How To Make Your First $1 Million

Incremental Investing
If you've got your retirement portfolios where you want them and are ready to start a pure income portfolio, then incremental investing is an excellent way to begin. You don't have to jump into the market with your life savings to make money. Even relatively small amounts can result in decent returns. The important thing to remember with your income portfolio is that capital gains taxes will be applied yearly to any income you pull out. Again, improving your tax awareness will help reduce the bite, but it takes time and knowledge to make one million solely from a taxable portfolio. Still, it has been done and will be done again. (See Investing 101 to get started.

How To Make Your First $1 Million

Ramp-Up Your Retirement Savings
Rather than letting your boss's contribution lessen your load, try to put a little extra into your retirement plan whenever you can. Automating your account contributions will make setting your money aside that much easier. That said, making extra contributions a priority will speed up your journey to $1 million and make your golden years that much more golden. You don't have to eat cat food to do this, just keep your retirement in mind when you've got extra cash on hand. (For more in this vein, see Playing Retirement Catch-Up.)

How To Make Your First $1 Million

Build Through Your Boss
If you're looking to save $1 million dollars for retirement, look no further than your boss. With matching contributions, your employer can be your best ally when it comes to building up retirement funds. If you think you need to squirrel away 20% of your income for retirement and your boss puts up 6% in matched contributions, then you're left with a much more manageable 14%. Even if you are your own boss, there are still options under SEPs. (For more on this see Making Salary Deferral Contributions.)

How To Make Your First $1 Million

Crafty Compounding
Time is on your side when you've got compounding working on your savings. The earlier you start saving and the earlier you get your savings into a financial instrument that compounds, the easier your path to $1 million will be. You may be thinking of tenbaggers or hot issues that return 10 times their value in a few weeks, but it is the boring, year-on-year compounding that builds fortune for most people. (To learn more, read Compound Your Way To Retirement.)

How To Make Your First $1 Million

Target Your Taxes
Another leaky hole you need to plug is the parasitic drain of big government. While you are expected to pay your taxes, it's the right of every taxpayer to try and reduce their tax bills to the absolute minimum allowed by law. Increasing your tax awareness means making taxes a quarterly chore rather than an annual scourge. Keeping abreast of allowable deductions, changes to your withholding and changes in tax limits will allow you to keep more of what you earn, so that you can put that money to work for you. (See 10 Steps To Tax Preparation for more.)

How To Make Your First $1 Million

Prune Your Purchases
When you do have to spend, try to get the most utility, not simply the most you can. The difference between great value and utility is a fine line. Buying too much house or too costly a car comes from confusing the two. If you shop for what you need and buy it cheaper than you'd planned, that's a great deal. By keeping the end use of large purchases in mind, you can avoid this drain on your cash. Before paying more than you can afford, remember that Warren Buffet, a man who constantly jockeys for richest person on earth, still lives in his humble Omaha abode. (For more on the value of frugality see Save Money The Scottish Way.)

How To Make Your First $1 Million

Stop Senseless Spending
It's easy to spend your way out of a fortune. Fortunately, the opposite is also true - you can save your way into your first million. Most people working in North America right now will earn well over $1 million during their working lives. The secret to saving $1 million lies in keeping more of what you earn. Just as extending your earnings offers a unique perspective, doing the same with your spending sheds a ghastly light on the waste. If you spend $5 every day of your working life on coffee, snacks, etc., you lose $73,000 of your lifetime earnings, making it that much harder to hit the $1 million mark in savings. (For more, see Squeeze A Greenback Out Of Your Latte.)

How To Make Your First $1 Million

The Millionaire's Mindset
When your grandparents lamented that a dollar just isn't a dollar anymore, they weren't just bellyaching. Inflation attacks the value of a dollar, reducing it as time goes by so you need more dollars as time goes on. That is one of the reasons that $1 million is often thrown around as a retirement goal. Back in 1900, a $1 million retirement would include a mansion and a bevy of servants, but now, it has become a benchmark for the average retirement portfolio. The upside is that it is easier to become a millionaire now than at any time before. While you won't be buying islands, it is still a goal worth shooting for. Read on for 10 ways to make your first million.

