Thursday, November 24, 2011

Yes I was given 1st Hand Inside News.. So What !!!

When H was trading at 20++ sen I was given the news that it would skyrocket to 60 sen because The N's son would be on board. If I said news, it is really 1st information. Not the news which already tracking down to Macik at wet market. I was told to buy some even though he knew me that I am always against that source of news. Few days later it shoot passed 80 sen. I told him to be careful. At the same time, I was told it would be at 1.20 .... I warned him again then again I was told it would be 1.60 sampai lah it reached 2.00. At that point of time I was like " who am I to tell him to be careful, he is making money all the way up from 30 sen to now 2.00 ".  At the same time I was told it would hit 2.50 .... Of course he bought at 30 sen, then 1.10 and then 1.40 which I am not sure in between he did the days trade or not. After it has be designated ( which we saw lost half its price in matter of days ) , I was again told that the Big Guys would support it at least up to 1.50 ... Yeah Miracle happened it gyrated up from 90 sen to 1.50 ... Then All of sudden, the N's son I dun want to be in board liao... CB ... like that also boleh kah ? Of course the beloved H dropped from 1.50 to 70++ sen in few days ..... now it is back up again to 1.00++ at the time of writing.... I was speechless when I found out that he is still holding it ? I mean I just can't find the logic to play a game which the rules of the game could be changed by the host anytime ... It is rather stupid to play it... Of course the ones who make money from this game would laugh at me to say that but I believe majority of the game players are losers and they would come to me and say " damn, you are so right about it from the beginning "....
So am I smart or am I stupid ? .... I just choose not to play the game.... Malaysia Corporate Governance sucks lah .... In fact it is all the same everywhere ....

Thursday, October 27, 2011

Copy and Paste

Have been busy these few weeks..... There is nothing much to say... Europe debacle issue is settling down... I didn't go  hunting for the past weeks because there is  there is no point to carry a gun without ammo ...
nothing much to say here so I will just copy and paste here ....


Rubber Value Chain: Time to buy downstream names (DBSV)

Rubber Value Chain
Time to buy downstream names
• 3Q11 data show slower EU/US consumption, but Chinese/Japanese NR demand pick up
• Expect margin pressure on downstream operators to ease from 1Q12 onwards
• Recent marketing trip reveals limited exposure to downstream names
• Top picks: JA Wattie and Hartalega; cautious on mid stream processors/logistics counters over next 12 months

Latest NR data in line. IRSG’s October bulletin revealed a recovery in Japanese consumption (+3% q-o-q following disruption in 2Q11 post-earthquake) and return of Chinese buyers (+26%), as rubber prices eased in 3Q11. However, US and EU consumption fell 16% and 13%, respectively, following strong 1H11 data. Rubber output in major producing countries saw a seasonal rebound (wintering ended in 2Q11 in Thailand), by 22%-96%. With demand and consumption numbers in line, we are retaining our forecasts for the rest of the year. We expect TSR20 prices to average US$4,675/MT in CY11, implying US$4,241 in 4Q11.

Hartalega and JA Wattie are top picks. We like the downstream segment and our top pick is Hartalega. It is both cost and capital efficient, with superior margins (28% vs 16% industry average) and ROE (36% vs 22% industry average). Its dominance in the nitrile market (c.25% share) and innovative R&D also give it strong pricing power. A weaker price outlook also does not deter our choice in JA Wattie - its strong volume growth (FY10-13F FFB and rubber CAGR of 46% and 11%, respectively) would still translate into 3-year earnings CAGR of 39%.

Downstream under-owned. Our recent marketing trip to Jakarta, HK, KL and Singapore revealed limited ownership in downstream rubber glove makers. We see this as an opportunity to increase exposure, as we expect recent margin pressure from high rubber prices to ease in 1Q12. We expect CY12F NR prices to drop 9% y-o-y as supply moves from 172k MT deficit to 183k MT surplus with rising supply from trees planted during 2005-07.

Still cautious of mid stream processors/logistics counters. Despite its strong business model and balance sheet, we are cautious of GMG in anticipation of 17.1% y-oy decline in 2012 core profit (due to lower rubber prices). For Goodpack, we see slower rubber trade flows from decelerating GDP growth and higher leasing costs crimping profit growth over the next 12 months.

Takeaways from marketing trip
We recently went on a marketing trip to Hong Kong, Jakarta, KL and Singapore. The following are key takeaways and feedback.

Moving to supply surplus next year
Investors we met were generally positive on rubber demand from emerging markets, but were surprised by our view that the natural rubber (NR) market would shift from deficit of 172k MT in 2011 to 183k MT surplus in 2012. The incremental rubber supply would come from 788k ha of rubber trees that were planted during 2005-07, which should start maturing from 2012 onwards (rubber trees take 6-7 trees to mature and produce latex). Our surplus expectation resulted in our below consensus NR (TSR20) price of US$4,675/MT.

Tightness in Synthetic Rubber
Our audience was generally unaware of the current tight synthetic rubber (SR) market, which is due to reduced supply of butadiene, the key material used in the production of synthetic rubber. A major development in the industry is the discovery of shale gas in the US, which had depressed natural gas prices there. This caused petrochemicals crackers to switch feedstock to ethane (natural gas derivative) from naphtha (crude oil derivative). As the butadiene yield from ethane is 4 times less than that derived from naphtha, butadiene supply shrank. The resultant tightness in the SR market provides support to NR prices, and hence, we do not expect NR prices to collapse despite our expected surplus in NR next year.

Top picks – JA Wattie and Hartalega
Given our expectations of lower NR prices over the next 12 months (CY12 TSR20 price of US$4,251/MT from US$4,675 for CY11), we prefer downstream glove makers in the rubber value chain. We should see the full impact of lower NR prices starting from 1Q12 – that would reverse some of the margin pressure from high rubber prices this year.

We like the downstream segment of the value chain, and our top pick is Hartalega (the world’s largest nitrile glove producer). Our choice is supported by the following:
1. Hartalega is a cost efficient producer, as demonstrated by its superior operating margins (28% versus 16% industry average). The competitive advantage stems from its ability to develop in-house equipment which enables the group to produce up to 30-35k gloves per hour versus peers’ 15- 18k gloves per hour.

2. The group has strong pricing power due to its lead in the nitrile glove market (c.25% share).

Despite expectations of softer rubber prices, we also like JA Wattie an Indonesian upstream planter due its strong production profile (3 year FFB CAGR of 46%, and rubber 11%). The strong volume growth expectations will support 3-year earnings CAGR of 39%.

NR demand and supply outlook
Recovering Chinese and Japanese consumption
Preliminary 3Q11 data from IRSG (International Rubber Study Group) reveals a recovery in Japanese consumption post Mar11 earthquake (+3.2% q-o-q, +0.3% y-o-y). Demand also recovered in China following a drop in NR prices and rebuilding of inventories in the quarter (+25.9% q-o-q, +3.5% y-o-y). This contrasts a slowdown in the US and EU following very strong consumption in 1H11.

Seasonal production boost with end to wintering period
Rubber production increased q-o-q in 3Q11 by 22%-96% in most of the rubber producing countries due to end of wintering period in 2Q11. However Indonesia’s production fell 9% as planted areas south of the equator entered the wintering period.

DBS Vickers 4Q11F outlook
With overall 9M11 global consumption and production close to our projections for CY11, we are maintaining our current supply/demand forecasts.

