One of the great advice given by investment guru, the late Philip Fisher, was that one should exit a stock once the fundamentals of the stock starts to deteriorate.
Or as Warren Buffett says he would hold on to a stock for many years as long as the economics of the business didn't change dramatically for the worse.
Sunday 18 October 2009
Opportunity costs of our investments
"There is this company in an emerging market that was presented to Warren. His response was, 'I don't feel more comfortable buying that than I do of adding to Wells Fargo.' He was using that as his opportunity cost. No one can tell me why I shouldn't buy more Wells Fargo. Warren is scanning the world trying to get his opportunity cost as high as he can so that his individual decisions are better."
When you are evaluating any investment, you must compare it to every other available investment, including ones you may already own. Instead, many investors collect stocks like baseball cards and the resulting portfolio bloat will likely not increase returns or reduce risk. So when you hear about the new hot stock in the next can't-miss sector, ask yourself two questions:
(1) Do I understand the investment as well or better than one I already own?
(2) Is the risk and reward profile of the investment superior to all other alternatives?
If the answer is "no" to either questions, it is probably best to stay away.
When you are evaluating any investment, you must compare it to every other available investment, including ones you may already own. Instead, many investors collect stocks like baseball cards and the resulting portfolio bloat will likely not increase returns or reduce risk. So when you hear about the new hot stock in the next can't-miss sector, ask yourself two questions:
(1) Do I understand the investment as well or better than one I already own?
(2) Is the risk and reward profile of the investment superior to all other alternatives?
If the answer is "no" to either questions, it is probably best to stay away.
Sit on Your Assets, if You Can
While most investors associate Buffett and Munger with finding good stocks cheap, Munger points out that quality can trump price.
"If you buy something because it's undervalued, you have to think about selling it when it approaches your calculation of its intrinsic value," he says. "That's hard. But if you buy a few great companies, then you can sit on your ass. That's a good thing."
"If you buy something because it's undervalued, you have to think about selling it when it approaches your calculation of its intrinsic value," he says. "That's hard. But if you buy a few great companies, then you can sit on your ass. That's a good thing."
Intelligent Investing
“We think all intelligent investing is value investing,” he says. “What the hell could it be if it wasn’t value?”
Charlie Munger
Berkshire Hathaway
While Mr Buffett’s mentor, the economist Benjamin Graham, is considered the father of value investing, it is Mr Munger who is credited with helping Mr Buffett evolve beyond buying stocks for no other reason than that they were cheap.
“That worked fine in the period after the 1930s,” Mr Munger says. “I don’t think it works nearly as well now. Too many people are doing it.”
Many of Berkshire’s holdings, from longtime investments such as Coca-Cola and Wells Fargo to last year’s purchase of General Electric’s preferred shares, are blue-chip companies considered the best at what they do.
The strategy sounds simple enough, but Mr Munger says few investors practise it.
“You can’t believe the way that conventional wisdom invests money,” he explains. “They tend to rush into whatever fad has worked lately. In my opinion, a lot of them are going to get creamed.”
17th May 2009: Today he's negative about the economy, but positive about stocks -- a bullish sign. In the late 1990s, Munger complained that he didn't see much to buy. The market quickly proved him right. But, at current market prices, Munger sees many long-term investment opportunities.
"I am willing to buy common stocks with long-term money at these prices," Munger said. "Is Coca-Cola worth what it's selling for? Yes. Is Wells Fargo? Yes." He owns both.
"If you wait until the economy is working properly to buy stocks, it's almost certainly too late," he said. "I have no feeling that just because there's more agony ahead for the economy you should wait to invest."
But you need to be selective.
Charlie Munger
Berkshire Hathaway
While Mr Buffett’s mentor, the economist Benjamin Graham, is considered the father of value investing, it is Mr Munger who is credited with helping Mr Buffett evolve beyond buying stocks for no other reason than that they were cheap.
“That worked fine in the period after the 1930s,” Mr Munger says. “I don’t think it works nearly as well now. Too many people are doing it.”
Many of Berkshire’s holdings, from longtime investments such as Coca-Cola and Wells Fargo to last year’s purchase of General Electric’s preferred shares, are blue-chip companies considered the best at what they do.
The strategy sounds simple enough, but Mr Munger says few investors practise it.
“You can’t believe the way that conventional wisdom invests money,” he explains. “They tend to rush into whatever fad has worked lately. In my opinion, a lot of them are going to get creamed.”
17th May 2009: Today he's negative about the economy, but positive about stocks -- a bullish sign. In the late 1990s, Munger complained that he didn't see much to buy. The market quickly proved him right. But, at current market prices, Munger sees many long-term investment opportunities.
"I am willing to buy common stocks with long-term money at these prices," Munger said. "Is Coca-Cola worth what it's selling for? Yes. Is Wells Fargo? Yes." He owns both.
"If you wait until the economy is working properly to buy stocks, it's almost certainly too late," he said. "I have no feeling that just because there's more agony ahead for the economy you should wait to invest."
But you need to be selective.
RHB maintains outperform call on LPI
RHB maintains outperform call on LPI
Tags: LPI | RHB
Written by The Edge Financial Daily
Monday, 12 October 2009 15:30
RHB Research has maintained its outperform call on LPI CAPITAL BHD [] with a higher fair value to RM14.95 following an upwards revision in its earnings forecast.
LPI recorded 3Q09 net profit of RM32.9 million, an increase of 44.7% quarter-on-quarter (q-o-q), which took its 9M09 earnings to RM91.1 million, up 27.3% year-on-year (y-o-y).
“This accounts for 80.2% and 82.7% of our and consensus expectations respectively. The deviation was mainly due to higher insurance gross premium and investment income at holding level,” RHB said. No dividend was declared in the quarter.
LPI’s 9M09 revenue grew by 11.9% y-o-y on the back of higher premium underwritten by Lonpac, which RHB believed was closely related to its expanding agency force and loan growth from PUBLIC BANK BHD [].
However, it said underwriting surplus was slightly below its expectation due to lower retained ratio against its assumption as a result of its fire-skewed portfolio, which the research house said has a lower retention rate versus motor, and higher management expenses due to increase in manpower.
RHB cut retention ratio to 35% from 34.5% and increased management expense to 19.8% from 19.5% previously. However, it noted that LPI’s 3Q09 underwriting surplus increased by 59.6% y-o-y, resulting in its 9M09 underwriting surplus to increase by 57.1% y-o-y.
“We believe this was caused by lower claims ratio, as economy has gradually improved, as well as its ability to obtain more retail business which is more profitable against lumpy underwriting,” RHB said.
It also increased the rate of return for investment at the holding level to 5.5% from 5% previously. Hence, earnings forecasts were increased by 2.3% to 10.1% per annum in FY09-11.
It added that LPI’s investment income in the quarter has expanded ten-fold q-o-q and 25.8% y-o-y. Going forward, it expected investment income from interest and dividend to remain a consistent contributor to overall earnings.
The fair value revision to RM14.95 from 13.58 previously is based on unchanged 15 times FY12/10 earnings per share.
http://www.theedgemalaysia.com/business-news/151122-rhb-maintains-outperform-call-on-lpi.html
Tags: LPI | RHB
Written by The Edge Financial Daily
Monday, 12 October 2009 15:30
RHB Research has maintained its outperform call on LPI CAPITAL BHD [] with a higher fair value to RM14.95 following an upwards revision in its earnings forecast.
LPI recorded 3Q09 net profit of RM32.9 million, an increase of 44.7% quarter-on-quarter (q-o-q), which took its 9M09 earnings to RM91.1 million, up 27.3% year-on-year (y-o-y).
“This accounts for 80.2% and 82.7% of our and consensus expectations respectively. The deviation was mainly due to higher insurance gross premium and investment income at holding level,” RHB said. No dividend was declared in the quarter.
LPI’s 9M09 revenue grew by 11.9% y-o-y on the back of higher premium underwritten by Lonpac, which RHB believed was closely related to its expanding agency force and loan growth from PUBLIC BANK BHD [].
However, it said underwriting surplus was slightly below its expectation due to lower retained ratio against its assumption as a result of its fire-skewed portfolio, which the research house said has a lower retention rate versus motor, and higher management expenses due to increase in manpower.
RHB cut retention ratio to 35% from 34.5% and increased management expense to 19.8% from 19.5% previously. However, it noted that LPI’s 3Q09 underwriting surplus increased by 59.6% y-o-y, resulting in its 9M09 underwriting surplus to increase by 57.1% y-o-y.
“We believe this was caused by lower claims ratio, as economy has gradually improved, as well as its ability to obtain more retail business which is more profitable against lumpy underwriting,” RHB said.
It also increased the rate of return for investment at the holding level to 5.5% from 5% previously. Hence, earnings forecasts were increased by 2.3% to 10.1% per annum in FY09-11.
It added that LPI’s investment income in the quarter has expanded ten-fold q-o-q and 25.8% y-o-y. Going forward, it expected investment income from interest and dividend to remain a consistent contributor to overall earnings.
The fair value revision to RM14.95 from 13.58 previously is based on unchanged 15 times FY12/10 earnings per share.
http://www.theedgemalaysia.com/business-news/151122-rhb-maintains-outperform-call-on-lpi.html
CEOs need to stick with vision for growth
CEOs need to stick with vision for growth
Tags: CEOs | Chief executives | David Frigstad | Frost and Sullivan | growth
Written by Fong Min Hun
Wednesday, 14 October 2009 11:11
KUALA LUMPUR: Chief executives may be saying the right things during this crisis, but their actions may not necessarily reflect what they are saying, David Frigstad, the chairman of Frost and Sullivan, said yesterday.
“Now more than ever, investments in company’s growth strategy and execution capabilities can set businesses apart from their competitors,” he said.
He was speaking to the media at the Growth, Innovation and Leadership Congress 2009 held here to discuss how CEOs can sustain growth in the current operating environment.
Frigstad said growth opportunities were emerging, but CEOs needed to position their companies to best exploit them. This meant sticking with a growth vision while taking advantage of opportunities that arise, he added.
This meant picking up depressed assets, hiring talent that may be out on the streets, and sticking to a vision. While many CEOs say they do that, Frigstad said their actions belie what they say.
“When we surveyed CEOs, 80%-90% say they don’t change their long-term growth strategies,” he said. “You look at what they’ve actually done and it’s just the opposite.”
Frigstad added that there were also contrasting views between how CEOs thought of themselves and how their staff thought of them. Frost and Sullivan’s survey showed that CEOs appraisals of themselves and their leadership qualities generally differed quite vastly from their staff’s appraisal of them.
This article appeared in The Edge Financial Daily, October 14, 2009.
Tags: CEOs | Chief executives | David Frigstad | Frost and Sullivan | growth
Written by Fong Min Hun
Wednesday, 14 October 2009 11:11
KUALA LUMPUR: Chief executives may be saying the right things during this crisis, but their actions may not necessarily reflect what they are saying, David Frigstad, the chairman of Frost and Sullivan, said yesterday.
“Now more than ever, investments in company’s growth strategy and execution capabilities can set businesses apart from their competitors,” he said.
He was speaking to the media at the Growth, Innovation and Leadership Congress 2009 held here to discuss how CEOs can sustain growth in the current operating environment.
Frigstad said growth opportunities were emerging, but CEOs needed to position their companies to best exploit them. This meant sticking with a growth vision while taking advantage of opportunities that arise, he added.
This meant picking up depressed assets, hiring talent that may be out on the streets, and sticking to a vision. While many CEOs say they do that, Frigstad said their actions belie what they say.
“When we surveyed CEOs, 80%-90% say they don’t change their long-term growth strategies,” he said. “You look at what they’ve actually done and it’s just the opposite.”
Frigstad added that there were also contrasting views between how CEOs thought of themselves and how their staff thought of them. Frost and Sullivan’s survey showed that CEOs appraisals of themselves and their leadership qualities generally differed quite vastly from their staff’s appraisal of them.
This article appeared in The Edge Financial Daily, October 14, 2009.
AmResearch bullish on Kossan’s prospect
AmResearch bullish on Kossan’s prospect
Tags: AmResearch | Kossan Rubber Industries Bhd | strong demand | strong earnings
Written by Tony C H Goh
Wednesday, 14 October 2009 22:24
KUALA LUMPUR: AmResearch has upgraded its recommendation on KOSSAN RUBBER INDUSTRIES BHD [] to buy from hold previously, on the expectation that the glovemaker is poised to pose strong earnings on the back of better pricing and product mix.
Kossan is also set to benefit from the strong demand growth trend underpinned by a capacity boost to 18 billion pieces per annum by the end of 2011 from 11.1 billion currently.
In addition, AmResearch said it remained assured by the strong demand growth trend for examination gloves, as reflected by the group’s high utilisation rate in excess of 90%-91%.
“We have turned positive of Kossan’s earnings deliverance going forward, given the stronger earnings in the second half of FY09 on the back of smaller forex losses, better margins on its product portfolio mix and pricing power,” said the research house.
Kossan had previously entered into aggressive structured currency contracts to hedge its receivables for up to 10 months, with expiry in November 2009. So far, the group has recognised forex losses of RM12.2 million and RM12.5 million in 1Q and 2QFY09, respectively.
As the average US dollar to the ringgit exchange rate has weakened by around 3% to RM3.43 compared with RM3.52 in 3Q, the favourable exchange rate outlook has provided room for an earnings improvement for FY09.
Higher margins owing to Kossan’s product portfolio mix and better pricing power, as well as a strong demand will fuel Kossan's growth trend going forward.
