Friday, 19 October 2012
Maybank IB keeps 'buy' on Public Bank on 'solid fundamentals'
Maybank IB keeps 'buy' on Public Bank on 'solid fundamentals'
Written by Ho Ching-Ling
Friday, 19 October 2012 11:48
KUALA LUMPUR (Oct 19): Maybank Investment Bank (IB) has maintained its “buy” call for PUBLIC BANK BHD [] and raised its target price by 70 sen to RM16.70 based on the group’s stable growth and
solid fundamentals.
Public Bank's net profit for the third quarter ended Sept 30, 2012 rose to RM983.29 million versus RM931.95 million a year ago.
Revenue for the quarter rose to RM3.58 billion from RM3.27 billion a year earlier. Earnings per share was 28.08 sen while net asset per share was RM4.83.
In a research report on Friday, Maybank IB said Public Bank continues to perform within guidance with a domestic loan growth of 13% in line with management’s 12% to 13% target for the year.
“At the heart of the loan growth domestically is residential and commercial property lending, which rose at an annualised rate of 17% and 22% respectively. Hire purchase growth trailed at 9%,” it said.
According to Maybank IB, the banking group still maintains a dominant position with market shares of 18.8%, 33.4% and 26.3% in residential property, commercial property and passenger vehicle financing
respectively.
However, the research house highlighted that the group’s overall loan growth lagged at 11%, mainly due to a contraction in its Hong Kong loan book.
“Competition remains stiff for Public Bank (Hong Kong), which has 32 branches in Hong Kong, three in China and is involved primarily in commercial loan disbursements, as well as Public Finance (42 branches), which mainly provides personal financing to maids,” said Maybank IB.
Having said that, Maybank IB does not expect a large earnings impact from Public Bank’s Hong Kong operations since its overseas operations only accounts for just 6% of its profit before tax.
theedgemalaysia.com
Buy and Hold is safe and rewarding for selected stocks
Have a look at this portfolio.
Note that dividend gains are not included in the calculations.
https://docs.google.com/spreadsheet/ccc?key=0AuRRzs61sKqRdDFQd2QtdjZtNjBtUjlMUWtvaUowNlE
Thursday, 18 October 2012
Buffett believes it is foolish to use short-term prices to judge a company's success. What happens to the stock price in the short run is inconsequential.
If adapting Buffett's investment strategy required only a change in perspective, then probably more investors would become proponents. Unfortunately, applying Buffett's approach requires changing not only perspective but also changing how performance is evaluated and communicated.
The traditional yardstick for measuring performance is price change: the difference between the purchase price of the stock and the market price of the stock. In the long run, the price of a stock should approximate the change in value of the business. However, in the short run, prices can gyrate widely above and below a company's value, dependent on factors other than the progress of the business. The problem remains that most investors use short-term changes to gauge the success or failure of their investment approach. However, these short-term price changes often have little to do with the changing economic value of the business and much to do with anticipating the behaviour of other investors.
Buffett believes it is foolish to use short-term prices to judge a company's success. Instead, he lets his companies report their value to him, by their economic progress. Once a year, he checks several variables:
If these economic measurements are improving, he knows the share price, over the long term, should reflect this. What happens to the stock price in the short run is inconsequential.
The difficulty of using economic measurements as yardsticks for success is that communicating performance in this manner is not customary. Clients and investment professionals alike are programmed to follow prices. The stock market reports price change daily. The client's account statement reflects price change monthly and the investment professional, using price change, is measured quarterly.
The answer to this dilemma may lie in employing Buffett's concept of "look-through" earnings. If investor use look-through earnings to evaluate their portfolio's performance, perhaps the irrational behaviour of solely chasing price might be tempered.
The traditional yardstick for measuring performance is price change: the difference between the purchase price of the stock and the market price of the stock. In the long run, the price of a stock should approximate the change in value of the business. However, in the short run, prices can gyrate widely above and below a company's value, dependent on factors other than the progress of the business. The problem remains that most investors use short-term changes to gauge the success or failure of their investment approach. However, these short-term price changes often have little to do with the changing economic value of the business and much to do with anticipating the behaviour of other investors.
Buffett believes it is foolish to use short-term prices to judge a company's success. Instead, he lets his companies report their value to him, by their economic progress. Once a year, he checks several variables:
- Return on beginning shareholder's equity
- Change in operating margins, debt levels, and capital expenditure needs.
- The company's cash generating ability.
If these economic measurements are improving, he knows the share price, over the long term, should reflect this. What happens to the stock price in the short run is inconsequential.
The difficulty of using economic measurements as yardsticks for success is that communicating performance in this manner is not customary. Clients and investment professionals alike are programmed to follow prices. The stock market reports price change daily. The client's account statement reflects price change monthly and the investment professional, using price change, is measured quarterly.
