JP Morgan: Buying opportunity in property share price weakness

KUALA LUMPUR: JP Morgan Asia Pacific Equity Research said any weakness in share prices(not pullback?haha) from the Bank Negara Malaysia announcement on the imposition of a 70% loan-to-value cap (LVR) on mortgages for third PROPERTIES [] as “a buying opportunity”.

In a research note issued on Thursday, Nov 4 it said the new ruling was clearly targeted at speculative buyers. Genuine first and even second time home buyers would not be affected, and would still be able to obtain financing of up to 90%.

“This is in line with guidance and not a surprise to the market. The government has already provided hints on this possibility over the past couple of months. Note however that even prior to this, banks have generally been stringent with the previous 90% ceiling LVR already not a common practice as much depends on the credit profile of each customer,” it said.

JP Morgan said on balance, it remains positive. In the short term, developers with higher exposure to the more speculative condo/high rise market (namely in the KLCC and Mont Kiara area, Klang Valley) and even for high-end landed properties in certain limited hot spot locations in Klang Valley (i.e. Desa Park City, Mutiara Damansara) and in Penang, could see some softening in demand.

“Overall however, we believe the move is positive for the long term sustainability and health of the sector,” it said.

It maintained its overweight on IJM Land and SP Setia(noted with thanks but I prefer REAL PULLBACKED ONE!)but preferred the former on valuation. The more speculative condominium market accounts for no more than 20% of sales for SP Setia and 35%-40% for IJM Land.

“For IJM Land, its strong branding, attractive product portfolio at the 'Light' project, and shortage of land in Penang island, also means that it should continue to fare better than most other condo developers, in our view,” it said.

JP Morgan said both companies could also benefit from upside to earnings from new projects i.e. from the commercial KL Eco City project for SP Setia to be launched by year-end, and from the Canal City residential project for IJM Land to be likely launched in 2011.

“We see any weakness in share prices from this announcement as a buying opportunity,” it said.

It said IJM Land was currently trading at a 30% discount to its RNAV of RM3.80/share, while SP Setia is already trading close to its RNAV of RM5.20/share.

During periods of strong liquidity and foreign inflows back in 2007 coupled with healthy sector fundamentals, SP Setia traded up to a 20% premium to RNAV.

ADDED GOOD NEWS FOR PROPERTY STOCKS

UEM Land has 40.3pc support for Sunrise bid

Buying on PULLBACK!

At Bursa Malaysia, property stocks may stage a mild pullback in a knee jerk reaction to Bank Negara Malaysia's (BNM) caution to lenders against irresponsible lending practices which would contribute to the build-up of excessive leverage among households.
- BNM is imposing with immediate effect the maximum loan-to-value (LTV) ratio of 70% for the third house financing facility taken by a borrower as it seeks to curb "excessive investment and speculative activity in the residential property market".
- The central bank said on Wednesday, the move was expected to moderate the excessive investment and speculative activity in the residential property market which has resulted in higher than average price increases in such locations.
- Economists said there could be a pullback on property stocks following the imposition of the LTV ratio, which they said was necessary.

for me ,it is time to buy on pullback,but what is pullback? newspaper, forum, websites, blogs etc everywhere you can see the word---PULLBACK

I check it from investopedia
http://www.investopedia.com/terms/p/pullback.asp

What Does Pullback Mean?
A falling back of a price from its peak. This type of price movement might be seen as a brief reversal of the prevailing upward trend, signaling a slight pause in upward momentum.

Investopedia explains Pullback
Often pullbacks are seen as buying opportunities after a security has had a large upward price movement. It is important, however, to analyze closely any pullback as it may be a sign of a definite trend reversal or a slight pause in the upward trend, each having very different trading implications.

So it is not that easy to buy at pullback, better dig up those overpulled, enough pulled, no more pulled before buying,llet start looking or rather pulling!

Ooi Kok Hwa -- Is there a super bull run in 2010

Is there a super bull run in 2010?
Personal Investing - By Ooi Kok Hwa

Although the economic situation now compares with that of 1993, the last push must come from local retail investors

THE recent rally in our local bourse has prompted many seasoned investors, especially those who experienced the super bull run in 1993, to wonder whether the current rally is about to turn into a real bull run. Of course, nobody can tell for sure what will happen next, but we certainly can do some homework, comparing the circumstances back in 1993 against the current situation.

In 1991, Tun Dr Mahathir Mohamad unveiled the philosophy of “Malaysia Incorporated” which was a development strategy for Malaysia to achieve a developed nation by 2020. In the early 1990s, despite slowdown in the global economy, as the third largest economy in South-East Asia, after Indonesia and Thailand, Malaysia was supported by relatively strong macroeconomic fundamentals and resilient financial system. With the real GDP growing at 9.9%, ringgit appreciation, strong export growth and the Government’s measures to hold inflation low at 3.6%, the local stock market became an attractive alternative to foreign investors.

Before 1993, foreign investment in Malaysia was mainly dominated by long-term direct investment in the manufacturing sector. However, as a result of measures taken to develop our domestic equity market, coupled with the strong economic backdrop, we saw a massive influx of foreign capital inflow, which helped fuel the super bull-run in 1993. Within the year, the market increased by 98% to reach an all-time high of 1,275.3 points and foreign investors’ participation accounted for 15% of total trading value of our local bourse. This had also driven the market into a highly speculative one, which lured many retailers into the market, thinking of making fast and easy money.

With the presence of new and unfamiliar players, the market became a huge “casino”. Retail investors bought into stocks based on rumours rather than company fundamentals. Among the hottest topics during that time were the awards of government mega projects, privatisation candidates, sector play and regular news on upward revision of corporate earnings. Examples for the highly speculative stocks were Ekran, Ayer Molek Rubber Co, Berjuntai Tin Dredging and Kramat Tin Dredging.

In 1993, with the economy booming, the Government planned several mega projects, including the KL International Airport (RM8bil), Johor-Singapore Second Link (RM1.6bil) and Kuala Lumpur Light Rail Transit (RM1.1bil). The news of contract awarding immediately sent the market into speculative mood on those potential candidates. Similarly, the news of the Government planning on privatising some of the its own corporations, such as Petronas, KTM and Pos Malaysia had also driven these counters into prime trading targets.

Besides, the ease of accessing bank credit by investors also contributed to the market rally. We noticed that a high percentage of loans was channelled to broad property sector as well as the purchase of securities.

As a result of massive inflow of foreign funds and the super bull run in stock market, Bank Negara introduced a number of selective capital controls in early 1994 to stabilise the financial system,

Recently, our Prime Minister Datuk Seri Najib Tun Razak unveiled the Economic Transformation Programme (ETP) with the aim to boost our gross national income (GNI) to US$523bil in 2020 from US$188bil in 2009. The programme is to attract investment not only from the Government, but also (more importantly) from domestic direct investment as well as foreign direct investment. In view of strong economic growth, our GDP growth is anticipated to increase by 6% this year.

In September, we notice that there was a net inflow of foreign funds again in our equity market. Over the past few weeks, the average stock market daily volume had been hovering above one billion shares per day. Almost every day, the top 10 highly traded stocks were those speculative stocks with poor fundamentals. In addition, we noticed that some retail investors had started to get excited again in the stock market.

According to Andrew Sheng in his book titled From Asian To Global Financial Crisis, there were two main indicators to irrational exuberance during the super bull run in 1993. The first was the amah (domestic maid) syndrome. We need to be careful when amahs got excited about the stock market. This was because they did not know what they were buying and would always be the last to sell. The second indicator was when businessmen began to speculate stocks in the stock market. This was because they might neglect their businesses and use some of their cash for speculation.

Comparing our current market situation with the 1993 bull run, there are certain similarities that we see, such as strong economic growth, ringgit appreciation, inflow of foreign capital and ease of credit. However, our local retailer participation is yet to get boiling, which may be the last push factor towards the bull run. Hence, once the participation of the local investors starts to get heated up, together with more inflow of foreign fund, that may be the signs of the market heading for a ‘mini’ super bull run.

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

PARKSON and the lions....

This used to be one of my favourite stock few years ago including all the other lion's companies
such as lion div, lion industry, lion corp,lionfib...you name it. With the help of a blogger friend, I even drew up a diagram showing how all the companies interlinked with each other and had a great discussion with some good friends and earned some good money. Now, I totally lost track of the lions, have to restudy back but where is my old notes and old friends? please help!

Positive Outlook for FY10 CONSUMER
· On track to meeting FY10 SSSG guidance
Parkson Holdings (PH) is expected to meet its FY10 SSSG guidance of
10-11% in China, 3-4% in Malaysia and 25-26% in Vietnam with little
difficulty. Consumer demand and spending has been supported by the
positive economic growth momentum in FY10. Malaysia is likely to
outperform forecast given the strong 11.3% SSSG registered in 1HFY10.

· Expanding store network
The group continues to extend its retail network by opening stores in new
locations, injecting minority interest stores and M&A activities.
Management continues to target an annual 15% increase in retail area
with 7-8 new store launches in the pipeline for CY10, of which 5 are in
China (3 of which have already been opened), 1 in Malaysia and 1-2 in
Vietnam. PH is also venturing into Cambodia, with its first store in the
country due to open its doors in 2HCY12.

· Alternative proxy to China’s retail growth
PH has a strong balance sheet with net cash of RM316.5m (at end-June
2010) that will enable it to fund its expansion capex. PH continues to
present a cheaper option for exposure to China’s retail market (FY11 P/E
of 17.3x compared to Parkson Retail Group’s 25.3x) and provides steady
earnings growth driven by a proven business model and continual
improvement in operating efficiency.

· Estimates unchanged
We are confident that our FY11 net profit growth forecast of 27% and
FY12 estimate of 25% will be met. Our assumptions of 7 new stores and
SSSG of 10% in FY11 are conservative and within Management
guidance.

