Friday, September 26, 2014

Buy TA Enterprise

This is not a massive purchase, but I like the stock particularly its strong asset backing. TA as a stockbroker is no longer dominant - quite the right thing to do as the business is not as profitable as what it used to be before. Commissions is now reduced.

However, TA is still a careful and diligent investor. TA has nowadays been more interested into buying assets overseas - hence if you want some exposure overseas, this is one company. It has been buying hotels - good long term asset hold in very established markets.

I have written about TA some time ago, and during then was cheaper. I think it is not too late though.

Thursday, September 25, 2014

So what's the right PE?

You tell me! (Let's not talk about other valuation methods - strictly PE)

I remember when I started investing, people (or some books) used to tell - anything that is above 8x PE is considered expensive. That practice is still within some Malaysian VCs, investors where they would even look at prospective PE of 3x - 5x. Is this archaic measurement realistic?

Times change, appetite changes as well. However, if one is to look at the global interest rate trend, starting with the US Fed Funds rate - where it has come down from a high of almost 20% in 1980 during the Volcker period to now post-2008 subprime crisis where the Feds are keeping rates at almost zero, should it signify something?

Similarly, Japan has even kept rates at zero for much longer period, basically for the entire 21st century thus far (see below).

In Malaysia, I am pulling out the time (fixed) deposit rate where it has dropped from above 8% to hovering around 3.0% to 3.5% for more than 10 years now, where does one expect to put their money? - in FD still? Would one's risk appetite be higher investing into stocks, properties, even commodities etc? Surely.

If one has a higher risk appetite, due to the low deposit rates together with low financing rates from banks - would the accepted average PE generally be higher? Again surely.

If one is to look at the general trend from US to EU to Japan as well as in a period where funds are able to move freely, would you think that these funds would look at opportunities all over the world? It is much easier for some of the funds to get financed from a low interest rate country and invests their money in any investments that would get them anything that would provide between 8% to 10%, sometimes lesser - assuming currencies exchange does not change much.

So, what's the right PE? Anything that provides me higher than the 3.4% what banks is giving me, or for some bigger funds - anything higher than high quality bonds, with a little bit of buffer.

With that wouldn't you think that any business that has a good consistent growth, a PE of somewhere between 15x to 20x, be even digestible?

Or someone has a crystal ball and can see that interest rates are moving upward fast in the near future?

Monday, September 22, 2014

Keuro-WE: Let it go!

Well, I have just let go 6000 units of Keuro-WE.

If you have read Chinese newspaper, Oriental Daily, basically the project has already commenced. Some part of it is expected to complete by 2018, while the entire project supposed to complete by 2019. So what is the expected risk in this project - you will have to hold for long term and will not know how good a prospect it will be. There is not going to be dividend for the next few years, at the very least. For now, I am hoping that the stock will go into consolidation phase if that is the case.

My portfolio looks like below.

Saturday, September 20, 2014

What happened to commodities?

I am not so much of a commodity person. For an investor in commodity, I have always believed that the investor has to have a much better macro picture i.e. consumption of steel in the construction industry. Another example, edible oil market i.e. comparison between sunflower vs soy vs palm oil. What are their prices per metric ton. Which are consumed more etc? These are things that I am not able to understand well.

Look at the prices of major commodities here especially over their 52 weeks price range.

Similarly, for platinum, silver there must be some use for those i.e supply and demand - or real industrial use. Over the last decade commodities were doing well.

However, these have not been so for the last one year or even more. Read the news I picked up from BusinessInsider below.
Silver is getting crushed.
On Friday, Silver fell more than 3% to less than $18 an ounce, its lowest level in more than four years.

View gallery
The price of gold also fell about 0.8% and touched its lowest level since January. Gold has been weak recently and is approaching a four-year low.

View gallery
Platinum also fell to a nine-month low.
What actually happened. These commodities are no longer used for its real purpose i.e. industrial, consumption etc. They have been pretty much speculated. Or could it be China's slowed consumption? I am pretty sure we are not worse off today as compared to four years ago globally. Although it made some sense that gold were sought after during bad times or during period of uncertainties, but what about platinum, copper or silver? Aren't they sought after for industrial purposes?
For that matter I am not really sure whether palm oil has found its low.
For a while, investors have been very speculatively positive over commodities and they seemed to have lost their fangs recently.

