Quality first, Price second

Philip Fisher: Quality first, Price second

Fisher formulated a clear and sensible investing strategy (which I'll get to in a second), wrote one of the best investment books of all time, Common Stocks and Uncommon Profits, and made a good deal of money for himself and his clients.

His son wrote that Phil's best advice was 
-to "always think long term," 
-to "buy what you understand," and 
-to own "not too many stocks." 

Charles Munger, who is Buffett's partner, praised Fisher at the 1993 annual meeting of their company, Berkshire Hathaway Inc. (BRK/A): "Phil Fisher believed in concentrating in about 10 good investments and was happy with a limited number.  That is very much in our playbook. And he believed in knowing a lot about the things he did invest in. And that's in our playbook, too. And the reason why it's in our playbook is that to some extent, we learned it from him."

In addition to the warning against over-diversification — or what Peter Lynch, the great Fidelity Magellan fund manager, calls "de-worse-ification" — the book makes three important points:

(1)  First, don't worry too much about price.  (Quality first, Price second)
-  "Even in these earlier times [he's talking here about 1913], finding the really outstanding companies and staying with them through all the fluctuations of a gyrating market proved far more profitable to far more people than did the more colorful practice of trying to buy them cheap and sell them dear."
-  In fretting about whether a stock is cheap or expensive, many investors miss out on owning great companies. My own rule is: quality first, price second.
(2)  Second, Fisher says that investors must ask, "Does the company have a management of unquestionable integrity?" 

(3)  Finally, Fisher offered the best advice ever on selling stocks. "It is only occasionally," he wrote, "that there is any reason for selling at all."

Yes, but what are those occasions? They come down to this: Sell if a company hasdeteriorated in some important way. And I don't mean price! 

Fisher's view, instead, is to look to the business — the company itself, not the stock. 

"When companies deteriorate, they usually do so for one of two reasons: 
- Either there has been a deterioration of management, or 
- the company no longer has the prospect of increasing the markets for its product in the way it formerly did."

A stock-price decline can be a key signal: "Pay attention! Something may be wrong!" But the decline alone would not prompt me to sell. Nor would a rise in price. 

Time to sell? If you did, you missed another doubling.

"How long should you hold a stock? As long as the good things that attracted you to the company are still there."

Should You Support Your Adult Child?

Should You Support Your Adult Child? March 21, 2010 Your child is an adult now. You have supported him until he has graduated from university. How far should you continue to support him? Parents are not doing their adult child a favor by supporting him continuously with no limits in sight. Your adult child may end up being dependent on you and may put off taking full responsibility for his own life or future. Personally, I think that it is fine to support my adult child and he is welcome to stay at home within certain conditions or parameters. One of the ground rules I would insist upon is that my adult child helps with the household chores and if he is working, he should contribute towards the household expenses as well. One day, I would expect him to move out and build a family of his own. However, I would not kick him out of the house when family support is still needed. Money concerns One of the main concerns when an adult child lives with the parents is on money matters. I would not want to jeopardize my own financial future to support my adult child continuously. Your adult child has to understand that you are not going to sponsor his leisure pursuits or other hobbies while staying with you. You are not his banker unless he is committed to repaying the money. I would love to help my adult child once in awhile (if I can afford it) but it will be my decision whether to do so or not. Educate him quickly! Your adult child needs to be taught to live within his means, start to build a nest egg as soon as possible and not to fall victim to money traps like credit cards. An important priority is finding a source of income (not the parents) like getting a good paying job or jobs (it does not hurt to work hard especially when you are still young). It is imperative that your child loves his work and finds it fulfilling. Teach him how to budget and to pay his bills on time. If he has trouble paying his bills, do not rush in immediately to bail him out. He has to figure out how to solve his money problems with your advice and guidance. In short, the goal is getting your adult child to be independent and take control of his own life. You would not want him still dependent on you especially during your retirement period, right?

http://www.investlah.com/forum/index.php/topic,7271.0.html


Warren Buffett's approach is reasonable, give them enough to be 
comfortable but not so much as to end up as useless human trash.


Related:

Let The Man Be The Man He Is

http://malaysiafinance.blogspot.com/2012/08/let-man-be-man-he-is.html

Avoiding Stocks Is a Big Mistake: Vanguard Founder

By Lee Brodie | CNBC – Mon, Aug 6, 2012

If you don't have money in the stock market (^GSPC) and you hope to retire someday, the founder of The Vanguard Group says you're making a big mistake.

