Overall, market is on the up trend for almost 2 years without any meaningful correction. Right now, near all time high. What's happen in middle East, Europe and Japan fail to bring down the market , this is an indication that the market sentiment is still strong.
Bursa Malaysia's Index going to be included into Advance Index Country start from Jun 2011. This is good news but only if you buy the correct counters which prefer by foreign investors. Bank Negara also raised the interest rate and bank's reserve for the first time. As expected, since the market cycle comes to 3rd years, normally interest rate will start to go up as monetary policy goes from loose to tight. We expect interest rate will go up few rounds before the end of market cycle. This action is similar to China, and if there's any indication, just see how the China's index's perform, it almost side way for few months with a little bit of bias upward. Bear in mind if foreign investors come in, they will only select the blue chip solid counters.
Bull market is not going for long, next few months is time to play safe. IPO is one of the option can try... we will have few good one to come... I will keep you update when time come. Some of counters like F&N, Nestle, Dlady, BAT start to go higher, because many investors move their fund to these counters.
I have been recommended F&N in last few months when it was RM14.50, this counter never fail me since 10 years ago. Many clients told me this counter was very expensive, really? If you see today's price, RM18++ even more expensive, what I trying to say here is the 'Value' of the company, not the share price. Someone also mentioned YHS (RM1.7+) is better, since it's cheaper than F&N.
Below some points for both companies:
F&N RM18, PE 22
EPS on up trend, about 5% every year
DPS is about 55Cent
ROA 10
ROE 19
YHS RM1.7+, PE 22
EPS not stable, for past 5 years, 2 years in red.
DPS is about 10 cent
ROA 1.05
ROE 1.5
Both companies are good but quite expensive, with PE of 22 (normally PE above 15 is consider expensive, but for solid company, you need to pay some premium), YHS profit is not very stable, some years in red, also F&N's ROE is 19 excellent, meaning every 4 or 5 years, the profit will double! (that's why share price double too) Hence, if you just looking for dividend, YHS is not bad, but if you looking for growth with dividend slightly less, then F&N is better option. (no need to buy it now... but keep in the list, buy only if market crash!)
This is one of my idea to share on how we choose a good company for investment.
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