Wednesday, June 30, 2010

There must be an explaination to every market movement

When Dow skidded 2.65% or Nasdaq suffered bungee drop 3.85%. Most people will get very excited and surely want to find some kind of explanation for it.

Some says:

No matter where they look, investors are seeing economic trouble.

Stocks and interest rates plunged Tuesday after signs of slowing economies from China to the U.S. spooked traders who were already uneasy about a global recovery. The Dow Jones industrial average fell 268 points, or 2.7 percent, and dropped below 10,000. The benchmark Standard & Poor's 500 index dropped 3.1 percent to close at its lowest level since October.

The smarties say:

Earlier in the day, the Conference Board downwardly revised a leading indicator of Chinese economic growth. Investors were also jittery about the expiration of a European Central Bank program to extend 12-month financing to European lenders.

A double-dip recession is still widely viewed as unlikely. But the drop in confidence is just the latest sign suggesting the economy could lose steam in the second half of 2010 and perhaps grow more slowly than in the first half.

Weak job creation is a central part of the problem. Friday's report by the Labor Department on the job market in June is expected to show private-sector hiring perked up in June as the Census Bureau laid off temporary workers. But gathering signs of economic headwinds suggest future job growth could be slim.

Among these headwinds: signs that the housing sector is heading into a new downturn, and financial conditions that have turned less supportive of growth as stock prices decline, the dollar strengthens and credit markets struggle. The global backdrop has grown more uncertain as European governments such as the U.K. and Germany turn their attention to closing budget deficits.

I say:

All these arguments are old arguments -- no case I said. The real problem is liquidity is thin. When someone decided to unload, thinly traded market tend to magnifying the volatility. Reduced betting size, less active are the best way to save ourselves from heartache and headache. Unless you really don't care and taking a long term position, buying something cheap at any given day. I mean really a long term position before you call your broker and NOT after you buy and lost money then changing your position.

Sunday, June 27, 2010

Buy Silver

Uncle Jim is back and making the same pitch. Buy something depressed - silver, agriculture commodities especially sugar. Oil is going go higher in the long-term. Hang on to your gold.

Saturday, June 26, 2010

Sentiments are improving

A few things happening in the markets.

First the World Cup, instead of looking at computer screen, most people will look at big screen holding beers and cheering with friends at cozy bars or minum teh tarik under the pondok.

As summer season is already here, big western investors already started to pack their bags heading to nice beaches or hosting barbeque at their holiday homes. When lack of directions, most people will sit still -- kind of like self fulfillment prophecy. Just flip through the newspaper, no exciting news. Even there is, the writers seem to be exhausted and unable to excite readers.

The European debts fear triggered many governments to seize the moment talking tough. We got to keep our public finance in control. You can hear it from the Great Britain to Japan, West to East so to speak. This rattles investors or gamblers a bit as reduction of public spending will slow the world economy. People tend to overreact especially they think consumer spending surely will go down. In case you have not been following on the Malaysian second hand car market, prices are going up. Used Nissan Fairlady gone up by 10%.

Some good news have been ignored.

The US factory orders have been improving months after months. Some argue, we are at the restocking cycle. It will fade away but don't forget restocking is part of the economy recovery and normally will go on for a while(2-3 years). This is quite a telling sign that the world economy is recovering.

The US consumer sentiments have been improving months after months again.

Lastly, the US financial sector, a chunk of the index, had taken the beating very hard started to rise. Things does not look so bad as originally imagined, as always.

(Reuters)Banks climbed after lawmakers agreed on rules that did not make dramatic changes to derivatives and proprietary trading, two highly profitable businesses in lawmakers' crosshairs. The bill must still be approved by both chambers of Congress before it can be signed into law.

JPMorgan Chase & Co (JPM.N) rose 3.7 percent at $39.44 while Bank of America Corp (BAC.N) gained 2.7 percent to$15.42.

The S&P financial sector .GSPF, which is down 8.4 percent over the past quarter, rose 2.8 percent.

"Regulation is less onerous than people's fears, so you're seeing a bit of a relief rally in the financials today, which obviously is helping," said Michael James, senior trader at Wedbush Morgan in Los Angeles.

Oracle Corp (ORCL.O) gained 1.7 percent to $22.60 a day after it posted a stronger-than-expected quarterly profit on solid sales of new software.

