Malaysian Bulk Carriers Bhd

Date announced 23/11/2010
Quarter 30/09/2010 Qtr 3 FYE 31/12/2010

STOCK Maybulk C0DE  5077 

Price $ 2.95 Curr. ttm-PE 11.39 Curr. DY 5.08%
LFY Div 15.00 DPO ratio 62%
ROE 15.7% PBT Margin 80.8% PAT Margin 80.5%

Rec. qRev 109027 q-q % chg 13% y-y% chq 11%
Rec qPbt 88069 q-q % chg 164% y-y% chq 25%
Rec. qEps 8.77 q-q % chg 178% y-y% chq 26%
ttm-Eps 25.91 q-q % chg 8% y-y% chq 63%

Using VERY CONSERVATIVE ESTIMATES:
EPS GR 3% Avg.H PE 11.00 Avg. L PE 10.00
Forecast High Pr 3.30 Forecast Low Pr 2.13 Recent Severe Low Pr 2.13
Current price is at Upper 1/3 of valuation zone.

RISK: Upside 30% Downside 70%
One Year Appreciation Potential 2% Avg. yield 6%
Avg. Total Annual Potential Return (over next 5 years) 9%

CPE/SPE 1.08 P/NTA 1.78 NTA 1.65 SPE 10.50 Rational Pr 2.72



Decision:
Already Owned: Buy, Hold, Sell, Filed; Review (future acq): Filed; Discard: Filed.
Guide: Valuation zones - Lower 1/3 Buy; Mid. 1/3 Maybe; Upper 1/3 Sell.

Aim:
To Buy a bargain: Buy at Lower 1/3 of Valuation Zone
To Minimise risk of Loss: Buy when risk is low i.e UPSIDE GAIN > 75% OR DOWNSIDE RISK <25%
To Double every 5 years: Seek for POTENTIAL RETURN of > 15%/yr.
To Prevent Loss: Sell immediately when fundamentals deteriorate
To Maximise Gain & Reduce Loss: Sell when CPE/SPE > 1.5, when in Upper 1/3 of Valuation Zone & Returns < 15%/yr


Stock Data: Recent Stock Performance:
Current Price (11/19/2010): 2.89
(Figures in Malaysian Ringgits)

Recent Stock Performance
1 Week -2.0% 13 Weeks -3.3%
4 Weeks 0.3% 52 Weeks -10.8%

Malaysian Bulk Carriers
Bhd Key Data:
Ticker: MAYBULK
Country: MALAYSIA
Exchanges: KUL
Major Industry: Transportation
Sub Industry: Shipping

2009 Sales 303,707,000 (Year Ending Jan 2010).
Employees: 371

Currency: Malaysian Ringgits
Market Cap: 2,890,000,000
Fiscal Yr Ends: December Shares Outstanding: 1,000,000,000
Share Type: Ordinary Closely Held Shares: 745,849,550

UMW Holdings Berhad

Date announced 22/11/2010
Quarter 30/09/2010 Qtr 3 FYE 31/12/2010

STOCK UMW C0DE  4588 

Price $ 6.8 Curr. ttm-PE 12.89 Curr. DY 2.94%
LFY Div 20.00 DPO ratio 59%
ROE 14.7% PBT Margin 11.0% PAT Margin 4.8%

Rec. qRev 3087276 q-q % chg -6% y-y% chq 10%
Rec qPbt 340922 q-q % chg -23% y-y% chq 18%
Rec. qEps 13.17 q-q % chg -30% y-y% chq 15%
ttm-Eps 52.76 q-q % chg 3% y-y% chq 49%

Using VERY CONSERVATIVE ESTIMATES:
EPS GR 5% Avg.H PE 12.00 Avg. L PE 8.00
Forecast High Pr 8.08 Forecast Low Pr 5.50 Recent Severe Low Pr 5.50
Current price is at Middle 1/3 of valuation zone.

RISK: Upside 50% Downside 50%
One Year Appreciation Potential 4% Avg. yield 6%
Avg. Total Annual Potential Return (over next 5 years) 10%

CPE/SPE 1.29 P/NTA 1.89 NTA 3.59 SPE 10.00 Rational Pr 5.28



Decision:
Already Owned: Buy, Hold, Sell, Filed; Review (future acq): Filed; Discard: Filed.
Guide: Valuation zones - Lower 1/3 Buy; Mid. 1/3 Maybe; Upper 1/3 Sell.

