low and sell high or buy high to sell higher is entirely up to you.
You and only you alone know your own risk-tolerance.
In the stock market, if you do not have knowledge, wisdom, patience and discipline, you will find that making money here is most difficult whether you invest or trade. Upgrade yourself first before you think of profit.
Among the maxims that I know, the one mentioned above is one that I like to commit to my memory.
Maximum pessimism here, means that most people if not all, are pessimistic about the stock market. At this time, the market is very quiet, volume transacted is very low, nobody wants to talk about equities, and more and more remisers are going for their holidays. How long this period will last? Nobody knows. During this period, political news and economic news will be bad not only in your own countries but in foreign countries as well. Most people will be in a state of despair. Some may even be cursing and vow not to touch equities again. But savvy investors will be building up their portfolios. They will buy slowly; they will take their time to pick and choose undervalued stocks. You can be sure that many such stocks will be on offer.
Someday the market will start to move up. But there will be many false dawns. Slowly and quietly, as the market continues to improve, skepticism surfaces. At this stage, many are doubtful, and many are still fearful and critical. From skepticism, the markets moves to optimism. Volume improves and prices move up daily. More and more people are throwing cautious to the wind. Those who have the courage to enter the market make money. They buy high and sell higher.
As the market continues to improve with more encouraging news daily, newbies commence to come in droves. Initially all will make money. They call this: "Beginners' Luck."
The last stage of a bull market is the stage of euphoria. It is at this time that many will say, "this time is different." The sad truth is that "this time is different" will eventually turn out to be the most expensive four-word sentence. I call this euphoria, "Extreme Optimism."
During this period of Extreme Optimism, all the small boys will be involved in the stock market. Hawkers, ice-creme sellers, vegetable sellers, shoeshine boys and even barbers will be talking about the market. Price improvement will be phenomenal and something that is to be expected every trading day. Every tip turns out to be a winner.
"The market is most dangerous when it is most attractive." This is another maxim you should not forget.
Whether you want to buy low and sell high or buy high to sell higher is entirely up to you.
You and only you alone know your own risk-tolerance.
In the stock market, if you do not have knowledge, wisdom, patience and discipline, you will find that making money here is most difficult whether you invest or trade. Upgrade yourself first before you think of profit.
River of Life
Jul 2, 2011
River of Life in full flow
KUALA LUMPUR: The much-anticipated River of Life project, which aims to revitalise and transform the city’s dirty rivers, has taken off.
Prime Minister Datuk Seri Najib Tun Razak yesterday launched the project which seeks to transform the Klang and Gombak rivers into iconic waterfronts on par with waterways in cities like Amsterdam, London, Melbourne and Paris by 2020.
The Greater KL-Klang Valley project is an Entry Point Project under the Government’s Economic Transformation Programme.
“I believe there will be a drastic change to Kuala Lumpur’s image. This is what Kuala Lumpur folk have been waiting for.
“The Klang river has all the elements to become an attractive waterfront bustling with daily activities,” Najib said at a ground-breaking ceremony near Jalan Pahang yesterday.
He said there would be a joint effort to clean the rivers and improve water quality.
“It is estimated that 170 tonnes of rubbish enter the Klang river every year but only 25 tonnes are cleared.
“There is also treated and non-treated sewage entering the river every day,” he said.
Najib said strict enforcement and a change of mindset were needed to ensure the rivers were kept clean.
The project, he said, had huge economic potential, would attract more tourists, create jobs as well as raise property value along the Klang and Gombak rivers.
Najib said the project was expected to contribute RM11.3bil to the country’s Gross Domestic Product until 2020.
The project is divided into three parts, namely river cleaning, which will involve a 110km stretch along the Klang river basin; river beautification along a 10.7km stretch by the Klang and Gombak river corridor which will include pedestrian walkways; and corridor development.
Najib also viewed the five masterplan proposals for the river beautification master planning competition.
Later, at the launch of the Kuala Lumpur Architecture Festival, he said a new affordable home scheme for low and middle-income earners would be launched on Monday.
River of Life in full flow
KUALA LUMPUR: The much-anticipated River of Life project, which aims to revitalise and transform the city’s dirty rivers, has taken off.
Prime Minister Datuk Seri Najib Tun Razak yesterday launched the project which seeks to transform the Klang and Gombak rivers into iconic waterfronts on par with waterways in cities like Amsterdam, London, Melbourne and Paris by 2020.
The Greater KL-Klang Valley project is an Entry Point Project under the Government’s Economic Transformation Programme.
“I believe there will be a drastic change to Kuala Lumpur’s image. This is what Kuala Lumpur folk have been waiting for.
“The Klang river has all the elements to become an attractive waterfront bustling with daily activities,” Najib said at a ground-breaking ceremony near Jalan Pahang yesterday.
He said there would be a joint effort to clean the rivers and improve water quality.
“It is estimated that 170 tonnes of rubbish enter the Klang river every year but only 25 tonnes are cleared.
“There is also treated and non-treated sewage entering the river every day,” he said.
Najib said strict enforcement and a change of mindset were needed to ensure the rivers were kept clean.