· RM6.70 sum-of-parts target price
Reiterate our RM6.70 target price based on a sum-of-parts valuation
(utilising FY11 P/Es of 20x for China, 11x for Malaysia and 10x for
Vietnam) with a 20% holding company discount. Further, foreign
shareholding in PH stood at 22.4% (at September 2010), significantly
lower than the 30.0% peak in 2008, which would indicate a potential
further upside to share price. full report get it free from ECMlibra
https://www.ecmlibra.com/ecmlsmy/

Malaysian stock market still has legs to run

Oh, reading through this articles, so optimistist about our BURSA, I dont really agree but have to keep track of my small investment, hopefully Mr Lim , my legs are strong enough to run fast when the crash or so call correction comes(Or rather my hands are fast enough to run my stocks....)

MIDF Amanah CEO says the run will be driven mainly by inflows of funds as investors start to see the full potential of the Malaysian and regional markets.

THE Malaysian stock market still has legs to run and the rally is still at the early stage, MIDF Amanah Asset Management Bhd said.

Hence, Bursa Malaysia still offers plenty of opportunities for investors, the wholly owned unit of Permodalan Nasional Bhd said.

MIDF Amanah chief executive officer and chief investment officer Scott Lim said the run will be driven mainly by inflows of funds, both local and foreign, as investors start to see the full potential of the local and regional markets.

"The market is not fair. It is very selective. The first wave of money is very particular on what they choose. They always buy the most blue-chip. They always buy the best-quality companies.

"After they have invested, they make their money and the (price-to-earnings, or PE) valuation will become too high, from 10 times to more than 15 times," Lim told the media in Kuala Lumpur last week.

The local stock market, which fell by about 50 per cent during the global financial crisis, has regained its momentum.

It has risen by some 17 per cent so far this year, and jumped 80 per cent from the 829.41 points in October 2008.

Lim said this meant that investors would have to look for better value.

"They will go and hunt for lower-valuation companies that have better growth in terms of pricing. So, the development of the market is that when it has become matured, investors will go to the next tier and when the market grows even more matured, the investors will go to the lower tiers.

"This bull market is still at the very early stage because there is still a lot of values to be found. I am not sure how many more good years the rally is going to be. It all depends on how fast they re-price this market," he explained.

Lim added that while the "smart" money had come to Asia, the next money, or next big wave, would be from those people unwilling to leave the US right now.

"But the wave will come and, when it comes, it will be bigger than the first wave," he said.

Lim also noted Asia's strong economic fundamentals, which will make it the epicentre of growth in future.

These fundamentals include a high population base, favourable demographic, accommodative interest rates, healthy government fiscal balance and strong household balance sheet.

Welcome to StockCharts.com

http://stockcharts.com/


Welcome to StockCharts.com!
Who thought making great looking financial charts could be so easy? We give you the tools, the educational information, the expert opinions, and the support you need to improve your investing. While anyone can use our free tools, subscribers get access to real-time data and much more.

This is the website my friend(over the cyberworld, difficult to call someone a friend) Smartbiz from http://sensecents.blogspot.com/ recommended to me, after few days of reading through, I agree with smartbiz this is one of the best website that teach chart analysis. start with Moving Average. I like the simple description and presentation of the various technical indicators.

You should start reading from:
http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators

STOCK PICK FROM JUPITER

Sector to watch out:
Plantation. O&G and Steel.

Plantation:- TDM, TwsPlant, Rsawit, Swk oil Plams, TSH QL.

O&G: EPIC, Dayang, Handal& Kencana.

Steel: Ann Joo, Lion Industry, Hiap Teck, CSC Steel.

Timber :- Jaya Tiasa, Classic Scenic, Eksons.

Health care:- Topglove, Supermax, Kossan, Faber, KPJ.

East Malaysia:- Sarawak Cable, Cahaya mata, Naim, HSL.

ETP: Zelan ( for trading only), MRCB, AZRB, MahSing, Paramount, Hua Yang.

Transport: AirAsia, Tasco, Airport, Konsort.

Motor:- Tchong, TSM, APM, Proton.

BUY AT YOUR OWN RISK, I DO AGREE WITH SOME BUT NO TIME TO LOOK INTO THE FA AND TA(oh I started learning some TA after my friend Smartbiz post me a good website)

The Rubber Glove Industry

again from Mr Kok, thanks, I am not buying CPO, Rubber Glove,but concentrating on some small property laggards(a meaningful and yet useless term,as expert used to say leader will always be leader and laggards will forever be laggards, is that so, I dont know ....what I want is my 20%(or ~15%if situation change)profit and looking at these rather small counters with minimal downside risk(I said so)I can have peace of mind.

The Rubber Glove Industry
The Pessimistic Outlook … dated Oct 2010

The Malaysian Rubber Glove Manufacturers’ Association’s (Margma) move to urge its members to increase selling prices, which are denominated in US dollars, seems like rain in the dry spell for the glovemakers.

Margma’s statement is an influential one considering that its 45 members collectively supply 60% of the world’s rubber glove demand. According to Margma president KM Lee, the price increment is about 10% to mitigate the effects of costlier raw materials and a weakening US dollar.

In fact, the majority of glove producers, especially the bigger players, have raised prices of their products. The early birds had done so as early as the beginning of 2010, while some initiated price hikes in Sept – Oct 2010.

The 10% increase took into account that latex constituted some 60% of production cost and the 19% rise in natural rubber or latex prices since early 2010.

In reality only 80% of the price increment will be borne by the customers, and the glovemakers will still have to absorb the remaining 20% of price adjustment. This is the common practice in the industry.

So is the 10% price increase enough to cover the rise in costs and to offset the foreign exchange effect caused by the stronger ringgit?

The price of latex rose by 19% from an average of RM6.57 per kg in January 2010 to a high of RM7.79 per kg in late Oct 2010.

Demand for natural rubber is outstripping supply, due to growing consumption of the commodity for tyre production in growing economies, such as China and India’s automotive industries. Also, the pace of natural rubber production is not keeping up with demand. Apart from weather problems, planters are also reluctant to start replanting activities, causing a fall in production yield.

Meanwhile, the ringgit has strengthened 9% to RM3.12 against the US dollar so far till Oct 2010, helped by the inflow of foreign funds.

Industry players said the issues of costlier natural rubber and stronger ringgit were not new to glove manufacturers. However, the real issue is overcapacity due to consistent capacity expansion in anticipation of constant demand growth due to the outbreak of diseases in the past.

Apart from the capacity expansion among the Malaysian players, there are also new glove manufacturers sprouting up in South America.

It remained to be seen if the 10% hike in glove prices was sufficient to cover the higher costs. This takes into consideration that latex rates are still high, and the overcapacity environment within the glove manufacturing fraternity will also reduce plant efficiency.

Players are also undercutting each other.

4Q2010 & 1Q2011 to be tough for the industry in anticipation of weaker quarterly growth.

In view of the overcapacity landscape, it is likely that players will have less bargaining power to pass down the higher cost to buyers.

The Optimistic Outlook … dated Oct 2010

Nonetheless, some industry observers view that concerns about overcapacity, margin and earnings pressure from the normalising of glove demand, high latex prices and weakening US dollar have all gone overboard.

It concurs that the slowdown in demand, coupled with slower-than-expected cost pass-through due to high latex prices and the weak US dollar, could lead to a continuation of the weak earnings trend for the glove makers. But this is a temporary situation as growing hygiene awareness and increase in healthcare spending should give glove demand a big helping hand.

The glove demand growth is still deemed healthy and glovemakers’ pricing power would still allow them to pass on the additional costs to customers, albeit, with a time lag of one to two months.

Higher latex prices had prompted anticipation of lower demand for natural rubber gloves, and vice-versa should latex prices decline.

Going forward, dynamics in the glove manufacturing industry will be closely watched given the current challenging operating landscape. It will be interesting to see how the players execute their revenue-growth and cost-cutting strategies as they contend with the headwinds.

The CPO INDUSTRY

This is the work of a remiser Mr Kok, thanks for sending me this , please send more.

The CPO Industry

Optimistic Outlook … dated Oct 2010

The CPO prices are close to rm3000 per tonne level. With CPO on an uptrend, plantation stocks enjoyed a strong flow of funds.

The spike in CPO prices came after the release of a report by the US Department of Agriculture on Oct 8, 2010, which downgraded its forecast of soyabean harvests in North America.

Soyabean output in the US is expected to be lower than projected in Sept 2010 but higher than last year. Rainfall in Aug 2010 failed to boost yields, prompting the government to reduce its acreage estimates.

While weather concerns gave largely driven commodity prices till Oct 2010, market observers say the soyabean supply crunch certainly took the market by surprise as the report changed the outlook for oilseeds for the next six months (Oct 2010 – April 2011).

The report caused soyabean oil prices to jump as concerns over tight supply hit the market. Given that CPO prices move in tandem with soyabean oil prices, things are certainly looking for palm oil, at least in the near term.

CPO prices may be ripe for a further upswing, given the USDA’s downgrade of soyabean crop estimates and the threat to oilseed and edible oil supplies posed by the ongoing. This also coincides with anticipated drop in palm oil yields in 4Q2010 and 1Q2011 due to last years (2009) drought.

An upgrading of CPO prices also led to upgrading the FY2010/FY2012 earnings of all the planters. The PER of big cap planters in Malaysia is at 16 times.

Industry players are bullish about the sector for the next six months (Oct 2010 – April 2011), with a preference for planters with pure CPO play. The stocks will definitely be on uptrend. And should the US carry out its second round of quantitative easing. It will bring liquidity into the market and push prices even higher. But the fundamentals are there to support the share price rallies.

Now (Oct 2010), the tide has turned, plantation stocks in the region are seeing the return of foreign interest.

However, Malaysian plantation stocks may not attract the same kind of attention from foreign investors as they are trading at a premium to their Singapore and Indonesian peers. The PERs of the plantation stocks in Malaysia are in the high teens while those of the Singapore and Indonesian planters are around 13 times to 15 times.