Aim:
To Buy a bargain: Buy at Lower 1/3 of Valuation Zone
To Minimise risk of Loss: Buy when risk is low i.e UPSIDE GAIN > 75% OR DOWNSIDE RISK <25%
To Double every 5 years: Seek for POTENTIAL RETURN of > 15%/yr.
To Prevent Loss: Sell immediately when fundamentals deteriorate
To Maximise Gain & Reduce Loss: Sell when CPE/SPE > 1.5, when in Upper 1/3 of Valuation Zone & Returns < 15%/yr

Integrax Berhad

Date announced 22/11/2010
Quarter 30/09/2010 Qtr 3 FYE 31/12/2010

STOCK Integra C0DE  9555 
Price $ 1.6 Curr. ttm-PE 11.01 Curr. DY 1.88%
LFY Div 3.00 DPO ratio 21%
ROE 8.1% PBT Margin 61.6% PAT Margin 44.4%

Rec. qRev 24918 q-q % chg 6% y-y% chq 4%
Rec qPbt 15340 q-q % chg -15% y-y% chq 9%
Rec. qEps 3.68 q-q % chg -19% y-y% chq 13%
ttm-Eps 14.53 q-q % chg 3% y-y% chq 26%

Using VERY CONSERVATIVE ESTIMATES:
EPS GR 5% Avg.H PE 8.00 Avg. L PE 4.00
Forecast High Pr 1.48 Forecast Low Pr 0.94 Recent Severe Low Pr 0.94
Current price is at Upper 1/3 of valuation zone.

RISK: Upside -21% Downside 121%
One Year Appreciation Potential -1% Avg. yield 2%
Avg. Total Annual Potential Return (over next 5 years) 1%

CPE/SPE 1.84 P/NTA 0.89 NTA 1.79 SPE 6.00 Rational Pr 0.87



Decision:
Already Owned: Buy Hold Sell Filed Review (future acq): Filed Discard: Filed
Guide: Valuation zones Lower 1/3 Buy Mid. 1/3 Maybe Upper 1/3 Sell

Aim:
To Buy a bargain: Buy at Lower 1/3 of Valuation Zone
To Minimise risk of Loss: Buy when risk is low i.e UPSIDE GAIN > 75% OR DOWNSIDE RISK <25%
To Double every 5 years: Seek for POTENTIAL RETURN of > 15%/yr.
To Prevent Loss: Sell immediately when fundamentals deteriorate
To Maximise Gain & Reduce Loss: Sell when CPE/SPE > 1.5, when in Upper 1/3 of Valuation Zone & Returns < 15%/yr

PPB Group Berhad

Date announced 22/11/2010
Quarter 30/09/2010 Qtr 3 FYE 31/12/2010

STOCK PPB C0DE  4065 

Price $ 18.8 Curr. PE (ttm-Eps) 10.70 Curr. DY 3.88%
LFY Div 73.00 DPO ratio 54%
ROE 15.9% PBT Margin 55.2% PAT Margin 50.1%

Rec. qRev 574531 q-q % chg -1% y-y% chq -38%
Rec qPbt 317086 q-q % chg -3% y-y% chq -51%
Rec. qEps 24.29 q-q % chg -9% y-y% chq -52%
ttm-Eps 175.67 q-q % chg -13% y-y% chq 28%

Using VERY CONSERVATIVE ESTIMATES:
EPS GR 5% Avg.H PE 10.00 Avg. L PE 7.00
Forecast High Pr 22.42 Forecast Low Pr 16.00 Recent Severe Low Pr 16.00
Current price is at Middle 1/3 of valuation zone.