John 'Jack' Bogle tells us if you're investing for the long-term don't get spooked by events of late. "Knight Capital is meaningless for anyone in the market for the long haul," he says. "In fact, you're probably in a mutual fund and you can pat yourself on the back for being smart."

In other words, for most individual investors the risk from Knight Capital is non-existent because most individuals hold a basket of stocks and the diversity of the basket hedges out the single stock risk.

And he takes issue with commentary from Bill Gross who believes "the cult of equity is dying."

"Like a once bright green aspen turning to subtle shades of yellow then red in the Colorado fall, investors' impressions of 'stocks for the long run' or any run have mellowed as well," Gross says.

The analogy of stock investing to autumn may be poetic, but it's not accurate and never will be, according to Bogle. "Equities offer higher risk and will therefore always generate higher reward," he argues. Therefore, "The cult of equity is never going to be over."

Bogle goes on to remind us that in 1979 BusinessWeek made the same argument.

The article came out right before the beginning of one of the greatest bull markets of the 20^thcentury, Bogle insists. "It's always a question of balance but anyone who is out of stocks right now is making a big mistake.

http://finance.yahoo.com/news/avoiding-stocks-big-mistake-vanguard-194125818.html

Study: Vacations Do Not Actually Make You Happier

http://www.bloomberg.com/video/study-vacations-do-not-actually-make-you-happier-WMURfKCaRD~sBidgDmN_0w.html

Buy and Hold: Still Alive and Well

By Morgan Housel
August 7, 2012

Meet Bill. He invested $10,000 in an S&P 500 (INDEX: ^GSPC  ) index fund 10 years ago and checked his account balance for the first time yesterday morning. He's elated to see his investment is now worth $19,590 after all dividends were reinvested.

Bill knows a thing or two about market history. He knows that, historically, he earned a good return -- 7% a year, or close to average. He remembers that during that decade we endured two wars, a housing bubble, a collapse of the financial system, the worst recession since the Great Depression, 10% unemployment, a near shutdown of the government, a downgrade of U.S. debt, and Justin Bieber. Through it all, he managed to nearly double his money without lifting a finger.

"Buy and hold works wonders," he thinks to himself.

But then he starts reading market news. Almost without exception, he finds that commentators have declared buy and hold dead, using the last decade as proof.

Buy and Hold Is Dead (Again) is the title of one popular book. "Holding an index or mutual fund for decades will not work for today's investor as spikes in volatility and risk can quickly wipe out any gains," one article warns.

"The only way to make money in the equity market is to be nimble, and that means adopting a strategy that is not buy and hold," he reads. "Buy & hold is a relic of a bygone era when the economy was stable and consistent growth was the norm," another analyst laments.

"What are these people talking about?" Bill wonders. He spent the decade visiting his kids, taking trips to the beach, reading good books, and enjoying life -- and managed to double his money all the while. These professionals, it seems, spent the decade poring over financial news, trading obsessively, stressing themselves relentlessly, and they're bitter about the market.

Bill knows why they're bitter. They didn't double their money. They likely lost money. Most traders do -- a fact he's well aware of. The only people who think buy and hold is dead, he realizes, are those frustrated with their inability to follow it.  

Bill is fictitious, but the numbers and analyst quotes here are real.

Going back to the late 19th century, the average subsequent 10-year market return from any given month is about 9% a year (including dividends). If you rank the periods, the time from August 2002 to August 2012 sits near the middle of the pack. What we've experienced over the last decade has been pretty normal, in other words. This goes against the thousands of colorful buy-and-hold eulogies written in the last few years, but it has the added benefit of being accurate.

And even it understates reality. The S&P 500 is weighted toward the market cap of its components, a quirk that skewed it toward some of the most overvalued companies in the last decade. An equal-weight index -- one that holds every company in equal amounts and provides a better view of how companies actually performed -- returned more than 140% during the decade.

Why have so many declared buy and hold dead? I think it's all about two points.

First, if Bill started investing just two years earlier, his returns through today would be dismal. 2000 was the peak of the dot-com bubble; 2002 was the depth of its aftershock recession. Bill started investing when stocks were cheap, setting him up for good returns today. The majority of today's investors, who likely began investing during the insane late '90s, have fared far worse.

