A friend highlighted this stock to me early this year, I took a look at the annual report (31/7/2014), apart from what have been analysed and mentioned by KCChong above, I remembered I had a shock when I saw the total directors' remuneration for the year was RM19.5 million. This represents about 10% of its gross profit in 2014.

Excluding the 3 non-executive directors of VS, the 6 executive directors (who are also major shareholders, namely Gan & Beh who controls about 30% of the shares) earned total remuneration of RM19.1 million, that is an average of RM3.1 million per person.

The highest paid executive director of VS (not named in the annual report, which should be Datuk Gan, the MD) received about RM5 million during the year, whereas the CEO of Maybank, Datuk Abdul Farid received RM5.4 million of remuneration in year 2014.

For comparison, VS has a market capitalisation of RM850 million and Maybank is the largest bank in Malaysia with market cap of RM87,000 million. Errr ... no matter how "good" VS is managed, I personally don't see a good governance here judging by how the directors (owner) are being paid. Why are these directors getting the first "slice" before the rest of the shareholders? Why are they getting a remuneration of RM19 million vs. a dividend of RM9 million to all shareholders?

Either someone is suppressing OSK price or the sellers don't know maths, RHB shares today up 30 cents, OSK's portion is currently worth 2.35 per share and those fellows are selling OSK at 2.21?

Sigh, same fate like Tan Sri Hassan Marican, the well respected former CEO of Petronas, who is now chairman of Singaporean companies like Sembcorp Marine, Singapore Power, Pavilion Energy and Lan Ting Holdings. These include companies linked to Temasek Holdings, the Singaporen government investment arm. Sadly enough, he is not seen in any Malaysian listed oil and gas company.

The Company has a dividend policy of 40%-75% of net profits:
http://www.mnrb.com.my/media-relations/news-releases/mnrb-pays-32-dividend-fy2013

Based on the 12 months net profit of RM154.9 mil @ 31/3/2014, the upcoming dividend could be 0.29 to 0.55 per share. I guess most likely it will be around 0.30 to 0.40 per share, which translates to >7% dividend yield based on current price. No wonder the price was up and up after the results announcement.

The Proposed Bonus Issue of RCPS provides the holders of the RCPS with flexibility to either:-
i) redeem the RCPS for cash at RM0.50 each (which is exercisable from the market day immediately after the date of issue of the RCPS up to the third (3rd) month anniversary (both dates inclusive)), effectively translating to a cash distribution of RM0.25 for every one (1) existing Share held; or
i) convert its RCPS to Shares by tendering two (2) RCPS in exchange for one (1) new Share (at any time from the first (1st) anniversary of the issue date up to the maturity date).

Cash of $0.25 per share! What are people thinking?

Uninterrupted dividend payment since 1996, every year also profitable (except one), share price below NAV, but not much interests in this counter.

KC, I got a price lower than its existing share price. Maybe it's my assumption. How would you compute then?

KC, thanks for your pointer. After adding additonal 49% of profit from Bank Islam and accounted for the enlarged share base, I derived a theoretical PE of 12.44x @ 31.12.2013, which is roughly the industry median. Nevertheless, the P/B ratio is still high because the net assets of Bank Islam has been consolidated.

Noticed that 75% of Bank Islam loans come from retail customers, so I believe it's a challenge for them to grow the loan book at the same rate like previous years. Generally, the banking sector is quite challenging, which is already reflected in the share price.

Good day KC, we have discussed before that when trading in warrants and call warrants, it is important to analyse the underlying mother share as well. Let's look at the following numbers (all TTM basis as extracted from I3):

Counter P/E DY P/B
BIMB 18.19 0.81% 2.36

Affin 8.83 3.91% 0.90
AFG 12.47 1.69% 1.71
AMMB 12.36 3.1% 1.71
CIMB 12.39 3.21% 1.90
HLB 16.70 3.2% 1.80
MBB 12.80 5.52% 1.87
PBB 17.15 2.61% 3.41
RHB 11.56 1.94% 1.28

Median 12.47 1.80
Average 13.6 1.88

In your view, why is BIMB trading at such a high P/E and P/B compared to the the rest of the banking groups listed on Bursa?

Whilst I understand the high premium accorded to PBB due to its management capability, asset quality and historical growth rate, I can't seem to convince myself with the pricing of BIMB, except for its stake in Takaful.

