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Tuesday, January 31, 2012

China Stationery Limited and Sentoria Group Berhad IPO

China Stationery Limited IPO price RM0.95
CSL IPO Closing Date 10/02/2012
Malaysian Public 60mil shares


Sentoria Group Berhad IPO price RM0.85 Retail Price. Private placement price RM0.87
SNTORIA IPO Closing Date 10/02/2012
20mil Malaysia Public
10mil for eligible directors, employees, business associates
30mil private placement


Sentoria Group Bhd, is the developer and operator of the Bukit Gambang Resort City (BGRC) in Kuantan, Pahang.

Will post more when I get the info.

For more in on IPO, here.
http://politemarket.blogspot.com/search/label/IPO


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Monday, January 30, 2012

How Remisiers Should Answer Their Clients

Before I tell you how remisiers should answer their clients, I will first relate and tell you about a Hong Kong TV comedy show. In an episode, there was a stupid actor who doesn't know how to answer questions given by reporters. Therefore, his manager taught him a easy way, that is to give few standard answers.

1) I don't know
2) Hahaha.... you are right
3) I cannot reveal
4) Let me consider it

Initially the actor managed to answer all the questions by using the standard answer. But subsequently, there were mismatch in the questions and answers.

As a remisier, sometime clients ask many difficult questions. Now, let us see whether we can use the standard answers.


Q1.  How's the market
Q2.  They say somebody going to push up Benalec share price, is that true?
Q3.  Will MAS and AIRASIA merge?
Q4.  What stock to buy
Q5.  My brother told me to buy PMetal
Q6.  Got tips or not?



If you are smart, then you can match the questions and answers
Q1.  How's the market  (I don't know)
Q2.  They say somebody going to push up Benalec share price, is that true? (I cannot reveal)
Q3.  Will MAS and AIRASIA merge?  (Hahaha.... you are right)
Q4.  What stock to buy  (I don't know)
Q5.  My brother told me to buy PMetal.  (Let me consider it)
Q6.  Got tips or not?  (I don't know)


But if like the stupid actor, then there will be some mismatch in the questions and answers:
Q1.  How's the market   (Hahaha.... you are right)
Q2.  They say somebody going to push up Benalec share price, is that true?  (Let me consider it)
Q3.  Will MAS and AIRASIA merge? (I cannot reveal)
Q4.  What stock to buy?  (Hahaha.... you are right)
Q5.  My brother told me to buy PMetal.  (I don't know)
Q6.  Got tips or not? (I cannot reveal)


 .

Friday, January 27, 2012

Boustead Stock Analysis

Boustead share price RM5.42.

Using PEGGY Method:

Boustead PE ratio is about 11x and with modest growth rate of 7%.
Gearing level is manageable and Boustead dividend yield is about 7% (with 70% formal dividend payout rate)

Some brokers recommended to buy. HwangDBS give Bosutead fair value RM6.60.

Some said growth not high enough, but some said this stock is steady due to diversification of industries. Some prefer Bstead stock because of dividend play. Some said this is bluechip some said this is not. Some said the management has turnaround the company, but some said the previous track record nothing spectacular.

Up to individuals.

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Why TMS warrant is so cheap? Or is it a trap?

TMS warrant TMS-WA is RM0.115 or RM0.12
TMS share price is RM0.40

TMS warrant exercise price is RM0.10 and TMS warrant expiry date or maturity date is 16 January 2017.


If we use RM0.40 minus RM0.10 = RM0.30.
But why TMS warrant stock price is just RM0.12? Is it because it is too cheap and we can buy? Or is it because the conversion period has not started? Or is it because the TMS stock price going to drop sharply?




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Thursday, January 26, 2012

Gefung stock - a new Sunrise Bhd Stock?

Is there a value in Gefung share? Or will there be a selling down in Gefung shares due to listing of the rights issue.

Gefung rights issue:
The listing date of the rights issue shares is 27 January 2011.
Renounceable rights issue of up to 193,500,002 new ordinary shares of Gefung shares together with up to 38,700,000 free detachable new Gefung warrants on the basis of five (5) Rights Shares together with one (1) Warrant for every four (4) ordinary shares of Gefung held as at 5.00 p.m. on 27 December 2011.