The project, he said, had huge economic potential, would attract more tourists, create jobs as well as raise property value along the Klang and Gombak rivers.
Najib said the project was expected to contribute RM11.3bil to the country’s Gross Domestic Product until 2020.
The project is divided into three parts, namely river cleaning, which will involve a 110km stretch along the Klang river basin; river beautification along a 10.7km stretch by the Klang and Gombak river corridor which will include pedestrian walkways; and corridor development.
Najib also viewed the five masterplan proposals for the river beautification master planning competition.
Later, at the launch of the Kuala Lumpur Architecture Festival, he said a new affordable home scheme for low and middle-income earners would be launched on Monday.
Sunday, June 26, 2011
The 10 Maxims of Successful Investing
Weekend: The 10 Maxims of Successful Investing
By Steve Christ | Saturday, June 25th, 2011
Templeton's 10 Maxims
He called them Templeton's 10 Principles for Successful Investing. They included the following:
Invest for real returns: “The true objective for any long-term investor is maximum total real return after taxes.”
Keep an open mind: “Never adopt permanently any type of asset or any selection method. Try to stay flexible, open minded and skeptical. Long term top results are achieved only by changing from popular to unpopular the types of securities you favour and your methods of selection.”
Never follow the crowd: “If you buy the same securities as other people, you will have the same results as other people. It is impossible to produce superior performance unless you do something different from the majority. Buying when others are despondently selling and selling when others are greedily buying requires the greatest fortitude and pays the greatest reward.”
Everything changes: “Bear markets have always been temporary. And so have bull markets.”
Avoid the popular: “When any method for selecting stocks becomes popular, you will need to switch to unpopular methods.”
Learn from your mistakes: “'This time is different' are among the most costly four words in market history.”
Buy during times of pessimism: “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.”
Search worldwide: “To avoid having all your eggs in the wrong basket at the wrong time, you should diversify. When you search worldwide, you find more better bargains than when you monitor only one nation. You also benefit from more safety thanks to diversification.”
Hunt for value and bargains: “Too many investors focus on outlook and trend. Therefore, more profit is made by focusing on value. In the stock market the only way to get a bargain is to buy what most investors are selling.”
No-one knows everything: “An investor who has all of the answers doesn't even understand the questions.”
Of course, those aren't the only words of wisdom Templeton had to offer. He also once said, "It's nice to be important, but it is more important to be nice."
Templeton passed away in July 2008 at the age of 95.
As for some places to start building a lifetime of wealth, our editors have put together a few of their best ideas for the years to come in this week's top-read articles from Wealth Daily and Energy & Capital, below.
Have a great weekend.
Your bargain-hunting analyst,
Steve Christ
Editor, Wealth Daily
By Steve Christ | Saturday, June 25th, 2011
Templeton's 10 Maxims
He called them Templeton's 10 Principles for Successful Investing. They included the following:
Invest for real returns: “The true objective for any long-term investor is maximum total real return after taxes.”
Keep an open mind: “Never adopt permanently any type of asset or any selection method. Try to stay flexible, open minded and skeptical. Long term top results are achieved only by changing from popular to unpopular the types of securities you favour and your methods of selection.”
Never follow the crowd: “If you buy the same securities as other people, you will have the same results as other people. It is impossible to produce superior performance unless you do something different from the majority. Buying when others are despondently selling and selling when others are greedily buying requires the greatest fortitude and pays the greatest reward.”
Everything changes: “Bear markets have always been temporary. And so have bull markets.”
Avoid the popular: “When any method for selecting stocks becomes popular, you will need to switch to unpopular methods.”
Learn from your mistakes: “'This time is different' are among the most costly four words in market history.”
Buy during times of pessimism: “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.”
Search worldwide: “To avoid having all your eggs in the wrong basket at the wrong time, you should diversify. When you search worldwide, you find more better bargains than when you monitor only one nation. You also benefit from more safety thanks to diversification.”
Hunt for value and bargains: “Too many investors focus on outlook and trend. Therefore, more profit is made by focusing on value. In the stock market the only way to get a bargain is to buy what most investors are selling.”
No-one knows everything: “An investor who has all of the answers doesn't even understand the questions.”
Of course, those aren't the only words of wisdom Templeton had to offer. He also once said, "It's nice to be important, but it is more important to be nice."
Templeton passed away in July 2008 at the age of 95.
As for some places to start building a lifetime of wealth, our editors have put together a few of their best ideas for the years to come in this week's top-read articles from Wealth Daily and Energy & Capital, below.
Have a great weekend.
Your bargain-hunting analyst,
Steve Christ
Editor, Wealth Daily
Friday, June 17, 2011
Sell when Investors Are Most Optimistic
Everything has a value. In times of extreme optimism shares become overvalued. In times of extreme pessimism, shares become undervalued. A savvy investor is able to exploit these extremes.
When a stock becomes overvalued, it may become more overvalued and stay overvalued for a long time. As long as the trend keeps going up, you should hold on to your stock. In a bullish scenario, man can become mad with enthusiasm. Thomas Edison said, " I can calculate the movements of the stars, but I can't calculate the madness of man."
