Wednesday, December 23, 2015

Merry Christmas and a Happy New Year!

Dear Reader,

We are approaching the last week of the year for 2016. Our local stock market still doing very well, if you know to select the uptrend stock. For your info, for the months of Dec, we have many stocks on the move and with the gain more than 10%, just to name few of them, they are Padini, TopGlov, Supermx, PIE and OWG.

Once again, wish you a Merry Christmas and a Happy New Year!

Friday, November 13, 2015

MyETF Thomson Reuters Asia Pacific ex-Japan Islamic Agribusiness

Below are the questions post from clients related to the launch of IPO, MyETF Thomson Reuters Asia Pacific ex-Japan Islamic Agribusiness ("MyETF-AGRI").

1. May I know what is this offering?
2. Does this IPO related to the financial market data service provider Thompson Reuters?
3. How does it related? Is it a good option to buy? What do you think?


My reply as below:

This one is ETF (Exchange Trade Fund) base on Thomson Reuters Asia Pac Islamic Agribusiness as benchmark Index Shariah Methodology. Meaning, the fund will buy those companies in their Benchmark Index, they may review and rebalance semi annually and provide the NAV (Net Asset Value) on daily basis. (normally the stock price for ETF will follow NAV closely)
Currently their top 10 constituents (make up almost 53%) of the Benchmark Index and their respective weightings are as follows, however, they may change the securities base after quarterly review:
1. Ottogi Corp (Korea)
2. China Huishan Dairy Holding Co Ltd (Hong Kong)
3. Standard Foods Corp (Taiwan)
4. China Mengniu Dairy Co Ltd (Hong Kong)
5. Nufarm Ltd (Australia)
6. Taiwan Ferfilizer Co Ltd (Taiwan)
7. Universal Robina Corp (Philippines)
8. Kuala Lumpur Kepong Bhd (Malaysia)
9. PPB Group Bhd (Malaysia)
10 Nestle (M) Bhd (Malaysia)

The fund's will invest in 8 countries, including Malaysia (30.1%), Australia (18.4%), Hong Kong (15.1%), Taiwan (13.7%), Korea (8.7%), Indonesia (6.8%), Philippines (5.1%) and Thailand (1.9%). According to the i-Vcap, MyETF-AGRI , the Index provide average return of 8.8% per annual, though past performance may not indicate similar return in future.

Question: How to make money from this ETF?
Simple, buy low and sell high. Basically how you make money from ETF depends upon the underlying investment of the ETF. (since we already know the top 10 holdings of the fund) If most of the stocks in the basket fall in price, the NAV will fall. When most of stocks in the basket rise, the NAV value will rise as well.

Another reason why people invest in ETF is to reduce the risk of investing in single stocks. Just imagine invest 100% of your money into a single stocks, if the company go bankrupt, then all the money will gone. However, if invest into ETF which the fund manager invest into a basket of stocks base on the Benchmark Index, the fund manager will do their job to delete (to sell) or to add (to buy) or what we call rebalance, this will provide diversify effect and reduce the risk of single stock. Of course, the fluctuation will be less, hence reduce the excitement of making a lot (or make huge lost) of money in single stocks.

My opinion, if you are interested in this ETF, no need to rush for the IPO. The reason is, since they use the fund raise from IPO to buy the above basket of stocks, on first few days, the NAV may price around RM0.98 to RM1.02. So, you can always place RM0.99 or RM0.98 for the buy order on listing day. (IPO price is RM1.00) Who know's if market crash few days after listing (or you can wait till market pull back), the NAV may fall as well. (my point is take advantage on market fall, buy ETF to keep and hold it till market up)

IPO closing date is 19 Nov 2015, the tentative listing date is 03 Dec 2015. The stock code and name is 0826EA & METFAPA, For more info, you may refer to MyETF-AGRI web page.

P/s: The past record show that My-ETF trade with very low volume and lack of market maker, hence, it's not advisable to invest into it if you were to trade more than 10,000 unit.

Friday, November 6, 2015

Time to buy Genting?

Yesterday I posted the below chat to some of my clients:

In the post, I say, this stock form higher high for daily and weekly record and it create an opportunity for investors to buy on pull back.

Guest what, a lot of query started to come in:

* "Did you tell me can buy this stock?"

* "At what price can I buy?"

