Most investors are short term traders. They look at the quarterly announcements and the price charts but they do not examine what kind of business the company is doing.
For example, when JAKS reported losses in its annual accounts, most of the short term investors just dumped their holdings as if there was no tomorrow.
If you look at JAKS’ announcement on 28th February of its losses, you can see that I bought 6.9 million shares at Rm 1.06 per share. Since then my wife and I have accumulated a total of 138 million shares and became the controlling shareholders.
We bought so much shares because JAKS has secured the contract to build 2 X 600 MW coal fired power plant for Rm 7.6 billion to sell electricity to the Vietnamese Government for 25 years. JAKS has subcontracted the whole project to the Chinese party which has been involved in 90 % of the production of electricity in China.
I know how much profit JAKS will make every year for 25 years as an Independent Power Producer (IPP).
When I was Managing Director of Mudajaya, we built almost all the 19 coal fired power plants in Malaysia as a contractor and not as the owner. As you know, contractors do not make much money. Owners of power plants make fantastic amount of money because they are selling electricity to consumers who have no alternative but to buy from them.
Most of the plants are currently owned by TNB, Tan Sri Syed Mokhtar and Tan Sri Yeoh Tiong Lay. According to the latest report of the top 50 richest men in Malaysia, Yeoh Tiong Lay is No 7 and Syed Mokhtar is NO 10.
As the controlling shareholder, I believe with my long experience in doing business, I can help JAKS to make more profit.
For a start, I will not want the company to tender any more construction contracts. Studies has shown that almost all construction contracts cannot be completed on time. The biggest obstacle that all contractors have to overcome is the open competitive tender system, the cheapest tender gets the contract.
In order to achieve the cheapest price, every tenderer has to be very optimistic while making his estimate. He has to assume that he can get all the required labour and materials at the current prices. He has also to assume that he will not meet inclement weather during construction.
When he is awarded the contract, almost all his assumptions will not come true. Due to inflation and many other reasons, the prices of labour and materials invariable are higher than what he has allowed in his tender. There is also more rain than he has assumed.
Moreover, he has construction difficulties which he did not foresee during tender preparation.
As a result, almost all construction contracts cannot be completed within scheduled time.
In fact, one of JAKS’ contracts is already being penalised for late completion.
After many decades of experience in the contracting industry, I have developed a system or method to complete contracts within programmed time to save cost and avoid penalty for late completion.
JAKS must concentrate on producing electricity business
JAKS must concentrate in getting another contract to build coal fired power plant. As I said earlier, getting contract to build power plant to sell electricity is so profitable, I will help JAKS secure another contract in Myanmar. If you visit Yangon, you can see that almost every shop has a standby diesel power generator because there is a terrific shortage of electricity supply.
About 4 years ago, I arranged Mudajaya to sign a MOU with the Chief Minister of Mandalay to build a coal fired power plant in Mandalay which you can see the photo of the signing ceremony below.
Unfortunately, we could not find a consortium of banks to finance the project. Now with the Chinese partner, I believe I can arrange JAKS to undertake a contract to build a coal fired power plant in Myanmar.
But now, according to CS in an extensive report yesterday, while the 34% decline in Malaysian equities on a dollar-adjusted basis over the past 45 months was warranted, the market bottom may be close at hand.
Calling it as “the ultimate contrarian trade”, the research house outlined 10 reasons to be bullish (see table).
Among them is that Malaysia’s GDP growth may see further upside, thanks to a rebound in commodities. Additionally, the government may have more leeway to increase spending, given its conservative average crude oil price forecast of US$48 per barrel, CS said.
“We believe that the recent stability in the commodity complex we have witnessed the last of the downgrades to near term growth expectations.
“We now expect a pick-up in growth to 4.5% this year (above consensus expectations of 4.3%), driven by public infrastructure projects, commodity-related investments and a boost to rural income from the recovery in rubber prices,” it explained.
Another reason is on the improvement of earnings dynamics among Malaysian corporates. CS points out that at the sector level, the recovery in earnings revisions is led by the energy and mining space.
Additionally, among the larger sectors, consumer discretionary and staples have recovered sharply well into net positive territory with industrials and financials improving to at least neutral levels.
Another key catalyst for the markets is the attractiveness of the ringgit at present levels after significant devaluation.
Although Malaysia’s 15-year trend of a weaker ringgit in real effective exchange rate (REER) terms is justified by the steady erosion of its share of global exports, the 18% REER devaluation over the past three years appears severely overdone, given the relatively modest decline in export share over this period, CS noted.
