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PADINI join the billion dollar club!

2012-03-06T17:34:00.001+13:00

PADINI, the well known homegrown fashion retailer in Malaysia has just become more popular. Its share price has surge above RM1.52 this morning, thus put the stock market capital above 1 billion ringgit.

From my point of view, this is a huge milestone for the company as it may starting to get more attention from local and international funds. As a fundamentally good company, PADINI therefore may be value at P/E between 10-14 times.

Technical chart suggest that the share price took off at a faster pace than i thought. Low tide will come after the high. I think the share price may cold down a little bit in the short term.

DAIBOCI start moving

2012-01-05T22:25:00.002+13:00

Technical Outlook
I manage to draw a symmetrical triangle trendline for DAIBOCI base on its share price movement for the past two years. It is a continuation pattern.

Last month, share price manage to break above resistance RM2.65 and stay above. Today, it closed at RM2.89. I think the uptrend has started.

Immediate resistance RM3.00, then RM3.30. Guess what, when i put the widest distance into measure, it gives me a RM1.68 different. Apply into RM2.65(the breakout point) put the target price to a whopping RM4.33, near to 50% upside.....haha

QL downtrend's over

2012-01-04T21:29:00.001+13:00

Technical Outlook
QL shareprice been trending down since May 2011, from RM3.30 or even RM3.45 if you like.

On 15/12/2011, it break above resistance RM2.90, with a fair volume. It has move up 7%, and share price standing firm at RM3.09 today. Immediate next resistance RM3.20, follow by RM3.30. MACD, ADX as well as moving average show positive signal.

CPO futures likely to hover below RM3,020

2011-12-17T21:43:00.000+13:00

Below is an article copy from Business Times.

Crude palm oil (CPO) futures on Bursa Malaysia Derivatives are expected to remain at RM3,020 level next week in light of the global economic uncertainties, dealers said.

"The price range is expected to hover below RM3,020," a dealer said.

However, the current monsoon season in top palm oil-producing countries in Southeast Asia is expected to offer some support. with expectations of declining output.

On a weekly basis, December 2011 closed RM61 lower at RM2,989 a tonne, January 2012 lost RM98 to RM2,985 a tonne, February 2012 fell RM100 to RM2,984 a tonne while March 2012 slipped RM102 to RM2,984 a tonne.

Turnover for the week was higher at 101,370 lots compared with 97,848 lots last week, while the open position tumbled to 116,782 contracts from 118,592. -- Bernama

PADINI catch my eye this time

2011-12-06T19:07:00.001+13:00

Company Profile
Padini is a well known in apparel industry all over Malaysia. Company basically design, manufacture and sell its own product directly to the end consumers. Through nine brands, company stretch its arm to consumers from all folks of life and sex.

Padini, Padini Authentucs, PDI, P&Co, Seed, Miki, Vincci, Vincci+, Vincci Accessories

Financial Result
For the 1Q12 quarter, company net profit jump 47% to RM26.9m compare to RM18.4m recorded on 1Q11. Net profit hike come on the back of increase revenue to 178.1m from 136.6m on same quarter preceding year.
Ongoing expansion in gross floor area has contribute to increase revenue. During last 12 months, 4 Brands Outlet stores and 2 Padini Concept Store has been opened.

The impact from the Brands Outlet revenues was particularly significant as sales of our own merchandise during the quarter under review rose 85.7% year-on-year. While the sales of our own products from the Brands Outlet stores made up about 11% of the total revenues of Q1 of the previous financial year, this figure had increased to more than 15% for Q1 this year.

Hari Raya Aidilfitri and Merdeka Day sales promotion and events has also contribute to the revenue.

Technical Outlook
Padini share price has been climbing steadily since bottoming during the end of September. On 18/10/11, MA(14d) cross over MA(50d) and stay above. Today, looks like MA(50d) will be touching MA(100d). Surely, there is a buying momentum on the way. Share price broke above 9 months downtrend is a positive sign too.

Stock Valuation
For the last twelve months, company recorded EPS $0.127. With current share price $1.11, its trading at PE multiple of 8.7x. With this multiple, it is deem attractive.

Overall
Padini is a popular brand in apparel industry in Malaysia. From my record, company EPS has been growing at about 20% annually. ROE for the past 5 years, has shows me that company has been run efficiently. Management tend to bring better return to the shareholder.

The only thing i cannot understand is Padini should deserve a higher PE valuation, maybe 12x? Know what, none of the company in this sector have a double digit PE valuation. Take a look at the company's prospect outlook

Commentary on Prospect
The Group has started off its financial year with yet another creditable performance. While we expect the next quarter to be exceptionally strong in view of the Christmas season and the expected early shopping for the 2012 Chinese New Year season, we are also aware of the numerous economic problems that plague the world today, and how this may finally impact upon the Malaysian economy in general and the retail industry in particular. Nevertheless, given our experience in coping with economic downturns, we are also confident of having another profitable year for 2012.

The 1-2-3 Model for stock market performance

2011-10-20T21:29:00.003+13:00

The model takes its name from the three major factors that affect the market :

1. Is the market too expensive? YES/NO
    ~The clearest, time-tested measure of whether stocks are cheap or expensive is price-earning ratio(PER)
~It is a indicator of how much investor willing to pay per dollar of earning. For example, P/E 10 means investor pay $10 for $1 of current earning.
~Compare the company in the same industry. Different industry deserve their PER accordingly. Company historical P/E also a good reference.
~In general, high P/E suggest that investor are expecting higher earning growth in the future compare to company in lower P/E. Otherwise, its deem expensive.

2. Are the Feds in the way? YES/NO
    ~The second factor in determining the stocks direction is the availability of money.
    ~When interest rate are high, its bad for stock market.
   ~Company incur a higher borrowing cost to run the business. Directly it will effect the earning. Drag the share price.
    ~When interest rate fall, people tend to move money out of the bank and seek for higher return. Those fund usually end up in the stock market.

3. Is the market going up? YES/NO
    ~This is refer to whether market momentum is strong or week. When Buy exceed Sell, price goes up. Otherwise, it will be weak.
    ~To see market action, we use all sort of technical indicator like MACD, RSI, ADX or SMA(Simple
      Moving Average)
    ~Share price above SMA means market is going up. Below SMA means stock prices are weak.