In the bull market of 1971 to 1973, OCBC went up to a high of $50 per share. Stocks were then traded at 1000 shares per lot. That means if you buy 1 lot of OCBC, you have to pay $50,000 which was then equivalent to the cost of 2 terrace houses that could fetch an annual rental of $4000. As for 1 lot of OCBC, your annual dividend is only $100. Such was the madness of the stock market then.
The bubble in OCBC eventually burst. Within less than 3 months, if I am not mistaken, OCBC plummeted to $3 per share.
You will do well to remember that when shares are sold ex-hope and cum-despair, it is the time to buy. But when shares are at the other extreme, you should get ready to sell everything, and sell everything when the trend reverses.
When a stock becomes overvalued, it may become more overvalued and stay overvalued for a long time. As long as the trend keeps going up, you should hold on to your stock. In a bullish scenario, man can become mad with enthusiasm. Thomas Edison said, " I can calculate the movements of the stars, but I can't calculate the madness of man."
In the bull market of 1971 to 1973, OCBC went up to a high of $50 per share. Stocks were then traded at 1000 shares per lot. That means if you buy 1 lot of OCBC, you have to pay $50,000 which was then equivalent to the cost of 2 terrace houses that could fetch an annual rental of $4000. As for 1 lot of OCBC, your annual dividend is only $100. Such was the madness of the stock market then.
The bubble in OCBC eventually burst. Within less than 3 months, if I am not mistaken, OCBC plummeted to $3 per share.
You will do well to remember that when shares are sold ex-hope and cum-despair, it is the time to buy. But when shares are at the other extreme, you should get ready to sell everything, and sell everything when the trend reverses.
Thursday, June 16, 2011
Bank Negara warns of phishing email
PETALING JAYA: Bank Negara Malaysia (BNM) has warned of an email aimed at deceiving members of the public into disclosing their personal banking details.
A statement issued by the central bank Thursday said the email, which claims to be from Bank Negara, urges people to update their account details through a provided hyperlink.
"Intended victims receive emails purportedly from BNM, informing them that BNM is collecting personal banking information to update its database. They will be prompted to either click on a link or reply to the email directly.
"Once the victim clicks on the link provided in the email, they are directed to a fake website requesting disclosure of personal financial details such as credit or debit cards details including card code verification or other personal identification numbers (PIN)," the statement said.
BNM said financial institutions, including credit card issuers and BNM and all banking institutions will never request for personal banking information when contacting customers, be it via telephone calls, SMS or emails.
People who have received such emails are advised to contact their respective banks or contact the Associations of Banks in Malaysia (ABM) toll-free service at 1-300-88-9980.
For more information on financial scams activities, visit the financial fraud alert site at http://fraudalert.bnm.gov.my.
The public can also contact BNMTELELINK (Customer Contact Centre) at 1-300-88-5465 or email to bnmtelelink@bnm.gov.my for enquiries.
A statement issued by the central bank Thursday said the email, which claims to be from Bank Negara, urges people to update their account details through a provided hyperlink.
"Intended victims receive emails purportedly from BNM, informing them that BNM is collecting personal banking information to update its database. They will be prompted to either click on a link or reply to the email directly.
"Once the victim clicks on the link provided in the email, they are directed to a fake website requesting disclosure of personal financial details such as credit or debit cards details including card code verification or other personal identification numbers (PIN)," the statement said.
BNM said financial institutions, including credit card issuers and BNM and all banking institutions will never request for personal banking information when contacting customers, be it via telephone calls, SMS or emails.
People who have received such emails are advised to contact their respective banks or contact the Associations of Banks in Malaysia (ABM) toll-free service at 1-300-88-9980.
For more information on financial scams activities, visit the financial fraud alert site at http://fraudalert.bnm.gov.my.
The public can also contact BNMTELELINK (Customer Contact Centre) at 1-300-88-5465 or email to bnmtelelink@bnm.gov.my for enquiries.
Tuesday, June 14, 2011
Control Your Emotion or Others will Control You
When you buy a stock,
Hope is high that you will make a lot.
But things are normally not that rosy.
The moment you buy, things become messy.
The price drops and drops and drops.
You become frustrated, 'cos your attempt flops.
Your hope of a profit vanishes.
Already set in are much damages.
You hope and pray for a rebound.
One day it comes and things seem to turn around.
Just when the going looks good,
The price stops moving and just stood.
Moments later, the price starts to retreat.
Nothing is left to benefit.
Your hope has turned forlorn.
Your hope remains unborn.
Next time it moves up, I will sell, you say.
But for long, the price has gone astray.
At the darkest hour, comes the dawn.
Despair is now a conclusion, forgone.
As the price turns around,
Your chance to sell at a small gain is abound
Soon the price hits your target.
You sell with joy and without regret.
But your joy soon turns to frustration,
'Cos you sell at a bullish occasion.
If you have held on to your gains,
You would have much much more to gain.
Hope is high that you will make a lot.
But things are normally not that rosy.
The moment you buy, things become messy.
The price drops and drops and drops.
You become frustrated, 'cos your attempt flops.
Your hope of a profit vanishes.
Already set in are much damages.