Nonetheless, with the economy picking up and what looks like the start of a strong rally in the plantation stocks, foreign funds looking for exposure in the local index may start considering these counters.

News report say that CPO might rise to RM3600 per tonne by 1Q2011due to potential shortfall in supply. CPO may hit all time high of RM4486 in March 2008. While this level may not be on the horizon. Certain factors will keep CPO prices at a high level.

Strong growth in the emerging markets and an increase in biodiesel mandates will likely boost demand. The upside potential of CPO prices may also be fuelled in the near term by soyabean production risks in South America.

The discount at which CPO is trading to soyabean oil has widened to a historical average of US$120 per tonne, which could also lift demand for CPO in the near term.

Meanwhile Malaysia’s palm oil exports rose by 21.16% to 1.47 million tonnes in September 2010 against the previous month. Year-on-year (yoy), the palm oil export for Sept 2010 reflected a 10.9% climb compared with the same month last year.

Malaysia’s palm oil exports are expected to reach RM65.2bil this year from RM49.5bil in 2009.

Also, the latest monthly statistics for released by the Malaysian Palm Oil Board showed the exports of palm kernel oil increased by 41.44% to 114,224 tonnes, palm kernel cake rose by 95.54% to 252, 749 tonnes and biodiesel advanced 11% to 10,011 tonnes for September 2010 on a month-on-month (m-o-m) basis.

Only oleochemicals exports slid, going down by 7.16% to 170,521 tonnes in September 2010 m-o-m.

But the increase in exports did not entirely correspond with the country’s palm oil inventory where the total palm oil stock in September 2010 marginally increased by 0.23% to 1.71 million tonnes m-o-m. Also, crude palm oil (CPO) stock rose by 18.88% to 929,225 tonnes in September 2010 m-o-m.

But this inventory could be counter balanced by the lower production of palm oil in general that included CPO, palm kernel, crude palm kernel oil and palm kernel cake in September 2010 against the previous month. CPO production went down by 2.72% to 1.56 million tonnes last month against August.

By Murali Krishna PV, CEO of India-based Transgraph Consulting Pvt Ltd … dated Oct 2010

Continued growing demand coupled with lower production and weather factors are expected to lift crude palm oil (CPO) prices to the RM3,300-level in the next four to six months (Oct 2010 & Beyond).He projects the global production of palm oil to decline by 2.41 million tonnes in 2011 while the demand for palm oil is estimated to grow 8% to 10% annually.However the uptrend in CPO would be met with intermittent seasonal corrections due to crop arrival pressure.With the growing per capita income in China and India, demand from these two countries for CPO could reach 37 million tonnes and 26 million tonnes respectively in the next few years (2010 & Beyond). In 2013, there is going to be a major bull run which is already underway.
He expects crude oil to trade on the upside from now (Oct 2010) till March 2011, potentially hitting US$90 a barrel with the downside at US$70. Crude oil could cross the US$100 mark after March 2011.

By CIMB … dated Oct 2010

PALM oil prices are heading towards the RM3,400 mark by the second half of next year (2011) on the back of a bullish run by vegetable oils in the global market,It expects prices to touch RM3,400 per tonne in the first quarter of 2011, but cautioned that it is important to have prices at RM2,800 per tonne in the short term.
Pessimistic Outlook … dated Oct 2010

Factors that may curb the uptrend of crude palm oil (CPO) price in the near term could be the release of higher-than-expected October 2010 production numbers, improved soya bean planting in South America due to better weather conditions, a stronger US dollar or if China revalues its currency, said plantation analysts.

A bearish factor that may hamper the upward movement in CPO price is the release of the October 2010 on Nov 2010 production numbers. An increase in production numbers may see prices cooling. CPO production was 1.56 million tonnes for September against 1.61 million tonnes for August 2010.

The price reversal could take place should there be improved soya bean planting in South America. With improved planting, this may mean a higher consumption of soy oil in the place of palm oil. This might be the case as weather conditions in the United States and South American countries saw further improvement over the next two months (Nov – Dec 2010).

Whether the plantation index will continue upwards will largely depend on the movement of CPO prices.

Meanwhile, should the US dollar strengthen, CPO prices would come off. Commodities, which are priced in the greenback, become less attractive to buyers who use foreign currencies as the dollar strengthens. The rise in all soft commodities is more a function of a weaker US dollar rather than the fundamentals of commodities.

Another consideration will be the outcome of the G20 meeting. Should China look to revalue its currency, then all bets are off”. China has come under external pressure to increase the value of its currency to alleviate pressure on foreign economies by boosting their exports and reducing trade deficits.

Lan Chen, an economist at UK-based LMC International … dated Oct 2010

He disagreed with the bullish outlook for CPO. While CPO prices had generally followed the level of stocks back in the years before 2007 and then tracked the trend of crude oil prices post-2007, recent trends showed that CPO price movements were very much tied to the price of soybean and soybean oil.US soybean oil, which is a direct substitute of CPO, “is more than US$100 (a tonne) overpriced in the US biodiesel market.” This will place downward pressure on soybean oil which in turn will pressurise palm oil prices even more.Additionally, Chen expects MPOB’s stocks of CPO to peak at 2.25 million tonnes next year (2011), without giving a specific timeframe for the estimate. The output will be strong in 2011. In the end, if use today (Oct 2010)’s US dollar exchange rate and petrol price, the CPO price will be RM2,500 to RM2,600.

SABAH by-election, look at SABAH'S STOCK

then SARAWAK ELECTION, BUY SARAWAK'S STOCKS, then General Election,buy general stocks,can it be that easy to make quick money?I don't know. I believe some people can but I doubt my ability to do so, thus still stick to my strategy, buy when I have the urge to buy, sell when I am too scare to hold any further. Is Alam Maritim a Sabah company, looking at their webpage,http://www.alam-maritim.com.my/
I dont think so, nevermindlah, as long as I can make money.
FROM THE EDGE DAILY

KUALA LUMPUR: ALAM MARITIM RESOURCES BHD

It's share price advanced on Monday, Oct 25 after Maybank Investment Bank Bhd Research (Maybank IB) maintained its hold call on the stock with target price RM1.15 and said it was positive on the company's partnership with the Yayasan Sabah Group.At 9.35am, Alam was up five sen to RM1.12 with 783,000 shares traded.Alam Maritim entered into memorandum of understanding (MoU) with Yayasan Sabah Shipping Sdn Bhd, a unit of Yayasan Sabah Group with a view to form a joint venture (JV) company.

Alam Maritim said the JV would be involved in the provision of services including offshore installation CONSTRUCTION marine operations, and subsea works to the energy industry in Sabah.

MAYBANK Investment Bank Bhd Research (Maybank IB) maintained its hold call on ALAM MARITIM RESOURCES BHD [
registerQuotes("ALAM", "ALAM_span");
] at RM1.07 and target price RM1.15 and said it was positive on the company's partnership with Yayasan Sabah Group.It said the partnership creates a Sabah-based O&G company and sends out a strong signal of intent to capitalise on O&G opportunities in the state. "The SOGT [Sabah Oil and Gas Terminal] and pipe-laying projects would be among the jobs that it could target. "Maintain Hold with a RM1.15 target price, based on 10 times 2011 EPS," it said in a note on Monday, Oct 25

2010 CPR Guidelines

2010 CPR Guidelines

How the American Heart Association's CPR Guidelines Have Changed for 2010
http://firstaid.about.com/od/cpr/qt/09_2010_CPR_Guidelines.htm

By Rod Brouhard, About.com Guide

Updated October 18, 2010

After a review of the available research published over a 5 year period, the American Heart Association released its 2010 CPR Guidelines. As expected, the focus for CPR is on good quality chest compressions. Here are the differences between the 2005 and the 2010 CPR Guidelines:

* A-B-C is for babies; now it's C-A-B!

It used to be follow your ABC's: airway, breathing and chest compressions. Now, Compressions come first, only then do you focus on Airway and Breathing. The only exception to the rule will be newborn babies, but everyone else -- whether it's infant CPR, child CPR or adult CPR -- will get chest compressions before you worry about the airway.

Why did CPR change from A-B-C to C-A-B?
* No more looking, listening and feeling.

The key to saving a cardiac arrest victim is action, not assessment. Call 911 the moment you realize the victim won't wake up and doesn't seem to be breathing right.

Trust your gut. If you have to hold your cheek over the victim's mouth and carefully try to detect a puff of air, it's a pretty good bet she's not breathing very well, if at all.

I have a secret to share: paramedics have been doing it this way for years. Rarely have I seen an EMT or a paramedic put her ear to a victim's nose and listen for air movement. We just get to work.

* Push a little harder. How deep you should push on the chest has changed for adult CPR. It was 1 1/2 to 2 inches, but now the Heart Association wants you to push at least 2 inches deep on the chest.

* Push a little faster. AHA changed the wording here, too. Instead of pushing on the chest at about 100 compressions per minute, AHA wants you to push at least 100 compressions per minute. At that rate, 30 compressions should take you 18 seconds.

Besides the changes under the 2010 CPR Guidelines, AHA continues to emphasize some important points:

* Hands Only CPR. This is technically a change from the 2005 Guidelines, but AHA endorsed this form of CPR in 2008. The Heart Association still wants untrained lay rescuers to do Hands Only CPR on adult victims who collapse in front of them. My biggest problem with this campaign is what's left unsaid. What does AHA want untrained lay rescuers to do with all the other victims? In other words, what do you do with the victims that aren't adults or that didn't collapse right in front of you? AHA doesn't provide an answer, but I have a suggestion: Do Hands Only CPR, because doing something is always better than doing nothing.

* Recognize sudden cardiac arrest. CPR is the only treatment for sudden cardiac arrest and AHA wants you to notice when it happens.

