JULY MARKET COMMENTARY

29th July 2008
“The Oil Factor”

The price of crude oil seems to be now ‘the factor’ affecting global market sentiments and a downward trend in oil prices may be the answer to a trend reversal in the current market sentiments. This month’s commentary focuses some questions on the oil factor.

Oil prices have risen to record levels in recent weeks, with traders in London and New York paying more than $147 a barrel for crude oil at its peak on 11 July. How much has oil fallen and has this been translated to cheaper pump price for the consumers?
Since July 11th, prices have fallen, dipping more than 20% to a low of $121.34 for a barrel on 29 July. Crude oil prices affect the wholesale cost of the petrol and diesel paid for by the major retailers. The good news is a number of those firms have passed on the lower prices to motorists at their forecourts, including our neighboring country, Singapore. The wholesale price of fuel also fell substantially last week. The price of refined diesel, for example, has fallen by 8.3% since it reached an all-time high on 11 July of $1,241 per metric ton.


Why did oil prices fall?
The perception in mid July that the slowing US economy could trigger a worldwide economic slowdown had clear implications on the expected demand for oil. Countries such as India and China depend on the US, Europe and Japan as major markets for their manufactured goods and services. If demand for their goods declines, as is expected, so too will their thirst for the oil and fuel needed to produce the products. Another factor helping to cut oil prices was on the supply side, where there were indications that tensions were easing between oil-producer Iran and the US over its nuclear program. This reduced fears that the supply of crude oil from Iran could be interrupted. Traders also pointed to news that a Chevron oil pipeline in Nigeria had reopened following an attack on it in June.


Are these the only factors that determine oil prices?
No. The price of oil on the international markets is determined by a combination of forces. There are the so-called fundamental factors of supply and demand which are expected to keep prices high in the longer term. On the demand side there is the rising need for oil from the ever-expanding economies of India and China, which need more fuel oil to run their factories and more petrol for a growing number of motor vehicles. On the supply side, there are concerns that it is taking longer than before to develop new oil fields, an average of at least 10 years, so it is difficult to increase output quickly to meet increasing demand.
This is exacerbated by critical shortages of skilled oil engineers, and the limited investments made by many state-owned oil companies who control the vast majority of the world's oil production. In the even longer term, there are worries that we may be reaching the limits of the world's finite oil resources and that production could begin to fall in the decades to come.


Can these explain the sudden changes in oil prices?
Not really, and crude oil is something of a special case. Oil is traded on futures markets, making it more vulnerable to the kind of speculation that can move prices by as much as $5 a barrel in a single day. According to Dr Manouchehr Takin of the Centre for Global Energy Studies this volatility is caused by oil traders. He says that oil traders are making decisions to buy or sell oil on a minute-by-minute basis, and are much more influenced by rumors and stories than their counterparts trading shares on stock markets. "Perception is the key word here because the fundamentals of the oil market don't change every minute". It is the perception of changes in either the demand or supply of oil that drives and fans market rumors.


Is the sudden drop in prices going to keep going?
Well, it’s hard to tell though measures have been put in place for curbing of oil trades. As the US Dollar continues to strengthen, demand begins to soften, and market manipulation is under a more watchful eye of the regulators, crude oil prices can be on the way down to as much as $70 to $80 per barrel by year end. Except for any other uncontrollable disruptions e.g. tropical storms or geopolitical risks, crude oil prices seem to be heading southwards which is translated to higher consumer confidence and better margins for many sectors of the economy worldwide. Certainly, inflation which is a huge concern at this moment for many Asian economies will ease as crude oil prices fall to sub $100/barrel levels. This will translate into more corporate margins, more money in our pockets and certainly a reversal in market sentiments globally.
.

Received 4.5sen Dividend From Genting

Received dividend from Genting - 4.5sen. At this juncture, the best way dealing in bearish market is to concentrate bluechip counters that give consistent dividend. Dividend yielding of more than 7% onward is no doubt a good choice in your selection criteria. This dividend yield will provide a better yield comparing to FD rate at the same time cushion your stock price, it is the best defensive stock that one can consider holding them and lock them in long run like FD. Bluechip that given consistent dividend is a safer bet as these type of counters have solid background which is worth putting your investment money without fear......