A Relevant Tale Of The Mouse, Frog And Hawk

A Relevant Tale Of The Mouse, Frog And Hawk
Jim Oberweis, Oberweis Report 08.06.09, 5:40 PM ET


If fable-teller Aesop sat down with China's President Hu Jintao and Federal Reserve Chairman Ben Bernanke, the meeting would begin with the story of the Mouse, the Frog and the Hawk:

"A mouse who always lived on the land, by an unlucky chance, formed an intimate acquaintance with a frog, who lived, for the most part, in the water. One day, the frog was intent on mischief. He tied the foot of the mouse tightly to his own. Thus joined together, the frog led his friend the mouse to the meadow where they usually searched for food. After this, he gradually led him toward the pond in which he lived. Upon reaching the banks of the water, he suddenly jumped in, dragging the mouse with him.

"The frog enjoyed the water amazingly, and swam croaking about, as if he had done a good deed. The unhappy mouse was soon sputtered and drowned in the water, and his poor dead body floating about on the surface. A hawk observed the floating mouse from the sky, and dove down and grabbed it with his talons, carrying it back to his nest. The frog, being still fastened to the leg of the mouse, was also carried off a prisoner, and was eaten by the hawk."

Ah, but who is the frog and who is the mouse? Is the mouse an allegorical depiction of the U.S., with the death of its manufacturing powerhouse catalyzed by the subsidies and currency manipulation of the Chinese frog? Or is China the mouse, whose export-based economy remains susceptible to the unsustainable and careless spending of the overleveraged western frog? In the latter scenario, the Chinese mouse's life (or at least savings) lay in the hands of the frog, steep in danger, an eventual victim to the hawk of Inflation.

Let us not forget that most unhappy final twist: the frog dies too, bound at the leg to the mouse. And so might the film roll, with an unhappy ending for the American frog. As the U.S. inflates away the burden of its debt (jargonized as "quantitative easing"), we may have fooled the Chinese this time, but future creditors will vanish, and the U.S.' ability to finance deficit spending on absurdly attractive terms will be relinquished for the foreseeable future.

It doesn't take an expert in game theory to realize that the mouse will try to untie itself before it gets dragged under water. In fact, China recently made waves with a proposal for alternatives to the U.S. dollar as a reserve currency. Bernanke, in fulfilling his patriotic cheerleading duties, recently sought to quell inflation worries with a promise to maintain harmony and balance throughout the universe: "I think that they are misguided in the sense that … the Federal Reserve is able to draw those reserves out and raise interest rates at an appropriate time to make sure that we don't have an inflation problem."

Borrowing a line I recently heard from a Harvard-educated economist, "That's bunk!" How popular will it be to raise rates and curtail economic growth just as the economy edges out of the worst recession since the Great Depression? More important, how will he do that as election season approaches and political pressure intensifies?

Besides the potential for intentional deception, one must also consider the chance for unwillful error, or being too late to the punch. In the same way that it is possible that an elephant guided by a troupe of chimpanzees might learn to ride a bicycle, it just isn't particularly likely. The Fed won't get the equilibrium just right. Bernanke has himself suggested it is better to err on the side of inflation rather than deflation, and it is inflation we expect to see, yet significant inflation is not yet imputed into bond prices, likely because the Fed itself is propping up prices for the moment by scooping up bonds to keep yields low. That sounds a bit like the mouse helplessly trying to stay afloat as the hawk lurks overhead.

Inflation is coming. In an inflationary world, stocks outperform bonds and long-term bonds fare particularly badly. Foreign stocks with undervalued currencies outperform stocks denominated in inflating currencies. For these reasons, equities will outpace fixed income for the decade to come (though not so in every year). Chinese equities will continue to offer their outsized gains over the next several years, even after its amazing run thus far in 2009.

