Friday, September 30, 2011

Comment and Opinion

I did not manage to capitalize on the recent share price correction. Limited fund available at the moment and this fund also reserve for my property investment. I still of opinion that the sell off is only correction not the beginning of the bear market. I aware that many will think otherwise. Share market tend to correct every 3-5 years and this time should be also correction not recession. Some investors already feel the pain, especially those invested in the 2nd grade stocks. In order to survive in the stock market and make money always not an easy task. Over more than 10 years of investing experience tell me to only stick to really well managed companies is the way to weather through the market fluctuation. One should always take a long term perspective and prepared for the up and down of the market. If you ask me some of the stocks are quite attractive like CIMB and Aeon Credit. I sold one service apartment recently and reinvested into a terrace house. This is big investment for myself, hopefully i made a correct choice, instead of buying share i vested in property. Seldom people buy terrace house for renting purpose but i plan to do that. Recent property price hike make some of the landed sub-sale look attractive as compared to newly launched condo or landed.


  1. Need your opinion. Are you willing to pay, say 10 - 15% more for a property because of its extensive renovation and ID. And that property is acquired for rental in the short term and capital appreciation in the mid-long term?

  2. Properties and stocks are the same, as for property...the most importance is location, you must get a prime location...just as for a company, if it is a money marking company then even in crisis, the return will still be fine.....just my 2cents :)

  3. Tiger, there are few issues you need to consider, 1st is the renovated items going to last how long. Said you strategy is to dispose in 2 years later, are these items still look acceptable to new owner by then? If no then there are not value-added thing you can shout about, because the new owner need to re-furbish it. So the new buyer may not want to pay you premium price as you paid.

    2nd, the new buyer may dont like the design due to personal taste or the design is obsolete. So may have difficulty to sell at also premium price.

    3rd, 10-15% higher is very substantial in property investment. In property investment buy cheap is one of crucial cutting edge. If the price you bought is the price of other investor want to dispose 2 years later just imagine which one will get the buyer first.

    Lastly, it is very difficult to get bank valuation for the extensively renovated house. So you have to fork out additional money between your purchase price and the valuation price. So your investment cost increase substantially.

  4. Snowbreeze, investing in property is quite similar to stock but not the same. A lot of investor said location, location, location as it is nothing wrong. At anytime you are also able to buy good located property, i mean sub-sale, like KL Sentral, but what is the price? There are able to rent out at 3-4k to expatriate, but want is price you able to operate with no negative cash flow?

    Sometime you also need to consider whether the rental market will rise or not, or the property price still have any room to appreciate? Because all these will affect your strategy. And is it viable to invest?

    Buy stock mostly is using our own money but property mostly are leverage game. So please dont forget the holding cost. Buying good located property sure can survive, i mean the property can survive, but how about us?

  5. 2ndbrother,

    What is your view on Hartalega holdings which just released their quaterly report yesterday? For the quarter ended 30 September, Hartalega posted a 2% decline in net profit as compared to the corresponding quarter in 2010.

    The demand for nitrile gloves from the global medical industries is still on the rise. However, headwinds such as volatility of the dollar, increasing competition in nitrile gloves from other manufacturers, and the rising cost of raw materials seem to be unforgiving to Hartalega as well and they are one of the world's lowest cost producer of nitrile gloves.

    Hartalega is a well managed company with a huge moat in the production of nitrile gloves. Bottom-up, Hartalega is indeed a very compelling stock to own. From the top-down view, it seems that there are many reasons to sell the stock.

    So, under these circumstances, what are the chances of the erosion of Hartalega's earnings the couple years to come?

  6. heineken,

    Pertaning to hartalega result, i am a bit disappointed but nothing to complain. The volitality of US dollar will continue to persist until global crisis being US itself or Eurozone is settle down. The prices of raw nitrile is depend on demand and supply, so nothing hartalega can do. If not considering the forex loss of 8.6mil, hartalega financial results is barely affected by rising of nitrile prices.

    Both latex and nitrile prices had dropped recently. My view is both latex and nitrile glove will co-exist for years to come. Nitrile glove is going to gain more market share as what already happen in US. No matter how, nitrile glove is still a premium product and tend to have pricing power and higher margin than latex glove.

    Business is like that if the margin is good, it tend to pull more competitors to the game. The question is how all these competitors able to compete with hartalega. For now and immediate future, there are no producer able to fight hartalega productivity, technology and cost. At this stage hartalega not required to drop selling price to gain order, however if it decided to take more market share after incresing of production capacity, it will be nightmare for others.

    So in future, hartalega profit margin going to be lower but profit will be higher after capacity expansion.

    Making money in stock market is not the ablity to predict how a company perform quarterly but years to come.

  7. Dear 2nd brother,

    Nice to meet you.

    Could we link exchange ?

    Thank you.

    Best Regards,
    Bruce Lee

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