RISK: Upside 56% Downside 44%
One Year Appreciation Potential 4% Avg. yield 6%
Avg. Total Annual Potential Return (over next 5 years) 10%

CPE/SPE 1.26 P/NTA 1.70 NTA 11.03 SPE 8.50 Rational Pr 14.93



Decision:
Already Owned: Buy Hold Sell Filed Review (future acq): Filed Discard: Filed
Guide: Valuation zones Lower 1/3 Buy Mid. 1/3 Maybe Upper 1/3 Sell

Aim:
To Buy a bargain: Buy at Lower 1/3 of Valuation Zone
To Minimise risk of Loss: Buy when risk is low i.e UPSIDE GAIN > 75% OR DOWNSIDE RISK <25%
To Double every 5 years: Seek for POTENTIAL RETURN of > 15%/yr.
To Prevent Loss: Sell immediately when fundamentals deteriorate
To Maximise Gain & Reduce Loss: Sell when CPE/SPE > 1.5, when in Upper 1/3 of Valuation Zone & Returns < 15%/yr

KPJ Healthcare Berhad

Date announced 30/08/2010
Quarter 30/06/2010 Qtr 2 FYE 31/12/2010

STOCK KPJ C0DE  5878 

Price $ 3.73 Curr. ttm-PE 17.50 Curr. DY 2.14%
LFY Div 8.00 DPO ratio 41%
ROE 16.4% PBT Margin 10.1% PAT Margin 7.1%

Rec. qRev 410237 q-q % chg 9% y-y% chq 11%
Rec qPbt 41305 q-q % chg 9% y-y% chq 15%
Rec. qEps 5.54 q-q % chg 7% y-y% chq 16%
ttm-Eps 21.32 q-q % chg 4% y-y% chq 32%

Using VERY CONSERVATIVE ESTIMATES:
EPS GR 5% Avg.H PE 12.00 Avg. L PE 9.00
Forecast High Pr 3.26 Forecast Low Pr 2.67 Recent Severe Low Pr 2.67
Current price is at Upper 1/3 of valuation zone.

RISK: Upside -78% Downside 178%
One Year Appreciation Potential -2% Avg. yield 3%
Avg. Total Annual Potential Return (over next 5 years) 0%

CPE/SPE 1.67 P/NTA 2.87 NTA 1.30 SPE 10.50 Rational Pr 2.24



Decision:
Already Owned: Buy, Hold, Sell, Filed; Review (future acq): Filed; Discard: Filed.
Guide: Valuation zones - Lower 1/3 Buy; Mid. 1/3 Maybe; Upper 1/3 Sell.

Aim:
To Buy a bargain: Buy at Lower 1/3 of Valuation Zone
To Minimise risk of Loss: Buy when risk is low i.e UPSIDE GAIN > 75% OR DOWNSIDE RISK <25%
To Double every 5 years: Seek for POTENTIAL RETURN of > 15%/yr.
To Prevent Loss: Sell immediately when fundamentals deteriorate
To Maximise Gain & Reduce Loss: Sell when CPE/SPE > 1.5, when in Upper 1/3 of Valuation Zone & Returns < 15%/yr

TSH Resources Berhad

Date announced 18/11/2010
Quarter 30/09/2010 Qtr 3 FYE 31/12/2010

STOCK TSH C0DE  9059 
Price $ 2.6 Curr. ttm-PE 16.84 Curr. DY 1.92%

LFY Div 5.00 DPO ratio 28%
ROE 8.7% PBT Margin 12.7% PAT Margin 8.5%

Rec. qRev 214265 q-q % chg 3% y-y% chq 5%
Rec qPbt 27131 q-q % chg 53% y-y% chq 1%
Rec. qEps 4.45 q-q % chg 61% y-y% chq -22%
ttm-Eps 15.44 q-q % chg -8% y-y% chq 83%

Using VERY CONSERVATIVE ESTIMATES:
EPS GR 5% Avg.H PE 10.00 Avg. L PE 8.00
Forecast High Pr 1.97 Forecast Low Pr 1.73 Recent Severe Low Pr 1.73
Current price is at Upper 1/3 of valuation zone.

RISK: Upside -262% Downside 362%
One Year Appreciation Potential -5% Avg. yield 2%
Avg. Total Annual Potential Return (over next 5 years) -3%

CPE/SPE 1.87 P/NTA 1.46 NTA 1.78 SPE 9.00 Rational Pr 1.39



Decision:
Already Owned: Buy, Hold, Sell, Filed; Review (future acq): Filed; Discard: Filed.
Guide: Valuation zones - Lower 1/3 Buy; Mid. 1/3 Maybe; Upper 1/3 Sell.

