One Morning One Night in Bursa, EG, Hang Seng Call Warrant, Biohldg, Prolexus, Superlon, Bioalpha

My chinese friends said 一朝一夕 means one morning one night. It means very short period of time. In stock market investment (not trading), the result is not 一朝一夕. That's why many people have given up. Every day look at the screen and feel sad asking why their stocks prices didn't go up and some were down.

We must remember investmemt is not 一朝一夕 yī zhāo yī xī. In cantonese it is pronounced as YatJioYatJic.

Many days ago saw many Hang Seng HSI call warrants suddenly dropped a lot. For sure there will be a lot of losses. Be careful of trading in call warrants especially HSI because of huge premium and you are fighting against time.

If you buy call warrant C hoping market good you make money, and you buy put warrant H hoping to make money when market down, yes sound very easy. BUT, but and but there is something called premium. Most of the call or put warrants are trading at a huge premium. The prices will continue to drop until they reaches expiry, unless there is a very BIG swing up or down in Hang Seng. Another example is C may down 5% a week, but H may up only 2% a week. If you bought correctly you make 2% or 20% for example, but if you bought wrongly you may lose 5% or 23%. Therefore, it is not a 50 50 chance. Be careful.

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Make Money From Stock Market is about FUTURE, and not just past ROI, Cash Flow, Dividend, etc

Sometimes I read a lot of arguements and disputes about who right and who is wrong.

I summarised these people into 3
1)Too much historical FA. HFA
2)Balance Approach- Future and Valuation. BL
3)Simplified Future. SF

HFA
There is one group of people who like Historical Fundamental Analysis. Talking about net asset per share, PE ratio, dividend, cash, etc. Mostly about historical. 

If a company PE ratio is super low, 4 times, a good buy. But what if the profit drop next two years? You may lose money.

If the asset worth RM10 per share, now selling at RM6 per share, good buy. But if profit keep dropping or no increase, we may not make money. Unless we are the owner, we buy at RM6 and then sell the whole company at RM10.

They will show you numbers,  then numbers and lastly numbers until your kepala pening "headache".

Don't get me wrong. All these are important. But we should spend more time thinking and searching info about the future. Nobody know about the future. You are half right. If your son is in Form 3, next year in the Future he will be in form 4. But sometimes unforeseen things happen. He decided to stop studying and concentrate on badminton and you got it wrong. We don't know 100% about the future but we can forecast based on information that we have.

BL
Balance. These group of people talk more about future, eg icon sifu. Most of the info he shared are about future, the project, the expansion, the new orders, etc. He shared details things of future. He uses and also shares past records eg profit margin, but is for the purpose of analysing the trend, future and worth. Focus mainly on future. But he doesn't stop there, he also values the stock, whether the current price are expensive. Example no point buying a stock if the profit will grow 100% but the share price is already up 300%. That's why he also touches on PE ratio etc.

Analysts are the same. They forecast and they value. That is why in research report only few simple tables showing some important figures and forecast. They don't too much about ROI, net asset per share, etc.

For me, this is the best approach.

SF
Some just said the stock is good if the profit is growing. This is too simplified. That is why you can see many stocks 3 months later announce profit up 90% but the share price hardly move within this 3 months, because the stock price already up or PE ratio already very high.

×××××××

Just Vitamin C is not enough, that's why we need multivitamin.

I have attended a 2 full days course on fundamental, it did not benefit me much because they focus too much on cash, dividend, current ratio, etc. I thought that was just one topic, maybe Level 2 talk about Future. I went to chat with them, that's all, they just invest based in historical fundamental. The tutor was also quite surprise on the high % gain made by someone attended the course also. I know why, because they focus too much on dividend and stable stock, their return per year will not be high.

Investment is about Future and Valuation. Not just future and not just valuation.

Not to say I am "Mr Know It All", I don't know all and I am learning. But because lack of time, I don't really read those just talk mainly on fundamental. Because I only have 24 hours a day, I focus on those who talk about Future and Valuation.

With this would like to thank all analysts and those who contribution information generously.

Thank you.

Strong USD stocks, Top 30 stocks to buy. So many to choose from

Ringgit weaken again. For those who are interested to know stocks benefited from strong USD or weak Ringgit, refer here.

http://politemarket.blogspot.my/2016/09/list-of-export-counters-for-us-to-buy.html

Saw many people sharing cold eye stocks below. He is one of the famous investors in Malaysia. His name is in many listed companies top 30 shareholder list.

2016年11月5日, 冷眼分享会个股关注名單 ColdEyes Top 30 Stocks Pick:

>RM 3 (高价股）
PERSTIMA, TGUAN, ASIAFILE, TAANN, SOP, UMCCA

RM 1-3 （中价股）
HEVEA, SUPERLN, PENTA, IQGROUP, ECOWORLD, RCECAP, POHUAT, JAKS, MFCB, JTIASA, FREIGHT, PRLEXUS

<RM 1 （低价股）
JOHOTIN, MBSB, OPENSYS, MMSV, SOLUTN, RGB, HOMERIZ, SENDAI, WASEONG, OCK, WCE, WILLOW

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Sell Your Mother, Sell Your Car and Sell Your House. It Is Time To Sai Lang on MFCB-WA

Don’t misinterpret, sell your mother means for those who have MFCB mother shares, may work out computation on the potential upside vs risk on the mother share vs the MFCB-WA warrant and see whether MFCB’s son the warrant has better return than the mother or not.