Received Final Dividend of 3.6sen and 4sen from Resort and Yilai

Just received the final dividend of 3.6sen from Resort and final dividend of 4sen T.E from Yilai respectively. During bear market is good to source for high dividend yielding stock as a more defensive stock to cushion your losses, it may in turn produce higher return comparing to FD rate in the long run. At current level many blue chips have came down drastically and comparatively the dividend yield looked even more attractive at this level in around 8% - 10% which is far more better than FD rate. This bearish market provide greater opportunity in increasing your dividend portfolio to a larger portion if one is really looking for more. I am still sourcing and waiting as for now no need to act hastily, just be patient and buy in stages at the right time. Divide your bullet in few bucket and lock them in gradually. Till then happy trading.

Bruce Lee - Just For Laugh

Bought IOICORP at RM5.80

Can't resist myself by buying back IOICORP at RM5.80 this morning which i disposed at RM7.15 some months back. Market condition is definitely still in the loom of downtrend due to many factors. Same strategy buying in in stages and keep very long term, this is the approach i am adopting. Happy to see that PBBANK is declaring 30sen dividend again with it 13% increase in profit. It may be tough in coming second half of 2008 in which economy may be slowing down due to global oil price hike, US recession, high inflation rate (abt 6-7%) and political uncertainty. I foresee that market will be drifting down further and the impending increase of interest rate by BNM will be a concerned where, by how many basis points will they implementing ? If it marginal say 25 basis points, i think the impact will not be that great to the market. Hope that this can be carried out in a proper and planned manner compare to increase steep oil price in a sudden without proper planning of curbing inflation by our government.

The Effects of Time

Got time to read this...perhaps? BEAUTIFUL:)

My wife called, 'How long will you be with that newspaper? Will you come here and make your darling daughter eat her food?

I tossed the paper away and rushed to the scene. My only daughter, Sindu, looked frightened; tears were welling up in her eyes. In front of her was a bowl filled to its brim with curd rice. Sindu is a nice child, quite intelligent for her age.

I cleared my throat and picked up the bowl. 'Sindu, darling, why don't you take a few mouthful of this curd rice? Just for Dad's sake, dear'.

Sindu softened a bit and wiped her tears with the back of her hands.
'Ok, Dad. I will eat - not just a few mouthfuls, but the whole lot of this. But, you should...' Sindu hesitated. 'Dad, if I eat this entire curd Rice, will you give me whatever I ask for?'

'Promise'. I covered the pink soft hand extended by my daughter with mine, and clinched the deal. Now I became a bit anxious. 'Sindu, dear, you shouldn't insist on getting a computer or any such expensive items. Dad does not have that kind of money right now. Ok?'

'No, Dad. I do not want anything expensive'. Slowly and painfully, she finished eating the whole quantity. I was silently angry with my wife and my mother for forcing my child to eat something that she detested.

After the ordeal was through, Sindu came to me with her eyes wide with expectation. All our attention was on her.

'Dad, I want to have my head shaved off, this Sunday!' was her demand.

'Atrocious!' shouted my wife, 'A girl child having her head shaved off? Impossible!'

'Never in our family!' My mother rasped. 'She has been watching too much of television. Our culture is getting totally spoiled with these TV programs!'

'Sindu, darling, why don't you ask for something else? We will be sad seeing you with a clean-shaven head.'

'Please, Sindu, why don't you try to understand our feelings?' I tried to plead with her.

'Dad, you saw how difficult it was for me to eat that Curd Rice'.
Sindu was in tears. 'And you promised to grant me whatever I ask for.
Now, you are going back on your words. Was it not you who told me the story of King Harishchandra, and its moral that we should honor our promises no matter what?'

It was time for me to call the shots. 'Our promise must be kept.'

'Are you out of your mind?' chorused my mother and wife.

'No. If we go back on ourpromises, she will never learn to honour her own. Sindu, your wish will be fulfilled.'

With her head clean-shaven, Sindu had a round-face, and her eyes looked big and beautiful.

On Monday morning, I dropped her at her school. It was a sight to watch my hairless Sindu walking towards her classroom. She turned around and waved. I waved back with a smile. Just then, a boy alighted from a car, and shouted, 'Sinduja, please wait for me!' What struck me was the hairless head of that boy. 'May be, that is the in-stuff', I thought.