Gefung Rights issue price is RM0.15
After the ex date 22 December 2011, Gefung share price was about RM0.15.
Right issue price and the share price is about the same and with just free one warrant for every four Gefung shares that your subscribe, not many people want to subscribe.

Only 53.40% subscribed / acceptance, and 2.98% applied for excess.Total is only 56.38%


My question is, who want the Gefung shares at RM0.15? Why the company didn’t set the Rights issue price lower?
Do the directors or major shareholders see value is Gefung stock that we are unable to see?

Based on Gefung Annual report 2010, the managing director is Dato’Allan Lim Kim. He was the major shareholder of Sunrise Bhd (7.24%, Sunrise annual report2010). Now Sunrise stock has been delisted (due to takeover by UEMLand stock). Can Dato' Lim turn Gefung into another Sunrise Bhd?

Look at Innoprise Plantation Bhd. INNOPRISE PLANTATIONS BERHAD rights issue in April 2010. Price was about RM1.00 and the rights issue price was RM1.00.
The acceptance was only 68.73%.
But what is Innoprise Planation stock share price now? Inno share price now is RM1.44 and some brokers recommended to buy with much higher fair value.


Information:
What is Gefung Warrant exercise price?
Gefung warrants total issue Size in Unit: 21,819,950
Gefung warrant Maturity Date is 19 January 2017 and the Gefung warrant fair value target price is determined by Gefung shares price, Gefunng Exercise price or conversion price of RM0.150.

Can Gefung Holdings Berhad be another Innoprise or Sunrise stock? Or will it trade lower than RM0.15?

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Gefung stock analysis

Gefung share price is RM0.16.

Content:
Major Shareholder of ex Sunrise Bhd stock (merged with Uemland stock)
Rights issue plus free Genfung warrant.

The analysis will be posted later.

Tuesday, January 24, 2012

52 Ways of Making Money in Stock Market - Part 33/52 - Private Placement

Private Placement
You can make money in the stock market through private placement. Get you private placement shares which are normally lower than the current share prices and sell it to make profit.

What is private placement? Private placement is non-IPO non-public offering issuing of shares to identified or selected group of investors.  The investors are normally strategic investors such as suppliers, customers, institutional investors such as banks, insurance companies, unit trust and  pension funds.

Merchant bank or investment bank will assist the company in the private placement, normally the total number of private placement shares is not more than 10% of the total company issued shares. The issue price is normally cheaper than the current share price.

In Malaysia, sometimes the private placement is being used to increase the Bumiputra percentage holdings in the company, The shares are then offered to selected Bumiputra and I think it may involve MITI.

Private placement may also offer to individuals that are not strategic to the company. It can be anybody as long as you have a bit of connection. 

From my observation, after the completion of the private placement, if I take a look at the annual report, there will be few individual names appear as substantial shareholders, in which I think they have no benefits to the company. I always feel that after they received the shares, many may sell it to take profit. Those who have not sold, and still holding it, I think they will then sell if they need the money. Their cost is low, therefore some prefer to sit on paper gain and no urgency to sell.

My question is this, how the company select who will be the purchaser of the private placement shares? And what benefits do these people bring to the company? If you look at the defination from a text book, it normally state strategic investors.

If the purchasers are suppliers or customers, then it will be good because it serve as strategic investors. If it is EPF or large unit trust, then is good as they can be a watchdog to the stocks. 

If you are rich, why don’t you call up your investment bank friends and see how the shares is being allocated.


RISKS, LIMITATIONS OR DIFFICULTIES:

You may need connection in order for the shares to be allocated to you. I also want to know how, and I also want to be allotted. The quantity is normally in big block and you may need to have substantial money.

OPINION:
My opinion is that all these private placement should be allocated to strategic investors and not ordinary individuals.

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Monday, January 23, 2012

52 Ways of Making Money in Stock Market - Part 32/52 - Last Days of Call Warrants

Last Days of Call Warrants
How to can make money from share market by trading Call Warrants on last few days before expiring?

