Thursday, December 27, 2012

It Is a Wild Wild Market Dude !!!

At I am writing this the KLCI hits another record high at 1682.39. It doesn't matter how e call it. Window dressing kah, election effect kah or CNY  rally kah.... I just can't fill the bull broadly. Where is the participants of the game actually ? In comparison to about a month ago, generally what is actually pushing the market higher and higher ? I it is perplexing and I am not comfortable with it.
It is no pointing what is actually pushing the market so the "expert" will tell us all sort of stories. Believing that this is because of the spell of Saruman from Mordor is not entirely absurd at all. The analysts would only come out with tons of explaination when the show is over which is merely academic to me.
From 1600 several weeks ago till now at 1682, I just cant see the major market move or rally. The volume is thin. For me I am out it is the best time to consolidate the cash and wait for the " durian runtuh ". The ironic thing is I am always wrong in timing the market. Never been right !!! :) Adios.

Watching List :
1. Hartalega
2. Allianz
3. Cypark
4. Padini ( Reserve unless it is super cheap )
5. Well Fargo ( WFC )
6. Symetra Financial ( SYA )
7. Apple ( APPL )
8. Lucadia ( LUK )

Tuesday, November 6, 2012

ElectriFlying Allianz

It was my conviction that Allianz was a good bet. Too bad I sold it at much lower price  for my own personal reason. Maybe I am out of patience or maybe my conviction was not strong enough. 2nd Brother was right patience is always a fundamental key in investing. Kudo to him and for anyone who bought my previous post CONGRATULATION !!!As I write this, it is selling at RM8.08 ... Unbelievable but true ...

Tuesday, October 2, 2012

Cypark The Risk !!!

Have been searching high and low about Cypark. After reading a 28 pages of report by CIMB, this is the things that concern me most. I would copy and paste here for you guys to digest. You are welcome to tell me do you think.... Share your thought. Let's make the buck together .. Happy Trading ...


4.1 Continuity is not certain
Malaysia’s 13th general election must be held by mid-2013. However, many believe that it will be held in 2012. The outcome may result in high-level personnel changes, which could alter the thinking and motivation behind the government’s RE initiatives. If so, we would have to re-evaluate our view on Cypark. However, we believe that the RE initiatives being discussed are not only relevant but politically neutral and stand a high chance of being successfully implemented.

4.2 Change of long-run energy targets
We also understand that the long-run fuel mix of Malaysia is under review. In 2011, nuclear energy was seriously discussed but the EC put this option on the backburner after the Mar earthquake and tsunami in Fukushima, Japan. The importation of hydro energy from Sarawak has also been explored but this initiative was put on hold in 2010. In light of the gas shortage in 2011, we gather that the Energy Ministry is rethinking Malaysia’s long-run fuel requirements. This could result in a lowering of RE targets.

4.3 High-capex expansion plans
Cypark intends to finance up to 80% of its RM735m capex over the next two years (up to FY14) via bank borrowings. This implies an additional RM588m of debt for Cypark, which would raise FY13 net gearing to 258% of total equity. While this is an aggressive plan, note that Tenaga is the offtaker. We believe this mitigates the risk of default given the government’s emphasis on raising the RE contribution in Malaysia. Cypark’s high leverage is further mitigated by the company’s high interest cover, which by FY13 would be around 4.1x.

4.4 Unable to raise debt financing
Over the next three years, we expect Cypark to require RM735m capex to carry out its expansion programmes. In the worst-case scenario of it being unable to secure debt financing and needing to raise the entire amount via equity, the company may issue up to 387m shares, enlarging its share base by 2.3x and may dilute its share price by 71% (based on RM1.90). Note that in Mar 2012, Cypark raised RM26m by placing out 14.5m new shares at RM1.80 per share to institutional shareholders. While this is a concern, Cypark’s success with its 8MW project in Pajam suggests that management has the ability and credibility to secure funding for future projects.

4.5 Short track record
Over a short period of two years, Cypark intends to turn itself from a landfill contractor into a pure RE developer. This would require management to adapt quickly and acquire a net set of skill sets. Also, the FiT mechanism was only formalised in Dec 2011 and Cypark will be among the first to use the new system. This entails operational procedures that have not been tested.