That's not to say there won't be plenty of micro-cap stocks in the U.S. that have carved out growth opportunities, but don't ignore the low hanging fruit. Small-cap growth stocks in China--companies like Asia Info Holdings (ASIA), E-House (EJ), Baidu.com, Ctrip (CTRP), American Dairy (ADP), Perfect World (PFWD) and Rino (RINO)--as well as diversified China mutual funds, offer the benefits of foreign currency exposure and higher Chinese GDP growth to your aggressive growth portfolio.

So what's the moral of the story of The Mouse, the Frog and the Hawk? Be the hawk.

Jim Oberweis, CFA, is editor of the Oberweis Report and manager of several mutual funds focused on small-cap growth stocks and China.



http://www.forbes.com/2009/08/06/baidu-ctrip-asiainfo-personal-finance-investing-ideas-inflation-china_print.html

Latexx

Price 2.10
latest eps 5.86
annualised eps 23.4
annualised PE = 8.9
Market cap 383.555 m
NAV 72 sen

Hartalega

Hartalega

Price 5.20
latest qtr eps 10.88
annualised eps 4x 10.88 = 43.5
annualised PE = 12
Market cap = 1.3 billion
NAV 1.12



Date Announced : 12/08/2009

Type : Announcement
Subject : HARTALEGA HOLDINGS BERHAD ("HARTA and/or Company")
-Director's dealing in shares in HARTA during closed period pursuant to paragraph 14.08(c) of the Listing Requirements of Bursa Malaysia Securities Berhad

Contents : Pursuant to paragraph 14.08(c) of the Bursa Securities Listing Requirements, Encik Sannusi Bin Ngah, a Non-Independent Non-Executive Director of the Company has given a notification that he has disposed a total of 3,000,000 ordinary shares of RM0.50 each in HARTA, details of which are set out in the table below.

Glove makers to ride on strong demand growth

Glove makers to ride on strong demand growth

Tags: Hartalega | Kossan | Top Glove

Written by The Edge Financial Daily
Friday, 14 August 2009 12:07

KUALA LUMPUR: Maybank Investment Research remains overweight on Malaysia's glove manufacturing sector, which has the top manufacturers in the world.

The research house said on Aug 14 it had raised the target prices of Hartalega and Top Glove by 19%-23% to RM6.50 and RM8.30. It also retained the Buy calls on Hartalega, Top Glove and Kossan.

It said expectation is for demand to grow by a strong 10%-12% per annum over the next five years, above its 5%-8% forecast.

Maybank Investment Research said the drivers are improved hygiene standards and healthcare awareness in developing countries like Latin America and Asia; higher incidences of major infectious disease outbreaks, an ageing population and rising economic and social conditions, and more outsourcing by large medical companies in US.

The challenges for the sector is the government's stand on foreign labour, double levy and tax benefits; lack of R&D in the industry; volatile latex prices and currencies, and energy issues.

However, glove makers should be able to continue passing on additional costs over time to mitigate exposure.

"We shall see selling prices being adjusted upwards in 3Q09 to accommodate latex prices' current uptrend," it said.

All producers are expected to post above-par core second quarter 2009 earnings, riding on lower material costs and orders surge owing to the H1N1 outbreak. Demand growth should be stronger ahead.

"We have raised Top Glove and Hartalega's FY09-12 net profits by 7%-13% but lowered Kossan's FY09 by 10% due to losses in structured currency product. The combined net profits of the producers are still expected to record a three-year compounded annual growth rate (CAGR) of 14%. Capacity expansion should support demand growth.

"Considering their dominant global market share, the sector's 2009-10 price-to-earnings ratio (PER) of 11 times to 13 times is undemanding relative to the FBM-KLCI 30's 17 times. We raise Hartalega's and Top Glove's TP to RM6.50 (+19%) and RM8.30 (+23%) respectively. We maintain Kossan's TP at RM5.30," it said.