Now, ask yourself about the three questions above.

If you answer to two or three of the 1-2-3 model question is YES ... its time to SELL At this time, search for undervalue company using Graham's number technique(Net current asset value). Graham suggests that you can safely buy a stock that sells for 66% of Graham Number.
If you answer to only one of the three question is YES....you can HOLD Here is a rule of thumb. Subtract your age from 100. The resulting number is the percentage of your investment portfolio you might consider holding during this mode.
When you answer NO to all three questions above.....STRONG BUY

ZHULIAN weather the storm well

2011-10-19T21:26:00.002+13:00

31/8/2011
Financial Result
Zhulian has just announced its FY2011 third quarter result. To compare with 3Q2010, company's revenue jump 25% to RM91.8m. Following the top line, company's bottom line also sees a 23% increase to RM24.3m. This translate into a EPS of RM0.053.

For the 9 months period, company recorded net profit of RM67.3m. Base on the consistent performance for the past few quarter, Zhulian net profit for FY2011 should exceed RM87m, it achieve for FY2010.

Technical Outlook
Zhulian share price is in a medium downturn since Jun 2010. It recorded a high of RM2.09(adjusted) on 21/6/2010, then all the way south to a low of RM1.50 on 26/9/2011. However, it manage to hold its ground and climbing slowly. MACD positive, ADX positive, MA(14d) to cross over MA(50d) is crucial.

Today, share price (RM1.70) is sitting on the fence of the downtrend line. Can it fall to the right site? Let's keep that in the watch list.

Stock Valuation
For the past twelve month, Zhulian recorded EPS of RM0.198. Base on current share price, it is trading at P/E 8.6x. Being a high yield counter, it should demand 10xPER. Fair price should be RM1.98.

Overall
Zhulian has been declare dividend every quarter. For the last couple of years, company has declare more than 60% of its earning. Despite the generosity, Zhulian's piggy bank worth RM0.29 per share. I think Zhulian is a good dividend stock to hold, providing cash flow in the bull or bear.

GAMUDA FY2011 result update

2011-10-05T21:06:00.000+13:00

FY31/7/2011
Financial Result
For the current quarter, the group recorded a revenue and profit before tax of RM810.6m and RM151.1 as compare to RM714.7m and RM115.2m in the preceding year comparative quarter.
Company revenue and profit before tax for FY2011 also jumped 8.9% and 32.1% to RM2673.2m, RM544.5m respectively.

Increase in profit from all the division has send Gamuda for another good year. Engineering and Construction division contribute RM143.32m, Property Development and Club Operations contribute RM149.94m and Water and Expressway concessions put RM251.26m into company's perk.

Technical Outlook
Couple of months ago, i did comment about GAMUDA technically in a "do-or-die" situation. Share price broke above resistance and looks promising. On the other end, "head and shoulder" is waiting if things went wrong.
As i look back the chart today, it had pan out exactly the way i thought. However, i'm not going to discuss anymore about the past. Always look back will get you sore neck!!
Share price has find a support at RM2.86, one of the support line from Fibonacci. Its also start of the uptrend line 15months ago. I actually think that the sharp sold down recently need some time to absorb. Give it a miss for now and we'll have another look in a forthnight.

Stock Valuation
GAMUDA is trading at RM2.90. Base on FY2011 EPS of RM0.207, it is trading at P/E14x. Company's NTA improve to RM1.79 also means that it is currently trading at P/BV of 1.6x. Base on this two ratio, i think Gamuda is pretty attractive.

Overall
Euro and US economy crisis has make the market panic, lose their direction. With another year of great financial result, backed by good fundamental. I think GAMUDA share deserve a better price. The only reason i can think of is Institutional investor and fund managers pulling off. Shall we follow the "smart money" to get out or choose to be "not so smart".... i don't know!

7 Common Investor Mistakes

2011-08-06T19:18:00.000+12:00

Of the mistakes made by investors, seven of them are repeat offenses. In fact, investors have been making these same mistakes since the dawn of modern markets, and will likely be repeating them for years to come. You can significantly boost your chances of investment success by becoming aware of these typical errors and taking steps to avoid them.

1. No PlanAs the old saying goes, if you don't know where you're going, any road will take you there. Solution?

Have a personal investment plan or policy that addresses the following:

Goals and objectives - Find out what you're trying to accomplish. Accumulating $100,000 for a child's college education or $2 million for retirement at age 60 are appropriate goals. Beating the market is not a goal.
Risks - What risks are relevant to you or your portfolio? If you are a 30-year-old saving for retirement, volatility isn't (or shouldn't be) a meaningful risk. On the other hand, inflation - which erodes any long-term portfolio - is a significant risk. (To see more on risk, read Determining Risk And The Risk Pyramid and Personalizing Risk Tolerance.)
Appropriate benchmarks - How will you measure the success of your portfolio, its asset classes and individual funds or managers? (Keep reading about benchmarks in Benchmark Your Returns With Indexes.)
Asset allocation - What percentage of your total portfolio will you allocate to U.S. equities, international stocks, U.S. bonds, high-yield bonds, etc. Your asset allocation should accomplish your goals while addressing relevant risks.
Diversification - Allocating to different asset classes is the initial layer of diversification. You then need to diversify within each asset class. In U.S. stocks, for example, this means exposure to large-, mid- and small-cap stocks. (Find out more about allocation and diversification in Five Things To Know About Asset Allocation, Choose Your Own Asset Allocation Adventure and A Guide To Portfolio Construction.)

Your written plan's guidelines will help you adhere to a sound long-term policy, even when current market conditions are unsettling. Having a good plan and sticking to it is not nearly as exciting or as much fun as trying to time the markets, but it will likely be more profitable in the long term.

2. Too Short of a Time Horizon
If you are saving for retirement 30 years hence, what the stock market does this year or next shouldn't be the biggest concern. Even if you are just entering retirement at age 70, your life expectancy is likely 15 to 20 years. If you expect to leave some assets to your heirs, then your time horizon is even longer. Of course, if you are saving for your daughter's college education and she's a junior in high school, then your time horizon is appropriately short and your asset allocation should reflect that fact. Most investors are too focused on the short term.