Despite these challenges, we believe that Cypark’s management possess the creativity and drive to implement its RE projects successfully. The company’s first solar project in Pajam was installed as an entry point project (EPP) with the backing of the government’s Performance Management & Delivery Unit
(Pemandu). With this support, we believe that Cypark is in a good position to execute its aggressive goal of building 52MW of additional RE capacity in FY13.


5.1 Long-dated cash flows
As Cypark transforms itself from a landfill contractor to a pure RE developer, the company’s cash flows will become increasingly stable and long-tenured. For example, we forecast Cypark to generate RM200m in landfill contract revenue in FY12, making up 89% of total revenue. From FY13 onwards, Cypark’s revenue
profile will change dramatically. By FY16, we expect Cypark to generate only RM100m (37%) in landfill revenue but RM147m in revenue from RE PPA contracts with Tenaga (63%).

5.2 Earnings set to soar in 2013
With the Pajam integrated RE plant (10MW of RE) under its belt, Cypark now has the credibility to implement additional RE projects. The Pajam plant will contribute RM18m annual revenue (RM11m from solar and RM7m from biogas), starting from Mar 2012. In addition to the Pajam plant, we expect Cypark to build an additional 30MW of solar capacity and 27MW of biogas capacity in FY12. With all of these projects up and running by FY13, capacity will jump eightfold to 60MW and output will rise by 13x to 265k MWh. The solar FiT in 2012 is RM0.95/Kwh for 21 years. The FiT mechanism (see Appendix 5 for details) encourages RE developers to launch their projects early as the solar FiT tariff will be lowered by 8% (degression rate) per year, i.e. an RE developer launching a solar farm in 2013 will be paid RM0.874/Kwh or 8% less than the 2012 rate. The FiT mechanism provides an additional tariff (bonus) to developers using local equipment. However, we do not expect Cypark to earn any bonus payments for its solar venture as the company will not be using any local equipment.
For Cypark’s biogas plants, Cypark will earn RM0.42/Kwh for each unit of RE generated over 16 years. This includes RM0.32/Kwh as the base FiT plus a RM0.1/Kwh bonus payment for efficient gas plants (RM0.02/Kwh) and the use of landfill waste as fuel (RM0.08/Kwh).
As a result, we estimate that FY13 core EPS will surge by 91% to RM0.32. At the same time, we gather that Cypark’s board will seek to raise the company’s dividend payout to up to 50% in FY13 from 25% currently. Our forecast is more conservative and models a 40% dividend payout by 2013. While gearing is high, Cypark should be able to raise its dividend payout because borrowings will be project specific and will be ringfenced at the project level.

5.3 New model enhances cash cycle
We expect Cypark’s cash flow profile to improve significantly from 2012 onwards as the company begins its transition from a contract based model to a full-fledged RE developer. For example, in FY10/11, the company had RM256m in accounts receivables or 1.6x the revenue generated in the same year. This is because Cypark’s old business model depended on the Ministry of Housing to pay it for its landfill services. Over the next two years, we expect the company to unlock RM100m in receivables for services rendered in prior periods. This will help the company to partially fund its RM735m FY12-14 capex programme.
We expect Cypark to receive payment from Tenaga 21 days after the company bills Tenaga. Previously, Cypark took almost a year to convert sales into cash (FY11 conversion cycle was 335 days). Our analysis suggests that in FY13, as Cypark winds down its landfill contract business, its cash conversion cycle
will fall to 81 days or under three months.

5.4 Higher payout from FY13 onwards
Given the expected improvement in Cypark’s cash conversion cycle and cashflow from operations, management is committed to raising the group’s dividend payout from 25% of net profit to up to 50% once its RE projects stabilise. Our forecast factors in 40% dividend payout from FY13 onwards, below management’s guidance. As a result, we expect net yields to increase from 1.4% in FY10 to 6.4% in FY13 (Figure 24). This would put Cypark in the ranks of the highest-yielding stocks in our Malaysian coverage.

5.5 Debt backed by long-term cash flow
While total debt is expected to rise from RM116m in FY11 to RM559m in FY13,
RM448m or 87% are long-term borrowings (8-12 tenure) backed by long-term
agreements signed with Tenaga. As Malaysia’s national utility and the country’s
sole offtaker, Tenaga is, we believe, too big too fail and has an implicit guarantee
from the Ministry of Finance through its 35% shareholder, Khazanah Nasional.