But that doesn't prove buy and hold is dead. It just proves that the deluded interpretation of it -- that you can buy stocks any time at any price and still do well -- is wrong. But it was always wrong. It just became easy to forget during the '90s bubble. For as long as people have been investing it's been true that if you pay too much for an asset, you won't do well in the long run. If you buy the S&P 500 at 30 or 40 times earnings, as people did in the late '90s, you're going to fail. If you do like Bill and wait until it's closer to its historic average of 15-20 times earnings (or even better, lower), you'll do all right. Nothing about the last decade has changed that. The '90s, not the 2000s, were the fluke.

Second, most people know that buy and hold means holding for a long time, like 10 or even 20 years ("Our favorite holding period is forever," says Warren Buffett.) But, in an odd mental twist, they use volatility measured in months or even weeks to reason that it doesn't work.

The market suffered all kinds of schizophrenic turns over the last decade. Since 2002, there have been 401 days of the Dow Jones (INDEX: ^DJI  ) rising or falling more than 1.5%, and 83 days of it going up or down more than 3%. These can be emotionally devastating for investors following daily market news, watching their wealth surge and crash before their eyes.

But Bill didn't even know about them. He was too busy enjoying his sanity at the beach. He knew he was investing for the long haul, and that he bought at a decent price. Why should he care what stocks do on a daily, monthly, or even yearly basis? While others tumbled through manias and panics, Bill's blissful ignorance was one of his greatest advantages -- as it is for most buy-and-hold investors.

Naysayers of buy-and-hold investing lose track of this to an almost comical degree. The "flash crash" of 2010 sent stocks plunging for 18 minutes before rebounding. Last week'ssnafu by market-maker Knight Capital caused a handful of companies to log some funny quotes for half an hour. These events should be utterly meaningless to long-term investors. Yet the number citing them as proof that buy and hold no longer works is astounding.

Jason Zweig of The Wall Street Journal quoted an investor last week dismayed with the Knight Capital fiasco. "You could buy and hold a company for 15 years and then have everything you've built up disappear in five minutes," he said. The same fear was echoed two years earlier during the Flash Crash.

Folks, accept some frank advice: If you measure your portfolio in five-minute intervals, you shouldn't be investing. If you think business value is "lost" by a few misquoted trades, you shouldn't be investing. Value is created when a business earns profit, allocates it wisely to its owners, and compounds year after year. An errant stock trade doesn't make a company less valuable any more than misplacing your birth certificate for 18 minutes makes you less alive.

"There's no such thing as a widows-and-orphans stock anymore," Zweig's investor complains.

Sure there is. Ask Bill.

http://www.fool.com/investing/general/2012/08/07/buy-and-hold-still-alive-and-well.aspx

Also read:

*****Long term investing based on Buy and Hold works for Selected Stocks

http://myinvestingnotes.blogspot.com/2010/03/long-term-investing-based-on-buy-and_08.html

Buy and hold until fundamentals change is safe for selected stocks.

http://myinvestingnotes.blogspot.com/2010/06/buy-and-hold-until-fundamentals-change.html

The Death Of Buy & Hold Strategy

http://malaysiafinance.blogspot.com/2012/08/the-death-of-buy-hold-strategy.html

Indonesia Q2 GDP up 6.4pc

2012/08/07

JAKARTA: Indonesia's economic growth surprisingly picked up in the second quarter of this year, fuelled by easy credit and strong domestic demand, signalling Southeast Asia remains resilient to the global slowdown.

Most economists expect the central bank to keep interest rates on hold at a record low into next year to drive growth, although some have cautioned that tighter policy might be needed beyond that to dampen domestic demand that is causing a trade deficit.

Indonesia's statistics bureau said gross domestic product growth (GDP) last quarter was 6.4 per cent from a year earlier against 6.3 per cent in the first quarter, helped by domestic consumption and investment. GDP grew by 2.8 per cent on a quarterly basis, although the figures are not seasonally adjusted.

"The strong Q2 growth provides a cushion against the risk of further growth setbacks in the rest of the year," said Aninda Mitra, an economist at ANZ Bank in Singapore.

"But we still think policymakers will need to tighten policies to ensure that the strong growth does not destabilise the external financing gap, which could be rupiah negative and ultimately not good for inflation either."

Economists had forecast that annual growth in Southeast Asia's largest economy would ease to 6.1 per cent, citing shrinking exports.