One prominent beneficiary from the repair in the macro environment appears to be the banking sector, which is a heavyweight component for the FBM KLCI.
The research house said that private sector credit growth had just bounced off a 13-year low at 5.6% year-on-year in January compared to 4.2% in September last year.
“Encouragingly, deposit growth recovering back into positive territory should serve to moderate the pick-up in the loan-to-deposit ratio, which is currently at elevated levels which typically dampens credit extension,” it said.
In light of its market recommendation, CS has picked its top 10 stocks which offer superior dividends and free cashflow yields.
Many income taxpayers wait until the eleventh hour to file their income tax returns. While some people work best under pressure and choose to procrastinate on filing taxes, there are those who simply forget to file by the April 30 deadline.
Waiting to file your taxes till the last minute can put you under tremendous pressure. Everyone makes mistakes, especially when under the stress of gathering documentation, crunching numbers and lowering tax liabilities as much as legally possible – let alone the possibility that the e-filing might not work properly due to a large number of users.
Despite these very real reasons, there are many others benefits to get your act together early this tax season:
1. Eliminate tax deadline stress
Though filing taxes may be an unpleasant task, it’s best to get it out of the way as soon as possible. Give yourself a fake deadline—well ahead of the deadline—to get your taxes filed.
It’s always best to get it done as soon as possible so that you do not get tangled among the last minute rush taxpayers. Begin your preparations and execute your income tax e-filing process as soon as possible.
The sooner you start on your taxes, the more opportunity you have to make sure you claim all the tax reliefs, tax deductions and tax rebates you’re eligible for. Don’t put yourself in a position where you have to cut corners in order to meet the deadline.
Remember not to rush through the process. That’s how mistakes happen. And when it comes to taxes, those mistakes can come with a huge Ringgit sign. Get started early so you have time to get the job done right.
Once your income taxes are filed, reward yourself for being an efficient and responsible taxpayer. You can then relax and watch others stress out about getting their taxes done on time.
2. More time to plan out financials
When you file your taxes, you’ll know exactly how much you will have to pay or how much refund you can get back (if your employer practices Monthly Tax Deductions, also known as PCB).
However, you won’t have to pay in full until the filing deadline on April 30. Preparing yourincome tax e-filingearly will give you enough time to arrange your payment, if any. The more time you have to come up with the money, the less likely you are to crack your budget or drain your emergency funds to pay off.
File your taxes early to know how much you owe, plan out your financials, and get that tax bill out of the way.
Besides, filing income tax returns early can be used as a means to reduce your tax liability. You practically get one liability off your shoulders and concentrate on the rest.
3. Faster tax refunds
Yet another common reason to file taxes early is to receive your tax refund earlier, if you have any. As most taxpayers are onMonthly Tax Deduction (MTD/PCB), where a percentage of their salary is deducted by their employer for income tax, there is a high chance that you overpay your taxes, especially if you are eligible to claim tax reliefs.
Filing your income taxes electronically, and giving the correct bank account details, will enable theInland Revenue Board Malaysia (IRBM)to deposit the refund directly into your bank account. It is by far the fastest and most efficient way to get your income tax returns. Your tax returns, big or small, can come in handy when cash is tight, or you can easily plan where to invest it.
Taxpayers using e-filing typically gets their refunds credited directly into their bank accounts within 30 days after the income declaration is made.
4. Protect your income tax returns from identity theft
Filing income taxes early may not eliminate the threat of identity theft, but it can protect your refund. The purpose of a fraudulent tax return is undoubtedly to pocket your tax refund. This scam occurs early in the tax season, well before most taxpayers file. In 2015 alone, there were five cases of cheating and attempts to cheat tax records, involving tax refunds of almost RM200,000.
If you file taxes early, the IRBM will automatically reject the fraudulent application(s) under your name.
Take every possible precaution to keep your income tax details private and confidential, and reduce the risk significantly by filing your taxes early.
5. Avoid paying penalty
If you fail to file your tax returns before the April 30 deadline, you will be liable to pay a penalty. You might think that you have plenty of time to prepare your e-filing as end of April might seem far away, but you can’t predict what can happen suddenly.
You might sit down at the last minute to do your taxes only to discover that something is making your tax situation more complicated and that you won’t have time to figure it out before you submit your income taxes.