3. Too Much Attention Given to Financial MediaThere is almost nothing on financial news shows that can help you achieve your goals. Turn them off. There are few newsletters that can provide you with anything of value. Even if there were, how do you identify them in advance?

Think about it - if anyone really had profitable stock tips, trading advice or a secret formula to make big bucks, would they blab it on TV or sell it to you for $49 per month? No - they'd keep their mouth shut, make their millions and not have to sell a newsletter to make a living. (To learn more, see Mad Money ... Mad Market? and The Madness Of Crowds.)

Solution? Spend less time watching financial shows on TV and reading newsletters. Spend more time creating - and sticking to - your investment plan.

4. Not Rebalancing Rebalancing is the process of returning your portfolio to its target asset allocation as outlined in your investment plan. Rebalancing is difficult because it forces you to sell the asset class that is performing well and buy more of your worst performing asset classes. This contrarian action is very difficult for many investors.

In addition, rebalancing is unprofitable right up to that point where it pays off spectacularly (think U.S. equities in the late 1990s), and the underperforming assets start to take off. (Keep reading about this subject in Equity Premiums: Looking Back And Looking Ahead.)

However, a portfolio allowed to drift with market returns guarantees that asset classes will be overweighted at market peaks and underweighted at market lows - a formula for poor performance. The solution? Rebalance religiously and reap the long-term rewards. (Find out how to put this tip to use in Rebalance Your Portfolio To Stay On Track, When Fear And Greed Take Over and Master Your Trading Mindtraps.)

5. Overconfidence in the Ability of ManagersFrom numerous studies, including Burton Malkiel's 1995 study entitled, "Returns From Investing In Equity Mutual Funds", we know that most managers will underperform their benchmarks. We also know that there's no consistent way to select - in advance - those managers that will outperform. We also know that very, very few individuals can profitably time the market over the long term. So why are so many investors confident of their abilities to time the market and select outperforming managers?

Fidelity guru Peter Lynch once observed, "There are no market timers in the 'Forbes' 400'." Investors' misplaced overconfidence in their ability to market-time and select outperforming managers leads directly to our next common investment mistake. (For more insight, see Pick Stocks Like Peter Lynch.)

6. Not Enough Indexing
There is not enough time to recite many of the studies that prove that most managers and mutual funds underperform their benchmarks. Over the long-term, low-cost index funds are typically upper second-quartile performers, or better than 65-75% of actively managed funds.

Despite all the evidence in favor of indexing, the desire to invest with active managers remains strong. John Bogle, the founder of Vanguard, says it's because, "Hope springs eternal. Indexing is sort of dull. It flies in the face of the American way [that] 'I can do better.'"
Index all or a large portion (70-80%) of all your traditional asset classes. If you can't resist the excitement of pursuing the next great performer, set aside a portion (20-30%) of each asset class to allocate to active managers. This may satisfy your desire to pursue outperformance without devastating your portfolio.

7. Chasing PerformanceMany investors select asset classes, strategies, managers and funds based on recent strong performance. The feeling that "I'm missing out on great returns" has probably led to more bad investment decisions than any other single factor. If a particular asset class, strategy or fund has done extremely well for three or four years, we know one thing with certainty: We should have invested three or four years ago. Now, however, the particular cycle that led to this great performance may be nearing its end. The smart money is moving out, and the dumb money is pouring in. Stick with your investment plan and rebalance, which is the polar opposite of chasing performance.

ConclusionInvestors who recognize and avoid these seven common mistakes give themselves a great advantage in meeting their investment goals. Most of the solutions above are not exciting, and they don't make great cocktail party conversation. However, they are likely to be profitable. And isn't that why we really invest?

by Jay Yoder, CFA®

Jay A. Yoder, CFA is an accomplished investor and author. He spent 10 years directing the endowments of Smith and Vassar Colleges, generating top-quartile returns for most of his tenure. He subsequently left to co-found an asset management firm which today has $280 million under management. Earlier in his career, he spent seven years with an investment consulting firm.

KFC technically outlook

2011-07-28T21:00:00.000+12:00

Technical Outlook
KFC share price has broke above resistance RM3.91 day before(26/7/11). As usual, resistance will turn support at RM3.91. To be precise, its a strong support.

MACD stay quiet below zero. ADX positive. MA(14d) cross over MA(50d) signal a uptrend.

My next target is RM4.12, which is a long term uptrend line. Break above will push the price all the way up to RM4.51. Its time to ACCUMULATE.

PBBank growth from strength to strength

2011-07-27T21:01:00.001+12:00

Financial Result
PBBank has just announced its 1H11 financial result two days ago. Its half-year net profit has jump from 1.419bil(1H10) to 1.708bil current year. A whopping 20.3%. If you have a good look at the chart below, its 1H net profit has been growing strongly since 2007.

Public Bank operate in several segments. Its biggest pre-tax profit coming from its retail operation, hire purchase department, fund management, overseas operation and many more. A 29.9% jumped in pre-tax profit from its retail operation is the major contribution of current half lift.

Technical Outlook

Chartwise, PBB has been trading sideway from the beginning of the year. It trap between a ascending triangle with a top of RM13.25. 3 weeks ago, PBB share price break above this resistance, and firmly above this support now.

With this breakout, i think PBB should be start accelerating. Slowly but surely.

I have my target price at RM14.02.

Overall

Current financial result announcement also come with a RM0.20 single tier dividend declared. I take this as a bonus. With today closing at RM13.46, its trading at P/E14.2 (EPS RM0.944 ttm), trading cheap.

GAMUDA break above with good volume

2011-07-03T10:56:00.000+12:00

Technical Outlook
Following my post last week, GAMUDA share price has been steady, closing at high of RM3.95(1/7/2011). Therefore, its 1st resistance RM3.84 broke and now turn support. Next resistance RM3.98, then it should be challenging its long term high of RM4.28.

Friday's break out seems promising to me. It has been support with good volume, and positive MACD crossover from just above 0. MA(14d) also crossover MA(100d), which some people like to translate it as "Golden Crossover". The party may have just started!!

However, break above RM3.98 is crucial, else we might see "Head and Shoulder", which is not good.