Aim:
To Buy a bargain: Buy at Lower 1/3 of Valuation Zone
To Minimise risk of Loss: Buy when risk is low i.e UPSIDE GAIN > 75% OR DOWNSIDE RISK <25%
To Double every 5 years: Seek for POTENTIAL RETURN of > 15%/yr.
To Prevent Loss: Sell immediately when fundamentals deteriorate
To Maximise Gain & Reduce Loss: Sell when CPE/SPE > 1.5, when in Upper 1/3 of Valuation Zone & Returns < 15%/yr

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20 Tools For Building Up Your Portfolio

20 Tools For Building Up Your Portfolio

The concept of a portfolio and the birth of individual investing have opened up possibilities for everyone. The only real difference between you and Warren Buffett is a few well-chosen stocks - the billion-dollar fortune is the result. Stocks, while important, aren’t all there is to investing. Keeping your portfolio divided between the different investment vehicles reduces your overall risk while still generating returns. Here are 20 investment tools you can use to increase your portfolio’s diversity. Read: 20 Investments You Should Know

Inflation does matter in China and the world

Inflation does matter in China and the world
By Huang Shuo (chinadaily.com.cn)
Updated: 2010-11-15 16:58

The growth rate of China's consumer price index (CPI) was 4.4 percent year-on-year in October, a 25-month high. The rate is up 0.8 percentage points from September. This is an alarming statistic for a country that for the past three decades has had steady economic growth. Inflation risks do matter for China.

In particular, the new factor of a rise in prices, main promoter for CPI growth, took up 3 percentage points of the 4.4 percent surge. Prices of agricultural products and food have been playing major roles in contributing to the CPI hike. Food prices surged by 10.1 percent compared with the same period of last year as a result of the price hike in international agricultural products, and the recent flood in South China’s Hainan province affected vegetable prices and oil prices, adding to the product costs, said Sheng Laiyun, spokesman for the National Bureau of Statistics (NBS).

In addition, daily essentials such as eggs and vegetables are leading the price increases in China's consumer market, followed by meat, oil and white sugar.

As the industry generally expected that about 4 percent would be the proper answer for CPI, the final data released by the NBS on Nov 11, 2010, was 0.4 percentage points higher than estimated, which astonished the public and drew lots of attention from domestic and foreign experts.

Consumer prices associated with social stability are the top concern of the public in China. The increase of CPI indicates that the surge in commodities prices is ongoing in the consumption market, closely linked with the daily lives of ordinary people. China’s income per capita still lags behind the United States, the European Union, and even some other emerging economies. How to increase income and stabilize or lower the prices in the market, especially for daily essentials, should be attached great importance by the government.

Livelihood is like the basis for constructing a building, which lays the firm foundation for a harmonious society. Whether people can lead a good life decides the quality of governance by central and local authorities. High consumer prices pose an unstable economic factor to improving the living standard of people.

More regulations are expected for the soaring Chinese CPI. As to that situation, the People’s Bank of China, the central bank of China, has noticed and adopted a measure increasing the required reserve ratio by 50 basis points and coming into effect on Nov 16, 2010, in order to ease the pressure from the second round of quantitative easing policy (QE2) by the Federal Reserve of the US and increasing liquidity caused commodity prices to rise in China. But is it enough to merely depend on national economic regulatory authorities?

Every economy released loose monetary policies to conquer the challenges brought by the international financial crisis in 2008 and get out of the recession. But side effects are inevitable. Rising inflation is one of the consequences. As a result, countries with expansion policies on issuing more currencies should work together and reach agreements to confront the emerging side effect -- inflation.

The author can be reached at larryhuangshuo@gmail.com.

http://www.chinadaily.com.cn/business/2010-11/15/content_11552427.htm

China rate rises no panacea to curb inflation: PBOC adviser

China rate rises no panacea to curb inflation: PBOC adviser
(Agencies)
Updated: 2010-11-18 11:06

China should not solely rely on interest rate rises to curb inflation, an academic adviser to the People's Bank of China said in remarks published on Thursday.

Zhou Qiren, who is also a professor at Peking University, said the government must take steps to tackle supply-side strains that have been a key factor pushing consumer prices.

Loose monetary policy in 2009 has created excessive liquidity and helped fuel prices of various products, he said.

