myinvestingnotes.blogspot.my (Bullbear Buffett Stock Investing Notes)

Keep INVESTING Simple and Safe (KISS) ****Investment Philosophy, Strategy and various Valuation Methods**** The same forces that bring risk into investing in the stock market also make possible the large gains many investors enjoy. It’s true that the fluctuations in the market make for losses as well as gains but if you have a proven strategy and stick with it over the long term you will be a winner!****Warren Buffett: Rule No. 1 - Never lose money. Rule No. 2 - Never forget Rule No. 1.

Monday 17 January 2011

A Brief Look at Hing Yiap Group Bhd. & the take-over offer by Everest Hectare

Hing Yiap Group Berhad

Business Description:
Hing Yiap Group Berhad (Hing Yiap) is a Malaysia-based company engaged in property and investment holding, textile knitting and the manufacture of garments. The Company operates in three segments:

manufacturing, which includes textile knitting and the manufacture of garments;
trading, which includes wholesaling, retailing and distribution of ready-made sports and casual wear, women intimate apparel and related accessories, and
food and beverage, which includes the rights to operate gourmet chocolate cafe and retail outlets known as Theobroma Chocolate Lounge.

It has nine subsidiaries, including Antioni Sdn. Bhd., which is engaged in retailing and distribution of the Antioni brand of ready-made sports and casual wear and related accessories; Hing Yiap Trading Sdn. Bhd., which is engaged in wholesaling of ready-made garments and fabrics, and Bumcity Sdn. Bhd., which is engaged as operator of specialty stores known as Bumcity, among others.

Current Price (7/1/2011): 1.74
2010 Sales 134,827,402
Employees: 1,675
Market Cap: 72,709,380
Shares Outstanding: 41,787,000
Closely Held Shares: 39,240,280

Recent Financial Results

Announcement Date	Financial Yr. End	Qtr	Period End	Revenue RM '000	Profit/Lost RM'000	EPS	Amended
24-Nov-10	30-Jun-11	1	30-Sep-10	45,507	8,541	20.44	Amended
26-Aug-10	30-Jun-10	4	30-Jun-10	25,140	574	1.37	-
27-May-10	30-Jun-10	3	31-Mar-10	34,126	2,486	5.95	-
27-Aug-09	30-Jun-09	4	30-Jun-09	23,790	199	0.48	-

Year DPS EPS
2005 1.1 -4.1
2006 2.2 3.4
2007 3.7 10.8
2008 7.5 18.8
2009 8.1 22.4
1Q10 0.0 20.44 NAV 2.3500
2010 7.5E 29.3P (SPG)

Historical
5 Yr
PE range 4.8 - 8.4
DY range 10.3% - 5.5%

Estimated EPS for 2010 (SPG) = 29.3 sen
At price of 1.74, its forward PE = 1.74 / 0.293 = 5.9 x

Un-audited financial results for the financial period ended 30 September 2010.

Balance Sheet on 30.9.2010

Non-Current Assets 32.708 m
PPE 21.070m
Intangible assets 7.393m
Deferred tax assets 2.177m
Held-to-maturity investment 1.004m
Available-for-sale investment 1.064m

Current Assets 112.136m

Inventories 69.544m

Receivables 34.258m

Cash & bank balances 8.334m

Total Asset 144.844m

Shareholders' Equity 98.075m
Share capital 41.787m
Reserves 56.288m

Non-Current Liabilities 0.338m

Current Liabilities 46.631m
Payables 41.421m
Hire purchase payables 0.636m
Short term borrowings 4.374m

Total Liabilities 46.769m

Total Equity and Liabilities 144.844m

Net assets per share 2.35

Income Statement 1Q ending 30.9.2010

Revenue 45.507m
Profit from operations 11.564m
PBT 11.509m
PAT 8.541m
EPS 20.44 sen

Weighted average no. of ordinary shares 41.787m

Cash flow statement for period ended 30.9.2010

PBT 11.509m
Operating profit before WCC 12.276m
Cash from operations (4.868m)
Net CFO (6.037m)

CFI (1.426m)

CFF (0.260m)