We expect production to increase q-o-q in 4Q11 as most rubber producing countries approach peak production season. On the demand side, we see 3Q11 trends continuing into 4Q11, recovery in China and Japan offset by slower growth in the US and EU.

In terms of prices, we expect 4Q11 TSR20 price to average US$4,241/MT to meet our CY11 average of US$4,675.


Source/转贴/Extract/Excerpts: DBS Vickers Research
Publish date:27/10/11

Wednesday, October 5, 2011

Don't Keep Asking Lah If You Are Not Ready To Into It !!!


I have been frequently asked about my opinion about the market. Everyone has their own opinion about it. As you could sense in this blog, I think the market is in kind of cheap valuation. I told the ones who asked me to get into action. I may not be right about the market. Of course people don't have to buy my opinion, but it is kind of bored to listen to the same question every few days by the same person. I am not God and I can't predict the market precisely. But, don't give me this " Long Ugly Way To Go " when the DOW plunge 3-4 % every now and then. Market fluctuates in this kind of macro environment. Yes, you could wait and see, that is your opinion I respect that. The ones who wish market to go down further are the ones who are not in the market. Excuse me, you don't have to tell me directly lah. I am in the market. My friends are in the market. My other friends are in the market. Of course I all of us doesn't want to see it go down further. A piece of advise for the ones are not in the market yet. It is rude to tell the one has long position that market will get uglier. If you are happy that market goes down further, keep it to yourself.
I still opine that the market is oversold. You don't have to believe me, but you shall at least listen to the greatest investor of all time Mr.WB. He bought heavily in Oct 2008, only to find  that market bottomed in March 2009. He might not the best market timer, but with due respect, his opinion worth consideration and contemplation.
I still stick to Hartalega and Allianz for I think that is the best bet. Looking at the current rebound of Supermax and Top Glove I am not a bit attracted to them. Hartalega is still have the cutting edge advantage over Top Glove and Supermax. The decline of latex price recently does not  change the structural game of the glove industry. Latex price need to go down much further to be on par with nitrile glove in term of price. But bear in mind that nitrile glove is premium product in coparison to rubber glove. With the decline of oil price and the rising of US dollar, I don't see any downside for Hartalega. It is still a much better and cheaper bet than Top Glove and Supermax.

Adios Happy Trading.

Monday, September 19, 2011

The Boss Is Adding His Position !!!

It is very boring market. There is nothing much to say about except Europe debt crisis, world economy slow down and etc. 4 months ago, everyone is ruling out recession. Now most said recession is just around the corner. It is always easy to flow with the market. It is the noise I would like to ignore. Nothing much to say but came across this announcement yesterday which I think the share holder of Hartalega will like to know. Looks like the boss is adding his position big time.

ANNOUNCEMENT
HARTALEGA HOLDINGS BERHAD
EXEMPTION GRANTED UNDER PARAGRAPH 21.1(C) OF PRACTICE NOTE 9 OF THE MALAYSIAN CODE ON TAKE-OVERS AND MERGERS, 2010 (“CODE”) TO KUAN KAM HON @ KWAN KAM ONN (“KUAN KAM HON”) FROM THE OBLIGATION TO UNDERTAKE A MANDATORY OFFER FOR THE REMAINING ORDINARY SHARES OF RM0.50 EACH IN HARTALEGA HOLDINGS BERHAD (“HHB”) (“HHB SHARES”) NOT ALREADY HELD BY KUAN KAM HON AND THE PARTIES ACTING IN CONCERT WITH HIM
We wish to announce that on evendate, we have received notification from our Managing Director and substantial shareholder, Kuan Kam Hon that he has commenced negotiations with Md Jais bin Ngah and Sannusi bin Ngah for the proposed acquisition of their entire equity interest in Budi Tenggara Sdn Bhd (“BTSB”) (“Proposed Acquisition”) where the acquisition price for the entire equity interest of BTSB would not result in a premium to the market value of the HHB Shares at the time of completion of the Proposed Acquisition.
As at 15 June 2011, BTSB is an investment holding company with the following interests in HHB:
(i) Direct interest of 18,150,000 HHB Shares representing 4.99% equity interest in HHB; and
(ii) Direct interest of 16,962 ordinary shares of RM1.00 each in Hartalega Industries Sdn Bhd (“HISB”) representing 13.86% equity interest in HISB. HISB in turn has a direct interest of 183,927,000 HHB Shares representing 50.59% in HHB.
Kuan Kam Hon is a Director of HISB with a direct and indirect equity interest of 37.57% and 0.04% respectively in HISB, an upstream entity which controls HHB. Kuan Kam Hon and the parties acting in concert with him, namely HISB, Kuan Kam Peng, Timol Industries Sdn Bhd, Ching Hean Chong, Wong Kin Seng, Chow Siew Fong, Kwan Choh Kiew, Kuan Mun Keng, Kuan Mun Leong, Kuan Eu Jin, Kuan Vin Seung, BTSB, Md Jais bin Ngah and Sannusi bin Ngah, collectively control 56.62% interest in HHB as at 15 June 2011.
Upon completion of the Proposed Acquisition, Kuan Kam Hon’s direct and indirect equity interest in HISB will increase from 37.61% to 51.47%, i.e. more than 50%, thereby gaining indirect control of HHB. Kuan Kam Hon would also hold 4.99% indirect equity interest in HHB via BTSB. Pursuant to Part III, Section 9(1) of the Code, Kuan Kam Hon is obliged to extend a mandatory offer for the remaining HHB Shares not already held by him and the parties acting in concert with him upon completion of the Proposed Acquisition.
Relating to the Proposed Acquisition, Kuan Kam Hon had sought an exemption from the Securities Commission (“SC”) under Paragraph 21.1(c) of Practice Note 9 of the Code from the obligation to undertake a mandatory offer for the remaining HHB Shares not already held by him and the parties acting in concert with him (“Proposed Exemption”). Paragraph 21.1(c) of Practice Note 9 of the Code allows an exemption from a mandatory general offer obligation where a group of persons acting in concert holding more than 50% of the voting shares or voting rights of an offeree and as a result of acquisition of voting shares or voting rights from either members of the group or non-members, a member of the group will control the offeree. The SC had vide its letter dated 28 July 2011 granted the approval for the Proposed Exemption.
There was no immediate announcement made upon receiving the approval by SC for the Proposed Exemption as Kuan Kam Hon had not commenced negotiation with Md Jais bin Ngah and Sannusi bin Ngah for the Proposed Acquisition at the point the approval was granted.
Barring any unforeseen circumstances, the Proposed Acquisition is expected to be completed by end January 2012.
This announcement is dated 19 September 2011.



Adios.. Happy Trading.

Thursday, September 1, 2011

Property Investment !!!!

It is a huge misconception of mine about property investment. I just can't take understand it. I am the stubborn type and it is hard for me to change my perception. I think I am totally wrong about property investment. 3 years back when the regulations were loosen, interest rate fell, stocks dropped like shit, it was the best time to jump into the band wagon. You could make a huge fortune which would change you life.
2 years ago property price started to edge up. Inflation started to kick in. Still I just couldn't accept that the property market in Malaysia is not a textbook case. Household debt is raising, and the property price skyrockets. It looks like a bubble in making. Every experts tell you the same bloody thing.
But I must admit that 2ndbrother is right. Whether it is a bubble or not, they are still good property and speculative properties out there. Just like the stock. They are good counters and they are speculative counters. It takes skill to pick up the good ones.
Check around you and you will find that new launch decent condo is fetching RM300-350 psf. Better located condo is around RM400 psf. Would the price keep on going up ? I have no idea. But I have a feeling that, the interest rate will be kept low for sometimes. The inflation will be remained a challenge. The construction cost will not drop anytime soon. All these would not adjust the price downward much if three is any.
Unlike stock, a 10% price adjustment is huge is property market. If  we have the holding power, I think property investment is something we shall seriously look into especially for landed property. The best is landed, guarded and gated. I am new in this, hence I will be glad if you guys could share your experience. Adios... Happy trading.