Friday, September 28, 2012


Cypark just announced it current quarter financial result. As usual I eat my own cooking. Long Cypark several weeks ago and add more few days ago. The P & L is good. The balance sheet is so so .... But the cash flow did pop my eyes. it is a pretty straight forward business. I land filled the solid waste. the land cant be used for any purpose. So it convert it into a solar panel fields. Sell/export the electricity to TNB. Of course the solar power is not the main business but its potential is huge. It is a capital incentive business ( solar power ). My mind won't troubled shall the cash flow is manageable to sustain this business model. but the current quarter cash flow is arrrrrrr...... It is a warning sign. Big one some more. Click the link to read the result. Check the cash flow.
Overall the business model is quite stable. Hmmm need some brain storming this coming weekend. Happy trading. I shall be beware of the post budget market too. Need to be cautious man ....

Saturday, August 18, 2012

Market Timing

Someone is probably lying if he claims that he could time the market to the dot. Does the Oracle of Omaha good in timing the market. He humbly said he is lousy in timing. A further insight, come to think of it, he is probably one the the best market timer I have ever known. Didn't he tell us " Be greedy when everyone is fearful and be fearful when everyone is greedy ' ? Isn't that a way of timing the market on it's different way ?
Timing the market shall not be related to analytically analysis. The chart only shows what have happened and we are merely assume that the rend would continue or anticipating the trend would reverse. That looks like  quantitative to me. Nothing wrong with that anyway.

Most of the cyclical business could be timed. For instant, when the palm oil is at the bottom, one could " time the market " to accumulate the oil palm related company. Similarly, we could also accumulate the construction related companies, steel manufacturer, cement producer now for we know that the MRT and the other mega project would  eventually bring some positive impact on the above said. We could accumulate banking stocks when the interest is still low and start selling when the interest rate is picking up. These are the example of the cyclical business. We are always trying to time the swing the of the pendulum.

We could also time the market base of the unexpected event. The flood in Thailand was the good example for us to accumulate the surviving hard disk producer then. Likewise, we could also time the market base on the fluctuation of certain commodities. One good example is the rubber glove producer. We could start buying rubber glove producer like Top Glove,  Supermax and etc when the latex price is almost half from RM10.00++ to currently around RM5.00++.

As changes is the only constant in investing, it is how sensitive we are and how vigilant we are that determine we are going to make a killing or not. In other word, hour sensitivities is the watch to  ' time the market'.
Of course, the could be temporary or ad-hoc certainty that we could pretty comfortable with. A very good example is Hartalega. Unless something major happen, we are quite certain that the profit will surely goes up substantially once the company increase the production capacity in the coming years. Another good example is the REIT. We are quite certain that the profit is pretty stable and it all depends of what sort of yields are we looking for. That is for the unadventurous. I am more of the mix of 2.

But there are another 3 secrete ingredients to make a killing. " Gut, Gut, Gut" !!!
Without it, it doesn't matter how good you are in predicting the market, it won't translate into big action to win you big money. Happy Trading and Happy Holidays.

Tuesday, August 14, 2012


For whoever attend the Hartalega AGM and so happen to read this, hope you share some of the management insight with the rest of us. Tight schedule prevent me to attend it. By the way, manage to  catch the new here  . It looks like growth would be in the pipe lines in the coming quarters. The profit will be eventually goes up significantly when the new production lines start commissioning Sept 2012. Shall the NGC complex be executed successfully, Hartalega would be a counter to be hold for the coming 6-7 years. It is hard to find another well managed company like Hartalega. For a long term investment horizon, at RM4.45 per piece Hartalega is a good buy. Just like cooking a chicken soup, the longer you cook it the better the taste. We need time to fully capitalize the full potential of Hartalega. Enough said about it, the blog is not dedicated to Hartalega anyway.

Saturday, August 4, 2012

Cooking List ...

The market is still hot here are the dishes ( 2nd liners )  for a meal  :

1. Appetizer - Cypark
2.  Main Course - Benalec
3. Dessert - MBL

What do you think ?  I don;t think I have to put a standard disclaimer here. It is just for the fun of it. Comments are welcome. I am running of trading idea... and I am not intending to hold cash. People said cash is King... yeah yeah .. the problem is I don't want to be a King ..... happy trading ...