Can you enlighten me what's the upside for BIMB (that will also trigger interests in its WA other than a takeover bid)? Yes, I agree with you that the gearing and the time value of this WA is awesome, but I really need more justifications to convince myself to invest in this WA. Do you think you can spare your thoughts and help me out?

This transaction is valuing FPI shares at around RM0.89 per share. (NT5.6 x 100,000,000 x 0.11)/69,000,000 = RM0.89.

緯創(3231)董事會通過以盤後交易方式購買Formosa Prosonic Industries Berhad (FPI)之普通股，該公司是馬來西亞股票上市公司，主要從事高品質音響及喇叭單體的生產。針對緯創的併購，高盛證最新出具報告認為這項交易，對緯創短期的業務展望並沒有重大的改變，應此仍維持緯創「賣出」評等。

緯創昨天宣布，以總金額以不超過新台幣5.6億元為上限，取得FPI約6900萬股普通股，交易完成後緯創將持有該公司25%~30%的股權。FPI主要從事高品質音響及喇叭單體的生產，為全球第二大音響、喇叭單體製造商，緯創過去幾年在影像產品的布局上已經有面板、顯示器模組，未來消費者對音效需求提升，因此決定入股FPI公司。


高盛證認為該項交易並無法改變緯創近期的偏弱的營運現況，未來幾季獲利轉弱的因子包括：1.核心業務如NB和手持裝置的惡化。2.產品多樣化優勢的能見度低。3.在蘋果EMS的毛利率和獲利不確定性高。

據此，高盛給緯創「賣出」評等，目標價為22元。

FPI's financials are not spectacular, very thin margin. However, they never make losses and managed to accumulate a lot of cash over the years. With this new Taiwanese partner, perhaps they can get better business prospects and improve their margin. The future is hard to tell, I was looking at this counter few days back but I didn't take action, perhaps I am too late now.

Sephiroth is saying that by paying 91 cents now, you are getting 62.66 cents in cash and all the other assets of FPI (presumed value at less than 30 cents??). Good or bad, you think?

Yeah, understand that PNB has always wanted to get out (didn't know about the Allianz deal though, thanks for the info). Since MetLife is buying AmLife, maybe AIG can also buy some of MNRB, foreign partners may improve their competitiveness.

Gark, are you implying that AIG is interested in MNRB? I am not sure if BNM / MOF is keen on that. Remember our "Malaysian" pride factor? Btw, I am glad that this counter is inching up.

Thanks a lot, Gark, 20% is good enough to keep MNRB growing.

http://www.bnm.gov.my/index.php?ch=li&cat=insurance&type=LR&fund=0&cu=0

MNRB is the only licensed life reinsurer in Malaysia by BNM. I am not very familiar with the reinsurance business, can anyone from the insurance industry enlighten me? Does this mean that MNRB has a "monopoly" business?

KC, thanks for the write-up again. Padini is on my watchlist for 2014 too, but I am still observing its performance. Yes, Padini has been delivering consistent growth in the past, but I doubt whether this kind of growth rate, i.e. 10% - 16% can be maintained for the next 5 years.

At first, I was quite positive on Padini as I think they are serving the mass-market and 2nd tier cities pretty well. However, when I started seeing Uniqlo opening in Melaka, Cheras, Alamanda, the Mines ... I am getting a little worried (because I thought Uniqlo will not compete in those cities).

As a shopper, I have to honestly admit that Uniqlo clothings are surprisingly value for money. The designs are pretty simple & basic, but the quality / material is really good. On the other hand, I have not bought any Padini clothes or Vincci shoes for the past few years. Uniqlo's main selling points are its clothing technology and their marketing tactics (e.g. "limited editions" designs).

The edge that Padini currently holds over those foreign brands, in my opinion, include 1) its long presence in the country (brand awareness); 2) price; 3) design for our climate (noticed that foreign brands including Uniqlo are selling winter clothings in Malaysia during year-end, which I observed is slow moving and inefficient use of store space for at least 3 months). I hope Padini can capitalise on its strength and innovate to grow further. If it doesn't change, it will be falling into the likes of Esprit, Giordano, Bossini, etc ... which were once market leaders in clothes retailing, but all struggling now.