You hope and pray for a rebound.
One day it comes and things seem to turn around.
Just when the going looks good,
The price stops moving and just stood.
Moments later, the price starts to retreat.
Nothing is left to benefit.
Your hope has turned forlorn.
Your hope remains unborn.
Next time it moves up, I will sell, you say.
But for long, the price has gone astray.
At the darkest hour, comes the dawn.
Despair is now a conclusion, forgone.
As the price turns around,
Your chance to sell at a small gain is abound
Soon the price hits your target.
You sell with joy and without regret.
But your joy soon turns to frustration,
'Cos you sell at a bullish occasion.
If you have held on to your gains,
You would have much much more to gain.
Friday, June 10, 2011
Ten commandments for life
Someone has written these beautiful words. Must read and try to understand the deep meaning of it.
They are like the ten commandments to follow in life all the time.
1] Prayer is not a "spare wheel" that you pull out when in trouble, but it is a "steering wheel" that directs the right path throughout.
2] So a Car's WINDSHIELD is so large & the Rear view Mirror is so small? Because our PAST is not as important as our FUTURE. So, Look Ahead and Move on.
3] Friendship is like a BOOK. It takes few seconds to burn, but it takes years to write.
4] All things in life are temporary. If going well, enjoy it, they will not last forever. If going wrong, don't worry, they can't last long either.
5] Old Friends are Gold! New Friends are Diamond! If you get a Diamond, don't forget the Gold! Because to hold a Diamond, you always need a Base of Gold!
6] Often when we lose hope and think this is the end, GOD smiles from above and says, "Relax, sweetheart, it's just a bend, not the end!
7] When GOD solves your problems, you have faith in HIS abilities; when GOD doesn't solve your problems HE has faith in your abilities.
8] A blind person asked God: "Can there be anything worse than losing eye sight?" He replied: "Yes, losing your vision!"
9] When you pray for others, God listens to you and blesses them, and sometimes, when you are safe and happy, remember that someone has prayed for you.
10] WORRYING does not take away tomorrow's TROUBLES, it takes away today's PEACE.
If you really enjoy this, please pass to others. It may brighten someone's day...
They are like the ten commandments to follow in life all the time.
1] Prayer is not a "spare wheel" that you pull out when in trouble, but it is a "steering wheel" that directs the right path throughout.
2] So a Car's WINDSHIELD is so large & the Rear view Mirror is so small? Because our PAST is not as important as our FUTURE. So, Look Ahead and Move on.
3] Friendship is like a BOOK. It takes few seconds to burn, but it takes years to write.
4] All things in life are temporary. If going well, enjoy it, they will not last forever. If going wrong, don't worry, they can't last long either.
5] Old Friends are Gold! New Friends are Diamond! If you get a Diamond, don't forget the Gold! Because to hold a Diamond, you always need a Base of Gold!
6] Often when we lose hope and think this is the end, GOD smiles from above and says, "Relax, sweetheart, it's just a bend, not the end!
7] When GOD solves your problems, you have faith in HIS abilities; when GOD doesn't solve your problems HE has faith in your abilities.
8] A blind person asked God: "Can there be anything worse than losing eye sight?" He replied: "Yes, losing your vision!"
9] When you pray for others, God listens to you and blesses them, and sometimes, when you are safe and happy, remember that someone has prayed for you.
10] WORRYING does not take away tomorrow's TROUBLES, it takes away today's PEACE.
If you really enjoy this, please pass to others. It may brighten someone's day...
Thursday, June 09, 2011
Published: Wednesday June 8, 2011 MYT 8:38:00 PM
Public warned about syndicate passing off as HK police
Be extremely careful when you remit money to another account, because the money remitted may never come back.
MALACCA: The state police have advised the public to beware of a fraud syndicate, which passes itself as the Hong Kong police and Bank Negara staff to cheat victims.
Explaining the modus operandi, state police chief SAC Datuk Chuah Gee Lye said that syndicate's members would introduce themselves as policemen from Bukit Aman and tell the intended victim that his identity has been used to launder money abroad.
They will ask the victim to contact the Hong Kong police using a number they give, Chuah told reporters here.
“On calling the number, the victim will be told that Bank Negara has been contacted. Shortly after that, he will receive a call from an officer, supposedly from Bank Negara, who will confirm that his account was used for illegal activity.
“The syndicate members will then advise their intended victim to transfer his money into another account if he does not want his funds to be frozen,” he added.
Chuah said that two cases had been reported in the state but the intended victims were lucky to escape from being cheated.
He advised members of the public who are similarly approached to contact the state Commercial Crime Investigation Department at 06-2854196.
Public warned about syndicate passing off as HK police
Be extremely careful when you remit money to another account, because the money remitted may never come back.
MALACCA: The state police have advised the public to beware of a fraud syndicate, which passes itself as the Hong Kong police and Bank Negara staff to cheat victims.
Explaining the modus operandi, state police chief SAC Datuk Chuah Gee Lye said that syndicate's members would introduce themselves as policemen from Bukit Aman and tell the intended victim that his identity has been used to launder money abroad.