"Much liquidity and fewer goods are the reasons behind inflation. Raising interest rates cannot change such a situation," he was quoted by the China Securities Journal as saying.

Zhou warned that liquidity had been channeled from the real estate market to other sectors of the economy, after Beijing took harsh measures to prevent a property bubble.

China's CPI hit a 25-month high of 4.4 percent in October, fuelling expectations of further tightening measures.

The PBOC has ramped up its efforts to tighten monetary conditions in the past month, increasing bank reserve requirements and surprising markets on Oct 19 by announcing the first rate rise in nearly three years.

http://www.chinadaily.com.cn/business/2010-11/18/content_11570306.htm

Related readings
: Gold drops on China interest rate hike rumor, stronger dollar
 Stocks down on mainland rate worries
 Rising food costs boost China's inflation rate to 25-month high
 Oct consumer confidence falls due to inflation, rate hike

Rise of the middle class

Rise of the middle class
By Tang Jun (China Daily)
Updated: 2010-11-18 15:12

Society will be more stable when one third of the Chinese population has material means to become social backbone

Many scholars and individuals are showing concern about what kind of social structure will bring the best stability.

According to sociological theories, a modern society can be divided into four ranks: the wealthy, the middle class, labor and the disadvantaged. The middle class creates the ladder between the well-to-do and the poverty-stricken, thus easing the antagonism between them, by granting those at the bottom the hope of rising to a higher level.

Generally speaking, in a modern society, the middle class contains 60 to 70 percent of the population, leaving about 15 to 20 percent at either end of the ladder. Such a large middle class ensures stability for a society.

How do we define the middle class? There are three standards: material wealth, job status and self-identity.

Concerning material wealth, a middle income, sufficient to maintain a comfortable but not luxurious lifestyle, is the first pursuit of the middle class. In the present social situations, a typical middle-class family tends to own a car and a house, together with certain financial products.

The xiaokang (literally moderate prosperity) standard introduced by the government is essentially the Chinese version of the middle class. Sufficient wealth accumulation is the first prerequisite to be xiaokang.

Job status is another essential. In this society, a salary is still the most important income source for most individuals; therefore a stable job is the pursuit.

With the rise of knowledge capital, intellectuals and technicians are taking more pride in gaining a position through their knowledge or technical skills.

Self-identity is also indispensable. Being middle class means having access to a decent and relatively comfortable life and having the will to strive forward. This is beneficial to both the people and society.

During the past 30 years, a middle class has come into being in China. According to Professor Lu Xueyi of the Chinese Academy of Social Sciences, 23 percent of the population belong to the middle class; five years ago it was 18 percent. He estimates that the number will increase by 1 percent every year. If that growth rate can be maintained the middle class could reach 40 percent of the population by 2020.

However, that will not be achieved without problems. Ever since reform and opening-up in late 1970s, our changes in social structure have lagged 15 years behind economic development; that's the origin of many of our social problems.

The middle class, with a strong sense of social responsibility, should be the backbone of society. The awareness of being a responsible citizen offers strong support for society. However, the middle class in China is still immature in this respect and society needs them to meet their social obligations.

Of course, the rise of the middle class in any society is in dire need of rational support from the government. On their road to industrialization and modernization, many developed countries offered support or subsidy to blue-collar workers, helping them to own and accumulate capital. After World War II, many countries also used the policy "houses for residents", which proved very successful.

Owning a house has long been considered a prerequisite of entering the middle class, and when more and more people find it hard to reach this standard, it is impossible for them to remain silent.

The present tendency of economic growth is unfriendly to many people, especially to the supporting pillar of industry - migrant workers, whose number has reached 200 million. We hope the "inclusive growth" in the 12th Five-Year Plan (2011-2015) will solve these problems.

Three decades ago, Deng Xiaoping said: "Let one part of the people get rich first." Today might we make a similar statement for the 12th Five-Year Plan period - let one third of the Chinese people become middle class first.

