Fair Value: RM 1.99

Current Price: RM 1.95

Recommendation: BUY

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

Recommendation: HOLD

Refer to previous write-up here for more info on this company.

Fair Value: RM 1.79

Current Price: RM 1.90

Recommendation: HOLD

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
http://biz.thestar.com.my/news/story.asp?file=/2009/11/4/business/5035143&sec=business

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.

Fair Value: RM 1.79

Current Price: RM 1.71

Recommendation: BUY

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.

KUALA LUMPUR, Nov 2 (Bernama) -- Hai-O Energy Sdn Bhd, the technology unit of Hai-O Group, is expected to become a new growth driver with its new invention on heat transfer technology, according to OSK Research.

"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.

-- BERNAMA

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.