They will ask the victim to contact the Hong Kong police using a number they give, Chuah told reporters here.
“On calling the number, the victim will be told that Bank Negara has been contacted. Shortly after that, he will receive a call from an officer, supposedly from Bank Negara, who will confirm that his account was used for illegal activity.
“The syndicate members will then advise their intended victim to transfer his money into another account if he does not want his funds to be frozen,” he added.
Chuah said that two cases had been reported in the state but the intended victims were lucky to escape from being cheated.
He advised members of the public who are similarly approached to contact the state Commercial Crime Investigation Department at 06-2854196.
Wednesday, June 08, 2011
The 6 Rules For Successful Investing In Chinese ADRs
By DOUG TSURUOKA, INVESTOR'S BUSINESS DAILY
Posted 05/11/2011 05:50 PM ET
The Chinese flag is displayed on an electronic screen at Nasdaq on Wednesday for the initial public offering of Jiayuan.com. China's largest dating... View Enlarged Image
A passel of U.S.-listed Chinese stocks have run into trouble lately. Some have restated earnings or undergone trading halts as the SEC probes accounting glitches or allegations of malfeasance.
Trading in the last two months was halted on China Electric Motor, NIVS Intellimedia Technology and Puda Coal, to name a few. Fertilizer and feed maker Yongye International's (YONG) production figures and ties are also being questioned by analysts.
Shares of several others tumbled without any company-specific news. The volatility comes at a time when Chinese IPOs in general are struggling. Renren (RENN), "China's Facebook," fell below its $14 IPO price Wednesday after hitting 24 intraday in its May 4 debut. But appliance maker Deer Consumer Products (DEER) brushed off criticism to post Q1 profit and sales growth above 40% on Tuesday.
There are no hard rules to investing in China-based companies that trade in the U.S. But analysts say these six points offer a good checklist:
1. Are they industry leaders in China?
2. Do the companies use any of the Big Four global accounting firms (KPMG, PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young)?
3. Do they have the sponsorship of big investment funds?
4. Is there serious backing from venture capital funds?
5. Are sizable chunks of equity owned by management?
6. Are Americans on the board?
"The best rule of thumb for investing in China is whether that company is No. 1 in its space," said venture capitalist David Chao, co-founder of early-stage tech VC firm DCM. "Competition is fierce in China. Such companies have withstood the test of time."
Chao compares China's situation to Japan, where giants like Sony (SNE), which led in the early 1960s, are still pretty much the leaders today. Chao is on Renren's board.
John Mattio, a senior vice president at investor relations firm HC International in New York, says many U.S. fund managers won't take a stake in a Chinese company unless its auditor is one of the Big Four. It stems from a belief that smaller bookkeepers can't check or balance their work.
But Mattio warns that bigness alone won't ensure accuracy. Chinese law requires large foreign auditors to join with local accounting firms, he notes. This means Chinese partners, not U.S. expats, often do the books.
"It's not like the team from midtown Manhattan is flying to China to do the audit," he said.
China MediaExpress (CCME) hasn't traded since March 11 after months of claims of cooked books. That same day, a Deloitte Touche affiliate severed ties.
Sponsorship and rising holdings by big mutual funds, hedge funds, banks and other institutions are other positives.
Janet Stites, publisher of China Business Knowledge, an online newsletter that tracks U.S.-listed Chinese firms, says big funds have the staff and resources to conduct due diligence.
"If Fidelity is investing, it's not a 100% good call, but it's a good place to start," Stites said.
Also desirable are credible margins and strong EBIDTA, though those can be hard to pin down in fast-changing, booming China.
Analysts like to see top executives with a stake in future performance. For example, managers own 17% of Chinese search engine Baidu (BIDU).
The downside: Some heavily family-owned Chinese firms are used as cash dispensers.
Depth and length of VC funding is another guide. Internet firm Qihoo 360 (QIHU), which raised $175 million in a successful March IPO, had over five years of substantial VC backing, Stites says.
DCM's Chao says having U.S. directors shows that a Chinese firm can tap U.S. expertise and will likely adhere to U.S. governance standards.
Stites cites hog producer Tianli Agritech (OINK). One director is Peter Gadkowski, an ex-SEC enforcement attorney and founder of a 30,000-sow farm in Colorado.
The Chinese flag is displayed on an electronic screen at Nasdaq on Wednesday for the initial public offering of Jiayuan.com. China's largest dating... View Enlarged Image
A passel of U.S.-listed Chinese stocks have run into trouble lately. Some have restated earnings or undergone trading halts as the SEC probes accounting glitches or allegations of malfeasance.
Trading in the last two months was halted on China Electric Motor, NIVS Intellimedia Technology and Puda Coal, to name a few. Fertilizer and feed maker Yongye International's (YONG) production figures and ties are also being questioned by analysts.
Shares of several others tumbled without any company-specific news. The volatility comes at a time when Chinese IPOs in general are struggling. Renren (RENN), "China's Facebook," fell below its $14 IPO price Wednesday after hitting 24 intraday in its May 4 debut. But appliance maker Deer Consumer Products (DEER) brushed off criticism to post Q1 profit and sales growth above 40% on Tuesday.