"This could be a sign of a pick-up in tech spending, which may mean other tech firms are going to report strong numbers," said Andy Fitzpatrick, director of investments at Hinsdale Associates in Hinsdale Illinois.

PS, thanks for coming back to check on my "boutique blog" frequently despite of very low activities by Turtle. Turtle appreciates your support very much.

Monday, June 21, 2010

Bought 1,500 shares. KSL @ $ 1.39

Bought KSL. 1500 shares at $ 1.39

KLCI 1335

Friday, June 18, 2010

KSL Holdings. Low profile, deeply undervalued.

(Business Times)CORPORATE Malaysia had hardly heard of KSL Holdings Bhd (5038) until, one fine day, the Johor-based property developer announced that Templeton Emerging Markets Group of Franklin Templeton Investments had bought a little over 5 per cent of the company.

What could have possibly caught the eye of the globally renowned fund management company that most of corporate Malaysia had missed?

Not just any executive in Templeton at that, but chairman Mark Mobius himself.

As KSL executive director Ku Tien Sek tells it, it was due to an unshakeable belief of Mobius that the Iskandar Malaysia development in southern Johor would boom.

"In his thinking, the next five years will see tremendous growth in Iskandar," Ku told an audience of analysts and fund managers in Kuala Lumpur yesterday.

KSL has four major projects in Iskandar Malaysia. It owns 446.8ha there.

And, as Ku tells it, it was a story right out of every listed mid-cap company's dreams.

"One fine day (last year), I was informed that Mark Mobius, not a managing director or anybody else but Mark Mobius, wanted to come and see us. So we made an appointment and he came, and we showed him our 'Tamans' (residential developments)."

Ku also remembers clearly a question Mobius asked him during tea after visiting KSL's developments.

"He asked me, 'Tell me what happened to you, Ku? Why is your stock like that? There are no related-party transactions or anything like that, and yet your share price is way below your net tangible asset value.'"

What ensued after that was an interview with Mobius, which entailed Ku describing in detail the company's processes and management controls.

According to Ku, what tipped the scale was when he explained that KSL bought its own building materials, which it then provided to its subcontractors, as a means of protecting the quality of its developments.

Impressed with the company, Mobius immediately declared his intention to buy a 5 per cent stake in the company.

"Mark Mobius promised me that they would be with us between five and 10 years until the com-pany grows to its potential," Ku said.

Read more: The Malaysian gem that Templeton spotted

Cheap valuation company is quite hard to find. Even you found it, you will have a lot doubts. Another value trap? Another Gram's dog? But KSL is truly attractive. I was at first thought there must be something wrong with this company and it will stay cheap. But I change my opinion after reading their annual report. It's a very easy to read annual report and you get the feeling these folks are down to earth. At the end of page 90, I agree 100% this this company is truly under-valued. Under-valued unjustifiably!

Look at the list of major shareholders, institutional funds like Lembaga Tabung Haji, Public Mutual, Templeton, JP Morgan, etc have been building their positions quite nicely as at 7 May 2010.

With the owners still holding substantial stakes and a group respectable shareholders, buying into this company this will make us feel a lot better.

Two main reasons of why I like this company:-

(1) Big margin of safety. They have 2,100 acres of land. If we value the land-bank just at RM 16 per sq feet, landbank worth 1.5 billion or 4.40/share.

(2) The company management has a very clear idea how they want to develop the landbank. See below table.

At 1.38, this stock is selling for less than 2 times forward PE? Assuming they take another 3 - 5 years to realize that RM 700 mln revenue, at the same depressed 5 times earning multiple, it will push the share price to RM 3.70. Entry at RM 1.38 and exit at RM 3.7 in 5 years time will give us annual compounded return of 22%. In the meantime, they will pay us a net dividend yield of 2.7% every year.

Disclosure: No position(yet).

Thursday, June 17, 2010

Titan Chemical is purely for speculation purpose

I posted a chart yesterday without knowing what was going to happen. The post was purely based on sentiment analysis and a bit of value analysis though I did not make a full blown write-up. Now that I saw this being announced today, I will have to inform my readers that buying into Titan now is purely for speculation purpose. When sentiments turn sour, stock price can unwind violently. Trade at your own risk.