'Sir, your daughter Sinduja is great indeed!' Without introducing herself, a lady got out of the car, and continued, 'that boy who is walking along with your daughter is my son Harish. He is suffering from... leukemia'. She paused to muffle her sobs. 'Harish could not attend the school for the whole of the last month. He lost all his hair due to the side effects of the chemotherapy. He refused to come back to school fearing the unintentional but cruel teasing of the schoolmates. Sinduja visited him last week, and promised him that she will take care of the teasing issue. But, I never imagined she would sacrifice her lovely hair for the sake of my son! Sir, you and your wife are blessed to have such a noble soul as your daughter.'

I stood transfixed and then, I wept. 'My little Angel, you are teaching me how selfless real love is!'

The happiest people on this planet are not those who live on their own terms but are those who change their terms for the ones whom they love...

Defensive stocks the choice picks

CIMB: Investors should go for high-dividend counters
PETALING JAYA: Stocks with high dividend yields continue to provide some form of protection to investors who are seeking defensive stocks amid the current market and political concerns, said CIMB Research.
CIMB has picked its top five high yield stocks- DiGi.com Bhd, Gamuda Bhd, Public Bank Bhd, Telekom Malaysia Bhd and Wellcall Holdings Bhd.
The stocks were expected to give a dividend yield of close to double-digit percentage and above in financial year 2009 and were rated “outperform”, it said.
In its recent research report, CIMB said: “We believe that the high dividend yields of these companies are sustainable thanks to strong cash flows and balance sheets.”
The report said DiGi is an outperform stock that offers both defensive and growth elements in an uncertain environment.
“We believe DiGi will pay above its free cash flow yield of 7% to 9% in the next few years to optimise its balance sheet,” it said, adding that key catalysts for growth includes potential capital management moves, a positive impact from mobile number portability and a greater competitiveness with 3G.
Assuming that DiGi pursues a net debt and earnings before interest, tax, depreciation and amortisation of 1 to 1.5 times in FY08, shareholders are expected to get a return of RM3.20 to RM4.65 per share.

Despite rising raw material prices and weaker long-term earnings visibility for the construction sector, Gamuda remains an “outperform.”
Given its strong cash support of about RM300mil per annum from its concessions, Gamuda offers a solid three-year earnings compound annual growth rates of 31% and the highest dividend yield of above 10%.
In addition, the sale of Gamuda's 40% stake in Syarikat Pengeluar Selangor Holdings Bhd and 80% stake in Gamuda Water Sdn Bhd estimated at RM1.5bil to RM2bil would result in a potential special dividend.
Public Bank remains CIMB's top-pick thanks to its strong fundamentals that includes a high return on equity of 20%, fastest loan growth, non-performing loans ratio of 1% and the lowest cost-to-income ratio in the banking sector.
CIMB is maintaining a “trading buy” on Telekom as it believes the shares have not priced in the likelihood of a special dividend in coming quarters.
TM is believed it would consider a special dividend after receiving TM International Bhd's loan repayment to TM, said CIMB.
Due to rising production costs, rubber hose manufacturer Wellcall's group earnings is expected to remain strong as there are further signs that major players in the rubber hose industry are outsourcing their orders to smaller players such as Wellcall.
Currently, Wellcall offers more than 11% dividend yield at its current price.
It pays out 50% of its earnings backed by its strong net cash position of RM28mil.
DiGi, Gamuda and Wellcall are in a good net cash position and enjoy robust earnings growth, while Public Bank is pursuing a 100% payout ratio and TM has surplus cash, said CIMB.

Sold PBBANK (1295) at RM10.20

Political uncertainty and market heading south, this trigger my decision in off loading PBB for the time being. Will definitely buy back this giant when it dip, hope that i did not make the wrong decision by getting rid of this golden goose that really lay eggs. Market sentiment is just bad, it might drift down further. Feel a bit uneasy while selling PBB, in fact i have been keeping this giant for almost 6 years. The capital appreciation, bonus and dividends received thus far has giving me an approximately 500% gain if calculation is not wrong, that indeed a handsome gain considering an average of 83% per year. Wow...So, all the best and good luck to you guy. I am staying out at the moment.

Just For Laugh

An elderly lady was standing at the railing of the cruise ship holding her hat tight so that it would not blow away in the wind.

A gentleman approached her and said, "Pardon me, madam. I do not intend to be forward but did you know that your dress is blowing up in this high wind?"

"Yes, I know," said the lady. "I need both my hands to hold onto this hat." "But madam, you must know that you are not wearing any underwear and everything is exposed!" said the gentleman in earnest.

The woman looked down, then back up at the man and replied, "Sir, anything you see down there is 85 years old. I just bought this hat yesterday!"