There are no hard rules to investing in China-based companies that trade in the U.S. But analysts say these six points offer a good checklist:
1. Are they industry leaders in China?
2. Do the companies use any of the Big Four global accounting firms (KPMG, PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young)?
3. Do they have the sponsorship of big investment funds?
4. Is there serious backing from venture capital funds?
5. Are sizable chunks of equity owned by management?
6. Are Americans on the board?
"The best rule of thumb for investing in China is whether that company is No. 1 in its space," said venture capitalist David Chao, co-founder of early-stage tech VC firm DCM. "Competition is fierce in China. Such companies have withstood the test of time."
Chao compares China's situation to Japan, where giants like Sony (SNE), which led in the early 1960s, are still pretty much the leaders today. Chao is on Renren's board.
John Mattio, a senior vice president at investor relations firm HC International in New York, says many U.S. fund managers won't take a stake in a Chinese company unless its auditor is one of the Big Four. It stems from a belief that smaller bookkeepers can't check or balance their work.
But Mattio warns that bigness alone won't ensure accuracy. Chinese law requires large foreign auditors to join with local accounting firms, he notes. This means Chinese partners, not U.S. expats, often do the books.
"It's not like the team from midtown Manhattan is flying to China to do the audit," he said.
China MediaExpress (CCME) hasn't traded since March 11 after months of claims of cooked books. That same day, a Deloitte Touche affiliate severed ties.
Sponsorship and rising holdings by big mutual funds, hedge funds, banks and other institutions are other positives.
Janet Stites, publisher of China Business Knowledge, an online newsletter that tracks U.S.-listed Chinese firms, says big funds have the staff and resources to conduct due diligence.
"If Fidelity is investing, it's not a 100% good call, but it's a good place to start," Stites said.
Also desirable are credible margins and strong EBIDTA, though those can be hard to pin down in fast-changing, booming China.
Analysts like to see top executives with a stake in future performance. For example, managers own 17% of Chinese search engine Baidu (BIDU).
The downside: Some heavily family-owned Chinese firms are used as cash dispensers.
Depth and length of VC funding is another guide. Internet firm Qihoo 360 (QIHU), which raised $175 million in a successful March IPO, had over five years of substantial VC backing, Stites says.
DCM's Chao says having U.S. directors shows that a Chinese firm can tap U.S. expertise and will likely adhere to U.S. governance standards.
Stites cites hog producer Tianli Agritech (OINK). One director is Peter Gadkowski, an ex-SEC enforcement attorney and founder of a 30,000-sow farm in Colorado.
Tuesday, June 07, 2011
Malaysia's Most Expensive Fish
Presently, the Empurau is the most expensive fresh-water fish in Malaysia. The fish is known as Wang Pau Liao in Mandarin. It can grow up to a size of more than 20 kg.
In KL Restaurants, the price ranges from RM1100 to RM1800 per kg. The fish originates from Sarawak.
Saturday, May 28, 2011
CMSB Is Undervalued
CMSB is a conglomerate involved in cement manufacturing, trading in construction materials, construction, road maintenance, property development, financial services, technology, education and other services.
Its vision is: To be the Pride of Sarawak.
The key statistics as at March 31, 2011 are as follows:
1Q2011: Vs 1Q2010
Revenue: RM 226.367m Vs 177.633m
Profit before tax: 43.095m Vs 21.347m
EPS : 9.30 sen Vs 3.68 sen
NTA: RM4.08
Current Assets: RM1,267,736,000 of which 189,614,000 is in cash
Current Liabilities: RM378,669,000
Borrowings: RM299,668
Share Capital: RM329,446,000
Par Value per share: RM1
In 2010, the government has allocated RM4.7 billion for the construction of roads & bridges, and RM2.6 billion for water supply & sewerage services. It is hopeful that more will be allocated in 2011. These government spendings will be a boast for the bottom line of the company. Looking at the above figures, there is every reason to believe that company will do well going forward. The stock was last traded at RM2.30 per share cum dividend of 10% less tax. At this price, the stock is undervalued.
Technically speaking, the stock was seen to be in demand when trading started last Friday. It is now coming out of a well-formed base. Demand is likely to continue when trading resume come Monday morning.
Review of performance (Excerpt from filings with Bursa)
The Group’s recorded a pre-tax profit of RM43.10 million for the three months ended 31 March 2011, compared to a pre-tax profit of RM21.35 million for the 3 months ended 31 March 2010. The higher contribution was registered by the Construction Division and there was a gain on acquisition of CMS Roads Sdn. Bhd. and CMS Pavement Tech Sdn. Bhd. of RM12.21 million.
The profit before tax for period ended 31 March 2011 was contributed by all Divisions except Property Division. The Manufacturing Division, being the largest contributor to the Group’s profitability, continued to achieve healthy results. The Construction Materials Division continued its excellent performance, recording a hike in profit before tax riding on the back of the government’s spending on continued projects.
The Construction Division registered a jump in profit primarily because of the re-acquisition of the profit-making entities namely CMS Roads Sdn. Bhd. and CMS Pavement Tech Sdn. Bhd., which contributed positively in the quarter under review. The higher contribution was also due to the profit from government’ s spending on periodic road maintenance work and road rehabilitation.