(The Star)KUALA LUMPUR: Titan Chemicals Corp Bhd’s major shareholders is currently in talks with a third party to divest their stakes.

In a filing with Bursa Malaysia, Titan said the Chao Group and Permodalan Nasional Bhd (PNB) were presently in "informal discussions with a third party subsequent to a proposal which was presented to them by that third party".

“There is as yet no outcome, event or other development from such discussions,” it said in the statement.

StarBiz reported today that the Choa Group and PNB were in talks to divest their stakes in the petrochemical company. The prospective buyer could be a foreign party.

Titan said the company was presently not contemplating any corporate proposal.

“In addition, we have not received any proposal from any other person concerning our shares or business,” it said.

It said it would make an announcement, if warranted by events or developments, at an appropriate time.

Titan rose 7 sen to RM1.53 at 12.30pm.

Wednesday, June 16, 2010

Trading Idea : Titan Chemical Corp Bhd

People has been trying to exit this stock for a long time. You can see though the stock is trying to head higher, people are dumping shares faster than anything else. My "feeling" is sellers should exhaust themselves soon.

This is one of the cyclical stocks which is trying to catch up with the valuation. Basing on last 4 rolling quarters, the stock is selling for 5X PE. Tagging 7X PE will translate to a target price of RM 1.96. The question is will value investor bite into this? If not, watch the momentum. Wobbling around 1.67 - 1.70 will have to take money off the table. Stop loss is 1.35.

Disclosure: No position

Tuesday, June 15, 2010

Genting eyes bigger US presence

(BusinessTimes)'Genting Malaysia is aggressively searching for opportunities to invest in the US casino gaming market,' Justin Leong, head of strategic investments and corporate affairs at group parent Genting Bhd, said in an interview in New York. 'Our strategy is building a US presence.'

Armed with US$1.7 billion in cash and being debt free, Genting Malaysia is seeking acquisitions, new markets and potentially a strategic partnership in the US, he said.

The Kuala Lumpur- based company, which said this month that it may bid to develop a slots casino at Aqueduct Racetrack in New York City, first invested in the US sector last year, buying MGM Mirage bonds.

'It's unlikely to be a single asset,' Mr Leong said. 'If we were to acquire something, it's more likely to be a portfolio of assets or a substantial stake in a company.'

Genting Malaysia is also looking at developments and new gambling jurisdictions opening in the US, he said. The company bought MGM Mirage's secured bonds in May 2009 when the Las Vegas Strip's biggest casino owner raised cash to avoid a potential bankruptcy. Genting Malaysia has invested in every capital issue by Las Vegas-based MGM since, said Mr Leong, 32.

'Genting Malaysia's first foray into the US casino market was investing in MGM, and that strategic relationship continues.' The bid for Aqueduct 'is another step'.,4574,390472,00.html?

Genting Malaysia has been buying stuffs throughout the financial crisis. The risk appetite seems to be getting bigger and bigger. Well, my be I'm wrong, these guys suppose to be expert in gaming industry and knowing what they are doing. Are they stretching themselves too far? One may argue that if they are an active investor then they are over-stretching themselves. It will be OK if they are just a passive investor. Sitting back and collecting money, just like what Warren Buffet did with GE or Goldman Sachs. Unfortunately, I think are taking some active roles - running London, Egypt casinos and now want to be a US lottery operator? Phew! A lots on its plate. Don't forget Genting Singapore that has not delivered what its promises yet. Ah.....I got a headache now, their Star Cruise venture draining the group cash is really hitting me. The risk profile of this company is changing. Its has been a great growth stock for the last 40 plus years but not sure how this company will look like 40 years in the future.

Sunday, June 13, 2010

The World Cup Effect On The Malaysia Stock Market

Dear readers, sorry if I did not post as frequent as I should be. Sorry too if my posting quality drop throughout this world cup season. Your turtle is suffering lack of sleep.

(FundSupermart)Soccer is the most popular sport in the world, with the 2006 FIFA World Cup commanding a cumulative (with duplicates) global TV audience of 26.2 billion, with 376 channels showing the event and a total of 43,600 broadcasts across 214 territories according to FIFA’s marketing figures.