Good on you Seph, I wanted to add position when saw dropping to 47.5, unfortunately called by my boss and dragged into a long meeting, when out, already 52.5.

Another Perak Corporation in the making? Net asset = RM3.60, Price = RM1.79

Sephiroth, managed to do a quick calculation. premium suddenly dropped to 3-4% starting 2014. Average premium for past 18 days was 7.91%.

Date Premium (%)
3/1/2014 3.70%
2/1/2014 4.07%
31/12/2013 7.09%
30/12/2013 8.40%
27/12/2013 9.35%
26/12/2013 8.94%
24/12/2013 8.13%
23/12/2013 8.13%
20/12/2013 8.54%
19/12/2013 8.13%
18/12/2013 9.02%
17/12/2013 7.72%
16/12/2013 7.72%
13/12/2013 9.02%
12/12/2013 8.13%
11/12/2013 9.50%
10/12/2013 8.20%
9/12/2013 8.61%
Average 7.91%

The Edge's computation of 7% was based on 31/12/2013 closing price : Mother = 1.27, WC = RM0.36. I didn't check the historical premium %, but I think should be around 4% - 10% (will verify when I have time).

According to the Edge Warrants Update, PJDev-WC could fetch 50.23 sen if the mother share appreciates to 1.404, provided the market continues to accord 7% premium.

Thanks, I must have missed that posting of yours while on holidays.

I feel like I am having a dilemma whereby I keep adding stocks to my portfolio and not selling / removing ...

Hi, KCChong, Happy New Year! First, I believe 53% is an "understated" return for this portfolio as it is assuming equal weightage for all shares listed here, which I think in real life it may not be the case. If the "real-life" portfolio was heavy on Pintaras (which you were seen very confident in this company), Jobstreet or Prestaring, I am sure 53% is a "humble" figure. I have some questions for you ...

I noticed this is just your 1H portfolio of 10 stocks and you had another selection of stocks for 2H. Also, based on your postings, you did hold / invest in other counters which are not listed in these 2 portfolios. I am just wondering do you limit yourself to a maximum number of counters held at one time? What is your guiding principles on the "ideal" number of counters in your portfolio?

Warren Buffett is widely quoted as saying : “Diversification is protection against ignorance.” But, his mentor, Benjamin Graham was pro-diversification. What is your thoughts on this?

I think you people are missing the big picture. It's not about this person earning RM12k and not enough, it's about the rising costs of living! I see the comments here are no different to what our dear ministers told us - "if toll is too expensive, don't use highway then". All this while, RM12k was more than enough for this couple, but with petrol + electricity + toll + GST (and other chain effect), they are feeling the pressures (and 2nd kid coming along). Yeah, it's easy to say "change your lifestyle", hey, can you walk the talk first (starting with our government cutting down expenses?).

Off topic a bit. Note to bsngpg, the Naraya bag is "huge" in Bangkok! You can see crazy Mainland Chinese, HK and some Japanese queueing in the shop to buy their bags (like LV in Paris). This is very good for the Thai People because it's a Thai brand and made in Thailand! Unfortunately, I have yet to find a Malaysian brand that tourists are queueing to buy.

Listed Logistics Companies In Malaysia - Bursa D
http://klse.i3investor.com/blogs/kianweiaritcles/40669.jsp

KCChong, did you manage to read this article? I know you have invested / still investing in Freight Management. What's your view on other logistic companies, like Tasco or Tiong Nam or those mentioned in the article?

I have briefly analysed Tasco, it meets all the five yardsticks except Cashflows. It always have positive CFFO, but FCF varies YoY. My major concern is its huge investments in plant & equipment. But this company has long operation history and related to the Yusin Logistic Co.in Japan. Any thoughts?

Basically, I think the logistics and courier business are still growing and this trend will continue for a while. The retail business is very globalised nowadays, and online shopping has become a norm. I have checked global logistic companies like UPS / FedEx which are trading at P/E of roughly 65x and 27x, does this say something about market's perception?

KC, do you have any reservation by assigning 100% factor to land and properties? In the original Graham's formula, real estate property seems like not part of the equation. When I compute the net net value, I still assign 100% value to land & properties if the company doesn't adopt a revaluation policy in its balance sheet, I feel safe to assign 100% when these properties are recorded at cost compared to revalued amount.