From the Edge

Warren Buffett Was Right

Warren Buffett Was Right
By: Zacks Investment Research
Friday, August 07, 2009 6:35 PM


Did you follow Warren Buffett's advice last year to buy American stocks? In that now famous October 17, 2008 Op-Ed piece in the New York Times, Buffet shared his simple rule for buying stocks: "Be fearful when others are greedy, and be greedy when others are fearful." Certainly at that time fear had gripped the markets and investors were fleeing equities into cash.
Well if you did buy at that time, then you are one of the few, the proud, and the bold value investors who made a prudent call that is now paying off handsomely. And if you didn’t buy then lets review the lessons that Warren was trying to share and how it will benefit you going forward.

1. The Markets Rebound Long Before the Economy

Buffett believed that equities would far outperform other asset classes, especially cash, over the next 5, 10 or 20 years as the stock market rises in anticipation of an economic recovery, even if we weren't in one yet.

A perfect example is the Dow's behavior during the Great Depression. Buffett wrote that it took several years for the Dow to hit its low of 41 on Jul 8, 1932. But you wouldn't have known that that was "the bottom" based on economic conditions. The economy continued to worsen until March 1933, when Franklin Roosevelt took office.

Meanwhile, from the market lows in July 1932 to March 1933, the Dow rebounded 30%.

We've seen a similar rebound in the last 5 months but no one knows how long the rally will last or if it's the start of a new bull market. Still, while your cash is getting virtually no interest in this zero-rate interest environment, equities are paying a dividend yield and have the possibility of more upside. In this kind of environment, cash is not king.

2. Long-Term Outlook For Equities Is Good

The stock markets have been around much longer than any of us. During that time, the world suffered through world wars, influenza outbreaks, terrorist attacks, recessions and one depression but still, businesses created new products and made profit. They will continue to do so in the future.

Consider Apple and the iPhone. Even in the midst of this recession, millions of people bought the iPhone around the world. Investors who understood that Apple was still selling its products at a fast clip were rewarded with a stock that jumped over 90% from the beginning of the year.

Apple won't be the last company to cash in on its powerful brand and host of good products. The key for investors is to find other companies that will be next to do the same.

3. Prepare for Inflation

Buffett wrote that greater inflation was a possibility as the government printing presses work overtime to alleviate the recession and liquidity enters the economic system. Cash is where you will NOT want to be. The value of your cash will actually decline under those conditions.

There are now exchange-traded funds (ETFs) and other instruments available to investors to prepare for inflation including owning TIPs, Treasury-Inflation Protected Securities, and the precious metals through the gold or silver ETFs or precious metal mining stocks.

4. Finding Great Stocks

The great thing about being an investor is that there are always hidden gems to be uncovered in any kind of market.

Despite the massive rally we've seen on the markets in the past few months, you can still hunt for undervalued stocks that will see a big upside when investors figure out that the fundamentals are great and the stock is cheap.

For example, in May, well after the rally began, the Value Trader portfolio, which buys a basket of stocks with a holding period of 3 months, bought shares of Western Digital and sold in late July for a 23.44% profit.

We try and find these kind of stocks every day.

5. It's Not Too Late to Invest

By March, it seemed that Buffett's advice to buy equities was very, very wrong. But that was his point. You can't time it. He said he had no idea what stocks would do in the short term. But it's not too late.


http://www.istockanalyst.com/article/viewarticle/articleid/3402145

Reviewing my Sell Transactions

http://spreadsheets.google.com/pub?key=t0sOF20dGoiu6n90X-XiAfA&output=html


Reasons for selling:

1. When cash is needed urgently for emergencies. Hopefully you will have cash kept aside for such contingencies.
2. When the fundamentals of the company has deteriorated. The stock should be sold urgently.
3. When the share is deemed overpriced, reducing its upside potential and increasing its downside risk.
4. To switch a stock to another stock with better upside potential and lower downside risk.

