A Co’s current P/E Ratio stands at 20. 

B Co’s current P/E Ratio stands at 30. 

So, does it mean that A Co is more attractive an investment than B Co?

Let’s examine. 

Here, I’ll share two methods on interpreting their current P/E Ratios. 

They will shape my perspectives on their attractiveness as investments. 

Before I share the two methods, let’s add some context to both stocks: 

A Co and B Co

For A Co, it is a national champion that operates in a matured market. It is a cash cow which has a track record of paying out 80% of its earnings to shareholders in dividends and keeping about 20% of its earnings for plant repairs and maintenance purposes. At present, A Co’s details are: 

Stock Price = $20.00
Earnings per Share (EPS) = $1.00
P/E Ratio = 20
Dividends per Share (DPS) = $0.80 (80% of $1.00)
EPS Growth Rate = 0%

For B Co, it is a global powerhouse. Like A Co, it is also a cash cow. But unlike A Co, B Co invests 100% of its earnings back into the business, expanding its moat (dominance). As a result, B Co’s EPS is growing at a rate of 15% per annum. At present, B Co’s details are: 

Stock Price = $30.00
Earnings per Share (EPS) = $1.00
P/E Ratio = 30
Dividends per Share (DPS) = $0.00
EPS Growth Rate = 15%

Method 1 – Comparing Current PE with Historical PE

This method involves comparing their P/E Ratios with their historical P/E Ratios (10 years). 

Here is the rationale. 

Let’s say, in Year 0, you bought an apartment for $480,000 for investment. 

You secured a tenant that pays $2,000 a month / $24,000 a year in rent. 

So, your rental yield is 5% per annum. 

10 years later, you manage to raise the rent to $2,500 a month / $30,000 a year in rent. 

If investors continue to expect 5% in annual rental yield, what’s the value of your apartment? 

Answer = $600,000. 

What went up in those 10 years? Answer = Property Price. (Price)

What was the driver for its appreciation? Answer = Rental Income. (Earnings)

What had remained constant in those 8 years? Answer = Expected Rental Yield (Valuation)

This rationale (or concept) can be applied on stocks. 

Referring back to A Co and B Co. 

Let’s say, over the past 10 years, A Co’s shares were trading on average at a P/E Ratio of 25. That is also the same with B Co. 

At current P/E Ratio of 20, A Co is undervalued as it is below its historical average of 25. 

As for B Co, it is overvalued as its P/E Ratio of 30 is above its historical average of 25. 

So, is that it? Is A Co definitely a winner when compared to B Co?

Let’s dive deeper. 

What Are We Investing For?

Here, it is helpful to revisit our purposes for investing in stocks. 

It is primarily to achieve sustainable capital growth in the long run. 

Of course, in the meantime, it is always nice to receive dividends. Hopefully, they will grow too. 

Hence ultimately, growth is what we are looking for. 

Such is achieved more sustainably with growth in earnings per share (EPS), which is contributed by long-term sales growth, earnings growth and share reduction. Companies that could deliver such financial results often have competitive advantages, which are often known as moats. 

So, it is fundamentals that drive long-term growth, be it capital growth or dividend growth. 

Method 2 – Comparing PE with EPS Growth

With this in mind, it is crucial to assess the fundamental qualities of a stock before investing. 

By factoring in growth, we discover that the payback period for investing in B Co is shorter. This is even if its P/E Ratio is higher than A Co. 

Here are the maths. 

For A Co, its payback period is 20 years. 

Investors who opt for A Co shall invest $20 to earn $1 every year. Since its EPS doesn’t grow, the shareholders shall earn $20 by holding onto A Co for 20 years. 

But, what about B Co? 

In Year 0, its EPS is $1.00. 

In Year 1, its EPS is $1.15 as it grows at a rate of 15% per annum. 

In Year 2, its EPS would grow further to $1.32. 

In Year 3, its EPS would grow further to $1.52. You can generate a table as follows:

Investors who opt B Co may (in a glance) pay a higher PE for its shares (PE = 30). 

But, their payback period is between 11 to 12 years, a lot faster than A Co. 

Based on this perspective, B Co is more attractive than A Co despite having a higher P/E Ratio.

Notes: 
A Co – Invested at $20 (PE = 20). Earned back in 20 years. 
B Co – Invested at $30 (PE = 30). Earned back in 11-12 years. 