All in, AmResearch raised its FY09 earnings forecast by 2% to RM57 million, and a further 25% and 26% to RM97 million and RM120 million for FY10 and FY11 respectively.
Ahead of buoyant earnings for rubber glove manufacturers and backed by strong fundamentals, it conservatively pegged Kossan’s FY10 earnings to a higher target price earnings (PE) of 10 times.
“Valuation is undemanding as the stock is still trading below its eight-year historical average of 12 times, and at a steep 40% discount against a 25% to 30% historical discount gap of 13 times that of Top Glove,” said AmResearch.
Kossan added 17 sen to close at RM4.95 on Oct 14.
http://www.theedgemalaysia.com/business-news/151331-amresearch-bullish-on-kossans-prospect.html
Tags: AmResearch | Kossan Rubber Industries Bhd | strong demand | strong earnings
Written by Tony C H Goh
Wednesday, 14 October 2009 22:24
KUALA LUMPUR: AmResearch has upgraded its recommendation on KOSSAN RUBBER INDUSTRIES BHD [] to buy from hold previously, on the expectation that the glovemaker is poised to pose strong earnings on the back of better pricing and product mix.
Kossan is also set to benefit from the strong demand growth trend underpinned by a capacity boost to 18 billion pieces per annum by the end of 2011 from 11.1 billion currently.
In addition, AmResearch said it remained assured by the strong demand growth trend for examination gloves, as reflected by the group’s high utilisation rate in excess of 90%-91%.
“We have turned positive of Kossan’s earnings deliverance going forward, given the stronger earnings in the second half of FY09 on the back of smaller forex losses, better margins on its product portfolio mix and pricing power,” said the research house.
Kossan had previously entered into aggressive structured currency contracts to hedge its receivables for up to 10 months, with expiry in November 2009. So far, the group has recognised forex losses of RM12.2 million and RM12.5 million in 1Q and 2QFY09, respectively.
As the average US dollar to the ringgit exchange rate has weakened by around 3% to RM3.43 compared with RM3.52 in 3Q, the favourable exchange rate outlook has provided room for an earnings improvement for FY09.
Higher margins owing to Kossan’s product portfolio mix and better pricing power, as well as a strong demand will fuel Kossan's growth trend going forward.
All in, AmResearch raised its FY09 earnings forecast by 2% to RM57 million, and a further 25% and 26% to RM97 million and RM120 million for FY10 and FY11 respectively.
Ahead of buoyant earnings for rubber glove manufacturers and backed by strong fundamentals, it conservatively pegged Kossan’s FY10 earnings to a higher target price earnings (PE) of 10 times.
“Valuation is undemanding as the stock is still trading below its eight-year historical average of 12 times, and at a steep 40% discount against a 25% to 30% historical discount gap of 13 times that of Top Glove,” said AmResearch.
Kossan added 17 sen to close at RM4.95 on Oct 14.
http://www.theedgemalaysia.com/business-news/151331-amresearch-bullish-on-kossans-prospect.html
THIS is the first of a two-part report by Deutsche Bank.on Malaysia
Listing Petronas, or parts of it, could reinvigorate investor interest
Tags: Barisan Nasional | Datuk Seri Najib Razak | Deutsche Bank | FIC | GLCs | Khazanah | KWAP | Listing Petronas | Low free float | LTAT | MoE | MSCI index market cap | NEP | New IPOs | PNB | Umno
Written by Financial Daily
Thursday, 15 October 2009 10:54
THIS is the first of a two-part report by Deutsche Bank. The first part contains two key messages — 1. Why listing Petronas (or parts of it) is critical for the market and 2. A bold start by Datuk Seri Najib Razak, but largely ignored by the market. The second part, on the challenging valuations and stocks picks in Malaysia, will be published tomorrow. (Note: The Deutsche Bank report is dated Oct 4, 2009)
Restructuring the market
The market is fully aware of how Malaysia has been marginalised as an investment destination since the Asian crisis. And as an analyst, it is all too tempting to write yet another report highlighting what is wrong with the market. Instead, in this report, we have taken a hard look at what can be done to revive interest in this market. First, let us address the challenges.
• Low free float relative to the regional markets — with North Asian markets swamped with new issuances, Malaysia runs the risk of market weightings easing further than it already has. More needs to be done to liberalise ownership structures in ‘nationalistic’ assets and/or the government should consider reducing their stakes in GLCs.
• Lack of new IPOs — the government must consider listing Petronas and, if not in its entirety, the LNG and refinery businesses alone could make a significant difference.
• Fund flows into Malaysia are still lagging the region and Asean. This is the most underowned market in Asia
(1) Addressing the market’s low free float
One of the biggest challenges for Malaysia is this — the low level of market free float versus other markets in the region.
Here are a few numbers to ponder: government-related agencies (Khazanah, PNB, Petronas, KWAP, LTAT, MoF, etc.) collectively own about 28.4% of the market (based on MSCI universe). If one includes EPF’s stakes in various companies, this figure goes up to 39.4%, based on our estimates.
Although EPF (Employees Provident Fund) is considered free-float, it does provide some perspective as to how tightly domestic funds have a dominant presence in the market. Therefore, this explains Malaysia’s weighted free float of only 49%, at the lower end of the region and lower than that of Indonesia and Singapore.
What needs to be done?
• Khazanah stake reduction. Khazanah should reduce its stakes in companies where they have ownership dominance. Indeed, we estimate that Khazanah’s exposure in the market represents 8% of MSCI Malaysia component stocks.
This may not be much, but Khazanah’s stakes are meaningful in large-cap companies such as Tenaga, Axiata (RM3.15, hold, target price RM2.79), etc.
The positive news is that Khazanah recently ‘signalled’ its intention to improve market free float when it disposed of 5% of Malaysia Airports Holdings Berhad (MAHB, RM3.47, NR) via a private placement.
PNB loosens its grip on key stocks
Although PNB’s mandate (largest government managed unit trust funds) is very different from that of Khazanah, a reduction in its dominance in large caps, such as Sime Darby (RM8.54, hold, target price RM7.60), would also help to improve free float.
This outcome is quite unlikely given PNB’s need for consistent dividends from its major investments. The market’s free float could improve if Khazanah gradually reduced its stakes in their key holdings.
(2) Increasing IPOs and listing Petronas (or at least the downstream businesses)
The region is awash with new IPOs, and Malaysia desperately needs a few large IPOs to draw attention back to the market. Equity raising is anticipated to be higher (as a percentage of market cap) versus the last two years, but this is mostly with the inclusion of Maxis’ relisting. Much more needs to be done. Indeed, just to keep up with the region, Malaysia has to expand the depth and breadth of the market at a higher rate. Here are our suggestions:
What needs to be done to improve the IPO pipeline?
• To improve the depth and breath of the market, Malaysian companies with foreign subsidiaries should be encouraged to list on Bursa (RM8.17, sell, target price RM3.30). Bursa should encourage companies, such as Sime Darby, YTL Power (RM2.17, hold), etc to list their profitable businesses in Malaysia to raise funds for future investment plans.
• Encourage the government to list Petronas. If the government is not willing to list its prized exploration and production division (E&P), the LNG and refinery divisions are substantial enough on their own to make a significant difference to the market. After culling through various scenarios and possible options, this is the most effective means for addressing a large part of the market’s structural issues.
• Encourage Malaysian entrepreneurs to list their businesses in Malaysia (and not in HK or Singapore). With the recent liberalisation rules on bumiputra shareholdings relating to pre- and post-IPO structures, such an option should now be met with less objections. Promoters are now able to stay in control, with up to 75% (post IPO) vs 45% under the previous structure.
Petronas is large; could potentially raise Malaysia’s weightings from 3.8% to 6.4%. In a country report on Malaysia by IPE.com (dated Jan 30, 2009), it was stated that Petronas could be worth US$207 billion (RM912.6 billion) assuming 15x forward PER. This is almost the same as Malaysia’s entire market cap of US$257 billion.
Based on this and assuming that only 25% of Petronas is listed, Malaysia’s free-float adjusted weightings in MSCI Asia ex-Japan could rise from 3.8% to 6.4% based on our estimates.
This is a material change, and one we believe the government should consider. It would transform the Malaysian market and would allow the government to unlock value in Petronas but still maintain control, in our view. This could also help raise US$52 billion (25% listing) in order to help narrow the government’s fiscal deficit.
Conclusions: Petronas is critical to lifting market profile and size
• The listing of Petronas could almost double the total market cap of Malaysia, to US$464 billion from US$257 billion currently.
• If listed in its entirety, Petronas alone would be 40% of MSCI Malaysia’s weighting (assuming 25% free float).
• Petronas is such a behemoth entity that a mere 10% release of its equity interest will result in an increase of Malaysia’s MSCI index market cap from US$76 billion to US$101 billion with the index weighting rising to 4.99% from 3.84% currently.
• While the listing of Petronas as a whole entity remains uncertain, a plausible scenario would be for Petronas to list its downstream subsidiaries such as gas/LNG and refineries while preserving its upstream E&P. The current outlook for LNG is positive, thanks to an increase in the current and future global demand for a cleaner, greener energy source. Malaysia is currently the third-largest LNG producer in the world.
• A partial listing of Petronas’ gas/LNG and refineries alone would also create a dramatic impact on the market. Just a 25% injection of Petronas gas/LNG and refineries equity stakes combined would push Malaysia’s MSCI index market cap to US$123 billion and index weighting to 5.95% by itself.
• Combining the Petronas possibility and Khazanah’s 25% uniform reduction of holdings, Malaysia should have an MSCI index market cap of US$130 billion and weighting of 6.28% within Asia ex-Japan. This combination can provide the catalyst that would allow Malaysia to command a more meaningful weighting and one that is on par with Singapore.
• Petronas will be a critical component in determining how sizeable Malaysia can become in the MSCI Asia Pac, ex Japan Index, we believe. Divesting the holdings from Khazanah and possibly other GLCs is certainly a good start. However, if the intention is for Malaysia to be able to tip the scale, and PNB is certainly unlikely to scale back its holdings, any strategy or attempt has to include Petronas as part of the equation. This is absolutely essential.
(3) Fund flows into Malaysiastill lagging
Fund flows into Asia ex-Japan rebounded in late August/early September, largely led by India, Korea, and Singapore. Again, Malaysia lagged. This would explain why foreign ownership in the market has barely changed since the start of the year. Malaysia’s weightings and fund flows are in sharp contrast to Indonesia.
Najib’s first six months
Surprising his critics: delivering punchy initiatives so far...
Najib’s first six months in power as prime minister have been closely watched by all. So far, so good — he had a positive start despite inheriting a weak economy, a fractured coalition party, a disenchanted voter base, and an unloved market facing significant structural challenges.
Three significant market-related initiatives were introduced by Najib. Critics may argue that these capital markets initiatives were late in a regional context. We do not disagree with this view, but in the context of Malaysia’s national economic policy (NEP), these changes should be viewed as bold. No other prime minister has attempted to address these issues.
• In June, the Foreign Investment Committee (FIC), which oversees mergers, acquisitions and equity stakes (viewed largely as an administrative roadblock by many), was abolished. Pre-IPO bumiputra ownership was also reduced from 30% to 12.5%, with no requirement post-IPO or for future fund raising.
This, in our opinion, was positive as it provided clarity on ownership rules and should allow promoters of companies to maintain a comfortable majority (75% vs. 45% previously) post-IPO.
The re-listing of Maxis may be an important step in forcing investors to reconsider the Malaysian market again. The positive ownership liberalisation measures will take time to translate into greater depth and breadth in the market. Unfortunately, Malaysia faces stiff competition in the region.
• Foreigners are now able to own 100% of a commercial property asset if acquired from a non-bumiputra controlled entity. Also, ownership in selected sub-sectors of the financial industry was liberalised too; eg, foreigners are now able to own 70%-100% of a local fund management entity, 70% of local stockbrokers vs 40% previously.
• CONSTRUCTION [] jobs are finally hitting the economy. The lack of policy implementation was one of the weaknesses of the previous administration. The good news is that contractors’ feedback so far tells us that government infrastructure jobs have been awarded and the knock- on effect is beginning to have an impact on the real economy.
... but much still needs to be done; politics still a dominant issue
Politics matters more than ever for this market, especially when investors’ confidence in Indonesia’s political backdrop has improved significantly over the last 12 months. There has never been a time when all political parties are at odds with their own identity.
The ruling coalition party, Barisan Nasional (BN), remains fractured, with Umno trying to find the right balance between embracing structural change to stay relevant to its increasingly young voters and on the other hand, being seen to be protecting Malay rights, where applicable.
Rebuilding confidence and renewed aspirations in the ruling coalition party
Najib has made some strides in trying to rebuild confidence and political momentum within the party.
The recent proposal to abolish the nomination quota structure for Umno elections was a significant milestone for the party and it sends a clear message that the party has little choice but to reform. But BN has other challenges too, especially with other key component parties like MCA and MIC squabbling internally.
Challenges within the opposition party, too
The opposition coalition too has its own challenges. PKR component parties have aired their internal disagreements publicly on issues perceived to be minor. Datuk Seri Anwar Ibrahim, the opposition leader, appears to be distracted by his court proceedings.
Eighteen months since the March 2008 general election, Malaysians are still unsure what PKR truly stands for given the absence of a manifesto and a much-needed shadow cabinet. Critics argue the opposition party may well be squandering a rare opportunity to gain greater support.