Why did he cry? A True Story

A true story that happened in China。 A bus full of passengers was travelling on hilly road.

Midway through the journey, 3 armed thugs was eyeing the pretty woman bus driver. They forced the bus to stop and wanted to have fun with the driver! 。

The woman driver naturally shouted for help, but all the rest of the passengers just kept quiet. Then a weakly looking middle-aged man came forth to ask the 3 men to stop; but he was instead beaten up.

The man was very angry and appealed loudly to the other passengers to stop this uncivilised act but nobody responded. And the driver was dragged by the 3 men to the bushes nearby.

An hour later, the 3 thugs and the ruffled driver came back to the bus and the driver is ready to drive off again.... "Hey you, get down the bus!" the woman driver shouted to the man who tried to assist her earlier on. The man was bewildered and said: "What's wrong with you? I was trying to save you just now and was I wrong in doing so?" "You save me? What have you done to save me?"

The driver retorted, and a few of the passengers were quietly laughing away. The man was really angry. Even though he did not have the ability to save her, he should not be given this treatment at all. He refused to get down the bus and said; "I paid for the trip and I have the right to remain."

The driver put on a grim face and said: "If you don't get down, the bus will not move on." What was unexpected was that the passengers, who were oblivious to the barbaric act of the thugs just now, suddenly woke up and in a concerted effort asked the man to get down the bus saying: "You might as well get off the bus, we have things to attend to and cannot afford anymore delays!"

A few stronger passenger were indeed trying to drag the man down the bus The 3 thugs were smiling knowingly at each other and commented: "We must have done a great job to the lady!" After much ado, the man's luggage was thrown out the bus window and he was ousted out of the bus.

The bus started on its journey again. The driver straightened up her hair and turned the radio to full volume. The bus was reaching the hill top and will go downhill after a turn. The right side of the bus was facing an unfathomable cliff. The speed of the bus increased gradually. The driver's face was very calm with both hands on the steering wheel. Tears started to swell in her eyes.

One of the thug realised something amiss and said to the driver: "Drive slowly, what are you trying to do?" The driver said nothing, but the bus travelled faster and faster. The thug tried to grap hold of the steering wheel, but the bus shoot towards the cliff like an arrow leaving the bow.

The next day, the local paper reported a tragic accident at the 'Tiger Taming Hill' region. A medium sized bus fell through the cliff and the driver and the 13 passengers were all killed. The man who was chased down the bus saw the paper and cried. Nobody knew what was he crying about and why he cried! You know why he cried? If you were in the bus, would you stand up like the man did? We need people like him to create and sustain a normal society! When we treat others with our hearts; we will receive warmth and love from people!

Buying and selling signal

Wednesday June 18, 2008
This article by Ooi Kok Hwa, an investment adviser and managing partner of MRR Consulting, tackles some basic skills needed to detect the buying and selling strength of a stock price.
THE price movement of a stock is dependent on the demand and supply of the stock, which in turn is influenced by the buyers’ buying interest and the sellers’ selling interest.
Every buyer or seller has different purposes when entering into a trade. The followings are general “rules”, which provide us with some hints on whether the stock price will probably go up or down.
Investors should not view these “rules” as a foolproof method that will hold true all the time. There are certain occasions that market manipulators might be using these “rules” to mislead the general public.
Rule 1: Buyers are showing small orders and sellers are showing big orders. However, the stock prices are holding quite well – buy signal.
When we want to purchase a stock, we will call our remisiers to check on buying or selling orders on the stock. A lot of selling orders with only a few buying orders on the stock may imply that the stock price would come down.
However, if the stock prices are holding quite well, it could mean there are some net buyers accumulating the stock.
The reason for this is buyers may refuse to show their buying orders to attract sellers to sell at the buyers’ buying price.
Showing high buying orders may delay selling interest, as sellers will wait for the buyers to buy at their selling price. Hence, it is a “buy” signal if we notice the above rule on any stock.
On the other hand, if buyers have big orders and sellers have small orders while the stock price continues to drop, it might be a “sell” signal that this stock has some big sellers that are not willing to show their selling orders but they need to sell the stock now.
Showing big selling orders may cause panic on the stock. Hence, to sell at higher prices, sellers will try to hide their selling orders.
Logically, if a stock has a strong buying interest, the stock price should go up instead of come down. Hence, the weakening stock price may imply that sellers outnumber buyers.
Rule 2: The overall market is weak but your stock price is moving against the overall market trend – buy signal.
In a down market, if a stock that you own is inching up steadily despite the overall weak stock market sentiment, this may imply that there are some net buyers on this stock.
We view this as a “buy” signal where buyers are eagerly accumulating the stock in spite of the weak market. In most instances, the stock price will move higher the moment the overall market sentiment recovers.
In contrast, if the overall market is moving up but your stock is being beaten down, it is a “sell” signal. Normally, insiders are aware of certain crucial bad news that is still not available to the market yet.
Rule 3: Stocks carry a lot of bad news and are trading at high volume but stock price remains stable – buy signal.
Sometimes a certain stock is facing huge bad news but the stock price is holding on quite well. Normally, it may imply that buyers are not worried about the market concerns on this stock. The current stock price may have discounted all the bad news.
In contrast, if a stock, despite having all the good news in the media, continues to see its price decline, this is a “sell” signal that shows there are certain sellers who have some concerns over the stock, but the overall market is still not aware of the news.
Ooi Kok Hwa is an investment adviser and managing partner of MRR Consulting.

