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)
Company Background
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.
Fundamentals
ROE: 31.38%
Average EPS Growth Rate: 46.2%
D/E: 0.29
Gross Profit Margin: 31.36%
Average P/E: 7.3
Dividend Yield: 2%
Fair Value: RM 2.12
Current Price: RM 1.96
Recommendation: BUY
SWOT Analysis
Strengths
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.
Weaknesses
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.
Opportunities
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.
Threats
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).
CONCLUSION
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:
http://bursawinners.blogspot.com/2009/08/invest-in-knowledge-key-to-financial.html
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)
Company Background
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.
Fundamentals
ROE: 34.53%
Average EPS Growth Rate: 20.7%
D/E: 0.04
Gross Profit Margin: 33.73%
Average P/E: 8.45
Dividend Yield: 8%
Fair Value: RM 5.25
Current Price: RM 5.10
Recommendation: BUY
SWOT Analysis
Strengths
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.
Weaknesses
Some of its products are not unique because similar products are sold by their competitors as well.
Opportunities
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)
Threats
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.
CONCLUSION
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 =)
Happy Investing!
Best wishes,
Daniel Wong