All eyes on the outcome of the Bagan Pinang by-electionon Oct 10
The Bagan Pinang by-election, the ninth since the general election, is an important bellweather to determine how BN has fared since Najib became prime minister. The polling date was for Oct 10 and BN was tipped to regain the seat as it is the clear incumbent supported by sizeable postal votes. If BN loses, this would be negative for the market. BN won the Bagan Pinang by-election by an increased majority of 5,435 votes.
A positive start; much more required
Najib has surprised the market so far by delivering much-needed market reforms in his first six months. The market will now be watching to see if these initiatives can be implemented effectively. Much still needs to be done to lift investor confidence in Malaysia.
This will certainly take time to take effect, especially given the competitive environment for capital across the region. In fact, we believe Malaysia has to work doubly hard to win back investors’ “mind share” in order to keep up with the dynamism of structural reforms in the region.
This article appeared in The Edge Financial Daily, October 15, 2009.
Tags: Barisan Nasional | Datuk Seri Najib Razak | Deutsche Bank | FIC | GLCs | Khazanah | KWAP | Listing Petronas | Low free float | LTAT | MoE | MSCI index market cap | NEP | New IPOs | PNB | Umno
Written by Financial Daily
Thursday, 15 October 2009 10:54
THIS is the first of a two-part report by Deutsche Bank. The first part contains two key messages — 1. Why listing Petronas (or parts of it) is critical for the market and 2. A bold start by Datuk Seri Najib Razak, but largely ignored by the market. The second part, on the challenging valuations and stocks picks in Malaysia, will be published tomorrow. (Note: The Deutsche Bank report is dated Oct 4, 2009)
Restructuring the market
The market is fully aware of how Malaysia has been marginalised as an investment destination since the Asian crisis. And as an analyst, it is all too tempting to write yet another report highlighting what is wrong with the market. Instead, in this report, we have taken a hard look at what can be done to revive interest in this market. First, let us address the challenges.
• Low free float relative to the regional markets — with North Asian markets swamped with new issuances, Malaysia runs the risk of market weightings easing further than it already has. More needs to be done to liberalise ownership structures in ‘nationalistic’ assets and/or the government should consider reducing their stakes in GLCs.
• Lack of new IPOs — the government must consider listing Petronas and, if not in its entirety, the LNG and refinery businesses alone could make a significant difference.
• Fund flows into Malaysia are still lagging the region and Asean. This is the most underowned market in Asia
(1) Addressing the market’s low free float
One of the biggest challenges for Malaysia is this — the low level of market free float versus other markets in the region.
Here are a few numbers to ponder: government-related agencies (Khazanah, PNB, Petronas, KWAP, LTAT, MoF, etc.) collectively own about 28.4% of the market (based on MSCI universe). If one includes EPF’s stakes in various companies, this figure goes up to 39.4%, based on our estimates.
Although EPF (Employees Provident Fund) is considered free-float, it does provide some perspective as to how tightly domestic funds have a dominant presence in the market. Therefore, this explains Malaysia’s weighted free float of only 49%, at the lower end of the region and lower than that of Indonesia and Singapore.
What needs to be done?
This may not be much, but Khazanah’s stakes are meaningful in large-cap companies such as Tenaga, Axiata (RM3.15, hold, target price RM2.79), etc.
The positive news is that Khazanah recently ‘signalled’ its intention to improve market free float when it disposed of 5% of Malaysia Airports Holdings Berhad (MAHB, RM3.47, NR) via a private placement.
PNB loosens its grip on key stocks
Although PNB’s mandate (largest government managed unit trust funds) is very different from that of Khazanah, a reduction in its dominance in large caps, such as Sime Darby (RM8.54, hold, target price RM7.60), would also help to improve free float.
This outcome is quite unlikely given PNB’s need for consistent dividends from its major investments. The market’s free float could improve if Khazanah gradually reduced its stakes in their key holdings.
(2) Increasing IPOs and listing Petronas (or at least the downstream businesses)
The region is awash with new IPOs, and Malaysia desperately needs a few large IPOs to draw attention back to the market. Equity raising is anticipated to be higher (as a percentage of market cap) versus the last two years, but this is mostly with the inclusion of Maxis’ relisting. Much more needs to be done. Indeed, just to keep up with the region, Malaysia has to expand the depth and breadth of the market at a higher rate. Here are our suggestions:
What needs to be done to improve the IPO pipeline?
• To improve the depth and breath of the market, Malaysian companies with foreign subsidiaries should be encouraged to list on Bursa (RM8.17, sell, target price RM3.30). Bursa should encourage companies, such as Sime Darby, YTL Power (RM2.17, hold), etc to list their profitable businesses in Malaysia to raise funds for future investment plans.
• Encourage the government to list Petronas. If the government is not willing to list its prized exploration and production division (E&P), the LNG and refinery divisions are substantial enough on their own to make a significant difference to the market. After culling through various scenarios and possible options, this is the most effective means for addressing a large part of the market’s structural issues.
• Encourage Malaysian entrepreneurs to list their businesses in Malaysia (and not in HK or Singapore). With the recent liberalisation rules on bumiputra shareholdings relating to pre- and post-IPO structures, such an option should now be met with less objections. Promoters are now able to stay in control, with up to 75% (post IPO) vs 45% under the previous structure.
Petronas is large; could potentially raise Malaysia’s weightings from 3.8% to 6.4%. In a country report on Malaysia by IPE.com (dated Jan 30, 2009), it was stated that Petronas could be worth US$207 billion (RM912.6 billion) assuming 15x forward PER. This is almost the same as Malaysia’s entire market cap of US$257 billion.
Based on this and assuming that only 25% of Petronas is listed, Malaysia’s free-float adjusted weightings in MSCI Asia ex-Japan could rise from 3.8% to 6.4% based on our estimates.
This is a material change, and one we believe the government should consider. It would transform the Malaysian market and would allow the government to unlock value in Petronas but still maintain control, in our view. This could also help raise US$52 billion (25% listing) in order to help narrow the government’s fiscal deficit.
Conclusions: Petronas is critical to lifting market profile and size
• The listing of Petronas could almost double the total market cap of Malaysia, to US$464 billion from US$257 billion currently.
• If listed in its entirety, Petronas alone would be 40% of MSCI Malaysia’s weighting (assuming 25% free float).
• Petronas is such a behemoth entity that a mere 10% release of its equity interest will result in an increase of Malaysia’s MSCI index market cap from US$76 billion to US$101 billion with the index weighting rising to 4.99% from 3.84% currently.
• While the listing of Petronas as a whole entity remains uncertain, a plausible scenario would be for Petronas to list its downstream subsidiaries such as gas/LNG and refineries while preserving its upstream E&P. The current outlook for LNG is positive, thanks to an increase in the current and future global demand for a cleaner, greener energy source. Malaysia is currently the third-largest LNG producer in the world.
• A partial listing of Petronas’ gas/LNG and refineries alone would also create a dramatic impact on the market. Just a 25% injection of Petronas gas/LNG and refineries equity stakes combined would push Malaysia’s MSCI index market cap to US$123 billion and index weighting to 5.95% by itself.
• Combining the Petronas possibility and Khazanah’s 25% uniform reduction of holdings, Malaysia should have an MSCI index market cap of US$130 billion and weighting of 6.28% within Asia ex-Japan. This combination can provide the catalyst that would allow Malaysia to command a more meaningful weighting and one that is on par with Singapore.
• Petronas will be a critical component in determining how sizeable Malaysia can become in the MSCI Asia Pac, ex Japan Index, we believe. Divesting the holdings from Khazanah and possibly other GLCs is certainly a good start. However, if the intention is for Malaysia to be able to tip the scale, and PNB is certainly unlikely to scale back its holdings, any strategy or attempt has to include Petronas as part of the equation. This is absolutely essential.
(3) Fund flows into Malaysiastill lagging
Fund flows into Asia ex-Japan rebounded in late August/early September, largely led by India, Korea, and Singapore. Again, Malaysia lagged. This would explain why foreign ownership in the market has barely changed since the start of the year. Malaysia’s weightings and fund flows are in sharp contrast to Indonesia.
Najib’s first six months
Surprising his critics: delivering punchy initiatives so far...
Najib’s first six months in power as prime minister have been closely watched by all. So far, so good — he had a positive start despite inheriting a weak economy, a fractured coalition party, a disenchanted voter base, and an unloved market facing significant structural challenges.
Three significant market-related initiatives were introduced by Najib. Critics may argue that these capital markets initiatives were late in a regional context. We do not disagree with this view, but in the context of Malaysia’s national economic policy (NEP), these changes should be viewed as bold. No other prime minister has attempted to address these issues.
• In June, the Foreign Investment Committee (FIC), which oversees mergers, acquisitions and equity stakes (viewed largely as an administrative roadblock by many), was abolished. Pre-IPO bumiputra ownership was also reduced from 30% to 12.5%, with no requirement post-IPO or for future fund raising.
This, in our opinion, was positive as it provided clarity on ownership rules and should allow promoters of companies to maintain a comfortable majority (75% vs. 45% previously) post-IPO.
The re-listing of Maxis may be an important step in forcing investors to reconsider the Malaysian market again. The positive ownership liberalisation measures will take time to translate into greater depth and breadth in the market. Unfortunately, Malaysia faces stiff competition in the region.
• Foreigners are now able to own 100% of a commercial property asset if acquired from a non-bumiputra controlled entity. Also, ownership in selected sub-sectors of the financial industry was liberalised too; eg, foreigners are now able to own 70%-100% of a local fund management entity, 70% of local stockbrokers vs 40% previously.
• CONSTRUCTION [] jobs are finally hitting the economy. The lack of policy implementation was one of the weaknesses of the previous administration. The good news is that contractors’ feedback so far tells us that government infrastructure jobs have been awarded and the knock- on effect is beginning to have an impact on the real economy.
... but much still needs to be done; politics still a dominant issue
Politics matters more than ever for this market, especially when investors’ confidence in Indonesia’s political backdrop has improved significantly over the last 12 months. There has never been a time when all political parties are at odds with their own identity.
The ruling coalition party, Barisan Nasional (BN), remains fractured, with Umno trying to find the right balance between embracing structural change to stay relevant to its increasingly young voters and on the other hand, being seen to be protecting Malay rights, where applicable.
Rebuilding confidence and renewed aspirations in the ruling coalition party
Najib has made some strides in trying to rebuild confidence and political momentum within the party.
The recent proposal to abolish the nomination quota structure for Umno elections was a significant milestone for the party and it sends a clear message that the party has little choice but to reform. But BN has other challenges too, especially with other key component parties like MCA and MIC squabbling internally.
Challenges within the opposition party, too
The opposition coalition too has its own challenges. PKR component parties have aired their internal disagreements publicly on issues perceived to be minor. Datuk Seri Anwar Ibrahim, the opposition leader, appears to be distracted by his court proceedings.
Eighteen months since the March 2008 general election, Malaysians are still unsure what PKR truly stands for given the absence of a manifesto and a much-needed shadow cabinet. Critics argue the opposition party may well be squandering a rare opportunity to gain greater support.
All eyes on the outcome of the Bagan Pinang by-electionon Oct 10
The Bagan Pinang by-election, the ninth since the general election, is an important bellweather to determine how BN has fared since Najib became prime minister. The polling date was for Oct 10 and BN was tipped to regain the seat as it is the clear incumbent supported by sizeable postal votes. If BN loses, this would be negative for the market. BN won the Bagan Pinang by-election by an increased majority of 5,435 votes.
A positive start; much more required
Najib has surprised the market so far by delivering much-needed market reforms in his first six months. The market will now be watching to see if these initiatives can be implemented effectively. Much still needs to be done to lift investor confidence in Malaysia.
This will certainly take time to take effect, especially given the competitive environment for capital across the region. In fact, we believe Malaysia has to work doubly hard to win back investors’ “mind share” in order to keep up with the dynamism of structural reforms in the region.
This article appeared in The Edge Financial Daily, October 15, 2009.
Pantech: Strong growth prospects on cheap valuations
Pantech: Strong growth prospects on cheap valuations
Tags: InsiderAsia | Pantech
Written by InsiderAsia
Thursday, 15 October 2009 16:50
WE are upbeat on Pantech's (RM1) prospects going forward. The company has built a strong business franchise, reputation and track record as one of the largest one-stop centres for PFF (pipes, fittings and flow control products) solutions in the country.
In addition to a strong hold on the domestic market, Pantech has also made inroads overseas with its range of manufactured carbon steel fittings. Its customised long bends, in particular, have enjoyed good demand abroad including in the US, Asia and the Middle East.
Pantech maintains good profitability
Demand for PFF has demonstrated resilience over the past few quarters amid uncertainties in the global economy. And despite the sharp plunge in prices for steel products, Pantech is still running a very profitable business. This is underscored by its earnings results for the first half (1H) of the financial year ending February 2010.
Sales were up by about 2% year-on-year (y-o-y), totalling RM243.3 million, in 1HFY10. Even though net profit dropped 16% y-o-y to RM28.3 million, the results were admirable given the sharp drop in prices for steel products since hitting peak levels in mid-2008. To be sure, Pantech is no longer earning "abnormal" margins/profits due to record prices. But the underlying fundamentals of the business remain very much intact.
Sales for the manufacturing arm, the bulk of which were for export, fell sharply in 1HFY10 as a result of the global downturn. Demand in the US, one of its biggest markets, in particular was weak.
Positively, strong demand in the local market picked up the slack. The company's trading arm remains its biggest earnings generator, servicing, primarily, the domestic oil and gas sector as well as palm oil and refinery, petrochemical and oleo-chemicals industries.