Thursday, August 18, 2011

AGM

Puprposely took a day off to attened Hartalega AGM. Have to get a personal touch on this counter since I am betting big time on Hartalega. I was sitting at the back ( I am the shy type ) hence, I was having problem to listen carefully what was presented by the "Kuan Family ". Nevertheless, I was impressed by them. I can't post what information that I get from the AGM here because what I get from there might not be 100% accurately imterpreted. However for the ones who are interested to know please feel free to email me at cruger12345@hotmail.com. I would try my level best to answer to you. Again, I must stress that it is my own interpretation and I am not representing Haralega. My own opinion doesn't warrant a recomendation to buy or sell. I eat my own cooking and I expect you al the same. Happy trading

Tuesday, August 9, 2011

The Number Speaks

As I mentioned in my previous post dated 30 June 2011 ( Here ), which I have put the quote by Mr Thai into record for future reference. I would like to highlight it again here.

“The holiday [good times] for nitrile glove makers is over. There was a 22% jump in nitrile costs from May to June as oil prices spiked. We believe players with huge nitrile capacity would see margins squeezed in 2Q due to the high prices,” Thai told reporter.

In the post I said :

" I never like a boastful CEO. So I would like to put this in record and see who will have the last laugh. If you can only acheive 10-15 % margin, that desn't mean your competitor can't squeeze that out."

 The number speaks louder. ( Here ) The net margin is 25.0 %. Again Hartalega delivers.

With the oil price plunging to below USD80.00. Would Hartalega deliver in the coming quarters ? The chance is high. Happy Trading. Logng Hartalega.

Thursday, August 4, 2011

Are You Prepared ?

Are you prepared for the selloff ?The roller coaster is sliding down toward the bottom. It is going to be emotional ride again. Other than guru like Buffet, Prabai, Watson and the others, it is hard to believe anyone not to be emotional affected when the cart is speeding down the hill. So everyone will say cash is king now. Yeah right, unless you deploy the cash, it remains a pile of paper. Period.
It is bullshit to tell us what to do now or what shall we avoid now. It is time to prepare your shopping list. So what is it your shopping list ? Here is mine just for the fun of it.
US-- Well Fargo ( WFC ), Apple Inc ( AAPL ), Symentra Financial ( SYA ), Mitsubishi UFJ ( MTU ), Berkshire Hatchaway ( Brk.B  )
HK--Standard Charted ( 2888 )
Bursa -- Hartalega ( 5168 ), Allianz , CIMB, Public Bank, Aeon Credit, EAH
So what is in your shopping list mind to share ?
Happy trading.  

Sunday, July 31, 2011

The Deal is Almost Done

At last the politicians in US come to their senses. It is almost a done deal. But, no one will know utill it get it voted and signed. But what is next now ? It will be always headwind ahead. It is far more difficult to pick a stock when the fiasco was at the peak in march 2009. ( but emotionally it was crazy lah at that moment ). As for the time being, it is better to take care of the down side.
I was listening to Tan T B interview this morning on 89.9 ( BFM = Boyish Future Millionaire :) ). Well, as people said he is the Buffet of Malaysia. I do respect people who could achieve what he has done. But, come on lah to brag aout how great you are is a bit huhhhh lah. yes, you made a great call on Petronas Dagangan, Padini and F&N. But how about your bad call on the others ? I remembered very well his statement about how he beat Berkshire Hatcheway. Hello you are a diffrent leage to Buffet my dear friend. he is managing USD billions fund and you are managing RM 1.5 billon at the max. If I am comapring my fund to yours, could I brag about how I beat you ? Of course I can, it is a free world. But that is not a good thing or right thing to do.
For me, a good fund manager will be honest and admit their dumb and stupid mistake. Your decouple theory right after the Lehman Brother collapse was deadly wrong. Admit it. I would have done much better if I didn't try to believe it. If you have made a great call, people will notice it. It is a FB era, people get that kind of information easily.
Having said that I was totally agree with you about Indonesia. But the information is just hard to get ? Anyone out there with any information ? I would much appreciate if  you could drop some lines for everyone to share.
I do agree with him about US. US is a very vibrant, unique and fascinating country. Throughout the history, the American could always come back to their feet and prosper again. 2 world war, 1 cold war, 1 deep depression, 70's oil fiasco, 80's recession, 2 Iraq wars and many more didn't bring them down. Do you think the 2008 financial crisis would wipe them out ? Years to come they will prosper again. I don't like US, but I have to admit that they are damn good.
P/ S : Grammar and spelling checking is a pain for me. Bear with that ok. Happy trading. 

Thursday, July 28, 2011

Shall The MIghty Default

We are now at the cross road of the uncharted territory again. What if the US default the debt ?   I opine that is unlikely because the consequences would be unimaginable. Imagine that even the lecturer at the Faculty of Finance or Economy would find it hard to term Risk Free Asset ? Is it going to be huge ? Ohh yes .. it may be a credit crush like 2008 because any bank which holds US Debt has to some how set some lost provision on the US debt they holds. That would be more fund raising to raise up the capital adequacy ratio. Interest rate will go up and etc . The panic might begin and  the chain reaction will extend until  all hell  break loose. allocation for its capital base
The American is not stupid. They know the consequence and they know they need to pass the debt limit bill. The problem is the politicians are stubborn. If it happen in Malaysia, I doubt the MP in the parliment will understad the situation or not.
Anyway, that is beside the point. The concern is the word " what if ". Should the US default even temporary, what is the alternative for the investors to put their money ? Should China stop buying US Treasury and buying Europe debt instead ? There is not much option laid on the table. Europe is not doing well as well. Japan also separuh mati. Of course China can  can't buy their own debt.... so honestly there is not much option.
But certainly US Dollar will drop. If that happen that is a huge opportunity to buy US equity. So are you prepared for the worst ? I hope the Americans are not stupid and the politicians are not stubborn.   After all, it is a dangerous territory to cross. It is very stupid to try. It is like to check whether a shark will attack you or not when you are swimming with a cut wound. If you are swimming in sea with a cut wound when people advise you not too, then you are stupid and stubborn. Happy trading.

