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Monday, September 30, 2013

Forget stock picking, stick with the indexes

Source: http://www.marketwatch.com/story/forget-stock-picking-stick-with-the-indexes-2013-09-27?siteid=rss

Sept. 27, 2013, 2:45 p.m. EDT

Forget stock picking, stick with the indexes
Commentary: Investors can’t handle fear in the market

Is it a stock market, or a market of stocks?

The market has been unusually selective of late, with an abnormally large percentage of stocks hitting new 52-week lows even as the S&P 500 SPX -0.41% was itself recording new highs.

At first glance, that would suggest that stock picking is more important than ever. Not so, according to several academic researchers.

The typical stock always tends to move in lock step with the overall market, they say. That reality is just being masked by the bull market’s strength.

If they are right, it means you are kidding yourself if you think there are greater-than-normal odds of beating the market when picking individual stocks. Buying and holding a broad-market index fund remains the best course of action for most investors.

There is a statistical reason not to take at face value stocks’ recent tendency to march to the beat of their own drummer. Even when a stock’s sensitivity to overall market movements hasn’t changed, it will nevertheless go through periods when it appears to move in tandem with the market and other periods when it doesn’t, according to Brian Boyer, a finance professor at the Marriott School of Management at Brigham Young University.

One factor that has a big effect on stocks’ sensitivity to movements in the overall market: changes in the market’s overall volatility, as measured by benchmarks like the Chicago Board Options Exchange’s Volatility Index VIX +9.96% , or VIX.

U.N. dials back temperature projection

A U.N. report on climate change said that while human activity is "extremely likely" to blame for global warming, temperatures aren't expected to rise as quickly as previously thought. Gunnar Myhre, coordinating lead author for the IPCC, explains the details to WSJ's Gautam Naik.

Yet those fluctuations don’t mean there has been any real change in stocks’ relationships to the overall market, according to Kristin Forbes, professor of management and global economics at MIT’s Sloan School of Management “It’s an artifact of the statistics that any time volatility decreases, correlations decrease automatically as well,” she says.

This well describes the markets over the past couple of months. After spiking to near 22 in June, in the wake of Federal Reserve Chairman Ben Bernanke’s hint that he might accelerate the timetable for monetary tightening, the VIX has fallen back to its current level, below 15, as have statistical measures of the extent to which stocks are moving in tandem with the overall market.

The other reason to suspect that stocks might only temporarily be out of lock step with the overall market, BYU’s Boyer says, is behavioral. As soon as fear becomes investors’ dominant emotion, it is a good bet investors will run for the exits. In the process, almost all stocks — including those that remain highly profitable and otherwise immune from whatever is causing the downturn — can be punished and quickly get in sync with the overall market.

Consider Wal-Mart Stores WMT -0.35% during the 2008-09 bear market. Though both the company’s sales and earnings continued to rise during those years, its stock nevertheless shed 26% as the market plunged.

This behavioral factor means that, in addition to low market volatility recently, another reason why stocks have been acting more independently of late is that the pendulum has swung so far away from the fear end of the spectrum.

The investment implication: Stocks — at any time and with no warning — could once again begin moving in lock step with the overall market. As a result, stock selection has no greater odds of success now than at any other time.

And those odds are depressingly low, according to Terrance Odean, a finance professor at the University of California, Berkeley. Research he and others have conducted, he says, suggests that “less than 1% of individuals who trade frequently can consistently outperform the market through skill. Over the long run, the rest would be better off investing in low-cost index funds benchmarked to the broad market.”

The implication for most of us is that we should invest in such a fund rather than trying to pick individual stocks. The Vanguard Total Market ETF VTI -0.40% is the broad-based index fund recommended by David Nadig, head of research at ETF-tracking firm IndexUniverse, based on a number of factors, including expenses, liquidity and how closely the fund tracks the overall market. Its annual expenses are 0.05%, or $5 per $10,000 invested.

If holding such an index fund through a bear market would result in intolerably large losses for you, then you should reduce the amount you have invested in stocks to whatever level you would be comfortable holding throughout an extended decline.

You don’t have to put the nonstock portion in bonds or savings accounts with minuscule returns. One alternative is to invest in international stocks. Though to some extent they move in sync with the U.S. market, they do so much less than the typical U.S. stock. Allocating a chunk of your equity portfolio to international stocks should reduce your portfolio’s volatility.

The arguments in favor of index funds are even stronger for international than for domestic stocks. The fund that Nadig picks is the Vanguard Total International Stock ETF VTSNX -0.26% , with an expense ratio of 0.16%.

Mark Hulbert is the founder of Hulbert Financial Digest in Chapel Hill, N.C. He has been tracking the advice of more than 160 financial newsletters since 1980. Follow him on Twitter @MktwHulbert.

產業神話再現?

Source: http://klse.i3investor.com/blogs/sin_chew_financial_review/37713.jsp

談起實達集團(SPSETIA,8664,主板產業組),除了屢獲國際大獎肯定的多元產業發展計劃,丹斯里劉啟盛肯定是你不陌生的名字。


熟悉實達集團的人,都應瞭解是劉啟盛獨特的眼光,將實達從默默無名的小型發展商,一躍成為業務涵蓋新加坡、澳洲和英國的國際性產業發展商,但也許是他做得太好之故,結果讓國民投資公司(PNB)青睞有加,決定將之收歸己有,並藉由他的名聲來擦亮旗下龐大產業資產名聲。

但是,國投的如意算盤打不響,全購計劃引發了市場的一片批評,而劉啟盛的去留更是引起各界的關注,雖然最後國投與劉啟盛達成共識,聯手獻購實達集團,還簽署管理合約維持現任職位3年,並讓他以每股3令吉95仙,分3個階段脫售手上近8.6%股權。

縱然劉啟盛人還留在實達,心卻已經不在了,而Eco World發展公司的橫空出世,不僅震撼了整個國內產業界,也印證了劉啟盛留在實達的時間已在倒數計時,因為Eco World不僅由其兒子劉添雄領航,加上整個團隊幾乎都是從實達集團完整複製,就突顯他想在棄實達,在產業界另起爐灶的決心。

更重要的是,實達現已將目光放向全球,而Eco World選擇此時在國內大興土木,實有趁其外出之際迅速在國內市場卡位之嫌。因此,嚴格說來,現在的EcoWorld就像是流著劉啟盛基因(DNA)的新結晶,正與他一手捧紅的實達集團一較長短。

面對這種尷尬局面,投資者是應追從劉啟盛的腳步,轉投Eco World的懷抱,還是期待國民投資公司可能向實達集團注入半島(I&P)旗下高達100億令吉資產,將之扶持成馬股產業龍頭的利多?

對於購屋者來說,更是兩難,應該如蘋果迷爭相購買喬布斯遺作iPhone 4S,趕趁劉啟盛還在實達當家作主時快速入手,還是買進Eco World濃厚“劉啟盛”味道的新產業發展計劃?

無論如何,衝出海外的實達集團能否再創高峰?先聲奪人的Eco World能否再創神話?一切就讓我們拭目以待吧。(星洲日報/投資致富‧投資茶室:洪建文)

Instacom Group - Moving Up The Ranks

Source: http://klse.i3investor.com/blogs/rhb/37661.jsp

We initiate coverage on Instacom with a BUY recommendation and FV of MYR0.51. The company is a major beneficiary of the rollout of LTE networks and USP projects in East Malaysia, backed by a decent orderbook of MYR300m. Earnings growth is likely to see a new leg up with the company venturing into the telco infra lease business. We like Instacom for its good earnings prospects and undemanding valuations.

- A small cap telco infra play. Instacom is an end-to-end solutions provider for the telecom industry and has all the main players in the local telecom industry, including telecom equipment vendors and state-backed companies, as its customers. The company aspires to become a telecom infrastructure service provider.

- Beneficiary of LTE rollout by mobile operators. Given its strong market credentials Instacom is a potential beneficiary of the rollout of LTE services and Universal Service Provision (USP) fund projects in Sabah and Sarawak. It is also looking to venture into the telecom infrastructure leasing market which offers superior margins. The company has a sizeable orderbook of around MYR300m.

- FY12-FY14 earnings CAGR of 54%. We are forecasting FY12-FY14 revenue to grow at a CAGR of 53%. EBITDA margin is expected to hover around the elevated 20% level while profit margin should remain high at ~17%. We expect to see strong earnings growth for the company in the next two years (2-year CAGR of 54%).

- Risks. Key risks to earnings include: i) the growing trend among telcos to share their networks, ii) regulatory and execution risks in the setting up of infrastructure assets, and iii) a slower-than-expected take-up of its services.

- FV of MYR0.51. We value the stock at a 13x FY14 P/E. This is based on a 35% discount to the P/Es of local mobile operators and regional/global tower-related companies, which trade at ~ 20x forward P/E. The discount reflects its significantly smaller operations and share illiquidity. We like the company for its strong earnings prospects within the telecommunications space as well as its undemanding valuations. The stock is one of RHB’s top small cap picks for 2013. BUY.



Source: RHB

Real Estate - Batu Kawan: A “Mini Iskandar” In The Making

Source: http://klse.i3investor.com/blogs/rhb/37658.jsp

Recent news on Batu Kawan reinforce our positive view on Penang mainland’s property market. The various developments taking shape there highly resembles the initial growth stage of Iskandar when the latter was about to take off three years ago. The land prices to be inked by Paramount are likely set a new benchmark for subsequent transactions. TILB remains the best proxy to Penang mainland play.

- Batu Kawan: A “Mini Iskandar”. The growth cycle on Penang’s mainland has just started. Last week, two education institutions – University of Hull and KDU University College (under Paramount Corp (PAR MK, NEUTRAL, FV: MYR1.55)) respectively announced plans to set up their new campuses in Batu Kawan. The developments currently taking shape on the Penang mainland, including the completion of the Penang Second Bridge as well as the state government’s plans to put up a premium outlet, theme park and international golf resort at Batu Kawan, very much resemble the initial growth trajectory experienced by the Iskandar region when it was about to take off three years ago. Over the last three years, the Iskandar region has witnessed the completion of infrastructure works, highways, theme parks and the sprouting up of industrial parks, schools and medical centres. Since then, land and property prices in certain hotspots have more than doubled due to the influx of local and foreign buyers. As business activities heighten and job opportunities expand, the Penang mainland is likely to see the same trend, in our opinion.

- New transactions set new benchmark. Following EcoWorld’s transaction cost at above MYR30 psf at Jalan Paboi, we believe the land cost (yet to be announced) for Paramount’s 30-acre project in Batu Kawan (10 acres for KDU’s campus and 20 acres for an integrated development) is likely to set a new benchmark for subsequent land transactions and pricing of new properties. High-rise residences, which are gaining popularity, have achieved a pricing of MYR360 psf in Butterworth. We expect Paramount to price its university township project at MYR400 psf and above when it is launched in 1-2 years’ time.

- Landbank owners the winners. With more developers jumping on the bandwagon, current land owners on Penang’s mainland are the ultimate winners, and some of them can be easily taken over due to their relatively small size. Among the key players including Asas Dunia, Wing Tai, Malton, GOB (all Not Rated) and IJMLD (IJMLD MK, BUY, FV: MYR3.70), we still like Tambun Indah (TILB MK, BUY, FV: MYR2.00) the most for its solid fundamentals. We keep our valuations on Paramount for now, pending official announcement on signing of the agreements.




