Saturday, August 24, 2013

What now after this?

The thing about market is that you do not know what you are going to get. It is akin to the fishermen whether the professionals or apprentices or even the enthusiast, we just do not know whether it would be a good day tomorrow, next week or next month. We just have to get prepared. The only thing we know is that to be a good fisherman, one will need to improve on the methods, know where to fish and with the right equipment and technologies. One just need to be prepared and the ability to sustain.

The market had a shock, dropping substantially over the last 1 week. In fact, I had noticed of something which is not normal in one of my small article, but not able to foresee that the large funds are readjusting their portfolio. Even the large Malaysian funds are not able to defend, or rather they would not, preferring it to take a much needed breather, then go in again. Smart funds do that.

On the market, it seems to me that the market is seen a tapering off. Now, as retail investors, what do we do. We have to take a smart take ourselves. I am not able to predict (or foresee) where the economy of Malaysia as well as the world are heading. It is hard to predict where in some articles, say that the world is doing ok, while another one say otherwise. Let me provide an example, while one may say that the market is getting too expensive, the amount of liquidity today (despite tightening) will still see funds and individuals looking for places to invest. Some have invested into properties but again between properties and stocks, properties to me is much much more expensive. The tightening of liquidity will see it affecting properties more than stocks.

The thing about buying stocks or investing is that, we have to continue to buy something that we believe in i.e. those that will do well over a longer period. This is what fundamental investing is about. Throughout my investing life, I have seen many rounds of the similar situation happened. The same scenario, I have seen sometime back in 2005 or 2006, where stocks like Iris, FTEC (if one can remember) were trading at absolutely abnormal prices. The same scenario I have seen recently, where trading on penny stocks were abnormally high. This time around, it is not at those crazy stage but were moving towards that. The small crash however halted the rise. I am not sure whether the market will continue with the rise, but the important thing is to continue to look for good fundamental stocks. Much safer this way.

On advise given by investment firms which is to try to stay away from stocks that are largely held by foreign funds, it is the right thing to do in the short run, but foreign funds come and go actually. The move around. The funds may leave in July, August but may come back next year. Most of the time, foreign funds will just buy certain stocks. They for example will not touch stocks like Wellcall, but recently one did. They may not invest in NTPM.

These funds largely concentrate on larger companies that are covered by the analysts especially the MSCI stocks. Now the thing to continue to do is to see what will happen to the companies assuming that there is a minor slowdown in spending and GDP. What will happen to the banks, properties, consumer stocks, defensive typed stocks. Well we have to figure out as companies as in individuals are dynamic. Industries are dynamic as well.

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By the way, note that IJM has bought a 3.4+% block from Tan Sri Chan Ah Chye. What does that mean?

27 comments:

sanjib said...

hi felicity, i enjoy reading ur blog.. nice stuff, keep it up.. what is your opinion on Parkson?? I am holding lots of parkson, but after seeing the continuous sliding, i am having second thoughts to divest, but that would incur high loss.. i like parkson due to its business coverage in Asia, yet the region economy seems contracting..

felicity said...

Hi Sanjib

I think Parkson is ok especially at this price. They have done a lot of reinvestment, we just have to keep fingers cross on the success. Will take time though.

Cheers

LuPorTi said...

HI Felicity,

NTPM is my main holding as well. I have a question. Do you worry on depreciating RM which may bring down NTPM's profit due to purchase of raw material which is done by foreign currency?

LuPorTi

felicity said...

Hi Luporti
Obviously it will be affected by the currency, but these are products which will be able to pass to customers. So are all the imported or non-imported products in the supermarket. All our lives are affected by currency exchange.

Value Investor said...

Parkson Asia (Parkson Holdings' subsidiary listed on SGX) reported a disappointing 4th Quarter and FY June 2013 results last week. Pretax Profits for FY 2013 declined by 15.1% vs FY 2012 mainly due to lower Same Store Sales Growth (SSSG) in Msia & Vietnam, lower gross margin in Msia & further weaknesses in the Vietnam operations.

