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.