* Don't stop pushing. Every interruption in chest compressions interrupts blood flow to the brain, which leads to brain death if the blood flow stops too long. It takes several chest compressions to get blood moving again. AHA wants you to keep pushing as long as you can. Push until the AED is in place and ready to analyze the heart. When it is time to do mouth to mouth, do it quick and get right back on the chest

MTUC against private pension fund

MTUC against private pension fund

Union hopes to dissuade EPF contributors

PETALING JAYA: The Malaysian Trades Union Congress (MTUC) has called on the 10 million contributors to the Employees Provident Fund (EPF) not to participate in the proposed Private Pension Fund (PPF) as returns for their investment are not guaranteed. (most of us already not happy with the returns of 5 to 5.75% from EPF,what else with returns that are not GUARANTEED!!!!)

"The returns would depend on market forces, and this was very risky for the contributors because they might lose all their savings," said MTUC secretary-general G. Rajasegaran.(VERY VERY TRUE)

He disclosed that insurance companies had been lobbying for such a fund for a long time, and the MTUC had objected to it and the EPF board upheld the MTUC's concern.

"Now, however, it appears that the insurance lobbyists have succeeded, based on the announcement by the finance ministry that the Government had agreed to appoint insurance companies to handle the fund," he said Wednesday.

Rajasegaran was commenting on a statement by the ministry's economic and international division under-secretary, Datuk Dr Mohd Irwan Serigar Abdullah, that EPF dividends would be gradually scaled down to encourage contributors to bring their money to the PPF. (@#$%^&* DONT EVER COME TO DISTURB OUR EPF CONTRIBUTION!)

Prime Minister Datuk Seri Najib Tun Razak announced during the tabling of the 2011 Budget last Friday that the Government would launch the PPF next year for the benefit of private sector employees and the self-employed. (What benefit?show me the figure first!)

Najib said the existing income tax relief of up to RM6,000 for an employee's contributions to the EPF would be extended to the contributions made to the PPF, including for those self-employed.
Rajasegaran said in view of this new development, the MTUC would soon launch an aggressive nationwide campaign to educate workers and encourage them to reject the PPF. (fast fast fast, please.)

In the meantime, he said the MTUC was seeking an urgent meeting with the ministry to discuss the PPF and its long-term implication for the workers, especially their well-being in old age. - Bernama

klse news of my interest

Fajarbaru landed a contract worth RM36.47 million from the East Coast Economic Region Development Council (ECERDC) for the CONSTRUCTION of the first phase of the Pasir Mas Halal Park in Kelantan. Yesterday, Fajarbaru said its unit Fajarbaru Builder Sdn Bhd had received the letter of acceptance from the ECERDC on Oct 19. It said the construction period was 15 months commencing from the date of possession on Nov 1 this year.

AirAsia extended the term of its cooperation agreement with Tune Talk Sdn Bhd (TTSB) up to July 27, 2011 to generate extra revenue and further boost the low-cost carrier's branding. Under the terms of the agreement, AirAsia would continue selling any unsold TTSB SIM cards; allow TTSB to continue redeeming unused e-gift vouchers; continue utilising the various advertising platforms; and continue AirAsia's entitlement to be remunerated with a 5% sale commission on total top-up sales.
TTSB is 23.42% owned by Tune Ventures Sdn Bhd, in which both Datuk Seri Tony Fernandes and Datuk Kamarudin bin Meranun are substantial shareholders. The low-cost carrier has also been in focus lately after several analysts raised their target price and earnings estimates on it. - Analyst raised their target price for the low-cost carrier following the release of its preliminary 3Q operating statistics on Tuesday, which saw revenue passengers kilometre (RPK) increasing 26.6% from a year earlier.

MBSB’s net profit for the nine months ended Sept 30, 2010 surged to RM133.21 million from RM66.91 million a year earlier, due mainly to higher loan and financing income, especially from the expansion of personal financing and higher other operating income from personal financing activities. These were partly set off by higher operating expenses and higher loan loss impairment, it said in a filing to Bursa Malaysia on Thursday, Oct 21.
MBSB chief executive officer Datuk Ahmad Zaini Othman said the company’s sustainability of its profit for the current quarter was due to the right strategies adopted.

Tips for first-time house buyers

I am reading a reply from teh about MU(University of Malaya, during our time we prefer to call her MU),he mentioned MU was TOP 50 in the late 80, I would confirm this as I can recall during my time (mid 80) my Dean used to say MU's Medical faculty was No 3rd in Asia after Japan and Hongkong, even better than Singapore U, now at what position?

from the star
Tips for first-time house buyers

--------------------------------------------------------------------------------

BUYING a house for the first time is like getting married. You need to be level headed, think wisely, plan well and eliminate the chances of regretting the decision later.

For first-time house buyers, scouring the market for a suitable property can be exhilarating but it can also be frustrating if you don’t find “the one” or you do but it comes with a bust-your-budget price tag.

There are a few factors to consider in the pursuit of buying your first dream house. Firstly, a prospective house buyer should ascertain how much upfront money he or she can fork out, says SK Brothers Realty Sdn Bhd general manager Chan Ai Cheng.

“This is important. There are heavy upfront costs depending on what you buy, including transfer cost, legal fees and so forth,” she says.

Secondly, the prospective buyer needs to check with the bank on the amount of loan that can be secured based on the income level. “At the same time, try to have savings amounting to at least three to six months of loan instalments plus household expenses as reserve fund, in case of an emergency,” Chan says.

In short, if you want to buy a house, you need to figure out your affordability – how much you can afford.

A real estate agent tells StarBizWeek that the rule of thumb is that monthly loan repayments should not exceed one third of the gross monthly income.

“In assessing your repayment capability, the financial institution would also take into account your other debt repayments such as car loan, personal loan and credit cards,” he says.

He adds that the margin of financing can go as high as 95%.

“The higher the margin, the higher you will have to pay per instalment. Plus, at a given rate, a shorter tenure will require you to pay higher instalment,” he says.

He adds that after you have set your finances right, make a list of features you are looking for in a house.

“Be sure that the house you are buying is big enough to meet all your future needs, in case you have additional members in the family,” he says.

“Take good note of the area and the neighbourhood as these aspects will play a crucial role in determining the price of the house in case you want to sell it in future,” he adds.

In terms of financing, buyers have a wide array to choose from be it conventional or Islamic.

Under the conventional financing, one’s outstanding loan consists of principal plus the interest charged.

“The interest is actually the financial institution’s cost in obtaining the funds. Islamic financing works on the concept of buying and selling where the financial institution purchases the property and subsequently sells it to you above the purchase price,” says a banker.

As for the loan tenure, it can range from anything up to 30 years or until the borrower reaches the age of 65, whichever is earlier.

She also advises that it’s better to buy than to rent a home as the latter is largely expense without equity.

Furthermore, she says: “When you invest in a home, it offers the possibility for appreciation in value. At the same time, the equity becomes yours when you’re still paying off your mortgage. You even get to live in it while your investment matures.”

Still, the key determinant ought to always be keeping within the budget.

“That’s most important. It’s easy to be swayed into wanting a bigger home or a bungalow just because your friends or someone else has one. This is nice to wish for but definitely not practical if it’s way out of your budget. Be realistic,” the banker says.

Ask on the “right” timing to buy a house, she says there is no “right” time to buy or sell anymore.

“If you find a home now, don’t try to second-guess the interest rates or the housing market by waiting. Changes do not usually occur fast enough to make that much difference in price and a good home will not stay on the market long,” she says.

Do you like the 2011 BUDGET?

Do you like the 2011 budget just announced?
I don"t really like!!!
I support fully the ONE MALAYSIA slogan but come to the basic, like everyone of you out there I am still a basic moneyminded lay person,thus when I dont see money into my pocket instead trying to steal money from me, I am not happy!
If you want to read all the good news or all leaders' great great response just go to the star and click
http://thestar.com.my/news/nation/

So many of them !tired of reading.
But I am someone that like to read negative news,reading between the lines, look at things at different angles.......basically it is a budget that will benefit mainly the government servant but not those working at the private sector,they got hardly anything.


WHAT !NO Personnal TAX RATE CUT!
WHAT!INCREASE SERVICE TAX BY ANOTHER 1%(better eating at home or at hawkers centre from now)
WHAT!WATCHING ASTRO HAVE TO PAY 6% SERVICE TAX!
WHAT!ANOTHER 100-storey skyscraper RM5billion WARISAN MERDEKA!

Pre-budget sell down?

So instead of Pre-budget rally, it is a pre-budget sell down indicating market is expecting a not so "rakyat" friendly 2011 budget,oh, I am just prediting only.I may be wrong, what we(am I speaking for the majority?)want is very simple....cut the tax rate, give more educational subsidy/scholarships to the deserved one fairly,give more incentives that will takeoff some burden form our tiny shoulders,executive some measures that will make our country peaceful & safe to live & work and of course earning some decent money. What contract, what project,what slogan,what mission and what sector will be benefited may not be of interest to majority of the rakyat......

14.10.2010 Finally 1500 was broken

Plantation!Plantation! I missed! should I jump in now?or wait for the pullback(any?)Wait,this is only the first time breaking 1500 barrier,not convincing enough you may say and Oh, I am too busy to look at the market....let it pass., let it be...

KL shares traded higher in early session

Published: 2010/10/14
Share prices on Bursa Malaysia were higher in early trading today with the benchmark index breaking the 1,500-point psychological barrier.
After 25 minutes of trading, the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) rose 3.87 points to 1,500.84.
A dealer said continued buying in selected bluechips especially plantation-related stocks helped the key index to start the day in a strong note. "Investors continue to snap up plantation stocks as they are bullish about the earnings of plantation-related companies following the higher CPO prices," he said.
He said market sentiment remained firm ahead of Budget 2011 to be tabled tommorow. At 9.25am, the Finance Index gained 24.74 points to 13,544.96, the Plantation Index increased 98.96 points to 7,360.02 and the Industrial Index added 7.74 points to 2,876.80.

