东和资源股价跟镍价的联系。

由于收到草根兄有关东和资源股价(Tonger’s Price)跟镍价(Nickel’s Price)联系的问题，所以特别开了这个帖回复草根兄的疑问。其实我现在也正在以英文作草稿撰写着Tongher’s Price跟Nickel’s Price之间的正面联系(Positive Correlation)，它将被呈现在"TONG HERR RESOURCES BERHAD (PART 2) 或 （PART 3)"。

我之前向草根兄提过东和("Tongher")是以先进先出（"FIFO")的会计方式来记录其存货的成本，这也是唯一被FRS会计准则允准的存货记录方式。另一种的存货成本记载方式是后进先出("LIFO")，这种方式比较广泛用于美国的会计制度("GAAP")，其对FIFO的优势是延后缴税("Deferred Tax")。不过美国GAAP将逐渐的与IFRS融合（"Harmonise")并逐渐过渡采用IFRS的准则，所以LIFO在未来将不被接纳。

FIFO的方式会将原料成本购买价的效应延后一段时间才发酵。其原料成本价效应通常是在未来原料购买价与之前的购买价出现了相反的发展趋势才能感受得到。可能我这么说草根兄还不能明白，所以我在以下举个例子。

假设我们现在是处于2007年的高通货膨胀时期("Inflation")，所有的原料价都涨价，包括Nickel's Price。由于原料价的上升，因此这给Tongher一个理由来为它的制成品("Finished Goods")涨价,以尝试将高涨的成本转移至客户身上。所以这有助于公司提高它的销售额("Revenue")。另一方面，由于受制于FIFO的方式，Tongher的销售成本("Cost of Goods Sold"或简称"COGS")却没有大幅度增加。这是因为Tongher的2007年会计帐目不能即时反映2007年的原料高收购价，而只能以2007年之前的低收购价来记录其COGS。

即使Tongher在2007年年头所购买的原料存货并在同一年的年尾以Finished Goods来出货(Real time inventory transaction is using LIFO),但是Tongher的会计记录方式还是要用2007年之前较低的原料收购价来反映其COGS。由此可见Revenue的增加是即时反应了通膨的效应，但COGS却往往在这个时刻因为FIFO的因素而保持不变甚至有所下降，因此这种落差将会为公司的营运盈利("Operating Profit")带来正面的增长。

相反地，当原料价下跌时，公司的Revenue就会即时反应出下跌的趋势(因为那时候Finished Goods不降价都不行，因为客户极可能会给公司压力，尤其是工业产品并无任何实质的品牌效应以保持起其产品价格不变），但之前在高价买进的原料存货却需得在这个时候呈现出来。所以祸不单行的是除了公司的Revenue下降之外，其COGS也在此时大涨。所以公司往往会在原料价下跌时会面临Operating Profit的下跌甚至蒙受亏损。

所以草根兄你也可能回观察到很多工业股都有类似的情况，那就是它们的股价跟原料价的联系("Correlationship")。 SHELL REFINING COMPANY (FEDERATION OF MALAYA) BERHAD （"SHELL"）就是其中一个典型的例子，当原油价高涨是Shell的盈利将增加并带动股价的上升。而当原油价下降是Shell的盈利将降低进而导致股价下滑。

(以上是我的看法，不一定正确，所以有待各位的指点)。

ICAP’s 5th AGM (Part 3)

(My photo shooting skill still need to improve...^_^")

Before Tan Teng Boo ("TTB") commenced to share us a list of shares that compse the ICAP's portfolio like last time, he mentioned why ICAP should be traded in premium (OK, I was patient to listen to this salesman promotion...^_^!!). The reasons given by TTB to justify 'why ICAP should be traded in premium' can be found from the previous article in my blog.
http://kinwing.blogspot.com/2009/08/forward-company-analysis-icapitalbiz.html

So he was just repeating the few points such as the 3 'N' principals, how the fund manager is saving lot of costs for the fund lah, how the fund manager is picking cheap stocks lah, how integrity the fund managerlah and blablabla. For me, I view the most important point is the 3 'N' principals, i.e. 'No' Borrowing, 'No' Derivatives / Off Balance Sheet Liabilities and 'No' Short Selling that enrich the financial strength of ICAP. At least I can sleep soundly during nights without worrying wake up the next day and found out the fund is in bankruptcy.