In Malaysia stock market, most of the times call warrants are trading at a premium. But when it is nearing to expiry date, it tends to trade at par (no discount or no premium). Due to price fluctuation, sometimes you may be able to buy at discount. You must be patience and que.


What is your risk then?
Assuming you buy at $0.10, but the warrant is worth $0.102 and the cash settlement will be $0.102

Mother share is RM5.00

If mother share does not move up or not, you then make 2%.

If the mother share price drop, then the cash settlement may be lower.

If settle at RM0.04, then your loss will be 60%.

If the mother share drop sharply, the maximum loss is RM0.10.

But if the mother share up sharply, then sky will be the limit for your gain. Can be 100%, 200% or more.

Share price may down or up. So we take the average, which is unchanged. If share price unchanged, then you have made the money already.

Call Warrants settlement price "normally" uses volume weighted average, and then average of 5 days. You may buy the call warrant if it got discount on the second or third day. Because it uses average, the last two/three days price fluctuation may not have a big impact on the call warrants settlement price. Therefore, the discount that you get, on a long run, probably is the average that you will get. Although the % is low, but if you can make 3% within a month, then one year will be about 36%.

If you just want to make the discount, without wanting a higher risk/return, then you need to choose call warrants that is with big conversion ratio. Example 10 call warrant to one mother share, means mother share move $0.10, call warrants settlement price move $0.01.

Bigger conversion will be 20 call warrants to one mother share, means mother share move $0.20, then call warrants settlement price move $0.01. This will be less risky.
I first notice about this when it was in 2007.

I cannot recall the exactly the situation and not sure about the year too, but roughly this is what had happened.

There was someone who bought Digi call warrant when it was near expiry, about $0.015. Then next few days, Digi price was up steadily on a low volume. The settlement was many cents higher than the purchase price. He made few hundred percent.

Another scenario was, someone made about 40% from Tenaga call warrant and 3% Maxis call warrant in March 2011.

Some may say 3% is very little. But if 3% in a month, and you repeat it for 6 months, then will be 18%.
 

RISKS, LIMITATIONS OR DIFFICULTIES:

You need to monitor the expiry and conversion. Need a bit of hard work.

To get a better price of discount, probably you need to que.

If you compute wrongly, then may end up with losses.

You can only trade occasionally because not many call warrant expiry in a month.


OPINION:

Need hard work and computation.

If you are hard working or you have a system to compute real time or up-to-date call warrant settlement price, then you may consider it.



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Thursday, January 19, 2012

52 Ways of Making Money in Stock Market - Part 31/52 - Monitor Direct Business Transaction (DBT)

Monitor Direct Business Transaction (DBT)
How you can make profit by monitoring Direct Business Transaction (DBT). I am not sure what trading system you are using, but the BFE (broker front end) that the remisiers are using, and the computer terminal (MASA) provided by most brokers able to display Direct Business Transaction (DBT) volume and price. When the deal is done, it will be shown in the BFE and MASA.

How it works?
When you see a BIG BLOCK (few percent of the company total shares) of shares transacted at a MUCH HIGHER price, the chances are the share price will then move up.

Assuming ABC share price is $5.00.
Total number of ABC shares is 100 million.

If there is a DBT transaction at $6.50 for 15 million shares, then chances ABC share will move up from $5.00.

Why?
1) So many shares transacted at $6.50, meaning this company is probably being valued close to $6.50 and is cheap at current market price of $5.00.
2) A big block of share transacted, maybe the buyer may then make general offer to the other shareholders.
3) The above example is 15 million shares, which is 15% of the company paid up capital. If the buyer is already holding 19 million shares (19%), with the additional 15% purchase, the buyer will have to make MANADATORY General Offer to the public at $6.50. This mandatory is required by the law, the threshold I’m can’t remember, but I think is 33%. If buyer buy more than 33%, the buyer is required by the law to make the offer to all the other shareholders.
4)Even there is no general offer, this kind of DBT will normally create buying interest for the stock.