The FBM Emas Index advanced 33.76 points to 10,103.04, the FBM70 perked up 61.65 points to 10,142.96 and the FBM Ace Index added 34.83 points to 4,190.44. Volume stood at 155.636 million shares worth RM156.824 million, with gainers leading losers by 265 to 76, while 197 counters were unchanged and 29 suspended.

Among active stocks, JCY International lost two sen to RM1.08 while Green Packet-Warrants rose four sen to 44.5 sen. TA Global gained 2.5 sen to 47 sen, IRM Group increased 4.5 sen to 43.5 sen and Time dotCom added one sen to 65 sen. Among heavyweights Maybank earned one sen to RM9.02, Sime Darby gained five sen to RM8.90, while CIMB Group shed one sen to RM8.06. -- Bernama

13.10.2010 edited

reading through news saying Topglove's Boss plans to move upstream by acquiring rubber plantations in the region, no need to depend on others for the raw material(rubber), great!
though he admits it is almost impossible for topglove to sustain such a fantasic rate of growth, glove stocks still moving upwards for the past few days........take a look at the three BIG,
topglove 5.72, Harta 5.33, and Supermax4.52 ......really on huge recovery!Market still strong ,damn strong, everyday up,up,up when everyone expecting a sharp dive coming,really coming?I don't so now.
I am not interested in gloves anymore, focus mainly on property stocks, I like stocks that have projects in Penang(then I can go for a site seeing) like SPsetia, Mahsing, E&O, someone mention sunrise.....any projects in Penang?

4.00pm
sometimes make me wonder what is the point of reading so many analyst's report,is it to gain knowledge or to gain insight when deciding to buy/sell/hold (these three terms are too simple for me to comprehend and I tend to read it the otherway round buy=hold, hold=sell, sell=may be buy, haha)a stock?Or just for the fun of reading before getting bore with life, oh actually I have better things to do.

Yesterday I just posted a NEUTRAL CALL 's report from ECMLIBRA and today the top gainers make up of so many plantation stocks!

PLANTATION ---NEUTRAL FROM ecmlibra

for the past two years I can't recall buying or holding any plantation stocks,why? I can't understand the whole business or I have other better stocks to look at, I don't know but after reading the report I still find it hard to take a look at any plantation stocks,howabout you ?

Plantation
Neutral
(under review)
September MPOB statistics
· Production declines 2.7% m-o-m
September production came in slightly weak m-o-m as expected given the Eid celebrations that took place during the month. On a cumulative basis, 9MCY10 production is up some 1.6% from 9MCY09. Looking into October, we expect that there could be a spike in production, but not one
as pronounced as was seen in 2009 (see figure 3). This is so because we view that the effects of the El Nino in 1QCY10 are taking a toll on yields and also that La Nina readings have become exceedingly high of late (see figure 7).

· Y-o-y export growth from Pakistan, US, EU and Egypt
Contrary to the belief that China has been driving export growth this year, it appears that exports to Pakistan, US, EU and Egypt are taking the lead instead. 9MCY10 exports to China are actually down 8.4% while exports to the said 4 countries have surged 11%, 14.6%, 18.4% and a whopping 58.4% respectively. Egypt alone took a record 161k mt of palm oil in September alone. To note, cumulative 9MCY10 exports are up 6.4% y-o-y and m-o-m export growth closed up 21%.

· Stock levels remain status quo at 1.7m mt
Stock levels were flat in September given that production still rose and that exports were coming from a low base. With our projection that October production won’t be as high and exports continue to be strong, the rise in stock levels next month may not reach safe levels (>2m mt) to take the industry through the year end festive season and the oncoming production down cycle.

· Sector call under review
September statistics changes our take on the sector to be more CPO price positive. Already, CPO prices nearly hit RM3,000 per mt yesterday, largely fuelled by the USDA report on trouble with soy supplies. YTD MPOB price now averages is RM2,540 per mt. We view that this situation could see CPO prices continue into strength and hence inducing strong corporate results in 4QCY10 and potentially stronger CY11 numbers. Our Neutral call on the sector and target prices of stocks under coverage are under review.
SIMEDARBY HOLD
IOI HOLD
KLKEPONG HOLD
GENTING PLANT HOLD
BOUSTEAD BUY
IJMPLANT SELL
full report please refer to ECMLIBRA & MPOB

CONSTRUCTION---NEUTRAL from ECM

4th – 10th Oct: Construction index inching up

· Construction index creeps upwards
The FBM KLCI Index and KL Construction Index both gained 1% to end at 1481.41 points and 265.85 points respectively last week. EPF accumulated 0.17% or 3.7m shares in Gamuda amid a 4% decline in share price. However, major institutional funds sold a combined 17m shares, or 1.3% in IJM as prices climbed 2.1%. Sunway Holding’s share price continued its strong performance, ending 3.6% higher for the week.

· Notable construction news
Circulating news of an RM15.6bn bid by MMC Corporation to take over UEM Group has created a flurry of excitement early last week. It was reported that MMC Corp is proposing to lead a consortium involving the Employees Provident Fund (EPF) and Permodalan Nasional Bhd (PNB) to acquire UEM via a special purpose vehicle, in which MMC would have a 40% stake, while EPF and PNB would hold 30% each. It was later confirmed that a preliminary proposal to take over UEM Group had been submitted to the government by MMC Corp. While the quantum was not divulged, MMC has revealed that they have not approached either EPF or PNB to be their partners. At Kumpulan Jetson, the Naza Group’s SM Nasarudin and SM Faliq have resigned from their executive positions, a further indication of their rumoured intentions of disposing their 33.2% stake in the company. However, both will remain on Jetson’s board as non-executive, nonindependent directors. Another executive director, Chow Chee Kin, is also
expected to be redesignated. After months of waiting, Mudajaya has finally seen development on the Securities Commission’s (SC) queries into the affairs related to its power plant project in Chhattisgarh, India. The SC remanded the company for ‘round-tripping’ practices and issued a ‘Caution and Reminder’ to observe its disclosure obligations. Concurrently, Mudajaya also announced the signing of a memorandum of understanding with the government of Laos
for a hydroelectric power project.

· Contracts awarded
WCT won the largest contract last week after securing the RM486m buildoperate- transfer concession for the Integrated Complex at the new Low Cost Carrier Terminal at Sepang.

· Maintain Neutral
We are turning positive on Gamuda in view of expected contract news flow for the MRT project. We note however, that allocation for physical infrastructure is lower under the 10MP. Although set off by numerous projects to be undertaken on a public private partnership (PPP) model, its positive impact is stock specific as certain companies may find difficulty securing financing under a PPP model. Our top pick is Sunway Holdings which is trading at undemanding forward PE of 8.7 times.
full report please get it from ECMLIBRA

BUSINESS TIMES --- BROKER'S VIEW

This is the page of Business Times I frequent most, but reading more or almost all broker"s view may load you with tonnes of info but blindly following their calls may be suicidal. Still, need to read with open mind and think, think, think....

http://www.btimes.com.my/Current_News/BTIMES/Section/indexind_html?section=industries&category=brokersview


IOI to delay launch of Sentosa Cove projects: CitiCitigroup Research says it is removing the Sentosa Seaview and The Pinnacle Collection projects from its immediate three-year forecasts
Axiata: Maintain buy, target price RM5.30MIDF Research expects that growth for Axiata Group Bhd (6888) will come from its overseas market, especially Indonesia and Bangladesh.
SapuraCrest: Buy, target price RM3.09Kenanga Research remains positive of SapuraCrest Petroleum Bhd (8575) given its locked-in prospects.
Kencana Petroluem : Buy, target price RM2.00
BToto: Buy, target price RM4.50OSK Research has maintained its "buy" call on Berjaya Sports Toto Bhd, but lowered its target Read more:

Selected financial report of interest : TOPGLOVE

Top Glove: Neutral, target price RM6.06 (Better call it a sell!)

OSK anticipates that Top Glove's first quarter 2011 outlook will be affected by rising latex prices and the weakening of the US dollar and ringgit

Although financial year 2010 was within expectations, Top Glove Corp's (7113) fourth quarter of the same financial year was affected by unfavourable external factors such as rising latex prices and the weakening of the US dollar and ringgit."We anticipate that its first quarter 2011 outlook will not be much different as we think the latex prices and exchange rates will continue to be unfavourable," OSK said.The research house said this will be offset by the stocking up of activities by its customers. (No, I dont think this can be offset satisfactorily)

Top Glove's customers may potentially carry out restocking rather than risk a further hike in selling prices when the rubber trees experience the wintering season, thus causing lower latex production(so the sales will increase but profit margin will still be low as it takes at least 2-3 month to partially pass the increase in cost to the customers).On a year-to-date comparison, both the financial year 2010 revenue and net profit were higher by 36 per cent and 45 per cent respectively following the higher sales and produc-tion capacity of examination gloves.

another article worth reading Stronger ringgit, costlier latex hit glove makers

Selected financial report of interest : RUBBER GLOVES

RUBBER GLOVES -M&P POSSIBILITY (CIMB)

read it at the smartbiz blog

Top Glove Corp yesterday said the industry is likely to consolidate as demand slows and costs rise but rivals think this is easier said than done. But industry players mainly agree that the sector’s big six, in terms of capacity, are likely to lead in takeovers of smaller rivals and not do deals between them. Rubber glove makers are facing slower demand growth as global fears over a pandemic flu disease subsides. Costlier latex and a weak US dollar are also affecting sales. Although takeovers seem attractive, there are hurdles like finding strategic fits and the challenge of combining different company cultures.

* In an interview with Business Times yesterday, Latexx Partners head of corporate services Dr Liew Lai Lai admitted her company is an attractive target but denied the company is up for sale to Top Glove. “Yes, they did visit us but it remains a market rumour. We have been receiving a few enquiries all along, it is not just Top Glove. While we’re open to a merger or acquisition, so far, we don’t see a strategic fit that would be mutually beneficial,” she said.

