Investment Idea - April 2011

It's near time to submit personal Income Tax Self Assessment, remember to claim back your 25% of  dividend by submitting HK3 form if you own shares that paid dividend with 25% deducted as income tax. While I went through all the dividend records, noticed there's one advantage for DRP. 

What is the advantage DRP to investor? 

Click here , if want to know more.

Recently, also receive some inquiry about new IPO, BoilerMech Holding Berhad. Many want to know if worth to apply or not. My answer, you can try to apply this counter through IPO. (the closing date is 21 APR 2011, http://www.boilermech.com ) The major share holder for this company is QL, hence investor can invest BoilerMech or directly invest into QL's share. QL suitable for long term investor, with ROE of 21%, if it can grow with the same rate, every 4 years the profit will double. (by theory, the share price will double as well, this had been shown in the past record)

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Market Update March 2011- Market Fluctuations Are an Opportunity

Not long ago, market start to slow down, couple of incidents happen in Middle East Asia follow by Japan's earthquake, all these gave the reason for the market to start the correction. For experience investor, they know that every 1 to 2 years, for market to go down 10% or 20%, is a norm. Every 4 to 5 years, there will be a financial crisis where market down for 30%. (which we already went through in 2008) 

So, what's hot now? Timber and Glove making company going to benefit! For short term, share price of these companies will go up. However, chasing this hot stock is only suitable for short term trader who prepare to cut loss in case if market not move as per their expectation. If you are the person who feel hard to cut loss, please do not consider the hot stock, instead buy only the 5 Star rating company .

For long term investment purpose, remember, it's 5 Star that we should consider. Early March 2011, we have another company, Transmil going burst in Bursa, this remind me, never buy any trouble company, even it's cheap, what's the point for us to buy cheap if the company can not survive and go burst?

The 5 star investment rating company's check list:
1. Is the company having ROE and ROA of more than 15? 
2. Is the company earning increase in the past three years? 
3. Is the management honest? 
4. Is the company's financial position healthy, do they borrow a lot of money? 
5. Do you have margin of safety, buy at low PE? 
6. Do you plan to buy more if the share price of the company going down? 

Investment Idea - Mar 2011

Last few months, we talk about price increased for Petrol, Gas and Sugar. Many want to know how to take advantage of this. On my Jan's mail, I also suggested at least 3 good stocks that will benefit from this price increase, they are TWS, Pchem and MHB. (refer to below my Jan's mail)

This is not a tips, I just share my thought on how to pick good stock that will benefit from current economy scenario. Again, to remind all, the first thing bear in mind is:

Know the company before Invest.

Ask yourself what's the company's business, how's the company making money in the past? (if company not making profit, just forget about it) Can they still making money more than before in the next 10 years?

For example, TWS ($7.20 on Jan), we know it's the plantation stock, so plantation is hot, especially all commodity price going high. There are so many plantation stocks list on Bursa, what's so special about TWS? Last year, TWS's  profit came from Palm Oil and Sugar, but this year it going to make profit from rice as well after took over PadiBeras. This is something like the plane suddenly put on additional engine, of course it will fly high after quarterly result announcement.

Similar to MHB and Pchem, the current high oil price will going to benefit these company. (remember, not any oil and gas company, we need to choose the best) PM. Najib have mentioned, he want to make the nations rich, one of the way is through Oil and Gas industry to make Malaysia regional hub. In short to medium term, these company will show very good profit.  

Two more company, Tenaga (RM6.23) and GENM(RM3.31) can keep in your watch list. I am not telling you to buy now, but time will come for it's share price to fly. You may monitor it until one day when it start to move, just buy it without hesitate. 

Last, never buy a stock base on rumour or tips. Remember to do your own research, internet is very convenience now.

Investment Idea - Feb 2011

In the beginning of Feb, our local market show some small correction, this create many opportunities. I do share the a topic at my blog:

Buy when stock price up or when stock price down? (remember, the choice is yours if you not agree with my point)

My view, it's very dangerous to average down (buy when it continue to go down). The best is buy when the price start to go up after the share price find the bottom. But how to do that? 

Today, I am going to share with you how I do this. For those who are interested, register an ID in Stock Games at CIMB web site:

http://www.itradecimb.com.my/

Select Tools --> Stock Games

Many will ask, why play Stock Games? This is my secret weapon where it help me to Buy Low and Sell High.

Let say you plan to buy a X stock at $2.80, so when first day down it hit 2.80, sign on Stock Game and buy @ $2.80 for 1000 share. Use Stock Game to "average down", the more it down, the more you buy. So, when you buy it with real money? I will keep on buying with Stock Game until one day if I notice the X stock start to move higher 7% from my lowest buying record.