Looks like Parkson Holdings results will be affected as Parkson Retail (listed on HKEX) reported a much higher decline of 38% on Net Profit for its 6-months period ended 30/6/2013.

Big Sea said...

The declining earnings from Parkson is NOT COMPLETELY due to contracting regional economy.

Between 2010 to 2012, PARKSON [HKEX] registered a 10% decline in EPS.

Between 2010 to 2012, Intime[HKEX] registered a 40% growth in EPS.

Both Parkson and Intime are around 4B revenue, operating in China, listed in HK so I believe it is a fair comparison.

Their plan to turn around ? If they register a stronger growth than Intime, then only I will trust them.

China Ah Pek company likes to practise Nepotism so when the capable founder took a back seat, it will be a matter of time before an incompetent successor screws up. Media would of course paint a wonderful picture of these people but of couse one should have know by now the integrity of our Main Stream Media is as good as sluts.

Fung C.F. said...

I would like add something on Parkson (I hope I'm not saying the obvious):

1) In China, Parkson has opened 6 more stores since 2012 and expect to open another 5 before year-end. The new stores are currently suffering operating loss. One thing for sure, Parkson will keep spending aggressively, and the margin/ cash flows will deteriorate in short term.

2) Long term wise, as pointed out by Felicity, we just have to keep finger cross. China economy is not growing quicker, but it doesn't mean the sales will disappear overnight. China still is the high saving country in the world and the sales growth will eventually kick-in when the new stores get stable.

3) As for the ASEAN part, the Myanmar story is an exciting one to watch, but again, it takes time to yield success. Indonesia and Vietnam has room to grow too. Nonetheless, it is peanut comparing to the China's operation.

4) One thing I really like about Parkson is their almost non-stop effort in buying back shares. I've lost count on how many million shares they bought back in the past 2 years, the beneficial is definitely the shareholders.

5) Given the strong financial position they have, I expect dividend payout to remain at at least 16 cents, despite of the increasing capex/new store expenses. At the current price, dividend yield is approaching 4.7%. Given the approx 50% payout, 4.7% yield is a good cushion.

6) I think it is fair to pay RM4 per share for Parkson Holdings, and it is a no-brainer if it touches RM3 per share. Anyway, it requires great patience to invest in it.

AdCool said...

Parkson is touching its historical low soon around RM3. We know that in market, fundamental is only one of the factors that affect the share price. As for now, I think Parkson shares have been oversold.

I agree with most of you that it needs long patience with Parkson now.

Big Sea said...

PARKSON has just released Quarterly Financial Report, a really poor set of result.

As a consumer, I like to visit Parkson.

However, if we look at the result from Parkson, the idea we get is that Parkson is getting nowhere. I believe Parkson was Out-Innovated by competitiors. If that is the case, openning more stores will get Parkson nowhere as well. Shopping experience is more pleasant at Carrefour or Daiso.

From a business perspective, Parkson's value is in the brands that Parkson is carrying and amount of stores that it is having. If they can come out with an exciting model/concept that improve their revenue, then probably I will buy Parkson again.

AdCool said...

The expectation from the investors is very unique. Have you noticed there isn't any company that would forecast or target a lower net profit even if the economy is not well.

Everyone expect that the revenue and profit will continue to grow each year comparing to previous years. My point here is, you can't. There would always be a economic cycle to factor in.

If this year financial report isn't better compare to last year, would it be better next year then comparing to this year? I'll leave that for your thought.

hng said...

felicity

Do you have any investment idea on YTLP recent cancelled its 3.3% treasury share?

Fung C.F. said...

My view on YTLP:

Many speculated that YTLP is due to give out bonus shares by distributing the treasury shares. They have now officially denied the rumor by cancelling the treasury shares. Anyway, bonus issue or not, it is deemed as non-event for me.

Fundamentally speaking, cancel or not, the EPS expansion effect was created on the day the 250,000,000 shares was bought back, so it is not specially meaningful. Anyway, cancelling the shares means that YTLP will not able to resell it, which in turn means they are committed to increasing the shareholders' value (remember, shareholders include YTL Corp).