Tuesday, July 12, 2011

Simply Silly

I am regretting for not doing the walk. Bravo to the ones brave themselves despite the intimidation from the authority. Brave themselves in the rain, teargas and the water canon. We could stand up for a cause that we believe in. " Chicken " like me who cakap saja in this virtual atmosphere is useless. Imagine if The King ( Martin Lurther ) didn't march on the street but instead praying in a church. How things would it be ?
Anyway, this is not a political post.
I  read some articles in some forum and bumped into one ( cari.com chinese version ) before  709 which I found it amusing. The author suggested to sell all the share and keeping the bullets to wait the market to fall the following Mondat after 709. He sold all his holding and waited for the " musang king " to fall.
It is rather silly to think a rally to bring the whole market down. He should be worrying about the Europe debt crisis more. I doubt a change of government in Malaysia would shake the market. Of course , it will be totally different if there is political uncertainty during the process of transition of power from one hand to another. But the 709 rally proves that we Malaysian are political mature enough to witness the transition should there be any.
I don't think politic is a systematic risk to the market in Malaysia. I believe some people would not want a change if that would affect their position in the market. WTF lah ... The market will fall if there is a change. So what !!!! It is going to be temporary.   You think market will kesain BN and remind low if the lose in the next election ? It will be .. and always will be like what Donold Trump said " it is nothing personal, it is business "  lah .... The ball will keep on rolling and it is not the end of the world for the market.
Market could even soar if there is a change lah ....
I would stop here. Smells like political already.
P/S : ..  Must get a bright striking polo T this weekend ... Adios .. Happy trading.

Thursday, June 30, 2011

Record ....

I am not saying this because I long Hartalega. It is plain rude to tease your competitor in public with this. I quote :

“The holiday [good times] for nitrile glove makers is over. There was a 22% jump in nitrile costs from May to June as oil prices spiked. We believe players with huge nitrile capacity would see margins squeezed in 2Q due to the high prices,” Thai told reporter.

Thai reckons there will still be a market for nitrile gloves, pointing out that Supermax’ planned expansion is mostly in the nitrile segment. However, with additional capacity in nitrile gloves coming on stream, margins of over 25% will be a thing of the past, he added.

“I’m looking at margins of about between 10% and 15%,” he said.

The raising cost of NBR ( nitrile glove raw material ) is not something new. It has been raising substantially for the past few quarters even though as crazy as the late. However, Hartalega is able to mainain its' net margin all this while above 25%. It is simply because of their they are technological prowess. They are the lowest cost producer. The raising nitrile cost of 22% would be a challenge. Having said that, with this raise, the selling price of nitrile will still be cheaper than power free latex glove. It still have its' advantage. At the same time it will discourage more players into nitilre glove market. It is also simply no wise to have a price war with the lowest cost producer. Let's see how the financial report ending June 2011 pend out.

I never like a boastful CEO. So I would like to put this in record and see who will have the last laugh. If you can only acheive 10-15 % margin, that desn't mean your competitor can't squeeze that out. Adios. Happy Trading

Saturday, June 25, 2011

Debt Crisis Debecle

We are now at the cross road. Shall the Greek default on it's debt, it would certainly creat huge cripple across the globe. Forget about what Mr. Tan TB used to laud about, the decouple theory. The theory didn't hold in the last crisis, it certain would not hold should it happen again. What would the domino effect ?
1. Spain, Italy etc ( the PIIGS ) would felt it. Their debt is is going to soar and making it more painful to borrow or maybe not at all. Should that happen they would be the one to default next. In fact they would be temp to default. Why pay ? Greece doesn't pay why shall I ?
2. The big European banks which hold the Greek debt would have to mark the debt down. Again, that may insolvent the banks which lead to severe credit crunch. It could be a Bear Stern case or even worse the Lehman Brother case which bring down the whole system down.
4. Credit default swap would soar. Making it is very expensive to insure the credit. It will shake the derivative market which may lead to another AIG senario.  
4. The Greek may be kicked out from Europe or maybe even Spain, Italy etc who knows ?
5. In order to help the Greek, the Europe may seek protection among themselves. All sort of levy maybe imposed might be introduce to Asian countries especially China in order to make them grow fast enough to solve their debt problem. That maybe lead to a hard landing on China.
6. US would pass the debt level in no time. No more political drama to raise the US debt level.
7. Some European leader would have to wave bye-bye to their presidency.
8. Street protect across Europe.
9. I don't have to elaborate more that Euro would drop and gold would soar.
10. The double dip would materialize, expect another round of QE3 and so on in Europe. Recession would follow which may last long.

On the bright side, the ECB should be better prepared this round. Having said that are they tackling the core problem correctly ? Is Greece a solvency problem or a liquidity problem ? Should it be the 1st case, it make no sense to lending more money to them. The same issue would appear again in couple of years if not months. Let pray hard that it would avoid a total collapse.
 

Wednesday, June 8, 2011

M & A

As 2nd brother said, one of the method of exponential growth is by Merger and Acquisition. Now we are seeing Maybank and CIMB fighting for RHB CAP. So why not Top Glove marries Hartalega or Harata lega taking Top Glove as wife.
I don't see any con for this marriage. With Top glove's production lines and Hartalega's technology know how, it's growth would be exponential in matter of couple of years. I am not surprise it will command 50% of the world rubber and nitrile gloves supply. So :
1) Should Mr. Kuan buy over Mr. Lim. Financially does Hartalega able to pull the trick ?
2) Should Mr. Lim buy over Mr. Kuan. Does Topglove able to flick it's financial muscle do the trick ?
3) How about a new entity, a share swap and etc. All just like Malakoff case, a SPV to merge it and delist both of them.

What would you do if you are Mr. Kuan/Mr. Lim. Maybe CIMB is drafting the merger proposal. Who knows ? I still believe there is a win-win situation here. If both parties are willing, I don't think the deal to be pulled ? What do you think ?

Friday, May 20, 2011

Presentation and Interview


Found this just now. Would like to share with you guys. An interesting and detail presentation. Long Hartalega . Here is the link.

P/S : You Must See This Movie.

Just find another link about the interview with Jens Reisch, the CEO of Allianz Malaysia at BFM. Interesting. Shall listen to it. Here.  

Wednesday, May 11, 2011

Why Allianz Is Considred Cheap To Me

I long Allianz and have been bragging about it. Why I like and hate it. I like because it is still considered cheap to me ( Will expalin later ). Hate it because of it low liquidity. If you read this  you will find the 40 % Berjaya Sampo would be sold at RM 496 mil which values Berjaya Sampo at RM1.24 bil. This is 3.3 time its book value ( NTA ) according to the source.
At RM5.25 a piece Allianz ( a general + life insurance ) is now trading at RM808 mil. Including Allianz-PA, the whole company is valued at ( 808 + 979 ) = 1.79 bil. A rough calculation will translate ( Allianz + Allianz )'s book value at RM3.64 per share. At RM5.25, it is selling at ( 5.25/3.64 ) 1.44 NTA. Comparing to Berjaya Sampo at 3.3 NTA, Allianz is considered cheap to me. Furthermore, Allianz has it life insurance arm and have a huge Taiko ( Aliianz SE ) behind it's back. Operational and prospect wise, Allianz is a queen of the ball. What do you think ?
Happy Trading. 

Tuesday, May 10, 2011

Another Oustanding Result

Hartalega just released its Q4 result. Here In short its revenue, profit, cash flow and etc is exceeding a fabulous company should have. Go ahead and tabulate it's financial ratio, profitability ratio, valuation measure or anything that you want to name it, you would find nothing less than a "thumb up". I just can't understand the market value it at PE of 11.00 ( 5.70/0.52 ) with a dividend yield of 3.68 % ( 0.21 /5.70 ). It deems kind of undemanding ( cheap lah for a layman term ). Furthermore, it is still undergoing it's expansion plan. Here is what the management has to say :

Commentary on Prospects and Targets
Our Group’s products are sold to the Health Care Industry. Glove consumption is inelastic in the medical environment because the usage of glove is mandatory for disease control. Our nitrile synthetic glove was well accepted by the end users due to its high quality and elastic properties that mimic that of a natural rubber glove.
The switching from Natural Rubber to Nitrile glove has gather momentum in Europe and demand is growing rapidly. We expect the Nitrile glove demand will continue to grow by 30% for calendar year 2011 and our Group is well positioned to take advantage of such demand growth with the completion of our plant 5 production lines which has started to contribute toward increasing our output capacity.
Correspondingly more producers are switching their production facilities to produce Nitrile glove and we may see some overcrowding of nitrile gloves producers. With the sharp increase in Nitrile material price and a weaker USD, challenging time is ahead.
Our Group is well positioned with the competitive advantage, leveraging on our technological competency, we will be able to deal with the competitive environment and limiting the impact on our margin and absolute profit.
The Group has achieved the internal target growth of net profit for the financial year ended 31 March 2011. The Board of Directors is optimistic that the Group will achieve continuous growth and securing better results for the next financial year.