Financial markets showed little reaction to the data, which showed that buoyant domestic demand, especially in transport, hotels and government consumption, kept growth on an even keel.
Thailand and Malaysia are also expected to post a pick up in growth in the second quarter versus the first quarter, economists have said.

After China, Indonesia's growth is also the highest among the world's leading emerging economies.

As demand from China and Europe fell in recent months, Indonesia has had consecutive trade deficits between April and June, weighing on the rupiah.

A burgeoning appetite for imports, from wheat for fast food to iPads and luxury cars, in a country that mostly exports raw commodities such as coal and crude palm oil, created a US$1.3 billion trade deficit in June - a deficit economists see continuing to the end of 2012 to keep pressure on the rupiah.

Expectations for slower growth meant economists had started to call for rate cuts this year. But most now see rates on hold into 2013 as Bank Indonesia will want to support annual growth towards President Susilo Bambang Yudhoyono's target of seven per cent by 2014. Reuters

Pavilion REIT's earnings forecast raised

2012/08/07

KUALA LUMPUR: Maybank Kim Eng Research has raised the financial year 2012-2014 earnings forecast of Pavilion Real Estate Investment Trust (Pavilion REIT)by eight to 8.4 per cent.

It also factored in a higher rental growth and turnover rent as well as higher occupancy rate.

Maybank Kim Eng in a research note today said Pavilion REIT's first half net profit of RM95.6 million was above the research house and consensus expectations at 55 to 56 per cent.

"This was due mainly to higher-than-expected retail turnover rent and rental hikes," it said.

Going forward, it said piling works of the Pavilion KL Mall extension will commence in the third quarter, whilst construction of the sub-urban mall in Subang Jaya is ahead of schedule.

"As for the Fahrenheit 88 mall, the management is monitoring the leases due for renewal in the third quarter, rental reversions and tenancy profile.

"When acquired, we expect these properties to raise Pavilion REIT's asset size by more than 41 per cent from RM3.6 billion currently," it added.

Maybank Kim Eng has maintained a "hold" call on Pavilion REIT but revised upward the target price to RM1.40 from RM1.26 previously. -- BERNAMA

http://www.btimes.com.my/Current_News/BTIMES/articles/20120807114500/Article/index_html

F&N's Q3 profit falls sharply to RM54.6mil

2012/08/07 Fraser & Neave Holdings Bhd's (F&N) pre-tax profit for the third quarter ended June 6, 2012, fell sharply to RM54.63 million from RM92 million in the same period last year. However, revenue for the period rose to RM896.70 million from RM882.48 million, driven by strong volume growth in all divisions, it said in filing to Bursa Malaysia today. F&N, which no longer distributes Coca-Cola products effective this financial year, said the soft drinks revenue increased 22 per cent on account of higher sales across all product categories partly from strong promotional drives and earlier Hari Raya selling-in window this year. On prospects, the company said its operating performance would be much lower than last year, due to the absence of the coca-cola business. It said although consumer confidence sentiment remained strong, the business would however continue to be challenged by macro and global financial uncertainties, affecting commodities' prices and currencies. "While the company's operating results will be much lower than that of last year due to the absence of the coca-cola business and the challenges faced by the dairy business in Malaysia and Thailand, F&N's overall results will be bolstered by the non-operating items, deferred tax asset recognition and pital gain crystallation," the company added. Bernama http://www.btimes.com.my/Current_News/BTIMES/articles/20120807183921/Article/index_html

