Friday, 16 June 2017

Special Cash Dividend Never Fail

For some, investing is an art; for some, investing is a game of luck; for some, investing is just a gamble. As for me, investing is about hard work - putting away leisure time, screening charts manually, reading through all the newspaper from local, global, social, sports to business news.

Of course, there are many more component to form a decision to invest, and emotion is one of them. Human are very vulnerable to emotional swings, and that is why stock prices have to swing up and down, so that human emotions will follow along the swinging of going up and down as well. It is very easy to say to buy at low, and sell at high. But at practical, it is not as easy as you think.

Today I am not going to talk on the effects of emotion towards a decision on share trading. But I would like to show you how a normal individual can trade the stock market without having any super natural intelligence, or being a super investor, or super logical thinking.

If you are hardworking enough to look for company that is going to pay special dividend (usually after some asset sale, or after capital reduction, or some special one off big dividend), you will notice that upon the approval of such dividend, the company share price will definitely go up.

Take for example, last year Sapura Resources had disposed off it's entire 49% stake of APIIT education group. The deal was announced in March 2016, and the dividend is approved in September 2016. Prior to the announcement of the dividend, the share gap up accordingly to reflect the cash payment back to the share holder.

So in this case, you can see that buying in at a period of time where the dividend is going to approve might be advantage for you because you the price had probably found it's balance, hence lesser fluctuation.

The second case I am going to present to you is the case of MAA. If you are aware, MAA had sold it's takaful arm to Zurich Insurance in 30 November 2015. Approximate 6 months later, MAA announce a 35 cents special dividend to be paid back to shareholder prior to the sale. As you can see from the chart, from the sale to the approval of dividend, the share price had been trending up strongly.

The third case is about Alcom. This stock had been suffering for the past 2 - 3 years, but the company had gone back into the black as aluminium demand shifted upwards. Despite that, the company restructure capital and pay back shareholder a hefty 20.5 cents. Upon this announcement, the share price continue to rocket upwards.

As you can see, if you are hardworking and looking at chart manually, you will know what is happening and most importantly why it is happening this way. You will not get this if you are too reliant on robotic screener.

Of the 3 example, 2 of them are related to asset disposal, while 1 is capital restructure and pay back to shareholder. All of them carry the same trait - a big fat dividend in the kind of special dividend, and subsequently, the share price gap up upon the confirmation of the special dividend payment.

So, as historical result prove this concept to be right working, it is back to an individual hard work in order to get the company which such event happening, and most importantly, is to board in before the confirmation of such special dividend being declared official.

Now, your problem is, you are too tied up, no time to scan manually, not to say search up and down the internet for such news. If I will to give you this news, of course, you have to decide on your own again.

So this company is nothing than a bleeding company, but had concluded the sale of it's infrastructure arm, netting in RM 380 million cash. This company is - Silk Holdings Berhad.

As you can see, the onus here is that the company will be using RM 70 million from the sale proceed to declare a 10 cents dividend for each shareholder. For a share trading at the range of 50 cents, that will means a 20% return. Or to put it in other words, this special dividend is akin to the company giving you 5% return a year for 4 year in a very instant manner. Sekali gus kaw tim 20% for you.

According to the technical chart, Silk had also broken away from the short term down trend line after consolidating at the range of RM 0.48. This is amidst the coming EGM that will be happening on 21st June which will determining the  approval of the special dividend amounting to 10 cents per share. Should the EGM approved the special dividend of 10 cents per share, where will Silk be at that time? 55 cents ? 60 cents ? I don't know, but all I know is that if you buy in before any solid announcement of the dividend, you will stand a better chance among all the others who bought it after the announcement.

In conclusion, I am educating you on how to look at opportunity in the share market using some solid examples and case studies. In the future, if such case arouse again, be very sure that you are the first one to notify it and get your position ready.


Wednesday, 7 June 2017

If you suck in stock investing, read this to understand why

Today, I am going to share with you another one of my secret on how I do my market analysis. As you would know, the market had 2 general analysis - Fundamental Analysis and Technical Analysis. But as for me, I always go beyond Fundamental and Technical Analysis, because I believe that in order to out perform the market, there are much more stuff required to learn. To me, one of the most important factor is the study of Psychological effect towards human being in reacting to news and it's underlying intention.

