Wednesday, 25 June 2014
Datasonic is not without fundamental. The prospect is clear as day light. The previous events of UMA, newspaper speculation, over exaggerate comments on its stock price, and most important - envy, had somehow killed the sentiment of DSonic for the last 2 months or so. But don't mess with her. She got substance. Not an empty vessel. She will bounce back and bounce back she will.
Now its stock price is trading around RM2.00 as I write this. This is equivalent to about RM4.00 before ex-bonus. Let's re-examine the chart. When was its stock price traded and closed above RM4.00? It was between 26.3.2014 to 03.4.2014. That was only for 7 days! It was hit with limit-down on the next day 04.4.2014. How many had bought during those 7 fateful days? If you have bought during those 7 days, ask yourself what is the reason. There is no right or wrong reason. Whatever reason it may be, it should make you better understand your investment philosophy.
Its stock price is now back to RM4.00 level. I don't see anymore negative comments now unlike the previous round when it touched RM4.00 and the negative comments got intensified when it hit RM4.50.
It is a very good lesson to learn from this episode. First - invest in stock based on value investing principle will never get you wrong. Second - have patience. Third - invest for long term. Fourth - don't speculate hoping to make quick profit in quick time.
Time and time again has proven that if you invested based on value investing principle, you will always at the winning side. Presbhd, OCK, and Ecoworld just to name a few. SCable, Hovid and Caring will be my next new story. It is not a question of will it happens, but it is a question of when only if you could wait a little longer. By the way, the first batch of some few hundreds towers job is pending announcement. Let's wait with abated breath.
Someone asked whether I buy more or sell when its price limit down previously. I posted my thought on this on 20.4.2014. Here. To recap, I have invested another 20% units at RM3.70 after it was hit with limit down. And my patience paid off in just 2 months. When the company's fundamental is as clear as daylight, nothing will sway me to part with my old flame.
My friend suggested that I should have sold at high RM4.87 and buy back later when it drops. That is definitely excellent thing to be able to do. But I just don't have the luck neither I am a stock expert to time the market. I am still learning.
Its price closed new high post-bonus-issue at RM2.02 on 25.06.2014.
You have my highest respect !
"We are trying our best to protect the country. I'm Malaysian. In the PDA (Petroleum Development Act), it is very clear, oil and gas belong to all Malaysians, .... we are the custodians. It is amanah ... diamanahkan ... the word amanahkan is very strong - as a Muslim, it would be a huge sin if I abused 'amanah'. "
- Tan Sri Shamsul Azhar Abbas, President and CEO of PETRONAS.
|The Edge Magazine|
Monday, 23 June 2014
When You Believe
EcoWorld going to jail, the Pudu Jail? The more you don't believe, the more it will surprise you.
Its price closed at RM5.39 on 23.06.2014.
You can take the company away from a man's pride but you cannot take the pride away from the man.
Wednesday, 18 June 2014
Property sales by developers have been pretty weak. It started since beginning of this year. No thanks to the ban on Developer's Interest Bearing Scheme (DIBS) and compliance to the guideline on loan capped at 70% for the third property, many developers are feeling the pinch as sales are not moving. On one hand, the guideline has managed to curb speculation but on the other hand, it will affect the bottom line of the property developers which in turn will affect the company's staffs as they may expect to get lower increment or bonus come year end or not receive at all. This is to be expected. With low sales, companies find it hard to give out good bonus or increment.
There will be cascading effect. Lawyers, engineers, architects, project consultants and property agents are expected to be affected as well. Lawyers will see their business dwindling due to less conveyance works to do. Engineers, architects and project consultants are either have to slash their fees or expecting to get lesser jobs as developers are planning to hold back some of their new launches. If current projects cannot sell, they will not dare to launch the new one.
The buyers. It is good that first time house buyer still enjoy 90% loan from the banks. And it should continue. But with house prices getting higher and not seem to be coming down, it is still a big hurdle for these first time house buyers to fork out the 10% down payment even if he or she qualifies for 90% loan.
Banning the easy financing scheme like the DIBS is a double-edged sword. It helps to curb speculation but on the other hand, the first time house buyer losses the opportunity to buy their first house with easy financing package. You want to help the first time house buyers or focus your energy on curbing speculators? I think the current cooling measures have got the reverse effect on the former.
According to many developers, there are still strong buyers' interest but getting financing from the bank is a big headache. Now property developers are finding ways to promote their units. You cannot blame them. They need to survive. They need to pay their staffs' salaries. They need to pay their shareholders.
Who will get the blunt at the end of the day? Of course the super rich fellow would not have the problem with financing. It is the working class citizen. I am not just talking about the lower income group but the middle income group is also finding it difficult to find a decent house with decent price at a decent location.
The other day, a property developer's staff tried to promote his company's project to me. The project is decent. Below is the price of the unit and its payment scheme.
I asked the sales staff whether their units could still sell well. The reply was yes, but up to end of last year. This year onwards, it is a tough market even as they try to be as innovative as they could to package the deal. The main problem is that bank is not lending due to stringent requirement set by central bank.