UMW expects higher 2012 earnings

UMW expects higher 2012 earnings 2012/08/07 UMW Holdings Bhd, Malaysia’s biggest carmaker and assembler by market value, expects full-year profit to increase as auto sales climb and its oil and gas business rebounds from two years of losses. The company’s oil and gas business will be profitable this year as its drilling rigs and the trading of oilfield products and services contribute to revenue, Chief Executive Officer Syed Hisham Syed Wazir said. In 2011, UMW’s profit declined 4.7 percent to RM502.1 million (US$162 million), with the unit posting a RM229.6 million loss. “The worst is over for the division,” Syed Hisham, 58, said in an interview yesterday, declining to give a more specific target for earnings this year. “The scenario is very buoyant and opportunities are increasing.” The profit gain may help extend its 41 percent rally this year, the second-biggest gain among Southeast Asian automakers and assemblers and the most on Malaysia’s benchmark FTSE Bursa Malaysia KLCI Index. The improving outlook also drew foreign investors, who held 24 percent of the company in the second quarter from 16 percent in the previous three months, according to data compiled by UMW. Shares of the assembler of Toyota Motor Corp. cars have lagged behind the Malaysian index for the past three years. UMW fell 0.3 percent in 2011, compared with the benchmark measure’s 0.8 percent advance. The gains in the previous two years were also about half of the stock gauge. Of the 16 analysts who track the stock, 10 rate it a "buy" while five have a "hold", with one recommending investors to "sell". Reasonable Valuation “UMW has been a laggard,” said Choo Swee Kee, chief investment officer at TA Investment Management Bhd, who manages about RM700 million including UMW shares. “Even with this rise, the valuation is still reasonable compared to other index stocks,” he said, adding that the rally “is sustainable.” UMW shares trade at 13.2 times estimated earnings, compared with the KLCI Index’s multiple of 15.1, according to data compiled by Bloomberg. The oil and gas unit is expected to turn in a profit as it expands into the upstream business, Syed Hisham said, referring to exploration and production. The company is also seeking to ride on increased exploration activities by a state-run energy group, he said. The Selangor-based group, which derived 72 percent of sales last year from manufacturing and assembling cars for Toyota, also increased market share in the Southeast Asian nation’s auto market in the first half of the year. UMW’s share in the country’s passenger-car market rose to 48 percent at the end of June from 45 percent last year, Syed Hisham said, citing Malaysian Automotive Association’s data.-- Bloomberg

Mah Sing a 'buy': AmResearch

AmResearch started property developer Mah Sing Group Bhd with a "buy" rating and fair value of RM3.60 per share, citing its strong balance sheet and bright earnings outlook. 

“Mah Sing is set to capitalise on the imminent return of pent-up residential demand; the impact of the responsible lending guidelines has normalised,” AmResearch said in a note on Tuesday.

The research house said 90 percent of Mah Sing’s development projects are at the early stages of their life cycles which would boost annual pre-sales from RM2.8 billion this year to RM3.3 billion in 2013 and RM4.0 billion in 2014. 

“Despite its status as the sixth largest property stock by market capitalisation, Mah Sing is very undervalued from both the earnings and assets standpoint,” the research house added.
As of 9.50am, Mah Sing’s shares rose 0.41 percent against the Malaysian benchmark stock index’s 0.08 percent rise. -- Reuters

Read more: Mah Sing a 'buy': AmResearchhttp://www.btimes.com.my/Current_News/BTIMES/articles/20120807101338/Article/index_html#ixzz22sMQTmWo

Mah Sing earnings forecast to hit RM209m

2012/08/07

KUALA LUMPUR: AmResearch estimates that Mah Sing Group Bhd's earnings to rise from RM169 million in financial year 2011 to RM209 million in financial year 2012.

The forecast also includes RM260 million earnings in financial year 2013 and RM320 million in financial year 2014.

The research house said the estimation comes along with a three-year earnings compound 24 per cent annual growth rate, anchored by in-demand landed residential developments namely, M Residence 1&2 and Southville City.

"The group's earnings are very much secured with current RM2.5 billion unbilled sales," said the research house.

AmResearch said the annual pre-sales are expected to rise to RM3.5 billion in financial year 2013 and to RM4 billion in financial year 2014.
"The net gearing is expected to rise to 0.5 with one or two more land acquisitions by year end, but this is still within a comfortable level and should be pared down by its solid cashflows," it said in a research note.

AmResearch said Mah Sing has a 40 per cent dividend payout policy now and it expects the group to pay 11 sen to 15 sen dividend per share for financial year 2012 until 2014, translating to decent yields of four to six per cent.

The research house has put a "buy" rating, with RM3.60 fair value for the initiating coverage on Mah Sing based on a mid-cycle discount to its estimated RM4.80 per share net asset value. Bernama

http://www.btimes.com.my/Current_News/BTIMES/articles/masen/Article/

Hartalega Q1 earnings dip 2.5% to RM53m

The Star Online > Business

Published: Tuesday August 7, 2012 MYT 7:02:00 PM

Hartalega Q1 earnings dip 2.5% to RM53m

KUALA LUMPUR: Glove maker Hartalega Holdings Bhd's earnings dipped 2.5% to RM53.36mil in the first quarter ended June 30, 2012 from RM54.77mil a year ago due to more competitive sales pricing.