It is not literally sell our mothers. We all know we love our mothers.

Sell Your Car and Sell Your House, I copy these phrase from ICON. All these words are a way to say go big into it. It is not literally to sell our cars and sell our houses. Just like the famous phrase “durian drop, sarong up”. It doesn’t mean we sell our sarong to buy durian, it is a way of saying durian is extremely nice to eat.

For more info, please refer to my previous articles on MFCB-WA.

By the way, the above is not a recommendation. Always seek professional advice on shares trading. The above is something to lighten up after two weeks of boring market where the Dow Jones index dropped for don’t know how many consecutive days.

Have a nice week ahead.

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MFCB Warrant Upside Potential table

Update from my previous post. How to read the table.

RM2.23 is MFCB current share price and warrant is RM0.675.

If MFCB up 35% to RM3.00 and the warrant trade at 20% premium, then MFCB-WA will be RM1.40, 107% upside potential.

You can ignore those in blue as I don’t think that can be achieved. Because the higher the share price and warrant price, the lower the premium.

MFCB medium target price is RM3.16 given by Public Investment Bank research analyst.

If MFCB up 42% to RM3.16 and the warrant trade at 20% premium, then MFCB-WA will be RM1.60, 137% upside potential.

MFCB long term fair value is RM4.43 given by Public Investment Bank research analyst.

If MFCB up 99% to RM4.43 and the warrant trade at 0% premium, then MFCB-WA will be RM2.23, 230% upside potential.

For those who have lack of long term faith, MFCB at RM3.16 does not look super difficult. Upside potential for warrant will be 137%.

Risk?

As usual, 100% loss. Max.

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MFCB-WA can up 270% or 140% in 3 years?

MFCB Target Price RM4.43 - exercise price of RM2.20 = RM2.23

Divided by MFCB Warrant price RM0.60 = upside of 270% !!

Medium term 12 months upside is 70% +.

My conservation calculation is 140% upside for 3 years.

Workings:
MFCB have this USD500m (RM2bn) Don Sahong hydropower project which has been on track, reaching 10% completion as of Aug 2016. The deadline to complete the project is31 Dec 2019 while commercial operation is scheduled to take place in early 2020.

Public Investment Bank's analyst said expecting a more than 3-fold jump in earnings.

I also tell you the bad points, may lose 70% of Group revenue (RM51.8 X 70% = RM36.26mil) and diluting with warrants.

2015 net profit RM51.8 million.
1-fold jump in profit RM51.8 million + RM51.8mil = RM103.6 million.
3-fold jump in profit = RM51.8 X 3 + RM51.8mil = RM207.2 million 

207.2m - losing 36.26m profit = RM170.94million

Shares issued 401.9m, + warrants 67.3m = 469.2

Earnings per share RM0.364

X 10 times PE ratio = RM3.64

Warrant in the money price =  RM3.64 deduct exercise price RM2.20 = RM1.44
Warrant Price now RM0.60.
= 140% upside.

140% is a conservative figure.

For those medium term 12 months MFCB Target Price given by Public Investment Bank RM3.16.

MFCB Target Price RM3.16 - exercise price of RM2.20 = RM0.93

Divided by MFCB Warrant price RM0.60 = upside of 55% in 12 months.

12 months for sure will still trade at premium, so the upside could be 70%.

1)I use fully diluted from warrants.

2)Between now and 3 years later, MFCB may get new projects

3)The China concession expiry in 2022, another 6 years. And they may not lose it.

4)PE ratio is only 10 times. Historical is more than 10x???

5)Analyst said earning more than 3-fold. The above assumption is only 3-Fold.

Public Investment Bank analyst said . . . ..
The Laos hydropower project could fetch as much as RM4.43/share. Upon the full commercial operation of the hydropower plant, we forecast that the Don Sahong Hydropower could contribute as much as RM4.43/share (WACC: 7%) based on our DCF valuation. As of now, we apply a higher WACC of 10% coupled with a 30% discount for the risk exposure during the construction period, which yields a valuation of RM2.26/share. All-in, our SOP-based TP is revised upwards from RM2.29 to RM3.16.

Let's said we don't bother about my own analysis, purely go for MFCB target price of RM4.43 in the future, the potential upside of RM4.43 is a lot.

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List of Export counters due to Strong US Dollar

Don't play play, now is almost RM4.20.

Below are the list of export oriented stocks. They will make more profit when the USD is up.

#
I'm not saying that now is the time to buy export counters. Sharing of info only. By the way, I don't gain by sharing info, and always receive criticism. People will leave some nasty comments in my blog and facebook. Is like eating nice durian, hope others can enjoy. I'll be glad if my sharing can help others. If you think my method is wrong or need to be improved, why don't you guide me. I'm also still learning.