Source: RHB

传资产注入SPV 公司 砂木业机构为上市铺路

Source: http://www.nanyang.com/node/567583?tid=462

(吉隆坡28日讯)消息指,监管砂拉越木材行业的法定机构———砂拉越木材业发展机构(STIDC),将把其1400公顷的伐木权与商业运作注入1家特别用途公司(SPV),为上市铺路。

熟悉该活动的知情人士向《The Edge》财经周刊透露,该机构的董事部已经批准企业架构———将把该机构的核心功能分为监管、商业与信托。

特别用途公司“Pusaka Capital集团”将成为企业实体,并拥有4间主要商业子公司,分别从事油棕种植、物流、房地产和建筑,以及木材业务。

减少利益冲突

该集团将拥有超过3000名员工,以及最终将会上市。

砂拉越木材业发展机构则维持法定机构的身份,而Pusaka信托则致力于发展社会事业,例如教育基金。

知情人士说:“这个活动将会消除砂拉越木材业发展机构的任何利益冲突,即其介于法定机构与商业实体之间的作用,后者将专注于优化盈利。”

他续称,把这个活动称为企业化或私有化,都是不正确的,因为这带有负面的含义。

“反之,这个活动为想进入私人企业,但又还想继续享有政府福利的雇员,提供更好的职业发展。”

作为重组计划的一部分,砂拉越木材业发展机构将把一些产业,包括位于丹绒马尼(Tanjung Manis)的1385公顷地皮,注入Pusaka Capital集团。

Pusaka Capital集团将会发行股票、凭单及可赎回可转换债券,给砂拉越木材业发展机构,作为回报。

同时,砂拉越木材业发展机构也会脱售一些公司,特别是丹绒马尼综合港口私人有限公司,给Pusaka Capital集团。

根据该机构的年报,尽管资产的账面价值资料不多,但相信上述交易价值逾6亿令吉。

巴克莱:利率将上扬 狮城房价2年内或跌20%

Source: http://www.nanyang.com/node/567623?tid=462

(新加坡28日讯)巴克莱银行预期,新加坡的房屋价格可能在2015年之前发生一次大规模的回落,跌幅最高或可达到20%。

巴克莱银行分析员宋特莉霞(译音)透过一份报告称:“我们认为,新加坡房屋市场发生修正的风险正在增加,并且在2014年至2015年更高的房屋贷款利率可能伴随着房屋供应量的大幅增加一同出现。”

巴克莱预期新加坡房屋价格在2013年将保持平稳,在2014年将下跌5%,而在2015年将可能继续下跌5%至15%。

作为东南亚金融中心,新加坡也是全球房价格最高的国家之一,自2009年年中以来,在低利率的刺激下,新加坡的房价已经上涨了超过60%。

明年供应增加

巴克莱的前景展望,是基于对2015年次季新加坡短期利率将开始上升的预期,并且预期利率在接下来的六个月多月中可能继续上升200个基点。

宋特莉霞解释,房价的下跌将与利率上升的速度相关联;新加坡的抵押贷款利率通常依据该国的三个月短期银行间同业拆借利率(SIBOR)决定,而新加坡银行间同业拆借利率直接跟随美国联邦基金利率的变动而变动。

此外,新加坡政府还将在2014年完全开始提高私人及公共房屋的供应。

宋特莉霞说:“未来两年总房屋供应量将达到平均每年4万幢,到2015年将达到4.7万幢的高峰,远高于1.23万幢的历史年平均水平。”

“假设新加坡购房者每年对房屋的需求为1.55万幢,我们预期到2016年新加坡的私营房屋空置率将从现在的5.6%上升至9.9%。”

2,500 people at Mah Sing's Southville City@KL South launch

Source: http://www.thestar.com.my/Business/Business-News/2013/09/30/Keen-interest-in-project-More-than-2500-people-at-Mah-Sings-Southville-CityKL-South-launch.aspx

SERI KEMBANGAN: Property-based Mah Sing Group Bhd (Mah Sing) has launched its Southville City@KL South sales gallery last Saturday.

Following the launch, a private balloting for registrants of Savanna executive suites, phase one of Southville City@KL South was held, which saw 1,068 units of Savanna executive suites worth RM351mil pre-booked in eight hours of the balloting event.

More than 2,500 guests turned up for the event. Present to launch the event was Mah Sing chairman, Gen (R) Tan Sri Yaacob Mat Zain, executive director Datuk Lim Kiu Hock and chief operating officer for marketing and sales, township residential James Bruyns.

Mah Sing, in a press statement, said the the first phase of its largest township so far, Savanna executive suites, offers freehold three-bedroom suites with built-up from 956 sq ft and indicatively priced from RM280,000.

The units have upgraded features of two carpark bays, four units of air conditioners, two water heaters and two shower screens.

Phase 1B comprising 766 units in Tower B1 and B2, was 90% booked and due to the overwhelming response, Phase 1A, which also has 766 units in Tower A1 and A2, was opened later in the day. This phase was 50% booked within the same day.

In view of the keen interest, Mah Sing intended to open two more towers and the Lifestyle Retail Lots @ Savanna with an indicative price from RM1.3mil which would also be available for pre-selection next week.

“Savanna Executive Suites is the first phase of Mah Sing’s Southville City @ KL South. One of our largest township projects, Southville City@KL South meets market demands for affordable housing for the middle-income group yet offers that special touch of class and distinction in each component of the township,” said Yaacob.

“The keen interest shown in our property signifies the trust and support the public has on Mah Sing Group and its products,” he added.

The 428-acre Southville City@KL South with the estimated gross development value of RM5.15bil is accessible with the proposed direct interchange from the North-South Highway and only 30-minute drive from the KL city centre.

Yaacob noted, “The development concept of Southville@KL South is ‘connectivity’, which forms the framework for an exciting communal living environment.

“We are making this integrated township ‘walk-friendly’ with a 13km pedestrian footpath-cum-bicycle track that connects the entire neighbourhood. There will be a riverside walk, nature trail and even a nine acres urban park.”

Upon completion, Southville City@KL South will be home to 17,500 people and provide seamless and rounded lifestyles for different family sizes. Upcoming phases will have properties for the upgrader market like linked semi-D, semi-detached and bungalows.

Mah Sing plans to build close to 70% of the residential component at below RM1mil per unit to meet the strong market demand for bread and butter properties.

Hunza plans to start RM7bil project in Bayan Baru in 2015

Source: http://www.thestar.com.my/Business/Business-News/2013/09/28/Hunza-goes-for-commercial-jobs-It-plans-to-start-RM7bil-project-in-Bayan-Baru-in-2015.aspx

AFTER its Gurney Paragon project, Hunza Properties Bhd plans to focus on the development of commercial projects on the island and in Seberang Prai.

The group plans to start a RM7bil commercial city project in 2015 in Bayan Baru in the south-west district, a RM700mil commercial-cum-residential development in Juru, and a hotel in Tanjung Tokong.

Group executive chairman Datuk Khor Teng Tong tells StarBizWeek that the commercial city project, to be located on 16.1ha in Bayan Baru, would take 10 years to complete.

“There will be at least two four-to-five-star hotels, a shopping mall, college, high-end condominiums and office towers.

“We have engaged Australian and Singaporean architects to provide consultation on the design and concept of the project,” Khor says.

The shopping mall would be twice the size of the present Gurney Paragon shopping mall.

The project site is four times the size of the Gurney Paragon land.

“We are now building 690 units of flats to relocate the squatters on the site,” he adds.

While the group had expected the Gurney Paragon project to place Hunza in Penang’s development spotlight, the Bayan Baru project would propel Hunza to the national level, according to Khor.

The group expects demand for high-end schemes in Penang to rise, as the infrastructure on the island is improving with the completion of the second bridge, slated by October.

“There is also the RM8bil infrastructure package which includes the 6.5km undersea tunnel project linking Gurney Drive and Bagan Ajam, the 4.2km Gurney Drive-Lebuhraya Tun Dr Lim Chong Eu bypass, the 4.6km Lebuhraya Tun Dr Lim Chong Eu-Bandar Baru Air Itam bypass and a 12km road connecting Tanjung Bungah and Teluk Bahang, which are being planned to take the infrastructure in Penang to the next level,” Khor says.

The group is also planning a high-end hotel project in Tanjung Tokong, according to Khor.

In Juru, the group plans to develop a RM700mil commercial-cum-residential scheme which will include a RM60mil to RM70mil four-star hotel on 14.9ha.

“This will be the group’s first hotel, which will have 250 to 300 rooms. The scheme also includes a hypermarket, leisure facilities, and commercial and residential properties,” he says.

Khor says the planning proposal for the scheme would be submitted to the local authorities soon.

“We hope to commence work by the third quarter of 2014. The whole project will take three to five years to complete.

“The hotel will be managed by professionals and will provide steady revenue stream for the group besides the Gurney Paragon Mall,” Khor adds.

On the group’s residential schemes, Khor says it will launch the RM500mil Alila 2 project on 4ha in Tanjung Bungah next year.

“There will be 270 condominium units. We will apply for the green building index and construction quality assessment system certifications for the project.”

In Seberang Prai, the group has launched in the third quarter some 173 two-storey terraced houses in Bandar Putra Bertam, Kepala Batas.

“The project has to date achieved sales of more than 50%,” he adds.

Saturday, September 28, 2013

Condom producer Karex Bhd to issue 40.5m new shares under IPO

Source: http://www.thestar.com.my/Business/Business-News/2013/09/27/Condom-producer-Karex-Bhd-to-issue-405m-new-shares-under-IPO.aspx

KUALA LUMPUR: Karex Bhd is issuing 40.5 million new shares and it also offering for sale 27 million existing shares under its listing exercise.

The company, which is seeking listing on the Main Market of Bursa Malaysia Securities Bhd, said on Friday the enlarged share capital upon listing would be 270.0 million shares.

Karex had on Friday signed an underwriting agreement with RHB Investment Bank Bhd where the latter is also the principal adviser and joint placement agent for the listing exercise.

Karex CEO Goh Miah Kiat signed the documents on behalf of Karex while RHB Investment Bank was represented by its managing director and CEO Mike Chan.

It has a total capacity to produce three billion pieces of condoms per year, making it the single largest condom manufacturer in the world.

It expects its prospectus to be launched in October and targets to be listed by November.

Goh said the listing would enable Karex to leverage on the growing opportunities of the global condom market.

He cited the growing demand driven mainly by the increasing global population which was projected to reach eight billion in 2025.

Karex was incorporated in 1988 in Johor, and it had a plant each in Pontian, Johor; Port Klang, Selangor; and Hat Yai, Thailand.

In addition to manufacturing condoms, the group also manufactures lubricating jelly and other medical devices which include catheters and probe covers.