So, do we use Method 2 over Method 1?

Well, not entirely. 

Personally, I use both depending on situations and context. 

Let’s say, I’m considering an investment into a growth stock. I’ll use Method 2 first to evaluate its investment attractiveness. Then, I’ll use Method 1 as a guide on determining my entry prices. As an investor, I’ll still prefer to invest when its current P/E Ratio is either below or (if above, close to / not too far away) from its historical long-term P/E Ratio. 

But, if I want to invest in a pure-breed dividend stock, I’ll only use Method 1. 

All in all, the first priority is on EPS growth. 

The second priority is on its valuation. 

Conclusion: 

There are a few conclusions to this: 

1. A low P/E Ratio does not necessarily mean that a stock is an attractive buy. 

2. The context (business growth & fundamentals) is important. 

3. Growth > Valuation. 

4. A stock with a high P/E Ratio can be attractive as an investment if its growth rate is solid. 

At the end, the focus is to shift from “buy cheap” to “buy growth at reasonable prices”.

Which is better for investors: stocks, unit trusts or ETFs? 

Today, many compare and prefer one over the other. 

It seems that stocks, unit trusts and ETFs are entirely different. 

Now, if you are new to investing and are scratching your head as to what they are and how they work, read on. In this article, I’ll share their basics and highlight their pros and cons. Of which, as an aspiring investor, you will be able to decide which is more suitable for yourself. 

Let’s begin. 

Case Study: Public Bank Bhd

Let’s take Public Bank as an example. 

In 2025, Public Bank earned RM7.2 billion from offering banking services to its customers. Based on 19.3 billion shares in issue, its earnings per share (EPS) is 37.41 sen. Of which, Public Bank had declared 22.5 sen in dividends per share (DPS). 

As I write, Public Bank is trading at RM4.98 a share. 

Now, there are three ways investors can choose to invest and own Public Bank’s shares. 

Method 1 – Stocks

Investors can buy or sell Public Bank’s shares directly through their stock brokerage accounts. If they own shares of Public Bank, they will collect its DPS declared and choose to either spend or reinvest it to further build their portfolios. Also, they will participate in any capital growth or loss
directly as Public Bank’s shareholders. 

This is simple and suitable for investors who prefer to make their own decisions. 

They know clearly what stocks to invest in and intend to decide on their own what prices, when, and how much shares they want to invest or divest over time. 

It’s about retaining control over investment decisions. 

Also, do investors incur any costs after investing in Public Bank’s shares? 

Well, after a one-time transaction costs (brokerage and stamp duty), there is no fee charged on keeping or holding onto the investment. Hence, in that sense, it is cost effective. 

Method 2 – Unit Trusts 

Alternatively, investors can own Public Bank’s shares indirectly via unit trust. 

Unit trust is a vehicle that pools funds from investors to invest. For instance, a company forms a unit trust fund known as Fund A. Fund A has successfully raised RM100 million from investors. It then invests the RM100 million raised into investments, which can include Public Bank’s shares. 

The decision to invest lies with its fund manager. 

The fund manager can decide: 

1. whether or not to invest or divest Public Bank’s shares 

2. the price to buy or sell for its shares

3. the time to invest or divest 

4. The quantity of Public Bank’s shares to be invested or divested

These decisions are done on behalf of investors who pooled in capital into that unit trust. 

Investors give away “control over investment decisions” to the fund manager. 

Investors who prefer to free their minds (or headache) from making these investment decisions would then compensate the fund manager with annual management fees. The fees payable are based on the fund size (also known as asset under management). 

So, if Public Bank (and other major investments) appreciate in stock prices and collectively, they have contributed to a larger size for Fund A, Fund A will earn higher fees from its investors. 

But, if the otherwise happens and have resulted in a reduction in fund size, Fund A would earn a lower management fee from its investors. 

In either direction, Fund A earns management fees. 

Now, what about DPS from Public Bank? 

How will investors of Fund A benefit from DPS declared and paid out by Public Bank?

So, let’s say Fund A owns 1 million shares of Public Bank (worth RM4.98 million) today. 

The fund manager decides to hold onto it for the long-term. 

So, Fund A will receive RM225,000 in dividend income from Public Bank in 2025. 