The oil and gas sector is estimated to account for about 70% of Pantech's sales and will be the key driver for growth going forward.
Still very much a growing company
Pantech is committed to a growth strategy. Crude oil is expected to remain the primary fuel source for the world in the foreseeable future. Hence, exploration and development activities will continue to drive growth in the supporting industries.
The company is in the process of acquiring a piece of land totaling some 20 acres in the Pasir Gudang Industrial Area, Johor, for RM12.85 million. The land will be used for its new corporate office and warehouse, which will consolidate its southern region warehouse, office and supply chain.
Also on the drawing board are plans to build a new factory — to expand its current range of manufactured PFF products. Total capex for the buildings is estimated at RM50 million.
In addition to expanding its product range, Pantech is focused on tapping new export markets. Most recently, Pantech gained approval from the EU Commission to sell its products in the euro zone without attracting the hefty anti-dumping duties currently levied on many countries, including Malaysia.
It has already made promising inroads. The euro zone market, which is relatively protected, offers vast potential. At the same time, Pantech is working hard to further penetrate the Middle East markets, including oil-rich Saudi Arabia.
If all goes to plan, sales to these new markets will boost utilisation at the company's existing manufacturing plant, for a start. Utilisation has fallen to about 55% currently, due to weak global demand, especially in the US. Success will also diversify the company's geographical risks going forward.
Another of the company's main strategies is to move towards higher-value products, such as corrosion resistant PFF for the subsea segment of the oil and gas industry.
Low valuations offer upside gains
Pantech's shares are very attractively valued against our estimated growth for the company as well as the broader market's average valuations. This promises good capital gains potential as the stock is gradually rerated upwards.
The stock is now trading at only 6.7 times our estimated earnings of 15 sen per share for FY10. Earnings are forecast to grow a further 18% to RM66.5 million in FY11, underpinned by the global economic recovery.
Thus, Pantech's prevailing valuations compare favourably to its prospective growth rates as well as the average valuations for oil and gas stocks (estimated at about 10-12 times price-to-earnings or P/E) and the broader market (about 17-18 times P/E).
Pantech also pays higher-than-market average yields. Based on estimated dividends totalling three sen per share for the current financial year, shareholders will earn a fairly attractive net yield of 3%. Dividends are expected to grow further in line with Pantech's earnings expansion going forward.
Note: This report is brought to you by Asia Analytica Sdn Bhd, a licensed investment adviser. Please exercise your own judgment or seek professional advice for your specific investment needs. We are not responsible for your investment decisions. Our shareholders, directors and employees may have positions in any of the stocks mentioned.
http://www.theedgemalaysia.com/business-news/151411-pantech-strong-growth-prospects-on-cheap-valuations.html
Tags: InsiderAsia | Pantech
Written by InsiderAsia
Thursday, 15 October 2009 16:50
WE are upbeat on Pantech's (RM1) prospects going forward. The company has built a strong business franchise, reputation and track record as one of the largest one-stop centres for PFF (pipes, fittings and flow control products) solutions in the country.
In addition to a strong hold on the domestic market, Pantech has also made inroads overseas with its range of manufactured carbon steel fittings. Its customised long bends, in particular, have enjoyed good demand abroad including in the US, Asia and the Middle East.
Pantech maintains good profitability
Demand for PFF has demonstrated resilience over the past few quarters amid uncertainties in the global economy. And despite the sharp plunge in prices for steel products, Pantech is still running a very profitable business. This is underscored by its earnings results for the first half (1H) of the financial year ending February 2010.
Sales were up by about 2% year-on-year (y-o-y), totalling RM243.3 million, in 1HFY10. Even though net profit dropped 16% y-o-y to RM28.3 million, the results were admirable given the sharp drop in prices for steel products since hitting peak levels in mid-2008. To be sure, Pantech is no longer earning "abnormal" margins/profits due to record prices. But the underlying fundamentals of the business remain very much intact.
Sales for the manufacturing arm, the bulk of which were for export, fell sharply in 1HFY10 as a result of the global downturn. Demand in the US, one of its biggest markets, in particular was weak.
Positively, strong demand in the local market picked up the slack. The company's trading arm remains its biggest earnings generator, servicing, primarily, the domestic oil and gas sector as well as palm oil and refinery, petrochemical and oleo-chemicals industries.
The oil and gas sector is estimated to account for about 70% of Pantech's sales and will be the key driver for growth going forward.
Still very much a growing company
The company is in the process of acquiring a piece of land totaling some 20 acres in the Pasir Gudang Industrial Area, Johor, for RM12.85 million. The land will be used for its new corporate office and warehouse, which will consolidate its southern region warehouse, office and supply chain.
Also on the drawing board are plans to build a new factory — to expand its current range of manufactured PFF products. Total capex for the buildings is estimated at RM50 million.
In addition to expanding its product range, Pantech is focused on tapping new export markets. Most recently, Pantech gained approval from the EU Commission to sell its products in the euro zone without attracting the hefty anti-dumping duties currently levied on many countries, including Malaysia.
It has already made promising inroads. The euro zone market, which is relatively protected, offers vast potential. At the same time, Pantech is working hard to further penetrate the Middle East markets, including oil-rich Saudi Arabia.
If all goes to plan, sales to these new markets will boost utilisation at the company's existing manufacturing plant, for a start. Utilisation has fallen to about 55% currently, due to weak global demand, especially in the US. Success will also diversify the company's geographical risks going forward.
Another of the company's main strategies is to move towards higher-value products, such as corrosion resistant PFF for the subsea segment of the oil and gas industry.
Low valuations offer upside gains
Pantech's shares are very attractively valued against our estimated growth for the company as well as the broader market's average valuations. This promises good capital gains potential as the stock is gradually rerated upwards.
The stock is now trading at only 6.7 times our estimated earnings of 15 sen per share for FY10. Earnings are forecast to grow a further 18% to RM66.5 million in FY11, underpinned by the global economic recovery.
Thus, Pantech's prevailing valuations compare favourably to its prospective growth rates as well as the average valuations for oil and gas stocks (estimated at about 10-12 times price-to-earnings or P/E) and the broader market (about 17-18 times P/E).
Pantech also pays higher-than-market average yields. Based on estimated dividends totalling three sen per share for the current financial year, shareholders will earn a fairly attractive net yield of 3%. Dividends are expected to grow further in line with Pantech's earnings expansion going forward.
Note: This report is brought to you by Asia Analytica Sdn Bhd, a licensed investment adviser. Please exercise your own judgment or seek professional advice for your specific investment needs. We are not responsible for your investment decisions. Our shareholders, directors and employees may have positions in any of the stocks mentioned.
http://www.theedgemalaysia.com/business-news/151411-pantech-strong-growth-prospects-on-cheap-valuations.html
Saturday 17 October 2009
Public Bank on track to meet full-year estimates
Update Public Bank on track to meet full-year estimates
Tags: 52-week high | Cambodian Public Bank plc | Islamic banking business | Maybank IB | OPR | OSK Research | Public Bank Bhd | Public Islamic Bank Bhd | Tan Sri Tay Ah Lek | third quarter
Written by Ellina Badri
Friday, 16 October 2009 00:42
KUALA LUMPUR: PUBLIC BANK BHD [] surged to its 52-week high of RM10.70 on Oct 15, the highest it has been since May 2008, following the release of its third quarter ended Sept 30, 2009 (3QFY09) results, which put it on track to meet full-year consensus estimates.
Its net profit in 3QFY09 rose 3.68% year-on-year (y-o-y) to RM639.05 million on the back of strong loans and deposit growth and stable asset quality, coming in slightly above analysts’ expectations of a growth of between 2% and 3%.
Upon mild profit taking, the stock closed unchanged at RM10.62 on Oct 15, with 2.3 million shares done. Its foreign shares rose two sen to RM10.62 on 681,400 shares traded.
In a statement on Oct 15, the country’s third-largest lender said the growth in profit was despite the negative impact of the drop in Bank Negara Malaysia’s overnight policy rate (OPR) and the slowing economy.
Revenue, however, fell 12.5% to RM2.44 billion in 3QFY09 from a year earlier, while earnings per share grew to 18.52 sen from 18.37 sen. It did not declare any dividend.
Its annualised net return on equity stood at 25.5%.
For the nine months to Sept 30, 2009, net profit declined 4.66% to RM1.84 billion from a year earlier, as its results in the previous corresponding period had included a one-off goodwill income of RM200 million from ING Asia/Pacific Ltd in respect to a regional strategic alliance on bancassurance distribution, it said.
It said excluding the goodwill, the group’s net profit rose 3.2% y-o-y during the nine-month period. Revenue dipped to RM7.22 billion from RM7.94 billion, while earnings per share declined to 53.66 sen from 57.44 sen.
If it maintains the profit momentum for the rest of the financial year, its net profit for FY09 could come in at RM2.45 billion, higher than consensus estimates of RM2.38 billion.
In a note on Oct 15, OSK Research said Public Bank’s annualised nine-month results were largely within its and consensus full-year forecasts, accounting for 73% and 77% of consensus estimates.
OSK and Maybank Investment Bank had both revised upwards its FY09 earnings forecasts for Public Bank ahead of its 3QFY09 results announcement.
OSK now expects the bank’s net profit to grow 5.9% to RM2.58 billion, after raising its loans growth estimates to 15% from 13.4% previously, while Maybank IB has upped its FY09 net profit forecast by 3%, expecting recurring net profit to come in at RM2.69 billion for the full year after adjusting for lower loan loss provisions.
Pre-tax profit at its local commercial bank, Public Bank Bhd, was lower at RM1.92 billion compared with RM2.13 billion in the nine months to Sept 30, 2008, mainly due to the goodwill as well as from the vesting of its Islamic banking business to its unit, Public Islamic Bank Bhd in November 2008.
Pre-tax profit contributions from its overseas operations fell by 35.9% to RM186.8 million, also due to the goodwill from ING.
Commenting on its higher nine-month net profit, the bank said: “The profit improvement was primarily due to higher net interest and financing income by RM273.1 million, which grew 8.6%, and higher other operating income by RM92.7 million, or 9.9%.”
It said the higher net interest and financing income, despite the negative impact arising from the reduction in OPR three times since November 2008, was attributable to the sustained high rate of growth in both quality loans and customer deposits, whilst asset quality remained stable.
It also said its higher other operating income was mainly due to higher investment income from securities held, as well as higher foreign exchange profit during the nine months to Sept 30.
“These were partially offset by higher other operating expenses by RM225.2 million and higher loan loss and impairment loss allowances by RM87.8 million resulting from higher business volumes,” it said.
It added the higher other operating expenses was due to an increase in personnel costs from the growth of its marketing sales force, while the higher loan loss allowance was partly due to higher general allowance by RM41.9 million, resulting from higher loan growth achieved during the nine month period.
Public Bank said total loans, advances and financing rose 10.7% year-on-year to RM133.6 billion in the nine months to Sept 30.
Its annualised loans growth and core deposit growth was 14.3% and 19.5%, respectively, ahead of the banking system’s annualised growth of 6.8% and 6.3%, it said.
“We are on track to achieve the targeted 14%-15% loan growth for 2009, supported by demand from small and medium-sized business enterprises and increases in housing loans and motor vehicle hire purchase financing,” the bank’s managing director and chief executive officer, Tan Sri Tay Ah Lek said.
Despite the above-average loans growth, the banking group maintained its asset quality, with its net non-performing loans ratio strengthening to 0.82% as at Sept 30 compared with 0.87% a year earlier, compared with the industry’s net NPL ratio of 2.1% as at end-August, the bank said.
It said loan loss coverage stood at 171%, from 160% in FY08, due to additional general allowance, amounting to RM1.99 billion, set aside for its loans growth.
The bank’s risk-weighted capital and core capital ratios stood at 11% and 12.1%, respectively, it said.
Meanwhile, the bank said total customer deposits grew 12.6% to RM182.7 billion, as core customer deposits rose 14.6% to RM128.8 billion.
Its overseas operations also contributed to deposits growth, especially Public Financial Holdings Group in Hong Kong and Cambodian Public Bank plc, which reported deposits growth of 15.6% and 53.6%, respectively.
Its unit trust and fund management business’s net asset value of funds under management grew 45% y-o-y to RM33.8 billion in the nine months to Sept 30, and recorded total unit trust sales of RM6.1 billion, while its bancassurance business reported a 64% increase in sales.
On the group’s prospects, Tay said: “As the global recession begins to recede and with recovery on the horizon, the outlook for the banking industry is expected to improve. However, margins continue to be under pressure due to continued intense competition.”
http://www.theedgemalaysia.com/business-news/151451-update-public-bank-on-track-to-meet-full-year-estimates.html
Tags: 52-week high | Cambodian Public Bank plc | Islamic banking business | Maybank IB | OPR | OSK Research | Public Bank Bhd | Public Islamic Bank Bhd | Tan Sri Tay Ah Lek | third quarter
Written by Ellina Badri
Friday, 16 October 2009 00:42
KUALA LUMPUR: PUBLIC BANK BHD [] surged to its 52-week high of RM10.70 on Oct 15, the highest it has been since May 2008, following the release of its third quarter ended Sept 30, 2009 (3QFY09) results, which put it on track to meet full-year consensus estimates.
Its net profit in 3QFY09 rose 3.68% year-on-year (y-o-y) to RM639.05 million on the back of strong loans and deposit growth and stable asset quality, coming in slightly above analysts’ expectations of a growth of between 2% and 3%.