The answer to this dilemma may lie in employing Buffett's concept of "look-through" earnings. If investor use look-through earnings to evaluate their portfolio's performance, perhaps the irrational behaviour of solely chasing price might be tempered.
The more appropriate question is not how did Buffett do it but why did not other investors apply his approach?
How did Buffett do it?
Given the documented success of Buffett's performance coupled with the simplicity of his methodology, the more appropriate question is not how did he do it but why did not other investors apply his approach? The answer may lie in how individuals perceive investing.
When Buffett invests, he sees a business. Most investors see only a stock price. They spend far too much time and effort watching, predicting, and anticipating price changes and far too little time understanding the business they partly own. Elementary as this may be, it is the root that distinguishes Buffett.
His hands-on experience owning and managing a wide a variety of businesses while simultaneously investing in common stocks separates Buffett from all other professional investors.
Owning and operating businesses has given Buffett a distinct advantage. He has experienced both success and failure in his business ventures and has applied to the stock market the lessons he learned. The professional investor has not been given the same beneficial education.
While other professional investors were busy studying capital asset pricing models, beta, and modern portfolio theory, Buffett studied income statements, capital reinvestment requirements, and the cash-generating capabilities of his companies.
"Can you really explain to a fish what it's like to walk on land?" Buffett asks. "One day on land is worth a thousand years of talking about it and one day running a business has exactly the same kind of value."
According to Buffett, the investor and the businessperson should look at the company in the same way because they both want essentially the same thing. If you ask a businessperson what he thinks about when purchasing a company, the answer most often given is: "How much cash can be generated from the business?"
Given the documented success of Buffett's performance coupled with the simplicity of his methodology, the more appropriate question is not how did he do it but why did not other investors apply his approach? The answer may lie in how individuals perceive investing.
When Buffett invests, he sees a business. Most investors see only a stock price. They spend far too much time and effort watching, predicting, and anticipating price changes and far too little time understanding the business they partly own. Elementary as this may be, it is the root that distinguishes Buffett.
His hands-on experience owning and managing a wide a variety of businesses while simultaneously investing in common stocks separates Buffett from all other professional investors.
Owning and operating businesses has given Buffett a distinct advantage. He has experienced both success and failure in his business ventures and has applied to the stock market the lessons he learned. The professional investor has not been given the same beneficial education.
While other professional investors were busy studying capital asset pricing models, beta, and modern portfolio theory, Buffett studied income statements, capital reinvestment requirements, and the cash-generating capabilities of his companies.
"Can you really explain to a fish what it's like to walk on land?" Buffett asks. "One day on land is worth a thousand years of talking about it and one day running a business has exactly the same kind of value."
According to Buffett, the investor and the businessperson should look at the company in the same way because they both want essentially the same thing. If you ask a businessperson what he thinks about when purchasing a company, the answer most often given is: "How much cash can be generated from the business?"
Buffett: His investment performance, widely documented, has been consistently superior.
Program trading, leveraged buyouts, junk bonds, derivative securities, and index futures have frightened many investors. The grind of fundamental research has been replaced by the whirl of computers.
Throughout the last few decades, investors have flirted with many different investment approaches. Periodically, small capitalization, large capitalization, growth, value, momentum, thematic and sector rotation have proven financially rewarding. At other times, these approaches have stranded their followers in periods of mediocrity.
Buffet, the exception, has not suffered period of mediocrity. His investment performance, widely documented, has been consistently superior. As investors and speculators alike have been distracted by esoteric approaches to investing, Buffett has quietly amassed a multi-million-dollar fortune. Throughout, businesses have been his tools, common sense his philosophy.
Throughout the last few decades, investors have flirted with many different investment approaches. Periodically, small capitalization, large capitalization, growth, value, momentum, thematic and sector rotation have proven financially rewarding. At other times, these approaches have stranded their followers in periods of mediocrity.
Buffet, the exception, has not suffered period of mediocrity. His investment performance, widely documented, has been consistently superior. As investors and speculators alike have been distracted by esoteric approaches to investing, Buffett has quietly amassed a multi-million-dollar fortune. Throughout, businesses have been his tools, common sense his philosophy.
Ultimately, the best investment ideas will come from doing your own homework. You should not feel intimidated.
Investment success is not synonymous with infallibility. Rather, it comes about by doing more things right than wrong.
The success in your investment approach is as much a result of eliminating those things you can get wrong, which are many and perplexing (predicting markets, economies, and stock prices), as requiring you to get things right, which are few and simple (valuing a business).
When purchasing stocks, you should focus on two simple variables: the price of the business and its value. The price of the business can be found by looking up its quote. Determining value requires some calculation, but it is not beyond the ability of those willing to do some homework.