Later, TTB shown us a list of shares that the fund has invested. The list of shares is shown below in alphabetic order:-
1) Astro All Asia Networks PLC (ASTRO, 5076)
2) Boustead Holdings Berhad (BSTEAD, 2771)
3) Fraser & Neave Holdings Berahd (F&N, 3689)
4) Haio-Enterprise Berhad (HAIO, 7668)
5) Integrax Berhad (INTEGRA, 9555)
6) Kuala Lumpur Kepong Berhad (KLK, 2445)
7) Lion Diversified Holdings Berhad (LIONDIV, 2887)
8) Mieco Chipboard Berhad (MIECO, 5001)
9) Padini Holdings Berhad (PADINI, 7052)
10) Parkson Holdings Berhad (PARKSON, 5657)
11) Petronas Dagangan Berhad (PETDAG, 5681)
12) Poh Kong Holdings Berhad (POHKONG, 5080)
13) P.I.E Industrial Berhad (PIE, 7095)
14) Suria Capital Holdings Berhad (SURIA, 6521)
15) Swee Joo Berhad (SWEEJOO, 5119)
16) Telekom Malaysia Berhad (TM, 4863)
17) Tong Herr Resoruces Berhad (TONGHER, 5010)

(to be continued)

Is YTLLAND (2577) a good buy in long run?

According to my analysis on YTLLAND, fundamentally it is totally not appeal to me. Extremely low ROE (if not mistaken by referring to the annual report, its average-5 year ROE no more than 5%), due to low profit but large base asset. The relative valuation such as P/E not attractive at all also because of low EPS.

Moreover, due to the nature of the business in property sector, the profit is highly fluctuating. In year 2005 and 2006, it had profit around RM40 mil and subsequently the profit dropped 'gaogao' till RM13 mil in year 2008. For me, a good company should have increased its profit gradually every year instead of decreasing. For your information regarding the the latest FYI 2009 (unaudited), the company only made a profit of RM1.9 mil. What a pathetic poor result.

Even in a good year, YTLLAND seems cannot make a good profit while it sit at a huge asset base and I just cant' imagine what kind of poor result it will attain during bad time. This is the reason why I don't like most of the property stocks in Bursa Malaysia.

Of course, if we look at the technical side, we might well receive different perception because the share price is at an uptrend bounce. Since it is a high-beta stock as we look at the graph above that showing it could drop at a high of RM2.38 to RM.425 (around 83% depreciation from peak), then it could be probably stand again at RM2.38 if KLCI index can bounce to the peak of 1,500 points. But who knows what is going happen to YTLLAND if it just sound too crazy to value it at RM2.38. YTLLAND just does not worth for at RM2.38 base on its earnings track record.

As a conclusion, YTLLAND is a speculating stock which can only be hold for short term and not fundamentally strong to hold for long term.

The Millionaire Next Door是一本怎么样的书?

Millionaire Next Door是其中一本对我的投资理财思想起了很大影响的书。基本上，这本书并没有很多很公式的理财投资说教，它主要是做统计，并传达了很重要的讯息，那就是量力为出('Live Under Your Mean'）。

从这本书我也领悟到＇从俭入奢易，而从奢入俭难＇。假设当一个人在赚取2000块时，却不能储蓄其中的10%，那他也将不可能在赚取 200万时将其中的10%存起来，因为他根本就没有真正谦虚去面对过生活的困境，却给自己诸多借口不去理财投资却有能力负担大笔的物质享受。

当我看完这本书时，我有个突而奇想的念头，那就是如何将投资和理财这两个点结合起来从而使我能将资产增值到100万。首先要着重的就是投资能为我们带来的 复利效用，假设每年投资组合能以26%增长，那每三年就能开个番，每10年投资组合就能增长至十倍，每20年就能增长至一百倍，就好比将1万块从20年里 增长成100万。

所以我将成为百万富翁的时间表定为20年里要达到，因为我相信至少能拨出1万块出来投资。但是我可不可将二十年的时间缩短呢？假设我的初次投资额不是1万 块，而是2万块，那可不可以将致富的时间速成一半呢？假设我除了投入初始的投资额后，我又在每年投入另2万块并保持投资回酬率，那我可不可以在少过20年 里成为百万富翁？

(以上的是转载于我在佳里论坛写的文章)

ICAP’s 5th AGM (Part 2)

The Chairman of ICAP, YM Tunku Tan Sri Dato' Seri Ahmad Bin Tunku Yahaya ("the Chairman") started the AGM by referring to the 1st agenda according to the Annual Report. The 1st agenda is to receive the audited financial statement for the financial year ended 31 May 2009. Before the shareowners voted to approve this 1st resolution, there would be a Q&A session. So one fellow shareowner came out to ask as a question.

Instead asking something that related to the audited annual report, the shareowner inquired why the management still not yet take any action to engage the fund to invest overseas (I noticed that there are always people asking question that out of the current topic question, why dont' we pass the 1st resolution first then only raise this question?).

