By Andrew Chia
"I hear I forget, I see I remember, I do I understand," Confucius.
One of the best ways of learning anything is to have a hands-on experience. That will be the method of instruction used in my Stock Market Secrets workshop.
It should not surprise you that I will not be doing much teaching during the workshop. But you will be learning the skills yourself. At the end of the workshop you will convince yourself that you are now somewhat an expert at stock investing.
Hard to believe, right? You'd better believe it.
You will know which companies on the stock exchange deserve your attention. You will know all the criteria these companies should meet, and how they stand up to close scrutiny. You will also know when and at what price you should buy them. More importantly, you will be prepared for all the scenarios after you have bought them, thus eliminating unpleasantly surprises.
Can you imagine learning all these things by yourself? Yes, it is great fun isn't it? That is why it is called a workshop. I will show you the where and how, but you will be doing the working and shopping!
Besides learning stock investing, you will have the privilege of witnessing first-hand one of the most powerful training methods ever invented. It is called the TSDR Method. I know the name sounds far from impressive. Let me tell you what it is. I have used it for the past 20 years and the results have always been satisfying.
Most other methods of training pale in comparison. Now, don't look at me - I didn't invent it. The US Army did.
That reminds me... please entertain me a minute and I'll tell you a joke. Some years ago, my friends and I were having a casual chat. It was during one of those Games; Commonwealth Games, if I remember correctly. The Vietnamese won a lot of gold medals in the shooting and archery events.
My buddy said, "You know why they won? That's because they always had live training. Guys from other countries practise on the sports field. If they lose, they just lose a medal. The Vietnamese practise on the "killing fields". If they lose, they lose their lives! They must always hit their target."
It is wise to employ training methods adopted by the army. Why? Because the army has to make sure that whatever is being taught will be used exactly in battle. There is no room for error.
Now, TSDR stands for Tell, Show, Do and Review.
I will TELL you where to look to find a good company. I will give you the introduction as well as the reasons why you should look in those places.
I will then SHOW you where to look.
You will be DOING the looking. Telling and showing takes only a fraction of the time. You will be having fun doing the work.
The most important part is REVIEW. After observing you doing it, I will let you know your weakness, and how you can improve and perfect your technique.
You will leave the workshop without any doubt in your mind how stock investing works.
There you are, simply as can be. Aren't all great things supposed to be simple?
You now understand why other methods of instruction are failing. Most of the time the trainer just TELLS. He ignores the other three vital steps. And then he's surprised why his students' results are disappointing. He forgets to even SHOW.
(Again you know why this usually happens. Speeding. Completing the four steps requires time and patience. Now, speed kills, remember?)
Good trainers go a step further. In fact, they usually go two steps further. They watch while their students DO what he has explained, and correct their weaknesses.
1. Become an expert at stock investing.
2. Have a lot of fun.
3. Learn how the most powerful training method is being practised.
Hey, that sounds like a three-in-one course. Should I increase the course fees? Just kidding. But you know you're getting a bargain-of-the-year. What are you waiting for?
To your success,
By Andrew Chia
By Andrew Chia
I've got to be honest with you. You can't have much leverage with stock investment.
If you want to buy a 100k piece of property the bank can lend you 90k. In some cases you can even do a "nothing down", meaning you can borrow the whole cost from the bank.
If you want to start a business, you can do OPM (other people's money), meaning you can go to your friend or relative with a viable business proposal and they may want to fund it.
It's difficult to get funding from your friends and family simply because stock investment = gambling to them. Imagine telling your friend you want to borrow money so that you can go to the casino.
And I don't recommend you get a personal loan from the bank to invest in the stock market.
Of course, you can buy shares on margin but that is also not advisable. Furthermore, the margin is usually less than 50%.
So, where does that leave us?
I believe the answer simply lies in SAVINGS. Let us examine this very important word, because its impact reaches much further than stock investment alone. It could be the foundation of success (and continual success) in our money world. Because saving requires discipline, and financial discipline is essential for success in our money world.
English is not an easy language, I'm sure you would agree. A word can have different meanings. You can save a man from drowning. You can get a 20% discount and save money if you buy now.
That is not the saving we are talking about.
Save means put away in another place. I always recommend to people who wish to start the journey to financial freedom to open a separate account dedicated to savings. And I usually advise them not to have an ATM card for that account.
Once you have opened a savings account, you start practising the Golden Rule of Personal Finance, that is, pay yourself first. Especially if you are a salaried worker, you should set aside 10% of your salary and put this into your "Saving" account. And I mean you do that before you do anything else, like paying your bills and instalments.
I know this may sound like a tall order to some of you. Your salary may not even be enough for you to survive, especially if you are living in a big city like KL or Singapore. But once you start putting aside 10% each month, you will be surprised. You will discover one thing - you won't be really missing that 10%!
Think about it. Despite us earning so little, a sizeable percentage of that unwittingly goes to unnecessary spending like eating out, fancy dresses and gadgets, and sight-seeing trips. We just need to trim down a little bit on those. I don't mean stinge. I just mean we will appreciate it more the next time we spend money on those items. We will have a better sense of the value of money.
You can only put your money house in order if you start practising the Golden Rule, pay yourself first.
In no time you would have accumulated your capital for stock investment. And you're on your way to financial freedom. Think about it, although saving is important, it is extremely difficult to become rich just by saving alone. Making money and investing will do that for you. That is why after you save, you must learn how to invest.
Furthermore, a little secret which I omitted in Money Secrets (come to think of it now), is that most people's hard earned savings disappear after some time, don't you agree? (I'm not even talking about the EPF/CPF.) Do you know why? It's a bit long for me to explain here, so I will tell you that when you come to my workshop,
This little secret is easily worth $1,000. People have blown hundreds of thousands of dollars simply by not knowing it.
Investing is made much easier today compared to a decade ago. 1 lot of shares is only 100 shares, compared to 1,000 shares earlier. The average price of a share on the Malaysian stock market is about RM2 or RM3. Therefore, you can become a stock investor with only RM300 or less!
Don't worry about brokerage. It is only about 0.42%, less than a cuppa at Old Town Kopitiam. You are investing, not trading, remember? Brokerage doesn't affect you.
Opening an account is usually free. You should open a stock investment account today. You do not need to put any money into the account, but you can start making use of all their tools like historical charts and company information and statistics. You can fund the account only when you decide you want to buy shares.