Wednesday, July 18, 2012

It Is A David Lynch Movie Market !!!

It has been two months. Being busy with my best investment so far. Taking care of my 2 months old daughter then. ( Now 4 months loor :) ). Anyway back to business. It is a strange market out there. Just like a  David Lynch movie, the market is fairly strange. Economic fronts doesn't look rosy. There are tons of problems way ahead. But the bull is keep on charging ahead especially KLSE. It has been recording a new high for the past few days. I can't find a reason for that except the " feel good " sensation when we are approaching the coming general election. Sold half of Hartalega ( unwillingly ) because need to consolidate my accounts in SG to MY. Paying too much fee to SG brokers in comparison to Click Trader account. Call it bad timing or bad luck ( sold it at RM3.87 ), by the time the " bullet" be transferred to MY, Hartalega sky rocket and I ain't an superman who can catch a flying rocket.... I have a year plus to do the transfer but I choose to do it a year plus later. The morale of this incident is don't drag something which should be / could be done immediately.
Is this the epilogue of the coming storm ? Frankly, with over 50% cash in hand I don't give a damn about it. If it tanks, I am happy. If it goes up further I am also happy. Being in the market since 1998, I have never been so comfortable with my current position. Bear in mind the market won;'t goes up forever likewise the market won't tanks to zero. Preparing ourselves could be the best strategy at this point of time. unless you have a ball as big as a cow, be 100% in stocks carry huge risk. When the election is called and the " feel good " sensation fades, some one is going to feel the pain of catching the falling knife. 
I have been talking to 2nd brother the other day. I told him that if you are making less than 10% or worse losing your capital for the past 2 years, stock market is not the place for you. You could blame it as bad luck or whatever it is. The bottom line is you are loosing money in a bull market. Something must have gone wrong instead of bad luck. There is something one needs to look into.
I have a friend told me he " cham lan dou " of knowing me for he is making quite handsomely these 2 years. I told him to study the counters I mention further before making a decision. He said " Friend, I have no idea about anything at all, you are much better in it than me. You are betting on that counter much more than me, if I loose $$$, it is fate lah " .... I was like haiizzzz.... It is not an good idea to blindly follow. Everyone makes bad bet in the market. I made bet bet in JCY, EAH, CHAODA, and etc .... I hope he reads this and be a bit vigilant and not over confidence in this bull run. Happy Trading.     

Wednesday, May 16, 2012

Why It Is Safe To Bet Hartalega

I ate my own cooking ( Bet heavily on Hartalega ) and come on it smell pretty good as well. At RM 7.44 a piece at the time of writing this, it sounds pretty safe if not cheap to me. There are several things I as one of the share holder always bear in mind.

1. Hartalega is the best and most efficient nitrile glove producer in the world and maybe the lowest cost producer. There are noises saying that the price war will squeeze it's margin and blah blah blah.... But read the lines by management carefully. It said they have to put customer order in allocation for the coming months. The whole production lines are running at full capacity. Will the margin squeezed further ? I doubt so. The latest 2 quarters show that it's net margin is still maintain at 20%. Highest among it's peer.

2. The demand of glove is inelastic. The current Euro debacle won't affect it's earning much. The switiching of rubber glove to nitrile glove will continue in quarters to come.

3. It is quite certain it's profit will increase substantially in the coming months, quarters or years. it has the technology, it has the stream of orders, it's has the competitive edge over it's peers. All it has to do is increase its production lines. Unlike its competitor who have tons of hurdles to be clear to catch up with Harta.

4. Shall the demand of nitrile gloves outpaces the future nitrile glove production capacity, all the nitrile glove makers will be doing just fine. Shall it not, who do you think will suffer ? Harta has a net margin of 20% compare to its peers f around 8-10% pr maybe even less, it will "sapu" all the market share by killings all its competitor by lowering it's margin by say 5%. Will that effect their earning ? Will with the increase future production capacity, the earning might in fact goes up. What is the problem of lowering down the margin of 5%   margin but can double your revenue ? I just don't get why some analysts are so concern about it's slight margin erosion. The main issue is the production capacity, which the management is putting a well structured production expansion plan.