By virtue of the population outreach and exposure to psychological factors, it wouldn’t be a big stretch to assume that the World Cup, soccer’s biggest sporting event, would cause short term fluctuations in stock markets. In fact, there is ample evidence to show that international soccer results have an asymmetric affect on stock markets; losses have a significant negative effect in the losing countries’ local markets, whereas victories do not have a significant effect.


Regardless of winning and losing, a research paper by Kaplanski and Levy on the spill over effect of the World Cup on the US stock market showed that from 1950 to 2007, the average return on the US market over the World Cup’s effect days is −2.58%, compared to +1.21% for all days over the same period length. The conclusion reached was that the World Cup has an adverse impact on the US stock market and that this gives rise to an exploitable predictable irrationality during the event.

This brings us to the purpose of this article. We intend to use a more simplified testing methodology and apply it to the Malaysia stock market, as represented by the FTSE Bursa Malaysia KLCI to see whether the World Cup also has an adverse effect on the Malaysia stock market.


Due to Malaysia’s time zone in relation to World Cup host countries, we take the closing price of the trading day preceding the game day as the buy-in point. The sell-off point would be the closing price of the game day itself, or the trading day subsequent to the game day if it falls on a holiday.

We will cover the past 4 World Cups and compare between the average daily returns of three different investment strategies; investing only on game days, staying invested for the duration of the World Cup (i.e., from the first game till the last game including the break days between matches) , and staying invested for the whole year.

Before we move on to the results, it is useful to know that we have found nothing to suggest any June – July seasonal effect when looking at data from the past 16 years. Excluding World Cups years, the number of June – July periods where the average returns were higher than the corresponding calendar years' was 6, while the number of June – July periods with lower average returns was also 6. As such, the differences between the average daily returns in the table below are mostly likely attributed to the World Cup.


As the above charts shows, investing only on game days is consistently worse off than staying invested for the duration of the World Cup, which in turn is worse than staying invested for the whole year. For example, during previous World Cup in 2006, investing in game days gave a 0.02% average return daily, while staying invested during the duration of the World Cup gave a 0.03% average return daily. In that calendar year, the KLCI advanced by 0.05% on average per day. In 1998, the KLCI advanced by 0.003% on average per day (too minuscule to appear on the graph), while the World Cup period gave average daily returns of -0.57% for game days and -0.54% for the whole duration of the event.


It is important to note that the macroeconomic backdrop would still be the key factor driving market performance and that our testing on the KLCI lacks the rigorous methodology of a bona-fide academic journal. However, the results show that the World Cup does have an adverse impact on the Malaysia stock market, and this phenomenon is also getting coverage in the local newspapers as the World Cup draws close. Although past performance does not guarantee future performance, the Kaplanski and Levy have found that, "the World Cup effect is large, highly significant, and long lasting."

Tuesday, June 8, 2010

Can Proton beats Lamboghini?

I hope you will really enjoy this video clip of how Mitsubishi Lancer EVO beaten Lamboghini. Now you know why EVO has always captured the hearts of many, generating cult-liked religion followers, modifying our Proton car to look like EVO.

Unfortunately our Proton share unable to generate that same amount of excitements. The share keeps sliding after Volkswagen said they found a new girlfried Suzuki. "Other priorities" they called it!

(TheEdgeMalaysia) KUALA LUMPUR: PROTON HOLDINGS BHD [] share price continued to slide for the second day and fell 2% or nine sen to RM4.46 at 9.35am on Tuesday, June 8 after it had said last weekend that talks with German carmaker Volkswagen AG had collapsed as the latter has "other priorities".

If you are the kind of person likes to rejoice whenever you heard bad news, you need to take a look at this chart.

Looking at the chart, the sentiment is neutral. The price/book value is right in the middle. For it to go above 0.5 to 0.9, we need a strong bull market.

Now the closing part of today's post. The price you have to pay for a "budget supercar".

Petrol consumption can go anything between RM $ 0.4 - 1/km, depending how macho is your right foot. Be ready to replace your gearbox, tyre, suspension, brake pad, etc. Yet people willing to eat Maggie and take BMW (Bus Mini Wilayah) to go to work and drive EVO on Sunday. This is what I call the power of branding. Get it, Proton?