Then, the fund manager can decide to:

1. Keep the RM225,000 in the fund’s bank account. 

2. Reinvest the RM225,000 into other stocks or add more Public Bank shares. 

3. Distribute the RM225,000 to its fellow investors. 

4. All keep some, reinvest some and distribute the remaining portion. 

The utilisation of dividend income is decided by the fund manager. 

Method 3 – Exchange Traded Funds (ETFs) 

For unit trust investors, they incur: 

1. One-time sales charge. 

2. Annual management and trustee fees. 

They hope to leverage on the fund manager’s expertise to invest their capital. 

ETFs have a similar structure to unit trust funds. 

ETFs also pool in capital from investors to invest. 

As ETFs hire fund managers to manage portfolios, investors also pay annual management fees. 

But typically, the fees charged could be lower than unit trusts. 

Why? 

This is because the manager of a unit trust fund does more work than the manager of an ETF. In brief, the fund manager of a unit trust does extensive research and analysis work to build, run, & manage the portfolio. Typically, an ETF is set up to track the performances of a specific industry or market (for instance, the KLCI). 

So, if an ETF is formed to track the KLCI, the manager would own stocks, which are members of the KLCI, in accordance to their respective weightage. Hence, if the KLCI has 8% of Stock A, 6% of Stock B, 5% of Stock C and so on and so forth, the manager will “copy & paste” such into that ETF portfolio. In this sense, the manager does less work, thus, earning lesser fees. 

Let’s say an investor buys an ETF that tracks the KLCI. 

He would own a portfolio of 30 biggest listed companies on Bursa Malaysia, which also includes Public Bank. The ETF earns dividends from Public Bank (and the 30 companies) and its manager decides how best to utilise the dividends similar to a unit trust fund. 

But unlike unit trust, investors can buy or sell ETFs directly via their stock brokerage accounts. In this sense, there is no sales charge for ETFs. 

So, in a way, ETFs are kind of a hybrid between stocks and unit trust funds. 

Conclusion: Which is Suitable?

Once again, here is a table that depicts the differences between stocks, unit trusts and ETFs:

To assess suitability, you may refer to the list of questions below: 

1. Do you prefer to make your own investment decisions? 

2. Do you have the interest to learn about investing? 

3. Do you want to learn about the business model of a company before investing?

4. Do you want a professional fund manager to invest on behalf of you?

5. Do you want to build a portfolio from scratch or own a ready-built portfolio? 

6. What are your thoughts about fees? 

7. Do you want to invest in a specific company or the overall market? 

Your answers will reveal which of the three vehicles is more suitable for yourself. 

Imagine this. 

Let’s assume you bought 1,000 shares of Public Bank Bhd at RM4.35 a share on March 5, 2021. 

Then, you bought another 2,000 shares of Public Bank Bhd at RM3.78 a share on June 2, 2022.

Ever since, you hold onto 3,000 shares of Public Bank Bhd and collect dividends from them. 

Now, Public Bank Bhd is trading at RM4.87 a share on 6 March 2026. 

So, what exactly is your investment returns from Public Bank Bhd’s shares?

Introducing XIRR

From the above, can you see that you have:

1. Made two investments into Public Bank Bhd at different dates (different intervals)? 

2. Invested different quantities of shares of Public Bank Bhd (different amounts)? 

Also, you would have collected different amounts of dividends at different dates since your first investment into Public Bank Bhd on March 5, 2021. 

So, you have different amounts of cash, flowing in and out, at different dates, between March 5,
2021 to March 6, 2026, from your investments in Public Bank Bhd’s shares. Here are the dates of your investments (cash outflows) and the dividend income you would have earned in between: 

XIRR, known as Extended Internal Rate of Return, would calculate the annualised returns of your investment in Public Bank Bhd’s shares based on the actual amount you’ve invested and earned in dates throughout the period. 

The annualised returns calculated are comparable to FD rates. 

Basically, we can easily calculate XIRR in three simple steps as follow: 

Step 1: Insert the “DATE” function

Allow me to demonstrate this with Google Spreadsheet. 

So, to insert a date, type in “=date(year, month, day)”. 

Hence, for March 5, 2021, type in “=date(2021, 3, 5)” as shown below: 

Repeat the same for all dates listed at the table above. 