5. The dividend policy is laid out with at least 45% payout ratio. While we are enjoying a decent level of annual dividend yield, we are actually on the " earning expansion boat " in the comings months. 

6. Certainty. There is no 100% guarantee return , but it is quite certain that Hartalega will be doing very well in the coming years. The reading is quite clear on the wall. All it has to do is increasing it's production capacity. It is silly to buy producer which is running at 70% production capacity and not Hartalega which it's order outpaces it's production capacity now. Is it safe to bet Hartalega at RM7.44 ? YES IT IS INDEED. 

Will you get a cheaper price a piece ? Ha ha ha ha I which I have a crystal ball to tell me that. But I will certainly load more shall the price go further down in future. By the way 6 sen dividend ex on 23rd May and ex bonus and free warant on 24th May. 

About Greece exit from Euro ..... I can't see a reason why the whole Europe want to see that happen. If I have to bet whether Greece exit Euro or not I will bet NO. Anyway, I doub;t the whole thing will effect Harta earning. Happy Trading .....

Thursday, May 10, 2012

Wednesday, February 29, 2012


I must admit that Allianz could be a bad call. I still like it and the latest result is still  fundamentally sound except for  the 15 mil lost  ( Court Case ) and the car insurance pool lost of 10 mil. If we includes these 2 items the over all earning is satisfactory. Illiquidness  is the issue here. Have been holding this counter for 18 months. Neck very long liao and I am losing my patience. Think punya think, holding it for another 12 months is  a opportunity cost for me. It is a very reluctant call but I opt to reduce the opportunity cost by cutting my holding by 75%. Padini would be a good bet. Oldtown is not too bad but valuation at the current price of RM1.29 ( EPS  40.2 - 8.4 /330 = 9.6 sen ) = > PE = 129/9.6 = 13.44 which is for me is not so attractive. I still prefer Padini for its track record and the coming aggressive expansion plan in the pipe line. What do you think ? Adios. Happy Trading.

P/S : I would definitely revisit Allianz from time to time for I think it is still a good call for the ones with a very long long long long investment horizon. Always like Billy Crystal as the host for Academy Award

Wednesday, February 22, 2012

The Bonus Issue and Free Warrant ....

Hartalega Just released its financial result for period ended 31/12/2011. ( This & Here )  As  expected, it makes about 50 mil this time. The 2 additional lines in Plant 5 have commenced it's production in Feb 2012 according to the statement and Plant 6 is target to be completed in Sept 2012. If everything is just as expected it's profit would start to shine again at the end of 2012 ( or Q1 2013 ). The result is something could be proud of under such kind of challenging operating environment. But what surprise me is the free warrant issue. I can't find anything in Bursa Malaysia website at this point of time. But I found the news as below. Could someone verify that ? ....

Hartalega Holdings Bhd registered a strong net profit of RM152 million for the nine-month period ended Dec 31, 2011, compared with RM138 million for the same period of 2010.

Revenue grew by 27.4 per cent to RM691 million from RM542 million.

"The significant increase in our results is due to the Group’s continuous operational efficiencies and excellent cost management," said its managing director, Kuan Kam Hon, in a statement today.

He said the increase in natural rubber prices followed by the drop in raw material costs for the production of nitrile gloves, coupled with ongoing technological advances to the company's manufacturing facilities, has had a positive impact on the bottom line for the quarter under review. 

"We are also experiencing an evident shift from natural rubber to nitrile gloves. "This bodes well for our range of products, given the reputation that we have built over the years, as a trustworthy manufacturer of high quality nitrile gloves," he added. 

Meanwhile, in an effort to improve liquidity of the stock and to reward shareholders, the Group is proposing a bonus issue of 371,654,940 bonus shares of 50 sen each. 

The issue is on the basis of one bonus share for every one existing share held by shareholders on the register as per the entitlement date. 

In addition, the Group is also proposing an issuance of 74,330,988 free warrants on the basis of one free warrant for every five existing shares held by the shareholders. 

The world’s largest synthetic glove manufacturer also announced that it has received approval from the relevant authorities to proceed with the construction of Plant Six. 

"This will have no material impact on the current financial year ending March 31, 2012. 