17.1.2011
HING YIAP GROUP BERHAD ["COMPANY"]
RECEIPT OF NOTICE OF UNCONDITIONAL TAKE-OVER OFFER FROM RHB INVESTMENT BANK BERHAD ON BEHALF OF EVEREST HECTARE SDN BHD ["EVEREST" OR OFFEROR"]

The Board of Directors of the Company ["Board"] wishes to announce the following:

1. On 17 January 2011, Everest Hectare Sdn Bhd had acquired an aggregate of 20,900,000 ordinary shares of RM1.00 each in the Company representing 50.02% of the issued and paid-up share capital of the Company, for a cash consideration of RM1.50 per share via an unconditional share sale agreement entered into with Chi Kuei Yung Sdn Bhd, Chi Oi Meng, Khoo Henn Kuan and Khoo Henn Kiew.

2. The Company has today received a notice of unconditional take-over offer dated 17 January 2011 ["Notice"] from RHB Investment Bank Berhad on behalf of Everest Hectare Sdn Bhd to acquire all the remaining ordinary shares of RM1.00 each in the Company not already owned by Everest ("Offer Shares") for a cash consideration of RM1.50 for each Offer Share ("Offer").

The Board of Directors of the Company is not seeking any alternative person to make a take-over offer for the Company's shares.

Notice of Unconditional Take-Over Offer of Hing Yiap
Main points:

It is the intention of the Offeror to maintain the listing status of Hing Yiap.

The Offeror does not intend to invoke Section 222 of the CMSA to compulsorily acquire any outstanding Offer Shares for which valid acceptances hve not been received.

Information on the Offeror

Everest Hectare was incorporated in Malaysia under the Companies Act, 1965 as a private limited company on 2 July 2010.

The present directors and shareholders of Everest Hectare are Ng Chin Huat and Yap Su P'ing who each holds 50% equity interest in Everest Hectare.

Ng Chin Huat is currently the Managing Director and the major shareholder of Asia Brands Corporation Berhad, an investment holding company in which its subsidiaries are primarily involved in marketing, trading and retailing of lingerie, ladies' casual wear, children's wear, care and related products. Some of the brands owned and currently carried by them include Anakku, Audrey, Disney and Mickey Mouse & Friends.

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My 18 points guide to Successfully compounding your money in Stocks

Be a good stock picker.
Think as a business owner.
Always look at value rather than the price. Do the homework.
Buy and hold is alright for selected stocks.
Compounding is your friend, get this to work its magic.
Mr. Market is there to be taken advantage of. Do not be the sucker instead. BFS;STS.
Always buy a lot when the price is low.
Never buy when the stock is overpriced.
It is alright to buy when the selected stock is at a fair price.
Phasing in or dollar cost averaging is safe for such stocks during a downtrend, unless the price is still obviously too high.
Do not time the market for such or any stocks.
By keeping to the above strategy, the returns will be delivered through the growth of the company's business.
So, when do you sell the stock? Almost never, as long as the fundamentals remain sound and the future prospects intact.
The downside risk is protected through only buying when the price is low or fairly priced.
Tactical dynamic asset allocation or rebalancing based on valuation can be employed but this sounds easier than is practical, except in extreme market situations.
Sell urgently when the company business fundamental has deteriorated irreversibly.
You may also wish to sell should the growth of the company has obviously slowed and you can reinvest into another company with greater growth potential of similar quality. However, unlike point 16, you can do so leisurely.
In conclusion, a critical key to successful investing is in your stock picking ability.

http://myinvestingnotes.blogspot.com/2012/07/my-18-points-guide-to-successfully.html

11 Lessons From Peter Lynch

Peter Lynch taught me:

1. Behind every stock is a company. Find out what it’s doing.
2. Never invest in any idea you can’t illustrate with a crayon.
3. Over the short term, there may be no correlation between the success of a company’s operations and the success of its stock. Over the long term, there’s a 100% correlation.
4. Buying stocks without studying the companies is the same as playing poker – and never looking at your cards.
5. Time is on your side when you own shares of superior companies.
6. Owning stock is like having children. Don’t get involved with more than you can handle.
7. When the insiders are buying, it’s a good sign.
8. Unless you’re a short seller, it never pays to be pessimistic.
9. A stock market decline is as predictable as a January blizzard in Colorado. If you’re prepared, it can’t hurt you.
10. Everyone has the brainpower to make money in stocks. Not everyone has the stomach.
11. Nobody can predict interest rates, the future direction of the economy, or the stock market. Dismiss all such forecasts and concentrate on what’s actually happening to the companies in which you’ve invested.