As you would see, if you are able to crack this great code, you will definitely be at the upper hand because you are able to analyze a market event different from the others, which is the herd.

One of my biggest reveal in the market is being the "Secret behind the Take Over Offers". You could had read a lot of investment journal, investment and trading courses, Warren Buffet books, Peter Jack or Jill trading strategy and etc... But I have to tell you that you will be in no where at any corner of the world that gave you a free education on cracking the secret behind take over offers.

If you had been reading my article and journal word by word, you will notice that I had teach you how a Take Over Offer without intention of delisting the company will result in the company share price doubling up from the take over price. Not even any prominent investor, trader, guru in the world would had taught you this, but only me, and giving you for free.

Plenty of example of take over offer, and share price doubling up. For instant, Euro, Denko, Halex, Gwplast, Iwcity, Alcom. You can check them out on your own as your own research. Of course, when REX (take over RM 1.65) goes to RM 3.30 in the coming future, then my basket will add in another proof of event.

Today, I am going to release another secret weapon of my analysis to you - FOR FREE AGAIN!!! But if you think I am putting up another BS talk, and thinking that Free stuff is never good stuff, then for goodness sake, you can close the browser and don't let me poison your mind. I have to tell you my poison is highly toxic, and will poison your investment mind forever. Haha..

Now, I am going to teach you, how to see beyond a bad news, which is actually a good news. As usual, I will give you a good example of this case for your understanding.

I am going to study the case of Masteel with you.

As you can see, during the year 2015, Masteel had a shocking event that put great fear on investor. That event is a delay in submission of financial report, which had resulted in the counter being suspended for 3 months. As a company running more than 10 years, suddenly slapped with trading suspension because of delay in submission of financial report ??? Weird, funny?  I don't know.

Honestly, there hasn't been much change in the fundamental of the company, but the effect of the counter being suspended for 3 mths trading due to delay in submission of financial report is loud enough a story to shake up the weak investor. Adding salt into wound, the period of 2015 to 2016 is the year where Malaysian equity market are suffering, especially from weakening exchange rate and exit of foreign funds. The share price drop 60%, from 90 cents to trade at 35 cents.

But now, 2 years after this event, Masteel is enjoying windfall from selling steel bar when MITI implemented some trade protection on certain steel products which had greatly benefited them.

Now, let's put it this way to think. If there is no such suspension, I would reckon that Masteel will definitely not be trading at 35 cents region. At most, it would be lingering at the range of 80 cents. As you can see, comparing the percentage of rise from 80 cents to the current RM 1.20, and 35 cents to the current RM 1.20,  you know how to do the math.

Alright, but I am not painting a picture that the management deliberately make this happen by intention. Honestly, I do not know, and also don't want to know. But as far as I know, they delay, they got suspended, they pay the fine or penalty and do the require submission, and things are done. All I can say is, they are playing within the rules of the playground. Not white nor black, it is grey.

As of now, you might be able to put up an argument - what are some other underlying factor that I can back up on seeing Masteel being able to perform better in the future ? Of course, I had to tell you that this one really do not come easy. If you had been following the steel sector closely, you would know that the local steel industry player had been actively seeking for protection from imports since 2014. If this is a standalone news, there might not be any click. But if you would put this news together with the temporary suspension order, now there might be a click.

So now, did you get it ?

If you don't get it, then go to sleep now, wake up later and read again, repeat until you understand.

With the above case as reference, now I am going to show you one potential case.

This is the case of Eden Inc Berhad (Eden - 7471)

I know you might not even know such company even exist. So, I will give you a brief background of what Eden is doing. Basically, this company is the holding company for Garden of Eden, where you can find a tree that grows apple. As this mysterious apple is so tempting, entry ticket to the garden of Eden is selling at unknown prices - And I will cut the crap now. Haha...

Now jokes aside. Eden is a company that had been bleeding cash for many years. Despite that, the bleeding got worst when their power plant unit got flooded during a wet season in 2014. Not only incurring lost of revenue, it comes with additional cost for repair and maintenance as well. You might be asking, so how bad is it ?

