Wednesday, August 14, 2013

Buying Kossan & Add Position to CIMB

I bought some Kossan. Nitrile glove is gaining more shift over momentum, especially from developed countries. It is money if you have the capacity to produce more nitrile gloves. Previously I always assumed Kossan as "kiasi" glove manufacturer due to its products mix of 50:50 between latex glove and nitrile glove. It is not as daring as Hartalega, its Management seem to be too conservative. However it surprised  the market with its latest aggressive expansion of plant mainly focus on nitrile glove. It is forecast to make more profits for years to come. I am convinced they will make it although its efficiency is no where close to Hartalega output of 45000 pieces of glove per hour. The price is not cheap, so can not consider as value buy, however profit increase will justify higher share price for years to come. There is no industry where production capacity is equal to money as compared to nitrile glove player. I repeat, it is MONEY if you have the capacity, the market is big enough to absorb any new nitrile glove capacity.

I also add my position of CIMB. Its Management has guided that 60% of future profit shall come from overseas (region). CIMB has never fail to deliver since 2003. Its share price is attractive currently at least to me, therefore bet big on it.

Monday, June 24, 2013

Update on My Portfolio

Another post only after 5 months, how to "cari makan"? However to my surprise the number of followers is increasing. What a boring blogger still manage to pull followers.

I disposed my Allianz due to it is fully valued currently based on my valuation, nothing wrong with the company.

I bought some CIMB as the dust already settled. Still opines that it is not fully appreciated as a regional bank by investors. I believe that a regional bank shall fetch a higher PE valuation as compared to a normal local bank. Although one can argue that Maybank is also on track to be a regional bank, which is traded at comparable PE with higher dividend. But one should notice that Maybank is following what is done by CIMB. So why want to buy a follower instead of a leader? CIMB is evolving constantly to realize its ambition to be a regional bank, which is still at infant stage. I foresee there is still more room to grow. Personally I like growth, I like a company able to grow meaningfully in years to come. It also keep streamlining is core businesses and improve its operational efficiency with CIMB 2.0 programme.

My favorite, Hartalega, is flying, hope that the sky is the limit. With NGC already move a big step forward, market appraised immediately with a even higher PE valuation. It is set to grow for years to come with this NGC, which is quantum leap. I said it is a quantum leap which it is, because instead of following what other glove makers did, it plan to multiply is capacity in a single plant. Other glove makers normally plan a plant follow by another plant with normal capacity expansion only. This how I valued Hartalega's management, I don't see a close fight in this sense. Some more NGC will also the most efficient plant by industry standard. Top notch management! It set the standard for others to follow, which I don't think others able to duplicate.

Wednesday, January 16, 2013

Stock Pick 2013 & Strategy

Things have been stagnant for months, no latest development for me. My strategy currently still waiting for the market correction to pick up some stocks I like. GE13 is around the corner, why not wait for it since I am waiting it for months. The bull market starting from early 2009 until today it is still not taking a break, market correction is unavoidable, only when.

Last year my stock pick were Hartalega & Allianz, both of them beat the market by decent margin. Hope that I am able to repeat the same call for this year and years to come. This year I don't have any stock call particularly at this moment, as I believe that the market will present a good chance to buy some good quality stocks that I admired like Hartalega, Allianz, CIMB, Public Bank, Jobstreet, and LPI.

Nothing cast in the stone, is all depend on the prices presented by "Mr. Market". Basically I like insurances, banks and nitrile glove makers, asset light company with solid recurrence cash flow. Although some consumer stocks like Nestle, Dutchlady and DIGI are solid with free cash flow but they are not cheap either. I also don't think that they will drop to PE below 18, this is the pricing I will enter.

Old Town is flying for last few months, it is eye catching. Its capacity expansion and China venture seem attractive. However, the customer experience at their outlet is suck, big time. It should be the worst customer service provided among all F&B. Every time I think of buying it, i not feel comfortable. With this kind of service, how it can retain its shore in the highly competitive environment.

HLFG is relative cheap entry as compared to Hong Leong Bank, however I dont like this method of investing.

Tuesday, November 20, 2012

Market Comment

The current state of market is very difficult to understand, we have some big banks like Maybank, CIMB & Public Bank traded at low teen PE. We also have some consumer related counters traded at very high PE. Are investors too cautious for business cycle related company but seeking for low risk dividend yield company?

Judge from the above, it seem like general investor already priced in any political shake-up might happen. If like this, I am of opinion that the correction after General Election may be very minor only. I hope I am wrong as I ready to capitalize on any correction.

Public Bank and Hartalega posted good financial results for quarter ended Sep 12, both companies will continue to grow for years to come, especially Hartalega. No point taking profit as future is still bright.

Allianz is yet to announced its financial result, another good quarter results will definitely boosted its share prices again.