Many also speculated that the share-buy-back is a move to facilitate the privatization. My view -- the effect of increasing YTL's shareholding % is very minimal, and furthermore, YTL would have to fork out around RM6b of hard cash (if all-cash deal) to get it done. Therefore, I personally think that the privatization deal is unlikely (if it is by share-swap, I'm not interested either).

hng said...

Fung C.F.

I believe YTLP opt to cancel the treasury rather than redistribute back to shareholder is proof the thesis that privatization through share swap is on the way. By cancel the share, it essentially reduce the number of YTL share to be issue under share swap, reduce dilute effect of Yeoh family stake in YTLcorp, and increase value of Yeoh family direct stake in YTLP and YTLP-WB

YTLP will keep buyback its share from open market once the targeted exchange ratio is reach and announcement of share swap will be make offer to minority shareholder

Fung C.F. said...

hng,

I think keeping shares in the treasury is as good as cancelling it. Cancel or not, the ultimate effect is the same. (If I'm wrong, please correct me)

hng said...

Fung C.F.

Yes, there is no difference between keeping treasury share and cancel it, as both also increase EPS.

However, it make difference in the case of take over offer. The number of YTLP share is reduce, translating to number of new YTLcorp to issue for share swap is reduce accordingly, and less dilute effect for Yeoh family stake in YTLcorp.

AdCool said...

Hi felicity, what is your opinion on Glomac and Mah Sing? I m looking at property counters now and been monitoring these two counters lately.

felicity said...

Frankly, am not too keen on pure-play property counters especially the high end developers

BobChris said...

Hi Felicity,

Thanks for all your sharing and advice. It's been very helpful.

Can you give your views on Efficient E-Solutions & Notion VTec stocks? Is it worth investing?

felicity said...

Efficient is facing deterioration in earnings, the last time I looked at it. I think it is facing tougher times especially when Singapore Press is terminating the partnership (if not mistaken). As for Notion Vtec, I am not too familiar but if it is making components for digital cameras, that would be tough as well.

Ironman said...

Hi Felicity,

What do you think on the latest performance of Freight management?

Do the issue of petrol up new will affect it negatively or possitively?

Btw, this stock is really illiquitidy... volume is become worsen less.

hng said...

YTLPOWR-WB(杨忠礼电力WB)


股价
目前股价:RM0.475
52周最高:RM0.555 (22/07/2013)


52周最低:RM0.369 (03/05/2013)


凭单概况
发行公司:杨忠礼电力(YTLPOWR,6742,主板基建组)
发行日期:2008年6月12日
交易期限:10年
截止日期:2018年6月11日
转换价格:RM1.21


关注原因
最近市面一直有谣传YTL有意私有化YTLPOWR,而且从YTLPOWR最近的一些企业动作可看出这种可能性其实是存在的。

首先,YTLPOWR的派息日益减少,2013年的全年净利虽然比前一年少,但仍然有14.78仙,可是该公司却只派出0.94仙,可说是历年来最低的股息。

接着,该公司在8月28日将占了股本约4%,总数2亿5000万股的库存股完全注销。

当股东们对此决定感到非常纳闷时,该公司又开始大手笔的从市场上回购自家股票。根据昨天(9月10日)大马交易网站的资料里显示,YTLPOWR目前的库存股已达到3202万股,短短一个多星期里会购了约2300万股。

而YTLPOWR的股价也从8月28日的RM1.54,逐步回升到目前的RM1.71。

公司一方面不愿派息,另一方面却注销库存股并且又大手笔回购股票,从这一连串的动作来看,其动机非常耐人寻味。

根据《资汇》第240期里透露,YTLPOWR的企业价值高达246亿。如果将这企业价值除以其总股数,相等于每股RM3.47,所以对大股东YTL来说,确实是有私有化YTLPOWR的吸引力的。

目前YTLPOWR-WB的母股高过转换价(RM1.21),所以此凭单属已到价。而且,如果此时以RM0.475买进YTLPOWR-WB,再付RM1.21转换成母股,总成本RM1.685,比起以RM1.71直接买进母股仍然有2.5仙的折价。

况且YTLPOWR应该值得更高的估价,而这也将会带动YTLPOWR-WB走高。

hng said...