The Chairman then replied that though the board had promised during the last AGM that they will look into this issue of investing overseas, they are still considering it seriously. However, the procedure of becoming to invest globally is not easy as it looks like. The management would need to consult from different professional parties such as authority, lawyer, accountant and the fund manager in order to take the appropriate action that match the best interest of the shareowners. In fact, the management thinks the company is not quite ready to invest globally, but the Chairman has promised (promised again!?) that once they make up their mind in not a very long period (how long is not long ya!?), an extraordinary general meeting will be hold for this matter.

I think this is another typical way that how a management to indirectly reject the call by shareowners to invest overseas. And I am neutral on this issue of investing globally. Instead, I am thinking that Bursa Malaysia is still having better potential as many counters in Bursa still trade cheaper than other markets. It is just a matter of time to do own research and find out the pearl that spread over the 'Bursa' ocean.

I am not going to mention the rest of the agendas of the AGM which is related to ordinary issues such as approving directors' fees and related party transactions, re-elect/reappoint the board and auditor. So the AGM was finished within 15 to 20 minutes.

And then it was the most expecting session of which was the main reason why most shareowners attending the AGM. The session was the presentation of investment portfolio of ICAP. The presenter was of course done by Tan Teng Boo, who are the chief fund manager of ICAP. This session sounds like those Berkshire Hathaway's shareholders attending the company's AGM to be hold at May every year just because they want to know what Warren Buffet has done for the last whole year.

(to be continued)

TONG HERR RESOURCES BERHAD (5010) (Part 1)

2 years ago I first invested into Tong Herr Resources Berhad (“Tongher”) by acquiring 600 shares at a price of RM5.30 (at 12-June-2007). Subsequently, the company had come through a corporate exercise by issuing bonus shares at basis of 1 bonus share for every 2 existing shares. So the adjusted cost price was then reduced to RM3.53 (=RM5.30 * 2/3).

After the bonus issue, the share price of Tongher (“Tongher’s Price”) was then peak at RM4.165 (at 11-Oct-2007) before crashing to the lowest price at RM1.55 (at 2-Dec-2008) during the ‘Lehman Panic’ period. Now the Tongher’s Price resume a little to RM2.15 as per today market price. In spite of the recession and ‘Lehman Panic’ sending the share price to so low, what is the other factor that greatly affected the Tongher Price?

I noticed that indeed the Tongher Price is some what correlated to the raw material of its product. The raw material of Tongher’s product is nickel. If we seriously want to find out the Tongher’s Price movement, maybe we could do some statistical calculation by using a regression model to exploit the correlationship in between the Tongher’s Price and the price of nickel.

Below is the regression model that showing the Tongher’s Price in relation to the price of nickel:-
Y = a + b(X)
Where Y = actual Tongher’s Price (Dependent Variable)
a = the least value of Tongher’s Price when the nickel price is zero (Intercept)
b = the correlationship in between Tongher’s Price and the nickel price (Slope Efficient)
X = the nickel price (Independent Variable)

Of course, the abovementioned regression model is seriously flawed because it might not be able to pass through several statistical test. Nevertheless, what I would like to emphasise by using the regression model is that the Tongher’s Price is positively correlated to the nickel price. (Positively correlationship (‘b’) means that whenever the independent variable (‘X’) is increasing, the dependent variable (‘Y’) will increase as well.)

(to be continued)

ICAP’s 5th AGM (Part 1)

I never miss any icapital.biz Berhad's ("ICAP") annual general meeting ("AGM") since its listing at Bursa Malaysia at year 2005. The AGM will be hold at August every year. So, last Saturday (8-Aug-2009), I went to attend the 5th AGM of ICAP together with one of my friends. Due to my effort of promoting ICAP, this was the 2nd friend who came together with me to attend the AGM. The first time I brought a friend to the AGM was last year the 4th ICAP AGM, but the friend had disposed off ICAP shares during the bear panic few months ago and thus he can't go with us this time.

The AGM was located at the 1st floor of Mandarin Oriental Hotel which is nearby the KLCC twin-tower. So it was so convenience for us to take LRT from Taman Jaya station to KLCC station. We arrived at Mandarin Oriental around 9.30 a.m. We first registered our shareholder status and the rebate door gift. The door gift was simple which is a recycle bag with ICAP's logo. Inside the bag there were some ICAP's brochure and a pen.

Subsequently, we took the refreshment prepared by the Company. It was simple refreshment come with only few breads, cakes and a cup of coffee. This could be probably because ICAP was trying to save cost for the fund owners and thus no fantastic food to avoid 'food abuse' by some '1-lot' shareowners who only care about food.