In short, it is so bad that the external auditor from Ernst & Young had issued a qualified opinion that the company had material uncertainty related to going concern.

Ah ? What material uncertainty ? What going concern ? Alright, unless you have accounting background, you will not understand what is going concern. As for me with "rojak" background, I am going to explain to you in a very simple manner.

Going concern means - Can the company continue to operate properly for a period of time, say the next 6 mths or 12 mths. If a company keep losing money, it will reach to a stage where there is no more money in the bank, and no cash flow, and everything stuck and boom and bankrupt.

So, on 31st May 2017, Eden is slapped with going concern issue! Waah..... If it get worst, default in banks payment, then it can potentially slip into Pn17, and that is a big big warning.

So, should a share price drop when there are potential of slipping into Pn17 ? Obviously, a human with rational mind will think that manner. But according to the chart, Eden had broke away from a long term down trend, and the down trend resistant line had become a temporary support line for Eden now. Now, this is very interesting.

For a company rich in asset, if got cash flow issue, the first thing to do is to dispose off the asset and convert into liquid cash. You do not need a PhD to teach you this step.

So what kind of asset that Eden really have ?

Of course, if you browse through the list, the highest possibly is definitely the investment land at Gebeng, Pahang. First the land is vacant, secondly, it is for investment purpose. Since it is for investment purpose, then I don't assume that they want to develop the land, and will be looking to sell it off when the time comes. Make sense to you ? Well I don't know, but it makes sense to me at least, haha.

But I had to tell you that this is not enough. If you are doing your analysis research, you should not stop here. You should dig further to know where is this piece of land actually.

For this case, I will dig for you.

Since it is 450 acres, it is very big. I had no idea how big is 450 acres in this map, but I had plot out 2 potential location which is near to Sungai Karang, Gebeng.

By looking at it, this is just a piece of land, situated at Pahang, near the sea, and nothing much. But I have to tell you that if you are thinking so, you are wrong. First, you must notice that this land is very near to Kuantan Port. And do you know how valuable is the land near Kuantan Port. Go and study the case of Tenaga Nasional Berhad taking Integrax private.

Not only that, now we already know about the development of ECRL (East Cost Railway Line), with major eastern hub at Kuantan Port. And to have big development, we talk about big big piece of land. And 450 acres of Industrial land is actually very big.

Since this land is so good, let's talk about RM 12 psf for the land, reasonable or not? Reasonable la, because KL land all talking 500 to 800 per square foot, some talk 2000 per square foot. So Pahang talk RM 12 per square foot, very reasonable, maybe undervalue.... Haha

Based on 450 acre (x 43560) = 19,602,000 square foot, then x RM 12 psf to get the potential selling price.

Wow, a freaking RM 235 million !!!
To support my assumption, I will do research to see what are the asking land price. So iProperty got a
land is selling at RM 526 million for 928 acre, which work out to RM 13 psf.

So I assume RM 12, and reality check is RM 13psf. Reasonable assumption ?

Just the land alone, it is worth 75 cents for a share in Eden. So by selling the land at RM 235 million, I don't know if you want to smile or laugh, because I scared this company later will limit up.

As a conclusion, you know why you are still reading this blog ? Because, you will never find another site, or another guru, or another prominent investor teaching you such thing step by step for FREE. Everything is here for you to study as a reference.

Eden now slapped with going concern issue, but your decision to take the rocket or not, is your own choice.

Limit up to Moon? Mars? Saturn? or Pluto ? It is your choice also.

Tuesday, 6 June 2017

This Company can Load Up your Duit Raya Packet now!

In the stock market, we must admit that irrational things will happen. As a normal human being, we are always taught to be rational in everything we do. Rational in our thinking, rational in our action and there goes the list. However in stock market, many a times, we start to have self doubt when we are accessing stock rationally, yet the stock acted otherwise.

The irrationality of the market that frustrate most of the investor is when bad stock are in good times, and good stock are in bad times. This happened so often that investor are conquer by frustration, which lead to emotional judgment, and hence a potentially wrong decision. And often due to this, we will be shy to recognize and confront the wrong move made, hence, we will always repeat the same old movement again and again.