It said on Tuesday, revenue rose 12.9% to RM247.68mil from RM219.37mil which was in line with the group's continuous expansion in production capacity and increase in demand. Earnings per share were 7.30 sen compared with 7.53 sen.

"However, the operating profit before other operating expense/income margin reduced to 28.3% from 30.3% due to more competitive sales pricing for the current quarter compared with the corresponding quarter of the preceding year," it said.

Hartalega said profit before tax margin reduced to 28.2% from 32.2% due to the stiffer pricing and recognition of net loss in foreign exchange and changes in fair value in forward exchange contracts of RM1.34mil compared with a net gain of RM3.53mil a year ago.

Padini's inks 10-year deal with Singapore's FJ Benjamin

Published: Tuesday August 7, 2012 MYT 1:59:00 PM

KUALA LUMPUR: Padini Holdings Bhd's line of women's shoes and accessories under its Vincci label would be distributed in Indonesia under a 10-year deal.

Its unit Vincci Ladies' Specialties Centre Sdn Bhd had on Tuesday signed a master franchise agreement with FJ Benjamin (Singapore) Pte Ltd and PT Gilang Agung Persada of Jakarta.

Under the agreement, FJ Benjamin, through its associate PT Gilang Agung Persada, open 25 stories within five years in Indonesia.

The franchise would see FJ Benjamin distributing trendy and affordable VNC women's shoes and accessories in Indonesia.

VNC products are sold under the Vincci label in Malaysia and are produced by the Padini Group.

http://biz.thestar.com.my/news/story.asp?file=/2012/8/7/business/20120807135834&sec=business

Integrax poised to seal 25-year TNB coal contract

Business & Markets 2012
Written by Ho Ching-Ling and Jose Barrock of theedgemalaysia
Friday, 27 July 2012 10:15

KUALA LUMPUR: Port operator INTEGRAX BHD [] is said to be close to
sealing a 25-year port utilisation agreement with utility giant TENAGA
NASIONAL BHD [] (TNB) for the handling of coal for the latter’s coal-fired
Janamanjung power plant in Manjung, Perak.

It is believed that the deal would entail Integrax handling an additional
three million tonnes of coal per year for TNB’s new 1,000mw coal-fired
power plant which is expected to be ready for commercial operations by
2015.

Integrax currently handles six million tonnes of coal per year for TNB to
power up its 2,100mw Janamanjung power plant located on Lekir Island.
This new agreement would be a substantial boost for Integrax as it would
increase its coal throughput at its deep-water terminal, Lekir Bulk
Terminal (LBT) by 50% to nine million tonnes per year.

“The negotiations have been on-going for some time now, (so) it should be concluded soon, at the latest, maybe late this week,” a financial executive familiar with the negotiations said on Thursday.

It is also noteworthy that TNB emerged as a substantial shareholder of Integrax in 2011 after it bought out Integrax’s former CEO Harun Halim Rasip’s 22% stake in the company

The acquisition by TNB came after an iron ore project by Brazilian mining giant Vale International SA in Sitiawan sparked disagreements between Harun and his brother Amin Halim Rasip, who is currently the co-CEO of Integrax.

Vale wanted Integrax to expand its capacity to facilitate the handling of iron ore, something Harun was not agreeable to because the expansion would involve huge capital. After Harun’s exit from the company, things were a little frosty between the management of Integrax and TNB.

In May 2011, Integrax received a writ of summons and statement of claim filed by TNB over the outcome of an extraordinary general meeting. However, the impending signing of the 25-year coal handling agreement seems to indicate that things are well between TNB and the Integrax management.

The new contract is likely to be a boon for Integrax. For its financial year ended December 2011, Integrax posted a net profit of RM43.8 million on the back of RM87.9 million revenue.

Earnings per share for the year stood at 14.58 sen. In contrast to a year earlier, net profits slipped 12.7% while revenue dipped only marginally. Nevertheless, the company’s outlook seems bright.

In notes accompanying its financial results, Integrax said, “The Lumut–Manjung corridor is expected to benefit from TNB’s 1,000mw Manjung 4 Power Plant project and Vale’s iron and steel investment in Teluk Rubiah.

