Comment - My Portfolio

To me the reporting season is over. Public Bank reported satisfactory results, EPS growing at mid teen as expected. Dividend payout as per guidance given by the its Management. The immediate future of banking industry is not rosy, this can be observed by PE fetch by Maybank, CIMB and also Public Bank. To my surprise all the banks are traded at low teen level, this is not usual, unlike the situation of bearish market every is cheap. Investor always priced the immediate future into share prices, i don't want to talk about world economy, it is the booming of property price and stringent credit control do matter. Sales of newly launched properties are not snapped immediate like previous, secondary market is slowing down, all these mean loan growth will likely to slow also. Now we also heard about hire purchase is more stringent also. Based on the above, how investor willing to pay premium for banking stocks? CIMB is the stock to be avoided by most investors due to GE13 is not far from now. Experience of 2008 where the index plunged almost 100 point within 2 days and this counter is hammered down by the market. However it do survive and perform satisfactory there after is something to think about. Is the market already priced in this event?

Hartalega reported results within expectation, and corporate proposal of 1 for 1 bonus issue and 1 for 5 free warrant is something the market like the most. No wonder its share price had appreciate more than 40% from beginning of the year. Construction of Plant 6 already started, and expected to commission 2 new lines by Sep 2012. Finally it is not undervalue any more. One of my friend called me saying that we should sell it as it is traded at PE 15, when i ask more the answer is only it is PE 15. Plenty of stock traded at PE more that 20 like DIGI, Maxis, Axiata, Nestle and blah blah...., and seem like he is not interested to ask. It is true that Hartalega never traded at PE 15, not like Topglove anytime investor willing to pay PE 18 and above. Some said margin is dropping due to new capacity from its competitors, this is valid. However eventually it is the low cost producer will win the game. Profit margin of bank is going down for years, but Public Bank still survive and making record profit year after year, this is because the market is still growing . Similar to nitrile glove, the market is growing and will grow further from developed countries. No point you going to sell the best nitrile glove producer which going to grow for years to come just because it is traded at PE 15. Name me a stock in Bursa Malaysia is possess superior quality than Hartalega, which happen to be in grow industry.

Financial results of Allianz is below my expectation, 15 mil out of court settlement and 10 mil losses for insurance pool, which affect its profit significantly. Dividend payout also at lower end. Its share price going to be side line as investor have nothing to shout about.