Subsidy cut the better option

Thursday June 12, 2008

COMMENTBy KHOO KAY PENG
The recent restructuring of fuel subsidies shocked the nation. It seems like a drastic move but it is better than spending RM40bil a year on oil subsidies when there are other pressing socio-economic needs.
LAST Wednesday, Prime Minister Datuk Seri Abdullah Ahmad Badawi shocked the country by announcing subsidy cuts for both petrol and diesel. His main critics slammed the decision as a move to spike whoever would take over from him.
A Pakatan Rakyat leader surprised at the decision reckoned that Abdullah had forfeited his option to call for snap polls should there be crossovers.
From this observation, it is clear that Abdullah did not put politics above the interest of the nation.
It simply does not make economic sense to spend RM40bil a year on oil subsidies when there are other pressing socio-economic needs. Every year, almost half of the fuel subsidies go to private cars, more than 75% of which are single occupant.
If the Government can deliver on its promise to improve and enhance the current sloppy public transport system, this money can be used to fund other more pressing needs such as essential food items, education, affordable housing and healthcare.
Again, the decision made was correct and timely, but the manner in which it was done robbed it of the full credits it deserved. Only weeks ago, Abdullah and his deputy Datuk Seri Najib Tun Razak had given assurances that subsidy cuts would be deferred at least until August.
Flip-flop in the decision making process did not help to consolidate people’s confidence in the government’s management of rising oil prices and inflation.
Considering our current socio-economic condition, a gradual cut of subsidy is a better option. The people and industries need time to adjust to the new environment. These industries have operated in an artificial cost structure supported by subsidies since 1982.
However, I agree with some economists who observed that it would be better for Malaysia in the long run to adjust its subsidy structure now, before we reverse our position to become a net importer by 2014. Moreover, we cannot continue to subsidise the rich and foreigners.
With the subsidies significantly reduced, the Government must now deliver on its promises to reduce wastage and streamline the bureaucracy.
All government expenditures must be made accountable and transparent to the public. Abuses of public funds reported in the Auditor General’s report must be curbed. The Government must show more teeth in fighting corruption.
Ironically, the question is no longer whether the Government can or cannot deliver on its promises. For its own political survival, Barisan Nasional has no other choice but to perform.
Inevitably, the manner in which the cuts were made courted severe criticism from several Pakatan Rakyat (PR) top leaders.
Parti Keadilan Rakyat de facto leader Datuk Seri Anwar Ibrahim described the retail petrol price increase as “wanton in size and callous in effect”. He charged at the way the profits of Petronas were disbursed, and criticised the “wanton waste in government expenditure”.
Touted by the foreign press as the “prime minister in-waiting”, Anwar pledged, “I will resign immediately” if a PR government was unable to roll back the subsidy cuts.
DAP secretary-general and Penang Chief Minister Lim Guan Eng criticised the move as “economically insufficient and socially unjust”. He claimed that the new structure “does not deal with ensuring that fuel subsidies fulfil the intended objective of helping the poor instead of benefiting the rich”.
But surely the Government, including a PR-led one, cannot continue to support a subsidy structure which is unsustainable once the country becomes a net petroleum importer.
The promise to reverse the subsidy cuts is an attractive one. But for how long can the subsidies be maintained before our limited resources are eaten away?
Anwar has to justify why we should continue to pay through our nose so that six million drivers can continue to enjoy the subsidies.
If the increase of 78 sen is too drastic now, can Malaysians accept a RM2 rise by 2014 should the fuel price continue to climb?
By using the money saved from the subsidy cuts on other pressing needs, the Government is addressing the basic needs of the poor. On the contrary, the continuation of the fuel subsidies is detrimental to the interest of the poor, and benefits only the upper echelons.
On this part, the enforcement bodies must work tirelessly to contain unnecessary price increases triggered by the higher retail fuel price, and not merely pay lip service to its intention to manage inflation.
If Anwar wants to position himself as a strong candidate for the premiership, he must prove that he has a plan to do better than merely proposing to reverse the cuts.
It is more productive for his coalition to propose an alternative strategy on how to control retail fuel prices, to prepare for the reverse of position to being a net importer, to improving quality of life, to ensuring finite resources are channelled to food security and public transport rather than to organise and support street protests.
Can the PR do better? We are listening.
Khoo Kay Peng is a corporate consultant and an independent political analyst.