“Integrax is currently in discussions with these parties to determine Integrax’s level of participation in these projects,” the company said. It was previously reported that Integrax is still keen to pursue a second attempt to tie-up with Vale after the lapse of its conditional contract to provide transshipment services for the latter for 10 years.

The Perak government has since given Vale the green light to construct its own jetty to serve the iron ore project. Integrax manages Lumut Port, which is made up of LBT and Lumut Maritime Terminal, which the company co-owns with Perak state.

Integrax closed unchanged at RM1.37 on Thursday.

This article appeared in The Edge Financial Daily on July 27, 2012.

MIDF Research upgrades KPJ to Buy, raises target price to RM6.98

Business & Markets 2012
Written by theedgemalaysia.com
Monday, 30 July 2012 09:10

KUALA LUMPUR (July 30): MIDF Research has upgraded KPJ
HEALTHCARE BHD [] to a Buy at RM5.88 with a revised target price of
RM6.98 (from RM5.10).

In a note Monday, the research house said the new target price was
derived from 25x PE multiple of FY13F EPS, based on peers average PE
multiple.

“The share price of KPJ has seen a strong positive movement over the
last few months, which we believe this has been part of the positive
spillover effect from the dual listing of IHH Healthcare Berhad recently.
“With this catalyst, we expect KPJ to no longer trade at a discount to its
peers, but should fetch the same valuation to its regional peers,” it said.

Warren Buffett Revealed

It’s about time to buy burnt-out European stocks

Aug. 1, 2012

It’s about time to buy burnt-out European stocks 
Commentary: The best companies will survive the euro crisis

By Matthew Lynn

LONDON (MarketWatch) — A currency that may implode at any moment. A collapsing banking system. A deepening recession, with no flexibility to boost growth through either monetary or fiscal policy. Making a bear case for euro-zone equities right now is easy.

But everything has a price. And some euro-zone markets are getting so cheap this summer that the moment to buy cannot be far away.

Such as? There are a lot of big, quality companies on both the Madrid and Milan bourses — the oil giant ENI E +0.07% , the electricity company Enel IT:ENEL -0.35% or the clothing retailer Inditex ES:ITX +1.06% , which owns the hugely successful Zara chain. Pretty much regardless of what happens to their domestic economies, these companies will thrive and prosper. And, while they may get cheaper still, the truth is they are already good value — and there may not be as much downside left as the market thinks.

Fiat

Italian blue chips, such as Fiat, will survive the euro crisis.

The first phase of the euro crisis involved minor markets. Greece and Portugal have small stock markets and no very big companies.

Not surprisingly, as they hurtled towards full-scale bankruptcy, their stock markets tanked. Yet even if you decided they were a bargain, there wasn’t much to buy. Naming a Greek blue chip is even harder than thinking of a famous Belgian — there are a couple of the latter, but virtually none of the former.

Ireland was far more successful economy: It was one of the five richest countries in the world pre-crash. But its economy was mainly made up of foreign multinationals, property companies and banks. Apart from the budget airline Ryanair RYAAY -1.56% , it did not have many big companies.

The second phase is different. As the crisis moved into Spain and Italy, equity values crashed just as they had in the smaller countries. The Italian MIB XX:FTSEMIB +0.59%  is down to 13,000, compared with 40,000 back in 2007. It is now below its 1994 levels — almost two decades ago.

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Stocks with double-digit growth

Revenue growth is sluggish for most of the market but not at these firms.

The Spanish market XX:IBEX +1.04%  is under 7,000, compared with more than 15,000 before the crash. As Spanish bond yields have soared, and speculation has mounted that the country will need a bailout, the market has been down to levels last seen in 1999. A dozen years have been wiped out.

Unlike Greece and Portugal, these are major economies, and the markets include some global companies. The Milan index takes in the automobile manufacturer Fiat IT:F +0.40% , the electricity company Enel and the oil giant ENI. These are big, solid companies with a lot of assets. It includes the sunglasses manufacturer Luxottica LUX +0.47% , which owns Ray-Ban, and the luxury-goods giant Salvatore Ferragamo IT:SFER +2.53% , which sell its products globally. It is booming Asia that matters to them — not recession-hit Europe.

The Madrid index includes the retail chain Inditex, the owner of the Zara chain, among others, with more than 5,000 shops around the world, as well as the telecom giant Telefonica TEF +0.09% , with widespread interests in fast-growing South America, and the oil company Repsol ES:REP -0.04% .