The author is a researcher and secretary general of the Social Policy Research Center of the China Academy of Social Sciences.

http://www.chinadaily.com.cn/business/2010-11/18/content_11571957.htm


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Coastal Contracts Bhd

Date announced 19/11/2010
Quarter 30/09/2010 Qtr 3 FYE 31/12/2010

STOCK COASTAL C0DE  5071

Price $ 2.32 Curr. PE (ttm-Eps) 4.22 Curr. DY 1.29%
LFY Div 3.00 DPO ratio 7%
ROE 36.4% PBT Margin 27.9% PAT Margin 27.9%

Rec. qRev 192091 q-q % chg 39% y-y% chq 37%
Rec qPbt 53601 q-q % chg 10% y-y% chq 11%
Rec. qEps 14.80 q-q % chg 11% y-y% chq 11%
ttm-Eps 55.04 q-q % chg 3% y-y% chq 40%

Using VERY CONSERVATIVE ESTIMATES:
EPS GR 2% Avg.H PE 5.00 Avg. L PE 4.00
Forecast High Pr 3.04 Forecast Low Pr 1.90 Recent Severe Low Pr 1.90
Current price is at Middle 1/3 of valuation zone.

RISK: Upside 63% Downside 37%
One Year Appreciation Potential 6% Avg. yield 2%
Avg. Total Annual Potential Return (over next 5 years) 8%

CPE/SPE 0.94 P/NTA 1.53 NTA 1.51 SPE 4.50 Rational Pr 2.48



Decision:
Already Owned: Buy Hold Sell Filed Review (future acq): Filed Discard: Filed
Guide: Valuation zones Lower 1/3 Buy Mid. 1/3 Maybe Upper 1/3 Sell

Aim:
To Buy a bargain: Buy at Lower 1/3 of Valuation Zone
To Minimise risk of Loss: Buy when risk is low i.e UPSIDE GAIN > 75% OR DOWNSIDE RISK <25%
To Double every 5 years: Seek for POTENTIAL RETURN of > 15%/yr.
To Prevent Loss: Sell immediately when fundamentals deteriorate
To Maximise Gain & Reduce Loss: Sell when CPE/SPE > 1.5, when in Upper 1/3 of Valuation Zone & Returns < 15%/yr

----

Prospects

Given that offshore shipbuilding activity is slowly perking up, Coastal Group has modest optimism of clinching new contracts to add to its vessel sales order book. The Group also expects steady income stream from its ship chartering division through continued utilisation of the Group’s fleet in coastal transportation and in various oil and gas support services. It is anticipated that future participation in the offshore structure fabrication business will be earnings-accretive and reduce the Group’s dependency on shipbuilding orders. The Group’s strong financial footing paired with low level of borrowings will further shield it from major financial distress.

With more deepwater oilfield developments off the western coast of Sabah coming on stream, Coastal Group is looking to enter a new phase of growth by diversifying into offshore structure fabrication to gain industry knowledge of the oil and gas engineering, procurement and construction business. Central to this plan are the Group’s strong foundation in marine structures and the geographical proximity of the Group’s 52-acre fabrication yard to the heart of Sabah’s growing oil and gas activities. Upgrading of infrastructure is currently at advanced stage to expand the fabrication yard’s capabilities.

Oil prices have risen above USD85 a barrel as improvement in the manufacturing sector in the U.S. and China, the world’s two biggest economies, boosted optimism that growth in global oil consumption will remain strong. Also, the U.S. Federal Reserve’s second round of quantitative easing to unleash more dollar into the economy had weakened the U.S currency’s value, which in turn made the dollar-denominated crude oil relatively cheaper for buyers using other currencies. This latest oil price development in the current environment of depleting oil reserves and increasing long-term energy demand will drive up offshore exploration, development and production activities going forward. The resultant capital investments in upstream oil and gas sector would spur additional requirements for offshore support vessels (“OSVs”).

Barring adverse changes in the global and regional economic outlook, Coastal Group is on track to deliver solid revenue and earnings growth in 2010, backed by the strong revenue visibility of the shipbuilding division’s vessel sales order book.

The Mood of Investors

Airtime: Fri. Nov. 19 2010
Sharon Sager of UBS Private Wealth Management tells CNBC's Maria Bartiromo how she's developing strategies for clients who have become more conservative.