Upon mild profit taking, the stock closed unchanged at RM10.62 on Oct 15, with 2.3 million shares done. Its foreign shares rose two sen to RM10.62 on 681,400 shares traded.
In a statement on Oct 15, the country’s third-largest lender said the growth in profit was despite the negative impact of the drop in Bank Negara Malaysia’s overnight policy rate (OPR) and the slowing economy.
Revenue, however, fell 12.5% to RM2.44 billion in 3QFY09 from a year earlier, while earnings per share grew to 18.52 sen from 18.37 sen. It did not declare any dividend.
Its annualised net return on equity stood at 25.5%.
For the nine months to Sept 30, 2009, net profit declined 4.66% to RM1.84 billion from a year earlier, as its results in the previous corresponding period had included a one-off goodwill income of RM200 million from ING Asia/Pacific Ltd in respect to a regional strategic alliance on bancassurance distribution, it said.
It said excluding the goodwill, the group’s net profit rose 3.2% y-o-y during the nine-month period. Revenue dipped to RM7.22 billion from RM7.94 billion, while earnings per share declined to 53.66 sen from 57.44 sen.
If it maintains the profit momentum for the rest of the financial year, its net profit for FY09 could come in at RM2.45 billion, higher than consensus estimates of RM2.38 billion.
In a note on Oct 15, OSK Research said Public Bank’s annualised nine-month results were largely within its and consensus full-year forecasts, accounting for 73% and 77% of consensus estimates.
OSK and Maybank Investment Bank had both revised upwards its FY09 earnings forecasts for Public Bank ahead of its 3QFY09 results announcement.
OSK now expects the bank’s net profit to grow 5.9% to RM2.58 billion, after raising its loans growth estimates to 15% from 13.4% previously, while Maybank IB has upped its FY09 net profit forecast by 3%, expecting recurring net profit to come in at RM2.69 billion for the full year after adjusting for lower loan loss provisions.
Pre-tax profit at its local commercial bank, Public Bank Bhd, was lower at RM1.92 billion compared with RM2.13 billion in the nine months to Sept 30, 2008, mainly due to the goodwill as well as from the vesting of its Islamic banking business to its unit, Public Islamic Bank Bhd in November 2008.
Pre-tax profit contributions from its overseas operations fell by 35.9% to RM186.8 million, also due to the goodwill from ING.
Commenting on its higher nine-month net profit, the bank said: “The profit improvement was primarily due to higher net interest and financing income by RM273.1 million, which grew 8.6%, and higher other operating income by RM92.7 million, or 9.9%.”
It said the higher net interest and financing income, despite the negative impact arising from the reduction in OPR three times since November 2008, was attributable to the sustained high rate of growth in both quality loans and customer deposits, whilst asset quality remained stable.
It also said its higher other operating income was mainly due to higher investment income from securities held, as well as higher foreign exchange profit during the nine months to Sept 30.
“These were partially offset by higher other operating expenses by RM225.2 million and higher loan loss and impairment loss allowances by RM87.8 million resulting from higher business volumes,” it said.
It added the higher other operating expenses was due to an increase in personnel costs from the growth of its marketing sales force, while the higher loan loss allowance was partly due to higher general allowance by RM41.9 million, resulting from higher loan growth achieved during the nine month period.
Public Bank said total loans, advances and financing rose 10.7% year-on-year to RM133.6 billion in the nine months to Sept 30.
Its annualised loans growth and core deposit growth was 14.3% and 19.5%, respectively, ahead of the banking system’s annualised growth of 6.8% and 6.3%, it said.
“We are on track to achieve the targeted 14%-15% loan growth for 2009, supported by demand from small and medium-sized business enterprises and increases in housing loans and motor vehicle hire purchase financing,” the bank’s managing director and chief executive officer, Tan Sri Tay Ah Lek said.
Despite the above-average loans growth, the banking group maintained its asset quality, with its net non-performing loans ratio strengthening to 0.82% as at Sept 30 compared with 0.87% a year earlier, compared with the industry’s net NPL ratio of 2.1% as at end-August, the bank said.
It said loan loss coverage stood at 171%, from 160% in FY08, due to additional general allowance, amounting to RM1.99 billion, set aside for its loans growth.
The bank’s risk-weighted capital and core capital ratios stood at 11% and 12.1%, respectively, it said.
Meanwhile, the bank said total customer deposits grew 12.6% to RM182.7 billion, as core customer deposits rose 14.6% to RM128.8 billion.
Its overseas operations also contributed to deposits growth, especially Public Financial Holdings Group in Hong Kong and Cambodian Public Bank plc, which reported deposits growth of 15.6% and 53.6%, respectively.
Its unit trust and fund management business’s net asset value of funds under management grew 45% y-o-y to RM33.8 billion in the nine months to Sept 30, and recorded total unit trust sales of RM6.1 billion, while its bancassurance business reported a 64% increase in sales.
On the group’s prospects, Tay said: “As the global recession begins to recede and with recovery on the horizon, the outlook for the banking industry is expected to improve. However, margins continue to be under pressure due to continued intense competition.”
http://www.theedgemalaysia.com/business-news/151451-update-public-bank-on-track-to-meet-full-year-estimates.html
CIMB Research keeps Outperform call on Public Bank
CIMB Research keeps Outperform call on Public Bank
Written by Joseph Chin
Friday, 16 October 2009 09:54
KUALA LUMPUR: CIMB Equities Research reaffirmed its Outperform recommendation on Public Bank following its superior 3Q09 performance with double-digit loan growth, benign non-performing loans (NPL) ratio and returns on equity (ROE) of 25.7%.
"It remains our pick of the big-cap Malaysian banks. Potential share price triggers include ROEs of 28%-29% for FY10-11; iincreased contributions from Greater China, and new growth avenue in bancassurance," it said.
CIMB said on Friday, Oct 16 another plus factor was Public Bank was the bank's dividend yield of 9%-10%, the highest in the sector.
On Thursday, Public Bank posted net profit of RM639.04 million compared with the RM616.34 million a year ago. Revenue was RM2.438 billion, a slight decline from the RM2.79 billion a year ago. Earnings per share were 18.52 sen compared with 18.37 sen.
For the nine-months ended Sept 30, 2009, net profit declined to RM1.839 billion compared with RM1.927 billion. Revenue slipped to RM7.22 billion from RM7.94 billion.
"Public Bank's nine-months net profit slipped 4.6% to RM1.84 billion, which is within expectations, being 72% of our full-year forecast and 76% of consensus. As expected, the bank did not declare a dividend for the quarter, keeping the YTD dividend per share at 30 sen.
"We are tweaking our FY09-11 earnings up by 0.2-0.6% while retaining our target price of RM15.00 as we continue to apply a 10% premium over our DDM value (unchanged cost of equity of 14.3% and interim dividend growth rate of 11.4%). The stock remains an Outperform," it said.
http://www.theedgemalaysia.com/business-news/151460-cimb-research-keeps-outperform-call-on-public-bank.html
Written by Joseph Chin
Friday, 16 October 2009 09:54
KUALA LUMPUR: CIMB Equities Research reaffirmed its Outperform recommendation on Public Bank following its superior 3Q09 performance with double-digit loan growth, benign non-performing loans (NPL) ratio and returns on equity (ROE) of 25.7%.
"It remains our pick of the big-cap Malaysian banks. Potential share price triggers include ROEs of 28%-29% for FY10-11; iincreased contributions from Greater China, and new growth avenue in bancassurance," it said.
CIMB said on Friday, Oct 16 another plus factor was Public Bank was the bank's dividend yield of 9%-10%, the highest in the sector.
On Thursday, Public Bank posted net profit of RM639.04 million compared with the RM616.34 million a year ago. Revenue was RM2.438 billion, a slight decline from the RM2.79 billion a year ago. Earnings per share were 18.52 sen compared with 18.37 sen.
For the nine-months ended Sept 30, 2009, net profit declined to RM1.839 billion compared with RM1.927 billion. Revenue slipped to RM7.22 billion from RM7.94 billion.
"Public Bank's nine-months net profit slipped 4.6% to RM1.84 billion, which is within expectations, being 72% of our full-year forecast and 76% of consensus. As expected, the bank did not declare a dividend for the quarter, keeping the YTD dividend per share at 30 sen.
"We are tweaking our FY09-11 earnings up by 0.2-0.6% while retaining our target price of RM15.00 as we continue to apply a 10% premium over our DDM value (unchanged cost of equity of 14.3% and interim dividend growth rate of 11.4%). The stock remains an Outperform," it said.
http://www.theedgemalaysia.com/business-news/151460-cimb-research-keeps-outperform-call-on-public-bank.html
Nam Cheong delivers vessel worth US$22.5m
Nam Cheong delivers vessel worth US$22.5m
Tags: Nam Cheong Dockyard Sdn Bhd
Written by Financial Daily
Friday, 16 October 2009 11:21
HO CHI MINH CITY: Nam Cheong Dockyard Sdn Bhd recently signed a deal with Petroleum Technical Services Corporation (PTSC) here to mark the delivery of an offshore support vessel (OSV) valued at US$22.5 million (RM75.6 million) before the end of the month.
Headquartered in Hanoi, PTSC, a unit of the Vietnamese state-owned Vietnam Oil & Gas Group, provides oil and gas technical services in Vietnam and internationally.
“Nam Cheong is not new in the Vietnam market. This year alone, we have sold three vessels to buyers here. This is in addition to six other vessels built by us that are operating in the Vietnam waters currently,” said Nam Cheong managing director Leong Seng Keat.
The agreement was signed between Nam Cheong’s executive chairman Datuk Tiong Su Kouk and PTSC general director Nguyen Hung Bung. YINSON HOLDINGS BHD [] managing director Lim Han Weng witnessed the ceremony. Yinson was the shipbroker of the deal.
Miri-based Nam Cheong specialises in building OSVs. It built and sold 12 vessels last year.
This article appeared in The Edge Financial Daily, October 16, 2009.
Tags: Nam Cheong Dockyard Sdn Bhd
Written by Financial Daily
Friday, 16 October 2009 11:21
HO CHI MINH CITY: Nam Cheong Dockyard Sdn Bhd recently signed a deal with Petroleum Technical Services Corporation (PTSC) here to mark the delivery of an offshore support vessel (OSV) valued at US$22.5 million (RM75.6 million) before the end of the month.
Headquartered in Hanoi, PTSC, a unit of the Vietnamese state-owned Vietnam Oil & Gas Group, provides oil and gas technical services in Vietnam and internationally.
“Nam Cheong is not new in the Vietnam market. This year alone, we have sold three vessels to buyers here. This is in addition to six other vessels built by us that are operating in the Vietnam waters currently,” said Nam Cheong managing director Leong Seng Keat.
The agreement was signed between Nam Cheong’s executive chairman Datuk Tiong Su Kouk and PTSC general director Nguyen Hung Bung. YINSON HOLDINGS BHD [] managing director Lim Han Weng witnessed the ceremony. Yinson was the shipbroker of the deal.
Miri-based Nam Cheong specialises in building OSVs. It built and sold 12 vessels last year.
This article appeared in The Edge Financial Daily, October 16, 2009.
Malaysia a stock-pickers’ market
Malaysia a stock-pickers’ market
Tags: Deutsche Bank | Stock-pickers | Valuations
Written by Financial Daily
Friday, 16 October 2009 11:23
THIS is the continuation of a report by Deutsche Bank which appeared yesterday. This last part of the report looks at the challenging valuations and the stock picks in Malaysia.
Overshadowed by Asean markets
Still expensive — does not deserve a premium rating
Structural and political challenges aside, the market’s near-term obstacle is its stretched valuation. The market is currently trading at a 3%-11% premium to the region at 17.7x and 15.2x PER 2009E and 2010E, respectively.
This appears to be at the upper end of the market’s post-Asian crisis valuation range of 12.5-18x forward PER. On a P/B basis, the market is trading at 2-2.1x for the same period, again at a 5%-11% premium against the region.
Within an Asean context, Malaysia trades at the highest PER valuation and offers the second lowest, after Indonesia, net dividend yield at 3% for 2010.
Not surprising then that Indonesia and Thailand have both enjoyed net fund inflows given a combination of attractive valuations (Thailand at 11.5x PER 2010 and Indonesia at 13.8x PER) and strong revision ratios.
In fact, despite mixed political news flow in Thailand, the market continues to maintain a high level of foreign ownership at c. 33% (vs 21% in Malaysia). The positive news is that earnings risk has abated since 1Q.
However, in a regional context, Malaysia is in sharp contrast to say a market like Korea where earnings revision has been strong. Malaysia lags in EPS and target price revision momentum. This clearly explains why the market is still placed in the region’s low beta “bucket”.
Significant improvement in 2Q; earnings expectations raised
Of the 21 Deutsche Bank-covered stocks which reported, 61% were in line with expectations, 29% above and 10% below. The results were far better than the first quarter.
Financial sector came through unscathed — positive; PLANTATION [] sector rebounds
The star of the reporting season was the banking sector. Most of the banks reported stronger-than-expected earnings driven largely by higher non-interest income and lower loan loss provisions. Again, this tells us that the Malaysian credit cycle is turning out to be less severe than anticipated.
The plantation sector too had a reasonable quarter after what was a very weak 1Q production season given the effects of severe floods in East Malaysia. 2Q was supported by stronger CPO prices and production lifting, though marginal.