Jobstreet posted a good set of financial result for quarter ended Sep 12. Based on its latest financial results, the share price seem acceptable, however it is also a tight liquidity counter.

Thursday, August 30, 2012

Allianz - Revisit

I blog about Allianz 2 years ago, at that time it was traded below RM4.00, I keep highlighting Allianz after that but it share price only appreciated recently only. I vet through some of the recent analyst's reports on it, amazing to notice that they (so called analyst) still assume that Allianz is a smaller company as compare to LPI and Manulife. What a big mistake they made, indeed Allianz is the biggest general insurer in Malaysia in term of underwriting premium, and now also in term of net profit.

Although LPI is traded at around market capital around 3.0 billion and making around 40 million last financial quarter, by annualize it going to make around 160 million for FY12.

Allianz is making 57million for the last financial quarter, look like it going to make more that 200 million for FY12. And it only traded at market capital around 2.4 billion.

Investor priced LPI using dividend yield model, that is why it fetch a very high PE valuation.

Allianz is set to grow after rationalizing of business previously acquired from CIMB, and put in place better underwriting discipline. It is a matter of time Allianz will start to pay good dividend, then it will be traded at market capital higher that LPI. The logic is simple, end of the day it is the net profit that does matter. Although a friend of mine keep telling me that net asset is a more accurate measurement for insurer, but I choose to follow the net profit method. You can tell me anything, but to me net profit or better still cash flow

Previously I also mentioned that it is a matter time market capital of Hartalega will be higher that LPI, QL ........a bunch of them. Seem I am correct at the moment. The issue is still haunting Allianz is the tight liquidity.

As I had mentioned a couple of time that patience is the only advantage a retail investor possess.

Monday, August 6, 2012

CIMB - Revisit

Over the years, CIMB had transformed from an investment bank to universal bank, then from universal bank to a regional bank. It is a of the good foresighted company in Malaysia. In term of management competence I rank it the best in Bursa Malaysia. Its shareholders have enjoyed good profit for years. It is an ordinary business that well managed. Its success is partly due to political link, and currently overshadow by this link.

As general election is around the corner, investors priced in the potential outcome. After read through an interview appeared on The Star on 4 August 2012, I must say I am impressed by it. It is the most ambitious bank in the Asean region, not even Singapore banks are that ambitious. As guided by Nazir sometimes ago, its Indonesia operation had became the largest profit contributor, over times its oversea profit will outpace local profit contribution.

Its planning to list in Thailand or Indonesia will enhance it valuation in my view. Local investors still not priced in a valuation of Regional Bank.

Questions in my mind, 1st, do investor priced in the political risk? 2nd, do investor priced in regional bank valuation? The worst scenario of buying now or the potential price adjustment of buying after general election?  The bank still will be well managed or ambitious if Nazir is not around?

Thursday, July 26, 2012

Common Stock Uncommon Profit

"Common Stock Uncommon Profit" by Philip Fisher. To me, this is the best stock investment book I ever read. I had benefited from this book by applying his philosophy and method in Bursa Malaysia. However, I will not provide any comment on this book here.

What I intend to share here are stock investing strategy and stock selection that in my opinion will result in uncommon profit.

1st is buying growth stock that its profit going to increase substantially for years to come, and hold this stock for years to enjoy the grow of business profit. As business profit jump, share price sooner or later will follow. Then there is the likelihood that investors will value it differently that resulted in change of appraisal. Once change of appraisal is happening this stock will fetch a higher PE valuation. Time is good friend for this type of stock. As time passed, share prices this company will outperform the market as a whole then resulted  above average profit or uncommon profit. I like this approach very much. This is the method suggested by Philip Fisher 80 years ago, as today this method still intact. My favourite, Hartalega, is this kind of stock that I hold for years, and will hold for years to come.

2nd is buying good or above average business or stock during bad time or market correction. This method will caused you buy at lower entry price for good stocks. As, Benjamin Graham taught us the stock market is higher volatile and fluctuated, we must mentally and financially prepared to face it. Instead of ride through the up and down, which we are impossible to avoid, why not we are prepared to capitalize on it. Stock market tend to have a correction every 3-5 years and major correction or crisis every 8-10 years. I can not fight the market force, however I am prepared to capitalize on it. To be greedy when other is fearful. I don't mind other call me speculator, to me it is the uncommon profit that count. I practised philosophy of Benjamin Graham.

3rd is buying good new business or new product that will increase profit of a company substantially. The risk of this method is on the high side, but the reward can be very very high. Bursa Malaysia is short of this kind of company not like other countries. The best example I can think of locally is Jobstreet. If you vested since it listed, you are sitting on good return. Off course in US we have this Apple or Google.

4th is buying above average old economy industries. But you have to be quite sure that this type of company still able to achieve above average profit for years to come. Or this particular stock is undervalue or overlook by investors.