Related:
Why Retail Investors Still Avoid Stocks

INVESTING November 14, 2010, 9:18PM EST

Why Retail Investors Still Avoid Stocks

Major U.S. stock indexes have returned 80% or more since their 2009 lows, but individual investors remain wary. Investor psychology expert Brad Barber discusses why

Even as U.S. stocks trade at some of their highest prices in two years, individual investors continue to sell, leaving the buying to larger players like hedge funds and other institutions. A Nov. 10 Morningstar (MORN) report showed in October another $6.3 billion was pulled from U.S. stock mutual funds, which are used mostly by smaller, retail investors.

A leading expert on investor psychology, Brad Barber is a finance professor at the University of California, Davis, and head of the university's Center for Investor Welfare & Corporate Responsibility. In a Nov. 9 interview with Businessweek.com's Ben Steverman, Barber talked about how he interprets retail investors' reaction to the current rally. Edited excerpts of their conversation follow:

Ben Steverman: Even though the stock market is up, retail investors seem to be sitting on the sidelines. According to Morningstar, investors have pulled $64.2 billion from U.S. stock mutual funds so far this year through October, even after withdrawing $26 billion last year. When might that change?
Brad Barber: My sense is that sentiment for equities isn't going to get positive until the economy is on strong footing. Even though the market has come back, it hasn't really been accompanied by robust economic growth. That can to some degree explain why retail investors remain skittish. The back story of the returns has just not been strong for the last year or two.

By "back story," you're not really talking about the condition of the economy, but the stories that are told in the media about the state of the economy?
Yes, and it's that back story that I think would need to improve to see renewed excitement and participation by retail investors.

Do you think investor behavior is different this time, compared with market rallies after previous recessions?
The more recent crisis certainly feels different. Unemployment rates have been much higher for much longer. The talk on the news is constantly about the weakness in the economy. The Internet bubble bursting in 2000 was a dramatic event, but it was not accompanied by the magnitude of economic dislocation that followed this financial crisis. Losing your job is different from losing a lot of your retirement portfolio.

Does the behavior of these small retail investors have a real effect on the market? Or are they such a small part of the investment pool—alongside hedge funds, pension funds, and other large institutions—that they don't have much impact?
It is true that retail investors directly hold very little stock, under 20 percent [of total shares] these days. There's been a secular shift toward institutions holding investments on behalf of individuals. Having said that, sentiment can also affect institutions to some degree. Direct ownership of stocks by retail investors isn't a big [driver], but it's a good instrument for thinking about the sentiment of the market as a whole.

What is the track record of smaller investors? Do they tend to buy and sell at the right times?
The order flow of small investors perversely forecasts returns. What I mean by that is: If small investors seem to be buying a stock, it tends to forecast poor returns for the stock. Conversely, if small retail investors are selling a stock, it tends to portend strong returns for the stock.

For example, people might become enamored with the latest high-tech startup firms. Retail investors pile in, driving the prices up, but the reality is these companies aren't making earnings. Later, there's a day of reckoning. Conversely, you might have really stodgy, old-line companies, about which retail sentiment is pretty negative. But they're plugging along and posting reasonable earnings. The lack of retail sentiment for those stocks may beat down their prices temporarily, and those low prices would portend strong returns as long as they have earnings to back up the company.

So, sentiment causes fluctuations in prices above or below some level justified by the underlying fundamentals of the company.

Given all the losses investors have experienced, do you expect that Americans are going to permanently change the role stocks play in their portfolios?
There is a lot of evidence that people's attitudes about their portfolios change as a function of market conditions. There is a nice paper by Ulrike Malmendier [an economics professor at the University of California, Berkeley] and Stefan Nagel [a finance professor at Stanford University] looking at how investors allocate stocks in their retirement portfolios.

If you lived through the Great Depression, you're less likely to invest in stocks because you stomached a 15-year period where stocks basically had a zero return. Conversely, if you experienced stocks during the late '80s and '90s—pretty much an unrelenting bull market—you probably were bullish on stocks and tend to have a high allocation of stocks in your investment portfolio. The last decade, of course, has been pretty lousy. And so investors who were saving and coming of age in the last decade are probably going to have lower allocations to stock in their retirement portfolios. The punch line is "experience matters."

So relatively short-term market conditions tend to affect long-term investment decisions. People who came of age in this decade might be permanently much less likely to own stocks?
Or at least have a lower allocation to stocks. In the late 1990s, when I was teaching MBA students, it was hard to convince students that if you held stocks for 10 years that you had any risk of loss. That's not so hard anymore. [Laughter.] The example that I used to try to hammer home this point was Japan, which in the late 1990s had been mired in a 10-year crash. Now it's 25 years and counting.