Friday, September 27, 2013

预算案料“重手” 降温房市 产业股目标价全线下修

Source: http://www.nanyang.com/node/567022?tid=462

(吉隆坡26日讯)来临的财政预算案宣布料将“下重手”实行多项房市降温措施,券商预期房产发展商势必受重击,达证券将房地产领域投资评级下调至“中和”,该机构所关注的房产发展公司目标价格全线下修。

达证券分析员在报告中指出,房产发展领域因缺乏新鲜指引,股价表现已达顶,吉隆坡产业指数(KLPRP)年初至今累积涨幅已达28%,这意味着该领域已利好用尽。

目标价格遭下调的公司包括实达集团(SPSETIA,8664,主板产业股)、马星集团(MAHSING,8583,主板产业股)、双威(SUNWAY,5211,主板产业股)、高美达(GLOMAC,5020,主板产业股)、华阳(HUAYANG,5062,主板产业股),及吉星(CRESNDO,6718,主板产业股)。

“我国房产发展商的风险回报已逐渐失去吸引力,我们根据现金流贴现(DCF)的实际净资产价值(RNAV)(RNAV)评估,下调该领域的投资评级。”

实达财测下调

达证券说,2014年的房地产领域目标本益比已下调1倍,大型及小型发展商的本益比分别为12.5倍及7.4倍。

“对于我们所关注的房产公司,维持原有的销售及盈利预测(除了刚宣布业绩的实达集团),不过,我们也趁此机会重新评估这些公司,以反映出相关措施对房产领域的影响。”

降温措施发展商影响微

该研究机构指认为,政府在过去实行的房市降温措施势,对房地产发展商影响影响其实并不大。

该机构所关注的房产股项,在2012年时,房产销售按年攀扬14%,今年首半年的按年增幅更飙升至16%(不包括实达集团伦敦的巴特西项目)。

报告指出,随着家债比例及房价不断扬升,市场屡传房产创下天价记录的消息,已让政府不得不下重手,借由措施抑制房产投机活动,同时让房价回返合理水平。

“房市降温政策势在必行,来临预算案宣布的措施将在明年逐步实行,措施项目及打房的强度将是关键。”

实达集团 销售不理想

该公司2013财年首9个月的销售差强人意,达证券根据该公司的盈利进行评估,将实达集团目标股价由3.88令吉下调至3.80令吉。

尽管实达集团目前拥有总值达670亿令吉的未发展项目,但随着该公司总裁兼总执行长丹斯里刘启盛,即将在2015年3月前引退,料将影响公司未来的运作。

马星集团 外资持股率颇高

达证券将马星集团的目标股价从3.16令吉调整至2.70令吉。

报告指出,马星集团的强劲管理执行力及多元化产品备受看好,该公司的房产项目遍布国内的4大热门地点。

不过,该公司的海外股东持股比例颇高,占25%,这成为了该股的下行风险。

双威 料成大项目赢家

作为双威城的主要发展商,该公司过往的强劲记录已成为优势。

该公司接下来计划将双威城概念“复制”到依斯干达特区,达证券预期,依斯干达项目将成为双威的另一得意之作。

“双威在建筑领域的良好记录以及专业技术,将使该公司成为大型发展项目如第2捷运线计划的赢家。”

华阳 股价年初至今涨77%

该公司股价今年来表现亮眼,年初至今累积涨幅达77%。

华阳今年于帝沙班丹(Desa Pandan)、莎阿南及斯里肯邦安(易城),推介3项发展项目。

达证券认为,随着3项计划推介后,该公司于巴生谷的地库已耗尽,增购地库将成为华阳的焦点。

吉星 股价涨幅到顶

达证券将吉星的目标股价从3.82令吉调整至3.52令吉。

该股至今累计股价涨幅已达74%,达证券认为已达顶限。

吉星目前的地库达3000英亩,其中1300英亩在哥打丁宜,1700英亩在依斯干达区。

高美达 城镇发展项目支撑

达证券将高美达的目标股价从1.56令吉调整至1.45令吉。

不过,该公司于巴生谷一带的城镇发展项目多为有地房产,公司的房产组合将支撑房产销售成长。

高美达进行中的主要项目,包括SaujanaUtama城镇、万挠Saujana、蒲种的LakesideResidence及八打灵再也的Glomac Centro。

Thursday, September 26, 2013

UMW unit to launch IPO prospectus on Oct 3

Source: http://www.thesundaily.my/news/840109

PETALING JAYA (Sept 26, 2013): UMW Oil & Gas Corp Bhd (UMW-OG), the oil and gas (O&G) unit of UMW Holdings Bhd, is expected to launch the prospectus for its much-awaited initial public offering (IPO) on Bursa Malaysia next Thursday, according to people familiar with the matter, with listing slated for Oct 31, 2013.

This comes close on the heels of Westports Holdings Bhd's impending listing on Oct 18.

Industry observers said the back-to-back listing of two sizable government-linked companies could help sustain investors' interest on the local bourse in the near term.

UMW-OG's IPO, which is expected to rake in up to RM2.36 billion, will be the country's largest this year after Westports' share sale of up to RM2.03 billion.

According to a draft prospectus released on June 19, 2013, UMW-OG is selling as many as 843.2 million shares, or 39% of its enlarged share capital of 2.162 billion shares. The indicative offer price for the retail tranche is set at RM2.80 each, with the final retail price to be pegged to the institutional price which will be determined via a book-building process.

Based on an indicative price of RM2.80 apiece, the total market capitalisation of UMW-OG will be RM6.1 billion upon its listing. This would, however, fall behind Westports' total market capitalisation of RM8.53 billion post-listing, based on its indicative offer price of RM2.50 per share.

"At an implied market capitalisation of RM6.1 billion, the IPO is priced at a historical price-to-earnings (P/E) ratio of 82 times on FY12 earnings," said an O&G analyst.

"Nevertheless, the high P/E valuation could come off sharply as UMW-OG is expected to see a sharp earnings rebound ahead due to an absence of several one-off lumpy expenses that had dragged down FY12's performance," he added.

UMW-OG reported a 6% drop in net profit to RM73.83 million for the financial year ended Dec 31, 2012 (FY12) from RM78.21 million a year ago, due to higher other operating expenses. However, revenue for FY12 grew 43% to RM846.11 million from RM591.85 million, driven by its drilling services segment.

Under the IPO, UMW-OG has earmarked 648.6 million shares or 30% of its enlarged share capital to institutional investors and the remaining 194.58 million or 9% for retail investors.

A source told SunBiz that the IPO includes a greenshoe option that allows UMW-OG to sell an additional 126.5 million shares or about 6% of its enlarged share capital to meet demand.

In its draft prospectus, UMW-OG said the proceeds raised from the IPO will be utilised for the repayment of existing debts, capital expenditure and working capital purposes as well as to pay listing expenses.

In a report dated May 17, 2013, Kenanga Research said the listing will enable the UMW group to unlock the value of its investment in UMW-OG as well as provide the opportunity for UMW-OG to expand its business and grow its market position.

"With the listing, UMW-OG will have direct access to the equity capital market, which will enable it to have greater capital management flexibility," the research firm added.

UMW-OG is principally involved in the upstream sector of the O&G industry, providing offshore drilling and oilfield services, which includes engineering and maintenance services.

Sunway REIT can raise up to RM1b more to fund capex and acquisition needs

Source: http://www.thesundaily.my/news/840112

PETALING JAYA (Sept 26, 2013): Sunway Real Estate Investment Trust (Sunway REIT), at its current gearing level of 31%, has room to raise another RM800 million to RM1 billion to fund its capital expenditure plans and future acquisitions.

Sunway REIT Management Sdn Bhd CEO Datuk Jeffrey Ng said it already has some RM1.4 billion ready to fund its future requirements through a RM1.6 billion commercial paper programme. Some RM315 million has already been utilised as at financial year-end.

"This will inevitably increase the proportion of floating rate borrowings going forward. We will convert the floating rate borrowing into fixed rate via interest rate swaps or other medium term note programmes when the opportunities arise through close monitoring of interest rate swaps movements," he added.

Ng also said that it is on track to achieve its over RM7 billion property value target in two to four years time, helped by assets from its sponsor, Sunway City Bhd, valued in excess of RM2 billion.

"Notwithstanding this portfolio of sizeable pipeline assets, we will continue to leverage on our investment strategy and balance sheet to very selective search for quality assets from third parties," he told reporters after its AGM here yesterday.

Ng said it will continue to adopt a complementary strategy by balancing pipeline assets with third party assets to build its position as one of the country's largest REIT with a retail focus.

As of June 30 this year, Sunway REIT has total assets under its management valued at RM5.18 billion.

"We do not want to rush just for the sake of buying. We are not in a hurry to do a deal. If the pricing is right and lucrative for us, then we will look into it.

"I would like to highlight that we remain selective in our assets. We only buy assets that give long term and sustainable growth for us," he added.

发草拟招股书献售46.2%股权 7-11拟上主板筹7亿

Source: http://www.nanyang.com/node/566636?tid=462

(吉隆坡24日讯)由本地富豪丹斯里陈志远所控制的7-11便利商店有限公司(Seven Convenience Bhd),将在今年杪上市大马交易所主板,并通过首次公开募股(IPO)发售5亿3033万股,或46.2%股权以筹资7亿令吉。

根据7-11便利商公布在证券监督委员会网站上的草拟招股书,该公司将公开发售3亿4894万现有股(相等于30.39%股权),以及1亿8138万5000新股(相等于15.8%股权)。

“5亿3033万股当中,公司将把4亿9078万股保留给机构投资者,剩下的3955万股则公开给散户。”

上述由马银行投资银行主理、瑞银(UBS)协助的首次公开募股活动料筹资7亿令吉,筹获资金将作为业务拓展、整修分店和资讯科技系统,以及营运资本。

去年净利4050万

截至2012年全年,7-11便利商营业额录得15亿8000万令吉,以及4050万令吉的税后盈利,分别按年增长9.7%和22.4%。

“7-11便利商未来计划之一,是继续投资和加强连锁业务,同时提升资讯科技发展以加速业务拓展。”

7-11便利商在29年前进入大马市场,目前拥有1497家分店,市占率为82%,为大马最大的便利商店。

今年8月份,市场消息传陈志远已委任瑞银及马银行投资银行为主理银行,但仍未决定上市规模或时机,仅料会在今年杪或明年进行。

5公司上市传言逐一实现

早前,市场已经传言,陈志远有意在今年内为旗下5家公司挂牌,以集资超过20亿令吉。

当中的公司,包括了多多大马商业信托(Sports Toto Malaysia Trust)及Bermaz汽车私人有限公司,前者的马新双边上市计划已经如火如荼,而Bermaz的上市申请也在9月18日获得大马交易所批准。

再加上7-11便利商的上市计划,可见“陈志远5公司上市”的传言已逐渐落实。

目前,还剩下MOL全球有限公司(MOL Global)以及UMobile私人有限公司的上市计划有待证实。

MOL AccessPortal曾经在2003年12月,上市于当时的自动报价市场(MESDAQ),不过该公司在2008年2月被私有化除牌,并纳入成为MOL全球子公司。

另外,市场也传言,陈志远有可能会把旗下的英国加的夫球会(Cardiff City)上市。

罗杰斯:告别印度 新兴国希望在缅朝

Source: http://www.nanyang.com/node/566858?tid=462

(伦敦25日讯)国际商品投资大师罗杰斯(Jim Rogers)表示,印度的苦日子来了,他看好缅甸、朝鲜成为下个新兴市场的明日之星。

他周二接受BBCRadio4电台节目访问时,提出了相当另类的建议。

首先,缅甸经济全球排名倒数第10,而朝鲜则有通胀严重问题;但罗杰斯认为只要克服上述问题,缅甸、朝鲜将是可以期待的投资标的。

印度遭逢财政、贸易双赤字危机,一夕间由新兴市场的金砖国家被打为股汇双杀的东亚病夫。

罗杰斯指出,印度经济问题完全是作茧自负,该国负债比例超过国内生产总值的90%,在此状况下,经济将难有突破性发展,印度必须设法平衡赤字。

不过他认为,即使印度不幸爆发经济危机,在中国、日本与台湾等债权大国合组防火墙的阻隔下,东南亚国家受牵连的机率不高。

重新谈判租约 双威冀商场租金调涨18%

Source: http://www.nanyang.com/node/566872?tid=462

(吉隆坡25日讯)双威产托(Sunreit,5176,主板产业信托股)放眼今年9月起,旗下双威购物中心(SunwayPyramid)大部分租金合约到期并重新谈判后,租金调涨率达16至18%,带动公司收入。