There you are, you don't need to worry about capital to invest in stocks. Imagine this, if you bought just a RM1,000 of Public Bank shares when it was RM0.80, you would be receiving RM500 in dividends and passive income when the share was selling at RM12.00. That is a 50% return, compared to 2% if you put it in FD!
So, come learn stock investing. It's on 10th January 2010. The next workshop would only be available after Chinese New Year, or end of February.
To your success,
My friend, Andrew Chia, will be conducting a 1 day workshop titled "Stock Market Secrets". He's giving a great offer for his Money Secrets readers :-)
Property and stocks are the most common ways of generating . With residual income you are on your way to and early retirement.
Just like other forms of investment, they cannot be learned overnight. Therefore, it would be wise to start your education in these two streams of income as early as possible.
I will be conducting my first one-day stock investing workshop for Money Secrets readers on 10th January 2010. It will be held at Dewan Mutiara, Jalan Ipoh, KL. Inclusive of lunch, 2 tea breaks and course materials, it is at a giveaway price of only RM380. (A participant from Penang at an earlier seminar told us he spent about RM22,000 for stock investing courses.)
So, hurry and book yourself a place. You can get the details and registration form here,
To your success,
Wednesday December 23, 2009
PETALING JAYA: Hai-O Enterprise Bhd posted an 84% increase in net profit to RM20.45mil for its second quarter ended Oct 31, compared with RM11.15mil in the previous corresponding period.
Revenue improved by 52% to RM132.4mil from RM87.3mil previously.
In a filing with Bursa Malaysia yesterday, Hai-O said the increase in net profit was mainly due to higher contributions from all core divisions.
It said the recovery in the domestic market had increased consumer spending, which boosted sales of its health and wellness products in the second quarter.
Moreover, it said, the increase in other income included the realisation of exchange fluctuation reserve on the disposal of foreign associates amounting to RM624,799.
For the first-half year ended Oct 31, Hai-O achieved a 40% higher revenue of RM280.95mil compared with RM200.20mil previously.
Meanwhile, Hai-O has proposed to implement the following:
·Bonus issue of up to 16.89 million new ordinary shares of RM1 each held in Hai-O to be credited as fully paid-up, on the basis of one bonus share for every five existing shares held in the company on an entitlement date to be determined later
·Share split involving the subdivision of each Hai-O share held in the company into two ordinary shares of 50 sen each in Hai-O
lAmendment to the Memorandum and Articles of Association of Hai-O and
·Private placement of up to 10% of the then enlarged issued and paid-up capital of Hai-O.
Daniel's Recommendation: Maintain HOLD
Last night I gave a Sell recommendation. However, due to the optimistism on the stock before the market opens this morning, I'm revising my recommendation from Sell to Hold. So, for those of you who havn't sold your stock yet, maintain Hold as there is potential upside to this stock further.
Refer to previous write-up here for more info about this company.
Current Price: RM 7.50
The recent quarterly profit which was announced today showed an improvement to the overall current EPS of RM 0.788 from previous RM 0.677. Thus, I raised the Fair Value to RM 6.64 from its previous RM 5.70. However, the current market price is 12.95% above my calculated Fair Value for this stock. Also, there is an announcement today that Hai-O is proposing a Private Placement of 10% of the company shares at a date to be determined later. The Private Placement will dilute the current EPS and thus will further decrease the current Fair Value by 10%. Thus, I give it a Sell rating. Buy back below RM 6.64 as the company's fundamental is still strong.
Refer to previous write-up here for more info about this company.
Published: Wednesday December 16, 2009 MYT 3:45:00 PM by http://biz.thestar.com.my/
Top Glove pre-tax profit up 100% in first quarter
KUALA LUMPUR: Top Glove Corporation Bhd has recorded a 100 per cent increase in pre-tax profit for its first quarter ended Nov 30, 2009, to RM86.6 million from RM43.3 million in same quarter last year.
Revenue of the world's largest rubber glove manufacturer rose 22 per cent to RM472.3 million from RM386.1 million previously.
Chairman Tan Sri Lim Wee-Chai attributed the continuing profit growth to aggressive marketing strategies and improvement in product productivity and quality.
"Top Glove is efficient and has adapted well to the chalenging business environment, resulting from cost-saving measures implemented at all factories," he said in a statement on Wednesday.
Lim said the group was continuing to strengthen its balance sheet and working capital position, currently in net cash position of RM222 million, with RM237.1 million cash in bank as at Nov 30, 2009.
"In view of the strong profit growth for the first quarter, the group is optimistic of its future outlook despite ongoing global economic challenges," he said.
"With a diversified range of good quality products offered to a huge customer base spread over more than 180 countries, the group is confident of continuous growth and good profitable performance in the current financial year," he added. - Bernama
Fair Value: RM 9.97
Current Price: RM 9.94
I've raised the current Fair Value for this stock to RM 9.97 from RM 8.49 previously. As the current share price is very close to my Fair Value, I give it a Hold rating.
Refer to previous write-up here for more info on this company.
Anne Scheiber was born in Brooklyn, NY in 1893. She was employed as an auditor in the Internal Revenue Service (IRS) in 1920 and retired in 1943. With her savings of $5000, she started an account at Merrill Lynch Pierce Fenner & Beane.
Her investment strategy was simple: Buy companies in which she understood their businesses well and hold on to them for the long term until she passed away. She didn't panic during the bear market of the 70's or during the crash of '87 because she was convinced her stocks would come back. Besides the $5000 which she started, she continued to grow her portfolio by investing a major portion of her annual pension of $3,150 and also reinvesting her dividends.
Scheiber did her own research before she did her investing. She didn't trust stock brokers because she was burned by brokers during the 1930's.
She passed away in January 9, 1995 at the age of 101 and by then her portfolio had grown to $22 million! In her will, she donated the $22 million to New York City's Yeshiva University to help educate the bright and needy young women.
Here was Anne Scheiber's top 10 stockholdings:
Here are some morals of the story:
1. Buy and hold strategy does works if you've done your homework like Anne Scheiber. Of course, buy-and-hold critics may say that timing the market will earn you even more. It's just a matter of personal preference here. I'm just proving a point here that one can make a handsome profit from the buy-and-hold strategy, without sleepless nights even when the market crashes.