Sound like they do really know what are they doing and know the game pretty well. Hopefully Mr. Market will give it a higher valuation. Long Hartalega big time.

P/S : The poster of a movie by Hou Hsiao-Hsien. A rare Japanese movie directed by 侯孝贤.Always like his movie.

Monday, April 18, 2011

Oji San Stock

Again Uncle Teh delivered an impressive result yesterday. with the annualized earning of 90++ sen Public Bank is current trading at PE 14. By comparison with others major bank in the world i.e Well Fargo, JP Morgan and etc it is considered cheap/undemanding. Yes, I do wish I have bunch of Public Bank. Just .... Oji san is still Oji San. ( Oji San = Old Man ). It is just not as exciting or promising as Hartalega or Allianz. I can understand why most of the local analysts don't like to cover it. Do you want to see a turle on a F1 track ? Analysts also cari makan juga. If they are boasting a stock which doesn't promise speedy appreciation who wouuld like to read it leh ? Would I like to own a peice of Public Bank ? Of course I do... But not now looorrrr.... I still prefer to watch a F1 car on F1 track. I am just too impatience.
As a retail investor, time and patience are the only tools we have to succeed. Aiii... bad habit is just too hard to get rid of. Just wish me good luck.
To me US stock is very promising. I love to have some Japan equity as well. That is why I long MTU. And ADR ofMitsubishi UFJ Financial Group Inc. Yes we can have a piece of Japanese company by buying it's ADR. Here is what it is. ADR . Here is the list of Japanese ADR that you can buy via CIMB Itrade. 

Adios. Happy trading.

Thursday, March 24, 2011

Happy Belated Birth Sg Buaya

I didn't realize that this blog was one year old several days ago. Yeah time is flying. I didn't enjoy a spectacular return for 2010 but still holding to Hartalega as the key investment. 
"Bragged" about concentrating investment before in my previous post. Was told again that it is better to diversify. Somehow I wonder these people get what I mean or not. What diversification does these bunch of people mean ? 10 k over a counters of  10 ? 100k over a counters of 10 or 1 million over a counters of  10. 3 different cases would lead to 3 differences scenario. You may think :
Case 1 : 10k over 10 is too diversified
Case 2 : 100k over 10 is maybe yes to some or maybe not to some  too diversified.
Case 3. 1 Mil over 10 is maybe yes to some or maybe not to some  too concentrated or not so diversified.
If I keep on increasing the figure it will lead to several more scenarios. Of course it is stupid to suggest 100 Bil over 10 because one may end up buying several companies in Bursa Malaysia.  So what the devil do these bunch of people mean by diversification ?  And I loath when they associate risk with their " diversification ".   I just can't see the link. Investing into a bad company is a bad investment, investing 3 bad companies would not make it  profitable. It probably make it worse.
The way I interpret their meaning by diversification is they do not sure what companies are they investing in. Buying an insurance by diversification is 1 + 1 = 2. They will insist that will reduce the risk of losing. But the other side of the story is it will reduce the probability to strike BIG  as well. Navigating carefully on a few counters carefully is better than spreading your concentration on too many counters. Of course it will depend on how much capital do we have.
Another thing is the advice always keeping certain percentage of capital just in case a rare opportunity arises. How much ? I am not sure. Some said 20% or 30%. But at certain point of time, we just need to deploy of the missiles or bullets. Otherwise waht is the point of keeping the remaining 20% or 30%.
There are so many parameters that we could use as a function of risk. I just don't think their "diversification" is one of them.
P/S : We could always sell the counter in a blink of an eye. So is concentration investing is riskier than  diversification ? I just don't think so. Enough on this topic. I am bored to listen to this kind of crap again.
   

Tuesday, March 15, 2011

Get a life !!!

I am very much troubled by the earth quake in Japan. It is such a tragic. Not only life were lost in a blink of an  eye but houses, properties probably everything to some was lost. Now facing with a potential nuclear crisis, I just hope the worst won't happen. My mood was troubled for the past few days. But they are some morons out there makes it worse today. Kan ni nah ... What do you " moron " mean by " Japanese were punished now because of what they did in WW 2 ". What do you the " moron " means by " The Japan government has not admitted and apologized of what they did during WW2".
Don't you moron know how to differentiate what is politic and what is humanity. F@@@ you, get a life and open your bloody shallow mind. The victims are innocent and they are human being too. Do you moron sleep better by watching the footage of the wreck left by the tsunami ? I just don't f@@@ing understand these morons.
It was bloody 60 yeras ago. And it was the past. We human being move forward. Only fools and morons kept their retarded mind in their backyard. What would you say if someone told you that anything bad happens to you or your family is because of the bad karma from your previous life. A human is a human. We are born not greater or better. We grieve if a life was lost. I am not expecting you morons to cry over the tragic. But to putting salt on the wound is the last thing you morons shall do. Another CBL publish a cartoon on Nerita Harian the other day. I am speechless to read about it. In fact I feel ashamed of being a Malaysian to tell the others that a Malaysian daily has produced such a tasteless and stupid joke. Enough said. You morons spoiled my week. Again get a life.
Ohhh yeah .. our government is going to build not 1 but 2 nuclear reactor. Is that a bloody joke ?  I read the lines " we are going to presse ahead with the reactors ". My mind is blown away. At this moment of time, the America, the Sweden and even the German are putting a brake of their projects to get more information and detail  or valuable lesson experienced by the current crisis in Japan, but Malaysia is going ahead. That is why we are always a laughing stock to the foreigners. Look at what our 1st lady said ....  This is how stupid we are. We do not have a proper nuclear institution. We do not have the law and protocol in place. We do not know how to build. We do not know how to operate. We do not even have nuclear energy courses provided by the university. I believe with fingers of a hand, we can count the how many nuclear experts we have. I am an engineer. I am not against the progress. But nuclear reactor  is not a pondok built by your kids at the backyard.  How prepared our government are to build and operate one ? Do we need that ? Last time they are just wasting our money to build over priced project. Now they are going to put my life on the line. Niam Mah ....   THESE MORONS ... get a life. ...

Thursday, February 24, 2011

Stay or Go

With the oil at USD 100 and the uncertainly surrounding the Middle East region people start to worry. So would you stay or would you go ? Just vote lah in the comment for the fun of it. Adios...

Thursday, February 17, 2011

Lessons I learn.... ( Comment onm 2nd brother 's)

At last you said something brader. I could not agree more about your comment about the local analyst. But I am the lazy type. It is just too bloody boring to go through a bunch of junk in Bursa Malaysia. However that doesn't mean we are not able to make money out of the Malaysia market. Hartalega is a very good bet. Unless there is a structural change in Hartalega, I will certainly hold it. Sometimes all we need is the patience to wait until someone to change their appraisal about certain company.
They are 3 valuable lessons I learn.