News/rumors that YTLP also eye Green packet's P1. YTLP already have both wimax and LTE spectrum. If it want to buy P1, the only reason could be it wan to add more capacity by another 30MHz more in the 2.3GHz band (WiMAX network) and another 20MHz more of the 2.6GHz spectrum (4G-LTE) to expand and meet demand of its growing 1 Bestarinet project.

The cost to acquire P1 require just around RM600m, compared to current Yes Wimax capex invested so far as much as RM 2.5b.

Remark: The cost refer to SK Telecom Co Ltd invested RM201.6 million in P1 for its 28.2 stake in the company

Another possible reason YTLP may acquire P1 is Packet One, with its licences in 2.3GHz and 2.6GHz, will run TD-LTE networks in parallel with its existing and widespread WiMAX systems, starting in the first half of 2014. Several companies from the WiMAX world are now working on dual-mode chipsets that will enable devices to support hybrid roll-outs.

Packet One has signed a technology cooperation agreement with China Mobile, aiming to spearhead TD-LTE technology in Malaysia and southeast Asia. With their combined trial, P1 will also learn how to scale up its roll-out, and with the Chinese giant driving TD-LTE adoption, a large number of ecosystem devices – including modems, routers and handsets – will come into the market in the next 1-2 years, driving prices down.

By contrast, YTL is yet to decide whether to stick with WiMAX or migrate to TD-LTE. If it decides to stay with WiMAX, that raises questions about its future viability. The rising availability and choice of TD-LTE devices over the coming 18 months will compare with limited options for WiMAX, giving LTE a rising competitive advantage. TD-LTE offers WiMAX operators the opportunity to join the large 3GPP ecosystem, and leverage benefits of economies of scale, roaming and network sharing.

hng said...

Everyday, after bidding time, there is big chunk of buying volume waiting for seller. Then following day, if seller reside, YTLP need to bid 1 or 2 sen higher again to entice more seller to sell their sell to YTLP. These process repeat again and uptrend to be continue.

I believe the main reason to buyback and later cancel share is to reduce total number of share. The reduction in YTLP share volume in turn decrease to number of new YTLcorp share to be issue under take over offer via share swap. Translating to reduce dilution impact on Yeoh family stake in YTLcorp

Today, YTLP buyback 79% of today total volume, total 11,862,800 share, paid for RM 20,392,658, translating to average purchase price at RM 1.719, increase treasury stake 0.17% to 0.74% now.

Based on YTLP aggressive share buyback, i think there is urgency for them to buyback quick and cancel later to reduce total number of YTLP share as soon as possible, to pave way for upcoming privatization via share swap.

hng said...

YTLP share buyback more than 88% of today total volume, accumulate another 8.83m share at average RM 1.729, increase treasury share stake by another 0.12% to 0.86% now.

Still long way to go (30 trading days or need 1.5 month) before reaching another 3.5% stake for second round cancellation again.

hng said...

Kamalanathan: 85% of schools nationwide connected to high-speed Internet

MUAR: About 85 percent of 10,094 primary and secondary schools nationwide have been connected to high-speed Internet connection and Virtual Learning Environment (VLE), said Deputy Education Minister P. Kamalanathan.

He said the setting up of the programme under the 1BestariNet at the remaining 15 percent of schools was expected to be completed by end of this year.

“We have 85% of the schools completed nationwide except for Sarawak due to network system issues and it is being resolved,” he said after launching the 1BestariNet Frog VLE Roadshow at SMK Dato’ Sri Amar Diraja here on Saturday.

Also present at the event were Muar district education officer Ahmad Othman and YTL Communications Sdn Bhd executive director Datuk Yeoh Seok Hong.

1BestariNet is an Education Ministry project involving 10,094 schools across the country.

It is in line with the Government’s plan to use ICT to improve the quality of education in Malaysia through better involvement of students, parents, the community and the private sector.

For this project in particular, YTL Communications is the private sector partner, and the aim is to equip all schools with portable 4G Internet connection and Virtual Learning Environment (VLE) capabilities.