GAMUDA on track to a good financial year

2011-06-24T21:50:00.000+12:00

FY30/4/2011
Financial Result
Compare to 3Q10, company revenue up 21% from RM511.2m to RM621.2m recorded for 3Q11. PBT has also increase 55% from RM101.8m to RM158.4m. The increase in profit before taxation for current quarter resulted by higher contributed from all divisions.

For 9 months period, company recorded revenue PBT of RM1862.6 and RM393.4 respectively.
Engineering and Construction division contribute 70% of company's revenue, 26% of PBT
Property Development division contribute 25% of revenue, 28% of PBT
Water and Expressway division through its associate company, contribute 46% of PBT

As we can see, water and expressway division are the goose that can lay eggs for the company. Its essential for GAMUDA to retained them.

Technical Outlook
Gamuda good financial result need some time to reflect in its share price. Immediate resistance is RM3.84, then RM3.98. MACD show some positive signal.

Stock Valuation
GAMUDA close at RM3.75 today(24/6/2011). Base on EPS(ttm) of RM0.184, its trading at 20.4x. As a bluechip construction company, i think the price is fairly valued.

Overall
Prospect for the company is very promising in the medium term. Couple of projects in each particular division will keep them busy. With a good quarter result announced, it'll soon reflect on its share price. Its an opportunity to ACCUMULATE while its still steady.

MAMEE propose capital reduction and repayment

2011-04-08T23:30:00.000+12:00

MAMEE share suspended for two trading days from 7th April 2011 pending for an announcement. Company gonna propose capital reduction and repayment....i call it "Privatization".

Company undertaking a selective capital repayment exercise under Section 64 to all shareholder, other than Non-Entitled Shareholders.

The propose capital reduction and repayment will be funded by this 71.9% Non-Entitled Shareholder by way of an advance or/and borrowing.

Proposed cash repayment per share is RM4.39, arrive after consider 5days, 1month, 3months average price of MAMEE share. Based on MAMEE NTA of RM1.71, its propose price-to-book ratio is 2.57times.

The reason given by the board for this proposal is :
1. Concern about the trend of increasing raw material prices and forex volatility.
2. Substantial capital expenditure may needed to improve productivity and expand capacity.
3. Need higher borrowing, which will affect dividend payment capability in immediate term.
4. MAMEE share thinly traded.
"lol, blame people don't stir up(goreng) the price "

All after all, MAMEE is a very highly rated company in my list. It doesn't disappointed me since i start researching them. Link.

I personally do not welcome this proposal, as we'll get kick out from a good partnership. However, MAMEE proposed cash repayment price RM4.39 is about 22% premium of closing price as of 6th April 2011(RM3.60). For the good faith of minority shareholder(28.1%) i think Non-Entitled Shareholder are generous and fair.

UCHITEC share price soar

2011-03-22T21:51:00.001+13:00

Technical Outlook
Uchitec share price jump RM0.07 to RM1.43 during as of posting. Two weeks ago(28/2/11) i start to keep a close eye on this stock as it break above symmetrical triangle at RM1.32. Straight away, I revise the target price to RM1.38 then RM1.44.

However, share price stay put since then i suspect because of the uncertainty in Japan Earthquake and Libya.

If share price successfully break above resistance RM1.44, uptrend should pretty firm. Next target will be RM1.54.

KPJ revenue recorded another year high

2011-03-17T13:27:00.000+13:00

FY31/12/10
Financial Result
Quarter-to quarter comparison, company revenue up 12.5% to RM433.43m from RM385.34m 4Q09. However, net profit had drop RM6.5m to RM30.81m. 4Q09 net profit was RM37.36m. I cannot find any explanation from the report, i guess is something to do with some sort of adjustment on minority interest.

Year-to-year comparison sees revenue recorded another high of RM1656.2m. Revenue on last preceding year was RM1456.35m. PBT also increase 16% to RM168.13m vs RM144.92m for FY09. As say in the report, the increase in PBT is in line with the revenue and contribution from the hospitals.

Technical Outlook
KPJ share price was on uptrend from July 09, until Dec 10. A period of 14 months. Since then, it hovering around RM3.80, ups and down between MA(50d), but well above MA(100d).

From my point of view, warrant issue during Jan 10 much or less effect the share price, as profit will be diluted when they are exercise.

Stock Valuation
Base on annual EPS RM0.212, KPJ is trading at PE18x. I think it about right for the price we pay for this share(RM3.82 as at 15/3/11).

Future Prospect
From financial report, board of directors are optimistic about KPJ's performance in FY11, in tandem with increasing hospital capacity and activities.

Acquire 100% in Sibu Medical Centre Corporation for RM26.9m, and 100% in Sibu Geriatric Health & Nursing Centre Corporation for RM1.24m. The acquisition is expected to be complete by 1H11.

Into condition Subscription Deed for acquisition of up to 51% equity interest in Jeta Garden Waterfront Trust(JGWT) and up to 3,308,415 10-year convertible notes for total cash consideration up to RM19m. JGWT is primarily involved in operating a retirement village in Queensland, Australia. Go here or here

Overall
KPJ is a fundamentally strong company. Company's revenue has been growing for the past 6 years(i only have data for this long). Inline with revenue growth, Shareholder's Equity has nearly double (0.86 times) since FY05. ROE averaging 13%(6 yrs) also prove that company always manage to generate profit for the shareholders.
In short term, share price may be drifting side way as more warrants to be exercise, diluted EPS. Both acquisition to be completed during FY11 shall generate more income to the company, push up the bottom line.
Long term prospect remain good.

Warren Buffet Watch

2011-03-16T15:48:00.002+13:00

Warren Buffet appeared live in CNBC on March 2,2011. I manage to download a copy transcript of his interview. Its a 60 pages long pdf file, attached below with my highlight.