Planning for additional tax reliefs or gathering receipts from the previous year may take time. There could be three possibilities in this situation: over claiming your reliefs, missing out some reliefs, or missing your tax filing deadline altogether. All of these scenarios cost money – if not in missing your reliefs, it’s paying a hefty penalty.
Why risk making a rushed mistake that could lead to a costly audit?
Avoid the possibility of being late and owing more – or worse, wasting money on penalties – which could have been easily channelled elsewhere.
Put your best foot forward and march out early to file your taxes. Typically saves you from the hassle of any last minute rush. Avoiding procrastination can give you a lot of peace of mind. File your taxes today!
Author:kcchongnz | Publish date: Wed, 23 Dec 2015, 08:29 PM
In the previous article in the link appended below, I have written on the principles of Dr. Neoh Soon Kean, one of the pioneers in fundamental investing in the stock market of Singapore and Malaysia. http://klse.i3investor.com/blogs/kcchongnz/88424.jsp
In this article, I would like to discuss on the principles of another more well-known super investor, ColdEye.
Fong Siling 冯时能 (冷眼) requires no introduction here as he is very well-known in the investing circle. He has worked as a journalist for many years before involving in investing in the share market. His initial investing experience was not good as he had been losing money following other discipline of investing before using the fundamental approach, according what he has written in his book, 冷眼分享集.
He has written a number of books with many fundamental investing principles. I have provided the above eBook and made it a point for my course participants who understand Mandarin to read his book. There are many good philosophies and principles 心得 which investors should enumerate. Here, I am just sharing a few of them with you.
Principles of ColdEye 冷眼心得
ColdEye reverberates the basic principle of Benjamin Graham that Individual investors must have the mind set of investing, rather than speculating. Investing in a stock should be viewed as investing in a part business, and this should be the “right path” to follow. He said,
The first thing an individual investor should learn is not how to make profit, but how not to lose money. Using the “right path” of investing.
Although you may not yield fantastic results from the “right path” of investing, at least it won’t make you bankrupt, causing the livelihood of your family in deep hot soup, but lead you to a more care-free life.
On the other hand, speculating is the “left path”, the opposite of the “right path”.
Speculating on and guessing share prices movement is difficult. It is like trying to catch a slippery eel. He admitted that he can’t do it right most of the time, and he believes nobody can.
In order to follow the “right path”, one must do homework, and by doing your own homework, it is more likely you can produce good investing results.
What kind of homework? In this respect, ColdEye has a few articles on these as below.
The homework includes company announcements, quarterly and annually financial reports, income statements, balance sheet and cash flows statements, and annual reports. These are the most basic and most important information about a listed company.
If you investing in a company, do not tell me you have no time to do this homework which is important for the outcome of your investment.
ColdEye has also have cited the importance of investing for the long-term to build wealth. He has given examples of investing in a few stocks; Maybank, Public Bank, Hong Leong Credit, OYL and Oriental Holding; and if an investor has held them for 30 years, RM10000 would have become RM1 million.
Why are most investors so impatient to invest for long-term? A business will generally take a few years to bear fruits, a house needs 3 years to complete, why can’t an investor invest in a share and wait for 3 years, or 5 years?
ColdEye, like those super investors in the US which I have discussed in my link below, also discourages the use of borrowed money to invest, because interest payment of the loan is fixed, but income from the investment is unpredictable. http://klse.i3investor.com/blogs/kcchongnz/88007.jsp
The Five Investing Metrics of ColdEye
In one of his presentations given to the public on 16th March 2013, ColdEye listed his investing strategy using 5 metrics that investors should look out for before he invests in that stock:
1. Return on equity, ROE,
2. Cash flows
3. PE ratio
4. Dividend yield and
5. Net tangible asset backing per share, NTA
If you have some basic knowledge in analysing and interpretation of financial statements, these metrics are simple metrics which can be easily extracted from the financial reports.
The strategy suggests to invest in good companies as presented by its high return on equity and good cash flows. These two metrics are also propagated by the super investors in the US as shown in the link below: http://klse.i3investor.com/blogs/kcchongnz/88007.jsp
The later three metrics measured the price versus value of the companies to invest in. Good companies may not be good investments if the price is not right.
The price-to-earnings ratio, or PE, measure how cheap or expensive a share is selling with respect to its earnings.it is the most common metric used in the investing circles everywhere in the world.