*Kossan Rubber senior manager of group corporate affairs Edward Yip said his company is only open to a deal if it results in value creation. “Bigger does not necessarily mean better. What matters is the bottom line. There has got to be consistent profits, productivity improvement and growth prospects. If a merger creates a bigger company but destroys value, what for?”

* Hartalega Holdings group managing director Kuan Kam Hon concurred and said consolidation among the top six is difficult “because all of us are strong individuals with our own set ways of doing business.” “We don’t see this happening at the moment. On paper it looks logical but in reality there are many hidden hindrance,” he said. (BT)

The news on consolidation is not entirely new. Among all the big six manufacturers that we cover, Top Glove, the industry leader, is the only company that is aggressively on the look out for acquisition in order to expand its market share. The current tough operating environment could provide opportunity for Top Glove to acquire a smaller competitor given that it now has RM299.5m net cash in hand.

BUY CALL BY CITIGROUP
DOWNGRADE BY MIDF
FROM HWANG DBS

Top 5 Tips to Build Wealth and Success

reading through yahoo and found a nice article to share and worth reading.

Top 5 Tips to Build Wealth and Success
Peter Gorenstein and Farnoosh Torabi Tuesday, October 5, 2010

Warren Buffett is worth $45 billion. That wealth isn't only a factor of savvy investing and good business — the "Oracle of Omaha" is also known as a penny pincher. Buffett still lives in the same Omaha, Neb., home he bought in 1958 for $31,500.
Follow his frugal formula, and you too may wind up with a lot more money than you ever dreamed.
This week Financially Fit covers five tips to build wealth and success.

1. Live Below Your Means.

Being wealthy isn't just a product of your salary or investment prowess; it's learning how to save.
"We can make a lot of money, you can make a little bit of money, but the second you spend all the money is when people get into trouble. Saving is the key to preserving your wealth," says Ed Butowsky, managing partner of Chapwood Capital Investment Management, a firm that manages money for wealthy individuals.
As many Americans realized during the booming real estate market, just because you think you can afford something doesn't mean you should buy it. Keeping an eye on your bottom line will pay dividends over the long term.

2. Bounce Back From Defeat

With nearly 15 million workers unemployed right now in the U.S., it's easy to get discouraged. Don't! Most successful and wealthy people have overcome obstacles and failure along the way. Steve Jobs was ousted from Apple when he was 30. Today, he's a billionaire and a legend. Plus, after getting fired, he created another billion-dollar media company, Pixar.
"Bouncing back from defeat is something all great achievers have. They have this undying belief good things will happen and will continue to happen," says Butowsky.
Take Michael Jordan. "His airness" was cut from his high school basketball team. Motivated by the rejection, Jordan became a star the next season. The rest is history.

3. Self-Promote

Regardless of the profession, the rich and successful tend to have a strong sense of self-worth — key to skillfully navigating an upward career path. Mark Hurd, who was ousted as CEO of Hewlett-Packard in August, couldn't be kept down for long. Using his business skills and connections, in September, Hurd was named president of Oracle. (Hurd and Oracle founder Larry Ellison are known to be close friends.)

4. Have Street Smarts

Bernie Madoff lived the high life for decades, scamming unsuspecting clients, with a money-making formula that proved too good to be true. Only afterward did we learn that with a little due diligence, most clients could have easily uncovered the fraud.
But it's not only the swindlers and the con men you have to watch out for. Many times, friends and family take advantage of the rich. Whether it's a handout or an investment idea, Butowsky advises his high net worth clients that in most cases, it's wisest to just say "no." The best way to do that: have someone else do it for you.
"You need to really set up a wall between you and your family," he advises. "If you don't want to give them (family or friends) money ... saying no is probably a good idea."

5. Buy Cheap

The rich can afford to splurge, but that doesn't mean they do.
John Paulson, a billionaire hedge fund manager, bought his Hamptons "dream house at a bargain basement price," according to Greg Zuckerman, author of the Paulson-based book, "The Greatest Trade Ever." The story has it that Paulson eyed the home while it was in foreclosure. Finally, on a rain-soaked day, he purchased the home on the Southampton town hall steps. He was the only bidder.
On New York City's Upper East Side, Michael's— The Consignment Shop for Women— has been a bargain-hunting destination for more than 60 years. "We have a good percentage of women who can afford to shop on Madison Avenue but really like the idea of saving that money," says proprietor Tammy Gates.
From Chanel to Gucci and Louis Vuitton, the store specializes in high-end designer merchandise for a reasonable price. Speaking of her clientele, Gates says, "they're wealthy for a reason. They recognize that bargains keep people wealthy. Paying top dollar when you don't have to doesn't make sense."

Selected financial report of interest : SUNWAY

SUNWAY
China MOU lapsed CONSTRUCTION
· Enters into MOU for a China property venture
Sunway announced yesterday that its memorandum of understanding (MOU) with the XuanCheng Municipal Government has lapsed and the company does not intend to enter into a definitive agreement. Recalled that Sunway had on 6 May 2010 entered into the MOU with
XuanCheng Municipal Government for the purpose of developing an integrated city, consisting of an international-standard entertainment park, exhibition centre, hotels, shopping malls, offices and residential units on land to be acquired from XuanCheng Municipal Government.

XuanCheng is a prefecture-level city in southeastern Anhui province, People's Republic of China. It lies 260 km to the west of Shanghai. Bordering the provinces of Jiangsu and Zhejiang, it covers an area of 12,340 sq km and has a population of 2.8m.
· Comments
We are concerned of this setback as we were not bullish on this venture. In terms of economic development, Anhui province lags behind that of its neighbour, Jiangsu and Zhejiang. Furthermore, industrial activities in Anhui province are mainly concentrated in Maanshan and Wuhu, rather than XuanCheng. We noted that GDP per capita of XuanCheng is RMB13,051 as compared to Sunway’s maiden property venture in Jiangyin, Jiangsu province which has GDP per capita of RMB91,538.
· Reiterate BUY call
Sunway remains our top BUY for the construction sector. This is premised
on (1) strong earnings growth of 67.6% in FY10, (2) undemanding forward
P/E valuation of 8.6x, (3) more landbank acquisition in the pipeline, and
(4) strength in securing overseas construction contracts. Our target price,
which is based on 10x P/E on mid FY11 EPS, remains unchanged at
RM2.61 as impact on FY11 earnings is negligible. Sum-of-parts valuation
is RM3.14
full report refer to ECM

Selected financial report of interest : HONG LEONG, MMC, E&O

Hong Leong: Shareholders give nod for EONCap buy
Shareholders of Hong Leong Bank Bhd (HLBK MK, Hold, TP: RM9.12) passed the resolution for the acquisition of the assets and liabilities of EON Capital Bhd for RM5.06bn at its EGM. HLBB’s MD and CEO Yvonne Chia added that she could not comment con EONCap’s ongoing court case. “Whatever happens, we are waiting for the due process and we are positive about it,” she told. On whether HLBB would extend its 30 Nov deadline for EONCap to accept its takeover offer
should the court case turn out to be longer than expected, HLBB’s non-ED said it was “too premature to comment at this stage”. (Financial Daily)

MMC :confirms UEM bid, awaiting government decision
MMC Corp Bhd said that it had submitted a preliminary proposal to the federal government to acquire UEM Group Bhd but had yet to receive “any indication” from the government on its proposal. “MMC will lead a consortium for the proposed acquisition and to date, we have not approached the Employees Provident Fund and / or Permodalan Nasional Bhd to be
our partners,” MMC said in a reply to a query to Bursa Malaysia. MMC is understood to have submitted its proposal to the Ministry of Finance in Aug. The move is seen as a “circuitous” way for MMC to acquire the toll road concessionaire, Plus Expressway Berhad (PLUS MK, Hold, TP: RM4.36). (Financial Daily)

E&O: Makes Penang Turf Club bidding list
Two foreign property development companies – one based in Singapore and another in Hong Kong – and Eastern & Oriental Bhd are among seven candidates shortlisted to bid for the new Penang Turf Club (PTC) development project. Most of the remaining candidates are headquartered in Kuala Lumpur. Those shortlisted for the tender have the option of buying
the 23.09ha site for RM200 per sq ft or developing the site jointly with PTC. It is learnt that those who submitted for the second round of bidding, which closed on 30 Sep had to pay a tender deposit of RM500,000. When contacted, E&O’s ED confirmed the group had submitted a bid in relation to the PTC land. The gross development value of the project was estimated at around RM1.5bn, based on the present market value of the PTC land of about RM500m, the sources said. (StarBiz)

Pre-budjet Rally?

Just read through the MAYBANK report onBudget 2011
some of the highlights from my remiser comments:

Construction (Overweight) -
Major winner thanks to major projects. The beneficiaries will also flow down to the building material players. Buys:

Construction: GAMUDA (TP: RM4.38), IJM (TP: RM5.50), WCT (TP: RM3.30), SUNWAY (TP: RM2.35) and HSL (TP: RM1.90)
Long steel: ANNJOO (TP: 3.05) and KINSTEEL (TP: RM1.00)

Property (Overweight) - No changes in taxes but watch out for imposition of a higher cap on loan-to-value ratio (LVR) rule. Overweight on the developers with strong demand to be driven by ample liquidity. Buys:
Property: SUNCITY (TP:RM5.20), MAHSING (TP: RM2.30) and GLOMAC (TP: RM1.84)
REITs: SUNREIT (TP:RM1.15), CMMT (TP: RM1.20), AXREIT (TP: RM2.28), ARREIT (TP: RM1.19).