2. Invest in companies that you can understand. Anne Scheiber invested in leading companies that created products she admired. She loved the movies. So she invested in Loew’s, Columbia, Paramount and Capital Cities Broadcasting. She drank Coke and Pepsi and bought shares in both. She invested in the companies that made medications she took - Schering Plough and Bristol Myers Squibb.
3. Keep saving and investing. Anne Scheiber regularly contributed to her portfolio from the small pension that she got. Regular saving and investing allows you to pick up additional stocks that fit your criteria. Merely saving is not enough. Take advantage of the power of compounding by letting your money work hard for you in the stock market.
4. Give something back. Anne Scheiber's $22 million gift to Yeshiva University will help countless young women realize their full potential for years to come. Yeshiva's president Norman Lamm says: "Anne Scheiber lived to be 101 years old, but here at Yeshiva University her vision and legacy will live forever."
Should we buy and hold our shares or time our buying and selling of our shares?
Watch this video of Prof. Kenneth French of Dartmouth on Investing Strategies:
Buy and Hold vs. Timing the Market @ Yahoo! Video
Some important points to take note:
- No one can ever be consistently right in forecasting or timing the market. One who trys to time the market are likely to miss a good year and avoid a bad year.
- If you are to follow someone's advice who is timing the market, and that person turns out to be right, you can't really tell if it's because of that person's skill or pure luck.
Current Price: RM 1.95
The recent quarterly profit which was announced on the 23rd November 2009 showed an improvement to the overall current EPS. Thus, I raised the Fair Value to RM 1.99 from its previous RM 1.79 and give it a BUY rating.
Refer to previous write-up here for more info on this company.
Fair Value: RM 8.49
Current Price: RM 9.00
Refer to previous write-up here for more info on this company.
Current Price: RM 1.90
Refer to previous write-up here for more info on this company.
This is a short CBS News which was broadcasted last year on the 17th October 2008.
Important key note from Warren Buffet, a role model in value investing principles:
"Be fearful when others are greedy, be greedy when others are fearful."
In other words, when other people are dumping a good stock at a discounted price, you buy it; when others are buying a good stock at an extremely high price, you sell it and buy it back again when the price drop back to a discounted value, as long as the company's fundamentals or business model still remain good.
Personal Investing - By Ooi Kok Hwa
Published in TheStar.com.my on 4th Nov 2009
AFTER the strong rally over the past seven months, the market is finally undertaking some corrections. Some investors may not fully comprehend why the stock market moved up when the companies reported bad financial results, but tumbled when the companies started to show better financial performance.
We need to understand that the market had discounted the good news. Some of those good financial results were already reflected in the stock prices. The stock market cycle always moves ahead of the economic cycle.
During the Great Depression in 1929, the stock market recovered eight months ahead of the real economic recovery. Even though some investment experts say the worst is far from over, we notice that a lot of economic indicators are pointing to an economic recovery.
However, the economic growth may not move as fast as the stock market. As a result, while the economy continues to recover, stock prices need to come down to reflect the fundamentals of the companies.
This explains why once investors started to realise that the stock prices could not be supported by the fundamentals of some companies, especially blue-chip stocks, the stock prices had to come down to reflect the true value of companies.
Nevertheless, based on our analysis, most listed companies in Malaysia showed great recovery in their second quarter of 2009 financial results against the results in the first quarter as well as the fourth quarter of 2008.
We need to understand that there are many disturbing factors that affect the stock prices, but not reflect the fundamentals of companies. From the perspective of behavioural finance, investors’ expectations and emotions have great influence on stock prices. Two factors influence investors’ expectations – past experience and new information.
In the absence of new information, investors will use past trends to extrapolate into the future. As a result, the stock prices may persist in trend for a while before the next market reversal. This may cause the market to overreact to good financial results as shown by some companies.
According to Fischer Black, some investors tend to be affected by noise that makes it difficult for them to act rationally. He defines noise as what makes our observations imperfect as well as keeps us from knowing the expected return on a stock.
Some investors, due to lack of self control and proper financial training, may misinterpret economic information and sometimes be carried away by the stock market emotion. Investors may feel uneasy over the recent strong market performance. However, they will still choose to follow the market trend even though they feel their judgment may be wrong. In behavioural finance, we label this as conformity in which we are inclined to follow the example of others even though we do not believe in the action.
The above phenomenon of stock prices being valued beyond the fundamentals of the companies is applicable to some selected blue-chip stocks. Nevertheless, Bursa Malaysia does have plenty of second- and third-liner stocks which are still selling at cheap valuations. Investors may want to take the current market corrections to accumulate them for the long-term.
We need to relate the current stock prices to the intrinsic value of the companies. Some investment tools like price-to-earnings ratio, dividend yield and price-to-book ratio will assist us in filtering out some good companies for investment.
Even though there are a lot of uncertainties along the way to full financial recovery, we feel that investors may view the recent corrections as good opportunities to build their long-term investment portfolios. For those who have been looking for investment returns higher than fixed deposit rates, there are still a lot of stocks that are paying handsome dividend yield of more than 4% and yet selling at cheap prices.
One of the most important investing principles is to have the discipline to hold long term. We should not pay too much attention to the fluctuation of stock prices; instead, we need to focus on the earning power of the companies as it is one of the most important drivers in deriving the intrinsic value of a company.
As a result of the financial crisis, even though a lot of companies are showing great recovery, their performance and prices are still lower than their peak level during the year in 2007. If the overall economy and the companies’ performance recover to 2007 level, their current stock prices may be a good entry level.
● Ooi Kok Hwa is an investment adviser and managing partner of MRR Consulting.
Current Price: RM 1.71
As the current price is now below the Fair Value, it is a good buy now. For those of you who have bought this share based on my miscalculation of the previous Fair Value (as stated here), now is the good opportunity for you to buy some more of this share to Average Down your cost per share.
"According to the management's conservative guidance, the positive earnings impact may be felt in two years," said the research house in a statement on Monday.
With the low investment cost of RM2.8 million compared to its net cash of RM52.1 million at first quarter of 2010 to set up the technology unit, the investment return may be large, OSK Research said.
"We understand that both parties have started their research and development work in Beijing to develop better applications using Hai-O's invention," it said.
The company has teamed up with China's Institute of Engineering Thermophysics (IET) from the Chinese Academy of Sciences to establish a joint laboratory on innovative high intensity heat transfer technology to develop better technology.