The gaming companies did not have a weak quarter as many had originally expected. Domestic consumption trends held up. There was slight weakness in results from companies like DiGi.Com (RM21.66, hold, target price RM19.80) which had the slowest quarter in more than six years) and KNM (75 sen, buy, target price RM1.10) which faced margin pressure.
The trajectory for earnings recovery is now far more convincing after the 2Q reporting season. We believe the lumpy writedowns as a result of diminution in value of major investments are now largely behind the market. Leading indicators in the economy have also been encouraging with a bottoming in industrial production, electricity sales, and loan approval and applications.
Post-2Q results: EPS growth at -8.6% and 17% for 2009 and 2010
Prior to the reporting season, we were forecasting EPS growth of -7.1% for 2009 and 9.9% for 2010, respectively. Today, these forecasts have been revised to -8.6% and 17.4%, respectively. The stronger growth outlook for 2010 was largely due to EPS revisions for the financial, plantation, CONSTRUCTION [] and gaming sectors.
Domestic liquidity; top-down index target suggests 13% upside
Domestic funds like the Employees Provident Fund (EPF) and PNB have been actively buying in the market, especially where foreign interest has waned. This explains why foreign ownership in the market has stayed flat at around 20%-21% despite the recovery in the market.
This trend is likely to persist in the near term, thereby keeping market valuations lofty. Our 12-month bottom-up index target for Deutsche Bank’s universe of stocks suggests an MSCI target of 453 (0.4% upside) and an FBM KLCI target of 1,213 (+0.4%). This compares against the consensus bottom-up target of 1,234, which suggests upside of 2.2%. We believe the key difference between the Street and our estimates is our slightly more conservative view on GDP growth estimates, currently at -3% and 4% for 2009 and 2010, respectively.
Putting this in the context of Asia, our regional strategist, Niklas Olausson, expects MSCI Asia ex-Japan to reach 522, suggesting upside of 18.2%.
With most markets expected to offer upside of more than 15%, Malaysia is naturally an underweight, along with Hong Kong, India, and the Philippines. The implied top-down valuation of 17.2x 2010 PER is at the upper end of Malaysia’s historical trading range. By using our bottom-up approach, with an implied valuation of 15.3x PER, this puts Malaysia in the “fair” territory, the mid-range of its post-Asian crisis PER band.
Local news flow can drive interest in the market despite demanding valuations
There have been times when the market outperforms the region momentarily on domestic news flow, ignoring valuations. In recent years, market-friendly initiatives, such as the first stage of GLC restructuring, have ushered renewed interest in the market.
Similarly, the property market liberalisation in 2007 prompted a re-rating of the smaller- to mid-cap sectors. We think a similar re-rating is likely to occur if and only when the market is convinced of three key issues.
First, that Barisan Nasional is gaining traction with the voter base, hence providing the market with renewed confidence that the corporate landscape or regulatory environment does not run the risk of significant changes under a new party. Secondly, sustainable signs that structural changes made are bearing fruit. Thirdly, potential sizeable new listings to force attention back into Malaysia, as discussed earlier.
Positioning into the final quarter of 2009/early 2010
We believe most would agree that Malaysia has been a difficult market for most of 2009. Often the market has been referred to as “Asia’s rounding error”, “Asia’s lost child” and “Asia’s most unloved market”, etc. And indeed it has been the worst-performing market in Asia ex-Japan year to date. (My comment: Probably the best piece of news in this article.)
But we also argue that it does not mean the entire market is a write-off. Far from it, we believe. In fact, Malaysia has always been a stock-pickers’ market. We believe it is important to select stocks for the final quarter of 2009 or early 2010 with the following pointers in mind:
• To focus on companies with growth prospects outside Malaysia, and especially those with an increasingly strong Asean/regional footprint; for example CIMB, Genting and IJM Corp.
• To focus on companies that have structurally transformed themselves by utilising improved systems and infrastructure to take advantage of a more robust economic environment next year; for example, AMMB.
• Returns being the priority of top management and having the ability to execute on the plans. Many Malaysian companies place significant emphasis on enhancing shareholders’ return but very few actually execute on them with a structured plan. Companies that have articulated their returns policies, and where we have a high degree of comfort of execution are Public Bank (though a hold), KL Kepong (has consistently paid 50% dividend payout ratio in the last four years) and CIMB.
• To focus on companies that continue to generate strong cash flows and are still dominant in their industry, ideally not heavily reliant on the domestic market for growth; for example KLK.
• Avoid companies that are heavily reliant on government contracts — political news flow is likely to stay volatile in the near term.
• Quality stocks tend to hold their valuation premiums, defying fundamentals at times — largely due to scarcity reasons and often, liquidity. These include companies such as Public Bank, IJM Corp and IOI Corp (RM5.21, hold, target price RM5.05).
Risks to our underweight call on the market:
The biggest risks to our Underweight call on the market fall into three areas.
The first risk is better-than-expected macro indicators as a result of the second stimulus package and improvements in domestic consumption trends. The second risk is that market liberalisation/structural change measures surprise the market. The last risk is a sudden collapse in neighbouring markets, such as Indonesia, prompting a sudden surge of liquidity into low-beta markets such as Malaysia.
This article appeared in The Edge Financial Daily, October 16, 2009.
Latexx 17.10.2009
Valuation
http://spreadsheets.google.com/pub?key=tGjkSMyCWNewTHtuEfqzoVg&output=html
Its latest quarterly Q2 '09 result:
qtr EPS = 5.86 sen
annualised EPS = 4 x 5.86 = 23.44 sen
At today's price of $2.40, its PE (based on annualised EPS)
= 2.40/0.2344
= 10.24
Latexx is the 5th largest glove company in Malaysia. Given its relatively smaller size, its growth is anticipated to be faster than the bigger glove companies (Topglove, Supermax) in the next 2 years.
Kossan's share price is playing catch-up with the other companies PE valuations.
Hartalega appears richly valued at its present price and market capitalization.
Hai-O 17.10.2009
http://spreadsheets.google.com/pub?key=t44jTv4fYF_pLfGhtHJN8aA&output=html
This share has done well the last 2 years. It is a multi-bagger.
Patience and confidence go hand in hand with successful investing.
As you invest in your personal portfolio in the next few months, always remember your long-term focus. Build wealth in the stock market over a five-year and longer horizon. Patience and confidence go hand in hand with successful investing.
Behavior of the Stock Market
The behavior of Stock Market and the prices of stocks depend greatly on the speculation of the investors. So, over- reactions and wrong speculation can give rise to irrational behavior of the Stock Market. Excessive optimistic speculation of future prospects can raise the prices of stocks to an extreme high and excessive pessimism on the part of the investors can result in extremely low prices. Stock Market behavior is also affected by the psychology of “Group Thinking”. The thinking of a majority group of people many times influences others to think in the same line and the Stock Market behavior gets naturally affected.
Sometimes the Stock Market behavior is affected by rumors and mass panic. The prices of the stocks fluctuate tremendously by the economic use even if it has nothing to do with values of stocks and securities.
So, it is extremely difficult to make predictions about the Stock Market and the inexperienced investors who are not that much interested in financial analysis of stocks; rarely get the financial assistance from the Stock Market at the time of need.
Sometimes the Stock Market behavior is affected by rumors and mass panic. The prices of the stocks fluctuate tremendously by the economic use even if it has nothing to do with values of stocks and securities.
So, it is extremely difficult to make predictions about the Stock Market and the inexperienced investors who are not that much interested in financial analysis of stocks; rarely get the financial assistance from the Stock Market at the time of need.
Dollar to Hit 50 Yen, Cease as Reserve, Sumitomo Says
Dollar to Hit 50 Yen, Cease as Reserve, Sumitomo Says
By Shigeki Nozawa
Oct. 15 (Bloomberg) -- The dollar may drop to 50 yen next year and eventually lose its role as the global reserve currency, Sumitomo Mitsui Banking Corp.’s chief strategist said, citing trading patterns and a likely double dip in the U.S. economy.
“The U.S. economy will deteriorate into 2011 as the effects of excess consumption and the financial bubble linger,” said Daisuke Uno at Sumitomo Mitsui, a unit of Japan’s third- biggest bank. “The dollar’s fall won’t stop until there’s a change to the global currency system.”
The dollar last week dropped to the lowest in almost a year against the yen as record U.S. government borrowings and interest rates near zero sapped demand for the U.S. currency. The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, has fallen 15 percent from its peak this year to as low as 75.211 today, the lowest since August 2008.
The gauge is about five points away from its record low in March 2008, and the dollar is 2.5 percent away from a 14-year low against the yen.
“We can no longer stop the big wave of dollar weakness,” said Uno, who correctly predicted the dollar would fall under 100 yen and the Dow Jones Industrial Average would sink below 7,000 after the bankruptcy of Lehman Brothers Holdings Inc. last year. If the U.S. currency breaks through record levels, “there will be no downside limit, and even coordinated intervention won’t work,” he said.
China, India, Brazil and Russia this year called for a replacement to the dollar as the main reserve currency. Hossein Ghazavi, Iran’s deputy central bank chief, said on Sept. 13 the euro has overtaken the dollar as the main currency of Iran’s foreign reserves.
Elliott Wave
The greenback is heading for the trough of a super-cycle that started in August 1971, Uno said, referring to the Elliot Wave theory, which holds that market swings follow a predictable five-stage pattern of three steps forward, two steps back.
The dollar is now at wave five of the 40-year cycle, Uno said. It dropped to 92 yen during wave one that ended in March 1973. The dollar will target 50 yen during the current wave, based on multiplying 92 with 0.764, a number in the Fibonacci sequence, and subtracting from the 123.17 yen level seen in the second quarter of 2007, according to Uno.
The Elliot Wave was developed by accountant Ralph Nelson Elliott during the Great Depression. Wave sizes are often related by a series of numbers known as the Fibonacci sequence, pioneered by 13th century mathematician Leonardo Pisano, who discerned them from proportions found in nature.
Uno said after the dollar loses its reserve currency status, the U.S., Europe and Asia will form separate economic blocs. The International Monetary Fund’s special drawing rights may be used as a temporary measure, and global currency trading will shrink in the long run, he said.
To contact the reporter on this story: Shigeki Nozawa in Tokyo at snozawa1@bloomberg.net.
Last Updated: October 15, 2009 03:34 EDT
http://bloomberg.com/apps/news?pid=20601109&sid=a_A5nqmw9Dq8
By Shigeki Nozawa
Oct. 15 (Bloomberg) -- The dollar may drop to 50 yen next year and eventually lose its role as the global reserve currency, Sumitomo Mitsui Banking Corp.’s chief strategist said, citing trading patterns and a likely double dip in the U.S. economy.
“The U.S. economy will deteriorate into 2011 as the effects of excess consumption and the financial bubble linger,” said Daisuke Uno at Sumitomo Mitsui, a unit of Japan’s third- biggest bank. “The dollar’s fall won’t stop until there’s a change to the global currency system.”
The dollar last week dropped to the lowest in almost a year against the yen as record U.S. government borrowings and interest rates near zero sapped demand for the U.S. currency. The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, has fallen 15 percent from its peak this year to as low as 75.211 today, the lowest since August 2008.
The gauge is about five points away from its record low in March 2008, and the dollar is 2.5 percent away from a 14-year low against the yen.
“We can no longer stop the big wave of dollar weakness,” said Uno, who correctly predicted the dollar would fall under 100 yen and the Dow Jones Industrial Average would sink below 7,000 after the bankruptcy of Lehman Brothers Holdings Inc. last year. If the U.S. currency breaks through record levels, “there will be no downside limit, and even coordinated intervention won’t work,” he said.
China, India, Brazil and Russia this year called for a replacement to the dollar as the main reserve currency. Hossein Ghazavi, Iran’s deputy central bank chief, said on Sept. 13 the euro has overtaken the dollar as the main currency of Iran’s foreign reserves.
Elliott Wave
The greenback is heading for the trough of a super-cycle that started in August 1971, Uno said, referring to the Elliot Wave theory, which holds that market swings follow a predictable five-stage pattern of three steps forward, two steps back.
The dollar is now at wave five of the 40-year cycle, Uno said. It dropped to 92 yen during wave one that ended in March 1973. The dollar will target 50 yen during the current wave, based on multiplying 92 with 0.764, a number in the Fibonacci sequence, and subtracting from the 123.17 yen level seen in the second quarter of 2007, according to Uno.
The Elliot Wave was developed by accountant Ralph Nelson Elliott during the Great Depression. Wave sizes are often related by a series of numbers known as the Fibonacci sequence, pioneered by 13th century mathematician Leonardo Pisano, who discerned them from proportions found in nature.
Uno said after the dollar loses its reserve currency status, the U.S., Europe and Asia will form separate economic blocs. The International Monetary Fund’s special drawing rights may be used as a temporary measure, and global currency trading will shrink in the long run, he said.
To contact the reporter on this story: Shigeki Nozawa in Tokyo at snozawa1@bloomberg.net.
Last Updated: October 15, 2009 03:34 EDT
http://bloomberg.com/apps/news?pid=20601109&sid=a_A5nqmw9Dq8
Your shares have advanced, good! A cause for prudent concern
A substantial rise in the market is at once a legitimate reason for satisfaction and a cause for prudent concern, but it may also bring a strong temptation toward imprudent action.
Your shares have advanced, good! You are richer than you were, good!
•But has the price risen too high, and should you think of selling?
•Or should you kick yourself for not having bought more shares when the level was lower?
•Or - worst thought of all - should you now give way to the bull-market atmosphere, become infected with the enthusiasm, the overconfidence and the greed of the great public (of which, after all, you are a part), and make larger and dangerous commitments?