该公司总执行长拿督黄中立在双威产托首届股东常年大会后的记者会上指出,今年9月起,该购物中心达90万平方尺或等于购物中心45%净租赁面积(NLA)的租金合约即将到期,必须更新。

他说,随着双威度假城(Sunway Resort City)新建设基本设施如双威线巴士捷运系统(BRT-Sunway Line)、扩大道路等工程完工后,可带动人潮。

“更多人潮就会带动消费,增加收入,我们有信心租金回酬也受激励。”

出席记者会的高层还包括该公司总财务长韦素芬、业务发展经理桑卡及高级财务经理曹珼荌。

根据双威产托年报,双威购物中心是该公司主要营业额贡献,2013财年内,营业额贡献达2亿3905万5000令吉,双威产托资产组合整体营业额为4亿1594万6000令吉。

同时,他披露,双威购物中心进行中Oasis Boulevard5扩张计划于今年底完成,增加2万362平方尺净租用面积,将陆续引进著名瑞典服装零售品牌H&M、Sephora、Armani Exhange等,冀望引来新人潮。

现有2万3432平方尺出租面积也将重新编排。

不急于收购资产

针对增购资产计划,黄中立解释,他们不急于短期内收购资产,因此会严格筛选资产,确保新资产能够带来长期增长和诱人回酬。

他透露,双威产托目前负债水平仅31%,足够资本开销和收购资产,加上有优先权,可收购双威(SUNWAY,5211,主板产业股)进行中的Sunway Giza购物广场、Sunway Pinnacle和Sunway Velocity,总值介于20至30亿令吉的资产。

他因此不担心无法完成未来2至3年内,将资产组合总值从51.8亿令吉,提升至70亿令吉的目标。

黄中立预见,长期内的利率料攀升,产托回酬会下滑,因此对收购资产价格更敏感。

同时,双威产托会继续谨慎进行资本管理,平均贷款成本维持在4%以下。

2013财年内,双威产托平均贷款成本为3.77%,节省高达1080令吉。

SBC eyes up to 50% higher revenue for current fiscal year

Source: http://www.thestar.com.my/Business/Business-News/2013/09/25/SBC-EYES-4050-PCT-HIGHER-REVENUE-IN-CURRENT-FISCAL-YEAR.aspx

KUALA LUMPUR: Property developer SBC Corp Bhd (SBC) expects its revenue to increase by 40% to 50% in the financial year ending March 31, 2014, bolstered by its ongoing and upcoming projects.

SBC Managing Director Sia Teong Heng said he expects current unbilled sales of between RM210mil to RM220mil to contribute to the group's bottomline.

The group has five projects comprising condominiums, shop offices and landed double-storey houses in Kuala Lumpur, Kota Kinabalu and Kuantan.

SBC, which has been making inroads into Kota Kinabalu, has embarked on the redevelopment of the Jesselton Waterfront for an estimated gross development value of RM1.8bil.

The project, on a 6.6ha site, is a joint venture with Sabah government-linked company Suria Capital Holdings Bhd.

Sia said the project will consist of mixed properties including retail commercial spaces, premium offices, waterfront serviced residences, waterfront business hotel and world-class marina facilities.

"We have submitted the plan and the construction will commence in the first quarter of next year.

"The full impact of this project will come in the year 2015," he told a press conference after the group's 23rd annual general meeting here today.

The group posted a slighlty higher pre-tax profit of RM38.8mil, up 11.63% for the financial year ended March 31, 2013 from RM34.78mil registered in 2012.

Revenue, however, dropped to RM126.03mil against RM153.70mil achieved in the previous year.

"The lower revenue was mitigated with an overall better bottom line performance, recording a higher profit after tax of RM27.91mil compared to RM22.68mil in 2012," said Sia.

He further said the group's net earnings per share increased by 21.43% to 34 sen compared to 28 sen registered during the last corresponding period.

On prospects, he said SBC is confident that the current projected GDV of RM4.8bil, to be rolled out over the next 10 years, will transform the company's revenue profile in the next few years. - Bernama

Pimco sees Asia advantage as bright outlook shrinks spreads

Source: http://www.thestar.com.my/Business/Business-News/2013/09/26/Pimco-sees-Asia-advantage-as-bright-outlook-shrinks-spreads.aspx

SINGAPORE: Asia’s stronger balance sheets and better economic outlook will see the yield premium investors demand to own the region’s debt versus US bonds shrink, Pacific Investment Management Co (Pimco), manager of the world’s biggest fixed-income fund, predicts.

Sectors to watch include energy, financials and high yield, where corporate issuance since Dec 31 set a record with 76 new deals totalling more than US$30.4bil, the Newport Beach, California-based fund manager said in its latestAsia Credit Perspectives report, released yesterday.

The extra spread investors demand to hold Asia dollar bonds has fallen 25 basis points this month to 333 basis points, Bank of America Merill Lynch indexes show. That compares with a 3 basis-point fall to 152 for debentures from US companies.

“There are many advantages to investing in Asia,” said Raja Mukherji, the Hong Kong-based head of Asian credit research at Pimco, which had US$1.97 trillion in assets under management as of June 30. “The region enjoys decent rates of growth which exceed much of the developed world.”

Developing nations in Asia are forecast to expand almost four times faster than developed economies in 2014, according to International Monetary Fund world growth estimates released in July.

The last several years had seen some extraordinary growth in Asian credit markets and ongoing trends, including supply and demand dynamics, banking sector deleveraging and increasing demand for energy across the region painted a vivid picture for credit investment opportunities, Pimco said.

Borrowers in Asia outside Japan sold some US$93.1bil of US dollar-denominated bonds this year versus US$84.1bil the same period of 2012, according to data compiled by Bloomberg.

Issuance ground to a halt in June after the Federal Reserve signalled it might begin tapering stimulus this year, sending bond yields to a one-year high as funds demanded compensation for the cost of future interest-rate rises. – Bloomberg

Tuesday, September 24, 2013

OCK launches RM150mil Islamic bond programme

Source: http://www.thestar.com.my/Business/Business-News/2013/09/24/OCK-launches-RM150mil-Islamic-bond-programme.aspx

KUALA LUMPUR: OCK Group Bhd, which has launched its RM150mil Islamic bond programme, is targeting to raise RM5mil initially to activate the sukuk programme while utilising the rest of the proceeds for its needs over the next two to three years.

Managing director Sam Ooi said after the sukuk launch yesterday that the local telecommunications network services company was in a better position to build more towers when required by its clients with the availability of another fund-raising option.

“Proceeds from the sukuk programme would be utilised to expand our tower assets. Currently, we own 60 telecommunication towers and we hope to grow the number to improve on our recurring income,” he said, adding that the sukuk issuance had helped it raise its capacity and capability to bid for bigger projects.

He said the company was in talks with interested parties to subscribe to its sukuk programme, which had a tenure of up to 20 years, but declined to elaborate further.

Commenting on the amount to be raised, BNP Paribas Malaysia Bhd managing director Tan Chong Hin said: “The issuer (OCK) has set an aggressive target for us as a joint lead manager, so we hope to be able to get back to them as soon as we can.”

On the method used, Bank Muamalat (M) Bhd chief executive officer Datuk Mohd Redza Shah Abdul Wahid said the sukuk programme provided flexibility for the issuer to raise funds at a more attractive costing compared to conventional bonds.

PNB Paribas is the principal adviser, lead arranger, syariah adviser and joint lead manager for the programme alongside Bank Muamalat, which is the joint lead manager.

As for the number of towers it plans to build, Ooi said it was subject to the needs of its clients.

According to him, a three-legged tower costs between RM250,000 and RM300,000, while the cost to build a rooftop site is about RM60,000.

He said the demand for rooftop sites was 70% compared to 30% for towers.

It took five to six years to recover the return on investment of its tower-leasing business, he added.

He expects its network deployment work to continue to grow at a double-digit quantum due to the rise in activities as a result of the upgrading works to long-term evolution technology by telecom operators.

Concurrently, it would also grow its sources of recurring income, for instance via its renewable energy business and tower leasing business, by double digits, he said.

Going forward, he expects its overseas operations to contribute about 10% to 20% to its topline, following the incorporation of its Myanmar and Cambodian units next year. It plans to set up an entity in Thailand for its green energy business.

In the previous financial year, the domestic business activities contributed to almost all of its revenue.

Monday, September 23, 2013

Joel Greenblat and Value Investing - M.A. Wind

Source: http://klse.i3investor.com/blogs/kianweiaritcles/37289.jsp

I wrote a short posting before about Joel Greenblatt, this time I like to present more material.




The first time I heard about Joel Greenblatt is when a friend recommended this book a long time ago to me:

"You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits"




It is a great book about "special situations" (mergers, spinoffs, arbitrages, etc.), definitely not meant for a beginner in stock market investing. The only minor point for people interested in Asian investing is that it is 100% focused on the US market (as unfortunately the large majority of books about investing). It is written in 1985, but still relevant and I would highly recommend it, the logic presented is very compelling.

Twenty years later he followed with:

"The Little Book That Beats the Market"




It provides a rather simple formula to chose and pick shares. The returns, backtested on a reasonable large sample, looked very promising. Basically the formula choses shares with a high ROE at a relative low PE multiple. Since no formula is perfect, users of the formula are encouraged to pick about 20 to 30 different companies, to diversify the risk.

Five years later he followed this up with"

"The Little Book That Still Beats the Market"




An updated version based on the latest data.

I have to admit, I haven't read this latest book, I found the proof in his previous book compelling enough.

Also, the proof that his formula is still working can be found here, a presentation Greenblatt held at the 2009 Value Investing Congress:





The link to the presentation slides can be found here.

Quite amazing that such a simple formula is enough to beat the market, while more than half of the US fund managers are trailing the relevant index.

The Magic Formula's website can be found here.

The holdings of the "Formula Investing US Value Select A (FNSAX)" which uses the formula for its stock selection can be found here.

Big question for Asian investors: would this formula also work, say in Malaysia or Singapore? My guess is it would indeed work. But unfortunately the data to test this assumption is not readily available, like in the US.
 