OSK Research said the collaboration between the two parties signified that Hai-O's invention was of a certain standard.
It also said that Hai-O Energy had submitted several patent applications which were awaiting approval.
For the fiscal year ended April 30, 2009, Hai-O's revenue increased 16 per cent to RM435.2 million from RM373.8 million in the previous year.
Article taken from The Edge Financial Daily, November 2, 2009
|Written by Mushida Muhammad |
|Monday, 02 November 2009 10:53|
In the high stake game of making money in the stock market, getting emotional is not an option. It is true that investors should focus on fundamentals, be patient and exercise good judgment; but alas, they are only human.
In the exuberance of a bull run or the trepidation of a bear, oftentimes there exist tendencies to inflate or deflate stocks above or below their intrinsic values disproportionately before investors realise that their optimism or pessimism was not entirely justified.
The danger lies when emotions overcome rational judgment, giving way to greed and fear. Excessive greed leads to a superfluous rise in share prices, creating a bubble which eventually sows the seeds for future panic.
Time and again, history has shown that panic often leads to a crash. In the past 10 years, greed and fear had culminated in three major financial crises; the Asian Financial Crisis, the Tech Bubble and — most recently — the Subprime Crisis.
In all cases, markets were experiencing unprecedented outperformance prior to the crash. Driven by greed, many believed that they could ride the high waves without repercussions. What lesson can be learned from this?
For one, investors tend to have a short term memory, often falling prey to the “herd mentality”. The temptation of making a killing often prompts them to take extremely high risks and disregard fundamentals for fear of missing the boat if they did.
Going back to basics. Regardless whether the objective is for the long- or short-term, investment practices should be based on fundamentals and good business judgment. Warren Buffett’s foundation has always been centralised on the principle of fundamental business analysis — a good investor should identify good businesses, purchase them at fair prices and hold them for the long term.
Success lies not in price behaviour but rather on an investor’s ability to apply sound judgment and make the distinction between market price and intrinsic value.
At a time when markets are insecure and unstable, information is key. Investors must understand the company’s business.
Thus, the onus lies with the investor to be discerning. Information is best found in financial statements, as they provide an up-to-date snapshot view of the company’s financial health and growth potential.
Some industries are inherently better for investment than others due to their intrinsic qualities. Health-care, consumer, plantation are a few sectors that generally provide better investment opportunities due to the inelasticity in demand.
Striking a balance between risk and reward is crucial, for the amount of risk taken ought to be proportionate with the anticipated reward. Assuming too much risk for too little reward gives way to bad investment.
More importantly, investors must have a stop-loss strategy to prevent escalating losses. Many a time investors make the mistake of holding on to losing stocks in the hope that it will turn around — but in reality, these stocks seldom do.
For those with a long term investment horizon, high and stable dividend income may be an important factor, as are return on equity, business sustainability, cash flow management. Corporate governance and management best practice are critical factors.
If a company reports annual growth and profits that seems “too good to be true”, it most probably is too good to be true.
Finding good stocks to invest in is difficult enough; therefore, investors should hold on to them for the long haul. Companies with a competitive edge have the tendency to increase in value over time. Eventually, the market would acknowledge the underlying value and push the price upwards.
So, when is the best time to sell? The answer is often as difficult as deciding when to buy. Depending on investor’s risk tolerance, if the stock proves to be too volatile for the nerves, it is best to sell and replace with another that lets you sleep at night.
Furthermore, social, environmental and ethical practices of many companies are now becoming a concern and investors may dispose of those that are in conflict with their social, religious or moral beliefs.
At times, the decision to sell is due to the company itself. A change in the company’s fundamentals or business plan may warrant a re-assessment on whether it is able to continue to meet the investor’s investment requirements.
There is no doubt that the stock market offers the best opportunity for higher returns in the long run. The risk is that it could dramatically erode investor’s net worth in the short-term should the down market last longer than expected. Nonetheless, it offers great opportunities.
Investors ought to rely on their judgment and not be influenced by the market. Knowing the company, finding its winning qualities and knowing when the right time to sell should aid the investor in obtaining success.
Attaching emotional value, however, is not. So be a wise investor; do not get sentimental. Have an investment objective and take the time to study before putting in your hard-earned money. Caveat emptor; be a wary investor.
Mushida Muhammad is the senior portfolio manager of the equity department, Kumpulan Wang Persaraan (Diperbadankan) (KWAP).
I always admire Warren Buffett for his ability to calculate the Intrinsic Value of a company, his humility despite being the richest investor in the world, and his philantrophic heart.
About 3 years ago, Warren Buffett made an announcement which surprised the world. He's gradually donating 85% of his fortune to the Bill and Melinda Gates Foundation.
As I have said in my previous post, "Giving away something of your own to make someone else happy is the answer to life's happiness." What is the use of having the riches of this world if it does not benefit others, long after one has passed away from this life into the afterlife? One would find meaning and purpose in this life if one uses one's talent for the benefit of others.
Here is Charlie Rose's exclusive hour-long conversation about a new partnership in philanthropy between Warren Buffett and Bill and Melinda Gates.
by Tony C H Goh
Monday, 19 October 2009 11:23
KUALA LUMPUR: HAI-O ENTERPRISE BHD , widely known as a wholesaler and retailer of Chinese herbs and medicine, is now looking at expanding its reach in the wine, liquor and liqueur business by leveraging on its strong network in China.
“Currently, wines and liquor are considered as the second-liner products carried by the retail division. But with the current market trend towards drinking of red wine in the country, we foresee huge potential,” Hai-O’s general manager Tan Kee Hock said at the third Yantai International Wine Festival in Yantai, China, recently.
Hai-O has an extensive network in China, with business dealings dating back to 1975, particularly with Changyu Pioneer Wine Co Ltd, China’s oldest vineyard, which was established in 1892 and its biggest wine producer based in the wine-producing region of Yantai, Shandong province.
“As the sole distributor of Changyu’s wines in Malaysia, we are allocating a big portion of our promotion and advertising budget to raise awareness,” said Tan, who is in charge of the Chinese medicated wines, cooking wines, healthcare food and beverages division of the company.
Among Changyu products under the sole agency rights of Hai-O are Ling Zhi Medicated Liquor, Tze Pao San Pian Chiew, Te Zhi San Pian Chiew, Changyu Cabernet Dry Red Wine, Changyu Cabernet, Gernischt Dry Red Wine and Changyu Ice Wine.