CNBC Warren Buffet Interview
To make it easy to review, i list down the majors :

Some of Warren Buffet's associate company : Coca-Cola,Wells Fargo, Wrigley,See's Candy,Iscar,Wal-Mart,BNSF Railway,GEICO,Johns Manville,Dairy Queen,Flight Safety,American Express,Fruit of the Loom,Marmon,Netjets,MarquisJet,

He is not worry about the oil prices issue regarding what's happening in Libya. It isn't a real supply situation yet, but market anticipate.
TTI, a world class leader in quality consumer, professional and industrial products is booming in Asia. I think its a Hong Kong company. Its main product including power tools and accessories, outdoor products, and floor care.
The demand for housing comes from household formation. For example, if we build 2 million houses and they were no 2 million families created, it will be a excess supply. The only way to solve that is to underproduce compared to household formations.
Warren do not like bonds. He think its a terrible mistake to buy into fixed dollar investments at this kind of rates.
While commodities price are going up and up everyday, Warren just don't like them. He like income producing assets.
Investment is about you buy the asset now and the asset itself deliver more money over time. For example, Coca-Cola, Wells Fargo and McDonalds.
The problem with commodities is you are buying something and hope somebody else will pay you more for the item. The item itself is not doing you anything. Its speculation.
An example about gold. If you took all the gold in the world, it makes a cube 67 feet and worth about $7 trillion. Its roughly 1/3 of the value of all stocks in US. Do you prefer to have 1/3 of all the stocks in US or owning that block of gold, which can't do anything.

Warren Buffet :" I like business or i like my earning power as the best assets in a time of inflation. They really can't be taken away"

A fair price to buy a company is one that we think we're going to get our money worth in terms of future earnings.
US Dollar will become less important over time because America's dominance of world economic system will diminish.
Importance of liquidity and not getting overleveraged.
People want to be entertained and want to be informed. The demand for media is huge, is worldwide, its going to go on forever.

I don't have to be right about everything or even understand about everything. I just have to right on the decisions i make. So i stay with the simple things. If i don't see any easy decision, i don't play

A century or so ago, nobody ever heard of monetary policy or fiscal policy. We had recession, it will cured themselves. Millions of American were trying to figure out how to do things better next day. Warren don't like fiscal policy to stimulate the economy.

Inflation is the ultimate Tax. It taxes people who don't know they're being taxed. It taxes people who believe in paper money. Paper money generally has a lousy future.

Productivity has improved very significantly. If productivity hadn't improved, we'd have less unemployment right now. But, productivity is great over time. More output is what really solves problems over time. When we have more output per capita, then we'll fight for it.

Warren Buffett says on the hunt for deals

2011-02-28T20:54:00.001+13:00

Warren Buffett says on the hunt for deals

NEW YORK: Warren Buffett is looking for acquisitions as an outlet to deploy his $38 billion cash pile, the legendary investor said in his annual letter to Berkshire Hathaway Inc shareholders on Saturday, Feb 26.
Buffett also gave an aggressive earnings forecast for Berkshire's collection of businesses, said the company would engage in record capital spending and forecast a recovery in the housing market would start within a year.

Buffett acknowledged the need for Berkshire to expand to grow earnings at its non-insurance businesses, a broad collection that most prominently includes the railroad Burlington Northern and the electric utility MidAmerican.

"Our elephant gun has been reloaded, and my trigger finger is itchy," Buffett said. The letter was released just before 8 a.m. EST (1300 GMT on) Saturday, as it is in most years -- and many large investors say they get up early that day to read it the moment it comes online.

The so-called "Oracle of Omaha" said Berkshire will need "more major acquisitions" -- with an italicized emphasis on major -- to meet its goal.

One long-time Berkshire investor described the letter as "punchy" and "confidently American," among other things.

"I would say as an investor, I think it's a very upbeat letter, it's one that celebrates his courage on behalf of investors of going into the marketplace when the world was most fearful," said Tom Russo, a partner at Gardner Russo & Gardner in Lancaster, Pennsylvania, who is one of the 15 largest holders of Berkshire Class A shares.

SUCCESSION

Buffett also addressed the hot-button succession issue in the 26-page letter, something investors had anticipated given his age, 80, and the lack of a clear replacement.

Investment manager Todd Combs, hired late last year, will manage an initial portfolio of $1 billion to $3 billion, Buffett said, and Berkshire may add another one or two managers over time alongside him.

But Buffett said he will continue to manage the bulk of the portfolio while he is CEO. Berkshire's equity holdings topped $52 billion at year-end.

He said less in the letter about who might follow him as chief executive of the company, though he said there were a number of good candidates. The most frequently tipped is David Sokol, chairman of MidAmerican and private jet service NetJets, who Buffett praised in the letter.

THE ECONOMY

Buffett tends to give an economic outlook in his letter and this year's was no exception.

"A housing recovery will probably begin within a year or so," he noted, which has led Berkshire to ramp up spending and acquisitions at its housing-related businesses.

He was less bullish on interest rates, which have been low enough to earn the company a "pittance" on its cash in recent times. Buffett said rates will eventually rise enough to contribute more normal growth to the company's investment income, but it was "unlikely to come soon."

Another hit to the investment portfolio will come from the *redemption of crisis-era preferred investments in Goldman Sachs and General Electric. Buffett said that both are likely to be gone by year-end. The Goldman investment in particular famously pays Berkshire $15 every second.

All things being equal, Buffett forecast Berkshire's "normal" earnings power at about $12 billion a year after-tax.

In the meantime, Buffett is spending on growth. He said Berkshire would make a record $8 billion in capital spending this year, with the $2 billion growth over last year to be spent entirely in the United States.
"Berkshire has created within itself its own outlet to redeploy capital," Russo said. "The best thing about that is when you can by that spending create additional competitive advantage." - Reuters

* redemption of crisis-era preferred investments in Goldman Sachs and General Electric ->see this, Buffet does trade too. Remember that during 2008 recession, he bail out these company and is going to cash out now. I think he think both Goldman and GE are fully value already.

MAMEE net profit down due to higher comodities?

2011-02-27T00:39:00.000+13:00

FY31/12/2010
Financial Result
For the quarter under review, MAMEE revenue increase 21% to RM125.17m, compare to RM103.21m in 4Q09. Higher sales were recorded from local and foreign markets, due to effective advertising and promotion activities, as well as new product launch(Mr. Potato Rice Crisps).
However, PBT drop 35% to RM7.83m, compare to RM12.22m in 4Q09. Higher expenditure in selling and distribution, foreign exchange loss and higher provision for doubtful debts are to blame.

Commodities price had gone up so much during the past 12 months. Chart below are the price movement of the main ingredient of Mamee F&B products.

Wheat gone up 62%

Sugar gone up 46%

Palm Oil up 66%

With this, no further explanation needed why company's net profit are 30% lower despite higher revenue.