"However, as we look ahead towards the coming financial years, we are optimistic that capacity from this plant, will help in strengthening our position as the world’s largest producer of nitrile gloves," Kuan said. -- BERNAMA 

Read more: Hartalega net profit, revenue swells

Tuesday, February 21, 2012

You Don't Have To Eat If You Don't Want To

I have been talking about Hartalega for ages .... I mean probably a hundred years or maybe since the beginning of time. Ok . Maybe not to that extend. But, seriously I have been blogging about it for quite some time. I ate my own cooking and I bet big on it. For the one who hold Hartalega as me, I certainly would like to share any article about with you guys. But to accuse me of using this platform to " jack up" the price... hahaha come on lah .. who am I ? I ain't the celebrity blogger like Dali or Moola, who would listen leh ... I am not to that par lah ... I wish I am :)....
However, if you don't like me blogging about it, what could I do ? Do I have to stop talking about it ? Maybe I should ..... Here you go .... Click Here 
:)...  Just let me shiok sendiri pun tak boleh meh ..... Adios .... Have a great days ahead....
P/S: You dont have to read if you don't like it. Just as the title said you are not obliged to eat my cooking.

Saturday, February 4, 2012

Research Report !!!!

Here you go ...Just read this and wwll like to share it ..
" Buy this stock. Although its share price has risen by an impressive 30% YTD, we see more upside. Hartalega’s 2013 PER of 10x is still a 45% discount to Top Glove’s 19x, despite industry-beating profitability over the last two years. Most importantly, we see a major re-rating catalyst from a potential bonus issue. Fundamentally, Hartalega’s operating environment remains impeccable owing to favourable input costs. The stock remains our top sector pick, with TP upgraded 25% to RM8.50 on a conservative 12x 2013 PER (DCF previously), still a 30% discount to Top Glove’s 5-year average PER." For full report click the link below. Happy Holidays

Friday, January 20, 2012

Gong Xi Fa Chaiiiiiiiiii !!!!!


Sunday, January 15, 2012

A Little Chicken, A Chicken and A Roster

If a kid ( Little Chicken ) cut que  right in front of you when you are with a pregnant wife what would you do ? A normal person I sounded the Little Chicken " Adik , Janga potong Q. Itu tak baik and tak elok ". Of course I let the Little Chicken cut my que which brought the attention of the chicken. She said " Apa sal U marah anak saya ". I calmly told her : " I am not scolding him. I just told him it is not a good mnner to cut que ". The Chicken was not happy with that saying : " Saya mak dia, dia que untuk saya tak boleh ". I said : " Tentu boleh dia untuk Q untuk cik. Tapi, dia sudah cut Q saya." The mother was behind me and of course the kid sneaked right in front of me and my wife. I was kind of pissed off with the Chicken but not the kid. The kid is innocent and he is still in the learning curve to be well manner man. I told the Chicken : " Saya cuma bagi tahu, potong Q adalah tak elok. No manner. Itu saja. Tak tahu kah cik tunjuk anak-anak budi bahasa ". I was kind of annoyed and seeing the conversation was leading no where so I just let the kid got what his mother asked him to do and carry on with my shopping. I took  me about 20 minutes to get everything done. And Kah Pommmmmmm disaster awaited me at the main entrance at The Jucso ( Mid valley ).
The Roster   was waiting at the main entrance for me. The moment the Roste spotted me he went shouting : " Apasal you marah anak saya !!!! " I was like WTF ? .... Everyone was watching us. I went : " I tak marah dia. I cuma bagi tahu tak elok and no manner potong Q. Buat apa I nak marah dengan budak ? ". He was shouting : " Wooooiiii I cakap apasal u marah anak saya.... No manner no manner apa.... kalau tak puas hati u cari bapa dia.... Nasib baik tak ada kat situ ... kalau ada... kena Kauuuuu &*()&^%#$@ ". I was like damnnn this guy want to get attention from the public. I just shook my head and walked away. He was shouting at the back. Probably want to get more attention from the public. I was pissed off ad thinking if he was after me I would sad : " Encik saya dan isteri saya rasa terugut dengan jerikan encik. Kalau encik nak ugut saya atau henta saya, sila kan. Saya jumpa encik kat balai saja. Biar anak and iter encik tunggu u kat luar lokap. "
This is a pissed off post and have nothing to do with the market. The moral of the story is When A Roster Married A Chicken and Teach The Kids Like A Chicken. The Kid Will Grow Up And A Roster.  !!!! I just feel sorry for the kid.
Anyway Happy Trading and Gong Xi Fa Chai ... Huattttt ahhhhhh :)
P/S : What will you do if you were me  ? :) .. Just curious

Tuesday, January 10, 2012

I Need An Axplanation For This !!!!!

