Sunday, June 12, 2011

P.I.E

A reader asked me whether I'm still interested to put some more money on the line for P.I.E.

I received notification of nett dividend of RM 262.50(gross dividend was RM 350) for 1,000 shares held by Turtle portfolio. That put Turtle portfolio at almost break even. I do question the management for declaring one time large dividend when the stock price is under-pressure. The price of stock will appear to have a huge drop after ex-date. Many will think the stock suffered 8% bungee jump when the reality is not that bad, as many people would have imagined.

Like I said earlier, I still like this share for its steady income. The question, however, will be frequently asked : can it continue to generate steady dividend? The answer is yes as the company require very little to maintain its existing operations.

I earlier posted an entry saying many companies are moving out from China due to rising labor costs. P.I.E is one of the beneficiaries. How come especially we too are screaming for labor shortage? Well the solution is to bring in people from Vietnam, Bangladesh, Nepal, Indonesia, China, etc? Thanks to our "balless" politicians that do not have guts to get rid of many subsidies such as electricity, petrol, etc that created artificial low cost manufacturing base. They all have been closing one eye or may be two eyes, allowing these foreign workers to get into our country. China on the other hand will not allow any foreign workers. That will put them on the upward pressure wage inflation. Unfair suppressed low cost and relatively cheap labor at the macro level will resolve in favor of P.I.E.

The rising cost in Foxconn who is the parent company of P.I.E will force them to download more jobs to P.I.E. Though the margin of the products may not be that great but having very little re-investment into the business should be all right as long as it has a decent return on investment or return on capital(13 -14%).

While collecting cheques consistently from P.I.E, there are some new businesses are coming up. Once the new business achieves certain critical size, I believe patience investors will be rewarded.

To answer to the original question, will I? YES, I'll buy a bit more.

2 comments:

dukuhead said...

me too, i'm in. Just bought 2,000 P.I.E shares today. I'm long on this company. It has sound fundamentals and is a worthy addition to my stock portfolio. thanks for bringing P.I.E to my attention in your previous posting. Happy blogging and keep up the good work

Hayden said...

first time at your blog. I went back to your first post in 2008. interestingly, in Jan this year I was considering doing exactly the same thing (investment in stocks with 3K as amateur ). good luck