My Investment Record (22) - 30th June 2015

Market Overview

Bursa Saham end up in 1706.64 points, 40 points lower compared to closing of previous month. 

Two events dominated KLCI performance in the past month:

- Possible of rating down grade by Fitch

- Possibility of greece defaulting from its loan. 

Both event pro-long the decline of ringgit against major safe heaven currency (like US dollar), 

which further putting pressure on local stock market (KLCI) performance. 

However, as Fitch revised the rating outlook for Malaysia, i will expect KLCI stopped its decline for next July, while trading narrowly waiting for the impact of GST to corporate earning become obvious in next cycle of financial reporting. 

Current Return and performance

The estimated holding period return for KLCI in the past period (1st June 2015 - 30th June 2015) is -2.06% (with dividend included). Holding Period return for my portfolio, is -0.44%. Total holding period return for my portfolio since the inception is 8.79%, annualized to be 3.02%, this is lagged behind KLCI total return of 13.99% (annualized, 4.73%) and lower than return from Fixed Deposit. 


Trading Activities

1. Addition of MNRB (6459),  loss shown in quarter 3 seem to be short lived as the company quickly turn into black and record EPS of 60 sen per year. This translate to P/E ratio of about 6-7, with P/B ratio still less than 1. With current cash level, i believe the next dividend will be around 20 sen, translate to dividend yield of more than 5%.  The worrying sign however is that, the total revenue seems to be stop growing. 

2. Addition of Symphony Life (1538), its unbilled sales increased significantly from 196 million at FY 2015 Q2  to 469 million at FY 2015 Q3 and 667 million at FY 2015 Q4, guarantee of at least 2 years revenue in the future. Thus with current P/E about 6, and Price to book value around 0.4, and recently announce dividend (not yet approved by shareholder) of 5 sen (translate to dividend yield of more than 6%), the company looks attractive to me. Not to mention the company still sit on top of large parcel of land in sungai long which had yet to start develop. 

Some signs need to take note of is the quick build up of inventory level, and whether the projects launched will be take up 100% in the end. 

My Investment Record (21) - 31st May 2015

Market Overview

Bursa Saham end up in 1747.52 points, 70 points lower compared to closing of previous month. 
Few events affecting KLCI's performance in short term horizon, 
- Possibility of Fed raising rates, resulted in net sell off of foreign investors in May?
- 1MDB saga, where its debt woes are worsen by downward trend of Ringgit following crude oil price crash. It will be interesting to see how negative the event can unfold. 
- Effect of GST, that will hit hard on retail & consumer's sectors performance.

- X factor, MERS outbreak, if uncontrolled like SARS, could hit asia economies hard. 

Current Return and performance

The estimated holding period return for KLCI in the past period (1st May 2015 - 31st May 2015) is -3.62% (with dividend included). Holding Period return for my portfolio, is -1.75%. Total holding period return for my portfolio since the inception is 9.27%, annualized to be 3.28%, this is lagged behind KLCI total return of 16.39% (annualized, 5.67%) and lower than return from Fixed Deposit according to best available market rate.

Trading Activities

1. Addition of Affin holding (5185). My rationale behind was this, there are few types of industry that is perceived to last long, and return moderate profit to the shareholder, these includes infrastructure (toll way, utilities, telekom), finance and banking business, FMCG (fast moving consumer goods). In current KLCI market, it seems banking and finance sectors is the only sector left with low P/E ratio, high dividend yield and back by low P/B ratio.  Sometimes my bet might go sour (like previous bet with CIMB and current bet with Affin holding), sometimes my bet remain promising (with Maybank and Public bank). 

2. Addition of Maybank (1155). First quarter profit went up but price still go down, at anticipated dividend rate current price offer a dividend yield of close to 6%. Seem acceptable for me. 

3. Addition of Public Bank (1295), a balancing act continuing from previous trading month (see here). Seem to pay off for me for now. 

My Investment Record (20) - 1st May 2015

Market Overview

US 1st Quarter GDP data came out surprisingly weak with growth of 0.2%, 

Fed is holding its move on next rate hike, consensus now looking at the earliest hike in september, 

Market become nervous, 

KLCI pare its early gain in the month and end up with 12 points lower than opening of the month (1818.27 pts currently). 

And here the theory,

A meltdown of the market usually triggered by sheep herd behaviour, where exiting of one group of investors follow by another. 

In Malaysia case, it will most likely be foreign investors who sell off first, then local retail investors who under margin call, and finally the remaining local retail investors. Institutional investors (like EPF, ASNB, Public mutual) etc seldom sell off as they investing strategy is to hold for long term. And the institutional investor often become key stopper of the fall/crash. 