Buffett: Principles of fundamental business analysis should guide investment practice.

Focussed investing: allocating capital by concentrating on businesses with outstanding economic characteristics and run by first-rate manager.

The central theme uniting Buffett's investing is that the principles of fundamental business analysis, first formulated by his teachers Ben Graham and David Dodd, should guide investment practice. Linked to that theme are investment pricniples that define the proper role of corporate managers as the stewards of invested capital, and the proper role of shareholders as the suppliers and owners of capital.

Buffett and Berkshire Vice Chairman Charlie Munger have built Berkshire Hathaway into a $70-plus billion enterprise by investing in business with excellent economic characteristics and run by outstanding managers. While they prefer negotiated acquisitions of 100% of such a business at a fair price, they take a "double-barreled approach" of buying on the open market less than 100% of such businesses when they can do so at a pro-rata price well below what it would take to buy 100%.

The double-barreled approach pays off handsomely. The value of marketable securities in Berkshire's portfolio, on a per share basis, increased from $4 in 1965 to nearly $50,000 in 2000, about a 25% annual increase. Per share operating earnings increased in the same period from just over $4 to around $500, an annual increase of about 18%. According to Buffett, these results follow not from any master plan but from focussed investing - allocating capital by concentrating on businesses with outstanding economic characteristics and run by first-rate manager.

Learning from Buffett

Buffett views Berkshire as a partnership among him, Munger and other shareholders, and virtually all his $20-plus billion net worth is in Berkshire stock. His economic goal is long-term - to maximize Berkshire's per share intrinsic value by owning all or part of a diversified group of businesses that generate cash and above-average returns. In achieving this goal, Buffett foregoes expansion for the sake of expansion and foregoes divestment of businesses so long as they generate some cash and have good management.

Berkshire retains and reinvests earnings when doing so delivers at least proportional increases in per share market value over time. It uses debt sparingly and sells equity only when it receives as much in value as it gives. Buffett penetrates acounting conventions, especially those that obscure real economic earnings.

It is true that investors should focus on fundamentals, be patient, and exercise good judgment based on common sense. Many people speculate on what Berkshire and Buffett are doing or plan to do. Their speculation is sometimes right and sometimes wrong, but always foolish. People would be far better off not attempting to ferret out what specific investments are being made at Berkshire, but thinking about how to make sound investment selections based on Berkshire's teaching. That means they should think about Buffett's writings and learn from them, rather than try to emulate Berkshire's porfolio.

Buffett modestly confesses that most of the ideas were taught to him by Ben Graham. He considers himself the conduit through which Graham's ideas have proven their value. Buffett recognizes the risk of popularizing his business and investment philosophy. But he notes that he benefited enormously from Graham's intellectual generosity and believes it is appropriate that he pass the wisdom on, even if that means creating investment competitors.


-----


Buffett has applied the traditional principles as CEO of Berkshire Hathaway, a company with roots in a group of textile operations begun in the early 1800s. Buffett took the helm of Berkshire in 1964, when its book value per share was $19.46 and its intrinsic value per share far lower. Today (2002), its book value per share is around $40,000 and its intrinsic vlaue far higher. The growth rate in book value per share during that period is about 24% compounded annually.

Berkshire is now a holding company engaged in a variety of businesses, not including textiles. Berkshire's most important business is insurance, carried on through various companies including its 100% owned subsidiary, GEICO Corporation, the sixth largest auto insurer in the United States, and General Re Corporation, one of the four largest reinsurers in the world. Berkshire publishes The Buffalo News and owns other businesses that manufacture or distribute products ranging from carpeting, briks, paint, encyclopedias, home furnishings, and cleaning systems, to chocolate candies, ice cream, jewelry, footwear, uniforms, and air compressors, as well as businesses that provide training to operators of aircrafts and ships worldwide, fractional ownership interests in general aviation aircraft, and electric and gas power generation. Berkshire also wons substantial equity interests in major corporations, including American Express, Coca-Cola, Gillette, The Washington Post, and Wells Fargo.