LPI released it's 4Q 2011 report ago. It will be boring to go into detail about it's asset quality and it's investment income. We know that it's asset quality and investment income are always top among the peers.  Let's cut it short. In 2011 LPI is making 154.50 Mil which translate it into and PE of 20 ( At he time of writing price = 14.00 EPS 70.++ sen ) . The dividend yield is about 5% ( Assuming 100% payout for the 70 sen per share income ). The PE yield is about 5% as well since 1/20 is 5%. NTA = 5.36 as on ( 4th Q 2011 ) at 14.00 a piece that is 2.62 NTA.
Is LPI a well managed company ? No doubt about it.
The Question is here ? Why Allianz still priced by the market at 4.80 at the time of writing. 3Q of 2011 sees a profit of 97.75 mil. Assuming the 4th profit would be average of t he 1st 3 quarters, that would translate the annual income of 97.97x4/3=130 mil or 34.63sen ( dilute earning per share i.e assuming all Allianz-PA converted into Allianz ). That is a PE of 13.8. Diluted NTA = RM 3.91 ( as on 3rd Q 2011 ). That is 1.23 NTA at the price of RM4.80.

Now, both Allianz and LPI are in insurance business. That is a balance sheet oriented business.
LPI ~ 2.62 NTA , PE=20 at the price of RM14.00 ( That is fairly valued by most analysts )
Allianz ~ 1.23 NTA PE = 13.8 at the price of RM4.80 ( I don't see any analyst rate it )

If this is a beauty contest, Allianz shall win hands down. The only flaw is that Allianz is not paying out dividend ( the dividends paid by Allianz so far is negligible ). But this is a balance sheet oriented company anyway. Emphsis should be on it's NTA and it's earning power. Allianz is high growth rat company. I just understand why it is commanding such an "attractive" price in comparison to LPI. maybe the guru is right if a good company share price didn't go up forthe past 3 years , it probably won't in future.

I am longing Allianz. tell me a reason to change ship ? I am holiding for a 1.25 year now. Maybe another 1.75 year for me to think about it. Adios... Happy Trading. :)

Sunday, January 1, 2012

Review of Prediction and 2012 Prediction

Here are the predictions made 27 Dec 2010 :