Lynch’s advice had a profound effect on my stock market approach. He taught me that investment success isn’t the result of developing the right macro-economic view or deciding when to jump in or out of the market. Success is about researching companies to identify those that are likely to report positive surprises.

Capital Expenditure

A great company with a Durable Competitive Advantage will have a ratio of Capital Expenditures to Net Income of less than 25%. Less is better.

Capital Expenditures are expenses on:
- fixed assets such as equipment, property, or industrial buildings
- fixing problems with an asset
- preparing an asset to be used in business
- restoring property
- starting new businesses

A good company will have a ratio of Capital Expenditures to Net Income of less than 50%.

A great company with a Durable Competitive Advantage will have a ratio of less than 25%.

Less is better.

Benjamin Graham's 113 Wise Words

The true investor scarcely ever is forced to sell his shares, and at all times he is free to disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more. Thus the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons' mistakes of judgement."

Philip Fisher's Wise Words

"The refusal to sell at a loss, while completely natural and normal, is probably one of the most dangerous in which we can indulge ourselves in the entire investment process.

More money has probably been lost by investors holding a stock they really did not want until they could 'at least come out even' than from any other single reason. If to these actual losses are added the profits that might have been made through the proper reinvestment of these funds if such reinvestment had been made when the mistake was first realized, the cost of self-indulgence becomes truly tremendous."

(Common Stocks and Uncommon Profits)

The Ultimate Hold-versus-Sell Test

Here is the overriding primary test, followed by observations on why it is so critically important:

Knowing all that you now know and expect about the company and its stock (not what you originally believed or hoped at time of purchase), and assuming that you had available capital, and assuming that it would not cause a portfolio imbalance to do so, would you buy this stock today, at today's price?

No equivocation. Yes or no?

Answers such as maybe or probably are not acceptable since they are ways of dodging the issue. No investor probably buys a stock; they either place an order or do not.

Here is the implication of your answer to that critical test: if you did not answer with a clear affirmative, you should sell; only if you said a strong yes, are you justified to hold.

Some thoughts on Analysing Stocks (KISS)

Ideally a stock you plan to purchase should have all of the following charateristics:

• A rising trend of earnings dividends and book value per share.
• A balance sheet with less debt than other companies in its particular industry.
• A P/E ratio no higher than average.
• A dividend yield that suits your particular needs.
• A below-average dividend pay-out ratio.
• A history of earnings and dividends not pockmarked by erratic ups and downs.
• Companies whose ROE is 15 or better.
• A ratio of price to cash flow (P/CF) that is not too high when compared to other stocks in the same industry.

Margin of Safety Concept: Stocks should be bought like groceries, not like perfume

The high CAGR in the early years of the investing period, due to buying at a discount, tended to decline and approach that of the intrinsic EPS GR of the companies over a longer investment time-frame.

Chapter 20 - “Margin of Safety” as the Central Concept of Investment

A single quote by Graham on page 516 struck me:

Observation over many years has taught us that the chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions.

Basically, Graham is saying that most stock investors lose money because they invest in companies that seem good at a particular point in time, but are lacking the fundamentals of a long-lasting stable company.

This seems obvious on the surface, but it’s actually a great argument for thinking more carefully about your individual stock investments. If most of your losses come from buying companies that seem healthy but really aren’t, isn’t that a profound argument for carefully studying any company you might invest in?

myinvestingnotes.blogspot.my (Bullbear Buffett Stock Investing Notes)

Monday 17 January 2011

A Brief Look at Hing Yiap Group Bhd. & the take-over offer by Everest Hectare

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All equity security investments present a risk of loss of capital

The Ultimate Hold-versus-Sell Test

Some thoughts on Analysing Stocks (KISS)

Benjamin Graham

Sell the losers, let the winners run.

Investment Style

Warren Buffett

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