汇华产业4 大理由支撑 北马产业还可旺足7年

Source: http://www.nanyang.com/node/565846?tid=462

(槟城21日讯)汇华产业(HUNZPTY,5018,主板产业股)反驳北马产业市场不如中南马的论调,更点出4大理由,认为北马的房市更有优势。

汇华产业集团主席拿督许廷忠说,槟城当地房屋市场将可再兴旺至少5至7年,这主要归功于以下4大理由:1)房屋需求极高;2)供需平衡,不像巴生谷及柔南地区供过于求;3)槟州人均收入提升;4)槟州政府正积极将槟城打造成国际城市。

因此,他看好槟城未来的政策及领导方向,将更有助于房市发展,令槟城的房市更具优势。

许廷忠指出,比较全马各地的房产市况,北马始终较中马和南马来得更具优势,因为中南马一带均有各自的隐忧。

外国买家看不透局势

他出席汇华产业分析员汇报会后,向记者如此说。

他分析,尽管依斯干达经济特区的计划不错,但由于当地的土地价格和房价已飙升得太高,未来的趋势将不乐观。

此外,当地的房屋炒家,尤其是来自中国和新加坡的炒家太多,也是关键之一。

“现阶段很多外国买家都可能看不透整个局势,所以,会认为还有很高的投资价值,不过,这得与本地经济情况挂钩分析。”

他也指中马一带的房屋市场,因为过多的发展商和炒家的出现,因此仍不及北马般更具优势。

“那里的竞争太大了,没有槟城的稳定发展。”

许廷忠补充,槟城的房市发展虽然速度不像中马那么快,但确实稳定成长,潜能和伸缩性大,也比较安全。

另外,许廷忠也提及集团正在落实的3项工程,即柔府、ALILA2,以及甲抛峇底的计划,将可在未来4年内带来13至14亿令吉收益。据悉,该公司目前在北马一带的地库还有900英亩。

Palm Oil Prices Could Fall 13%, M'sia and Indonesia planting more

Source: http://www.thestar.com.my/Business/Business-News/2013/09/23/Palm-Oil-Prices-Could-Fall-13-Pct-By-Jan-2014-As-Output-Surges.aspx

MUMBAI: Increasing demand from the bio fuel industry is unlikely to take crude palm oil (CPO) prices out of a 2,200-2,400 ringgit range in the next few weeks and there are chances prices could hit a four-year low of 2,000 ringgit in January 2014 if Brent crude drops below $100 per barrel, prominent industry analyst Dorab Mistry said on Sunday.

Crude palm oil is being used increasingly as an additive in fossil fuels, as it can cut costs and reduce environmentally damaging emissions. But production is also rising as farmers in top producers Indonesia and Malaysia plant more of the crop.

Global palm oil production in the vegetable oil year starting from Oct. 1, 2013, is set to rise by 3.5 million tonnes over the current year, Mistry, who is head of vegetable oil trading with Indian conglomerate Godrej Industries, told the Globoil India conference.

Global demand for palm oil from the bio fuel industry is likely to rise by 2 to 2.5 million tonnes, while demand from the food industry could rise by 3 million tonnes, he said.

"Despite the expansion of demand due to bio fuels, I do not expect a bull market," Mistry said in a speech at the Globoil India conference.

Rising demand from the biofuel industry could keep crude palm oil (CPO) prices <0#FCPO:> in a narrow range of 2,200 to 2,400 ringgit in the short term, Mistry said.

But by January 2014, they could fall 13 percent from current levels to 2,000 ringgit, if Brent crude falls below $100 per barrel and prospects of a bumper soy crop in South America surface.

A contrarian view was put forward on Saturday by James Fry, chairman of commodities consultancy LMC International, who said CPO prices may rise nearly 9 percent to 2,500 ringgit per tonne by February 2014 from current levels as Indonesia's inventories will fall now it has decided to promote biodiesel consumption.

On Friday, benchmark palm oil futures on the Bursa Malaysia Derivatives Exchange had lost 0.9 percent to close at 2,297 ringgit per tonne, bringing prices down 6 percent so far in 2013, after a plunge of 23 percent in 2012.

"The fundamentals of the oilseed and vegetable oils complex are clearly bearish. They can turn bullish only with a major weather problem," Mistry said, as the peak palm oil production season comes in the next few months and bumper output of soybean and sunflower is expected.

Oil palm trees in Indonesia and Malaysia - the world's top producers that make up about 90 percent of global palm oil supply - typically produce more fruit in the second half of the year after resting in the first half.

Mistry lowered his figures for palm oil output in Malaysia and Indonesia by about 2 percent and 3.3 percent respectively for the calendar year 2013 as the start of the higher production cycle was delayed.

But he expects a consistent rise in inventories in Malaysia and Indonesia for the next several months from September.

India, the world's biggest importer of palm oil, could see demand stagnating as local buyers turn to soy oil and sunflower oil alternatives to supply domestic refiners who cannot compete on refined palm oil with cheap exports from producing countries.

In the 2013/14 edible oil year starting from Nov. 1, 2013, Mistry estimates India's imports of palm oil at 8.3 million tonnes, compared with 8.35 million tonnes in 2012/13.

"Indian refiners are the gate-keepers to the Indian market. They determine which oil is to be imported and processed. If they face competition from processed and refined palm oil imports, will they import more palm or will they import more unrefined soft oils?"

India's vegetable oil production in 2013/14 is likely to rise by at least 500,000 tonnes from this year, he said. - Reuters

RIVERSTONE: Ramping Up Production Capacity Massively In Taiping

Source: http://www.nextinsight.net/index.php/story-archive-mainmenu-60/919-2013/7404-riverstone-ramping-up-production-capacity-in-taiping

Written by Leong Chan Teik
Sunday, 22 September 2013 12:34

IN LESS THAN a year from now, this site(picture) in Taiping, Malaysia will be transformed into a highly-automated sprawling factory producing gloves chiefly for workers in the healthcare industry globally.

Singapore-listed Riverstone Holdings will unveil in due course details of the production capacity increases and the various phases.

Last Wednesday (Sept 18), six analysts (from DBS Vickers, OCBC, OSK-DMG, Phillips, CIMB and UOB Kay Hian) and NextInsight visited the Taiping site -- as well as an existing factory of Riverstone a few kilometres away.

Riverstone also has factories in Kuala Lumpur, Thailand and China.

Currently, the company has a production capacity of 3.1 billion gloves a year -- a level which was achieved by end-2012 and a long way up from the 720 million-capacity it had in 2006, the year of its IPO.

The rate of utilisation in 2Q of this year was about 85%.

About 60% of Riverstone's production was for healthcare gloves and 40%, cleanroom gloves. The latter are used in cleanrooms of hard disk drive and semiconductor industries.

Riverstone is estimated to have a market share of 60% of the world's cleanroom glove market, as it is the main supplier to the big boys -- Seagate, Western Digital, Hitachi, Toshiba, and TDK.

NextInsight file photoHere are some highlights of the Q&A session between analysts and Riverstone chairman Wong Teek Son and CFO Lim Sing Peow.

Q: What gives you the confidence that you can use up the new production capacity?

Mr Wong: Firstly, for cleanroom gloves, we have decided to compete in the lower-end of the market also. Secondly, for healthcare gloves, a few customers have come to us requiring very big supplies but we can only produce part of their requirements. One customer wanted 800 million gloves a year, another asked if we can supply 70% of their requirements.

They are comfortable with us after auditing our factories. Thirdly, there is greater demand arising from a trend of users moving away from gloves made from latex to gloves made from nitrile which we focus on.

Q: You mentioned going into the low-end of the cleanroom gloves segment. What's the outlook for the high end?

Mr Wong: We have been taking market share but the market itself is not growing much because the HDD and wafer manufacturing sectors are not growing.

Q: You see more growth in the low-end cleanroom gloves segment -- what are these industries?

Mr Wong: Flat panel, touchscreen and mobile. The profit margins are almost the same as the other cleanroom gloves but the selling prices are lower. The margins are higher than for healthcare gloves and we can't ignore this market as it is growing.

For glimpses of the tour of the existing factory, click on the video below.

Q: For your new factory, do you forsee problems getting workers?

Mr Wong: We will depend on workers from Nepal and Myanmar to do the lower-level work but the new lines are more automated than existing ones. We can get local workers for the packing work which doesn't involve night shifts.

Q: Do you have a formal dividend policy?

Mr Wong: It's not formal but we have been paying 40-50% of earnings.
CFO Lim: And this will not be affected by the capex for the new factory as we have reserves from the exercise of warrants and we are looking for other financing. Phase 1 will cost RM70-80 million but Phase 2 will be less.
Mr Wong: For phases 1 and 2, no problem. For 3 and 4, if we don't have enough internal resources, we will get from the bank. We already have bank approvals.

Can you please give a breakdown of the COGS (cost of goods sold)?

Mr Wong: Raw material 25-30%, labour 15%, fuel 10-15%, chemical 7%, utility 7-10%, and the rest would be depreciation, maintenance and packaging.


dividend9.13> Unlike many a manufacturing business, Riverstone has zero debt and has enjoyed positive free cashflow since its listing in 2006. 

> The one-year return of Riverstone stock is 76%.

> Trailing dividend yield is 3.6%.

> Market cap is S$252 million (based on a recent stock price of 68 cents).

Saturday, September 21, 2013

XMH: Unaffected By Soft Coal Prices And Rupiah Slide

Source: http://www.nextinsight.net/index.php/story-archive-mainmenu-60/919-2013/7407-xmh-

Written by Sim Kih
Friday, 20 September 2013 12:00


XMH HOLDINGS’ revenue is driven by demand for vessels that transport Indonesia’s coal, but the distributor of imported diesel engines, propulsion and power generating solutions is unaffected by soft coal prices and the Indonesian rupiah’s recent slide.

“Our main product is the main engine used in tugs and workboats transporting coal. China’s import demand for Indonesian coal remains strong,” said executive director Sam Chua during a recent 1Q2014 results briefing.

"The weakening of the yen against the USD is good for us because we pay our key principal, Mitsubishi, in yen," said Mr Chua.

"However, customers in Indonesia may delay their orders in the hope that a revaluation of the rupiah will lower their cost," he added.

Mr Chua explained that XMH's gross profit margin for 1Q2014 came down by 3.4 percentage points to 24.9% because the company focused on capturing market share for smaller tugboat engines.

Its 1Q profit attributable to shareholders was up 22.7% at S$2.7 million.

”Coalmine owners need tugs and barges to transport coal from inland mines. Smaller engines are in demand because only small tugs are able to sail inland,” he said.

The good news is: Mr Chua expects group margin to recover in the upcoming quarters because now that the company has gained a foothold in the small engine market, it will focus on other products with better margins.

He also cited healthy enquiries from new markets such as India and Vietnam.

From below 30 cts during the first half of this year, XMH has enjoyed a good run up and stayed firmly above 40 cts. Bloomberg data

On 7 Sep, it acquired Mech-Power Generator (MPG), which manufactures, assembles, sells and services diesel powered generator sets. (See: XMH acquires Mech-Power Generator for $17.4 m in earnings-accretive deal)

Unlike XMH, which supplies mainly to the marine industry, MPG’s generator sets are used in multiple industries, ranging from industrial to commercial to marine and the military.

Thus, the gensets can be sold to shipyards and ports, hospitals, education centres, data centres, airports, hotels and resorts infrastructural projects (roads, bridges, underground tunnels, waste treatment plants etc).

The MPG Group also fabricates, manufactures and customises all supporting equipment such as acoustic silencers and attenuators, and bulk fuel tanks.

Q: Who are your competitors?

Engines are our main product. Hong Leong owns Yuchai, a PRC engine player in China. There are few engine distributors like us. We also distribute propellers, which is the main product of Mencast.

Q: What is the typical value of your product?

The most common order is for the 1,000-horse-power (hp) engine and gearbox with a value of about US$180,000. Each vessel needs two sets for its main engine. The smallest engine we carry is about 50 hp. The biggest one is about 18,000 hp, which is for Handy-sized vessels.

Q: How is your recently acquired company, Mech-Power Generator, synergistic to your business?