As such, you would have inserted all the transaction dates as follow:

Step 2: Insert the “Net Cash Inflow / Outflow” Amount

The next step is to insert the net cash inflow / outflow amount for each date in that period. 

So, for March 5, 2021, the amount to be inserted is “-4,362”.

This figure is negative as you paid RM4,362 to acquire 1,000 shares of Public Bank Bhd. 

Cash flowed out of your pocket. 

Next, for March 22, 2021, the amount to be inserted is “130”. 

This figure is positive as you earned RM130 in dividends from Public Bank Bhd. 

Cash flowed into your pocket. 

Then, we have today’s date, which is March 6, 2026. 

Although you intend to continue to hold onto your shares, you’ll need to imagine that you would be selling off your shares today in order to calculate your annualised returns. 

Thus, the market value of your 3,000 Public Bank Bhd’s shares, which is RM14,610, is inserted as a “cash inflow” in the Google Spreadsheet. 

Step 3: Insert the “XIRR” function

At this stage, we are ready to calculate the annualised return of your investments. 

You may proceed to insert “=XIRR(cashflow amounts, cashflow dates)”. 

You may first drag all the

First – all the “Cashflow amounts” inserted in Step 2 and 

Second – all the “Cashflow dates” inserted in Step 1

Once done, you would get the annualised return figure, which is “0.08638…”

Then, kindly click onto the “%” function as shown below. 

Of which, you would obtain the figure as 8.64%. 

That would be the actual annualised return of your investments into Public Bank Bhd. 

And yes, we are done! 

Why Do Different Investors Obtain Different Results, Despite Investing in the Same Stock?

Now, what if another person invests in Public Bank Bhd at an earlier or later date? 

What if another person just happens to buy Public Bank Bhd at the same dates above but not at the same quantity of shares? 

You can play around with the XIRR calculator at Google Spreadsheet. 

Of which, you’ll discover that different results are obtained when different investors buy: 

1. at different prices

2. at different time or intervals

3. at different quantities of shares

Of course, we haven’t factored in – What if an investor chooses to sell off his shares partially?

As such, one thing is for sure. 

Stock investing is more than just knowing what stocks to buy. 

With XIRR, it reminds us that every investor’s journey in building portfolios is different. 

By tracking XIRR, we can see if our decisions have contributed to compounding of our wealth. 

Announcement:
I have just launched Dividend Vault – my latest book. It documents my 10-Year Journey as an investor, which includes my background, 15 case studies of stocks that I invested in, successes, mistakes and lessons learnt from them. 

Link: Dividend Vault Book

To recap, in 2024, Oriental Kopi had 20 outlets, earned RM43.1 million, and was intending to get RM184.0 million in gross proceeds from issuing IPO shares at 44 sen each. With these funds, its leaders would pursue outlet expansions and grow its packaged food business. Also, it would set up a new head office, central kitchen and warehouse to support its expansion plans. 

So, how has Oriental Kopi done since its listing on 23 January 2025?

Here, I’ll summarise its key developments up to date (26 February 2026). They are as follows: 

1. Cafe Chain Operations: 28 Outlets in FY 2025

Oriental Kopi had added 8 outlets, thus, lifting its store count to 28 by 30 September 2025. The continuous expansion led to a 60.4% sales growth for its cafe operations, raising from RM260.4 million in FY 2024 to RM418.6 million in FY 2025. 

2. Packaged Foods: 36 SKUs in FY 2025

Oriental Kopi expanded its portfolio of packaged foods from 26 SKUs in FY 2024 to 36 SKUs by FY 2025. The new offerings include: 

Overall, Oriental Kopi had experienced greater sales volume for existing and new retail offerings across key platforms such as retail, wholesale and online channels. Thus, segment revenues had increased by 153.0% from RM11.5 million in FY 2024 to RM29.1 million in FY 2025. 

3. Annual Financial Results: FY 2021 to FY 2025

Fuelled by continuous expansion, Oriental Kopi had reported higher revenues, gross profits, and shareholders’ earnings in FY 2025. Still, its gross margin had dipped marginally as it experienced a rise in material costs namely santan and coffee bean prices and higher labour costs, which are incurred in relation to the pre-opening of its new cafes. Its cash conversions are above 100% as Oriental Kopi generates cash sales mostly from its cafe chain operations. 