Of course, it is not hard to understand why the markets in those countries have crashed. Their domestic economies are in deep recession. Spain, we learned this week, contracted by another 0.4% in the latest quarter. Italy is heading into another downturn. Borrowing costs have soared. Most of all, there is what the markets now politely refer to as “redenomination risk” — the possibility that your shares will be repriced from “worth-something euros” to “worth-almost-nothing new lira or pesetas.”

EUROPE IN CRISIS | Topics: Europe

 Reuters

Alexander Nevski Cathedral in Bulgarian capital Sofia.EU’s poorest countries shunning the euro
The union’s poorest members, who once looked to joining the euro as a symbol of prestige, are now shunning the currency.
• Has Draghi overpromised?
• Darkening skies over Europe
• It’s about time to buy Europe
• Europe as enemy of recovery

It is going to get worse, as well. The euro zone is prescribing precisely the same medicine for Italy and Spain that it prescribed for Greece — even though it just about killed the patient.

Yet everything, it bears repeating, has a price. And the fact remains that many of the companies on both indexes are very successful global business — and they will carry on being successful even if their domestic economy is in terrible shape.

A company doesn’t have to be based in a growing economy to do well. Japan has gone nowhere for two decades. But the likes of Uniqlo, the fashion retailer, have turned into major global companies. Britain is stuck in the longest recession since records began, but a company such as ARM Holdings, which designs the chips that power many smartphones as well as iPods and iPads, has still made huge progress.

Great companies can come from bailed-out countries. Ryanair is a case in point. The shares halved in value as Ireland went bust, but have performed reasonably well since then. If you bought in as Ireland sunk, you’d have done well. It hasn’t been destroyed by a deep recession in Ireland — and neither need many Spanish or Italian companies be ruined by a recession in their home economies. A company such as Telefonica has seen its profits hit by the recession — but it is not going to get wiped out.

True, the Spanish and Italian bourses might well get cheaper. If the euro does fall apart, there will be another crash in equity values. That said, to micro-time the market you have to be very smart or very lucky — and usually both. It will be hard to get in at the absolute bottom.

If Spain or Italy does quit the euro, trading on the main bourses will probably be suspended. Capital controls will be introduced. Banks may close their doors for several days. If you think that in a situation like that you can move in and snap up as many shares in Fiat or Inditex as you want, you may well be kidding yourself. This could be the cheapest moment when these shares are widely available to investors.

And the ECB may well step in at some point with unlimited quantitative easing. The euro zone could decide to pool its debts, and issue common euro bonds, which will immediately slash Italy’s and Spain’s debts. On either, the Italian and Spanish indexes would soar — particularly as both are heavy with hard-hit banks and insurers.

If you want to buy some very cheap equities that are good long-term values, these may be the markets to go for right now. Sure, there’s a catastrophe coming — but it is already in the price. 

Matthew Lynn is chief executive of Strategy Economics, a London-based consultancy. His latest book ‘The Long Depression: The Slump of 2008 to 2031’ is published by Endeavour Press.
http://www.marketwatch.com/story/its-about-time-to-buy-burnt-out-european-stocks-2012-08-01

S&P revises Tesco outlook to negative;'A-/A-2' rtgs affirmed

Tue Jul 31, 2012 8:06am EDT

2012  July 31 -

Overview

-- We believe that in light of currently difficult industry conditions, a trend of weakening profitability and low top-line growth will continue for U.K.-based retailer Tesco PLC.

-- The decline in Tesco's profitability and difficulties in protecting its U.K. market share, in particular, could in our view lead to a deterioration in its business risk profile.

-- We are revising our outlook on Tesco to negative from stable and affirming our 'A-/A-2' corporate credit ratings on the company.

-- The negative outlook reflects our view that declining profitability and difficult trading conditions could dilute its credit metrics beyond the levels we consider adequate for the current ratings.

Rating Action

On July 31, 2012, Standard & Poor's Ratings Services revised its outlook on U.K.-based Tesco PLC (Tesco) to negative from stable. At the same time, we affirmed our 'A-/A-2' long- and short-term corporate credit ratings on Tesco.

http://www.reuters.com/article/2012/07/31/idUSWLA122620120731?feedType=RSS&feedName=rbssFinancialServicesAndRealEstateNews&rpc=43