There are occasions where the DBT is a big block of shares but the price transacted is less than the current market price, the share price also went up. This happened in 2010 when QL bought one big block of Layhong shares at price below than the market, but LayHong shares price went up. Why? This is because QL is a very good company and investors feel that if QL holding so many Lay Hong share, QL will help Lay Hong to improve the profit substantially.

In 2010, when EPF sold some of RHBCAP shares to many buyers through DBT at market price, RHBCAP share price also when up. This is because investors prefer higher free float, that is more shares are being held by minority rather than major shareholders (EPF).

By the way, you must ignore those DBT with small quantity even the price is very high. Why? Normally these DBT is done by retail clients that were trying to avoid contract loss or want to roll their position.
Example they bought the shares at $10.00, and on T+4 the share price is $8.80. These people refuse to cut loss and therefore they do a DBT, sell to themselves using another person name (eg wife, brother, etc) at $10.00. Wise or unwise?


RISKS, LIMITATIONS OR DIFFICULTIES:

You need to monitor the DBT frequently, where got time? If you are late, when you know it, the price already went up.

The DBT need to be big quantity and very high price, this seldom happened.

Although BFE and MASA display DBT volume and price, they do not display the buyer and the seller. Quite difficult to make decision if we don’t know the buyer. In the above example, if the buyer already hold 19% of the shares, they have to make mandatory general offer. But you don’t know who is the buyer and you are just hoping.

The price may not move up after the DBT especially during bad market sentiment.

Sometimes the price may drop after the DBT? Why? Because the seller is the owner that have brought success to the company and the buyer is an unknown person or with bad track record.

Sometimes is just changing hands between two related companies or parties.

Sometimes I think major shareholder try to make big DBT at higher price to cheat people into buying the shares. Do you think this will happen?


Many people may already know about the DBT before it was done. When you notice the DBT, it is already too late. I remember there was once a stock (can’t remember the name), the share price went up suddenly, I was curious why. Then two days later there was a big DBT done at very high price.


OPINION:
You must remember the quantity must be big, at least few percent of the company total shares and the price must be much higher than the market price. Based on what I have observed, the share price will then move up most of the times. This is just my observation, you will have to consult your remisier or dealer.


More on 52 Ways of Making Money in Stock Market, here.
http://politemarket.blogspot.com/search/label/52%20Ways%20of%20Making%20Money%20in%20Stock%20Market


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Wednesday, January 18, 2012

Formula: To Buy or Not to buy a stock

Many people give me a formula on whether to buy a stock or not. I think the formula is too simple and we may miss out on many tips/ recommendation.

We all use "estimate" and "average" in the formula.

The common formula is:
(Probability of Gain X Percentage of Gain) + (Probability of Loss X Percentage of Loss)

Example 3 months:
Chances of the tips is real is 70%, and will make 20% gain.
Chances of the tips is false 30% (meaning 100% - 70%), and the loss estimated 50%

(70% X 20%) + (30% X -50%) =  negative 1%.

Because it is negative (or lower than your required return), you should not buy.
If it is above your required return %, then you can consider.

But the formula is too simple.

What if in medium term or long term, the stock can recover and make 40% in two years, why not?

Conclusion:
Do not buy if the result shows % less than your required return and the stock also cannot recover in medium term.

May consider to buy if:
1)Got tips/recommendation
2)If anything goes wrong the stock still can recover and make good % gain in medium term.
3)You are willing and able to hold for medium term


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What is PEGGY Method is stock market
http://politemarket.blogspot.com/search/label/Peggy%20Method


What is Dollar Cost Averaging in Stock Market
http://politemarket.blogspot.com/search/label/Dollar%20Cost%20Averaging




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Monday, January 16, 2012

52 Ways of Making Money in Stock Market - Part 30/52 - One bid profit

For lower price counter, one bid higher can make profit.

Example, ABC stock is trading at $0.06 and $0.065. You que to buy at $0.06, if matched, immediate sell it at one bid higher, that is $0.065. If manage to sell at $0.065, your profit is 8.3%. After minus out buying and selling brokerage, you may make 7.3%. No need the price to move up, just trade at buyer or seller quotes and you can make profit. If you can repeat that many times in a year, you may make 50% or 100% in a year.