4. Quarter Financial Results: Q1 2025 to Q1 2026

On a quarterly basis, Oriental Kopi achieved higher revenues and earnings. Earnings grew a little slower as its net margins had contracted marginally due to pre-opening expenses of new cafes. Cash conversions remain above 100% except for Q1 2026 as it has settled trade payables in the period. 

5. Current Balance Sheet: Q1 2026

In Q1 2026, Oriental Kopi had reported RM295.4 million in current assets, comprising mainly the company’s cash balance and other investments (money market funds) totalling RM250.9 million (84.9% of current assets). It had reported RM49.6 million in current liabilities. Hence, its current ratio stood at 5.96. This ample of liquidity was contributed by operating cash flows and also the funds unutilised from its IPO listing. 

Oriental Kopi had reported RM3.3 million in total borrowings, relatively insignificant if this figure is compared to its current assets. 

6. 2026 Expansion Plans

Oriental Kopi had revealed its plan to open 13 new cafes in FY 2026. In addition, it had stated its discussions with potential partners to further expand to Indonesia, Thailand and the Philippines, which are currently still in the preliminary stages. 

7. Purchase of Land and a Factory Lot in Puchong

Oriental Kopi entered into an agreement to purchase 5,262 sqm of leasehold land together with one unit of factory lot erected thereon in Taman Perindustrian Putra, Puchong for RM23 million. 

Oriental Kopi currently occupies the property as its tenant. After its landlord (Vendor) indicated its intention to dispose of the property, Oriental Kopi decided to acquire it to reduce disruption of its current operations and to support ongoing growth of its operations. 

8. Valuation

On 26 February 2026, Oriental Kopi was trading at RM1.26 a share. 

Based on its recent 12-month earnings of RM64.7 million or Earnings per Share (EPS) of 3.2 sen, its latest P/E Ratio is 38.95. Based on its latest dividends per share (DPS) of 1.0 sen, its dividend yield is 0.79%. 

Conclusion

All in all, Oriental Kopi had an eventful year in FY 2025. Its efforts in expanding its business have yielded an increase in revenues, earnings and operating cash flows since its listing. Also, with an ample amount of liquidity, Oriental Kopi set its sights to expand both locally and regionally. 

Ultimately, the key to its continuous success lies in its ability to maintain high quality of its food and services and its execution speed and capability to further expand its businesses. As always, investors should conduct their own due diligence, weigh in the pros and cons and assess if the stock is a suitable fit to one’s individual portfolio before investing. 

Here’s a question. 

How much capital is needed to build a stock portfolio to earn RM1,000 in dividends a month?

Almost immediately, I can see that you might start working backwards. 

If you are expecting 5% a year in dividend yields, the capital needed is RM200,000. 

If you are expecting lower yields, the capital needed is more than RM200,000. 

And, if you are expecting higher yields, then the capital needed is less than RM200,000.  

But regardless, the capital required is still, by and large, in six-figures. Today, what if your capital is a lot less than six-figures? What if six-figures seem like a milestone to you? If that is the case, it is understandable to see a lack of capital to be an obstacle to building a dividend portfolio. It’s likened to running a marathon or hiking up Mt. Kinabalu. The feeling can be overwhelming. 

The Paths to Six-Figures

After years working as an educator, I see three common paths taken. 

The first path is to not invest altogether.

It is similar to looking up the majestic Mt. Kinabalu and just ditch the idea of climbing it. 

The second path is to earn faster money with stock trading. 

This usually involves studying charts and identifying patterns via technical analysis. 

The third path is to speculate stocks. 

For this path, the objective is similar to the ones taking the second path. But, the difference lies in their inability to spend time and understand charts, patterns and technical analysis. For them, their minds numb after looking at “too many screens”. 

So, they take a detour by asking for stock tips, buy or sell on news and seek recommendations. 

Overall, the three paths reveal two extremes. 

On one spectrum, it reveals an emotion of fear of losing money. This emotion is also “packaged” with extreme conservatism, paranoia, risk aversion and a desire of safety and certainty. 

On the other spectrum, it reveals greed, a desire for easy money. 

Investing is Simple, But not Easy

You may have heard of this quote – investing is simple but not easy. 

Why is that so? Isn’t simple the same as easy? Why can’t investing be simple and easy? 

Here is another angle to it. 

Is investing simple? 