What guides your investing?

It is surprising to know of many remisiers who cannot give you a short account of their investment principles. In conversations, they talk about short term "hot stocks". So and so "smart" investor is buying. So and so "smart" investor is selling. This stock should go up higher soon because of this and that. This is not such a good stock. This is a good stock.

Such "guide" is of little use for a serious investor who seeks to "invest" significant amount into the market for good returns (either for dividend and/or capital gains) over a life-time.

It is surprising why so many investors do not have a "good" guide for their investing. Many understand the buy low and sell high approach (or for some, buy high and sell higher approach), but with little application of fundamental business analysis. They have little control over the controllables, therefore, their approach is very much dependent on the play of the market and chance.

However, by adopting certain investment philosophy and understanding their emotion and behaviour, their investment operations can be safer with a higher probability of a positive moderate return. And there is no need to have a superior IQ to do so.

How to screen overseas stocks

Wednesday August 12, 2009
How to screen overseas stocks
Personal Investing - By ooi Kok Hwa


Four criteria to look at when choosing counters that are suitable for long-term investment


LATELY, interest has grown in overseas stock investment. Given the foreign markets’ relatively high volatility of returns compared with the local market, a lot of retail investors find it more exciting to invest in overseas stocks.

However, a common problem most investors face is how to filter, from among all the listed companies in the respective markets, the right stocks that are suitable for long-term investment.

Market capitalisation

One of the most important selection criteria is buying stocks with big market capitalisation. The market cap of a listed company can be computed by multiplying the number of its outstanding shares with the current share price.

In general, we should buy stocks with big market cap because they are normally well-established blue-chip stocks with higher turnover and widely-accepted products and services.

Even though some academic research shows that buying into small market cap stocks can provide higher returns compared with big market cap companies, unless we are quite familiar with the stocks available in those overseas markets, it is safer to put our money into bigger market cap stocks.


It is not difficult to find out which companies have the largest market cap in any stock exchange.

Such information is available in most major newspapers in that particular country or the stock exchanges themselves.

For example, if we intend to buy some Singapore stocks, we should pay attention to companies that are ranked in the top 30 in terms of market cap. One can get the rankings by market cap for the Singapore Exchange in StarBiz monthly.

Price/earnings ratio

Once we have filtered out the blue-chip stocks, the next selection criteria is the price/earnings ratio (PER), which should be lower than the overall market PER. This is computed by dividing the current stock price by the earnings per share (EPS) of the company. It represents the number of years that we need to get back our money, assuming the company maintains identical earnings throughout the period.

Even though some published PER may use historical audited EPS compared with forecast EPS, given that our key objective is to do stock screening, the PER testing will provide us with a quick check on the top 30 companies – whether they are profitable and selling at reasonable PER compared with the overall market PER.

If we cannot get access to the overall market PER, we may want to consider Benjamin Graham’s suggestion of buying stocks with PER of lower than 15 times.

Dividend yield

A good company should pay dividends. We strongly believe that this is one of the most important ways for the investors to get any returns from the companies that they invest in.

Our rule of thumb is that a good company should have a dividend yield that at least equals or is higher than the risk-free return, which is usually based on the fixed deposit rates.

The dividend yield is computed by dividing the dividend per share by the current share price. In general, most blue-chip stocks do have a fixed dividend payout policy and reward investors with a consistent and growing dividend returns.

Based on our observation, most smaller companies may not be able to pay good dividends as they may need the capital for future expansion programmes.

Price-to-book ratio

Most investors would like to invest at a market price lower than the owners’ costs in the company. The book value of a company represents the owners’ costs invested in it.

In a normal business environment, unless the company has some problems that the general public may not be aware of, it is quite difficult to find stocks selling at a price lower than the book value of the company.

As a result, we may need to purchase at a market price higher than the book value. According to Graham, the maximum price one should pay for any stock is the price which gives a price-to-book ratio no greater than 1.5 times. This means that we should not pay more than 1.5 times the owners’ costs invested in the company.