The wonderful thing is because you are no longer worry about the stock market, the economy, or predicting stock prices, you are now free to spend more time understanding your businesses.
More productive time can be spent reading annual reports and business and industry articles that will improve your knowledge as an owner. The degree to which you are willing to investigate your own business lessens your dependency on others who make a living advising people to take irrational action.
Ultimately, the best investment ideas will come from doing your own homework. You should not feel intimidated.
Determining how to allocate your savings is the most important decision you, as an investor, will make.
The success in your investment approach is as much a result of eliminating those things you can get wrong, which are many and perplexing (predicting markets, economies, and stock prices), as requiring you to get things right, which are few and simple (valuing a business).
When purchasing stocks, you should focus on two simple variables: the price of the business and its value. The price of the business can be found by looking up its quote. Determining value requires some calculation, but it is not beyond the ability of those willing to do some homework.
The wonderful thing is because you are no longer worry about the stock market, the economy, or predicting stock prices, you are now free to spend more time understanding your businesses.
More productive time can be spent reading annual reports and business and industry articles that will improve your knowledge as an owner. The degree to which you are willing to investigate your own business lessens your dependency on others who make a living advising people to take irrational action.
Ultimately, the best investment ideas will come from doing your own homework. You should not feel intimidated.
Determining how to allocate your savings is the most important decision you, as an investor, will make.
Public Bank records higher Q3 pre-tax profit of RM1.31b
October 18, 2012
KUALA LUMPUR, Oct 18 – Public Bank Bhd posted a higher pre-tax profit of RM1.313 billion for the third quarter ended Sept 30, 2012, compared with RM1.231 billion registered in the previous corresponding quarter.
In a filing to Bursa Malaysia, the bank said revenue for the period also increased to RM3.589 billion from last year’s RM3.272 billion.
Founder and Chairman of Public Bank, Tan Sri Dr Teh Hong Piow said the group’s gross loans grew at an annualised rate of 11.3 per cent to RM193 billion as at the end of September this year, with domestic loans up 12.8 per cent on an annualised basis.
“Over the same period, we also recorded a steady growth of customer deposits at an annualised rate of 13.2 per cent, with domestic customer deposits increasing by 14 per cent.
“As a result, the group’s loan-to-deposit ratio remained stable at 86.8 per cent,” he was quoted saying in the statement.
Teh said Public Bank continued to be in the forefront amongst its banking peers in Malaysia in terms of recording the highest net return on equity of 24.2 per cent and maintaining the lowest gross impaired loan ratio of 0.7 per cent.
The group’s lending to small and medium enterprises also recorded commendable growth with an annualised growth rate of 23.6 per cent in the first nine months of this year.
“Our funding position remained robust, supported by the strong retail franchise and large domestic depositor base of over 4.8 million customers.
“Domestic customer deposits grew at an annualised rate of 14 per cent compared with the domestic banking industry’s annualised growth of 8.8 per cent.”
The group expects to maintain its earnings momentum and record satisfactory performance for the fourth quarter of this year. – Bernama
KUALA LUMPUR, Oct 18 – Public Bank Bhd posted a higher pre-tax profit of RM1.313 billion for the third quarter ended Sept 30, 2012, compared with RM1.231 billion registered in the previous corresponding quarter.
In a filing to Bursa Malaysia, the bank said revenue for the period also increased to RM3.589 billion from last year’s RM3.272 billion.
Founder and Chairman of Public Bank, Tan Sri Dr Teh Hong Piow said the group’s gross loans grew at an annualised rate of 11.3 per cent to RM193 billion as at the end of September this year, with domestic loans up 12.8 per cent on an annualised basis.
“Over the same period, we also recorded a steady growth of customer deposits at an annualised rate of 13.2 per cent, with domestic customer deposits increasing by 14 per cent.
“As a result, the group’s loan-to-deposit ratio remained stable at 86.8 per cent,” he was quoted saying in the statement.
Teh said Public Bank continued to be in the forefront amongst its banking peers in Malaysia in terms of recording the highest net return on equity of 24.2 per cent and maintaining the lowest gross impaired loan ratio of 0.7 per cent.
The group’s lending to small and medium enterprises also recorded commendable growth with an annualised growth rate of 23.6 per cent in the first nine months of this year.
“Our funding position remained robust, supported by the strong retail franchise and large domestic depositor base of over 4.8 million customers.
“Domestic customer deposits grew at an annualised rate of 14 per cent compared with the domestic banking industry’s annualised growth of 8.8 per cent.”
The group expects to maintain its earnings momentum and record satisfactory performance for the fourth quarter of this year. – Bernama
The Author Of The 'Rich Dad, Poor Dad' Books Has Filed For Chapter 7 Bankruptcy
Jill Krasny
Oct. 11, 2012
Robert Kiyosaki, author of the bestselling "Rich Dad, Poor Dad" series, has filed for Chapter 7 bankruptcy protection after losing a nearly $24 million court judgment to The Learning Annex, The New York Post reports.