Kamalanathan said the roadshow was held to introduce and inform parents, teachers and students in Muar and Ledang district about the 1BestariNet activities.

He said a total of 193 schools out of 211 secondary schools in Muar and Ledang have been connected with the programme and the rest of schools would receive the connectivity by end of this month.

“The Government will ensure that the programme will reach all schools nationwide in a bid to reduce the ICT usage gap between rural and urban areas students.

“With this programme, we will ensure all students the country be given the opportunity to learn through 1BestariNet and VLE,” he said.

Kamalanathan added that the programme and education system would be improved from time to time from the feedbacks collected from teachers and students.

hng said...

Kuala Lumpur, Malaysia (September 18, 2013) – Red Hat, Inc. (NYSE: RHT), the world’s leading provider of open source solutions, today announced the completion of its collaboration with telecommunication service provider, YTL Communications to deliver a scalable, cost-effective cloud platform for e-learning in schools. Red Hat’s enterprise open source solutions have enabled YTL Communications to complete the cloud platform project – known as 1BestariNet – six months ahead of schedule and within budget, while achieving lower cost of ownership and reducing project risks.

“Red Hat was selected as a key partner for the 1BestariNet project due to its ability to provide a cost-efficient platform by leveraging open source software. Red Hat’s highly scalable, affordable, open source model was the most effective in running a large-scale cloud deployment project like the 1BestariNet,” said Wing K. Lee, CEO, YTL Communications Sdn Bhd.

According to Damien Wong, general manager, ASEAN, Red Hat, “Our alliance with YTL Communications has been a very fulfilling experience for both parties. Red Hat’s ability to deliver enterprise-ready, reliable open source solutions enabled YTL Communications to achieve greater efficiency in services and cost-savings on their IT infrastructure for this project. We expect more businesses to adopt open source solutions as it is a mainstream technology that not only liberates resources, but at the same time, provides an IT infrastructure that is secure, robust, and agile.”

Building a virtual learning infrastructure for 10,000 schools in 12 months

In December 2011, YTL Communications was contracted by the Ministry of Education to equip 10,000 primary and secondary public schools in Malaysia with a virtual learning infrastructure and provide high speed 4G Internet network access in just 12 months. Meeting the aggressive timeline required an unconventional departure from the traditional approach of deploying application servers in schools, to a cloud-based approach where 10,000 virtual learning environments (VLEs) and schools are deployed into the 1BestariNet cloud. This approach would enable all schools to access their individual school’s VLE via 1BestariNet or through any Internet connection.

YTL Communications based its search for a cloud solution based on criteria such as reliability, support, performance, and scalability. After evaluating solutions from various vendors, YTL Communications selected Red Hat Enterprise Linux, Red Hat Enterprise Virtualization, and Red Hat Satellite Server, which met all of the above requirements.

The 1BestariNet VLE system currently runs on 60 Dell and Intel Xeon-based servers with 2,400 cores for virtualization hypervisors to support the distribution of applications to the schools.

Flexibility and Scalability with Enterprise Open Source Technology

Built on a flexible Red Hat Enterprise Virtualization infrastructure, the VLEs can continue to scale and support additional processing or storage capacity as and when needed. “This can be achieved by scaling out horizontally and through adding more physical processing and storage capacity to the virtualization farms,” Wing explained.

Cloud Environment Increases Efficiency of Application Deployment

Adopting a cloud-based approach has enabled YTL Communications to standardize and control its IT infrastructure, as well as roll out new applications, application modules, updates and content to schools in an efficient manner – all which contributes to meeting its deployment and budget requirements.

With Red Hat’s open source solutions, VLEs for 10,000 schools were built and deployed within the first six months of the project. Today, 5.5 million students, 500,000 teachers, and 5 million parents have access to the cloud-based VLE in 1BestariNet.

The success of this project has spurred YTL Communications to take the VLE one step further. “We are in the midst of rolling out further applications and promoting the use of mobile devices to access the cloud environment,” said Wing.

hng said...

Introducing the 1BestariNet project

http://www.youtube.com/watch?v=S-6GaRdNHC8