While seeking to grow its wine and liquor business, multi-level marketing (MLM), wholesale and retailing are still the main contributors to Hai-O’s growth and revenue. It is exposed to all mainstream segments of Malaysia’s population, with the retail segment basically aimed at the Chinese, while MLM is mainly Malay-based.
For the fiscal year ended April 30, 2009 (FY09), Hai-O’s revenue increased 16% to RM435.2 million from RM373.8 million in the previous year. Net income rose 7% to RM52 million. The higher revenue reflects strengthening of the ringgit against the US dollar and the promotion of house-based products from the retail division.
The wholesale and retail division contributed RM16.8 million to the group revenue of RM148.6 million in the first quarter ended July 31, 2009 (1QFY10), down 11.2% from RM18.9 million in the previous quarter and 16.9% or RM20.2 million in the same period last year.
But given the promising potential of the wine industry in China, Hai-O believes its strategy of leveraging on the biggest wine company in the fast-developing Asian giant is likely to pay off. Hai-O has seen its share price jumping nearly 30% over the past three weeks to RM7.02 last Friday when it added another 12 sen, with 38,600 shares done.
Yantai is the largest wine-producing region in China, accounting for around 35% or one in every three bottles of wine produced there. The wine industry in China is the world’s 10th largest grape wine producer, and the only Asian country that produces grape wine on a commercial scale.
Other major grape wine players in China include Sino-French joint venture, Dynasty Winery Ltd and China Great Wall Wine Co, Ltd. Collectively, these top three wine producers control 40% of China’s wine market. Besides Shandong, some other famous wine-producing regions are found in Fujian and Guangdong provinces.
While growth in the traditional wine consumer countries has remained flat in the last 10 years, experts estimate that China would be the world’s most active wine market with a 36% growth through 2010. Over the same period, total global wine consumption is expected to grow at only 9.15%.
Research data from British research institute ISWR/DGR showed that based on current trends, total global wine consumption will reach 100 million litres by 2010, with China accounting for 5.58 million litres.
In a recent report on the company, RHB Research remained upbeat on Hai-O’s prospects going forward, even when there was a visible slowdown of the company’s retail and wholesale business.
This was largely due to the strong performance of its main business segment of MLM, for which the number of members has ballooned to more than 110,000 from 70,000 a year ago.
The company is well on track to surpass its internal target of 10% earnings growth in FY10. “Taking into account the robust 1QFY10 results and better-than-expected MLM sales, we raised our FY10-12 earnings forecasts by 22% to 28%,” said RHB.
“Hai-O’s attractiveness lies in its strong dividend payout policy of at least 50% of net earnings. Traditionally, the company has paid out above and beyond that amount, averaging 65% over the past five financial years.
“We project gross dividend per share for FY10 and FY11 to be at 54.5 sen and 57 sen, or a yield of 9.6% and 10%, respectively,” the research house added.
Some of the key risks include an unexpected reduction in dividend payout ratio to below 50% and the MLM division’s revenue coming in below expectations.
DANIEL WONG'S RECOMMENDATION: Maintain HOLD position.
Article taken from http://www.fool.com/investing/international/2009/09/25/how-i-timed-the-market.aspx
By Tim Hanson
September 25, 2009
Keep good records in case you get sued or audited -- or if you just hope to learn from past experiences. It’s for that last reason (and, frankly, the second ... curse you, IRS!) that I keep meticulous records of my investments.
And so I found myself looking back over my recent transaction history. I wanted to see what I had done since October 2007 -- the beginning of what became a historic market downturn -- and what that behavior revealed about my state of mind during that tumultuous time ... and what we can learn from it.
So let’s take a trip back in time ...
October 2007 to May 2008
This was, for lack of a better term, the beginning of the end, but it was a fairly benign beginning. While the market was down 20% over this 8-month period, it was business as usual in my portfolio, with two or three buys per month into companies such as 3M (NYSE: MMM) and Starbucks (Nasdaq: SBUX) that I not only thought were compelling values, but also believed had the financial strength to survive a coming downturn.
And while I thought at the time that I was a rational master of my emotions, it’s more likely I was just getting duped by my amygdala. As Jason Zweig writes in Your Money and Your Brain, “Because the amygdala [the reflexive part of your brain] is so attuned to big changes, a sudden drop in the market tends to be more upsetting than a longer, slower decline.”
Either way, I'd say I handled the slow decline from October 2007 to May 2008 fairly well.
June 2008 to July 2008
Fast-forward two months, however, and the market began to test my mettle. I followed up a sharp near-10% decline in the market with a flurry of activity. But rather than sell in fear, I went aggressively long -- making 13 purchases of volatile international stocks such as Philip Morris (NYSE: PM) and China Fire & Security (Nasdaq: CFSG) that I believed had been unfairly oversold. Although it looked savvy at first as the market briefly perked up in August, this was a mistake.
It was not a mistake of fear, however, but rather one of greed. And while Zweig suggests that investors tend to get caught up in upward momentum, sending more and more money into the market as stock prices rise, I, as a conditioned value investor, got greedy just as prices dropped sharply -- and ignored the data suggesting it could well get worse.
August 2008 to January 2009
The market declined 35%, creating what may end up being one of history’s great buying opportunities, and yet I couldn’t make more than a few buys here and there because I had used up my excess powder prematurely in July.
Thus, rather than being in a position to take advantage of this mega-drop, I was fully invested amid historic downside volatility. This led to some sleepless nights and some tough decisions in early February.
If investing success is buying low and selling high, then failure is the opposite. And yet there I was in early February unloading stocks such as Whole Foods (Nasdaq: WFMI) and Sotheby’s (NYSE: BID) at 50% discounts to where I’d bought them.
Why? First, I was in too deep. My episode of greed in July had caused me to invest more money in stocks that I felt comfortable with. Thus, as the market continued to drop, I was unable to stay unemotional.
Second, I fell victim to recency bias. As Zweig writes, "The more recently [an event] occurred . . . the more probable its recurrence will seem." Put those two facts together and you can understand why my brain was pushing me to take some money out of the stock market.