As one of Kiyosaki's earliest backers, The Learning Annex was responsible for arranging the speaking engagements and platform that led to his massive success.
But apparently the fame went to his head because according to court papers obtained by the Post, Kiyosaki, who published his first "Rich Dad" book in 1994, never paid the Annex its rightful share. Said founder and chairman Bill Zanker: "Oprah believed in him, and Will Smith believed in him, but he didn't keep his promise to us."
Kiyosaki's Rich Global company was ordered by a U.S. judge in April to cough up $23,687,957.21, which in turn led him to file for corporate bankruptcy on Aug. 20.
Despite the blow to the personal finance guru's reputation, Kiyosaki probably won't feel the pinch in his wallet. Forbes pegs his net worth around a cool $80 million, and Kiyosaki, who's written 11 books, operates as many as ten other companies. Rich Global was said to be worth a few million when it went under.
"Rich Dad, Poor Dad" became an overnight sensation when Kiyosaki made the rounds on feel-good daytime TV like "Oprah" and aired his speaking programs on PBS. Cash-strapped consumers identified with his inspirational story of learning how to manage money from one father who struck it big and another who died penniless and alone.
Of course, not everyone bought into the schtick. As Helaine Olen's wrote in Forbes Thursday, the guru's "tips ran the gamut from ridiculous to illegal and downright hurtful and included advocating for insider trading, arguing for the purchase of multiple real estate properties with little or no money down and telling followers they could purchase stocks on margin via unfunded brokerage accounts.
Read more: http://www.businessinsider.com/the-author-of-the-rich-dad-poor-dad-books-has-filed-for-chapter-7-bankruptcy-2012-10#ixzz29bQ4Ttcz
Wednesday, 17 October 2012
Financial Tenet: The One-Dollar Premise
Financial Tenet: For every dollar retained, make sure the company has created at least one dollar of market value.
An Illustration:
Public Bank Berhad
Since 2002, the market value of PBB has grown from RM 4.20 to RM 11.68 - an increase of RM 7.48 or 748 sen. (Calculation: Low Price of 2001 RM 11.68 - High Price of 2002 RM 4.20).
During these 10 years, PBB earned 568.8 sen. It paid shareholders, in dividends, 374.7 sen and retained 194.1 sen for reinvestment.
Thus, PBB retained 194.1 sen in earnings and created 748 sen in market value for its shareholders. That is, for every RM 1 retained earnings over the last 10 years, PBB created RM 3.85 in market value for its shareholders.
This financial accomplishment demonstrates the superior management and the ability to reinvest shareholder's money at optimal rates.
Financial Tenet: For every dollar retained, make sure the company has created at least one dollar of market value.
This is a quick financial test that will tell you not only about the strengths of the business but how well management has rationally allocated the company's resources. From a company;s net income subtract all dividends paid to shareholders. What is left is the company;s retained earnings.
1. If the business has employed retained earnings unproductively over the 10 year period, the market will eventually catch up and will set a low price on the business. If the change in market value is less than the sum of retained earnings, the company is going backward.
2. But if your business has been able to earn above-average returns on retained capital, the gain in market value of the business should exceed the sum of the company's retained earnings, thus creating more than one dollar of market value for every dollar retained.
An Illustration:
Public Bank Berhad
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Since 2002, the market value of PBB has grown from RM 4.20 to RM 11.68 - an increase of RM 7.48 or 748 sen. (Calculation: Low Price of 2001 RM 11.68 - High Price of 2002 RM 4.20).
During these 10 years, PBB earned 568.8 sen. It paid shareholders, in dividends, 374.7 sen and retained 194.1 sen for reinvestment.
Thus, PBB retained 194.1 sen in earnings and created 748 sen in market value for its shareholders. That is, for every RM 1 retained earnings over the last 10 years, PBB created RM 3.85 in market value for its shareholders.
This financial accomplishment demonstrates the superior management and the ability to reinvest shareholder's money at optimal rates.
Financial Tenet: For every dollar retained, make sure the company has created at least one dollar of market value.
This is a quick financial test that will tell you not only about the strengths of the business but how well management has rationally allocated the company's resources. From a company;s net income subtract all dividends paid to shareholders. What is left is the company;s retained earnings.
1. If the business has employed retained earnings unproductively over the 10 year period, the market will eventually catch up and will set a low price on the business. If the change in market value is less than the sum of retained earnings, the company is going backward.
2. But if your business has been able to earn above-average returns on retained capital, the gain in market value of the business should exceed the sum of the company's retained earnings, thus creating more than one dollar of market value for every dollar retained.
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