And when market become sentimental, anything could happen and it will be likely those who ride the first wave (whether selling from a peak or buying from a trough) will gain in this cyclical market condition. My prediction is KLCI will remain cyclical in current level at least until Q2 economy data is out, if the outlook is positive only then a move to break 1900 pts become possible. 

Current Return and performance

The estimated holding period return for KLCI in the past period (1st April 2015 - 30 April 2015) is -0.42% (with dividend included). Holding Period return for my portfolio, is 1.09%. Total holding period return for my portfolio since the inception is11.22%, annualized to be 4.07%, this is far lagged behind KLCI total return of 20.76% (annualized, 7.33%) and just about the same as return from Fixed Deposit according to current market rate.

Trading Activities

1. Disposal of  PohKong (5080), When i first start my investment portfolio, i made a few mistakes which resulted in poor performance of my portfolio compared to KLCI, This include, ignore how the huge inventory level (even the inventory is ready to sell) can influence the performance of particular company (in this case, gold inventory to PohKong and Tomei), ignore how the controlling stake holders can  act in the interest of its own while sacrificing the interest of minority shareholder (PohKong, few chinese stocks). The only chance to correct those mistakes is when the shareprice rise according to tide. Which i did for Poh Kong recently.  

2. Disposal of  Public Bank (1295), Public bank is a good stock that seldom disappointing its shareholder,  But viewing its current share price level and in anticipating of upcoming volatile market condition,  partial disposal of it is one of my strategic move to accumulate some cash and prepare for any short term slump in share price. The strategy might or might not paying out. 

My Investment Record (19) - 31st March 2015

Market Overview

Last month, KLCI declined initially by 40 points into 1778.16 at 11th March, before slowly climbing back to 1830.78 level, 10 point higher than previous month closing. I believe for the next few months KLCI will probably trading around current level, until the effect of GST to Malaysia economy and corporate earning become clear. 

However, oversupply in crude oil market exemplified by the agreement of Iran nuclear deal might caused a burst in US shale oil & gas sector (see here). On the other hand, China is showing every signs of economy slow down (see here, here), the spread over effects to Malaysia economy might cast a shadow to future of KLCI index. 


Current Return and performance

The estimated holding period return for KLCI in the past period (1st March 2015 - 31st March 2015) is 0.79% (with dividend included). Holding Period return for my portfolio, is -1.45%. Total holding period return for my portfolio since the inception is10.02%, annualized to be 3.77%, this is far lagged behind KLCI total return of 21.27% (annualized, 7.75%) and just about the same as return from Fixed Deposit according to current market rate.

Trading Activities

1. Addition of MNRB (6459), although recent quarter results showing a loss for the insurance company, overall i still believe in the long run, insurance company like MNRB will remain profitable and produce handsome return. With share price cost only 2/3 of the book value per share, MNRB looks cheap for me. 

2. Addition of Symphony Life (1538), its unbilled sales increased significantly from 196 million at FY 2015 Q2  to 469 million at FY 2015 Q3, sign indicating that the company still has business ahead. Thus with projected P/E less than 5, and Price to book value around 0.4, the company looks attractive to me. 


Others Investment Notes

When tracking their performance with the market, others often didn't include the fact that stocks in KLCI index do pay dividend. Thus, they will often be able to show their results to be superior/close to the market performance. However, as the average dividend yield of KLCI stocks will be about 3.2%, this will often have a significant impact on whether your portfolio is outperform/underperform compared to the market. 

Taking my performance as example, if we take the dividend component out, KLCI annualized return will be close to 4.5% only, which is still superior, but not far away from my annualized return of about 3.8%.  

Holding high cash position in the long run when stock market is expected to go up at rate higher than Fixed Deposit's rate will hurt one's performance. This can be shown by ICAPITAL's last 4 years (including current FY) results. 

My Investment Record (18) - 28th February 2015

Market Overview

During the CNY month, KLCI slowly climb up 40 points, perhaps due to satisfactory corporate earning announcement. The external economic environment trend hardly changed, except for Greece at the brink of defaulting, while ECB start its quantitative easing program. Besides, as China is experiencing slow down, its central bank start to cut interest rate. When credit become cheaper across the globe, we can expect equities price to start its climb until unsustainable level. 

Current Return and performance

The estimated holding period return for KLCI in the past period (1st February 2015 - 28th February 2015) is 2.52% (with dividend included). Holding Period return for my portfolio, is 2.79%. Total holding period return for my portfolio since the inception is 11.64%, annualized to be 4.50%, this is far lagged behind KLCI total return of 20.32% (annualized, 7.68%) and but still higher than return from Fixed Deposit according to current market rate. 