Sold Tenaga at RM8.50

Have sold my Tenaga at RM8.50 today. Is very much lower compare to my target price at RM9.30, however, this just prove that no one can predict future, so long as one don't make losses consider good enough and remember that one got to have patient when dealing with investment. Nothing is come free in this world, you want to make money you got to sacrifice your time and money. You got to sharpen your saw before making an attempt. Anyway, treat this as your own business, deal it with seriousness and be responsible with it. In this instance, every cent that put in is worth the value no matter what it turn out. All the best and may the best price be yours.

Bought Huaan (2739) at RM0.66

After evaluating the result of Huaan and considering the Coke and Coal prices have been up for about 50% to 60%, i expect it 2nd quarter result should be good, since it has already registered a whopping 100% increased in net profit for the 1st quarter.

This time i have to concur with 'toto' about Huaan. Thus, i have bought in Huaan at RM0.66 today. It also declare a T.E 4.55% dividend for this quarter which represent an annual of 3.4% in total. I think is a good dividend overall.

Conservatively, if we calculate based on PE=8 for a fair valuation, Huaan fair value should be around RM0.90. There is an upside of around 40% which i think is worth betting your money in. Giving this counter a medium term till year end, it should be realising it actual value i hope.

The above do not represent a buy recommendation from me, act at your own risk. Till then have a good week end. Bye.

Understanding the stock market rules

Stock Market Rules by Ooi Kok Hwa
In this article, we will highlight a few common and important ‘rules’ that are crucial to most investors.
Your purchase price is irrelevant when you consider selling a stock.
Most people always find it difficult to sell a stock at a price lower than the purchase price because this means making a loss.
For example, if you purchase a stock at 90 sen, you will not sell the stock lower than 90 sen as this means a loss to you.
You will most likely hold on to it until you are able to sell it at higher than 90 sen.
Unfortunately, your stock never remembers how much you have paid for it. You have memory of the purchase price but not the stock.
As a result, some investors end up holding on to lousy stocks with poor fundamentals.
The longer you hold on to these stocks, the higher the losses that you will incur.
Hence, the timing to sell stocks with poor fundamental will depend very much on when you are able to admit that you have made a mistake purchasing them.
Deciding whether to sell when the price is falling or continue to hold on to it with the hope it will recover and break even depends on the fundamentals of the stock.
The target selling price for a stock should be based on the future prospects of the company instead of the price that you paid for the stock.
Thus, you need to “sell the losers and let the winners run”.
For stocks with good value, you should consider holding them for a longer time.
Lately, some second liners with good fundamentals have been hammered down to very low levels. Some of them are even selling at lower than the owner’s cost (lower than book value).
However, not many investors are excited about those stocks although they are currently selling at a very cheap valuation.
Most investors worry that the price will go down further after they have bought it.
It is very hard to predict the market bottom. Based on our observation, certain fundamentally strong stocks may have temporarily found bottom despite the recent market sell down.
We think it is a good time to nibble on some good value stocks and keep them for the long term.
Even though the price will get cheaper than your purchase price tomorrow, we believe the current price should not be too far from the bottom.
Investors need to remember that the returns are based on the selling price. You may purchase the stock at a relatively higher price during a downtrend.
However, if the stock has great potential and you are patient enough to hold on and wait until the market recovers, you can still get higher returns than someone who may be lucky to purchase this stock at the lowest price but sell it too early.
As mentioned earlier, buying before the market reaches bottom is “buy low, sell high”.
However, to a certain group of investors it is safer to buy only when the market has found the bottom and started to recover rather than trying to predict where the market bottom is.
They prefer to buy the stock at a higher price because they believe they can sell it at a higher price. This is “buy high, sell higher”.
For those who prefer the “buy low, sell high” strategy, as you are buying before the market is touches bottom, you need to stagger your purchases so that you have enough bullets to average down your purchase price if the stock price drops further.
For those who prefer to “buy high, sell higher”, they need to prepare themselves mentally to buy at higher stock prices.
This might be a problem to investors as they are not willing to pay for higher stock prices as they always remember the recent lowest prices.
They may end up buying nothing but still hoping the stock price will come down one day.