For now, Uniqlo and H&M are only available in Klang Valley & Penang. Who's serving the customers in smaller towns?

I bought in yesterday, plan to add more as I am guessing the market "overlooked" this deal, as they are too busy with Karex and Barakah yesterday. KESAS is a cash cow, and the traffic is increasing due to housing developments in Puchong / Shah Alam / Kemuning area. I hope they can negotiate higher price from Gamuda.

I fully agree that the hardest to master in share market is selling, like what OTB said : "Buying a share is not a skill, selling a share is a skill". Well, he is a bit extreme, I would say buying requires skills (TA / FA), but selling requires a lot more skills! There are a lot of emotions involved when selling, e.g. fear of losing further gain, long term attachment, market pressures, when to cut loss, etc etc ...

The recent spike in a few good small-mid cap stocks (Fibon, Homeritz, YOCB, Willow, etc) did caught me at a surprise, including the like of Insas and PM Corp. Well, it seems to me that the market is suddenly "chasing" for these counters which had been neglected in the past. I don't know if this kind of price increase is "healthy" for the long term investors or the company itself. Does it create a temptation to directors to sell down their stake or trading their own shares? Does it attract punters or contra players to these counters? Yeah, like you said who doesn't want double digit return in a short period? However, we all know that those value investing gurus achieved their impressive return over a long period, not 3 months or even 6 months ... So I m actually concern over the unusual gain given the short period of time.

*Sigh* I just wanted to rant ... I missed out on my own warrant selection - SPRITZER-WA. Today fly to 70cents, I didn't monitor price movement lately because busy at work :-(

LLS is a very 'lucky' fella, his name was associated with two large scale scandals - 1) PKFZ and 2) Transmile (He was the Chairman of the Board), yet still managed to come out clean. Hooray, Malaysia very boleh!

Not only that, the app is quite "canggih" one, you can even see up to 10Y price charts, technical indicators (EMA,SMA,RSI,etc), plus compare among different indices.

Get the Bloomberg ipad app, can see all indices - year high & low, return, P/E ratio and mkt cap. KLCI is now trading at P/E of 17.01.

KCChong, good day! Should we track PJD-WC as well since you mentioned it's attractive?

What do you think about SPRITZER-WA:
Price: RM0.58
Mother share: RM1.73
Exercise price: RM1.18
Exercise ratio: 1:1
Maturity: 13-12-2016
Gearing: 2.98x
Premium: 1.73%

Do you mind creating a watchlist to track the warrants mentioned in this thread?

I think there is a misperception where investor is trying to compare the "return" on insurance plan with unit trust funds and invest in share market. Insurance is bought for "protection" not "return".

Based on my calculation, most insurance savings plan actually gives a guaranteed return that is 1-2% above the current FD rate if you add in the timevalue, i.e. use the IRR concept. However, I noticed some agents sell the plans by stressing the "return" calculated based on lump sum payment upon maturity over the initial capital without factoring in the years to maturity. This is quite misleading, but most people on the street don't understand.

I don't think the Insurance companies are operating like a Ponzi scheme if you understand the industry well. Insurance is a highly regulated industry just like banks and under the supervision of BNM.

Considering the long expiry date of the WC and the mother share is actually trading below its NAV, the current price is indeed very attractive provided it is still listed by then. But I am just concern that they have plans to take the company private, afterall, the Ong family has a track record of offering "unattractive" offer price to minority shareholders.

Mr Chong, I try to answer your questions to my question:

1) Just because that KLCI is made of the 30 index companies and with P/E of 15-16, doesn't mean that all other companies are overpriced.

2) Ohh, I still remember, when I was a kid back in the 90's, every Chinese new year, my parents reminded me not to wish the aunties & uncles "san nin fai lok" (happy new year in Cantonese), instead I should greet "san nin fai hei" (new year fast rise). It was quite crazy back then, my mom would stay in front of the TV whole day to check share prices (I couldn't remember what was that service called already).

3) During the dot.com era, whenever I read the US market news, it was always which and which internet/tech stock IPO, debut with how many percent increase.

4) After the 87 stock market crash, my dad knew his company is going to sack him, so he left before it happened. After that my dad started his own business with borrowings from my grandparents, we didn't have family trip for many years until mid 90's...
I don't know how was it like in the 1929, but people called it the great depression, so it must be really bad.