Monday, June 7, 2010

Turtle bought something today

Bought Sapura Crest 1,000 shares @ 2.01 and Parkson 500 shares at 5.23
KLCI 1286

Saturday, June 5, 2010

Oil and Gas Sector Watch

It’s about time to revisit O & G sector as the crude oil price seems to be stabilizing around US $ 70 – 80 bbl. At this level of crude oil price, O & G activities should pick up quite a bit. Most of the stocks in this sector seem to be quite depressed. Let me show you some samples of stocks that had corrected more than 20% from the recent peak. Some as severe as 30%-50%.

O & G industry is a very capital intensive industry. Size matters. Without certain size, there is no way you can bid for bigger jobs. Without certain size, you also can’t raise capital cheap enough. When the M & A tides come, the smaller one will be drown!

Here are some of 2009 revenue of some of the bigger players(RM $ billion)in our bursa:

(i) SapuraCrest 3.4
(ii) Wah Seong 1.9
(iii) Kencana 1.1
(iv) Dialong 1.1
(v) Petra Perdana .61
(vi) Alam Maritim .35

If one is bullish about O & G sector, Sapura Crest and Wah Seong are must haves in the portfolio.

Sapura Crest is big, RM 15 billion outstanding order booking, strong balance sheet with around 20% gearing, high ROE, paying dividend consistently are well like qualities.

Wah Seong is also a no brainer as it is one of the largest pipe coating in the world. The recent failure to bid Italian pipe coater Socotherm could have disappointed investors or punters. They have almost half-a-billion cash in hand, will be handy when the right opportunities come. High ROE 20%+ with no debts, 3% dividend yield and proven acquisition track records are something that I like a lot.

Kencana has 2 billion outstanding order in their book gives us relatively clear earning visibility. Strong balance sheet, good profitability and okay dividend yield should be okay to put some chips(not too much though) in this company.

Dialog – expensive, 20X PE with little growth visibility. Stay away.

Petra Perdana. Ah, board room tussle. No clear strategy. Putting money in Alam Maritim will be a better choice.

Alam Maritim is smaller but what I like about them is they are trying to be “AirAsia” of Offshore Support Vessels provider. Their 32 vessels ownership makes them one of the largest in Malaysia. They are ordering 4 more vessels to be delivered between Q4 ’10 to Q1 ’11. 2011 earning should expand with this added 20% more capacity. High gearing 100+% and low dividend are the two things that worry me a bit. But high pretax profit of 30% offset some of my concerns, 100 mln pre-tax profit should be able to service their finance charges of around 25 mln.

You may notice that I did not set any price target this time round. That means you have to time the entry and exit yourselves.

What is your problem Mr. Market?

Was last Friday sold down triggered by a very disappointed job growth from the private sector? The unemployment came down to 9.7% was actually a good sign but the market did not like to see the declined was supported by government. What the market missed was the trend of private sector contribution has been declining for quite sometime, so what is your problem Mr. Market?

Friday, June 4, 2010

Company watch : Alam Maritim

My this weekend reading and assignment.

(Business Times) MAYBANK Investment Bank Research maintained its "Buy" call on Alam Maritim Resources Bhd (5115) even though its first quarter results were weaker than expected.

In its research note, it also maintained its earnings forecasts as it expects more earnings to flow in during the remaining quarters.

The company's first quarter recurring net profit was 12 per cent lower at RM21 million, or 17 per cent of its full year forecast, mainly due to lower operating activities at its offshore marine charter and underwater services divisions.

Earnings also took a hit from a currency translation loss which accounted for 6 per cent of group net profit.

"We are keeping our earnings forecasts unchanged, expecting stronger quarters ahead as activities pick up from the second quarter. Its 50 per cent-owned pipelay barge, delivered in March 2010, is expecting commissioning by July 2010. The vessel has no firm contract but we understand that charter interest for the vessel has been encouraging," it said.

The research house expects Alam Maritim to deliver a 66 per cent net profit growth in 2010, including extraordinary gains.

Read more: Alam Maritim: Buy, target price RM2.40

Wednesday, June 2, 2010

Turtle Portfolio Update - June '10

Portfolio still gain 6.2%, kena wallop 5% after the correction. I am now sitting on 40% cash. Like I said earlier, it's about time to move a bit of cash slowly over the next 4 months.