1. Do not overly fixate on what we paid for a stock. Yes. Hartalega has gone up quite substantially since last year. But the future earning of the company is very promising and real. I strongly believe once the future earning be materialized,  one could expect a re-rating. In fact Hartalega is experiencing it. Compare the what the analyst about Haralega  3 quaters, 2 quartes ago and now, you would get what I mean.

2. Do not rush to grab a small profit if you are convinced that you are on the right track. At the same time always remember it is not too late to recognize you mistake to sell for a small profit to buy it back.Once the mistake be recognized, just don't forget the Lesson 1. ( Do not overly fixate on what we paid for a stock before ). this remind me a guy in a chinese forum ( www.cari.com.my ) made a good call on Hartalega 2 years ago but sold it after awhile in order to look for another "super star" . Even though the profit he made was quite handsome, but he could make more only if he could hold it a bit longer. I wish him luck with no regret. Regreating is only for fools. It is just too hard to find a " super star ". We are lucky to find one. So it is better to hold it as long as its earning power still remain structural sound and promising.

3. This is about stock recommendation. KNN  This is a neck pain. Friends do ask me to recommend some stock and I believe they won't be upset with me if the recommendation backfires. but the feeling is just not good lah... I ain't god so it should not be my responsibility. But I do feel great if the stock skyrocket. It is just a matter of sharing. Want to buy or sell, we are adult enough to make the call.

Happy Trading.  

Monday, February 7, 2011

About Hartalega Again ....

Hartalega current quarter result has just be released. It is rarely to find such a company in Bursa Malaysia  I am not saying this because I own its share. Fact remains  fact .... Look at the result ...



       
INDIVIDUAL PERIOD
CUMULATIVE PERIOD
       
CURRENT YEAR QUARTER
PRECEDING YEAR
CORRESPONDING
QUARTER
CURRENT YEAR TO DATE
PRECEDING YEAR
CORRESPONDING
PERIOD
       
31/12/2010
31/12/2009
31/12/2010
31/12/2009
       
$$'000
$$'000
$$'000
$$'000
1Revenue
188,123
148,599
542,393
408,507
2Profit/(loss) before tax
62,206
47,477
176,988
121,376
3Profit/(loss) for the period
49,211
37,252
137,772
96,795
4Profit/(loss) attributable to ordinary equity holders of the parent
49,203
37,200
137,763
96,681
5Basic earnings/(loss) per share (Subunit)
13.54
10.23
37.90
26.60
6Proposed/Declared dividend per share (Subunit)
5.00
5.00
9.00
10.00

Quarter to quarter, the Group’s sales revenue increased by 26.6% and profit before tax increased by 31.0%.


Comparing Current Q to Proceeding Quarter
In the current quarter, the Group's revenue was 2.1% higher and the profit before tax was 1.9% higher when compared to the preceding quarter. The increase in profit before tax is due to increase in demand for nitrile gloves.

For detail go here ...
Balance is ok. Cash flow is good. All the financial ratio is healthy.... hmmmm...
Looks like it is expending at the cost of the rubber glove. At 5.60++ I don't think it is expensive.
Adios Happy Trading.

Sunday, January 30, 2011

Will Egypt's Political Earth Quake Shake The World Market ?

Does the issue bigger than the EU's debt tremor ? I doubt it. As long as the world economy still operate under capacity, I don't see any recession in the comings months or years. It is just an excuse to take something off the table. If you are at the casino and you are winning 8th straight hands, I am sure you will be considering to take something off the table and head for the bar counter for a drink buddy. I am still bullish about the market. My view is swayed after the announcement of  QE2 by the US. Yeah we will see some headwinds like inflation concern, EU debt's issue, the Egypt chaos etc but would it be as serious as in 2009 and 2010 ? It is rather normal during the market recovery. We can't expect the smooth run anyway. But, it is the bumpy ride that create opportunities. Furthermore Fung Shui master's said this year will be a good year ... hhahahahhahaha
Being bullish is not a bad thing. Being foolishly bullish is another thing. This could be a beginning for the next super bull. Ride it cautiously.  Adios .. Happy Trading. and Happy New Year ....

Friday, January 28, 2011

The Nature of A Business

For me, there are only 2 major categories of business that I am aware of. It is either Balance Sheet Oriented or Cash Flow oriented. If there is a debt issue in a company, most of the time I won't even look at it. Because it is rather no point to look further. The business is deemed unattractive. Look at Air Asia. The whole empire is built on debt. And most of the time the profit is skewed to accounting profit.  Anyway .......

Insurance and bank are Balance Sheet oriented business. It is rather no point to put emphasis on the cash flow of these companies. Commercial banks are making money by taking deposit from the public and lend it out. They are making money by the spread of the interest they charge and the interest they give. The inflow and out flow cash doesn't tell us much about the companies. Instead, how good is the bank is very much depending on how they manage their asset. The banks have huge piles of loan that they lent out which its quality will determine how much the banks will be making. Look at Public Bank, they have the highest Return of Asset among its competitors. Of course, evaluating a bank is not as straight forward as this. It involves a lot more than its Return Of Asset. But most of the issues ( For instance Tier I capital ratio, loan loass provision, Non Perfoming Loan and etc) would be concentrated on its balance sheet.
Insurance companies are making money by investing the premium they received from its clients. Hence the core issue here is how good is its investment. They are either in stock, corporate bond, government bond, annuities and etc. Again it is more to a Balance Sheet oriented business. Most of the time insurance companies are busying managing its Balance Sheet.
If you bought a 10 mil dollar machine and generate 1 mil cash annually, it will take you 10 years to get you initial capital back ( assuming  you buy the machine in cash and there is no other additonal cost to run the machine ). Will take be a good business ? How much will the machine worth after 10 years ? How much will someone pay you to buy the company ? 10 mil ? You will be screaming " I machine worth at least 10 mil !!!! " if someone is ready to offer you 7 mil only.
On the contrary, a 1 mil-machine-can-generate-1 mil-cash-annually business is totally different story. How much do you want to sell the company ? 1 mil ? I will be willing to pay 4 mil or even more eventhough the machine only worth maximum 1 mil in the book. One good example of this kind of business is BTOTO. its NTA is merely RM 0.27 as on Q2 2010.
Most of the public listed companies in Malaysia is Cash Flow oriented. Warrent Buffet's term "owner earning" is more meaningful than the figure we get from The Profit and Loss statement. ( I am referring cash flow oriented companies ). Owner earning = Reported Earning + depreciation, depletion, amortization and certain other non-cash item - annual capital expenditure for plant and equipment. Very similar to Free Cash Flow.

(Since we only  look into companies with no debt or very less debt, the financing cash out flow concern could be ruled out. )
That is my 2 cent. Damn free today ... nothing much to do in the office. Gong Xi Fat Chai to you all .... Huattttttttt ahhhhhhhhhhhhhhhhhhhhhhh .. Happy Trading....