There are several reasons why property price is keep on going up. Chiefly because of higher land cost, coupled with cost-push factors. Construction materials cost is on the rise. With GST coming next year, nobody knows what will be the actual impact. Even though property transaction is not tax under GST, but the material used to construct the property is. Contractors are now asked to cost-in with the 6% GST during competitive tender. So it is only logical for the property developer to capture it in the sale price. And having to sell at higher price, developer has to package an innovative deal. DIBS was being used previously but has since outlawed.
Construction is related to property industry and it is proxy to country's economy. There are so many trades activities that rely on construction industry. Because of our overzealous to introduce more and more cooling measures, everyone will be affected. It is a matter of when it will hit us one way or other. If you killed property development activities, you kill construction activities. With construction down, all other trades related to construction will collapse as well. People will be out of job and out of business. At that time, who cares about property price anymore. The main priority then is to put food on the table. And stock market will be affected too.
I hope the government will do something about this and not just listen to one side of the opinions. I could appreciate the concerns the government has, but there are also other concerns to consider. Hope we could see something enlightening in the coming Budget 2015.
Monday, 16 June 2014
This stock was forgotten, well, almost. Today its stock price had a mini sprint to life. I knew of some people had bought this stock in early of the year in anticipation of good results showing for 2013 but its result failed to inspire. Now we are entering into second half of the year. This time, there is a stronger belief that its earning will inspire. Certain key personnel of company had taken position in the stock some time back albeit quietly and that is a telling sign.
Today 16.6.2014 the company announced that they will be buying 2 major cables producer companies. It is no brainer why the company embarks on such an exercise. Let's relook at what the company has in its order book and/or soon to be in their order book.
1) 500kV transmission line contracts. 2 of the 4 packages worth RM619 million are already in hand. The other 2 packages were awarded to other contenders. But, and it is a big but, these 2 contenders have to buy cables from someone in order to execute the jobs. Guess from who.
2) High chance to get a big slice of the contract on electrical works from the state government.
3) To clinch more jobs related to hydropower projects because of their strategic partnership with SEB.
4) Awarded with power contract in neighbouring country which can be viewed quite similar to IPP contract that we used to call here.
5) More contracts from TNB to improve transmission service which is said to be worth over RM2 billion.
I am comfortable with my investment in this company. Let's see how things pan out by end of this year which is only some six months from now.
Its price closed at RM1.54 on 16.6.2014.
Wednesday, 11 June 2014
Presbhd had a good run in April but started to retrace in May. From a high of RM4.12, the stock price had since retraced to current level of about RM1.80 or equivalent to RM3.60 before ex-bonus. Anticipation was very high among investors especially those new one when bonus issue was announced sometime in February. Many new investors were flocked in hoping to catch the early birds. That's natural and that makes our market very unique. The story of bonus issue excites many people. Those who bought after the bonus issue announcement would be holding the stock, if not already sold by now, at higher cost as compare to those bought before the bonus announcement. Those who bought at higher cost will feel a little uneasy because of the price drop recently.
Perhaps, we should ask ourself why need to feel uneasy. Is it because of the many comments now started to crop up saying that it is expensive? or is it because of the latest quarterly results doesn't look so good? or is it because of the 10% price drop from the all-time high? or is it because the stock price did not jump after the bonus issue ex-date? Feeling uneasy is normal and you should, but also never forget to ask this basic question - why I buy this stock in the first place? If you have a very clear answer to this question, you would not feel uneasy as short term price movement is not important. In fact even if you have bought at all-time high of RM4.12, the current price of RM1.80 which is about 10% from the high, is nothing to worry for any long term investor.
Yes, recent quarterly result is not so good but it doesn't means it is not good. Depending where we wanted to benchmark against with, it is still reasonably good in my mind and not to mention the company declared a interim dividend of 1.25 cent. This translates into 86% net dividend payout which is above the company's policy of 50%. I see this as a good sign. Sometime we lose some (lesser good Q1 result, price retraced from all-time high) and sometime we gain some (good dividend payout, more contracts coming soon, etc). Overall, things are still pretty solid.
Many people only see short term story and not long term goal. For a starter, Presbhd's long term goal is to achieve RM1.5 billion market capitalisation by 2017. Read here.
The following statement by the company's CEO during the briefing on the company's financial results was reported in newspaper:-
- Abu said "Q12014 result was the second dip in net profit after Q22011 and it expects a better performance in the second half this year (H2). Revenue was down for the first time in Prestariang's history but we continue to have a healthy profit margin. Even with the decrease in revenue, we managed to contain the costs." "It's a bruise but as a company, you'll see us hopefully bouncing back in H2," he said.
I like the frankness from the CEO.
A private report which I received following the release of the Q1 result, stated the following:-
" .... the results to be stronger in 2HFY2014 when most of the pending projects are approved ......... Prestariang is in the midst of bidding for a substantial concession-based project. If this materialised, this will provide the company with recurring revenue and hence a re-rating catalyst to the stock. "