Mech-Power provides OEM project engineering and management service while ours is a distribution business with after-sales support. They supply gensets and provide installation services. They have double our manpower even though our revenue is much higher.

Mech-Power carries many brands but we only carry our agency brands.

Q: Are you affected by the drop in coal prices?

Some of the new low-calorie coalmines are facing problems, such as an inability to obtain operating licenses. Our customers are mostly shipping companies that can serve coalmines, both big and small. The shipping companies are not as much affected as coalmine contractors.

Q: Do your customers have minimum contract values to ship for coal companies?

Yes, some of our customers have long-term charter contracts. The big coal companies are financially stable because they made a lot of money in the past, when coal price was high.

Prime Minister Lee says Asia ‘far’ from situation before 97 crisis

Source: http://www.theedgesingapore.com/the-daily-edge/business/45515-prime-minister-lee-says-asia-far-from-situation-before-97-crisis.html

Asia’s fundamentals are strong and “far” from the conditions before the 1997 regional financial crisis, Singapore’s Prime Minister Lee Hsien Loong said.

“I do not believe that we are in the situation of the Asian financial crisis,” Lee said in his speech in the city state today. The region is “between challenges but overall, we’re in a stable position,” he said.

Lee said the prospects of a tapering in the Quantative easing led to an outflow of capital and currency depreciation in Asia, with investors doubting the sustainability of emerging markets. He added the situation has stabilized though risks remain.

Emerging markets recovered after U.S. policy makers said this week they want more evidence of an economic recovery before paring its $85 billion-a-month quantitative-easing program. U.S. Federal Reserve Chairman Ben. S. Bernanke had said in June the central bank may start curbing stimulus this year and end it in 2014 if the economy finally achieves sustainable growth.

Friday, September 20, 2013

令吉反弹评级下调 手套股全军覆没

Source: http://www.nanyang.com/node/565288?tid=462

(吉隆坡19日讯)由于令吉反弹和分析员调整领域评级至“中和”,马交所主板手套股项在今日开市后即应声而挫。

今日闭市时,顶级手套(TOPGLOV,7113,主板工业产品股)报收6.27令吉,下滑3.67%或23仙;速柏玛(SUPERMX,7106,主板工业产品股)下滑6.2%或16仙至2.58令吉;高产尼品工业(KOSSAN,7153,主板工业产品股)下滑2.09%或14仙至6.68令吉;贺特佳(HARTA,5168,主板工业产品股)报收7.28令吉,下滑1.5%或11仙。

根据安联研究日前公布的报告,上述4家手套公司股价在过去9个月不断飙升,目前股价上扬空间十分有限,因而调低领域评级,从“增持”至“中和”。

此外,JF Apex证券分析员也表示:“我相信在全球前景黯淡时,紧抓股票的投资者们,会随着前景逐渐光明而套利离场。”

股价末季料无惊喜

美国宣布维持超宽松政策,亚洲货币汇价因而回扬。当中,令吉兑美元汇率攀扬2.1%至3.1662,相等于自2010年5月份后的最大涨幅。

安联研究分析员表示:“我们虽然认为手套领域基础稳健,但股价上扬空间是在有限。”

他说,大多券商已把领域业者利好因素如乳胶成本稳定、令吉对美元稳定和产能拓展计划,纳入股价预测之内,预料末季股价表现不会有惊喜。

在4家手套业者当中,惟高产尼品工业为此“买入”评级。

“高产尼品工业2013年次季业绩表现出色,而且销量和赚幅也不断上扬,受惠于更好的产品组合。”

Nam Cheong unit forms JV company in Indonesia to operate and charter vessels

Source: http://www.theedgesingapore.com/the-daily-edge/business/45490-nam-cheong-unit-forms-jv-company-in-indonesia-to-operate-and-charter-vessels.html

Nam Cheong announced that its wholly-owned subsidiary, Nam Cheong Pioneer Sdn Bhd (NCP) has entered into an agreement with PT Bahtera Niaga Internasional (BNI) to jointly invest in a shipping company in Indonesia.

Under the deal, NCP will acquire 49% of the equity stake in PT Bahtera Niaga Indonesia (the JV company) from BNI for the purchase consideration of US$1.5 million ($1.9 million).

The acquisition will be satisfied in cash through internal resources.

The objective of the JV company is to own, operate and charter of marine vessels for transportation, exploration and production activities in the oil and gas industry and to manage the maintenance of marine vessel and provision of offshore marine service and all other related businesses and activities.

The acquisition is in line with the group’s corporate strategy to strengthen its position as one of the leading global offshore marine players and grow its recurring income stream through the utilisation of BNI’s ship management and crew expertise.

Thursday, September 19, 2013

Tiong Nam plans to raise RM42m

Source: http://www.thesundaily.my/news/833654

PETALING JAYA (Sept 18, 2013): Tiong Nam Logistics Holdings Bhd has proposed to split its shares and issue fresh warrants at 20 sen each to raise RM42 million for working capital and to pay its business expansion.

"The proceeds will be used for the future purchase of land as well as construction of warehouse to support the growth of the group's existing business,'' it said in a filing with Bursa Malaysia today.

The company will allocate RM20 million from the proceeds of the warrant exercise for the purpose of business expansion, while the rest will be set aside for working capital.

Under the fund raising exercise, Tiong Nam said it will first execute the share split exercise by dividing one share into five shares.

Eligible shareholders will be offered to buy warrants to be issued by the company at 20 sen on the basis of one warrant for every two shares held after the share split exercise.

The warrant will carry a strike price of RM1 each.

Shares in Tiong Nam rose 13 sen yesterday to close at RM4.35. After the share split exercise, the stock price will be adjusted to 87 sen each.

Scheme to mentor youth in social entrepreneurship

Source: http://www.thesundaily.my/news/833843

KUALA LUMPUR (Sept 19, 2013): The government is expected to announce a framework including funding and programmes designed to assist and mentor youth in social entrepreneurship as early as next month, said Finance Ministry secretary-general Tan Sri Dr Mohd Irwan Serigar Abdullah (pix).

"The government has plans to design programmes to help and mentor the youth. During the Global Entrepreneurship Summit 2013 to be held on Oct 11, some announcements will be made by the prime minister," he told reporters at the event to announce the upcoming Fifth Global Social Business Summit yesterday.

He said there are plans to set up a centre where young entrepreneurs can be coached and have the opportunity to network with successful entrepreneurs, which is part of the government's aim in becoming a global innovative entrepreneur hub.

Irwan said the government is also in the midst of developing a framework for entrepreneurs which will also include social entrepreneurs.

"The government will announce it (the framework) soon. The government's funding for social entrepreneurship is also work in progress, wait for the Budget 2014 announcement. The government needs to look at the overall budget and decide how much goes to which entities," he added.

Currently, there are 70 social enterprises or businesses in the Klang Valley but the figure is not accurate as many social enterprises operate as non-profit organisations and there is no legal framework that defines these enterprises.

He said the government will support and provide more funds to develop social entrepreneurship as there are long-term benefits rather than relying completely on the government or the private sector.

On the effects of the recent fuel hike, Irwan said the impact on inflation is minimal at 0.2%, which would increase the current inflation from 1.7% to 1.9%. He said the country is not in recession mode while consumption and growth will continue.

"The Ministry of Domestic Affairs and Consumer Affairs are doing the enforcement They're going to the shops and so on, and controlling the price (of certain products such as food)…it's just a temporary effect, it will taper off soon," he said.

The Global Social Business Summit will be held at the Kuala Lumpur Convention Centre from Nov 7 to 9 and will be the first to be held in Asia.

Some 700 participants are expected to attend the summit which will feature speakers such as Nobel Peace Prize Laureate Professor Muhammad Yunus, Prime Minister Datuk Seri Najib Abdul Razak and co-founder of The Grameen Creative Lab Hans Reitz.

Sunway JV in S'pore to contribute from 2016

Source: http://www.thestar.com.my/Business/Business-News/2013/09/19/Sunway-JV-in-Spore-to-contribute-from-2016.aspx

PETALING JAYA: Sunway Bhd’s latest joint venture (JV) in Singapore with its “old” partners - Hoi Hup Realty Pte Ltd and SC Wong Holdings Pte Ltd - is expected to contribute meaningfully to earnings only from financial year 2016 onwards, according to Maybank IB Research.

“The new project in Singapore is expected to churn out a net profit of RM19mil per annum or 1.1 sen earnings per share,” it said in a report.

Sunway’s wholly owned subsidiary Sunway Developments Pte Ltd, along with Hoi Hup Realty and SC Wong Holdings, has been awarded 2.38ha on a 99-year lease term at RM1.13bil in Mount Sophia, Singapore.

Sunway owns 30% of the consortium, while Hoi Hup Realty and SC Wong Holdings have 51% and 19%, respectively.

Mount Sophia is located in a prime area and is close to the Dhoby Ghaut MRT station. The consortium plans to build low-rise condominium units. Analysts are positive on the land acquisition due to its strategic location and “reasonable price”.

According to Maybank, the consortium’s bid was about 0.06% above the second-highest bid of RM3,108 per square foot.

“Based on the transaction cost, the land cost-to-gross development value (GDV) ratio of 55% seems fair to us, given that land typically makes up 40% to 60% of GDV in Singapore,” it said.

It is learnt that the transaction represents Sunway’s ninth development in Singapore and the eighth JV with Hoi Hup Realty.

“This is the largest residential undertaking by Sunway with a GDV of RM2.06bil,” said Hong Leong Investment Bank Research.

The research house called it a “timely win” for Sunway, as its SeaEsta@Pasir Ris condominium development at an RM922.5mil GDV is fully sold, and its Novena medical suites, with a GDV of RM2.35bil, will be launched in the later part of the year.

“With Sophia, it would provide earnings continuity in Singapore,” it said, adding that the group’s unbilled property sales in Singapore stood at RM636mil, representing 35% of its overall effective unbilled sales as of the first half of financial year 2013.

Wednesday, September 18, 2013

巴菲特最新致富11招

Source: http://klse.i3investor.com/blogs/kianweiaritcles/37118.jsp

时间正是最大优势

人为财死,不管是穷人或富人,大家都渴望财富,但财富累积的速度总有快慢。致富非 偶然,要靠时间累积(像长期投资、储蓄、认真工作);发财讲运气,在短期内暴富(像中乐透、投机炒作)。许多股市散户都怀有投资发财的想法,其实这没有不 对,但错就错在观念。不少专家说过,时间是散户最大优势,但大家往往忽视自己的优势,想杀进杀出来快速获利。巴菲特等多位专家一再告诫大家,别只想到短线 获利,因为就算是投资专家乃至金融大鳄也常有失手,更何况是我们这些散户!这些专家一再提出长期做价值型投资的重要性,而且这是一般人都做得到的事。

巴菲特等多位专家别只想到短线获利,就算是投资专家乃至金融大鳄也有失手,更何况是散户!专家提出长期做价值型投资的重要性,而且这是一般人都做得到的事

虽 然巴菲特老是说长期投资、价值型投资之类的话,但人家就是成功了,投资人也永远听不厌倦。 Morningstar StockInvestor编辑柯芬纳(Matthew Coffina)参加巴菲特投资旗舰柏克夏海瑟威在5月4日股东大会后,归纳他11个投资建议。

第1,只要有1家公司拥有强劲和不断成长的竞争优势,用公平价格投资其股票是没问题。巴菲特说,不要以惊人的价格买好公司股票,应以公 平价格买让人惊艳的公司股票。什么是公平价格?等股价下跌回来时买进优质股。像苹果股票,你觉得应该在700美元追高,还是400美元以下低进?