Received 10sen Dividend From TENAGA

Received 10 sen dividend from Tenaga. There was an announcement make by Tenaga to propose purchasing it own shares up to 10% of the issued and paid-up share capital. The Share Buy-Back will enable the Group to utilise its surplus financial resources to purchase the shares. The Share Buy-Back is expected to stabilise the supply and demand as well as the price of the Company Shares. The improvement in earnings per share (“EPS”), if any, arising from the Share Buy-Back is expected to benefit the shareholders of the Company. The purchased shares can be held as treasury shares and resold on Bursa Securities with the intention of realising a potential gain without affecting the total issued and paid-up share capital of the Company. If the treasury shares are distributed as share dividends, it will serve to reward the shareholders of the Company. Assuming that the Company purchases 433.35 million Shares representing approximately 10% of its share capital as at 31 March 2008 and such shares purchased are cancelled, the Proposed Share Buy-Back will result in the issued and fully-paid up share capital of the Company being reduced from RM4,333.53million comprising of 4,333.53 million Shares to RM3,900.18 million comprising 3,900.18 million Shares. The proposed Share Buy-Back will have no effect on the issued and paid-up capital of the Company if the shares purchased by the Company are held as treasury shares and are not cancelled. The effect of the Proposed Share Buy-Back on the EPS of the Group is dependent on the purchase price of the Shares and the effective funding cost or loss in interest income to the Company. Further, should the Company choose to retain any Shares purchased as treasury shares and subsequently resell the treasury shares on Bursa Securities, depending on the price at which the said Shares are re-sold, the Proposed Share Buy-Back may have a positive effect on the EPS of the Group if a gain on disposal is achieved. However, if a loss on disposal is realised, it may reduce the EPS of the Group.

Genting posts lower Q1 net profit of RM439mil

PETALING JAYA: Genting Bhd, Asia's biggest casino operator, said net profit for the first quarter ended March 31 fell 33% to RM439.4mil despite a 7% rise in revenue to RM2.16bil.
The lower profit was due to less income from its British gaming operations, while profit in the previous corresponding period was boosted by a RM510mil one-off gain from the disposal of shares in its subsidiaries.
“Higher revenue was recorded at the group's non-leisure divisions, particularly the plantation division,'' Genting said in a statement yesterday.
Plantation revenue, via 53.8%-owned Asiatic Development Bhd, amounted to RM249.5mil, or 93% higher versus RM129mil a year earlier.
Genting said the plantation company achieved a higher crude palm oil selling price of RM3,403 per tonne in the January–March period against RM1,927 per tonne a year earlier.
An aerial view of Genting Highlands Resort
Asiatic released its first-quarter results on Wednesday.
Revenue at Genting's core leisure and hospitality division slipped 2% to RM1.44bil despite higher sales at Resorts World Bhd, operator of Genting Highlands Resort.
“The British gaming operations under Genting International Plc were affected by lower business volume, higher net bad debts written off and higher gaming duties,'' it said.
The group's power division delivered a 14% increase in sales to RM408mil, but Genting said rising coal prices “would likely affect” its operations in China.
It expects “satisfactory” group performance for the rest of the year.
In a separate announcement, 30.3%-owned Landmarks Bhd said its first-quarter net profit slumped to RM4.18mil against RM15.89mil a year earlier following the disposal of assets.
The group expects to post a lower profit for the year ending Dec 31 (FY08) compared with FY07, but said it “believes that Treasure Bay Bintan will contribute a significant portion of the group's profit going forward as we embark on our development programme.''
Landmarks has announced plans to develop resorts, condominiums, villas and entertainment facilities that may include gaming activities on 333ha. The project, called Treasure Bay, is on Pulau Bintan in Indonesia.