Fortunately, I wasn’t totally shell-shocked. I only moved out a little -- enough to restore an analytical mindset. Further, rather than keep those sums 100% in cash, I put some in high-yield bonds, which were also distressed and which have not wholly missed out on the recent rebound (though they have not done as well as equities).
At the end of the day, these were defensive moves made out of fear, moves that depressed my returns. And while it frustrates me that I fell into one of investing’s psychological traps, I did end up realizing a benefit.
March 2009 to present
With investor equilibrium restored, it was back to business as usual in my portfolio with two or three purchases per month. And just as the market began to turn in March, I purchased shares of a speculative -- but, I believed, highly undervalued -- Chinese company called Yongye International (Nasdaq: YONG).
At the time it traded over-the-counter and did not yet have a CFO or any independent directors on its board. The stock, however, was dirt cheap at $1.70 per share.
Now, if I hadn’t rebalanced my portfolio in February, I don’t think I would have had the gumption to purchase this stock. But I was back in my comfort zone, and I was able to pull the trigger.
I’m glad I did. Yongye has since added a number of qualified individuals to its management team and listed on the Nasdaq. Further, our Global Gains team visited Yongye in China in June to get a better handle on the business -- after which we called it out as a top pick to our Global Gains members.
Yongye now trades for more than $8 per share. I don’t write this to gloat or cherry-pick, but rather to highlight the importance of having -- at all times -- a balanced portfolio that allows you to make decisions untainted by emotion.
That’s my story, but there are three key takeaways for you as well. Here they are:
1. Never go all in.
I acted too soon in July, and that reduced my flexibility, as well as my ability to remain unemotional going forward.
2. Add money to the market on a regular basis.
Despite all of the research I’d read and all of the contacts I have, I was unable to anticipate the market’s near-term moves. I would have saved myself a lot of stress if I had stuck to regular buys of great companies at great prices.
3. Diversification matters.
Whether it’s stocks or bonds, domestic or foreign stocks, or small caps or large caps, the defense that diversification provides truly does provide peace of mind in times of crisis. Not only does it help you lose less money as the market’s falling, but it can also allow you to stay unemotional and analytical -- enabling you to take advantage of incredible opportunities such as Yongye whenever they present themselves.
(8 years Historical Chart)
The Top Glove group was established in Malaysia in 1991 and is principally involved in the manufacturing, trading, and exporting of latex examination, medical/surgical, clean room, nitrile, vinyl, polyethylene (PE), high risk and household gloves. True to its name, the group is the world's largest rubber glove manufacturer, supplying about 24% of the global market.
The group was listed in KLSE's Second Board in 2001 and a year later it was transferred to the Main Board. The group acquired 60.1% equity interest in Medi-Flex Ltd (a company listed on SGX-SESDAQ) in 2007. Currently, the group has 17 glove factories (13 in Malaysia, 2 in Thailand and 2 in China) with a production capacity of 31.5 billion pieces of gloves a year. The groups exports to 180 countries worlwide, including USA, Europe and the Far East (Japan, Hong Kong and Taiwan).
The group also has upstream production with 2 plants in Hadyai, manufacturing concentrated latex and block rubber products. These 2 latex concentrated plants are able to produce 90,000 tonnes of wet latex a year and is contributing about 80% of its in-house latex concentrate consumption.
The group recently reported a 55.5% y-o-y rise in earnings to RM168.1m, on the back of 11.2% rise in revenue for FY09. As there is increasing awareness of safety and hygiene among consumers coupled with Top Glove's aggresive capacity expansion, the group is expected to continue producing good earnings growth over the next few years. Also, rubber glove business is considered a recession proof business, particularly those of latex examination and medical/surgical gloves.
Average EPS Growth Rate: 30.3%
Gross Profit Margin: 16.52%
Average P/E: 15.2
Dividend Yield: 3%
Fair Value: RM 8.49
Current Price: RM 8.23
Current Price: RM 1.84
I just came to realise recently that I've miscalculated the Fair Value for Coastal Contracts, which should be RM 1.79 and not RM 2.12. This is because of my miscalculation of the current EPS which is RM 0.2748 now.
I'm sorry for my mistake. For those who have bought this share based on my previous recommendation, I would recommend that you continue to hold it because I expect this share to move up its price to at least RM 2.60 by end of this year or next year. If you have extra cash, you may also want to buy some more of this share below RM1.79 to average down your cost.
Refer to previous write-up here for more info about this company.
I just realised that there was a technical problem with the link for Email Subscription on the top right corner of my blog. =P
I just fixed it and now you can subscribe to the updates of this blog via email :-)
If you have any comments or questions, you're welcome to post it here.
shares, you are literally 'watering' the money tree to let it grow.
Investing your money by buying companies' shares is an interesting way to let your money work hard for you.
Also, you need patience because patience is virtue.
And guess how big your money tree would grow?
Just by saving $200 a month and invest them in shares which gives you a minimun ROI of 20% p.a., in 24 years, you will have about $1,000,000 in your account (the number of zeros are correct, your eyes are not playing tricks on you).
This is if your ROI is 20% p.a. What if your ROI is 30% p.a.? Then it will take only 18 years for you to have $1 million in your account.
What if the ROI is 50% p.a.? Then it will take 12 years plus :-)
But most important of all, give some to charity as well. Giving away something of your own to make someone else happy is the answer to life's happiness.
Money does not grow on trees, but you can surely grow a money tree.
Current Price: RM 6.03
The recent quarterly profit which was announced yesterday (29th September 2009) showed an improvement to the overall current EPS of RM 0.677 from previous RM 0.623. Thus, I raised the Fair Value to RM 5.70 from its previous RM 5.25. However, today's market overshot the current Fair Value, so I still give it a Hold rating. Buy below RM 5.70
Refer to previous write-up here for more info about this company.
Myth 1: Stock market investment is risky and can make you lose money
It is true that stock market investment has its own risk, so does holding to a single job especially in the private sectors. During global economy slowdown, lots of people loses their jobs.
One can lower the risk of stock market investment and avoid losing money by diversifying the investments into several good companies at an undervalued price. Stock market investment has its own risk, but it doesn't have to be risky. Just like driving a car on the road. Driving a car has its own risk, but it doesn't have to be risky.
Myth 2: Playing stock market is like gambling
Buying companies' shares from the stock market can only be a form of gambling if the individuals treated it as a gamble, that is, blindly dumping their money into the stock market without doing any research on the companies.