Lastly, the above four selection criteria are merely a preliminary quick stock screening process. Even though investors may be able to find stocks that fit the criteria, we suggest investors check further the fundamentals of the company, such as the balance sheet strength, its gearing, future business prospects and the quality of the management before deciding to invest.

● Ooi Kok Hwa is an investment adviser and managing partner of MRR Consulting.

From The Star newspaper

KFC Holdings (Malaysia) Bhd

*Wright Quality Rating: DAB1
Liquidity D (Fair)
Financial Strength A (Outstanding)
Profitability B (Excellent)
Growth 1 (Lowest)

Announcement
Date/ Fin.Yr. End/ Qtr/ Period End/ Rev RM '000/ Profit RM'000 /EPS Amended
21-May-09 31-Dec-09 1 31-Mar-09 526,639 29,433 14.47 -
26-Feb-09 31-Dec-08 4 31-Dec-08 601,907 28,717 14.32 -
20-Nov-08 31-Dec-08 3 30-Sep-08 552,440 31,824 15.86 -
20-Aug-08 31-Dec-08 2 30-Jun-08 529,843 31,002 15.34 -

(Based on above: ttm-eps was 60 sen)


Higher contribution from the KFC Restaurants segment: (1) from continuing network expansion (38 new restaurants added last year), and (2) from new sales channel such as breakfast and extension of operating hours of certain outlets to 24 hours. This is negated by increased cost of raw material.

Poultry Integrated segment: Higher turnover due to (1) improved sales to the KFC restaurants and (2) better sales of its Ayamas products both locally and in export sector. This is partially negated by the increasing cost of commodities which resulted in higher cost of internally produced poultry products.

-----

Historical data:

Last 5-Yr
DY Range 3.4% - 2.4%
PE Range 9.3 - 13.2 (Mean PE 11.25)
EPSGR 28.4%

Last 10-Yr
DY Range 2.9% - 2.0%
PE Range 12.7 - 18.6
EPSGR 47.1%

-----
What the management wrote in the last quarter release:
Current Year Prospects

The global economy deteriorated further during the first quarter. In Singapore, initial estimates indicated that the Singapore economy registered a negative growth of 11.5% in the first quarter and the Ministry of Trade and Industry announced that the Gross Domestic Product would contract by 6% to 9% in 2009. (Source : Ministry of Trade and Industry, Singapore). It was widely expected that the Malaysian economy will improve in the second half of 2009 supported by the stabilization in global economic conditions. These expectations were however dampened by the outbreak of Influenza A (H1N1) in late April 2009, which may slow down the economic recovery process.

With the prevalent economic uncertainties, consumer spending is expected to be negatively affected. Thus the Group will continue to focus on value to customers by offering value for money products to align with its customers spending ability.

Based on the foregoing, the Board is optimistic of sustaining the Group’s performance in the balance of the year. The Group has laid down plans to increase revenue and profitability by increasing the restaurants network, enhancing customer experience, developing new and improved products, expanding business activities, developing better cost efficiencies and improving productivity at all the restaurants and manufacturing facilities.

-----

Using ttm-eps 60 sen and expected estimated dividend (SPG) 16.5 sen

At today's price of 7.30:
DY is estimated 2.26% (Below the mean of the DY range)
PE is 12.2 (Just above the mean of the PE range)
PEG is 12.2/28.4 = 0.43 (Cheap)

At 7.30, one would be buying at slightly higher than the fair PE for KFC. However, valuation based on PEG is cheap.

The uncertainty as usual is in judging how the business will grow in the future. However, it is alright to acquire a good company at fair price. The question you should ask is: Will KFC be able to grow its business and earnings strongly in the next few years? The last 4 quarters revenues and earnings have been flat, probably due to the weak economic environment.

Anyway, KFC has done well the last 5 years and should continues to prosper, given the increasing numbers of Malaysians entering the middle income class group.