Presented thus in print, the answer to the last question is a self-evident NO, but even the intelligent investor is likely to need considerable will power to keep from following the crowd.
It is for these reasons of human nature, even more than by calculation of financial gain or loss, that we favour some kind of mechanical method for varying the proportion of bonds to stocks in the investor's portfolio. The chief advantage, perhaps, is that such a formula will give him something to do.
As the market advances, he will from time to time make sales out of his stockholdings, putting the proceeds into bonds; as it declines he will reverse the procedure.
(For today's investor, the ideal strategy for pursuing this formula is rebalancing)
http://myinvestingnotes.blogspot.com/2008/10/market-fluctuations-of-investors.html
Your shares have advanced, good! You are richer than you were, good!
•But has the price risen too high, and should you think of selling?
•Or should you kick yourself for not having bought more shares when the level was lower?
•Or - worst thought of all - should you now give way to the bull-market atmosphere, become infected with the enthusiasm, the overconfidence and the greed of the great public (of which, after all, you are a part), and make larger and dangerous commitments?
Presented thus in print, the answer to the last question is a self-evident NO, but even the intelligent investor is likely to need considerable will power to keep from following the crowd.
It is for these reasons of human nature, even more than by calculation of financial gain or loss, that we favour some kind of mechanical method for varying the proportion of bonds to stocks in the investor's portfolio. The chief advantage, perhaps, is that such a formula will give him something to do.
As the market advances, he will from time to time make sales out of his stockholdings, putting the proceeds into bonds; as it declines he will reverse the procedure.
(For today's investor, the ideal strategy for pursuing this formula is rebalancing)
http://myinvestingnotes.blogspot.com/2008/10/market-fluctuations-of-investors.html
When you are caught in a market panic
In fact, the only rational thing to do is take courage and make buys. Being gutsy enough to act on our contrarian test - refusing to sell good stocks cheap because Wall Street and Main Street have lost faith for a few days - ensures that your earlier selling at better levels, or not at all, will prove appropriate.
It will be emotionally difficult to buy in a panic. those who can do so are demonstrably rational and therefore also calm enough to sell with discipline as the prior highs approached.
So, should you find yourself in the midst of a crisis in the future, remember:
•Do not engage in panic selling.
•Sit tight and stick to your strategy.
•If you are a long-term, buy-and-hold investor, do hold on.
•If you are an adventurous investor, follow your strategy to buy on dips.
Make sure your overall portfolio is designed to limit your potential losses during a substantial market decline.
It will be emotionally difficult to buy in a panic. those who can do so are demonstrably rational and therefore also calm enough to sell with discipline as the prior highs approached.
So, should you find yourself in the midst of a crisis in the future, remember:
•Do not engage in panic selling.
•Sit tight and stick to your strategy.
•If you are a long-term, buy-and-hold investor, do hold on.
•If you are an adventurous investor, follow your strategy to buy on dips.
Make sure your overall portfolio is designed to limit your potential losses during a substantial market decline.
Pro-active action in a panic or crash
When appropriate selling has left an investor with only a few, high-quality stocks, he can and should hold onto those gems and play through the difficult experience of a panic or crash. He will be holding only a relatively small portfolio, so his level of pain will be no worse than moderate.
Consequences must dominate Probabilities
In making decisions under conditions of uncertainty, the consequences must dominate the probabilities. We never know the future.
http://myinvestingnotes.blogspot.com/2008/10/consequences-must-dominate.html
http://myinvestingnotes.blogspot.com/2008/10/consequences-must-dominate.html
In any crisis, there will be opportunities.
How to value these companies' businesses today? This will be difficult. The earnings for the next few quarters will need to be tracked. Past earnings are historical and due to fundamental changes in the businesses of various companies, assessing the value of these companies based on historical earnings will be unwise.
However, some companies can be anticipated to do not too badly. These are traditionally in the defensive sectors of food and beverages, gambling, healthcare and utilities.
For other companies, particularly in the industrial, plantations, tradings, construction, and housing sectors, the future earnings will be difficult to project with any degree of certainty at present.
Yes, some of these companies might have been oversold in the general negative sentiment of the present market but one can only be very certain of this when the results of the next few quarters are known.
However, some companies can be anticipated to do not too badly. These are traditionally in the defensive sectors of food and beverages, gambling, healthcare and utilities.
For other companies, particularly in the industrial, plantations, tradings, construction, and housing sectors, the future earnings will be difficult to project with any degree of certainty at present.
Yes, some of these companies might have been oversold in the general negative sentiment of the present market but one can only be very certain of this when the results of the next few quarters are known.
Fifteen Things More Important Than Money
The Simple Dollar: “Fifteen Things More Important Than Money” plus 1 more
Fifteen Things More Important Than Money
Posted: 15 Oct 2009 01:00 PM PDT
Three and a half years ago, I was in a desperate debt situation. My lifestyle was tied desperately to spending far more than I was bringing in – and I was finally paying the consequences.
I had let money become the most important thing in my life. It drove all of my choices and decisions. It chose my career for me. It chose my specific job for me. It chose how I spent my free time – I did expensive things to escape from the debts and the pressure-filled work, usually with a device on my hip that chained me to that job.
I was desperate and unhappy. I was in a prison made of money – and I knew I had to escape it.
Today, I realize something much more compelling. Money is not the most important thing in life. In fact, in a healthy life, money often follows behind many other elements in your life. If you put your energy and time into other things more important than money, money will follow. It will find a way to work.
Here are fifteen things I’ve found that are more important than money.
Experiences
Hug someone. Kiss someone. Write someone a letter telling them how you feel. Run (or walk) a marathon. Spend all day making an exquisite meal and eat it by candlelight. Make love to someone. Face the thing you most fear right in the face. The rush you get from experiencing something amazing is one of the best parts of being human, and most of the time the financial cost is minimal.
Wisdom
If you think you know the answer, you’re far from wise. Keep learning. Wisdom comes from knowing how little you actually know. Spend some time learning something new, perhaps even becoming skilled at something. You’ll surprise yourself at what you gain, often far beyond the mere knowledge you hoped to attain.
Marriage
Accepting another person wholly and intimately into your life is utterly life-changing. Opening up every part of yourself to another person is constantly challenging, but constantly powerful in how it changes you and makes you strive to be a better person.
Friendships
The regular companionship and camaraderie of people you care about and share interests with is continually life-affirming. Friendships don’t revolve around the things you have or the activities you can afford – they revolve around people.and shared experiences.
Physical health
Health can’t be bought, but it can be helped by the personal choices we make. Exercise. Eating better. Making choices that are less sedentary. Getting involved with activities that get us moving. Practicing proper hygiene. Money pales in comparison to the value of the physical health needed to enjoy life.
Mental health
On the flip side of the physical coin is mental health. Expressing our feelings in a healthy way. Finding people to talk to and relate our problems. Addressing the issues that bother us. Seeking professional help when these options don’t change things for the better. Again, money is insignificant compared to the value of mental balance.
Personal passions
What activities make you feel truly excited and fulfilled? Those things are the spice of life – every one of us wins by digging into our passions. The best part? Quite often, seeking out and following your passions often means that money will follow in the wake.
Communication
The ability to express our thoughts and feelings to a receptive audience is truly invaluable. it enables us to share elements of our inner world with others, something that can’t be achieved by all of the material wealth on this planet.
Self-reliance
Money comes, money goes. The ability to survive and even thrive with no money means that money becomes significantly less important. The ability to do things yourself reduces the need you have for money to solve your problems.
Security
If we channel our efforts into creating a safe and secure enviroment where we’re protected from our failures, we create a situation where our fortunes are much less tied to our ability to put money in our pocket. If we put effort into security now, we have true safety later, a type of safety that can’t be broken by ordinary material needs.
Helping others
For most people, the action of helping others provides a great deal of personal joy and satisfaction, something that cannot be replaced by any sort of material item. Helping others often requires no financial resources at all and can sometimes generate financial resources – free meals and such – plus goodwill in the community. Good karma has tremendous value.
Personal growth
Every single person has countless opportunities to improve as a person – their behavior, their beliefs, and so forth. Working to grow as a person only improves you and rarely costs anything, but it almost always improves your income potential for the future as well as naturally improving your outlook on the world and your self-confidence.
Thankfulness
When you move from desiring the things that you do not have to being thankful for the things that you do have, your perspective on the world changes drastically. Your desire for having the latest things goes down while, at the same time, your contentedness with life goes up dramatically.
Hobbies
If you can discover personally fulfilling activities to fill your time, you introduce happiness into your life. Many people fall into routines by default, never asking if their choices introduce authentic happiness, then they try to chase a sense of happiness by purchasing things. Step back from this. Try new things, and dig into the things you genuinely enjoy. Often, it’s the simplest things – playing a game with our partner, going on long walks, collecting rocks or leaves – that bring us the greatest personal satisfaction.
Spirituality
Does our life have a purpose? Do we have a spirit? Is there something greater than we can comprehend all around us? Digging into these questions through reading, contemplation, meditation, and prayer can bring an incredible sense of calm, peace, and even joy that can be difficult to find in other avenues – and impossible to find with money.
The more of these elements you dig into and discover in your life, the lesser the role of money, materialism, and spending occupies. In the end, you’ll find that you’re no longer chasing money, but that instead money is following you on the path to a much better life.
http://www.thesimpledollar.com/
http://www.thesimpledollar.com/2009/10/15/fifteen-things-more-important-than-money/
Fifteen Things More Important Than Money
Posted: 15 Oct 2009 01:00 PM PDT
Three and a half years ago, I was in a desperate debt situation. My lifestyle was tied desperately to spending far more than I was bringing in – and I was finally paying the consequences.
I had let money become the most important thing in my life. It drove all of my choices and decisions. It chose my career for me. It chose my specific job for me. It chose how I spent my free time – I did expensive things to escape from the debts and the pressure-filled work, usually with a device on my hip that chained me to that job.
I was desperate and unhappy. I was in a prison made of money – and I knew I had to escape it.
Today, I realize something much more compelling. Money is not the most important thing in life. In fact, in a healthy life, money often follows behind many other elements in your life. If you put your energy and time into other things more important than money, money will follow. It will find a way to work.
Here are fifteen things I’ve found that are more important than money.
Experiences
Hug someone. Kiss someone. Write someone a letter telling them how you feel. Run (or walk) a marathon. Spend all day making an exquisite meal and eat it by candlelight. Make love to someone. Face the thing you most fear right in the face. The rush you get from experiencing something amazing is one of the best parts of being human, and most of the time the financial cost is minimal.
Wisdom
If you think you know the answer, you’re far from wise. Keep learning. Wisdom comes from knowing how little you actually know. Spend some time learning something new, perhaps even becoming skilled at something. You’ll surprise yourself at what you gain, often far beyond the mere knowledge you hoped to attain.
Marriage
Accepting another person wholly and intimately into your life is utterly life-changing. Opening up every part of yourself to another person is constantly challenging, but constantly powerful in how it changes you and makes you strive to be a better person.
Friendships
The regular companionship and camaraderie of people you care about and share interests with is continually life-affirming. Friendships don’t revolve around the things you have or the activities you can afford – they revolve around people.and shared experiences.
Physical health
Health can’t be bought, but it can be helped by the personal choices we make. Exercise. Eating better. Making choices that are less sedentary. Getting involved with activities that get us moving. Practicing proper hygiene. Money pales in comparison to the value of the physical health needed to enjoy life.
Mental health
On the flip side of the physical coin is mental health. Expressing our feelings in a healthy way. Finding people to talk to and relate our problems. Addressing the issues that bother us. Seeking professional help when these options don’t change things for the better. Again, money is insignificant compared to the value of mental balance.
Personal passions
What activities make you feel truly excited and fulfilled? Those things are the spice of life – every one of us wins by digging into our passions. The best part? Quite often, seeking out and following your passions often means that money will follow in the wake.
Communication
The ability to express our thoughts and feelings to a receptive audience is truly invaluable. it enables us to share elements of our inner world with others, something that can’t be achieved by all of the material wealth on this planet.
Self-reliance
Money comes, money goes. The ability to survive and even thrive with no money means that money becomes significantly less important. The ability to do things yourself reduces the need you have for money to solve your problems.
Security
If we channel our efforts into creating a safe and secure enviroment where we’re protected from our failures, we create a situation where our fortunes are much less tied to our ability to put money in our pocket. If we put effort into security now, we have true safety later, a type of safety that can’t be broken by ordinary material needs.
Helping others
For most people, the action of helping others provides a great deal of personal joy and satisfaction, something that cannot be replaced by any sort of material item. Helping others often requires no financial resources at all and can sometimes generate financial resources – free meals and such – plus goodwill in the community. Good karma has tremendous value.
Personal growth
Every single person has countless opportunities to improve as a person – their behavior, their beliefs, and so forth. Working to grow as a person only improves you and rarely costs anything, but it almost always improves your income potential for the future as well as naturally improving your outlook on the world and your self-confidence.
Thankfulness
When you move from desiring the things that you do not have to being thankful for the things that you do have, your perspective on the world changes drastically. Your desire for having the latest things goes down while, at the same time, your contentedness with life goes up dramatically.
Hobbies
If you can discover personally fulfilling activities to fill your time, you introduce happiness into your life. Many people fall into routines by default, never asking if their choices introduce authentic happiness, then they try to chase a sense of happiness by purchasing things. Step back from this. Try new things, and dig into the things you genuinely enjoy. Often, it’s the simplest things – playing a game with our partner, going on long walks, collecting rocks or leaves – that bring us the greatest personal satisfaction.