Technical Outlook
Mamee share price broke above RM3.59 with a good volume, deem to be bullish. However, it doesn't sustain for long as the crisis in Libya heat up. Follow by a disappointing financial result announcement.
Support at RM3.42, Resistance RM3.60. Friday(25/2/11) closing at RM3.50, just under MA(50d).

Stock Valuation
Mamee EPS for current FY is RM0.294, is trading at P/E11.9x. With this multiple, i think downside is limited. Target price RM4.10(P/E14x).

Overall
4Q10 financial result do not effect my impression of the company, which has good track record for the past 6 years(i only have 6 yrs data). With its average ROE of 14%, good balance sheet with piles of cash( RM52.9m) and growing shareholder equity, its a ACCUMULATE for me.

MPHB seeks 100pc ownership in Magnum

2011-02-10T21:11:00.000+13:00

Update on MPHB acquisition

MULTI-Purpose Holding Bhd (MPHB) (3859), which now holds 51 per cent of Magnum Holdings Sdn Bhd, is buying back the remaining shares of the gaming firm from private equity group CVC Capital for RM1.64 billion.

CVC Capital had spent some RM2.2 billion to buy 49 per cent of Magnum in 2008, under a deal that also privatised the gaming company.

MPHB now plans to make gaming its core business once Magnum becomes its wholly-owned subsidiary. It expects the all-share deal to further strengthen its profits and cash flow position.

"The proposed acquisition is expected to widen the investor base appeal, including institutional investors of MPHB, due to better clarity in MPHB's core business," the company said in a statement to Bursa Malaysia.
Asia 4D Holdings Ltd and a few Magnum management members are currently holding 47 per cent and 2 per cent stake, respectively, in Magnum.

MPHB yesterday signed two memorandum of understandings (MOUs) to allow the company to buy the remaining 49 per cent interest in Magnum as well as RM674.7 million redeemable convertible loan stock class C of Magnum (RCULS-C) for RM1.64 billion.

The purchase price will be satisfied with the issuance of 343.8 million new MPHB shares at an issue price of RM2.30 apiece and RM809.2 million in cash.

The signatories in the first MOU were Asia 4D Holdings, a wholly-owned subsidiary of CVC Capital Partners Asia Pacific III L.P and CVC Capital Partners Asia Pacific III Parallel Fund-A L.P, and Asia 4D Co Ltd, a wholly-owned subsidiary of Asia 4D Holdings.

MPHB also signed another MOU with a few members of Magnum management team.

The purchase price was based on, among others, the audited net assets of the Magnum group of companies of about RM1.07 billion as at December 31 2009, the nominal value of the outstanding interest accrued on the RCULS-C and the future earnings potential of Magnum.

MPHB said as gaming will be its focus, it will sell non-core assets

In my opinion, i like this deal. As we know, 90% of MPHB's revenue contributed by its Gaming business, namely Magnum. As of FY3Q 10 result, company hold RM1.2b of cash and short term investment. To fully utilize this money, buying the 49% remaining shares in Magnum is the best option, given the future earning potential of Magnum.

MPHB expected to announce major acquisition

2011-02-09T21:05:00.000+13:00

This is an article from TheStar, dated 9 Feb 2011.

PETALING JAYA: Multi-Purpose Holdings Bhd (MPHB) will be announcing a major acquisition today, reliable sources said, although speculation is rife that the company could also be announcing the re-listing of its gaming subsidiary Magnum Corp Sdn Bhd.

Yesterday MPHB suspended its shares since the afternoon trading session, pending a material announcement. It has already been widely speculated that MPHB is finalising plans to relist Magnum. Such talks had been reflected in the sudden surge of investor interest in MPHB's securities, contributing to the recent rise in its share price.

However, a source close to the company said the announcement was more related to a significant acquisition by MPHB.

http://biz.thestar.com.my/news/story.asp?file=/2011/2/9/business/8025179&sec=business

MAMEE financial result update

2010-12-19T17:01:00.001+13:00

FY30/9/10
Financial Result
As expected, MAMEE had another good quarter. For the quarter under review:

Revenue increase 7% to RM121.8m from RM113.8m in 3Q09. Higher sales from local and foreign market as a result of effective advertising and promotion activities and strengthening of distribution channel. Its new product, Mr.Potato Rice Crisps have stronger demand than expected.
PBT stood at RM15.6m, compared to RM16.1m 3Q09. Higher expenditure of in selling and distribution incurred and Advertising & Promotion expenses during World Cup season and Hari Raya are the cause.
Bottom line increase 3% to RM12.3m, compared to RM11.9m due to lower effective tax incured.

Technical Outlook
MAMEE share price has been consolidate since hit a high of RM3.69(adjusted) during 23/7/10. Support at RM3.28 while resistance at RM3.45. MACD crossover signal line(red) under 0, which is beautiful.
MA(14d) try to cross over MA(50d) as well as MA(100d). Can we see a golden crossover ahead?

Stock Valuation
Mamee EPS is RM0.309(ttm) is trading at PE11x(17/12/10 closing price RM3.41). With this valuation, i think Mamee is still cheap given its stable EPS and ROE growth rate.

Future Prospect

According to Inter-Pacific Research, Mamee FY11 capex plans totaling RM100m. RM60m will be allocated for machinery with the rest for renovation / construction for:

Additional warehouse in Melaka~to increase warehouse capacity by 46%
New factory ~ to replace aging machineries with new models. 3 new modern lines to be added (produce instant noodle)with higher production capacity(1.5x faster). Company plan to reduce their labor relief (70% workforce consist of foreign labor at the moment).

With the heavy plan ahead, company gross margin might suffer from increase depreciation and overheads cost coupled with increasing palm oil cost.

Overall
Mamee is a good company for long term investor. Its growing rate(look at the chat below) and generous dividend payout(twice a year) is what we after. With the announcement of expansion plan for FY11, i'm pretty sure company is doing well and they look for more.
Will dividend payout affected if they need money for capex FY11? Increasing palm oil cost shall be noted.

Will JCorp sell KFC?

2010-12-04T17:19:00.002+13:00

An article about bidding to buy QSR, a majority shareholder of KFC.

Saturday December 4, 2010

Will Johor Corp sell KFC?

