Reading analyst reports can be really frustrating.Different analysts have very different opinions.
But analyst reports are useful for us to gather data for research.It’s better to deduce from the data ourselves than listening blindly to analysts.
In addition,analysts are paid commission for recommending certain companies.
Hence,I’ve created a new blog to share analyst reports to my readers.
Please visit my new blog.
The current rally in U.S is definitely a bear-market rally.Meanwhile,in Malaysia,it’s a political rally. Local funds (private / government) have been holding up KLCI since Dec 2008.Whether they are instructed to do so does not matter.
Comparatively,companies in Bursa Malaysia are much more expensive than companies in Singapore, Hong Kong and other countries in ASIA.It’s sad to say that the current rally will mark a starting point for further decline for stocks in Bursa Malaysia.
There are a few reasons for the continuition of decline in Bursa Malaysia
1) Malaysian stocks are relatively expensive. Foreign investors may wait at the sideline / go to Hong Kong & Singapore.
2) Political uncertainties from now until next election. Or maybe for the next 10 years as capable leader is not yet produced.
3) Weakening export. U.S & Europe are still in recession.
4) Weak consumer sentiment and rising unemployment. This can be seen in retail sales and home sales. The government and media are trying very hard to cover it up. But you can actually see weakening sentiment with your naked eyes.
5) Foreign investors are saying “Tak Nak” to Malaysia. Lack of transparency,corruption and small market hinder foreign investment. Big foreign funds may go to Vietnam (Low cost with 80 mil people), China & India (full potential growth story), Singapore & Hong Kong (investment friendly countries)
My advice is not to buy during this rally. It may looks ‘yummy’ but it’s just a mirage.Start to invest again when the bear starts to rule.
Mr. Market is the character Benjamin Graham uses to explain illogical mindset of traders . The story goes something like this:
Imagine that you own 50% of a business, which you purchased for RM3,600 mil. Mr. Market approaches everyday to tell you what he thinks the business is worth based on latest news. And everyday, he offers to either buy your business for a price which he forms in his head, or, to sell you his share of the business for that price.
Each day, however, he quotes you a different price from the day before. Sometimes the price he quotes sounds about fair. Sometimes it’s high. Sometimes it’s low.
Let’s say the whole business is producing on average, RM 1,200 mil free cash flow with net profit of RM 600 mil. What is the value of the business to you?
By owning 50% of the business, you own RM 600 mil FCF and net profit of RM 300 mil per annum.You paid around RM 3,600 mil for this business a year ago. Hence, you bought this business for 6 times its FCF and 12 x earnings.Let’s say the nature of the business is stable and you anticipate the FCF and net profit will increase over time,you might not want to sell it unless Mr. Market offers you a ridiculously high price.
One day, Mr. Market offers you an additional 40% extra of what you paid a year ago. He offers RM 5,040 mil to for your holdings.Most of us will let go after making 40% profit per annum.
But if you are a sensible businessperson, you won’t let Mr. Market’s daily communication determine your view of the value of 50% interest in the business. He is a sweet talker and convince you with various economic prediction,charts,information and etc to create doubt and fear in you.
Most of us will be swayed by Mr Market ‘s offer.
But as a sensible business owner, you may be happy to sell out to him when he quotes you a ridiculously high price, and equally happy to buy from him when his price is low. But the rest of the time you will be wiser to form your own ideas of the value of your holdings, based on full reports from the company about its operations and financial position.
Remember, fluctuations in the market price for a given business don’t really affect the fundamental value of that business. If you own a share in a company, the value of each share is a function of the business ‘s profitability/cash flow/management/branding and not a related to the price quoted in Bursa M’sia.
So, as long you understand the business you’re buying,today’s market price is totally irrelevant.
Mah Sing Group involves in construction, management, and development of residential, commercial, and industrial properties in Malaysia. The company also involves in the manufacture, assembly, and sale of a range of plastic molded products in Malaysia and Indonesia.
Around 80% of its revenue originates from property development and another 20% from its plastic division.Currently,Mah Sing is in net cash position.In times of turbulence,”Cash is King”.
By comparison to other property developers,its landbank is small.Moreover,it does not have revenue from property investment unlike Sunway and IGB.It does not have a REIT as well.
With current financial strength,Mah Sing is well positioned to:
1) Buy cheap lands in M’sia and other countries. Take note that Mah Sing has not venture overseas unlike SPSETIA,GAMUDA and GUOCOLAND
2) Eat up competitors to enhance landbank because good lands are limited
3)Increase J.V projects and benefit from current low construction cost
4)Capital repayment and buy back shares if Mah Sing does not have any future plan which I doubt
If you check its shareholders, Datuk Seri Leong owns around 40%,Capital Group 9.7% and Amanah Saham Bumiputra owns 14%.
What intrigue me was Amanah Saham Bumiputera has been accumulating Mah Sing ‘s shares in an aggresive mode.Could there be insider news?
Based on current,Mah Sing will declare 5% (8sen) dividend in mid April upon closing its book for the year.This stock has little probability to fall to RM 1.25 level again due to high percentage of institutional owners which are actively investing in this company
Risk of investing in Mah Sing:
1) Weakening property industry outlook
2) Bad capital deployment strategy
Weighing its risk and reward,Mah Sing is a good buy at around RM 1.60
First of all,i would like to apologize to you guys for MIA for quite a while. I stopped writing blogs because i was warned not to issue out sensitive information which could jeopardize my career.
So,here I’m again with new blogs theme….now without sensitive information which can make me as famous as Jeff Ooi.
Starting now,I will only post companies with good prospect with least sensitive information.
I hope you guys will tag along.
Hirotako Holdings Berhad, an investment holding company, engages in the manufacture and sale of automotive components in Malaysia. It offers safety restraint systems, including seat belts, airbags, and steering wheels to original equipment manufacturers. The company also provides acoustic, thermal, and composite materials, such as noise dampers, sound insulation and absorption products, interior trims, and electrical components. In addition, it offers precision metal forming and machining components and services, including steering wheel, air compressor, shock absorber, and seat belt; components for electrical and ventilation fans; components for audio and video, air conditioner, washing machine, refrigerator, gas cooker, and television cathode ray tubes; and CNC machining components, such as steering and motor shaft.
Hirotako Holdings Bhd is the only airbag manufacturer in Malaysia. Any vehicles which want to install an airbag (import/local) must go through Hirotako.
Hirotako has been paying dividends of four sen per share. At the current price of 55 sen, the company has a dividend yield of 7.25%. It has P/E around 10, fully loaded with cash for acquisition, no debt, low Price/Book Value and actively buying back its own shares.