Myth 3: One needs to have lots of money to invest in the stock market
Fact is that one can begin investing in the stock market if one has at least RM 1k.
Myth 4: Stock market always crashes in September or October and they are bad time to invest
It is just a psychological market fear that has no substantial evidence or facts to prove that it is true. In fact, there were times when stocks continue to rise during these 2 months and go down on other months. So to believe that all stocks will definately go down during these 2 months is nonsense.
Myth 5: Investing in Unit Trust is safer than the stock market
Most Unit Trust invest their funds in the stock market. So when the stock market crashes, so does most Unit Trust as well. Your investment in Unit Trust can also drop in value, as much as 40%, if it is run by a lousy fund manager.
(6 years Historical Chart)
Coastal Group, founded in 1978, is a Sandakan-based marine incorporation that provides marine products and services to the shipping, oil and gas and commodities industries. The Group main services include build, charter, repair, maintain and trade of marine vessels, ranging from tug boats, oil barges, dumb barges, landing crafts to offshore supporting vessels and more.
The Group operates shipyards that cover more than 90 acres of land. With the aim for high quality, its shipyards are well equipped with advanced technologies, operated by skilled personnel.
The Group has a portfolio of local and worldwide customers from many different backgrounds. Its local customers include logistic service providers, navy, shipping agents and commodities providers. Its worldwide customers come from shipping industries and offshore oil and gas industries specialised in diving support, oil and gas production, dredging work, marine construction and pipelaying.
Average EPS Growth Rate: 46.2%
Gross Profit Margin: 31.36%
Average P/E: 7.3
Dividend Yield: 2%
Fair Value: RM 2.12
Current Price: RM 1.96
The Group is one of the leading premier vessel fabricators in Malaysia. Also, it is an established vessel chartering services provider in Southeast Asia, with long term customers chartering its vessels to carry coals, iron ore, metal scraps, stones, crude oil, etc. It also offers maintenance, repair and overhaul services to the Royal Navy, Marine Police and Malaysian Maritime Enforcement Agent, thus giving it a steady stream of income from this segment. For the fourth consecutive year, Coastal Contracts was awarded Forbes' "Asia's 200 Best Under a Billion" in 2009.
Sometimes, customers can cancel their order for new ships, especially during global economy slow down. However, currently no cancellation of orders is significantly affecting the financial performance of Coastal Contracts.
As there are not many shipbuilding and marine transportation players in this region, there will continue to be demand for its services, especially from Indonesia.
The Group's main local competitor are Oceanic Engineering Sdn Bhd (shipbuilding), public listed Boustead Heavy Industries Corporation Bhd (formerly PSC Industries Bhd) (heavy engineering and construction, shipbuilding and ship repair, commissioning of offshore installations for the oil and gas industries) and Weidan Marine Services Sdn Bhd (shipbuilding).
Coastal Contracts is still experiencing double-digit earnings growth. As the current price is below the Fair Value, I give it a Buy rating.
For those who are familiar with Fundamental Analysis, I give those important figures for you to analyse the companies. But I would recommend that you double-check with the companies' annual reports or financial statements, just in case I input the wrong figure :-P
For those who are unfamiliar with Fundamental Analysis, I recommend that you get ALL of the books listed here:
I would also recommend that you get a copy of The Final Winner e-book (http://forum.lowyat.net/topic/1172211) and Bursa Winners e-book (http://forum.lowyat.net/topic/1124457). I recommend these 2 e-books because I'm selling them ;-) The Final Winner helps to create the mindset, attitude & character of a successful and wealthy person in you and reveals how the rich becomes rich. The Bursa Winners e-book answers the specific questions – what shares to buy, at what price to buy, how much to buy, when to buy, as well as when to sell. With the current world financial crisis, the Bursa Winners e-book is indispensable for investors who wish to generate long-term residual income from the Malaysian stock market. It also teaches you the formula to calculate the Intrinsic or Fair Value of a company's stock price.
One of the way to be successful in stock market investment is to be able to calculate a company's Intrinsic or Fair Value. That is why Warren Buffett is the richest investor in the world because he has the ability to calculate the Intrinsic Value of a company. When the market price is below the company's Intrinsic or Fair Value, I give a Buy recommendation. When the market price has reached the Intrinsic or Fair Value, I will give a Hold recommendation. When the market has gone 'crazy' with their valuation, I will give a Sell recommendation.
I apply the skill of Value Investing in my stock market investment. Value Investing means that you buy the stock of a good company when the market price is below the company's Intrinsic or Fair Value. When you buy the stock of a good company at a price which is below the Intrinsic or Fair Value, you're buying at the margin of safety. The market is inefficient. It will always be volatile and go up and down around the Intrinsic or Fair Value of a company. One who masters the skill of Value Investing will benefit from the market volatility.
For those who are lazy to read a book, you may think 'Why should I buy a book to read when I can just follow Daniel Wong's recommendation?' There is saying, "If I give you a fish, I can only feed you for a day, but if I teach you how to fish, you will be fed for a lifetime." Scientist says that human can only live up to 120 years old. So I will not be around forever to give tips here..hehe..Furthermore, most of the time I will be posting my stock recommendation ONLY AFTER I have bought the stock myself. So, the stock price might have already gone up (but still below its Fair Value) when I post it in this blog. In other words, you can profit more if you know how to calculate the Intrinsic or Fair Value of a stock by yourself =)
(13 Years Historical Chart)
Established in 1975, Hai-O has become a famous household name offering a wide range of Chinese medicines, medicated tonic and health care products. Hai-O was successfully listed on the second board Bursa Malaysia Securities Berhad in 1996, being the first traditional healthcare company on the stock exchange. In 2007, Hai-O had successfully transfered to the main board of Bursa Malaysia. The principal business of the company involves wholesaling, retailing, multi-level marketing, pharmaceutical manufacturing and modern Chinese Medicinal Clinics.
Peking Tongrentang (M) Sdn Bhd, a joint venture company (the JV Company) between Beijing Tongrentang and Hai-O started its business in Kuala Lumpur since 2002.
The Group is also promoting the integrated health services by combining the Traditional Chinese Medicine (TCM) clinic services and the effective non-decocted Chinese herbal with its existing retail stores. The TCM clinic services will be provided by its joint venture partner, Sanjiu (999) Pharmaceutical.