Tobacco, Brewery and Gaming (Neutral) - Regular but manageable excise duty hikes Tobacco - Given the resultant 70sen/pack price increase effective today, we expect BAT and JTI's earnings to continue heading in opposite directions. A larger factor is likely to be the continued shift from BAT's premium Dunhill brand to the illicit sector mainly and secondarily to JTI's value Winston brand.
Sell BAT (TP: RM43.00) & Buy JTI (TP: RM6.00) Brewery - Both listed brewers, CARLSBG & GAB will be able to withstand a measured single-digit percentage increase in duty. We prefer CARLSBG mainly because of greater leverage to the Singapore market, which is enjoying a boost from tourism and the success of the casinos.
Buy CARLSBG (TP: RM5.50) & Hold GAB (TP: RM8.40) Gaming - small chance of a gaming duty increase.
Buy GENTING (TP: RM10.45), Sell GENM (TP: RM2.40).

BRITISH AMERICAN TOBACCO--SELL(pre-budget price hike)

year in year out it never fails to highlight this kind of pre-budget price hike for tobacco, alcoholic drinks and even empat ekor(gaming) businesses and the conclusion is always SELL and you know why?

BRITISH AMERICAN TOBACCO
Cigarette price hike pre-Budget CONSUMER
· Significant 70 sen increase in retail price
Sin Chew Jit Poh reported yesterday that the price of 20s packs of
cigarettes would be raised to RM10.00 from RM9.30 effective today, citing
the Federation of Sundry Goods Merchants’ Association as its source. We
understand that the Association was notified by BAT of the price increase
via a letter that it received on Saturday. There has yet to be an official
announcement by any of the Big 3 tobacco players, Ministry of Finance or
the Customs Department.
· Likely excise duty hike in budget in addition to cess
The 3.5 sen per stick retail price hike is BAT’s move in anticipation of
lower sales volumes resulting from an increase in excise duties widely
expected close to the Budget 2011 announcement on 15 October 2010,
as well as the impending implementation of the cess of 0.5 sen per stick
announced by the National Kenaf and Tobacco Board (LKTN) on 10
August 2010. Excise duties currently stand at 19.0 sen per stick. Based
on the historical tax-led price adjustment of 1.5x over the excise duty hike
and taking into account the cess, we anticipate a 1.8 sen rise in excise
duties to c.20.8 sen.
· Earnings estimates unchanged
We are maintaining our earnings estimates as our assumptions already
imputed a 7.5% increase in cigarette prices and corresponding 5.5%
decline in sales volumes.
· Downgrade to Sell
DCF-based target price held at RM43.00 but lowering our
recommendation to a Sell. Given the recent run-up in BAT’s share price,
our prospective FY10 net dividend yield of 5.0% makes the stock less
attractive from a defensive stand point. The tobacco sector continues to
face strong negative headwinds of tightening regulation and competition
from high levels of illicit trade (37.5% in FY09)

Investors taken for a ride in scam

Today front page of The Star, so easy to be cheated or Malaysians lack of investment opportunities? After gold bar investment, fraud foreign currency trading, seaweed plantation, coffee house, Nasi Kandar,earthworm......now kiddy ride machine.

Investors taken for a ride in scam

By JOSEPH LOHsunday@thestar.com.my

PETALING JAYA: Hundreds of investors who were lured into taking part in a kiddy-ride machine scheme have been cheated of their money amounting to millions of ringgit.

The investors, who were lured with the promise of attractive monthly returns, have been duped into paying as much as over RM80,000 each to “invest” in kiddy ride machines that would be placed in several shopping malls around the country.

It is believed that hundreds of people have fallen victim to the scam operated by a Kuala Lumpur-registered company and lost millions in the last few months.

Syndicate members, who approached their victims at shopping malls or contacted them by phone, even went to the extent of applying for credit cards on the victims’ behalf so they could come up with the money for the investment.

One victim who said he had not received any returns, now owes a bank RM35,000 in credit card charges.

Others claimed they received cheques but there was no more payment after a few months. Victims were initially given various excuses but subsequent calls made to the company’s office went unanswered.

The Selangor MCA Complaints Bureau has received 80 complaints so far this year, with losses amounting to almost RM2mil.

Bureau head Datuk Theng Book believes many more people could have been similarly duped.
The majority of victims lost between RM20,000 and RM40,000, with one losing RM84,000.
He said victims of the scam were mostly from the middle-income group.

“The syndicate typically targets the middle-class group, especially those not business-savvy but hoping for better returns on their money,” said Theng, who is also the MCA’s head legal adviser.
Theng said victims had little recourse to recover their money, as current laws as well as the nature of the scam made it difficult.

“They (scammers) find loopholes in the law and exploit them. They are operating just below the law, and there are many uncertainties,” he said, adding that the police and Bank Negara had not been able to stamp out their activities.

“It is an enforcement problem. Either we do not have the expertise to enforce it, or the agencies are looking and waiting for each other to act. In the end, the victims suffer,” he lamented.

He said enforcement agencies should use all the laws available to bring scammers to book.
“It can be classified as deposit-taking because they collect money, promising returns. This falls under Bank Negara as only licensed financial institutions can collect deposits. They can also use the Anti-Money Laundering Act to nab these people.”

Theng said one syndicate had been running scams around the region for years.
“They constantly change the product or the company name. Within six months, they shut down and start a new one. And then they move and sell a new product,” he said.

A Bank Negara spokesperson said victims of the scam could lodge a report with them so that they could investigate and take the appropriate action.

BNMTELELINK can be contacted at 1-300-88-5465 or via e-mail at bnmtelelink@bnm.gov.my.
To check instances of previous fraud cases, visit www.bnm.gov.my/microsites/fraudalert/03_action.htm.

HAI-O SELL TARGET PRICE 1.61 by OSK....very drastic downgrade

SELL 
Target RM1.61
Previous RM3.57
Price RM3.26
CONSUMER (RETAIL)
Hai-O is involved in wholesaling, retailing,
multi-level marketing and pharmaceuticals,
and also operates modern Chinese
medicinal clinics.
Stock Statistics
Bloomberg Ticker HAIO MK
Share Capital (m) 202.2
Market Cap (RMm) 659.1
52 week H│L Price (RM) 4.93 2.40
3mth Avg Vol (‘000) 635.2
YTD Returns -7.6
Beta (x) 0.72
Major Shareholders (%)
Tan Kai Hee 9.61
Akintan SB 7.17
Excellent communication 5.13
Share Performance (%)
Month Absolute Relative
1m 0.9 1.0
3m -11.7 -22.7
6m -26.2 -32.9
12m 46.4 6.7
6-month Share Price Performance
2.30
2.80
3.30
3.80
4.30
4.80
Apr-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10
Hai-O’s 1QFY11 were below our and consensus estimates, with revenue and net
profit diving 63.1% and 57.7% y-o-y respectively. The poor results were mainly
attributed to its MLM division, which reported a sales contraction of 73% amid slower
membership growth. This is, however, partially offset by the sales improvement at
other divisions. Despite the weak results, EBIT margin improved by 2%-pts on higher
operating efficiency, sales of higher margin products, and the weakening of USD
against RM, which has reduced importat costs. Given that the results were
substantially below our expectation, we cut our FY11/12 earnings forecast by 52%-
55%. Our TP is hence reduced to RM1.61. Downgrade to SELL. full report please get it from OSK

BJ CORP, SAPURACREST,HAI-O

BCorp posted net profit of RM125.46 million in the first quarter ended July 31, 2010, up 214% from RM39.9 million a year ago. - The better performance was also due to lower investment related expenses of RM17.62 million compared with RM83 million a year ago. - BCorp's revenue rose 8% to RM1.74 billion versus RM1.61 billion a year ago. - Pre-tax profit was RM237.78 million, up 30% from RM182.81 million. - Earnings per share were 2.88 sen versus 1.01 sen.

SapuraCrest posted net profit of RM53.24 million in the second quarter ended July 31, 2010, which a marginal 1.68% increase from the RM52.36 million a year ago - Due higher contribution from the installation of pipelines and facilities (IFP) and the drilling division.

Hai-O's net profit fell 57% to RM7.84 million in the first quarter ended July 31, 2010 from RM18.52 million a year ago as the multi-level marketing (MLM) division recorded lower revenue. - Pre-tax profit was RM10.79 million, down 59% from RM26.28 million a year ago while revenue fell 63% to RM54.75 million from RM148.57 million. - Earnings per share were 3.91 sen versus 22.17 sen.

What are the risks in buying call warrants?-by OOI KOK HWA

from the star
http://biz.thestar.com.my/news/story.asp?file=/2010/8/11/business/6832498&sec=business

Prices are influenced by intrinsic value and time value


LATELY, we notice that there are growing numbers of call warrants getting listed on Bursa Malaysia. Even though there are many call warrants issued and traded in the market, the trading volumes of these call warrants are relatively low compared with the normal warrants.

Besides, a lot of investors have been complaining that they are unable to make money from the call warrants that they have bought.

Many investors cannot differentiate between a warrant and a call warrant.

A warrant is a transferable option certificate issued by a company which entitles the holder to buy a specific number of shares in that company at a specific price (or exercise price) at a specific time in the future. It is normally issued by a listed company.

A call warrant (like a call option) also gives investors a right to buy stocks in a company within a fixed period of time. However, warrants are issued by listed companies whereas call warrants are issued by investment banks.

An investor monitoring share prices at a private stock market gallery in Kuala Lumpur. Many investors have been complaining that they are unable to make money from the call warrants that they have bought.

If investors exercise the rights in warrants, they will receive the listed companies’ shares.

Meanwhile, upon maturity of call warrants, investment banks will only pay investors in cash if the closing price of the listed companies is higher than the exercise price of the call warrants. Investors will get nothing if the closing price of the listed companies is lower than the exercise price.

There are many risks in buying into call warrants. Call warrants have shorter maturity period as compared to warrants. Normally, warrants have maturity period of five years or more whereas call warrants have very short maturity period of less than a year.

In many instances, investors who have bought into these call warrants do not realise that their call warrants have expired. Nevertheless, call warrants will be automatically exercised upon the maturity date if the settlement price is higher than the exercise price.