Trading Activities

1. Addition of MNRB (6459), although recent quarter results showing a loss for the insurance company, overall i still believe in the long run, insurance company like MNRB will remain profitable and produce handsome return. With share price cost only 2/3 of the book value per share, MNRB looks cheap for me. 

2. Addition of RHB Capital (1066). with latest quarter results out, RHB capital P/E ratio current stand around 10, low compared to other banks and other KLCI stocks. Few reasons why RHB's share price was low was due to possible default by 1MDB on its 2 billion loan ( RHB portion = 32%), resignation of its CEO, and fallout of merger plan with CIMB. However, with Ananda Krishnan allegedly came to the rescue (source) for 1MDB, thus repaying the loan to RHB,  my bet is RHB's business will remain stable for upcoming years. 

3. Addition of Symphony Life (1538), its unbilled sales increased significantly from 196 million at FY 2015 Q2  to 469 million at FY 2015 Q3, sign indicating that the company still has business ahead. Thus with projected P/E less than 5, and Price to book value around 0.4, the company looks attractive to me. 

My Investment Record (17) - 31st January 2015

Market Overview
On the back of higher selling pressure from foreign institute (see following chart from Bursa Saham), KLCI surprisingly climbed back from 1750 lvl to 1780 lvl.

The fall and rebounce of oil price during last month was something interesting and worth study. It just demonstrate a typical case of business cycle, where falling price will deter capital expenditure investment, and thus led to a slow down in production (supply), and ultimately bringing the price back to equilibrium point. Signs already shown in US where the total US rig count is down 25% since October according to baker hughes (source). 

Moving forward, the short term nature of shale oil production cycle will act as a spring keeping the oil price at equilibrium level (which is the price where NPV of new rig for shale oil is positive). This article summarize the mechanism well. For Malaysia, the induced consumption brought on by the lower oil price will be balanced out by the cut in CAPEX of oil & gas industry and lower government budget spending. Hence, despite the current short rebound of oil price, the current low oil price impact to Malaysia economy i guess will still be negative. 

Current Return and performance

The estimated holding period return for KLCI in the past period (1st January 2015 - 31st January 2015) is 1.41% (with dividend included). Holding Period return for my portfolio, is 0.32%. Total holding period return for my portfolio since the inception is 8.61%, annualized to be 3.48%, this is far lagged behind KLCI total return of 17.37% (annualized, 6.85%) and almost equivalent to return from Fixed Deposit according to current market rate. 

There is no trading activities this month. 

My Investment Record (16) - 31st December 2014

Market Overview

KLCI end the year 2014 lowest than previous year, the second time since it recorded the low point during 2008-2009 Global Financial Meltdown. Given current falling trend with oil price, anticipation of more negative effect (from falling oil price) for Malaysia economic activities may drive the stock market price lower. 

Nevertheless,  i still hold on to the view that the ultimate determining factor for the share price is the underlying corporate earnings for the future. As corporate earnings is linked to the economic activities (measured by GDP, when GDP for Malaysia still forecasted to have positive growth (4.7% according to world bank), corporate earnings will be expected to grow. Looking from another angle, current KLCI's P/E ratio (summing of individual components P/E adjusted according to their weightage in KLCI index, calculated by myself) is about 18. I don't have the latest last average 10 years P/E in hand, but it suggested the index are slightly overpriced but not highly overpriced currently (based on average of 16.7x of last figure here)

Furthermore, the KLCI's P/E ratio is particularly tilted higher by IHH Health Care (code 5225 with P/E of 55!) , Astro (6399) and few telco stocks (TM, Maxis, Celcom, Digi). Excluding the effect of 6 stocks with highest P/E, KLCI's P/E ratio will come down to around 15, which looks slighly cheap compare to its historical average. Given the fact that we are not experiencing any financial meltdown yet, there will be some bargain to hunt for now. However if you hold some IHH shares my advice to be to sell as there is no way an industry required huge CAPEX and limited growth can justified a P/E of 55. 

KLCI Index Component Stocks Info (adjusted to latest available figure)

Current Return and performance

The estimated holding period return for KLCI in the past period (1st December 2014 - 31st December 2014) is -3.01% (with dividend included). Holding Period return for my portfolio, is -7.09%. Total holding period return for my portfolio since the inception is 8.26%, annualized to be 3.46%, this is far lagged behind KLCI total return of 15.73% (annualized, 6.46%) and almost equivalent to return from Fixed Deposit according to current market rate. 

There is no trading activities this month.