In Bursa Malaysia, there are many counters that are trading below $0.20. One bid can actually make profit. The lower the price the higher the profit.

Those price more than $1.00 also can be done, but the percentage gain is very little and your brokerage fee need to be low and you need to trade big. After minus buying and selling brokerage you may get less than 1% but if you can repeat it frequentlty, then the total percentage gain can be high if annualize it. The higher the price, the less profit but easier to get your order matched.

RISKS, LIMITATIONS OR DIFFICULTIES:
One bid profit has very little profit, just few percent or in some case less than 1%. If the price drop sharply, you may lose out more than 10%.

Many people are always doing that. That is why you notice there are many people queing to buy and queing to sell the counters that is less than $0.20, especially those less than $0.10. You may not get the chance to buy even you que there for many many days

Normally the counters that is less than $0.10 are poor in fundamental, the price may continue to go down or even be delisted. But there are still come counters that are profitable.

You can only make small profit. In the above example, because you immediately que to sell at $0.065, even if the stock shot up to $1.00, you only manage to sell at $0.065.

To make more profit, you need to repeat your trade many times.

Time consuming because you have to actively buy or sell.

OPINION:
You must ask yourself few questions. What are the chances that the stock price will continue to drop. What are the chances that you manage to buy or manage to sell, and how many times in a month? Are you willing to earn little profit but the loss can be high if market move against you.

You may want to consider counters where there have high volume but less people queing to buy or sell. The chances of your orders get matched will be higher.

For more info on 52 ways to make money in stock market, here.
http://politemarket.blogspot.com/search/label/52%20Ways%20of%20Making%20Money%20in%20Stock%20Market


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What is PEGGY Method in stock market, here.
http://politemarket.blogspot.com/search/label/Peggy%20Method


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Saturday, January 14, 2012

How to understand Research Report

Recently I read a research report on a stock in Bursa Malaysia. The analyst recommend Outperform on a stock. The stock share price is RM4.56 but the fair value is RM4.50.

He or she recommend outperform, if I buy at RM4.56, what do I get? I try to find of explanation in the report but couldn't find any.


I just couldn't understand. I think we also need some basic knowledge in stock market so that we can make our own judgement or decision.

Wednesday, January 11, 2012

My Fund Performance 2011

For the year of 2011:

KLCI up 0.75%

My Fund up 24.80% + 1.5% + 1% = 27.3%

Most counters performed quite okay, except NTPM (sold) and Zhulian.
But both have been giving some good dividend, the damage was not so great.

More info on my fund performance, here.


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Monday, January 2, 2012

52 Ways of Making Money in Stock Market - Part 29/52 - Loyalty Points

Some brokers offer loyalty points to their clients. Example through buying and selling you may already have traded $500,000 in value and you may collect 500 points and can redeem for gift.Or if your brokerage hit a certain amount, they may give you a gift. Some brokers may be doing promotion, and the amount that they set is very easy to achieve.

RISKS, LIMITATIONS OR DIFFICULTIES:
Normally the loyalty points are very little because the profit margin for brokers is very little.

Only when they having promotion, then the gifts will be great and the target is easy to achieve.

OPINION:
Don’t simply trade just to earn points. This is just an extra benefit where even you don’t make any profit, you may get something back.

For more info on 52 Ways of Making Money in Stock Market……..
http://politemarket.blogspot.com/search/label/52%20Ways%20of%20Making%20Money%20in%20Stock%20Market


Ayamas = Hai Yao Ma joke
http://politemarket.blogspot.com/2010/12/ayamas-hai-yao-ma.html

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Disclaimer

Disclaimer Clause
The information contained in this blog is my personal diary and has been prepared solely for myself. Without any previous reading material or discussion, by just reading my blog contents, reader may misunderstand the contents.
All the contents I am talking to myself and most contents are hypothetical or imaginary.
This blog has been compiled in good faith, with no intention to cause hurt, loss, or any trouble. No representation is (either express or implied) as to the completeness or accuracy of the information it contains.
This blog also is not an advice, recommendation or an invitation to buy or sell or invest in anything, eg shares, futures, derivatives, gold, etc. Consult your investment adviser before making any decisions.
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