The Group’s associate in the steel fabrication and manufacturing of steel pipes industry, namely KKB Engineering Bhd continued its sterling performance in the 3 months period ended 31 March 2011. However, the Group’s other associate in the investment banking industry reported a lower profit for the current period compared to previous corresponding period.
B2. Material changes in profit before taxation for the quarter
The Group’s profit before tax of RM43.10 million in the quarter under review was 19% lower than the profit before tax of RM53.16 million in the preceding quarter. This was because the Construction and Manufacturing Division registered exceptionally high profits in the preceding quarter.
However, the Group’s associate in the investment banking industry returned to profit this quarter as compared to a loss in the preceding quarter primarily due to the loss incurred previously as a result of impairment made in respect of the investment bank’s loans and advances and impairment of investment in an associate.
In the stock market, nothing is certain. It is said that the only thing certain is uncertainty. Therefore, do exercise caution when you buy. Know your risk tolerance and don't be controlled by greed.
Its vision is: To be the Pride of Sarawak.
The key statistics as at March 31, 2011 are as follows:
1Q2011: Vs 1Q2010
Revenue: RM 226.367m Vs 177.633m
Profit before tax: 43.095m Vs 21.347m
EPS : 9.30 sen Vs 3.68 sen
NTA: RM4.08
Current Assets: RM1,267,736,000 of which 189,614,000 is in cash
Current Liabilities: RM378,669,000
Borrowings: RM299,668
Share Capital: RM329,446,000
Par Value per share: RM1
In 2010, the government has allocated RM4.7 billion for the construction of roads & bridges, and RM2.6 billion for water supply & sewerage services. It is hopeful that more will be allocated in 2011. These government spendings will be a boast for the bottom line of the company. Looking at the above figures, there is every reason to believe that company will do well going forward. The stock was last traded at RM2.30 per share cum dividend of 10% less tax. At this price, the stock is undervalued.
Technically speaking, the stock was seen to be in demand when trading started last Friday. It is now coming out of a well-formed base. Demand is likely to continue when trading resume come Monday morning.
Review of performance (Excerpt from filings with Bursa)
The Group’s recorded a pre-tax profit of RM43.10 million for the three months ended 31 March 2011, compared to a pre-tax profit of RM21.35 million for the 3 months ended 31 March 2010. The higher contribution was registered by the Construction Division and there was a gain on acquisition of CMS Roads Sdn. Bhd. and CMS Pavement Tech Sdn. Bhd. of RM12.21 million.
The profit before tax for period ended 31 March 2011 was contributed by all Divisions except Property Division. The Manufacturing Division, being the largest contributor to the Group’s profitability, continued to achieve healthy results. The Construction Materials Division continued its excellent performance, recording a hike in profit before tax riding on the back of the government’s spending on continued projects.
The Construction Division registered a jump in profit primarily because of the re-acquisition of the profit-making entities namely CMS Roads Sdn. Bhd. and CMS Pavement Tech Sdn. Bhd., which contributed positively in the quarter under review. The higher contribution was also due to the profit from government’ s spending on periodic road maintenance work and road rehabilitation.
The Group’s associate in the steel fabrication and manufacturing of steel pipes industry, namely KKB Engineering Bhd continued its sterling performance in the 3 months period ended 31 March 2011. However, the Group’s other associate in the investment banking industry reported a lower profit for the current period compared to previous corresponding period.
B2. Material changes in profit before taxation for the quarter
The Group’s profit before tax of RM43.10 million in the quarter under review was 19% lower than the profit before tax of RM53.16 million in the preceding quarter. This was because the Construction and Manufacturing Division registered exceptionally high profits in the preceding quarter.
However, the Group’s associate in the investment banking industry returned to profit this quarter as compared to a loss in the preceding quarter primarily due to the loss incurred previously as a result of impairment made in respect of the investment bank’s loans and advances and impairment of investment in an associate.
In the stock market, nothing is certain. It is said that the only thing certain is uncertainty. Therefore, do exercise caution when you buy. Know your risk tolerance and don't be controlled by greed.
Thursday, May 26, 2011
Whistleblowers To Get Reward
America has decided to reward whistleblowers who raise red flags against frauds, cheating and other insidious crimes that are detrimental to the health and growth of stock exchanges. To promote integrity and transparency at Bursa and elsewhere, Malaysia should follow suit. Here's the story:
WASHINGTON (AP) -- Whistleblowers who report corporate fraud or other misconduct to the government could receive sizable cash awards under new rules adopted Wednesday by federal regulators.
Tipsters would be eligible if they give the Securities and Exchange Commission information that leads to an enforcement action resulting in more than $1 million in penalties. The SEC would pay up to 30 percent of the money it recovers from a company or person.
A divided SEC voted 3-2 to adopt the whistleblower program. The two Republican commissioners objected.
The new rules will take effect in about 60 days. Whistleblowers who provided information starting in July 2010, when the overhaul law was enacted, also would be eligible to receive awards.