* "I like to buy this stock, can you tell me when to buy and when to sell?"

Unfortunately, I can not tell the correct answer, in fact, there's no correct answer. What I tried to point out here is this stock starting to form the uptrend now, however, we do not know when the uptrend will stop and we should not predict it as well since the experience show that it's almost wasting time to predict the market. What we should concentrate is current market trend and we ride on the trend.

When time come to sell, we should sell it, it's normal for market to work that way, isn't it? However, this is not recommendation to buy, only those believe what they see will buy and this is the beauty of stock market!

Wednesday, September 23, 2015

Dare to buy on Dips

I like to attend stock market seminar, not because of want to find out the market tips as many of investors like to do but to learn from the speaker what's the method of making profit and his view on current market trend.

As usual, at one of the stock market seminar I attend recently, someone ask the speaker what's the stocks worth to buy and what's the speaker's current portfolio. The speaker shares a list of stocks to audience, and I know, many people will get confuse by the list. In fact, investment in stock market is very personal, how can one follow exactly other person's portfolio? As someone may like to speculate in high risk stock, some prefer dividend stocks, some prefer growth stock, some prefer mix of it, so, someone's meat may be other person's poison.

For me, market dips is an opportunities, as I like to buy more when opportunities arise. This is one of the way I used to build wealth for retirement, see my previous post at: Road to be a Millionaire. However, if you like to speculate for fast money, this is not the method for you. Ideally, the target can be achieved by investing in stocks with consistent dividend of 6 to 7%, the other 6 to 7% just come from capital gain is good enough!

Another way of calculation, if one need $4,000 a month for expenses, how much principal is required? Just take $4000 x 12, so one year is $48,000. Just take $48,000  ÷ 6.50% (assume your dividend income is 6.50%) = $738,461.53, meaning if one can accumulate for this amount, basically, $4,000 of free cash flow per month is not a problem, and my method is using stocks market timing to achieve this.

One need to do simple home work to find out the good stocks with consistent dividend of 6.50% and above. If your investment objective is for dividend income, then the current market dips is an opportunities for your to accumulate high dividend stocks at good price. Don't worry about the market price, it will rebound, and if that happen, it's the add on bonus!

Tuesday, August 25, 2015

The Bear is Coming

It was Monday morning, I knew today many people will dump their shares in stock market... why? Because last Friday (21 Aug 2015), US Dow drop by more than 500+ points, we have never see this kind of drop for many years.

As expected, on the closing, Bursa KLCI Index drop by 42 points, end at 1532. Some Minister may say, see, not only Malaysia stock market down, the whole world were down. The fact was, Malaysia market already down for almost 2 months, especially the currency, down from RM3.60 to current RM4.25 per USD, already down by more than 18% in just few months. Till now, I never see anyone from Ministry take any action but keep on shouting, "Ringgit is under value, Ringgit is under value!!" what's a "Big Joke" in the century! I hope someone can save Malaysia, especially the currency, anyway, all the retailer can not do anything to change it, let see what we can take advantage of it!

Market down, in fact, is a buying opportunity, especially those Blue Chips with good dividend, they are rarely down unless you see investors dumping it. Many people think that this time is different from 1997 financial crisis, however, the nature is, when the Ringgit currency is down and see no floor to the weakness, investors can not find the light in the end of tuner. Someone may think that weaker ringgit will help to keep domestic exports competitive, but they might forgot all the goods trade in international mostly quote in "USD", unless you can produce your own raw material, if not, what you gain, will paid for your lost. End up, all the price, who is going to pay? Final consumer, of course!

Since nobody from the Goverment taking any action, this things will drag for months. In my opinion, no need to rush into market too early (many stocks will touch 52 weeks low), unless you see the main "problem" solve and the Ringgit starting to recover. The day you notice Ringgit recover, it's the sign of foreign investor stop selling and that is the time, we need to enter the market immediately.

Luckily, I managed to sell all my holding in Amfirst (REIT) last two months and waiting to collect the good stocks when opportunity arise. With the US creating this kind of down trend, the opportunity is on the way! I will use the basic for investing, slowly invest in 5 star company with consistent dividend payout. Let welcome bear market!

Tuesday, July 28, 2015

How much Sunway Construction worth today compare to 2004?