By RISEN JAYASEELAN
risen@thestar.com.my

IT'S not just finger-licking fried chicken that KFC Holdings (M) Bhd serves up in Malaysia. You can always count on it for a good corporate story. Every now and then, some parties will start fighting for control over it, or more accurately, for the free cash flows the retailer churns out.

In that sense, nothing's new this time around. A number of parties have made competing bids to buy QSR Brands Bhd, the parent of KFC. But interestingly, Kulim (M) Bhd (that owns 58% of QSR) has rejected all bids, saying that it is not interested in selling QSR and that it believes in the long-term value of KFC.

The million-dollar question then is this: how did the bids come about if Kulim or in effect, Johor Corp (JCorp), Kulim's parent (and therefore the ultimate shareholder of KFC) is not interested in selling? Rarely do unsolicited bids of this size come about.

This is why the one unique spin-off from this KFC saga is the attention it has drawn on JCorp. Firstly, JCorp is saddled with more than RM6bil in debt, out of which RM3.6bil is due to be repaid by July 2012.

It remains to be seen if JCorp can afford to repay this debt without having to embark on some asset sales.

Secondly, there's the issue of a perceived lack of leadership at JCorp.

Its previous head honcho Tan Sri Muhammad Ali Hashim, who has grown to become synonymous with JCorp, after leading it for more than 28 years, has suddenly left his position.

The reasons for his departure he left on short notice and months before his actual retirement date remains a mystery. Word on the street is that more powerful personalities in Johor are not agreeable to Muhammad Ali being at the helm of JCorp.

Muhammad Ali could not be reached for this article. Neither did JCorp respond to questions from StarBizWeek.

But insiders reckon that both JCorp's debt and Muhammad Ali's departure have a lot to do with the two bids for QSR.

QSR for sale?

QSR was put up for sale, there's no doubt about that, points out an investment banker. But by whom?

Insiders say it could be Muhammad Ali. He remains chairman of Kulim, QSR and KFC although rumours are that he will not be for long, following his departure from JCorp.

Still, Muhammad Ali has been the one who got KFC into JCorp.

Those following KFC's colourful history will recall that Kulim's entry into KFC came about at the apex of an all-out battle between a management buy-out team led by Datuk Johari Abdul Ghani and another faction led by Tan Sri Nik Ibrahim Kamil, who was believed to be aligned to businessman Datuk Soh Chee Wen.

Johari, meanwhile, was said to have been backed by Datuk Ishak Ismail, a controversial character and is said to have been the person controlling KFC for many years, despite not appearing on its board.

Interestingly, Ishak is still rumoured to be playing a part in the current QSR/KFC saga, but it is unclear how.

At the height of the battle between these two factions, Kulim, under Muhammad Ali's stewardship, swooped in and took the prized asset, paying RM3.20 per QSR share.

Another reason KFC is said to be up for sale is because of JCorp's perceived need for money to repay its debt.

Indeed, there are some parties who reckon that JCorp is a distressed company. According to its 2009 annual report, JCorp had RM705mil in cash but a whopping RM6.62bil in debt and with hardly any free cash flows.

It also paid around RM500mil in interest payments and RM1.7bil in loan repayments.

Despite being perceived as asset rich, it only booked a paltry RM5mil in dividend receipts in FY2009.

The huge debt at JCorp is said to be a legacy left by Muhammad Ali, although his admirers would say that he had built the group into an asset-rich one, with more than 200 companies in its stable and easily the state investment arm with the largest spread of businesses in the country.

Muhammad Ali has denied allegations that his resignation was due to the debt woes of JCorp. He has repeatedly quoted these figures that JCorp's asset value today is in excess of RM12bil, out of which RM6bil is in listed shares of companies. All of these is worth much more than JCorp's debt, he was reported to have said.

JCorp will not face bankruptcy. The debt due is on July 31, 2012 and we will negotiate with the bank to refinance. Debt is normal in business, he has been quoted as saying.

JCorp's structural problem

Another problem with JCorp is the structure of the ownership of its assets. It doesn't own most of its prized assets directly. Two of its prized assets are KFC and the London-listed New Britain Palm Oil Ltd (NBPO).

JCorp owns 53% of Kulim, which owns 50% of NBPO and 57.5% of QSR. QSR then owns 50.6% of KFC. So if these assets were to be sold, the sale proceeds would be trapped at Kulim. What that means is that if the money Kulim got from the sale of NBPO or QSR were to be paid out in dividends, JCorp would only get half that, with Kulim's other shareholders enjoying the proceeds as well. No wonder then that Kulim's share price has enjoyed a stellar performance, almost doubling from early this year.

Largely due to high crude palm oil prices, Kulim's other key asset, NBPO, the largest oil palm plantation and milling operator in Papua New Guinea, has also experienced a rise in its share price, by over 80% this year. Currently trading at 7.60 per share, Kulim's 50% stake in it is worth some RM2.6bil. Kulim's stake in QSR, which has also seen its share price go up by some 75% year-to-date, has a market value of some RM968mil.

JCorp ideally should have a more flat' structure, whereby it owns the assets directly. It is something that can be done via a group-wide restructuring exercise. But that will be complex and takes time, says a fund manager.

To be fair, the current structure has its merits. JCorp's effective stakes in KFC and NBPO are only 15% and in 26% respectively and yet it controls these assets. That means JCorp per se did not have to fork out too much money to gain control of these entities.

Sale of other assets by JCorp?

In any case, JCorp has other assets that can be sold. One is its direct stake of 48.35% of KPJ Healthcare Bhd.

That stake alone has a market value of RM1bil. KPJ, the leading listed healthcare provider in the country, with 19 hospitals and close to 2,000 beds, has been another venture spearheaded by Muhammad Ali.

The group has been profitable over the past three financial years, with an annual turnover of more than RM1bil a year and y-o-y earnings growth of 15% to 30%. In FY2009, it posted net income of RM110.9mil on the back of RM1.46bil in revenue.

A likely buyer of KPJ could be Khazanah Nasional Bhd, bankers say, which is growing its healthcare business, having just forked out some RM8bil to take over Singapore's Parkway Holdings Ltd.

Other assets that JCorp can sell are plantation and industrial land mainly in Johor that is directly owned by JCorp.