第2,别人亢奋时要保持理智。巴菲特说,一生至少会遇到4或5次股市崩跌,但事后都证明那是进场最佳时机。

第3,投资不仅是数字游戏,由于涉及主观判断,我们必须了解企业的​​业务实际运作,光靠线型图表是成不了大事。

第4,许多人视股票为一张纸,把投资当赌博,投资者应该以老板的思维,用另一角度来看股票。

第5,既然要用老板的思惟,只有长期观察一家公司,你才能了解其管理层素质,因为会为你赚钱的正是这些管理层。

第6,订下简单的衡量企业表现标准,然后严守。巴菲特最爱用每股帐面价值做标准,若其升幅超标准普尔500企业的平均值就续抱;相反就卖出。巴菲特认为选股就这么简单。

第7,但巴菲特强调,一般来说,帐面价值只是会计上的概念,只能反映过去的成本,却不能反映内在价值,了解企业的​​资产价值更为重要。

第8,别做蠢事,尤其经营保险业务时尤其如此。因为保险或再保业务必须有真正优秀的管理团队才能脱颖而出。意即在投资1家公司时,了解其管理层素质极重要。

第9,别做自己能力范围以外的事。没时间深入研究股票的人,可买成本低的股票指数型基金(ETF)。巴菲特不投资看不懂前景的行业,他说,预测没人知道的事,而忽略自己的专长,这样做有够蠢。

第10,没人能预测未来,别太在乎宏观经济预测,因为当中有太多变数。

第11,美国从过去到未来,都是一个不断繁荣的故事。这正是他长期看好美股前景重要原因。

Peter Lynch: Beating the Street (Summary)

Source: http://klse.i3investor.com/blogs/kianweiaritcles/37134.jsp

Beating the Street Plot Summary
Preview of Beating the Street Summary:
Peter Lynch, manager of Fidelity Investment's incredibly successful Magellan Fund from 1977 to 1990, writes this book to provide investors with insight into his investment methodologies and tactics. He begins with a tale about a group of 7th graders who make mock investments as part of their class. The children are instructed to invest in companies they own and to research their choices to explain to their classmates why they made them. The 7th graders do extremely well, beating the S & P 500 index significantly. Their story demonstrates that even a child can invest successfully if they choose companies they are familiar with and do their research. Knowing one's investments is the main theme of the book.
Next, for those who might be timid about investing in stocks, Lynch explains why stocks are a better investment than bonds or certificates of deposit. While a conservative investor may prefer a...
 
Chapter 1 Summary and Analysis
Peter Lynch, manager of Fidelity Investment's incredibly successful Magellan Fund from 1977 to 1990, writes this book to provide investors with insight into his investment strategies. Lynch believes amateur stock pickers can outperform mutual funds.
He begins with a tale about a group of 7th graders who make mock investments as part of their class. The children are instructed to invest in companies they own and to research their choices to explain to their classmates why they made them. The 7th graders do extremely well, beating the S & P 500 index significantly. Their story demonstrates that even a child can invest successfully if they choose companies they are familiar with and do their research. The kids compiled a list of potential stocks, and then researched each one thoroughly, checking earnings and relative strength. Before any kid could put a stock in their portfolio, they had to understand the company's...
 
Chapter 2 Summary and Analysis
The successful investor cannot be afraid of the minor fluctuations and corrections of the stock market. Investors must resist the natural human urge to cut and run at the first sign of trouble.
The Barron's Roundtable, an annual meeting of the best and brightest investors, is used to demonstrate that even the experts get too caught up in letting the news of the day influence their stock purchasing and selling thoughts. Each year, during the late 1980s, after the crash of 1987, the group found pessimistic news to dissuade them from buying stocks. 1990 and 1991 were predicted to be especially gloomy years. In fact, the doom and gloom and slightly depressed market created a perfect opportunity to buy.
The best way to avoid being scared out of stocks is to buy them on a regular basis, month in and month out. Looking to the "Even Bigger Picture" as opposed...
 
Chapter 3 Summary and Analysis
Mutual funds are intended to take the confusion out of investing. You invest your money in the fund and do not have to worry about picking stocks or following the market. Mutual funds are so popular today that there are more mutual funds available than there are stocks on the New York and American stock exchanges combined.
Many investors make their investment decisions based on the amount of income a given type of investment will generate. They ignore growth potential. They often invest in bond or money market mutual funds because of the steady interest income they provide. Investors often ignore the income potential of stock dividends and the investment growth factor stocks provide. In other words, if you buy a bond, you will receive steady interest over the term of the investment, but, in the end, you receive your original investment back. This amount, when reduced by inflation, has...
 
Chapter 4 Summary and Analysis
Lynch took over Magellan in 1977. His first year was spent selling his predecessor's favorites and buying his own. These included Congoleum, Transamerica, Union Oil, Aetna Life and Casualty, Hanes, and Taco Bell. The variety of different companies reflects that Lynch did not have an overall strategy to investing. He was always looking for undervalued companies, no matter the industry. Lynch liked growing fast food chains because if they could be successful in one region, they would be successful nationwide.
Lynch made a point of getting to know every industry he could. One of the most valuable lessons he learned was the importance of doing his own research. Lynch made it a habit to meet with at least one industry representative from every sector once a month for a general update. This provided an opportunity to spot potential trouble early. Another trick he learned was to end every conversation by...
 
Chapter 5 Summary and Analysis
Lynch believes that focusing on the companies is more important than focusing on the stocks. Lynch used the methods of an investigative reporter: reading public documents for clues, talking with analysts and investor relations people for more clues, and then going to the companies themselves. After each contact, he would make a note in a loose-leaf binder with the name of the company, the current stock price, and a one or two line summary of the story he had just heard.
As Magellan grew, Lynch used assistants to call companies and analysts to keep up on developments. Lynch found that when people are given more responsibility, they usually live up to it. This was a revolutionary concept in the industry. Traditionally, fund managers choose stocks based on their analysts' research. Unfortunately, this allows managers to blame the analyst for a poor performing stock. If an analyst knows his or her...
 
Chapter 6 Summary and Analysis
The amount of time needed to research your portfolio depends on how many you own. A few hours a year must be dedicated to reading annual and quarterly reports and calling companies for periodic updates. One person with five stocks can do this as a hobby. The fund manager of a medium sized fund can do it as a 9-5 job. In a larger fund, a 60-80 hour work week is required. By mid-1983, Magellan had 450 stocks. Before the end of the year, the fund doubled to 900. Magellan was criticized for being too big-by owning that many stocks, they couldn't beat the market, they were the market.
When Magellan had 900 stocks, 700 of them accounted for less than 10% of the fund's total assets. The smaller stocks accounted for a tiny portion of the fund for two reasons: 1) the companies were small, so even if Magellan...
 
Chapter 7 Summary and Analysis
Lynch feels strongly that stock picking is part art and part science. Relying too much on either aspect, however, can be dangerous. Lynch has used the same stock picking method for 20 years. His method involves elements of both art and science with a healthy dose of legwork. He does not rely on computer programs or services. He figures that for every ten companies he researches, he will find one worth buying.
Lynch prefers a recession to an overpriced market. In an overpriced market, good value stocks are extremely hard to find. In a recession market, bargains are everywhere. He is happier to see the market lose 300 points than gain 300 points.
The investor who buys sells stocks frequently is asking for trouble. That investor would do much better to know their stocks. The investor who knows an industry and knows how a particular stock will respond to a...
 
Chapter 8 Summary and Analysis
A large regional mall can be the best place to do stock research. Many of the biggest gainers of all time are retailers: Home Depot, the Limited, Gap, and Wal-Mart are just a few. When it comes to retailers, if you like the store, you will probably love the stock even more.
Lynch attributes the success of retailers to the fact that taste in both food and fashion is universal. Typically the foods that are popular in one town or region will do well in other towns or regions. Likewise, clothes and fashion that are popular in one region often become popular nationwide.
Employees at malls can recognize very quickly which stores are doing well. If you don't happen to have such an insider connection, perhaps you can get some good tips from a friend or family member who visits the mall regularly. If a teenage girl you know buys...
 
Chapter 9 Summary and Analysis
Investors are often rewarded by looking to industries other investors fear. In 1992, for example, there was no more feared an industry than residential real estate. Investors feared that the collapse in the commercial real estate market would spread to residential real estate.
Lynch noticed that despite analysts' concerns, the median house price steadily rose from 1989 through 1991. Since the statistic was tracked in 1968, the median home price had gone up every single year. Lynch calls this a "quiet fact." Other quiet facts for the housing market are the "affordability index" and the percentage of mortgage loans in default. Even though these facts pointed in a positive direction, companies even remotely related to the home building and home finance industries were way down.
Anticipating a boom in the housing market, Lynch looked for housing-related companies that might benefit. He thought about Pier 1, the home furnishings retailer. If...
 
Chapter 10 Summary and Analysis
Towards the end of 1991, Lynch received a Supercuts prospectus and decided to visit a store for a haircut. He noted the prices were about the same as his regular barber, though much less than the salons his wife and daughters frequented. The company had just gone public a month or two earlier. There were 650 franchise stores established and management was embarking on an extensive expansion campaign. The theory behind the business was that the hair care industry was a $15-40 billion industry dominated by independent barbers and salons. Barbers, however, were a dying breed. This seemed a perfect opportunity for a well-managed national franchise do to very well.
Lynch liked the fact that the only expenditures for the company, besides rent, were scissors and combs. As a franchise operation, the corporation didn't have to invest its own money in expansion. The biggest plus of all, though, were the...
 
Chapter 11 Summary and Analysis
Lynch is quite fond of solid companies in poor industries. It is much more difficult to find an undervalued stock in an industry that is popular and successful. In a lousy industry, weak companies fail and strong ones earn an even bigger share of the market. A growing company in a stagnant market is much better off than one that has to struggle to keep up in a fast-paced market.
Good companies in poor industries share certain characteristics. They operate at low cost. Their owners are often characterized as "cheap" or "penny-pinchers." They avoid debt. They reject the traditional corporate structure of overpaid fat-cat executives who ignore the concerns and opinions of labor. Workers are well paid and often own a piece of the business. They seek out markets that larger companies have overlooked. They tend to grow very quickly.
Sun TV, a small, discount retail television and electronics business...
 
Chapter 12 Summary and Analysis
In the early 1990s, Savings & Loans had a terrible reputation. After hundreds went bankrupt, the federal government was forced into a $500 billion bailout. In that environment, investors did not want to go near an S & L. Many S & Ls, however, were doing just fine and were excellent candidates for investment. Lynch provides a framework to analyze an S & L. He divides them into three categories: the "bad guys" that perpetuated fraud, the "greedy guys" that ruin a good thing, and the thrifty "Jimmy Stewart" types.
The "bad guys" tended to run them into the ground in the same ways. For example: several investors get together and collectively invest $1 million. This is their equity. They take in $19 million in deposits and then make $20 million in new loans. In order to raise the $19 million in deposits, they paid sky-high interest rates. Those deposits...
 