Thursday, September 18, 2014

Is RevAsia counting chicken before it is hatched?

Came across this story when reading Focus Malaysia this evening. Catcha Media morphing into another name now, Rev Asia is probably at it again - playing with investor's ignorance? It has just announced - well on the 9 September 2014 - that it is selling its entire stake in iCar. Besides the news by TheEdge and several other news daily, do read the below carefully.

The company proposes to sell. Usually, it highly unusual for a company to announce its intention to sell and start to provide valuation on its potential sale. In fact, it has yet to have found a buyer. Compare this to another deal that I had covered, Jobstreet's sale to Seek. It is a confirmed sale, subject to some conditions.

In Rev Asia's sale, it is claiming that it intends to sell its entire stake which in its announcement could probably be worth RM238 million assuming that the sale was at AUD1.54. A day after the announcement of its intention to sell, the share price of iCar actually dropped substantially, signifying that the owners were not serious on the business but only waiting for the moratorium period to be due (11 Sep 2014).

My question is:

  1. Why bother announcing when you have yet to have found a buyer?
  2. Will the company be reducing the stake partially with Ltd owning 22.90% while Rev Asia owns a slightly higher stake of 27.9%?
  3. In the announcement, it says that it is allowing itself to sell the stake at a price not more than 25% of its prevailing market price. If the stake is a significant stake with control, why at discount? Could it be that iCar is not worth that much in its opinion? If a company negotiates a significant stake sale with relinquishment of control, why discounted price? Rev Asia has some well known directors with one ex-head of Accenture Malaysia - they surely could do better. Or could it be to mislead investors?
Surely, with the announcement, investors is made to think that there is value in RevAsia. Look at the sudden hike in price, a day after the announcement.

The fact of the matter is that the value is not real until it has confirmed a buyer. In fact, iCar's share price went the other direction after the announcement.

My personal feel is that RevAsia or Catcha is at it again and just paying an investment bank to announce the intention is a waste of shareholders money. Gain for the majority shareholders, while loss to small minorities.

The right thing to do is to announce only you have found a buyer, not when you think you want to sell, as 27.9% stake is not a small stake. One may not be able to find a buyer especially for a company which makes losses to the tune of more than AUD6 million.

Saturday, September 6, 2014

Who is the rat now?

Ironically this happened after I have posted the article in which case I was wondering something could be amiss on how the fund raised was used. That article was on Bright's rights where the cash raised was almost immediately used up.

Well another twist which is seemingly weird right? An executive director claiming that her signature on the financial statement was forged. Well for someone who had worked for PwC, Affin Merchant and Head of Corporate Planning for a company which is AIM listed? It takes someone of that background about 6 months to notice her signature in the financial statement was forged? Can that be really happening? Again, More questions than answers right?

Now my question is why wouldn't she resign? In any case the claim made on a listed company (or any company for that matter) is really very very serious!

Wednesday, September 3, 2014

Laying low

What happens when one does not know where the market is heading? There are 2 things we can do i.e. exit or another way is to continue to look for a strong potential company. Or else another thing one can do it by taking short term opportunity.

I have done that in one of the stocks, i.e. Jobstreet. If I can, I would only be putting my money in about 3 - 4 stocks, but can't do that as it is not good enough of a diversification.

For a while, I have not been able to have a good feel over the mid-term prospects of the market. I know that the speculative stocks are flying but for how long? That is always the fear. In previous experience, the hugely speculative stocks could potentially be a dampener to stock market generally especially when it crashes.

It will pull the others down as well. The only difference is that the strong fundamental ones will pick itself back while the fundamentally useless stocks may not make a comeback. Personally, I am not a market timer, and I do not intend to. Gone past that stage thinking of best ways to do market timing and to me it is a waste of time.

On the other hand, I am not a clever seller, hence might as well not sell (which is the best solution). One a few months time, hopefully the dividends from Jobstreet will provide me with some funds while some of those stocks I am holding will continue to provide consistent dividends. They are Padini, NTPM, Jobstreet (continue to provide quarterly cashflow).

One should note that from the portfolio, there is a new stock i.e. Keuro-WE. Well, that is through the rights subscription. For a while, I have not been updating the portfolio, and it is time I do so.

Am I thinking of selling some of the stocks? No, cause there is no better way of putting my money except towards stocks investments. And I am not too sure of it heading south as well. So the best way is to lay low while planning the next move.