As mentioned earlier, a lot of call warrants are not actively traded in the market. In fact, a majority of them do not have trading volume on a daily basis. We believe one of the possible reasons is that some of these call warrants are getting nearer to maturity date.

The prices of call warrants are influenced by their intrinsic value and time value.

If the call warrants are getting nearer to their maturity date, the time value will be closer to zero. In addition, if the mother price of the listed companies is being traded at a lower price than the exercise price plus the premium that the investors have paid for the call warrant, the market price of these call warrants will fall below their original issue price.

For those who have subscribed into these call warrants, rather than cutting losses and selling them into the market, they will likely hold on to the call warrants and hope that the mother price will recover one day. Unfortunately, in many instances, investors get nothing upon maturity of these call warrants.

Given that the gap between the buying and selling prices is quite big for some call warrants, many investors find it difficult to buy or sell the call warrants. Hence the fact that call warrants usually have low trading volume implies that this is an instrument with very high liquidity risks.

The main reason for a lot of investors to purchase call warrants is the hope of getting payments from investment banks. However, investors need to understand that the majority of the call warrants are European-styled, which means investors cannot exercise them before the maturity date.

The majority of call warrants are settled in cash for the difference between closing price and exercise price. The formula for cash settlement amount is equal to the number of call warrants x (closing price – exercise price) x 1/exercise ratio. Hence, investors need to pay attention to the exercise price, exercise ratio and premium that they have paid.

For example, the exercise price on Call Warrant Company A (Company A CA) is RM10, the exercise ratio is 10 Company A CA to 1 Company A share and the premium investors need to pay is 10 sen for each Company A CA. To the call warrant holders, in order to breakeven, the mother share price of Company A needs to go higher than RM11 or RM10 plus RM1 (10x10 sen, which is the total premium that they have paid).

Lastly, investors need to pay attention to the fundamentals of the mother companies and check the potential price appreciations for these companies.

Companies with good prospects will have higher possibilities of price appreciation and therefore lower risk of buying into the call warrants.


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

GAMUDA,JAYA TIASA & OTHERS

Gamuda's earnings surged 77% to RM76.61 million in the fourth quarter ended July 31, 2010 from RM43.29 million a year ago, due to higher contributions from all divisions and expects to perform better in the next financial year
- Revenue however declined 24% to RM714.78 million from RM942.24 million a year ago.
- Earnings per share were 3.79 sen versus 2.16 sen.
- For the financial year ended July 31, 2010, earnings rose to RM280.69 million from RM193.69 million.
- Revenue was lower at RM2.45 billion compared with RM2.73 billion in FY09.

Jaya Tiasa posted stronger set of results for the first quarter ended July 31, 2010.
- Net profit was RM22.69 million versus only RM791,000 a year ago.
- Revenue rose 12% to RM185.5 million from RM166.3 million.
- Pre-tax profit jumped to RM30.1 million from RM2.1 million.
- Better results in revenue and pre-tax profit were mainly due to improved proceeds from logs sales with 7% increase in average selling price;
- Better margin of plywood sales with 16% reduction in costs of production due to higher production volume;
- 66% increase in sales volume and 9% higher average selling price of fresh fruit bunches (FFB).

Bursa Malaysia has sought court action to force Golden Plus to compel it with the directives issued by Bursa Malaysia and consent order over the appointment of a special auditor.
- The directives and consent order are with regards to the appointment of a special auditor (SA) to review the affairs of GPlus and its subsidiary companies.
- This was in relation to its compliance with the Listing Requirements, including proper and accurate disclosures to its shareholders.

Formis Resources Bhd, which is undertaking the RM69.0 million government e-courts contract, said the implementation is on schedule and is about 90% completed.
- Formis executive vice-chairman and chief executive officer Datuk Mah Siew Kwok said Formis had a solid recurring income stream of RM61.0 million from maintenance and service contracts and an order book of RM194.3 million order as at Sept 15.
- He said the group also has a strong pipeline of potential projects, having tendered for a total of RM1.36 billion worth of contracts.

Supermax expects to achieve nearly RM1 billion in annual sales by the end of the current financial year Dec 31, 2010 driven by world demand and good marketing strategy.
- This would be 20% above the previous annual sales of RM800 million.

Buying and selling signal --- by OOI KOK HWA

Buying and selling signal

This article by Ooi Kok Hwa, an investment adviser and managing partner of MRR Consulting, tackles some basic skills needed to detect the buying and selling strength of a stock price.

THE price movement of a stock is dependent on the demand and supply of the stock, which in turn is influenced by the buyers’ buying interest and the sellers’ selling interest.

Every buyer or seller has different purposes when entering into a trade. The followings are general “rules”, which provide us with some hints on whether the stock price will probably go up or down.

Investors should not view these “rules” as a foolproof method that will hold true all the time. There are certain occasions that market manipulators might be using these “rules” to mislead the general public.

Rule 1: Buyers are showing small orders and sellers are showing big orders. However, the stock prices are holding quite well – buy signal.

When we want to purchase a stock, we will call our remisiers to check on buying or selling orders on the stock. A lot of selling orders with only a few buying orders on the stock may imply that the stock price would come down.

However, if the stock prices are holding quite well, it could mean there are some net buyers accumulating the stock.

The reason for this is buyers may refuse to show their buying orders to attract sellers to sell at the buyers’ buying price.

Showing high buying orders may delay selling interest, as sellers will wait for the buyers to buy at their selling price. Hence, it is a “buy” signal if we notice the above rule on any stock.

On the other hand, if buyers have big orders and sellers have small orders while the stock price continues to drop, it might be a “sell” signal that this stock has some big sellers that are not willing to show their selling orders but they need to sell the stock now.

Showing big selling orders may cause panic on the stock. Hence, to sell at higher prices, sellers will try to hide their selling orders.

Logically, if a stock has a strong buying interest, the stock price should go up instead of come down. Hence, the weakening stock price may imply that sellers outnumber buyers.

Rule 2: The overall market is weak but your stock price is moving against the overall market trend – buy signal.

In a down market, if a stock that you own is inching up steadily despite the overall weak stock market sentiment, this may imply that there are some net buyers on this stock.
We view this as a “buy” signal where buyers are eagerly accumulating the stock in spite of the weak market. In most instances, the stock price will move higher the moment the overall market sentiment recovers.


In contrast, if the overall market is moving up but your stock is being beaten down, it is a “sell” signal. Normally, insiders are aware of certain crucial bad news that is still not available to the market yet.

Rule 3: Stocks carry a lot of bad news and are trading at high volume but stock price remains stable – buy signal.
Sometimes a certain stock is facing huge bad news but the stock price is holding on quite well. Normally, it may imply that buyers are not worried about the market concerns on this stock. The current stock price may have discounted all the bad news.

In contrast, if a stock, despite having all the good news in the media, continues to see its price decline, this is a “sell” signal that shows there are certain sellers who have some concerns over the stock, but the overall market is still not aware of the news.

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

BUY STOCKS WITH LOW PRICE-TO BOOK RATIO BY OOI KOK HWA

Buy stocks with low price-to-book ratio
Personal Investing
By Ooi Kok Hwa


A fortnight ago, we elaborated on four of the seven criteria used in stock selection. In this week's article, we continue with the remaining three criteria: B for Book Value, H for Health and M for Management.

THE book value of a company is an important indicator of a company’s value as it tells us what the owner’s cost of a company is. No owner would be willing to sell a healthy and growing company at below cost unless the company has problems that are not known by general public.

Normally, we use book value per share (total shareholders’ funds divided by the outstanding number of shares of a company) to compare with the current stock price.

Price-to-book ratio is computed by dividing the stock price by a company's book value per share. It gives us the number of times the current stock is selling above or below the book value.

A ratio of lower than one means the current stock price is trading at lower than its book value.

One of the selection criteria is to select stocks with lower price-to-book ratio.

Benjamin Graham in his book entitled Security Analysis said we should consider buying stocks with price-to-book of lower than 1.5x. The number 1.5x or below implies that the maximum price that we pay for a company should not exceed 50% of the owner’s cost.

Due to the implementation of new financial reporting standards, there have been a lot of write-downs and impairment on certain assets of listed companies.

As a result, we can safely say that the current book value of these companies should reflect the owner’s real cost.

The price-to-book ratio is also frequently used in valuing banking, finance and insurance companies. In most instances, it is quite difficult to search for financial institutions that are selling at below their book values. This is because the book value is mostly in cash.

Normally owners would not accept any value that is less than the book value. This explains why most analysts use the price-to-book ratio in valuing financial institutions.

H for Health refers to the financial health of a company. We use debt-to-equity ratio (D/E ratio) to determine the level of borrowings of a company.

It is computed by taking a company's total debts and dividing it by a company's total shareholders’ funds.

A lower ratio implies that the company is using less debt but more equity to fund its operations. Even though cost of borrowing is lower than cost of equity, most investment gurus prefer companies to use less debt.

It will be even better if we are able to find companies that are cash rich and have zero borrowings.

According to Graham, a good company should have a D/E ratio of less than 0.5x. It means that for every RM1 the owner puts into the company, the maximum amount that he should borrow is 50 sen.

The rationale is to look for companies with lower financial risk - lower borrowings mean companies pay less interest expenses and face lower bankruptcy risk.

M for Management refers to companies with high management quality. It is always very difficult to determine the management quality of a company.

Almost all investment gurus, like Graham, Philip Fisher and Warren Buffett say that the management quality is one of the most important factors in stock selection.

A good management should exhibit unquestionable management integrity and try their best to maximise shareholders’ wealth through high dividend payment and capital gains.It is almost impossible for each listed company to consistently show high profit during all periods, especially in a weak economy.

However, a good management will make sure that they are able to perform better than their peers even in the toughest business environment.


The writer is a licensed investment adviser and managing partner of MRR Consulting.