Dividends are tangible cash flows returning to shareholders and important to the overall returns. Besides, it gives a positive signal if a company distribute consistent increasing dividends. http://klse.i3investor.com/blogs/kcchongnz/85100.jsp
Obviously a higher dividend yield is a better investment. If a company consistently and has the capability to give dividend with a yield of higher than the fixed deposit, it will be a no-brainer investment to me.
The ColdEye investment strategy is reinforced further if the company has good quality net tangible assets, compared to its price.
In this article below, I have attempted to explain each of the metrics mentioned above. http://klse.i3investor.com/blogs/kcchongnz/75946.jsp
We can see that the 5 metrics of investing of ColdEye cover almost every aspects of sound investing; good companies with the right measurements are found, and selling cheap in every angle. How intuitive is it!
Below I will use some experience of mine using the investment strategy of ColdEye.
Return of stocks using the ColdEye 5 yardsticks
I first posted an article in i3investor regarding the ColdEye 5 metrics of investing after his presentation in a public forum in the link below:
After my above post was published in i3investors, it received good response and constructive comments from many forumers. Many of them asked me about if their stocks meet the Cold Eye 5 yardsticks. These are all well documented in this thread in i3investor below.
Table 1 in the Appendix shows 9 stocks met the criteria above and were chosen as good investing candidates at about the time on 17th March 2013 basing on the 5 metrics. The return of these stocks were compared to the broad KLCI after two years and nine months as at to date.
As on 23rd December 2015, the average total return of the 9 stocks chosen is 281% in about two years and nine months, with the median return of 61.3%. This return way out-performed the total return of 8.5% of KLCI over the same period.
There are only two stocks, MBL and APM, making negative return, but with relatively small negative return of about 10%. These are also the only under-performers, or 78% of them over-performed the market.
A number of stocks over-performed the market by wide margins. Latitude returned 883%, Prolexus 786%, Liihen 652%, Willow 121% and ECS ICT 61.3%.
The characteristics of the return of this portfolio basing on the ColdEye investing strategy are summarized as below:
Most stocks, seven out of nine, or 78% outperformed the broad index.
Those stocks which outperformed the broad index outperformed it by a very wide margins; three digit returns against 8.5%.
The underperformers underperformed marginally against the market; maximum underperformance is 20%.
The average total return outperformed the broad KLCI index by very wide margin; 281% Vs 8.5%. Similarly, the Median return of the portfolio of 61.3% also way above the return of the broad market.
ColdEye, through his writing shares with us his valuable fundamental investing principles and strategies. The ColdEye 5 metrics in investing appears to be an attractive investing strategy which can provide potential high return with limited downside. The metrics are easy to use and can be quite easily extracted from the three basic financial statements.
For those who are keen to learn about fundamental value investing so that he can do your own homework when investing for long-term wealth building as suggested by ColdEye can contact me for an online investment course for a small fee at
Author:Koon Yew Yin | Publish date: Sat, 21 Nov 2015, 11:02 AM
Many of my close friends and my family members want to know how I dare to buy so much of VS Industry shares. As I have announced on 15th June 2015, I have 20,445,600 shares, nearly 10% of the total issued shares before one share is split into 5 shares. I am also a substantial shareholder of Latitude and Lii Hen. The price charts show that every one of the 3 shares has gone up a few hundred per cent per year.
A super investor must have the following 7 traits or characteristic features: Trait 1. Be a contrarian investor, the ability to go against the crowd in investing. You must not be afraid to buy when most people want to sell and sell when most people want to buy as if tomorrow is too late to sell. Trait 2. A great investor is one who is obsessive about playing the game and wanting to win. These people do not just enjoy investing; they live it. They wake up in the morning and the first thing they think about, while they are still half asleep, is a stock they have been researching, or one of the stocks they are thinking about selling, or what the greatest risk to their portfolio is and how they are going to neutralize that risk. Trait 3. A good investor is the willingness to learn from past mistakes or to admit that he or she has bought the wrong share. It is so hard for people to recognize their own mistakes and sell the bad share which they bought at a higher price. Most people would much rather just move on and ignore the dumb things they have done in the past. But if you ignore mistakes without fully analyzing them, you will undoubtedly make a similar mistake later in your career. In fact, even if you do analyze them it is not easy to avoid repeating the same mistakes. Trait 4. A good investor must have an inherent sense of risk based on common sense. You must have the common sense to realize the risk of buying any share which has gone up a lot and when all the analysts are recommending buy. No share can go up indefinitely for whatever reason. Quite often you might be tempted to fall in love with your purchase because it has been going up and up. You are so proud of your pick and refuse to sell it. Remember your ego can skew your judgment. Trait 5: Great investors have confidence in their own convictions and stick with them, even when facing criticism. Buffett never get into the dot-com mania and he was being criticized publicly for ignoring technology stocks. Eventually he was proven right. Unlike Buffet, we small investors can get in and out quickly and make some profit.