Investment Road

Friends and colleagues asked me how to start investing ? I always jokingly told them to stop reading sport section and start reading business section.t Seriously, I personally think we shall start by listening and read. It saves us a lot of hustles and time. If you are too lazy to read, then forget about the whole thing. Keep on working hard and hope for a big fat bonus.
Some people will suggest books by guru like Peter Lynch, books about Warren Buffet, books by George Soros, articles and interview by Jim Roger and etc. But seriously, will it create your interest in it ? I doubt it. Most of the time it will bore the beginners to death because the contents of the aforesaid books will be too technical and it rarely induce any interest to go further.
If one is seriously about it. I will suggest to take the CFA Level I course. Take the exams as well. I did that. Honestly, the few thousands spent is worth  more than any 3-4 days course conducted by the so called  "professionals" in the 5 start hotel.
For the ones who do not know what would be covered in CFA Level I  listed below is what you can get after the course.
1. A basic understanding about the financial report. You would know what are  the Balance Sheet, Equity Statement, Profit and Lost  & Cash Flow about. Without a basic understanding about it, I find it hard for you to understand a business and how it works for a company. Most of the time, the CEO of the companies are with the accounting background.
2. A basic understanding about economy. An understanding about how it works will certainly help us to gauge the market generally. Shall we sell the share during the recession and buy when the economy starts to pick up ? How the fiscal policy affect the market ?
3. An insight about finance. How a company finances it's expansion ? What is the cheapest cost structure ? ROE, ROA, financial ratio and etc which are important to gauge the health of  a company. You can in fact learn about how certain companies try to cook their book. It is related to item 1.
4. Several things about bond. A bit about properties investment.

The descriptions look brief but it covers a lot of stuff. If I am n ot mistaken there are about six sections for the Level 1. It certainly opened my eyes. It only take you about 6 months. If you are interested I will suggest go Kasturi and make sure you attend David Meow's class. It will certainly save you a lot of time trying to figure out where to start. In fact it will save you some $$$ which you may loose by following the crowd like a blind fly.
I am not saying that I am good. But if I have taken up the course earlier, I could have save me a lot of $$$, time and hustles. It was probably my best investment.   

Tuesday, January 25, 2011

So Where Are We Now ?

The market has fallen a bit since last Friday. Some people are freaking out some are sideline and waiting. Some are jumping into the wagon. Opps at the writing, the KLCI drops 16.00++ point. Is that something to be scared of ? Some people said the bull have been running for 22 months and there should be a big pull back from now. It is a trading market and be careful .... Baloney .... If you are putting a 3 months as the investing time frame or increase your trading frequency and given market is a trading market. That is beside the point. At anytime in any given market, analyst or the brokers would give you all sort of reasons in order to make you buy or sell. That is their better and bread anyway. That nothing wrong with that.
Let us be honest with ourselves in what circumstances the market will tank ? Recession ? Political issue ? Policy Issue ?
I personally don't think the bear market will come anytime soon. A correction maybe, but a bear market unlikely.
Here are the reasons :
1. Malaysia economy is expected to expand by 5.0++ % accoring to MIER.
2. Bank Negara is still maintaining a sound fiscal policy.
3. There should not be any super hike of interest rate.
4. Politically I don't think it is a big issue even PR win the next general election. tell me who wants the chaos ?
5. Compare to other countries in the region like Thailand and Indonesia, we are still lag behind.
6. They are still mega project in the pipe line by the government. MRT, the 100 storeys, Islamic financial, bullet train etc.  ( I am not a big fan of this mega spending but I would not discount the impact of it even though I don't like it ).
7. I look around and ask around and find that the restaurants, shopping mall, properties market etc which doesn't show any kind of contraction.

If all these materialse, we might be able to see the economy cuercircle for the years to come.

If you are not convinced and still want to be in the market, go for the industry which is not much influenced much by the market condition. Buying a nitrile glove producer is a very good bet. I blog about it before so I am not going to discuss further about it here. Otherwise people will think I am such a " syndicater ". For the record I long Hartalega big time. Happy trading adios...
P/S : This is a lousy post.

Friday, January 14, 2011

Why We Should Allow Short Selling !

It will be a thrill for me if Bursa Malaysia allows short selling. I believe some people will probably put me  in the " WANTED DEAD OF ALIVE " list in the financial market when I say " Short selling shall be allowed ". The long side will probably want to execute the short seller for fueling the selling pressure during bear market. ( As what had happened during the 2008 crisis ). Is short sellers such a sinner ? Let me lay out my case.
Let see who has the incentive to see the stock market keep on going up.
The Up
1. The Brokers. Broker companies are making money by charging fee. The higher the trading volume, the more money the make. So, of course they are in this camp. That is why we have prudence of financial analysis tossed freely by the brokers. Most of the rumors or tips are from the brokers anyway.
2. Financial press. The more people participate in the market the higher number of readers, which translate more advertisement. Hence more money to be made. They are more people in the market during bull market tahn bear market.
3. Investment bank. I don't think I have to explain this.
4. Banks. Even though it is more indirectly, we couldn't rule out that more loan would be taken by the people who make money in the stock market. Generally, bullish market would spur more consumption which is good for the bank as well. So far, I haven't seen banks loose money in the bull market.
5. The government. Of course the government want the stock price to go up. That would make them to leass weary. Given a choice who will like to have a general election during bear market ?
6. The company managements. Most of the compensation given to the managements is tied up with the share price performance. Worse still, most of them are holding majority share of the company. I can't see anyone in the management wants to the the share price plunge. The worst is sometimes the management team up with the brokers to spread rumors to jack up the share price.
7. The syndicates. Without stock price skyrocket how are they going to make money. They make money in the bull market.

So it seems that everyone wants the stock to goes up. Who wants it down ? Of course the one at the otherside of the boat. The Short Seller. They are the ones with the incentive to say : " Look, the Transmile book is not as rosy as it should be. The price should not worth RM10." They would also goes : " After going through all the numbers, I find that Megan is actually in deep shit. We should bet it goes bankrupt ". The same to companies like Fountain View, LCL and etc. They are actually the " invisible polices " who pick up the rotten apples in the market. It should somehow limit the stock " goreng " fancy. They are just merely creating the market volatility and piecing the bubbles sometimes.
Would I short if  it is allowed in Bursa Malaysia ?
You bet I will. Happy Trading.       

Wednesday, January 12, 2011

Why I Say Leverage Is Scary

BS 1
ASSET ( 50 K ) LOAN ( 0 K )
E ( 50K )


BS 2
ASSET ( 500 K ) LOAN ( 450 K )
E ( 50K )


BS 3
ASSET ( 400 K ) LOAN ( 450 K )
E ( -50K )

I must agree that leverage is an very exciting game.  It could make you ton of $$$ if you play it well. There are not many forms of leverage game to play in our market ( Malaysia market ). There are 2 that I could think of while I am writing this. 1st  is share margin financing the 2nd is commonly known properties investment.For me 1st option is out for I would never borrow money to buy stock. As for the 2nd option, I am always 15/16 ( as contonese said ). Let me elaborate a bit about what I think. ( It is a very simple straight forward elaboration )
Let say I have 50k of cash and nothing else. As shown in Balance Sheet 1  ( BS 1 ), it is pretty strait forward with nothing else to elaborate further. Say I have decided to leverage it up by 10x by buying  a house worth 500k. I take a 450k loan with 50k down payment. So my balance sheet will look like BS2. One fine day, for whatsoever reason, I find out that the house price drops to 400k. How will my balance sheet look like ? It would be look like BS3 which is not pretty at all. With a -ve equity, I would be served a PN note if  it is a public listed company. In this kind of situation, I am practically " insolvent ". However, as long as I am able to serve the 450k loan, I can still breath even though it is barely. If I ever loose my job and unable to serve the loan, I will be coerced to foreclosure. At that time, not only I lost the 50K that I put it as down, I would still have to pay the -50k ( -ve equity ) that I owe to the bank. A 25% depreciation of the house price would not wipe out my entire equity ( 50k ) but also send me to the debt land. Certainly I would be happy if the house price jump to 600k. Then whole scenario would be in reverse for BS3. That is the power of leverage.