One of my client ask me about today's new listing, Suncon (5263). So, I try to find the details about this company, since I also strike some shares for the IPO. Surprisingly, not many broker cover this stock, so, I need to do my own research, and I think it's good for me to share it here with all.

I started from the Prospectus, it's logo looks like this:

From the history, Suncon was listed on KLSE before on June 1997 and delisted on Dec 2004. After 11 years, they come back to list again. Of course, they will tell you Suncon  now have more than 30 years experience in construction business, with good track record, among the well known projects are, Kuala Lumpur Convention Centre, SILK Highway, Sunway Pyramid Shopping Mall, Legoland Theme Park and bla bla bla...

I am not interested to know all these, what I need to find out is, if the history going to give any indication for today's stock price. One info I found, at the year 2004 before it was delisted, the price rage in terms of PE (Price Earning Ratio) from 8.2x to 17x. Today, the quarterly EPS is 2.66 cents, if it were to repeat the same result for the next 3 quarter, then the whole year's EPS will be 10.64 cents.

Let's take 2004's PE range and apply today, it will be RM0.87 to RM1.80, meaning if history repeat, one would have to expect the price fall in this range. Base on formula of 30% from the lowest point, the safety entry points for today's SunCon is RM1.16 and below. My opinion is, if you satisfy with 3% dividend yield, then it's one of investment option to slowly collect SunCon if it below RM1.16 and dispose it slowly once above RM1.40. (most of broker give target price of RM1.40) However, if you see any two quarter's profit continue to go down trend, then the whole story change!

Base on market cap, SunCon currently place at number 4th position (market cap RM1.5B), behind IJM (RM12.1B), Gamuda (RM11.3B) and WCT (RM1.6B). The Prospectus seem a bit mislead by saying SunCon is the largest pure play construction company in Malaysia by revenue, but again, for investors, we need to find out who have the highest profit after tax margin. Again, SunCon PAT margin was not great, it's 6.6% only, compare to IJM (13.81%), Gamuda (13.94%) and WCT (11.81%).

One of selling point, SunCon's orderbook stood at RM2.8b as of March base on RM11b bidding project. The company target to increase their tender book up to RM20b, if this able to achieve, then for profit to increase another 30 or 40% is not a problem.

Last, I would think fund manager may not very keen on SunCon, as it was position number fouth in terms of market cap and profit margin.

Monday, June 22, 2015

Just talk to a client and I share with him one of the Bursa's newly launch web site: I think it would be good for me to share it here:

Many investors still buy or sell stocks base on tips or rumors, just imagine how nice if you heard a rumors, just sign on to BursaMarket place with your smart phone, then you can confirm if it's a rumors or facts! To have this "Market in Your Pocket", just register online, download the Apps with your smart phone, then you may enjoy full range of benefit from this website.

The site may seem a bit complicated for new investors, but after one go through the Learning / Knowledge tab, it's seem quite easy to use. Investors can find videos and tutorials  to start their investment journey.

Daily stocks suggestion, or they call it "Daily Espresso", where one can find recommendation of stocks based on analyst consensus and Alpha Factors. If you don't know what's Alpha Factors, it's a S&P ranking base on 5 category, i.e., Momentum, Valuation, Growth, Efficiency and Quality. (rating 1 is best, and 5 worse)

You may build your own Portfolio, be in live or paper trade stocks. For those who like to have buying or selling list, as well as future trading plan, they may build a Watchlist.

Another interesting feature, Screener, where one can search stocks base on criteria such as PE, Dividend Yield, Growth and many others. Under the "Opinion Leader" one can search their "Celeb" conversation or follow them in twitter. Last, of course, there are many "Research" reports available which provide by different broker.

Thursday, June 18, 2015

A crisis is an opportunity?

Few weeks ago, our local market Bursa started to go down! Someone press this button:

Yes, someone press a "Panic" button cause KLCI index falling from 1850 to currently level of 1718. Then as usual, I received many phone call, and one of the common question investors like to ask, "Should I Sell when a crisis occurs?" I will tell them, why don't you think it's an opportunity to buy?

The reality is, if you are trader and like to speculate the stock, then yes, you should sell and wait for opportunity. However, for long to medium term Investor, my opinion is, you only press the Sell button if the company's profit already down for more than 2 quarters or the reason for you to buy is not valid anymore.