Is Right Issue Worth subscribing for YUNKONG ?

A little background of Yung Kong :-

Yung Kong Galvanising Industries Berhad engages in the manufacture and sale of galvanized and coated steel products in Malaysia. The company, through its subsidiaries, markets and sells flat steel products, and other building and construction materials; and manufactures and sells furniture hardware and accessories. Yung Kong Galvanising Industries was founded in 1977 and is headquartered in Sarawak, Malaysia.

Yung Kong Galvanising Industries Bhd reported earnings results for the first quarter ended March 31, 2008. The company has registered first quarter pre-tax profit of MYR 6.611 million ($2.1 million), an improvement of 381.9% year-on-year thanks to the surge in steel prices. The steelmaker's revenue rose 23.3% to MYR 121.378 million for the three months ended 31 March 2008 against MYR 98.451 million for the previous corresponding period. Earnings per share rose to 6.77 sen from 1.13 sen previously.

Yeah, what was mentioned by forumer is true, why raising fund ? for a continue sound of business plan ? or paying debt ? Is the below subcription of right issue worth while ?

Renounceable rights issue of 65,178,300 Rights Shares together with 65,178,300free detachable Warrants at an issue price of RM0.50 per Rights Share (of which the first call of RM0.35 is payable in cash on application and the second callof RM0.15 is capitalised from the company’s revaluation reserve account andretained profit account) on the basis of one (1) Rights Share together with one(1) free detachable Warrant for every two (2) existing Shares (“Rights Issue with Warrants”) held at the Entitlement Date.

Lets mathematically the above by below example :-

1) Your holding of 2000 shares @ closing price of 0.64 sen = 640 X 2 = RM1280

2) Get to subscribe the right issue, you pay RM350 + RM10 (stamp duty) = RM360

3) Percentage of discount based on closing price = (0.64 - 0.35)/0.64 X 100 = 45%

4) Plus a free warrant (wonder how much is the listing price when it get listed, just assume this is bonus, since it is given free)

Looks pretty impressive to subscribe with a discount of 45% plus a free warrant but all this subject to the following :-

5) Your eventual holding is 3000 shares, that bring you an overall average price of = (1280 + 360)/3000 = 0.55sen

6) Ex-right will bring the share price adjusted to 0.55sen, if the closing is still 0.64 on 9/6/2008. Do you think at 0.55sen is still a good valuation ?

7) With additional new shares, the paid up capital increases, diluted and liquitity increases as well, these in turn will affect the EPS.

8) Now come to a more concern area, how overwelming is the subscription as mentioned by DoReMe ? If fully subscribed or a high subscription of the rights issue then YK happy and pocket the raised fund and everything stay normal...what if the underwriter has a,

9) undersubscribe shares, then a big problem arise here. They may then left no choice but to try sell the surplus new shares in the market, this will lead to a effective depression of the share price.

With the above you make the judgement. Personally, i think YUNKONG has a healthly BS and profit surge. Is normal for one to raise fund for company expansion unless a bad management has bad intention behind it but this company has been around for 30 years so i doubt it. Therefore should not be a problem subscribing the right issue with a 45% discount but anything can happen. Again this does not represent a BUY, act at you own risk. Bye, happy trading.

Resorts World Q1 profit rises 18% to RM395mil

PETALING JAYA: Resorts World Bhd registered an 18% growth in pre-tax profit to RM395.39mil for its first quarter ended March 31, compared with RM335.42mil in the previous corresponding period.
In a filing with Bursa Malaysia yesterday, Resorts said its revenue increased 3% to RM1.09bil from RM1.06bil earlier, underpinned by improved performance in its leisure and hospitality segments, which saw higher volume of business.
Its earnings per share came in at 5.09 sen against 4.27 sen a year ago.
Meanwhile, Resorts' sister company Asiatic Development Bhd saw its pre-tax profit surge over 120% to RM143.2mil for the first quarter ended March 31 against RM64.26mil in the previous corresponding quarter.
Its revenue jumped 83% to RM273.06mil against RM149.28mil previously. Its earnings per share more than doubled to 15.1 sen against 6.18 sen a year ago.
Asiatic attributed its improved performance to higher palm products selling prices along with a 7% increase in fresh fruit bunch production.