Average EPS Growth Rate: 20.7%
Gross Profit Margin: 33.73%
Average P/E: 8.45
Dividend Yield: 8%
Fair Value: RM 5.25
Current Price: RM 5.10
In the wholesale business, Hai-O has established itself as one of the leading distributors for Chinese medicinal products in Malaysia. Over a period of 30 years, it has secured and accumulated exclusive agency rights for importing and distributing in Malaysia more than two hundred branded products from China. The products include a wide range of quality Traditional Chinese Medicines, teas and wines. The group has developed multi-distribution channels that give them broad access to Chinese medical halls, hypermarkets, supermarkets, convenience stores, restaurants and other retail outlets.
Besides this, Hai-O has a strong retail presence across the country with over 50 Hai-O Chain Stores in major cities and towns, comprising owned branches and franchise shops. These stores are staffed by professional herb masters to provide advice on herbs and TCMs to customers.
Its multi-level marketing (MLM) segment has emerged as the largest contributor to the group sales and profit (contributed about 75% of group turnover and 69% of profit in FY08). This segment is involved in the direct sales of nutritious food, lingerie, skin care products, motor oil and fertilizers. Presently, the MLM division has over 100,000 distributors and growing at an average of 3-4k of new members per month.
Some of its achievements & recognitions/awards:
• Hai-O was ranked No. 6 out of 100 top listed companies in creating Shareholder Value by KPMG and The Edge in 2008.
• Hai-O was awarded Forbes Asia 2007 in the category of Best Under A Billion List in 2008.
• Hai-O Raya Bhd was awarded The BrandLaureate Award 2008-2009 under the Product Branding for Traditional Chinese Medicine category.
• Hai-O Raya Bhd was awarded the "Malaysian Business Ethics Excellence 2008" award by the Ministry of Domestic Trade & Consumer Affairs.
• Hai-O Marketing Sdn Bhd was awarded the "Malaysian Business Ethics Excellence 2008" award by the Ministry of Domestic Trade & Consumer Affairs.
• Hai-O was awarded Forbes Asia 2007 in the category of Under A Billion List in 2007.
• Hai-O is the first traditional herbal health care company to adopt a truly home grown franchise programme.
• SG Global Biotech Sdn Bhd was awarded the GMP (Good Manufacturing Practice) status and ISO:9001 certification in 1999 and its subsidiary QIS Laboratory Sdn Bhd was awarded with GLP (Good Laboratory Practice) in 2007.
• Hai-O was awarded the "Superbrand" status by the Malaysia Superbrand Council for the year 2003/2004.
• Hai-O Raya Bhd was awarded by Malaysia Book of Records 2001 for having the greatest number of traditional healthcare chain stores in the country.
• Hai-O Raya Bhd won the "Golden Bull Award" as one of the Malaysia's Top 100 Outstanding SMEs in 2003.
• Hai-O Raya Bhd is also one of the winners of "Enterprise50" award organized by SMIDEC and Deloitte.
Some of its products are not unique because similar products are sold by their competitors as well.
Hai-O is currently expanding its MLM operation into Indonesia. As most of its distributors are Bumiputeras, this will provide a greater opportunity for them to expand their business network.
Even though there is a possibility that the MLM market may get saturated and thus experience slow growth in their sales someday, as what is happening to Amway now, from its previous financial reports there is no sign that this is happening anytime soon.
Also, there is still room to expand its wholesale/retailing business. Hence, Hai-O has the best of both world in expanding its business: Conventional (Wholesale & Retail) and Unconventional (MLM)
As some of its MLM products are also sold by its competitors, it may experience losses of customers. However, as MLM is also a "relationship business", distributors who have build a good with relationship with their customers may retain loyal customers to their products.
The group profit margin can be affected if there is stronger-than-expected strengthening of the US Dollar against the Malaysian Ringgit.
Hai-O is still growing strong and the Dividend Yield is high. As the current price is below the Fair Value, I give it a Buy rating.
"The more you learn, the more you earn" - Robert Kiyosaki
I personally believe that to be successful in stock market investments, one should be equipped with the necessary knowledge to reduce the risk of losing money and increase the chances of profiting from the stock market.
There are 3 types of approaches to analyse the stock market:
1) Fundamental analysis
2) Technical analysis
3) Combination of fundamental and technical analysis
I personally prefer to use Approach No.3, with more priority given to Fundamental Analysis and a little bit of Technical Analysis.
Technical Analysis is very much speculative in nature, thus I don't give much priority to it.
There are several good books on Fundamental Analysis which have been helping me in making 20%-50% paper profit in Bursa Malaysia within a period of 6 months lately.
It's paper profit because I haven't make a sell call yet on the stocks that I'm holding and I intend to hold them 'forever'.
The strategy of holding a stock 'forever' is that I only sell them when it's extremely overvalued and buy them back when it's share price has dropped and become undervalued again, as long as the company's fundamental is still good.
Here's are several good books that I highly recommend:
1) Andrew Chia's The The Final Winner and Bursa Winners
The Final Winner: If you want to purchase via Credit Card or Paypal, go to http://www.ourmoneyworld.com/FinalWinner/?topage=28
or if you want to purchase via Maybank or CIMB cash deposits, go to http://forum.lowyat.net/topic/1172211
Bursa Winners: If you want to purchase via Credit Card/Paypal go to http://ourmoneyworld.com/bursawinners
or Maybank/CIMB cash deposits, go to http://forum.lowyat.net/topic/1124457
2) Ho Kok Mun's "How To Make Money From Your Stock Investment Even In A Falling Market" and "Essential Stock Investment Strategies To Make Money Even In A Falling Market" (can be found in MPH bookstores)
3) Stock Performance Guide by Dynaquest. It can be found in MPH or Popular bookstores or purchased online at http://www.dynaquest.com.my/
4) I Love Stocks by Pauline Yong. It can be found in MPH bookstores also.
Happy Merdeka everyone!!!
I decided to launch this blog today and share my investment tips on Bursa Malaysia with fellow Malaysians. I will be giving tips on stocks which I believe are winners in Bursa Malaysia, thus the name of this blog, Bursa Winners.
I shall try my best to update this blog every weekend on Buy/Sell Recommendation or tips from the investment world.
Hope that my investment tips will benefit more and more Malaysians and that not only we can celebrate Independance Day with joy but also achieve Financial Independance someday =)