For example, this down trend cycle, I managed to accumulate Axiata stocks at around $6.40 to $6.45. Then the company announced a 15 cents dividend. Today, I get extra 15 cents for free, and the stock price still remain at $6.50. Of course, for this stock, it's one of my long term investment, I will participate in their "Share Reinvestment Plan" which give me opportunity to buy the stock at $6.08.  (Axiata is also good at doing corporate responsibility, just refer to their Yong Talent Programme:

"People will rather be promised a winning lottery ticket next week than an opportunity to get rich slowly", this is one of the quote by Warran Buffett. So, don't follow me to buy the stock if you hope to get rich quickly.

Wednesday, May 20, 2015

Trade the stocks - are you the one?

A lot of people "think" they can trade in stock market and earn a living or pocket money. Unfortunately, thing is not as simple as one may think. What they think and the actual fact is so different! We as a dealer, receive many queries daily. If a stock going up, people will ask, should they sell or not, or sell at what price. If the stocks going down, they will also ask should they cut lost or continue to hold? The worst thing is, majority of people will sell the stocks that going up (or cut the profit) and keep the stocks that going down. (with the hope the price may up again in future)

If our intention is for trading (not investing), then we need have proper trading plan to counter all these problem. Trading is about changing from "cash" to "stocks" or vice versa. There's nothing wrong to hold "cash" on hand and waiting for opportunity. When you face a situation to hold stock that is flag (no trend of up or down), or the stock that keep going down, would you prefer to hold cash or the stock? In this case, the answer is clear, why hold the stock that continue to go down or flag? Why want to waste time on these stocks with no trend, since you do not know when it will go up. There's always opportunities in the market.

There's no question of cut lost or not, since we already analyzed the stocks before turn the cash to the stocks, and if the stock trend is not move in my favor, meaning my judgement was wrong, i must admit the mistake and quickly turn the stock into cash again, even if i do so will cause a small loses!

If you can "enjoy" all these process of changing the inventories (cash vs stocks), it could yield huge profit in futures and yes, trader's life is suitable for you!

Friday, April 24, 2015

Who Move My Cheese in Stock Market?

Many people think invest in stock market is too risky. Yes, some stock may go down in price, some time, the entire market may go down for months. However, do you know that the study shows for the past 100 years, stock market tend to go up 2 out of every 3 days? The logic is simple, population and new company keep on growing...

Few years ago, there was a little popular book, the title is "Who Moved my Cheese?" It's about the story of 4 little mice, with 4 different character. One day, they noticed that the cheese which they discovered earlier was no longer there...

Do you prepared if one day, you noticed your cheese disappear? (it can be you lost your job or relationship) Would you able to move some where and look for new cheese again? The cheese can be a good job, a loving relationship, money, a possession, health or spiritual peace of mind.

Sometimes, I like to relate stock market as cheese. Today, if you find a good taste cheese, don't take for granted tomorrow the cheese would be there. Stock market is where you can find a lot of changes everyday, one need to adapt to the change quickly and be ready to change quickly, again and again.

Stock market is a good place for us to build wealth. You may find cheese here and there everyday, but don't forget to built an "asset" or a machine that can produce cheese (or I call it dividend machine). That is a lot better than searching for cheese everyday.

The stock price change every second, there's nothing to worry or fear, enjoy the change and adapt to the change quickly. What you need is, be prepared before someone move your cheese away!

Friday, April 10, 2015

Moving Average

There are still many so call "trader" still do not understand why we need to plot Moving Average line in a chat. That come to my surprise when I have a conversation with a client. 

When is the time we use Moving Average? To answer the question, first we need to understand what's moving average represent. In the older day, if Mr A is a rich guy, he can buy a lot of X stock then record down the price everyday. Say the first day, he buy a lot at $1, second day buy at $1.10, third day buy at $0.95.... After buying for 10 days,  he can sum up all the money and divide by 10 lot to get the 10 day average price. Then plot a dot to a chat to represent this, after few days doing the same thing, he can draw a line to connect all these dots.... and this line we call it "10 days moving average". 

Today, we can use computer to help us plot the different type of "moving average" line, it can be 10 days or 5 days, with just a click, all the line would be displayed on the screen. After plot the line, we can know, Mr A's average price for X stock. If current stock price is above Mr A's average price, we can say the stock is on the uptrend and he is making profit. (be it paper gain or real gain, doesn't matter) If the current stock price is below Mr A's average price, we can tell that he is losing the money. 