Oh no ... I think what I replied on Q2 & Q3 sounds a bit like our property market now.

KCChong, I realised that you talk a lot about the companies you invested in instead of the market outlook, which is consistent with your comments about TTB. Based on what I read from the media, TTB talks a lot of about the economy and outlook, rather than the investments he made except I remembered he said his fund (not ICAP though), invested in Tiffany & Co seeing the demand for luxury goods from China ppl.

I am just curious ... I am sure you read the daily news (?), people have been talking about bubble economy and the crashes. I know you don't believe in "timing the market". But, are you not concern at all? Won't you adjust your portfolio accordingly?

PJD is listed as "outstanding" by the author:
http://klse.i3investor.com/blogs/tradeidea/38469.jsp

I think capital reduction (CR) is done as follows:
Before CR:
Share Capital = 100,000 (100,000 ordinary shares of RM1.00 each)
Accumulated losses = (10,000)
Shareholders equity = 90,000

After CR:
Share Capital = 90,000 (100,000 ordinary shares of RM0.90 each)
Accmulated losses = 0
Shareholders equity = 90,000

The reduction is by reducing the Par Value of the shares but not the number of shares outstanding. Does this make sense?

Great work! I would like to highlight that the net asset value for certain property development companies could be higher than the numbers reported depending on the valuation method used for their land and properties. I have picked two companies for comparison:

(1) PJ Development – cost method:
Investment Properties @ 2012 =
At cost (as reported) = RM147mil
At estimated fair value by directors = RM267mil (potential >81% appreciation).
(2) Daiman – fair value method:
Revaluation reserve @ 2012 = RM120mil (reflected in shareholders’ equity)
Revaluation reserve is non-distributable reserve, includes the changes arising from the revaluation of leasehold/freehold land and buildings above their cost.

In other words, Daiman’s reported Net Asset Value is already close to market value, whereas PJD's Net Asset Value is "potentially" undervalued and may have further room for appreciation (upon disposal or development).

Jerasia relies a lot on the Mango brand franchise, there is a risk that they may lose the distributorship or the principal suddenly decided to operate their own stores in Malaysia. Their own home grown brands are not strong enough either. Hence, their GP margin is around 30% compared with Padini which is around 50%. Jerasia's ROE is single digit compared with Padini's double digit. At this point, I don't see any catalyst for this counter unless they can grow their own brands and expand their offerings with better margins. Also, shares very thinly traded with small mkt cap.

Ha ha ... You don't like my flatter... Just my respect, don't say I am wrong again, so demotivating. Otherwise, I also don't dare to comment on your thread. Have a good weekend!

Mr. Chong, seems like you have already discussed these 3 companies before with another person :-) I feel that you are already an expert diver in the sea of Bursa and knew every single spot for hidden treasures or best school of fishes. Whereas I am still snorkelling around ...

I also tend to think Sg Began is the best of the 3, my goodness, just the cash and securities already worth more than share price. But, like you said no one knows how would the value be "realised", perhaps more dividends in the future (again, they are "stingy" people ... Like the Keck Seng gang, are they from the same family too?).

And yes, the market value of the two associates are only half of the value reported in Kluang Rubber's book. Which of these 3 are more worthy or all three are no no?

Mr. Chong, sorry I have to be more specific about my questions. I am actually referring to these 3 listed companies - Kluang Rubber, Kuchai Development and Sungei Bagan. The latter two are the associates of the first. I did my own calculation and I realised that they are all traded at a discout based on the formula which you gave. For instance:
Kluang Rubber Co.
Mkt Price: RM3.39
Freehold land = RM73.5 mil
Invesment in associates = RM232.6 mil (i.e. Kuchai & Sg Began)
AFS securities = RM36.9 mil
Cash = RM44.3 mil
Total liabilities = RM1.9 mil
Total net assets = RM385.4 mil
No. of share = 60.19 mil
Net Asset per share = RM6.40

Also, I noticed an item called "Biological Assets" worth RM336k in the accounts which have not been revalued since 1965. It just said "oil palm" ... What kind of asset is this?

Mr. Chong, what do you think? I also cross check the other two with similar results.