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, 9 January 2023

Profits of Malaysian plantation companies are heavily influenced by external factors

December 30, 2022

CPO expected to average at RM5,100 a tonne in 2022, seen at RM3,800 a tonne in 2023, says MPOB

KUALA LUMPUR (Dec 30): The Malaysian Palm Oil Board (MPOB) expects the price of crude palm oil (CPO) to average at RM5,100 a tonne in 2022, which is 15.7% higher compared to RM4,407 a tonne in 2021.

The government agency also foresees the price of CPO to stabilise at an average of RM3,800 a tonne in 2023 in anticipation of

higher palm oil production,
improved weather conditions in the second half of 2023 and
higher availability of supply of other major vegetable oils.

MPOB director general Datuk Dr Ahmad Parveez Ghulam Kadir said soybean oil prices, which are expected to be low due to the higher production in Brazil and the US, may impact the price of CPO.

He said in a statement on Friday (Dec 30) that the strengthening of the ringgit against the US dollar may also affect the price of CPO.

According to MPOB, the average CPO price for January to November 2022 was RM5,167 a tonne, up 18.4% compared to RM4,363 a tonne for the same period in 2021.

It said CPO prices had experienced a decline beginning the third quarter of 2022 due to the

high CPO production season,
rising palm oil stocks and
declining soybean oil prices.

Palm oil industry saw higher production, exports and revenue in 2022

MPOB expected the closing stocks of palm oil in 2022 to be at 1.85 million tonnes, up 14.9% compared to 1.61 million tonnes in December 2021 due to higher production.

Parveez said closing stocks of palm oil are projected at two million tonnes in 2023, higher than that in 2022, due to the expected higher supplies of other major vegetable oils including palm oil.

According to MPOB, CPO production for January to November 2022 stood at 16.83 million tonnes, an increase of 1% compared to 16.67 million tonnes achieved in the same period of 2021.

“This was attributed to an increase of 2.8% in processed fresh fruit bunches (FFBs) to 86.51 million tonnes in January to November 2022 compared to 84.17 million tonnes in the same period last year,” MPOB said.

Parveez said that CPO production is expected to increase slightly by 2.1% to 18.5 million tonnes in 2022 as compared to 18.12 million tonnes in 2021. He said the slow recovery is expected due to the issue of labour shortage in oil palm plantations' FFB harvesting and unloading activities.

Parveez projected CPO production to further increase to 19 million tonnes for 2023 due to the expected increase in the productive areas, especially in Peninsular Malaysia and Sarawak. He added that the workforce situation may stabilise next year as foreign worker applications are being approved in stages.

MPOB also provided data that the exports of palm oil and other palm-based products for January to November 2022 increased by 1.3% to 22.43 million tonnes compared to 22.14 million tonnes in the same period of 2021.

It said the higher price of palm oil in January to November 2022 has boosted total export revenue by 31.8% to RM120.43 billion from RM91.38 billion in January to November 2021.

Exports of palm oil alone itself rose slightly by 0.8% to 14.25 million tonnes in January to November 2022 compared to 14.14 million tonnes in the previous corresponding period, MPOB said.

“As such, palm oil export revenue surged 31% to RM80.22 billion from RM61.26 billion in the same period of 2021,” MPOB said.

Parveez said that Malaysia’s ratification of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on Sept 30, 2022 will encourage demand for palm oil products as it broadens the country’s access to new markets such as Canada, Mexico and Peru, which are not covered by any existing free trade agreement.

“Based on cost benefit analysis on the potential impacts of the CPTPP, upon ratification and implementation of the CPTPP, tariffs for palm oil products are now reduced from a maximum of 6% for Canada, 5% for Mexico and 9% for Peru to lower tariffs based on the tariff elimination schedule,” he said.

“Apart from higher palm oil exports to the markets, the elimination of tariffs improves the Malaysian palm oil competitiveness in the CPTPP member countries.”

https://www.theedgemarkets.com/node/650017

Hailey Chung

theedgemarkets.com

Surin Murugiah

Conclusion:

Profits of plantation companies are affected by crude palm oil (commodity) prices which are heavily influenced by many external factors:

- seasonal fluctuation on palm oil production,
- weather conditions
- availability of supply of other major vegetable oils e.g. soya
- labour supply in oil palm plantations' FFB harvesting and unloading activities.
- strength of the ringgit
- increase in the oil palm productive areas
- tariffs for palm oil products

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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, 9 January 2023

Profits of Malaysian plantation companies are heavily influenced by external factors

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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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