Fair Value: RM 2.97

Current Price: RM 2.18

Recommendation: BUY

Yesterday, the company announced its 4th Quarter report. Its yearly profit has increased 68.14%. Thus, I'm revising my Fair Value from RM1.99 to RM2.97 and my recommendation from Hold to Buy.

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

Andrew Chia will be doing a seminar on 12th March 2010 titled "How you can achieve financial success in 2010 and beyond".
Admission is free for Money Secrets readers.
Details are here,
andrewchia.com

                                                                Wishing All My Chinese Readers A Happy & Propesrous New Year! =)

Personal Investing - By Ooi Kok Hwa

Soure: http://biz.thestar.com.my/news/story.asp?file=/2010/2/10/business/5646486&sec=business

WE have been asked by many readers on ways to improve their investment skills. In fact, for all of us who invest, it is one of the essential skills that we need to acquire in our lifetime. Like it or not, we need to have it if we need to generate returns for our investment.

All investors want good returns from their investments. However, most of the times, instead of generating returns, retail investors are suffering from losses from their investments. We feel that one of the key differences between an intelligent investor versus a normal investor is that the intelligent investor will be aware that he may make mistakes in some of his investment decisions while a normal investor tend to overlook the fact that he will make wrong decisions no matter how good he thinks he is.

Despite extensive research on certain listed companies, due to some unforeseen changes in certain fundamental factors, even good value companies may suffer losses. Under such circumstances, an intelligent investor will admit that he had made a mistake in his investment decision and will cut losses fast.

However, the problem with most investors is that they refuse to face their mistakes; some are not willing to cut their losses even though they are aware of their mistakes.

Hence, rule number one in investing is that we must be fully aware that regardless of whether you are an investment guru or an average investor, everyone will make mistake in his investment decisions. That’s why some experts say: “When somebody mentions that they have more experience than you, they mean that they have incurred more losses than you in stock market.” The key is to learn from our mistakes.

In order to avoid incurring losses in stock market, we need to develop our own investing system that suit our needs, skills, knowledge and risk tolerance level. The investing system can be adopted from the fundamental analysis, technical analysis or combination of both. If we ask some remisiers, they will most likely tell you that they need two to three years to develop their own investing system that can help them to generate returns from stock market.

One of the fastest ways to acquire investing knowledge is through reading books relating to investment. There are many good investment books in the market. However, since every investor has different preferences, the best way is to visit bookstores and look for investment books that he or she can understand and can offer the skills needed. For beginners, always start with some basic investment books that explain well on key investment concepts.

Here are some good investment book titles for consideration: The Intelligent Investors (by Benjamin Graham), The Essays of Warren Buffett: Lessons for Corporate America (Warren Buffett and Lawrence A. Cunningham) and Rule #1 (Phil Town). For advanced investors, you may consider Security Analysis (by Benjamin Graham and David Dodd), which is still one of the best investment books in the world.

Apart from reading books, investors need to read more business news in newspapers and magazines to keep themselves updated on the latest happenings. In addition, many newspapers, magazines and websites also publish good articles for the purpose of educating general public on investment. For example, investors can get good investment knowledge from website like www.min.com.my, by Securities Industry Development Corp.

Reading analysts’ research reports will enhance our understanding on some issues and factors in valuation as well as comments on some corporate strategies and developments. This knowledge is crucial in helping us making better investment decisions. Besides, for those serious fundamental investors, they may consider buying books like Stock Performance Guide (by Dynaquest Sdn Bhd) and Shares (Pioneers & Leaders (Publishers) Pte Ltd), which will provide all the essential investment information like companies’ background and some key critical investment information.

Another way to acquire investing knowledge is through attending investment training classes. There are many types of investment training classes, for example, classes on fundamental investment, technical analysis, currency trading or option trading. Given that a lot of these classes are quite expensive, we need to check whether investment training suits our needs. We believe some of those classes may be able to help investors generating returns, however, they require higher level of discipline and commitment.

Before we start investing with “real” money, one of the ways to gain experience and at the same time test out our skills is by building up a “virtual” portfolio and investing using “virtual” money. We can always try out our investment skills through playing a simulated investment game and monitor the investment returns before putting the real money into the stock market. Besides, we should also start young. If we acquire these investment skills at younger age, the losses that we may incur will be much lower than trying them when we are getting nearer to our retirement age.

● Ooi Kok Hwa is an investment adviser and managing partner of MRR Consulting.
  