As usual, you will have to make your own decision in investing.



-----

*Wright Quality Ratings are based on numerous individual measures of quality, grouped into four principal components: (1) Investment Acceptance (i.e. stock liquidity), (2) Financial Strength, (3) Profitability & Stability, and (4) Growth. The ratings are based on established principles using 5-6 years of corporate record and other investment data.

The ratings consist of three letters and a number. Each letter reflects a composite qualitative measurement of numerous individual standards which may be summarized as follows:
A = Outstanding; B = Excellent; C = Good; D = Fair; L = Limited; N = Not Rated.

The number component of the Quality Rating is also a composite measurement of the annual corporate growth, based on earnings and modified by growth rates of equity, dividends, and sales per common share. The Growth rating may vary from 0 (lowest) to 20 (highest).

Supply of prime office space in Klang Valley

Nestle eyes ‘vital’ role in halal food industry via helping SMEs

Tuesday August 11, 2009
Nestle eyes ‘vital’ role in halal food industry via helping SMEs


PETALING JAYA: Nestle (M) Bhd wants to play a vital role to boost the halal food industry by helping local small and medium enterprises (SMEs) be competent suppliers to the company.

Managing director Sullivan O’Carroll said, at the same time, Nestle wanted to promote Malaysia as the global halal hub for its products.

“We have the expertise and experience to help local SMEs produce quality products that meet the international standard.

“At the same time SME players will have the opportunity to contribute through supplying of raw/semi-processed materials to us,” he said yesterday at the memorandum of agreement signing ceremony between Nestle, Small & Medium Industries Development Corp (Smidec) and Halal Industry Development Corp (HDC).


From left: SMIDEC chief executive officer Datuk Hafsah Hashim, SMIDEC chairman Datuk Ir. Mohamed Al Amin Abdul Majid, Nestle(M) Bhd technical and production executive director Detlef Krost, International Trade and Industry Minister Datuk Mustapa Mohamed, HDC chairman Tan Sri Datuk Dr Syed Jalaludin Syed Salim, HDC chief executive officer Datuk Seri Jamil Bidin and Nestle (M) Bhd managing director Sullivan O' Caroll after the signing of MOA on Monday.
The strategic collaboration between the three parties is to enhance the capacity and capability development of potential SMEs to become suppliers to Nestle.

O’Carroll said Nestle was currently importing most of its raw/semi-processed materials from Europe and the US for its products and wanted more contribution from the local SMEs.

“Europe and the US, for example, have a very high standard for any food players to be in their market and we need to fulfil their regulatory food standard. We believe Nestle can help the local SMEs reach the standard required by these international markets through our expertise and research and development technology,” he said.

HDC chief executive officer Datuk Seri Jamil Bidin said the collaboration confirmed the common desire of the three parties to cooperate for the purpose of promoting the development of business opportunities for SMEs involved in the halal food and beverages industry in Malaysia.

“Over time, the selected local SMEs suppliers will be able to benefit from the learning curve, compliance of standards, best practices and innovation to enhance their own capabilities and competencies,” he said.

Smidec chief executive officer Datuk Hafsah Hashim said the demand for halal food was increasing globally as more countries, such as Japan, were interested to be part of this industry.

“During our visit to Japan end of last month, five or six Japanese food companies had shown interest in this industry. They were also asking for assistance from HDC regarding halal certification,” she said, adding that one Japanese food company had already set up its facility in Johor Baru while another one was in the process of doing so in Malacca.

Smidec will identify and recommend potential SMEs in the halal ingredient industry to HDC and Nestle based on its evaluation system.

The selected SMEs will then be equipped with the requisite technology and financial assistance to ensure that they fulfil the requirement and meet the specifications set by Nestle to enable them to be considered as suppliers.

Currently, Nestle has about 150 suppliers, of which 40 are local companies and, in terms of value, these 40 companies supply only 10% of its required raw materials and ingredients.