After finished the food, I took out my new bought digital camera and took some shot outside the meeting hall, of course taking 'hot and sexy' ICAP's staffs was my mission as well (one of the reason that I bought the new camera for the AGM...>_<").

The AGM started at 10 a.m. and we sat at the middle of the seat row. And I count the number of attendee and found out the number of seat could be around 400 to 500 seats (= 3 * 12 * 12 = 452). And one auntie, who was at her sixty and sat at my left hand side, asked me whether I am a reporter....What!?...%$^&*@...Maybe I was looked young, dressed casually and taking a digital camera, so I was misunderstood to be a reporter. So I sarcastically replied the old lady that I was a shareowner of ICAP since its listing and could be holding the shares longer than as she hold...>_^

(to be continued)

Disposal of SUPERMAX

Today I decide to dispose SUPERMAX at a market price of RM2.70 for 10,000 units of shares. The reason I disposed off Supermax is because I would like to liquidate cash for another counter.

I started to accumulate SUPERMAX’s shares since 3 years ago. After disposing Supermax, the holding period return of SUPERMAX is around 33% as calculated below:-

= [( 10,000 units * RM2.70) / RM20,402] – 1 = 0.33 (33%)

Trading Buy Pelikan

According to ICAP’s TA analysis last Friday (31-7-2009), it called a trading buy on Pelikan at the price of RM1.45 of which target price will be RM2.24. As I further researched into this company, I found Pelikan’s bottom line is gradually recovering back on track to show profit after coming through a substantial profit drop last few quarters.

As per ICAP’s advice, I acquired around 13,000 unit of Pelikan’s shares at a unit cost of RM1.45. Though today the share price has shot up to RM1.63, according to ICAP’s target price as per mentioned, it still has a potential of 37% (=2.24/1.63) upside. And I have set a 5% cut loss point at RM1.38.

为何ICAP卖了AXIATA？有关疑问将在8-8-2009揭晓

其实陈鼎武(简称"TTB")当初投资亚通("Axiata")的决定并没什么不妥，更何况Axiata是除了国油("Petronas")之后的另一间能在外国比较能打拼和竞争的政联公司("GLC")。还有就是Axiata前几个季度的亏损是因为外汇兑换亏损("Foregin Exchange Loss"或简称"FEL")，因为它的子公司用的货币都不是马币，再加上Axiata是以现行汇率法("Current Rate Method")来综合("Consolidate")它子公司的帐目，因此任何的FEL都是反映在损益表("Income Statement")，而不是资产负债表("Balance Sheet")里的全面收益("Comprehensive Income"),这就是为何Axiata的Income Statement的盈余降低了很多。而我认为在短期内假设美金转弱，那它的FEL将会被扭转过来变成外汇兑换盈余("Foregin Exchange Gain"或简称"FEG")了。总而来说Axiata的外汇兑换是没亏没赚，只不过之前的FEL让Axiata有更好的借口来延迟缴税，对股东来说这反而是好事。

不过让TTB在Axiata翻车的原因应该主要是配发附加股("Right Issue")，因为每4股能得5个附加股("Right Share")，且附加股的价钱才卖RM1.12，因此对当时不打算再买进的股东而言是不利的，因为便宜的附加股稀疏(Dilutive)了没买进股东的权 益。其实很多GLC公司就是有这样的弊病，那就是爱发便宜的附加股("Right Share")或私下配售股("Private Placement")，却毫不理会existing股东("existing shareholders")的权益。看看马银行("Maybank")几个月前跌得这么够力，其中一个原因就是Right Issue了。

可能是因为TTB一向来对Right Issue很反感，也可能他对Axiata的高债务而感到不该在投入太多资金，因此决定不买进Axiata的Right Share。但是Right Share稀疏了ICAP在Axiata拥有的权益，到时候都不知道要等到何时才能升回当初买进的成本。长痛不如短痛，现在卖掉Axiata后用剩余的钱 来投入别的公司，说不定还能赚回本。

以上是我对ICAP卖掉Axiata的一些看法，要得到更正确回复，还是有待当天ICAP股东大会时由TTB来解释吧。

(以上的是转载于我在Investalk.com回覆某位股友写的文章)

Forward a company analysis – icapital.biz Berhad (5108) [written by Capital Dynamics]

As the above analysis report can only being get through by subscribers, so I can’t provide the exact web link that related to the said analysis report. I can only direct the web link to website of Capital Dynamics as indicated below.

http://icapital.biz/english/