Let's assume X stock move all the way down in few days:

$2.80 ----> Stock Game buy

$2.58 ----> next day, use Stock Game buy again

$2.39 ----> buy with Stock Game

$2.22 ----> buy again with Stock Game

$2.25 ----> Buy with Stock Game, the stock price rise a bit, but no action, as it rise less than 7% from previous buy point

$2.01 ---> Buy again with Stock Game

$2.21 ---> Buy with Stock Game & REAL MONEY

We use the Stock Game to buy with Cost Averaging Down Method (never use this method with Real Money, as you might end up losing all without cut loss) and buy with Real Money at $2.21, although we can not buy at the lowest, but it's more safe to start accumulate when stock start the up trend again. So you can now decide how many shares you want to buy with Real money and continue to add even the price move up to $2.30 or $2.40. (you need to add fast, as many experience trader always act fast) I think it's more cheaper if you buy at first down of $2.80.

You can do the same when stock move up very high at time when you want to sell.

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Investment Idea - Jan 2011

It's come to beginning of the year 2011, the best time to plan for our investment strategy. There are many ways to invest in stock market, but we always should remember Rules number one, “Not to Lose money in Stock Market”. Here to share with you some of the method use by investors:

One of the way is buy for dividend, investor can consider good stock which pay high dividend such as REITs and Banking stock. (Maybank or Public Bank) This type of investor are happy with return better than FD in bank, capital gain of course is just additional bonus.

If someone bought Maxis last year, today the price is still around RM5.35, no lose or gain. However, he earn the dividend pay by Maxis about RM0.28. Smart investor may think that he do not want to lost opportunities as many other good stock are actually moving up. He may opt to sell Maxis and buy other counters but keep Maxis in the list, until one day if the stock price moving up, he will buy again.

For some investors who want to take a ride on the current Super Bull, can buy the counter with clear up trend. Someone ask me what's the stock on your list now? I gave him 3 stock name last week and he was quite happy with it:

Pchem RM5.90

MHB RM6.01

TWS RM7.20

If you want to chase these 3 stocks, still no problem, go ahead, but beware to sell when market start to turn down. Investor can choose if he want dividend or ride on the Super Bull. 

Happy Investing!

Investment Idea - Dec 2010

Dear investor,

Sugar, Petrol and Gas price going to increase again, meaning another round of inflation is coming, we can benefit from our investment as well!
Choose the Industry leader that going to benefit the most among the same industry! Never buy the industry loser. (the loser can go burst anytime)
For example, AirAsia and MAS was showing good result, then we can consider invest in AIRPORT. (just check the price of AIRPORT, it already more than double since last year)

Another example, sales of vehicle improved, UMW, Honda, Toyota, Proton all shown good result, but all cars need to pay for TOLL company, hence we can consider PLUS.
This is the idea of how we choose best of the best. (I am writing this not to tell you to buy AIRPORT or PLUS right now, it just example how we set the investment strategy)

Last week, CIMB research mentioned about KLK, a leader in Palm Oil industry. There are many points mentioned on the research report, you may refer the attachment. If I were to invest in KLK, I will buy Batu Kawan instead of KLK. The reason is because Batu Kawan hold 46.57% of KLK, meaning:
1 BKAWAN share = 1.1628 KLK share + “Others Assets” 

Batu Kawan price at RM16.30 as of last Friday, KLK is RM21.38. Hence, Batu Kawan having great value than KLK. What happen if Batu Kawan share price going down? For sure I will buy more if the price fall below RM16. (never buy the stock if you dare not buy more when the price go down, it's the indication you don't understand the company or not choosing the great company)

p/s: this is not recommendation to buy any stock, the intention is to show the way of choosing great business, as many just choose the cheap instead of choose the value! I plan to invest in Batu Kawan and keep it for 3 years!
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Market Update after Petronas Chemical IPO

First, would like to congra those who got the IPO shares of Petronas Chemicals, the shares will be listed on 26 Nov 2010 .

Today, got another breaking news,  S. Korea and N. Korea seem to start the War. If the War really happen, what should we do as investors? To me, this will be the opportunity, as in my past 16 years at stock market, there are few of them, Gulf War, Iraq War, 911 ... the fact is, stock market going up again after the incident.

Below strategy that I used and let me share it to you:
- This is time to be real investor, only invest in great business (profit with high return) that we understand.
- Treat you are buying a business, not buying a stock
- Avoid company with high debt and accounting fraud
- The company's profit should be in cash and predictable
- Do not think of buying stock for 5 minutes if you are not prepare to invest for 5 years

I like to share points on my blog, as human is forgetful (that's why Market always up and down), so I write down all the points so that it will remind me what to do when I faced the similar problem in future and I don't mind to share with all who really understand and would like to success in stock market.
Below my latest blog:

1. Do not too emotion in stock Market 

2. Petronas Chemical Part 1 

3. Petronas Chemical Part 2 

4. Asia top 200 best companies 

5. How to build retirement income for life 

Happy Investing! 
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