Chapter 13 Summary and Analysis
A casual stock picker could pick five conservative S & Ls, invest an equal amount in each, and wait for the profits to roll in. One would likely do better than expected. Three of them would make an average return. One would do worse than expected. The overall result should be better than a traditional investment in Coca-Cola or Merck.
Lynch would try to improve his odds through in-depth research. He spoke with the CEO of Glacier Bancorp. It was a 12-15% earner selling at 10 times earnings. Nonperforming loans were almost non-existent. The dividend rose for the 15th straight year. It had just acquired two other S & Ls. Strong S & Ls grow quickly by acquiring troubled and defunct S & Ls. Glacier held a relatively high percentage of commercial loans, but these loans for multifamily housing, not vacant office buildings or condos.
Lynch phoned the CEO of...
 
Chapter 14 Summary and Analysis
Another class of company ignored by Wall Street was the master limited partnership or "MLP." The term limited partnership, in 1991, brought back memories of terrible tax-shelter partnerships that went bust. Another reason they were ignored was that an MLP forced the shareholder to do extra tax paperwork. The biggest difference between an MLP and a normal corporation is that the MLP distributes all of its earnings to the shareholders in the form of a very high dividend. A substantial drawback was that most all MLPs were forced to close out in 1997-1998 because of tax laws.
EQK Green Acres owned a shopping mall on Long Island. Lynch recommended this company in 1991. Management owned many shares and the dividend rose every quarter since it went public. Future earnings would be good as well, because rent would increase substantially a year down the road. He was worried about heavy borrowing,...
 
Chapter 15 Summary and Analysis
In a poor economy, fund managers often turn to cyclicals. Cyclicals are companies which typically follow a pattern of boom to recession and then back again. Common cyclical industries are: aluminum, steel, paper, automobiles, chemicals and airlines. Wall Street seemed to be anticipating the return of cyclicals earlier and earlier, making it that much more difficult to successfully invest in them. While a low P/E ratio is regarded as good with most stocks, such is not the case with cyclicals. When they are very low, a cyclical is usually at the end of a favorable period. Inexperienced investors will stick with the company because business is good and earnings are high. This, however, will soon change. Smart investors will sell. The price of the stock falls quickly once the selling begins. Never buy a cyclical after several years of record earnings and when the P/E ratio is at a low...
 
Chapter 16 Summary and Analysis
Utility stocks have traditionally been consistent earners. They are often better than a CD because they pay a nice dividend and normally appreciate in value over the course of several years. Troubled utilities can be excellent investments. A troubled utility almost has to fix itself because they are regulated by the government and the population has to have electricity. A utility may declare bankruptcy or eliminate its dividend, but it is going to have to stay in operation.
With several distressed utilities to choose from at the end of 1991, Lynch looked to CMS Energy, the utility company of Michigan. The company had done very well until it built a nuclear plant that regulators would not allow them to operate. Its stock fell from $20 to $4.50 in 1984. The company was forced to take a $4 billion write off-the cost of building the plant. Despite the huge hit, CMS...
 
Chapter 17 Summary and Analysis
Privatization of government-run business can be very profitable, no matter which country is selling. Privatization takes something that is owned by the public, sells it to the public, and then it is private. In America and Britain, privatization is almost always a no-lose situation. Elected officials do not want to upset the voting public by losing their money in a privatization deal that goes wrong. Privatizations almost always favor the investor with very low prices.
Telephone companies around the world have privatized and done extremely well. Privatization of telephone companies in Mexico, Spain, and the Philippines all resulted in investors making a once-in-a-lifetime killing. The Mexican phone company, for example, went up almost 800% in only two years.
Privatization in the United States is somewhat rare since the types of companies that might be privatized in other countries likely started out private in the U.S.
 
Chapter 18 Summary and Analysis
During Lynch's last three years at Magellan, Fannie Mae was its biggest position in the fund. Fidelity's clients made over $1 billion in profits from Fannie Mae during the 1980s. Looking back, Lynch thinks Fannie Mae was a rather obvious pick. He realizes, however, that no one can make that much on a stock unless the stock is grossly underestimated by the market.
Fannie Mae created the concept of the "mortgage-backed security." They bought mortgages, bundled them together, and then sold the bundle to anyone, including the banks that originated the mortgages. Fannie Mae earned a fee for this package and passed the interest rate risk on to new buyers. This service became very popular among the banks. Before it was invented, banks and S & Ls were stuck administering thousands of little mortgages. They were hard to keep track of and hard to sell. Now the bank could sell...
 
Chapter 19 Summary and Analysis
Lynch bemoans the fact that he missed investing in the mutual fund industry. The Great Correction of 1987 allowed him to give them a try. There was a great fear at the time that the mutual fund industry would collapse. Lynch bought mutual funds at low prices. When mutual funds are popular, it is often better to invest in the companies that sell the funds than to invest in the funds themselves. When interest rates decline, bond and equity funds attract more cash and the companies that specialize in these funds do very well.
 
Chapter 20 Summary and Analysis
New restaurants and fast food establishments are created every year. Historically, restaurant stocks have been some of the biggest earners of all time. Shoney's rose 168 times. McDonald's price multiplied by 400. Kentucky Fried Chicken rose 27 ? times its initial offering price.
The investor who missed the restaurants of the 1960s didn't have to worry. In the 1970s he could have done very well investing in Dairy Queen, Wendy's, Luby's, Taco Bell, Pizza Hut, and Long John Silver. In the 1980s, Cracker Barrel, Chili's, Sbarro, and Chi-Chi's were excellent restaurant opportunities.
Restaurant chains, like retailers, typically have 15-20 years of fast growth as they expand. Restaurant companies take time to expand across the country. Slow and steady expansion is better than overexpansion. If a restaurant expands by more than 100 stores a year, it is asking for trouble. A pace of 30-35 new units per year is much more...
 
Chapter 21 Summary and Analysis
A prudent investor should review his portfolio every six months and ask the following questions: 1) is the stock price still a bargain compared to its earnings? And 2) is the company doing anything to increase earnings?
Asking these two questions can lead to one of three conclusions: 1) the company's financial situation has improved and I should buy more, 2) the company's situation has worsened and I should sell or 3) the company's situation is unchanged and I can either leave the money there or put it into another company with better prospects. With this strategy in mind, Lynch re-examined the 21 picks he made for Barron's at the six-month point.
As a group, the 21 stocks did very well in an average market. Lynch read the quarterlies of the 21 companies. Some of his research led him to companies he liked better than the original 21. He recommended...
 
20 Golden Rules Summary and Analysis
This section is a summary of Lynch's most important lessons learned through two decades of investing.
Get the investor's edge to outperform the experts by investing in companies or industries you know and understand. An amateur can often outperform the professionals by ignoring them. In every industry, an amateur who does a little homework can find great growth companies long before a professional. Never invest in a company without understanding its finances. Never own more stocks than you can handle. An amateur can do quite well owning only five companies.
The key to making money is being patient. Sometimes even a successful company may not see an increased value in its stock for many years. Eventually, though, a successful company will show a long-term gain in value. Long shot stocks, on the other hand, almost always fail. "Hot" stocks in "hot" industries are usually risky. Established companies in non-growth industries...
 

Beating the Street Important People

Investors
Investors are the target audience of this stock-picking advice book. In recent decades, investors have shied away from buying stocks and have preferred investing in bonds or mutual funds. Lynch wrote this book to convince investors to head back to the stock market. He urges the cautious investor to give stocks a try by demonstrating that a long-term investment in the stock market will almost certainly pay off. He shows how investing in an established, solid company can result in long-term gains that could double or even triple the returns of a bond. The ups and downs of the stock market are largely made irrelevant by long term investment.
Fund Managers
Peter Lynch managed the Magellan Fund. A mutual fund is basically a pool in which many investors have deposited their money. The fund managers then invest the money in various stocks and other investments depending on the type of fund. An...
 

Beating the Street Objects/Places

St. Agnes School
This is the school the amateur 7th grade investors attend. Lynch uses them to make a point that even a novice investor can be successful if they make wise investment choices and sticks to areas in which they are knowledgeable.
Magellan Fund
The Magellan Fund is a fund created by Fidelity Investments in the 1960s. Peter Lynch managed Magellan from 1977 to 1990. By managing Magellan, Lynch became the premier fund manager in the U.S. Magellan outperformed the S & P index each year.
Barron's Roundtable
This was an annual meeting in which the top fund managers and investment analysts met to make investment recommendations for an annual issue of Barron's Magazine. Lynch's 1991 and 1992 recommendations form the basis of this book. The book highlights how he made his selections and how he reviewed and tracked them to make further recommendations.
P/E Ratio
The P/E ratio provides a way to measure a stock's value. P...
 

Beating the Street Themes

Invest in what you know
Lynch's overriding theme throughout the book is investing in what one knows. He demonstrates this first in the 7th grader exercise. The 7th graders did very well in their mock investments by choosing companies they were familiar with, from fast food restaurants to Nike to Disney to the Gap. Lynch suggests that an amateur investor can be just as knowledgeable about a particular field as a Wall Street analyst and perhaps even more so. For example, those who visit malls frequently often have insight into new retail stores and trends of which a Wall Street analyst may not be aware. The shopping mall regular may be able to pick out a new, popular chain with great potential like the Body Shop. Likewise, regional fast food chains on the move might be spotted early, as they are on their way to national expansion and great success. Taco Bell, Sbarro, and Chili's...

Beating the Street Style

Perspective
Peter Lynch is perhaps the most successful mutual fund manager of all time. Lynch managed the Magellan Fund from 1977 through 1990. During that time, Magellan was the top-ranked general equity mutual fund. TimeMagazine called Lynch the "#1 money manager." Lynch's first book, One Up on Wall Street, instructed potential investors to invest in subjects and areas in which they are knowledgeable. After retiring from Magellan, Lynch devoted his time to assisting nonprofit corporations with their investments. He wrote Beating the Street to help the average investor make better investment choices.
Lynch's intended audience could be any investor, from a seasoned pro to an absolute beginner. The beginner will appreciate the step-by-step method Lynch takes in explaining the basics of investing and then explaining his own methodology for researching a company for potential investment. The seasoned investor will likely appreciate learning Lynch's methodology and exactly what goes through his...

Beating the Street Quotes

"Never invest in any idea you can't illustrate with a crayon." Chapter 1, p. 27.
"You can't see the future through a rearview mirror." Chapter 2, p. 41.
"The extravagance of any corporate office is directly proportional to management's reluctance to reward the shareholders." Chapter 4, p. 86.
"The best stock to buy may be the one you already own." Chapter 6, p. 129.
"A sure cure for taking a stock for granted is a big drop in the price." Chapter 6, p. 131.
"Never bet on a comeback while they're playing 'Taps.'" Chapter 6, p. 138.
"If you like the store, chances are you will love the stock." Chapter 8, p. 152.
"All else being equal, invest in the company with the fewest color photographs in the annual report." Chapter 11, p. 190.
"...try to find a reason that the next year will be better than the last. If...

Beating the Street Topics for Discussion

Why are stocks a better investment than bonds or certificates of deposit?
Discuss three specific ways that research helps an investor make better decision.
Discuss how an average consumer has an advantage over a Wall Street analyst in choosing a retail stock.
What is the pattern of a cyclical stock and when should an investor consider buying one?
Name the five basic types of funds and describe each one.
What are the effects when a company buys back its own stock?
Describe how a recession can be good for an investor.
Explain how to find a good company in a lousy industry.
What is the "January Effect" and how can a good investor take advantage of it?
 
 
 
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Summary of Peter Lynch’s “One up on Wall Street”