The whistleblower program was mandated by the financial overhaul law enacted last year. It was contested by big U.S. companies, like AT&T Inc., Best Buy Co., FedEx Corp., Google Inc., Target Corp. and Verizon Communications Inc., in addition to the U.S. Chamber of Commerce.
They argued that whistleblowers should first have to tell their companies of misconduct and give them a chance to correct problems before informing the SEC. Otherwise, the corporations contend, it will take longer to address wrongdoing.
On the other side, advocates and lawyers for whistleblowers say they would be discouraged from reporting wrongdoing if required to inform company officials first.
The new rules would seek to discourage employees from bypassing their companies' compliance programs. Once employees report potential wrongdoing to their company, the SEC would officially designate them as whistleblowers, potentially eligible for awards -- provided they give the SEC the same information within 120 days.
In addition, the SEC will credit whistleblowers whose companies pass their information to the agency, even if the whistleblowers themselves do not. That way, whistleblowers could receive awards by reporting wrongdoing internally to their companies.
The new rules represent the first time that whistleblowers will be given a financial incentive to report misconduct to company authorities, SEC Chairman Mary Schapiro said before the vote.
Companies' internal compliance programs play "an extremely valuable role" in preventing fraud, Schapiro said. She said the new rules strike a balance between encouraging whistleblowers to pursue internal compliance when appropriate and giving them the option to go directly to the SEC.
"It is the whistleblower who is in the best position to know which route is best to pursue," she said.
Advocates of the new program say whistleblowers can be an effective line of defense against corporate wrongdoing. The SEC was embarrassed by its failure to halt Bernard Madoff's multibillion-dollar fraud over nearly two decades, despite red flags raised by whistleblowers.
The SEC has made few awards to whistleblowers under its bounty program. Until now, it's been limited to insider trading cases. And its system for processing tips from whistleblowers was criticized as chaotic.
Under the new program, if an insider at Goldman Sachs had given the SEC information leading to its $550 million civil fraud settlement with Goldman over its marketing of mortgage securities, that person could have collected up to $165 million.
"The SEC has chosen to put trial-lawyer profits ahead of effective compliance and corporate governance," the Chamber of Commerce said after the vote. "This rule will make it harder and slower to detect and stop corporate fraud, by undermining (internal) compliance systems."
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WASHINGTON (AP) -- Whistleblowers who report corporate fraud or other misconduct to the government could receive sizable cash awards under new rules adopted Wednesday by federal regulators.
Tipsters would be eligible if they give the Securities and Exchange Commission information that leads to an enforcement action resulting in more than $1 million in penalties. The SEC would pay up to 30 percent of the money it recovers from a company or person.
A divided SEC voted 3-2 to adopt the whistleblower program. The two Republican commissioners objected.
The new rules will take effect in about 60 days. Whistleblowers who provided information starting in July 2010, when the overhaul law was enacted, also would be eligible to receive awards.
The whistleblower program was mandated by the financial overhaul law enacted last year. It was contested by big U.S. companies, like AT&T Inc., Best Buy Co., FedEx Corp., Google Inc., Target Corp. and Verizon Communications Inc., in addition to the U.S. Chamber of Commerce.
They argued that whistleblowers should first have to tell their companies of misconduct and give them a chance to correct problems before informing the SEC. Otherwise, the corporations contend, it will take longer to address wrongdoing.
On the other side, advocates and lawyers for whistleblowers say they would be discouraged from reporting wrongdoing if required to inform company officials first.
The new rules would seek to discourage employees from bypassing their companies' compliance programs. Once employees report potential wrongdoing to their company, the SEC would officially designate them as whistleblowers, potentially eligible for awards -- provided they give the SEC the same information within 120 days.
In addition, the SEC will credit whistleblowers whose companies pass their information to the agency, even if the whistleblowers themselves do not. That way, whistleblowers could receive awards by reporting wrongdoing internally to their companies.
The new rules represent the first time that whistleblowers will be given a financial incentive to report misconduct to company authorities, SEC Chairman Mary Schapiro said before the vote.
Companies' internal compliance programs play "an extremely valuable role" in preventing fraud, Schapiro said. She said the new rules strike a balance between encouraging whistleblowers to pursue internal compliance when appropriate and giving them the option to go directly to the SEC.
"It is the whistleblower who is in the best position to know which route is best to pursue," she said.
Advocates of the new program say whistleblowers can be an effective line of defense against corporate wrongdoing. The SEC was embarrassed by its failure to halt Bernard Madoff's multibillion-dollar fraud over nearly two decades, despite red flags raised by whistleblowers.
The SEC has made few awards to whistleblowers under its bounty program. Until now, it's been limited to insider trading cases. And its system for processing tips from whistleblowers was criticized as chaotic.
Under the new program, if an insider at Goldman Sachs had given the SEC information leading to its $550 million civil fraud settlement with Goldman over its marketing of mortgage securities, that person could have collected up to $165 million.
"The SEC has chosen to put trial-lawyer profits ahead of effective compliance and corporate governance," the Chamber of Commerce said after the vote. "This rule will make it harder and slower to detect and stop corporate fraud, by undermining (internal) compliance systems."
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