The answer is yes. Think about the logic behind earning dividends. It is about investing in stocks that can generate continuous growth in profits and operating cash flows so that they could pay out continuous growth in dividends. Most people have the intelligence (IQ) to comprehend this and acknowledge that this is doable. 

Then, why is investing not easy?

Assuming you are starting with RM20,000 in investment capital. You invest in a few stocks that pay an overall dividend yield of 5% per annum. Of which, you make RM1,200 in dividends a year, which is RM100 a month in dividends. 

How do we treat RM100 a month these days? 

Rather petty isn’t it?

RM100 a month feels small and if you feel that way, you feel “small” about your investment. 

It is hard to feel like “the Man” or the “Big Boy” with RM100 a month in dividends. 

No high-fives from no one. No cheers or confettis. No postings on social media. Nothing. 

So, starting investing with small capital can be “simple logically”, “not easy emotionally”. 

I Was There Before

I had little capital when I was in my 20s. 

Of which, I chose to take a seemingly “long but simple route” to six-figures. 

Back then, I knew attaining a six-figure portfolio would take years realistically. 

And more importantly, I was willing to go through this process. 

So, the question is – Why?

Why invest to earn RM100 a month when it is better to 2X RM20,000 into RM40,000?

Here’s my personal answer as investing is a personal activity: 

1. I was not brought up with a Rich Dad who has a blueprint to build wealth with stock investing. My father got burnt in the Asian Financial Crisis and never really “touched” stocks ever again. As such, I developed a belief that stocks are “risky investments”. 

2. My beliefs evolved after reading Buffettology, a book that details Buffett’s investment style & approaches. My beliefs began to change and I realised that investing in stocks may not be risky. It is the adoption of a speculative mindset towards stocks that makes it risky. 

3. Before I start investing, I realise that most things take time to accomplish. It could be learning Taekwondo (going from a White Belt to a Black Belt), reading a book (from Page 1 to Page 300), long-distance running, completing ACCA papers and so on and so forth. With this in mind, I had a greater tendency to dismiss “fast gains”. 

4. Since I was new, RM100 a month in dividends – as insignificant as it seems – was okay as long as I can repeat this feat consistently and sustainably for the long run. It was my way of knowing that I have genuinely acquired real skills that can be practiced for life. So, hitting 2X with merely “beginners’ luck” isn’t something that I was aiming for. 

The Exponential Curve

At first, it doesn’t seem that I have accomplished much. 

I earned trickles of dividends, which I call “small recurring wins”. 

I had some losses where I had derived some investing lessons from them. 

Collectively, they may not seem much financially. 

But psychologically, they kept me going. As I built my portfolio, I learnt more of myself, became more confident in my investing skills as I added more knowledge, experience and wisdom along this journey. Interestingly, the size of my portfolio grew to RM50,000, I came to realise that I’ve become comfortable with investing and it became second nature to me. 

After that, RM50,000 to RM100,000 became easier. 

That was the case after RM100,000 and beyond. 

Since then, I was able to invest better and achieve better yields and greater capital growth. This is possible because I’m carrying with me the lessons, the skills, and the experiences of investing which were accumulated for years when I went from zero to RM100,000. 

The Bigger Pot of Gold Lies After RM100,000

Generally speaking, investors tend to make better decisions after the RM100,000 mark.

So, if you are starting with anything below RM30,000, that’s okay. 

RM30,000 to RM100,000 would serve as a period to sharpen your investing skills. It is also your place to gather invaluable investing experiences. They will serve as a foundation to success. 

But, the key is not to rush it. 

Rather, it is about surviving it. Hence, small wins which build confidence and positive character, not fast gains, will be preferable and more sustainable. 

All in all, a lack of capital is not the real issue to dividend investing. 

A bigger problem lies in a lack of patience. 

Six-figure capital is not a prerequisite to building six-figure portfolios. 

Six-figure portfolios are the result of years of persistence, discipline and emotional control. 

At the end, the common path for most seasoned investors are as follows: 

The first RM100,000 in our portfolio is a test of resilience. 

Beyond RM100,000, the market would start to reward us for your skills and experience. 

Announcement:
I have just launched Dividend Vault – my latest book. It documents my 10-Year Journey as an investor, which includes my background, 15 case studies of stocks that I invested in, successes, mistakes and lessons learnt from them. 

Link: Dividend Vault Book