So, now the question come, should we buy X stock when Mr A making profit (when a sock is up trend) or when Mr A making loses (when the stock is down trend)? 

If Mr A keep on buying for the last 10 weeks, we only need to plot a chat of 10 weeks moving average to know his average price. In this case, the smart way to buy this stock is when Mr A start to make money (the break even point). 

Saturday, March 21, 2015

Is it wise to take money from EPF and invest in Stock Market?

On of the email query from a client, "Since EPF (Employee Penson Fund, or know as KWSP) only gave us about 5%+ dividend per year, is it wise to take out some money and invest into stock market?" I told him, if you can consistently earn more than 25% of return in stock market, why not? He seem quite happy with it and think that he may do better than EPF.

Few years ago, I have the similar thinking as well when an agent approached me to withdraw EPF fund and invest into stock market. Initially, I followed his advice, withdraw the money every 6 months, invest in stock market and just ignore about market cycle. After 2 to 3 years, I noticed something very important, which the agent not really telling the whole story, it's the charges that eat up the profit.

Very first time, when we withdraw fund from EPF, the company will deduct 2%, the withdrawal of RM10,000, end up only RM9,800 in your investment account. Also, on quarterly basic, they will charge custodian fee, custodian charges and management fee, which cost another 2% per year. Every time, when you buy a stock, they will charge another brokerage and custodian fee again. Net net, you will pay them nearly 4% of your total amount as fee to them on yearly basic.

If your make a profit of 10% return that year, after deducted all the charges, the return become 6%. What's the point to do all these unnecessary, since the money park in EPF will earn dividend of about 5 to 6% per year. However, someone may say he can earn 25% profit in stock market, then why bother the 4% charges?

It is easier say than done, especially when you experience the market cycle, up and down. When one receive quarterly statement, if you notice the money invested now decrease by 30%, you may wonder if your decision is right or not... as compare to if you do nothing and let the money park in EPF, you will earn the 5% interest compare to having the losing holding in your investment account. Especially when we say for retirement purpose, how many time you dare to withdraw more fund out from your EPF and invest in stock market when compare both side? This is a psychological problem we may have to face before making any decision, though we know market is buy low and sell high.

Due to all the above "problems", after 5 years, I decided to close the account and transfer back the money into EPF. Guess what, they deducted another 2% of fee again before release the money into your EPF. Net net I earn about 15% of profit, but divided by 5 years, it's was about 3% per year! At least, I have tried the option and know that it can not meet my objectives.

EPF is risk free and volatility free investment, one can earn 5% to 6% per year but the downside is that is not near money. That's why I have decided to park the money every year in EPF to take advantage of tax deduction without worry about monitoring. If the opportunities arise, I will use cash on hand to invest in stocks, that would be more comfortable for me.

Thursday, February 26, 2015

The very interesting picture, see how nice if you can make money work for you...

Source of message: Click here.

Friday, February 13, 2015

CapitalMalls Malaysia Trust (CMMT)

Few days ago, a news appeal on the Sun with title, CapitalMalls Malaysia Trust (CMMT) has entered into the sales and purchase agreement with Tropicana City Malaysia Sdn Bhd for the acquisition of Tropicana City Mall and Tropicana Office Tower PJ for RM540 million. (not include the residential condo on Tropicana City Mall)

The management indicate the total expense is about RM25 million, so the total amount is about RM565 million. Seem they missed out one point, the GST which going to implement on April 2015, assume the transaction take to complete on 3rd quarter of 2015. If this is the case, the GST alone is about 32.4 million!

CMMT not yet decide how to raise the fund, be it Right Issue or raise bond (or borrow money), either way, share holder is the one who going to bear the cost. Personally, I do hope this transaction not going through, since the currently rental return on Tropicana City Mall is about 5% if base of RM540 million, not yet include the charges and related GST.

On the bright side, the Government has announced that electricity price will be lower by 5.8% for the next 3 months. This will decrease the impact of GST implementation, however, the rate on GST is still far more than the cost saving for CMMT, since the GST is base on the rental income and trading of transaction. Seem all the share holder will expect lower dividend pay out in the coming quarter.