Spirituality
Does our life have a purpose? Do we have a spirit? Is there something greater than we can comprehend all around us? Digging into these questions through reading, contemplation, meditation, and prayer can bring an incredible sense of calm, peace, and even joy that can be difficult to find in other avenues – and impossible to find with money.
The more of these elements you dig into and discover in your life, the lesser the role of money, materialism, and spending occupies. In the end, you’ll find that you’re no longer chasing money, but that instead money is following you on the path to a much better life.
http://www.thesimpledollar.com/
http://www.thesimpledollar.com/2009/10/15/fifteen-things-more-important-than-money/
You survived! Valuable lessons learned
Once an investor has successfully navigated the worst of the choppy investment seas, he/she will have learned survival lessons and will have internalized feelings and a vivid experience that will be of permanent psychological and instructive value.
Price is what you pay, value is what you get.
If stocks are bought without reference to value, they will in turn be sold without reference to value.
----
When prices increase at a greater rate than can be justified by business performance, they must eventually stagnate until the value catches up or they must retreat in the directions of the value.
Only when a stock is bought at less than its value can price increases that exceed incremental increases in value be justified.
Investing is the intention to seek a required rate of return (RR) relative to risk, based on an assessment of value.
Investing in stocks is not about buying scrip that will go up and down in price, but about investing long term in a sound business that represents good value at its present price.
----
When prices increase at a greater rate than can be justified by business performance, they must eventually stagnate until the value catches up or they must retreat in the directions of the value.
Only when a stock is bought at less than its value can price increases that exceed incremental increases in value be justified.
Investing is the intention to seek a required rate of return (RR) relative to risk, based on an assessment of value.
Investing in stocks is not about buying scrip that will go up and down in price, but about investing long term in a sound business that represents good value at its present price.
Current temporary PRICE is determined by a tiny minority interested in buying or selling
Although prices are deemed to reflect consensus, it should be remembered that prices are determined not by the majority of shareholders who are uninterested in buying or selling at the current temporary price, but by the tiny minority who are.
Friday 16 October 2009
Petdag 16.10.2009
Valuation:
http://spreadsheets.google.com/pub?key=tWD_ov2ZEm3y2RrDZLIGDYg&output=html
Implication of less liquid stocks or funds
Liquidity (relative lack of interest and trading activity) can be a double-edged sword:
•If you're selling, you may not get as good a price, but
•if you're buying, you'll likely get a discount.
It is not hard to see that these less liquid stocks or funds should be considered long-term investments.
•If you're selling, you may not get as good a price, but
•if you're buying, you'll likely get a discount.
It is not hard to see that these less liquid stocks or funds should be considered long-term investments.
Is it surprising that iCap is trading at a discount?
During the last bull market, iCap traded at a high of $2.82. There are many investors in the market with realised losses or who are still holding iCap shares at higher costs to its present price.
When selecting a closed-ended fund, investors must determine the reason the fund is trading at a discount and whether the discount is significant enought to be attractive. A discount may be justified by
•uncertainty,
•popularity or perceptions of the fund, and
•the underlying asset base.
When selecting a closed-ended fund, investors must determine the reason the fund is trading at a discount and whether the discount is significant enought to be attractive. A discount may be justified by
•uncertainty,
•popularity or perceptions of the fund, and
•the underlying asset base.
Never subsidize losers with winners.
Rather than take the medicine -- the loss -- they hold on to the losers and sell their winners.
They never learn my rule: Never subsidize losers with winners.
Sell the losers and wait a day. If you really want them, go buy them back the next day. I also am certain that you never will.
Eject the losers and the winners will lift the portfolio.
It is the percentage of time that most of a portfolio is invested in rising stocks that determines how good performance will be. Eject the losers and the winners will lift the portfolio.
An exception to every rule. This applies particularly to value investors with long term horizon. Instead of blindly selling the losers until all you have are winners, you should really look at whether the fundamentals have changed for the stocks. There may indeed be a good reason for the relative underperformance of Stock B – e.g. poor management or grim industry outlook. However if nothing has changed and you thought Stock B was good value when you first bought it, it must be an absolute bargain after dropping an extra 50%! Shouldn’t you be buying more instead of selling?
They never learn my rule: Never subsidize losers with winners.
Sell the losers and wait a day. If you really want them, go buy them back the next day. I also am certain that you never will.
Eject the losers and the winners will lift the portfolio.
It is the percentage of time that most of a portfolio is invested in rising stocks that determines how good performance will be. Eject the losers and the winners will lift the portfolio.
An exception to every rule. This applies particularly to value investors with long term horizon. Instead of blindly selling the losers until all you have are winners, you should really look at whether the fundamentals have changed for the stocks. There may indeed be a good reason for the relative underperformance of Stock B – e.g. poor management or grim industry outlook. However if nothing has changed and you thought Stock B was good value when you first bought it, it must be an absolute bargain after dropping an extra 50%! Shouldn’t you be buying more instead of selling?
Be an emotion free investor
An emotion free investor would only look objectively at the fundamentals and the valuation of the stock, instead of getting hung up on the entry price.
Be confident in the quality of your investments
Remember to be confident in the quality of your investments rather than nervous about the inevitable volatility of the short term.
Day traders will use these day-to-day and even minute-to-minute fluctuations as a way to make gains. But the gains of a long-term investor come from a completely different market movement - the one that occurs over many years - so keep your focus on developing your overall investment philosophy by educating yourself.
Don't panic when shares experience short-term movements
As a long term investing strategy, you should not panic when your investments experience short-term movements. When tracking the activities of your investments, you should look at the big picture.
Day traders will use these day-to-day and even minute-to-minute fluctuations as a way to make gains. But the gains of a long-term investor come from a completely different market movement - the one that occurs over many years - so keep your focus on developing your overall investment philosophy by educating yourself.
Don't panic when shares experience short-term movements
As a long term investing strategy, you should not panic when your investments experience short-term movements. When tracking the activities of your investments, you should look at the big picture.
Hong Leong Bank starts operations in Vietnam
Hong Leong Bank starts operations in Vietnam
Published: 2009/10/16
HANOI: Malaysia's Hong Leong Bank Bhd has begun operations in Vietnam, making it the first Southeast Asian bank lured to the country's growing market, an official said yesterday.
Wholly owned subsidiary Hong Leong Bank Vietnam Ltd opened its doors in the southern commercial centre of Ho Chi Minh City, Tri Tran Minh, told AFP by telephone.
"They see very good potential in the banking industry here," Minh said.
The State Bank of Vietnam announced late last year that Hong Leong Bank would be allowed to set up a fully-owned subsidiary, and said it would have registered capital of almost US$60 million (US$1 = RM3.35).
Minh said Hong Leong Bank, which did not have a Vietnam presence before, will initially offer a dollar deposit service but would expand its services and plans to open a branch in Hanoi.
On its website, the bank says it is the first foreign bank from Southeast Asia to establish a wholly-owned subsidiary in Vietnam.
A South Korean bank and financial institutions from Australia and Britain, have also been allowed to set up wholly foreign-owned operations in what they see as a relatively untapped market.
On Tuesday, US-based Citibank became the first US bank to offer a retail banking service in Vietnam. It has been in Vietnam since 1993, with branches in Hanoi and Ho Chi Minh City, but until Tuesday had only offered corporate and investment services without retail banking. - AFP
Published: 2009/10/16
HANOI: Malaysia's Hong Leong Bank Bhd has begun operations in Vietnam, making it the first Southeast Asian bank lured to the country's growing market, an official said yesterday.
Wholly owned subsidiary Hong Leong Bank Vietnam Ltd opened its doors in the southern commercial centre of Ho Chi Minh City, Tri Tran Minh, told AFP by telephone.
"They see very good potential in the banking industry here," Minh said.
The State Bank of Vietnam announced late last year that Hong Leong Bank would be allowed to set up a fully-owned subsidiary, and said it would have registered capital of almost US$60 million (US$1 = RM3.35).
Minh said Hong Leong Bank, which did not have a Vietnam presence before, will initially offer a dollar deposit service but would expand its services and plans to open a branch in Hanoi.
On its website, the bank says it is the first foreign bank from Southeast Asia to establish a wholly-owned subsidiary in Vietnam.
A South Korean bank and financial institutions from Australia and Britain, have also been allowed to set up wholly foreign-owned operations in what they see as a relatively untapped market.
On Tuesday, US-based Citibank became the first US bank to offer a retail banking service in Vietnam. It has been in Vietnam since 1993, with branches in Hanoi and Ho Chi Minh City, but until Tuesday had only offered corporate and investment services without retail banking. - AFP
Public Bank nets RM639m profit in Q3
Public Bank nets RM639m profit in Q3
By Chong Pooi Koon
Published: 2009/10/16
Public Bank Bhd (1295), the country's third largest bank, reported a 3.7 per cent higher third-quarter net profit as it earned more from loans, despite a weak economy and even as it has set aside more money to cover potential bad debts.
Net profit for the three months to September 30 2009 came in at RM639 million, although revenue fell 12.7 per cent to RM2.4 billion.
The bank has put aside RM176.4 million of allowances for loan losses, 65 per cent more compared to the same time last year.
Managing director and chief executive officer Tan Sri Tay Ah Lek said Public Bank is on track to achieve a 14-15 per cent loans growth target this year, driven by demand for loans to small businesses, mortgages and car loans.
Public Bank is expected to maintain the earnings momentum and continue to record satisfactory performance for the rest of the year, he said in a statement yesterday.
"As the global recession begins to recede and with recovery on the horizon, the outlook for the banking industry is expected to improve. However, margins continue to be under pressure due to continued intense competition," he added.
Despite a difficult economy this year, Public Bank's net profit has expanded consistently in the first nine months this year.
Net profit in the second quarter grew 3.6 per cent to RM611 million from RM589 million in the first quarter, and improved further by 4.6 per cent in the latest quarter.
Loans grew by 14.3 per cent on an annualised basis, while deposits expanded by 19.5 per cent. This compares with the industry's 6.8 per cent growth for loans and 6.3 per cent for deposits.
Public Bank's non-performing loans ratio stayed below 1 per cent, the lowest among Malaysian banks.
OSK Research analyst Keith Wee said the lender's performance was largely in line with his expectations. He maintains a "buy" call on Public Bank shares with a RM11.80 target price.
"The stock is currently trading at an undemanding 13 times its fiscal 2010 price earnings multiple, against its historical mid-cycle average valuation of 14.8 times," Wee wrote in a note after the results announcement.
The stock closed flat at RM10.62 on Bursa Malaysia yesterday.
http://www.btimes.com.my/Current_News/BTIMES/articles/dougan/Article/index_html
By Chong Pooi Koon
Published: 2009/10/16
Public Bank Bhd (1295), the country's third largest bank, reported a 3.7 per cent higher third-quarter net profit as it earned more from loans, despite a weak economy and even as it has set aside more money to cover potential bad debts.
Net profit for the three months to September 30 2009 came in at RM639 million, although revenue fell 12.7 per cent to RM2.4 billion.
The bank has put aside RM176.4 million of allowances for loan losses, 65 per cent more compared to the same time last year.
Managing director and chief executive officer Tan Sri Tay Ah Lek said Public Bank is on track to achieve a 14-15 per cent loans growth target this year, driven by demand for loans to small businesses, mortgages and car loans.
Public Bank is expected to maintain the earnings momentum and continue to record satisfactory performance for the rest of the year, he said in a statement yesterday.
"As the global recession begins to recede and with recovery on the horizon, the outlook for the banking industry is expected to improve. However, margins continue to be under pressure due to continued intense competition," he added.
Despite a difficult economy this year, Public Bank's net profit has expanded consistently in the first nine months this year.
Net profit in the second quarter grew 3.6 per cent to RM611 million from RM589 million in the first quarter, and improved further by 4.6 per cent in the latest quarter.
Loans grew by 14.3 per cent on an annualised basis, while deposits expanded by 19.5 per cent. This compares with the industry's 6.8 per cent growth for loans and 6.3 per cent for deposits.
Public Bank's non-performing loans ratio stayed below 1 per cent, the lowest among Malaysian banks.
OSK Research analyst Keith Wee said the lender's performance was largely in line with his expectations. He maintains a "buy" call on Public Bank shares with a RM11.80 target price.
"The stock is currently trading at an undemanding 13 times its fiscal 2010 price earnings multiple, against its historical mid-cycle average valuation of 14.8 times," Wee wrote in a note after the results announcement.
The stock closed flat at RM10.62 on Bursa Malaysia yesterday.
http://www.btimes.com.my/Current_News/BTIMES/articles/dougan/Article/index_html
Cash Rich and Profitable Companies
Net Cash = Total Cash and Equivalents - Total Liabilities.
By having net cash and the company is in profit, the company is in the position that is able to make acquisition when opportunity comes or providing consistent dividend to the shareholder.
Ref:
http://fortunesense.blogspot.com/2009/06/cash-rich-and-profitable-companies.html
By having net cash and the company is in profit, the company is in the position that is able to make acquisition when opportunity comes or providing consistent dividend to the shareholder.
| Company | RM mil |
| Resorts World | 4600 |
| Petronas Gas | 1500 |
| Oriental | 910 |
| Bursa Malaysia | 280 |
| Carlsberg | 220 |
| Uchitec | 136 |
| Dialog | 112 |
| Amway | 108 |
Ref:
http://fortunesense.blogspot.com/2009/06/cash-rich-and-profitable-companies.html
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