Daniel Wong's note: In achieving one's financial goal via share investment, another advantage of investing at a younger age is that one can adopt a longer investment horizon compared to one who is nearer to retirement age. A long term investment approach always has a higher success rate in making profit compared to the short term investment approach (as long as the company's fundamental is still good).

Hock's Viewpoint - By Choong Khuat Hock

Source: http://biz.thestar.com.my/news/story.asp?file=/2010/2/1/business/5577245&sec=business


At home, a divided Malaysia on racial and religious grounds is like a divided America on ideological grounds. Inspirational leadership will be required to bring together the various factions under an inclusive and liberal 1Malaysia concept that is not threatened by just a single word.

WHO would have thought that the Jan 19 loss of the Massachusetts seat by the Democrats, which it had held since 1953, could roil the markets by so much?

The loss of the seat deprived the Democrats of the 60-seat majority that it held in the Senate which would have enabled it to pass Bills easily. The loss of the “safe” seat worried many Democratic senators, especially those contesting in the Nov 2 mid-term elections for 36 of the 100 Senate seats.

Predictably, the Democrats have turned more populist by pandering to voters’ unhappiness over bank bailouts and generous Wall Street bonuses, made possible partly through an implicit guarantee for banks which allowed them to borrow funds cheaply.

Voters were also unhappy about the high unemployment rate and the burgeoning budget deficit which may have to be financed with higher taxes. Politicians scrambled to be seen to help Main Street rather than Wall Street.

Coincidentally or purposely, Obama announced on Jan 21, two days after the Massachusetts electoral defeat, proposals that were aimed at preventing banks from using depositors’ money for proprietary trading, hedge funds and private equity.

Though these proposals could reduce the chances of a failed banking division dragging down a “too-big-to-fail” mega-banking conglomerate, the market plunged on fears that populist measures would hurt bank profits and perhaps corporate profits in general if other measures were introduced.

Markets were also worried about the imminent rise in China’s interest rates which could cool the overheated Chinese economy and affect demand for commodities. Even Federal Reserve chairman Ben S. Bernanke’s senate confirmation was in doubt at one time before his eventual confirmation on Thursday after securing 70 out of the 100 votes.

Paul Volcker, the former Fed chairman, who supports more stringent banking regulations, also faced a difficult reconfirmation hearing in 1983 after raising interest rates and plunging the economy into recession to tame inflation.

Nevertheless, in the current economic and political climate, humans are likely to revert to norm which is to favour pain avoidance as per the Prospect theory. That means boosting growth through low interest rates and fiscal stimulus even if it means burdening future generations with higher debts.

Following the correction in the world markets, the question on many investors’ mind is whether a double-dip is likely.

Chances of a double-dip are low for the following reasons: First, the US market as shown in the Chart is not expensive as it is trading on a forward price/earnings ratio (PER) of 14.1 times compared with an average forward PER of 15 times since April 2006.

Results of companies have generally been quite good in the current earnings season. The Malaysian market is now fairly valued at a forward PER of 14.1 times which is the average forward PER since April 2006.

 

Second, interest rates are likely to remain low as consumer spending remains weak, and with Bernanke at the helm, easy monetary policies are likely to be favoured. After all, in his speech entitled Monetary Policy and the Housing Bubble on Jan 3, he asserted that loose monetary policy was not the cause of the US housing bubble. Perhaps, loose monetary policy was not the only cause of the US housing bubble but it was certainly a main contributory factor.

Third, fiscal stimulus by major countries should ensure reasonable economic growth, especially when compared with the weak numbers in 2009.

Going back to US politics, the loss of the 60-seat majority by Democrats may not be a bad thing as it would force the Democrats to work with the Republicans.

Bill Clinton remained a popular and effective president even after the Democrats lost their majority in the Senate and Congress in 1994. Politics will not be easy as voters want the budget deficit reduced but at the same time want government spending to boost job prospects and help the needy. Though the problem was created during the Bush era, a quick solution is demanded; blame is now being heaped on President Barack Obama for the jobless recovery. Politics seem certain to play a bigger role in business and the economy.

At home, a divided Malaysia on racial and religious grounds is like a divided America on ideological grounds. Inspirational leadership will be required to bring together the various factions under an inclusive and liberal 1Malaysia concept that is not threatened by just a single word.

Only liberal and open societies seem to prosper from Tang China, Ottoman Empire and the United States (before Bush).

Let us be one of those enlightened societies so that ideas and innovation can flourish rather than a guarded and paranoid society that encourages more brain drain.

● Choong Khuat Hock is head of research at Kumpulan Sentiasa Cemerlang Sdn Bhd.