Many a time in investment, we have to really cling to our own precious study, and endure the market irrationality towards the pricing of the stock. Of course, here I am pointing out on stocks that are fundamentally good, yet traded at a misunderstood pricing.

Before I would hand to you this stock that had been misunderstood by the market, and trading at a irrational low price, I had to tell you a real scenario where I had encountered the same situation in 2016.

Back then in the spring of 2016, the Malaysian equity market is severely punished, with problem such as low crude oil price, volatile and weak exchange rate and a series of scams as well. Banks are doing huge restructuring and taking in big impairment that had drag down the financial reports. During those tough moment, it is where undervalue share with great fundamental become gems. So it is this one stock named KESM that I had noticed then which is very undervalued despite it's solid earning and cash position in the company.
As you can see, during bad times like 2016, a good stock can be misunderstood, and being priced at a valuation of PER x 5, despite the fact that the company had been growing in revenue, sector is beefing up for a much greater expansion, and the company had been sitting in huge cash position.

However, when the market turn on to a bullish note, albeit the company did improve it's bottom line EPS by 33%, the valuation shot up from trading at PER x 5 to PER x 15. And I had to tell you that this big leap in valuation brought KESM into almost four fold in price appreciation, from RM 4 all the way to RM 15.

So, did you get your lesson now ?

As the Hari Raya is coming, I would like to try to point to you this 1 valuable share that could increase your Duit Raya. This share I believe is bearing the same traits of being misunderstood for it's fundamental, and to see it trading at irrational prices, you either take action, or see people take action.

So this share is called KSL Holdings Berhad (KSL - 5038).

You might think that what is so special in this property developer now that can give you a fatter and juicier Duit Raya to spend.

For this, I have to show you few things that is happening in this company that is comparable to KESM.

Firstly, we must talk about earning. Base on FYE 2016, KSL had a final EPS of 31 cents. If we talk about valuation of PER x 5, that is also RM 1.50 already, right? Now let's forget about 2016, we will talk about 2017.

Based on Q1 FYE 2017, the earning is 5.25 cents. Most of the contribution are from property development in Johor and Klang. Others contributing segment is property management and car park.
Since KSL have a good track record and as property billing are progressive in nature, let's take annualized the earning and take 80% of it, that will come out to a projection of 16.8 cents for FYE 2017. I had to tell you this calculation is very "kiamsap" to the max, because as you can see property sentiment had started to pick up, I am taking a very bad case scenario by further discounting 20%. What if KSL 2nd Quarter is better, 3rd Quarter is even better, and 4th Quarter also around the same? Alright, we will stop building big mansion in the sky first.

Let's talk about putting a PER x 10 valuation on projected earning of 16.8 cents. That alone will see KSL worth RM 1.68 per share. I have to tell you that KSL is now trading at RM 1.25 and you have to be fast, because these 2 parties are not going to wait for you at all.


As you can see, the first party is Lembaga Tabung Haji. As a matter of fact, they had been mopping up KSL share since earlier this year, and it had gone even intense lately, with the latest being 870,900 units mopped up on 1st June 2017.

The second person mopping up is none other than director himself. As you can see, for the past 3 days, he had been committed in mopping 100,000 units from the open market.

Both their action signal 1 thing in accord - The share of KSL is very undervalued, misunderstood, and trading at irrationally cheap price !

I do not need to convince you further, but you have to look at the cash position as of lately.

As you can see, one of the major reason on the massive drop in share price is due to no dividend payment in 2016. With this RM 230 million cash pile in the bank, KSL will probably restart their dividend again in 2017.

To make sure the cash are not loaded out from extra loan incurred, this financial statement is a strong proof, showing great decrease in liabilities and bank borrowings as well.

In a nut shell, with RM 230 million in cash and only RM 80 million in bank borrowing, this is a net cash property developer company.

So, I had presented to you a company
1. Trading at low single digit PE
2. Trading 50% from NTA
3. Net cash company
4. Consistent development plan in Johor and Klang
5. Share mopped up in open market by director and institution fund

Now the ball is yours. Take the shot wisely. Good luck!