To what extent is this reluctance to buy stocks rational behavior on the part of investors? And to what extent is it irrational, because investors miss out on stock gains and then, when sentiment finally turns positive again, might end up buying at the top of the market?
It's very difficult for people to understand their ability to tolerate risk until they experience it. It's all well and good to say "I can tolerate the gyrations of the markets." You can sit down with a financial adviser or you can go through online tutorials, but you don't understand until you actually live through it.

Folks go through these times where their portfolios are dropping 30, 40, and even 50 percent, and it causes them to lose sleep. Is it irrational to dial down your equity allocation when it's affecting your sleep and health? I don't think so.

Is it what most economists would recommend investors do? Probably not.

As someone who studies investor behavior, are there questions raised in the last couple of years that you're eager to answer?
The most pressing issue is how investors save and prepare for retirement. This will become even more pressing as we think about solutions to the underfunding of Social Security benefits.

There are a lot of folks doing work on these issues now: How can we get people to save adequately for retirement or make sensible investment choices?

http://www.businessweek.com/investor/content/nov2010/pi20101112_224434.htm

APM

Date announced 18/11/2010
Quarter 30/09/2010 Qtr 3 FYE 12/31/2010

STOCK APM C0DE  5015 

Price $ 5.3 Curr. ttm-PE 8.67 Curr. DY 3.02%
LFY Div 16.00 DPO ratio 43%
ROE 16.9% PBT Margin 16.3% PAT Margin 10.9%

Rec. qRev 291477 q-q % chg -7% y-y% chq 19%
Rec qPbt 47524 q-q % chg -12% y-y% chq 57%
Rec. qEps 16.18 q-q % chg -13% y-y% chq 65%
ttm-Eps 61.10 q-q % chg 12% y-y% chq 131%

Using VERY CONSERVATIVE ESTIMATES:
EPS GR 5% Avg.H PE 8.00 Avg. L PE 6.00
Forecast High Pr 6.24 Forecast Low Pr 3.61 Recent Severe Low Pr 3.61
Current price is at Middle 1/3 of valuation zone.

RISK: Upside 36% Downside 64%
One Year Appreciation Potential 4% Avg. yield 6%
Avg. Total Annual Potential Return (over next 5 years) 10%

CPE/SPE 1.24 P/NTA 1.47 NTA 3.61 SPE 7.00 Rational Pr 4.28



Decision:
Already Owned: Buy, Hold, Sell, Filed; Review (future acq): Filed; Discard: Filed.
Guide: Valuation zones - Lower 1/3 Buy; Mid. 1/3 Maybe; Upper 1/3 Sell.

Aim:
To Buy a bargain: Buy at Lower 1/3 of Valuation Zone
To Minimise risk of Loss: Buy when risk is low i.e UPSIDE GAIN > 75% OR DOWNSIDE RISK <25%
To Double every 5 years: Seek for POTENTIAL RETURN of > 15%/yr.
To Prevent Loss: Sell immediately when fundamentals deteriorate
To Maximise Gain & Reduce Loss: Sell when CPE/SPE > 1.5, when in Upper 1/3 of Valuation Zone & Returns < 15%/yr

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APM Automotive records higher Q3 profit
Published: 2010/11/18


APM Automotive Holdings Bhd reported a pre-tax profit of RM47.524 million for the third quarter-ended Sept 30, 2010, up 57.3 per cent from RM30.219 million in the same period last year.

The profit was achieved over an 18.6 per cent increase in revenue to RM291.477 million against RM245.746 million previously.

In a filing to Bursa Malaysia, the company said its Malaysian operations registered a 17 per cent increase in revenue on the back of higher vehicle production while its overseas revenue rose 39.2 per cent, contributed mainly by its Indonesian operations.

The company expects to maintain its current level of business for the remaining quarter and is optimistic that it will perform well for the whole year. -- Bernama



Read more: APM Automotive records higher Q3 profit http://www.btimes.com.my/Current_News/BTIMES/articles/20101118204734/Article/index_html#ixzz15dcIIHIx