Of course this is a simple example. Leverage of 10 is still ok for me. We need something big to force the house price to go down by 25%. But what if I leverage it up to 20x by taking 1 million loan ? A 5% down of the house price will wipe out my equity of 50k.
As I said earlier we need something big to force the house price down by 25%. What push the  the house price by 35-50 % in some cases 100% the past few year. Cheap credit ? Vast liquidity ? Better economy ? Increase of house whole income ? I really hope that the worse or worst won't happen.
Of course I am not ruling out the properties investment option. It is just a matter of risk management. I find that I can handle the risk in stock better than properties. Still need a lot to learn. Anyone who has vast experiences in properties investment please don't feel shy share.
Adios Happy trading

Tuesday, January 11, 2011

Immanuel Kant

This post has nothing to do with financial or investment or whatsoever. It is about moral. So what is moral ? Is stealing from the rich and giving to the poor morally accepted ? Is lying to a murderer in order to save your friend's life morally wrong ? I am not a religious guy. I am not saying that I am not a sinner. I won't say I never lie as well. I certainly do not possess the integrity of a monk, a priest or a ulamak.
But I like reading. Reading builds character. I read something about this great philosopher. Immanuel Kant. Click here to find out who he is.  I like his idea of moral. According to him we human being is different from an object or animal. That is because we have the faculty or ability of reasoning. To my understanding, he said moral and justice has to been carried out because it is categorical imperative ( unconditional absolute necessary ) and that should be the ends. For example, we must treat human being with respect and dignity because it is categorical imperative ( unconditional absolute necessary ). Not other reason. We treat our friends, colleagues family members with respect not because we want them to respect us as well. We help them not because we are expecting something in return. We treat others well because we are human being and human being should be respected.
The same reason tell us we should not lie to others. We should not kill others. We should not prostitute. We should not badmouth about others. We should not commit suicide and etc. All the aforesaid imply that we treat others or ourselves ( in the case of committing suicide )  as an object or animal. When we treat others as an object or animal, that implies that we are not respecting others or ourselves with dignity. Consequently, that implies we are nothing but  an object or animal.

Just now I read this comment on my blog :

neno said :

see how my sifu sam shames alexlu from nexttrade >

dare to blog this up ? u got guts to blog up ? ha ha..I dont think so .

www.samgang.blogspot.com
Bot in 45 lots of Pantech -wa @ 0.285 last Friday ( see d attachment ) , within a week, it is now 0.41cts , >82% $$$$$ return from it ^_- do I need tak ada akal method 2 tell my entry ?

Same goes 2 Citi , bot in citi @ avg cost of 3.65+ 4 months ago , citi is now closed @ 4.95 , once again, do I need tak ada akal ta method 2 tell my entry ?

Now take a look at Alex lu lu, he was calling buy on citi @ 4.95 today , read d below n see d attachment :-

***

Citigroup has broken above its triangle at USD4.80
For those who set their sight far & wide, you may take a look at Citigroup, which has just broken above its symmetrical triangle at USD4.80. I do not have a target for this stock but I believe the long-term prospect of Citigroup is fairly good. For a closer look at how far this stock has dropped since its heydays, go to Yahoo Finance (here).


Chart: Citigroup's daily cahrt as at Jan 5, 2011 (Source: Stockcharts)
Posted by Alex Lu at 1/06/2011 05:39:00 PM

***

Ha ha... first , y cant his ta tell him 2 buy citi @ 3.65 ?
http://samgang.blogspot.com/2010/10/v-mission-completed-sunway-154-n-6.html
? y ? ta not workable ?

Second, we hv already made about usd 1,300 per lot in pocket then only ta loser called 2 buy citi @ 4.95 , dont u think it is "STUPID" ???

Is that what u called ta can times d entry ? ha ha

now u shld know y ta losers got themselves burnt !! do I need 2 say more ?

By now, u should know y I said ta is tak ada akal method ?

Yah lulu, Evergreen closed @ 1.51 today , is Evergreen still a sell ? Alex lulu's call 2 sell Evergreen @ 1.45 >
http://samgang.blogspot.com/2010/11/v-muhibah-0995-evergreen-still-sell-mr.html


Calling 1, calling 2 lulu, is Evergreen still a sell ? or u need 2 wait until Evegreen break above 1.80 then only u call buy ? "


What can I say ? The only thing I can think of is, he wrongly pasted his comment on my blog. But that is unlikely. I do not know the reason why he wants to say his Sifu is so great here. Publicity ? I do not know. One thing is for sure is THAT IS IMMORAL  to  discerning others shortfall to boost how good they are. Furthermore, we can't justify Alex's call is wrong or right. That is no such thing as right or wrong in investing strategy. It is either good or bad. A bad call doesn't tell us he is a good person or bad person. But to laugh at someone's bad call is IMMORAL. Only bad person does that.

Friday, January 7, 2011

Investment Philosophy

People tend to think that investing is science. We tend to use all the empirical instrument to judge or to weight our position. Before you take a position, I am quite sure we will go through all the past financial report. Then you will go to the lab ( at your house basement or probably you study room ) and take out all the scientific instrument ( in this case probably you PC excel or your Casio calculator ) and start to carry out a postmortem on the reports. Several hours later or maybe days or even weeks later you will come out with a set of result. The result probably consists of the usual rations related to balance sheet, ratios about the cash flow, ratios ralated to P & L and ratios about the equity. From that you reach the ultimate conclusion and bet on it. It is either Buy or Sell. For the more sophisticated investors, they will go further with all the chart and financial models to conclude either Buy, Sell, Hold, Average down, Short, Buying a protective call or put options and etc. That is a scientific approach.
On the other hand investing could be an art. You do not rely on the financial result or chart but base on the basic logic and be extremely sensitive  to the current trend or issue. For instance you heard the news  about the terrible flood in Australia recently and come to a conclusion that the basic material will get a sudden spike on the upper stream of the supply chain. Base on that, you come to a conclusion  to buy basic metal material in anticipation of the price roar. Jim Roger is extremely good on that. He was buying heavily on sugar to see the price to soar to all time high recently. John Paulson uses his art skill is to anticipate the sub-prime crisis and shorting heavily on all sort of financial instrument. These are the people who are extremely superior on their skill to predict. It is an form of art to me. Behavior financial which I think you all are familiar with is an art as well.
The question is not which method one is better but which one is more suitable to you.
This make me recall the car driving analogy by WB.
When we are behind the wheel you are at the present. The back is the past and obviously the front is the future. Looking at the back mirror is like scrutinizing the past. ( Using the scientific method should be the way). Looking through the windshield is forecasting the future. ( Using the art method should be the way ) . Then how about present ? At present we use the gut my friends :).... Gut is like the imperative net in order to catch the big fish.
As we are driving down the road, the future will become the past some days. then we use the " Scientific Method" to justify the " Art Method ". Only by this way we could improve our scientific and art skill to achieve our goal.
As I always blog about Hartalega, I find this method extremely useful to justify my position. How about you ? As usual adios and happy trading.