1. QE2 effect is felt through out the region especially in US which will balloon the equity market for a while.
~ This is half baked. But it I don't think anyone will deny the QE2 was taking it's effect if not 100% effective. Going forward into 2012, US will fare better than Europe. China economy health would be a major concern.
2. Economy is getting better than expected. But unemployment will come down a bit but still remain high.
~ US economy indicator is heading north. The labour market is showing good sign of recovery in Q4 2011. Unemployment remains high as expected. Unless there is a major fall out of Europe, labour market should show sign of better improvement in 2012 which is a " Vigra " for the overall economy and equity. Recovery would be there but it would be bumpy road ahead in 2012.
3. Inflation would be edging up higher in China. Instead of raising the interest rate, the China would opt for higher target of  Yuan appreciation especially against USD.
~ Out of prediction. The China tightening took its effect. Inflation is edging down in China in the last 2 quarter of 2011. However, letting the yuan to appreciate more is helping to ease the inflation. I would expect Yuan to appreacitae against USD but not a figure that we shall be shouting. China is still a export oriented economy, letting Yuan to appreciate at higher pace would not help much to push it's economy. But, politic is still politic, Obama administration would keep on pushing China especially in 2012 ( The election year for US )
4. Indonesia will fair much better than Malaysia again.
~ This is a 1 + 1 =  how much prediction. Again 2012, Indonesia would do much better than Malaysia.
5. Latex price will remain high. Users are switching more to nitrile gloves from rubber glove.
~ The latex price caught me by surprise as it was approaching Q4 12. Current the price is around RM6.++ per kg. It  will certainly intensify the competition between Nitrile glove maker and rubber glove maker. However as the nitrile rubber is also experiencing the fall of it's price, the momentum of consumer to switch from rubber to nitrile till continue. Nitrile glove is still a premium product and it cost of production is still lower than rubber glove maker. Entering 2012, nitrile glove maker will fare better.
6. Properties will increase in US.
~ Yeah it did increase a bit. The sales of new and existing home was increasing even though it was at baby pace. The housing industries need to be pushed further in order to see the raise of the economy.
7. Interest rate would remain low in US as inflation doesn't impose a threat.
~ As expected. 1H 2012 would remain same. If there is no headwind from the Europe, interest rate and inflation shall pick up modestly.
8. Commodities price would come down after hitting another historical high.
~ Yeap, commodities felled in the 2H 2011. Nothing goes up forever as do nothing falls down forever. Commodities would head north shall the economy pick up as the 2H 2012.
9. Gold price would come down.
~ Yeap, it was falling towards the end of 2012. But still booked a gain in 2011. Gold is still an alternative investment product but not for me. Better buy SPRD GLD than Gold Investment Account from the local bank. The spread of gold price offered by the local bank is too big for me to swallow. Gold will book gain in 2012 but not much.
10. European debt issue still remain an issue. But market would like get " used to that "
~ As expected. Europe crisis would still be the headline of the 2012 newspaper business section.
11. North Korea is still stubborn as before. There would be NO WAR with south Korea.
~ If anyone can predict that Kim Jong Il would die in 2011, let me know I want him to read my palm. :). Thing will remain status quo in 2012. But I will like to see North Korea open it's door like China. I just feel sorry for the citizen of North Korea. They don't even know what is going on out there.
12. KLSE would touch 1650. DOW reaches 1300  13000 S&P 500 touches 1350.
~ Nope KLSE hit highest 1597  ( which is only 3 pint shy to 1600 , walau I must go and buy toto or magunum4d ). Ending 2011 with slight positive is considered good in comparison to the global index ). Dow hit highest 12876. Pretty close. S&P 500 hit highest at 1370 Pretty close as well. 2012 spells more uncertainty especially the Euro mess. However I still believe market would adjust itself to the north but it would be a bumpy ride. 
13.BDI will still under pressure because of the flood of new fleets.
~ New fleets keep on flooding the market. BDI will still under pressure. Maybulk could be a company under watch for dry bulk sector shall be bottoming in 2012. It has been  rough years for dry bulk carries. Nothing should remain at the bottom for too long. It is a sector under my radar screen shall the opportunity arises. 
14. To be added if something comes up before the new year eve
14. General election would be held. Pakatan will have tough fight.
~ Nah.. I am totally out. GE13 shall be in 2012. If not 2013 ahahahahahaha.... Pakatan would have a easy ride this round. 
15. More Malaysian are migrating out of Malaysia.

16. Still a way to go for me to hit the "pop"
~  Yeah still a long way. venturing property investment. Properties would remain soft in 2012 especially after the new " net income " guide line by the Bank Negara. Condominium would be most hit. Young couples / flipper who commit a 500k condo would find it hard off the unit, find it even harder to rent it out at rent with positive cash flow.  However, I would suspect a major changes of properties price. Landed property at Klang Valley area would still has it's market. After 2012 or 2013, with all the condo ( under construction now ) floods the market, then we would a  real deal.
17. Bank Negara would be dilemma to increase the interest rate to fight inflation for that would encourage more hot money inflow. Hence, properties would remain high floated.
~ Yeap. Property price remains high in 2011. Interest rate remain the same but with the new " net income" guide line, it shall put some damper on the property price. As mentioned above, price will grow at a much slower pace. Cant expect a 25% price increase in a year already. We shall be lucky enough to get a 10% yearly gain.
18. To be added if something comes up before the new year eve
18. US munibond would not default. If it does, it would be trouble again.
~ US won't default as they can always print money to pay. 

2012 would be a year of uncertainties. Well get used to it. Bursa won't be an exciting market. As long as no foreign to come in, we could only main sendiri. That doesn't men there is no money to be made here. Plenty of good companies to choose.  I bet u know my pick ..... haha I am going to stick to it. Just take care of the down side, the up side would take care  of itself. Happy Trading.... Yesterday you were a year younger, wishing the older you get wiser, healthier and happier. HAPPY 2012..... Adios