It should also be noted though that some investors have a beef with the companies in JCorp's stable because of a preponderance of related party transactions (RPTs).

For example it has been reported that the Employees Provident Fund (EPF), which had initially supported Kulim's entry into QSR and KFC, had subsequently sold off its shares because it didn't like the series of RPTs that took place in KFC under Kulim.

Enter Halim Saad

Back to the potential takeover of KFC.

One of the recent bidders for KFC is well-known tycoon Tan Sri Halim Saad. After his first bid that worked out to a price of RM5.60 per QSR share (his bid was actually for the assets of QSR), the Carlyle Group made an offer of RM6.70 per QSR share. Halim, teaming up with KUB Bhd and CVC Capital, then raised his bid to match's Carlyle's offer.

While Halim declined comment for this article, parties close to him say that his motivation for making the bid was that KFC could be run more efficiently. This has often been the stated reason for other bidders for KFC in the past.

Carlyle, on the other hand, is said to be keen on KFC because of the latter's recent expansion into India, not to mention its attractive cash flows.

But despite JCorp's rejection of these offers, rumours are rife that a deal involving the sale of QSR is still in the works.

Valuation-wise, the RM6.70 price tag does seem attractive. It values QSR at RM1.9bil or around 17 times FY2010 forecast earnings.

In a recent note, CIMB Research gave its take on the situation. The report said that the main reason for Kulim's decision not to sell is the growth opportunities in India.

To recap, KFC entered India on the invitation of Yum!, the US-based franchiser of KFC.

Yum! influence

That was a coup for KFC and demonstrates its warm ties with Yum! CIMB Research said. The report also highlighted the fact that KFC's three outlets in India are reporting monthly sales averaging RM450,000 per outlet, compared with RM250,000 per-Malaysian KFC outlet. This may increase KFC India's chances of taking over five profitable outlets which are now under Yum!, CIMB Research said.

Some insiders reckon the rejection of Idaman Saga was influenced by Yum!. This is because KUB (which was part of the second Idaman Saga bid) holds the Yum! franchise for A&W in Malaysia and Thailand.

Unlike KFC, KUB's food business, which is represented by the A&W franchise, has been far from roaring, turning in a net loss of RM3.6mil in the first half of 2010, said an insider.

But there is less explanation as to why Carlyle was rejected. Carlyle has a thriving list of food and beverage investments including Dunkin' Donuts, Baskin Robbins, Dr Pepper and 7-Up.

Perhaps there are some other considerations going on, to the effect not just any party can come to own a company like KFC, considering its vast reach into Malaysia, suggests an industry player.

In all likelihood though, this KFC saga is far from over. But the bigger story to watch though is how will JCorp fix its debt issue.

http://biz.thestar.com.my/news/story.asp?file=/2010/12/4/business/7554792&sec=business

MPHB doing good in gaming division

2010-11-25T22:43:00.000+13:00

FY30/9/10
Financial Result
Compare to same quarter last year, MPHB revenue stay flat at RM850.7m. However, PBT jumped 105% to RM138.06m from RM67.24m. Lets have a look at the result of each division.

Gaming division contribute 91% of company's revenue. Current quarter, its net profit is up RM76.3m to RM89.1m from RM12.8m last year. 4D Jackpot which launched in September last year, lower prizes payout ratio and reduced financial cost contributed to this substantial increase.
Stock Broking division's PBT increase 34.8% to RM6.2m mainly due to debts recovery and higher net gain from proprietary trading.
Financial Services division drop slightly to RM17.7m from RM18m. This is mainly due to write back of provision for impairment of investments in previous corresponding quarter.

In summary, company current quarter's net profit up 67% to RM86m from RM51.6m on 3Q09. Which translate into EPS RM0.081.

Technical Outlook
Support at RM2.12. There are three hurdles pass, as R1 has been broke. R2 was broke a few weeks ago, but it pulled back very quickly. Break above R2(RM2.18) in short term is crucial for this uptrend to continue.

Stock Valuation
Base on EPS RM0.30(ttm) and today's closing price RM2.18, it is trading at P/E 7.2x. With this multiple, i think MPHB is very cheap.

Overall
As we can see, company's revenue has been largely coming from its gaming division(91%). And as we all know, NGO business is a sure profit business and the cash generate will only become bigger and bigger like avalanche . As long as company operating as it is right now, this is only going to be our ATM.

CSCSTEL make a lost this time

2010-11-13T17:38:00.001+13:00

FY30/9/10
Financial Result
Current Quarter vs 3Q10 comparison

The Group achieved revenue and profit before tax for the current quarter of RM192.7 million and RM2.4 million respectively. This represents a significant decrease of RM68.8 million or 26% lower in revenue than that of its corresponding quarter. Profit before tax decrease significantly by RM51.2 million or 96% from RM53.6 million in the corresponding quarter.

The drop in revenue is due to contraction in sales volume as a result of sluggish demand. The reduction of profit before tax was mainly the results of lower sales volume and high cost of raw materials which necessitated a write-down of inventories of about RM10 million to net realizable value.
Current Quarter vs Immediate preceding quarter comparison
The Group’s revenue has decreased significantly by 36%, from RM301.7 million in the preceding quarter to RM192.7 million in this quarter. The decrease in revenue is due to sales volume contraction and lower selling prices of our steel products

The decrease in revenue together with inventories write-down have resulted Group’s profit before tax to reduce significantly by 94% from RM42.1 million in the preceding quarter to RM2.4 million this quarter

Technical Outlook
Despite negative financial result, CSCSTEL share price has been rising firmly. Until yesterday, before financial result announcement. It's now break under strong support of RM1.83. Its not looking good at the moment.

Stock Valuation
For the pass four quarter, CSCSTEL make a net profit of RM97.72m, translate into EPS of RM0.26. Its trading at P/E 7x(12/11/10 closing RM1.82). With this multiple, i think its still cheap.

Overall
I think current quarter negative result come as a bit surprise. It might halt the uptrend for CSCSTEL for a while, until some good news kick in. However, CSCSTEL piggy bank has getting fatter. Company holding RM306.2m cash in hand, which is RM0.82/share of cash.
Whenever steel sector resume to its glory, i think CSCSTEL will be the first to zoom. For long term investor, every price drop is an opportunities to accumulate.