Besides confidence, you must have patience to wait to buy when it is has established a base and not buy when it has shot up due to some exciting hot news. Trait 6. It is the ability to think clearly. Our brain has 3 basic functions. One is to circulate your blood and control your breathing. The second is your emotion and the third is logical thinking. All normal investors allow their emotion to control their logical thinking process. All successful investors can think clearly when faced with a problem. Trait 7. Finally the most important, and rarest, trait of all is the ability to live through price volatility and fluctuation without changing your logical thinking process. This is almost impossible for most people to do when the share goes through a price correction. A swing up or down over a relatively short time period is not a loss and therefore not risk, unless you are prone to panicking at the bottom and locking in the loss. But most people just cannot see it that way; their brains would not let them. Their panic instinct steps in and shuts down the normal brain function.
Most investors believe that no share can continuously go up or come down indefinitely for whatever reason. They will sell to take profit and buy back during price correction. But quite often, the correction is mild especially if the share has fantastic profit growth prospect. They would not buy back at a price higher than the price they sold.
As you know VS Industry share price went up from Rm 2.5 to above Rm 8 in the last 15 months. I know of a foreign professional investor who sold VS at about Rm 4.50 because his chart indicated an unavoidable price correction. When the price continued to climb, he did not buy back because he has not mastered the above 7 traits.
If you want to improve your technic in investing you have to look at the 7 traits frequently until you have mastered them. You have to absolve them into your brain so that you can react automatically like a reflect action.
Basing on the last few quarterly earnings, I believe the company of VS Industry will be able to make more profit this year than last year which complies with my golden rule for selecting shares. But I am obliged to tell you that I am a substantial shareholder of VS. If you decide to buy, you are doing it at your own risk.
Investors in Malaysia need to be concerned over recent developments in our country as well as externally which have a direct or indirect impact on investor sentiment. Hence the continuing political crisis over 1MDB, the sharp decline in the value of the ringgit against the US dollar, the battered commodity market affecting primary producing countries and pull back by foreign investors all have contributed to the depressed stock market.
What has made it even more of a turbulent storm is the recent decision by China to depreciate the yuan.Very few in the market – even among experts – expected this and the impact has seen the market take a further sharp fall.
There are two considerations that Malaysian investors may want to bear in mind looking ahead. One is that we are not the only country in the region that has seen its market fall badly. Believe it or not but in fact the Singapore share market – which Malaysians would expect to be the strongest and most resilient in the region – has dropped even more than the Malaysian one during the last one year. Of course, this is small or no consolation to our local investors who have lost money. But it puts into perspective the current market fall in our country for those who have started to panic about our local situation; and who think and mourn and groan that we are alone in experiencing this current market fall.
The table below compares the performance of the markets in the region and shows that only the small markets of Vietnam and the Philippine have remained in positive territory since the end of 2014. Besides Singapore, Indonesia has also taken a bigger hit than us.
The second consideration is that any economic storm will pass if the economic fundamentals are strong. While there may be many problems with our politics, I am confident that our economic fundamentals are not only strong but are superior to those in many other countries. This is why I have kept my money fully invested in Malaysian and continue to do so. This is why I am sure that we will weather the storm over our market right now.
This is the same in other countries where the fundamentals are strong. For those who have lost money and have lost heart, this is what Business Insider has to say in a recent article.
There is an equity risk premium in the markets. Over the long term, stock investors can earn average annual returns that are close to 5% above what they’d be able to earn at the risk-free rate. That’s a huge number when compounded over decades.
But it must be earned the hard way – battling through the worst the markets can throw at us. And, as both Buffett and Templeton can attest, it is when stocks are treating us the worst that this premium is right around the corner.
Finally, a reminder, that the stock exchange consists of over one thousand companies in the Main and Ace markets. When you invest your money, make sure you invest in those whose fundamentals are stronger than others and who can take advantage of the shrinking Malaysian ringgit!
As I said many a time, successful investors do not let their emotion over rules their logical thinking process. They dare to buy when people are selling desperately and sell when people are euphoric.