#
If you buy USD, USD up 1%, you make 1%. Some of the stocks below if USD up 1%, their profit could up 1.5% or some companies 2%. So, if you want to benefit from USD or hedge against USD, you may consider stocks that can gain at least 1% or more from 1% up of USD.

But some companies also will make less than 1% if USD up 1%.

#
It is also better to look for companies with good prospect, high dividend yield, high target price or fair value. In case the USD does not go up, at least the stock also can go up due to higher profit or receive good dividend.

People said avoid stocks with no prospect. They may gain from USD, but profit may down due to much lower sales.

#
The list below are 12 months ago, but most are still valid. Do your own research. Their share prices are the latest and target prices are quite recent. The target price I roughly average it if got few brokers. If I didn't indicate any target price means unable to find.

#
Some are not export stocks, but are benefited from strong USD or weakening of Ringgit (example strong Yen or Euro). They may have operations in overseas.

#
I also list those have negative impact from weakening of Ringgit.

#
Once again, sharing of information only, I may have typo or the info may be outdated. Check with your finacial planner.

#
The target price or fair value are BEFORE the straightening of USD to near RM4.20 now (RM4.15??). If USD up, the Target Price later will also be up.

#
I also list down those are negatively impacted by weakening of Ringgit. Don't mix up. DO NOT MIX UP.

POSITIVE from weakening of Ringgit:

Eversendai share price RM0.47, target price RM0.65

Rubber product manufacturers, semiconductor firms and furniture producers, because their costs are mainly in Ringgit while sales are mainly in USD.

RUBBER
Top Glove RM4.69, TP RM5.50

Supermax RM2.15, TP RM2.60

Hartalega RM4.40, TP RM4.30

Kossan RM6.25, TP RM7.50

Karex RM2.40, TP RM2.31

Furniture and Wood Related.
Homeritz share price RM0.885, Target Price RM1.09

Evergreen share price RM0.92, Target price RM1.48

Heavea RM1.25

JTIASA RM1.22

TAANN RM3.51, TP RM5.00

Latitud RM4.64, TP RM5.15

SHH RM1.77

LIIHEN RM2.93

Semiconductor or IT RELATED
Vitrox RM3.83, TP RM3.70
Last year Maybank said 1% USD up, Vitrox bottomline up 2%.

INARI, RM3.31, TP RM3.30

UNISEM RM2.70, TP RM2.85

UCHI TECH RM1.65

MPI RM7.93, TP RM8.48

EG RM0.84, TP RM1.02

Gaming.
Because some of the operations are in overseas.
GenM RM4.37, TP RM4.50

GenM family Genting RM7.76, TP RM9.15

Packaging
Daibochi  RM2.25, TP RM2.14
Tomypak RM1.66, TP RM2.00
Thong Guan TGUAN  RM4.28, TP RM4.88

OTHERS
MISC RM7.53, RM8.10

WCT RM1.65, TP RM1.85

OLDTOWN RM1.95, TP RM2.00

TIMECOM, RM8.42, TP RM7.28

Hovid RM0.375

IQGroup RM2.24, TP RM2.75

Kawan RM3.79

Asiafile RM3.68 ASIAFLE

CSCENIC RM1.69
You see this CSCENIC, there was one quarter it said although USD is strong, their profit was not good because undercut by Europe competitors. I think Euro also dropped against the USD, not sure. So you must determine whether is USD strong, or Ringgit weak.

VS??? Share price RM1.33, target price RM1.75

PRELEXUS. PRLEXUS because manufacture for NIKE.

Comcorp??

KESM??

Cimb and Unimech??? Benefit from weak Ringgit due to their Indonesia operations?

OCK probably may not benefit from strong USD but may benefit from weak Ringgit because of their South East Asia opeartions. I may be wrong but this is with my limited info.

Not sure about the below list...????
Ahb
Dps
Eksons
Eurosp
Facbind
Ffhb
Jaycorp
Lcheong
Pohuat
Sernkou
Sign
Syf
Tafi
Swscap

XXXXXXXX=======XXXXXXXXX

NEGATIVE from weakening of Ringgit. Do NOT mix up, below are negative. Bad from strong USD or weak Ringgit.

Company that import raw materials in USD but sell in Ringgit and those who have USD debt.

Automotive Sector
UMW
Tan Chong
Last year Kenanga said 1% fluatuation in USD, UMW's bottomline could be affected by 3%. Tan Chong is 6%.

Berjaya Auto RM2.30, TP RM2.55

DRBHCOM RM1.34, TP RM1.31

MBMR RM2.52, TP RM2.68

Aviation/Airlines
Because many borrowings are in USD. Fuel cost also. Unless they have hedged it.

AirAsia
You guys know AirAsia much better than me.

Telco?
Many telcos have borrowings in USD.

Axiata RM5.32, TP RM5.20

TM

MAXIS

ASTRO.
Because most content costs are in USD but sales are in Ringgit.

Others
Nestle
TCM
TENAGA
SUNWAY- USD debt
IJM- USD debt
F&N
GAB GUINNESS HEIM      HEINEKEN MALAYSIA BERHAD

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