Investor's Mind = Wakarimasen

Some humorous comments from my chatbox, made my day..Thanks, hahaha :)

- TDM dropped like there is a big fire in their estate.

- Glove counters dropped like waterfall as if suddenly people don't need gloves anymore.

Anyway, sometimes I admit I don't really know what's in the investors' mind. Simply sell shares like nobody's business. APM just announced their stunning results of 18.7 sen EPS in 2Q 2010, supported by net cash of around RM290 mil or RM1.44 per share on 18th Aug 2010. And...Tada!! The share dropped from RM4.91 to RM4.40 currently. Wakarimasen!! Perhaps someone can enlighten me on this :p

More interests in auto stocks?

There are quite a lot of news on consolidation of the auto industry which could generate some interests in auto stocks like Tan Chong, MBM Resources, APM, Delloyd, Proton, UMW, New Hoong Fatt, Ingress, TSM Global.

At a glance, MBM Resources, Delloyd, APM and TSM Global seem to be more attractive.

Will write more on these counters...

The news:

The Ministry of International Trade and Industry (MITI) will leave it to the local automative players to determine the model for the consolidation of their industry.

"The model is up to them. What is important is to ensure that steps are taken to increase productivity and efficiency as well as reduce production cost and increase competitivenes of the local automotive industry.

"That's the bottomline," said its minister, Datuk Seri Mustapa Mohamed after launching the Industry Led Automotive Graduate Apprenticeship Programme in Kuala Lumpur today. A Memorandum of Understanding between Malaysia Automotive Institute (MAI) and UiTM was also signed today.

Mustapa said the consolidation was urgent as there was excess capacity, keen competition and a need to increase export earnings.

"This is a timely suggestion. We have excess capacity and due to keen competition in the international market, we have to increase exports and not just depend on the small domestic market."

At the Proton's 25th Anniversary Gala Dinner last Friday, Prime Minister Datuk Seri Najib Tun Razak called on local automotive companies to consider merging if there was overcapacity in the industry.

Mustapa disclosed that the parties concerned have begun discussions.

He also said he had been briefed on the situation and what was important now was the implementation.

"It makes good sense. If the companies cooperate, there are many things that can be shared and this can be cost saving," he added.

On the pace of consolidation, he said companies should talk to each other and that the government strongly encouraged it.

Meanwhile, in his speech at the launching of the apprenticeship programme, he said many industrialists believed that the issue of unemployment arose due to a mismatch between market requirements and the graduates produced by the local institutes of higher learning.

Many graduates are not ready for employment as they do not possess the necessary skills to immediately perform their work.

"The apprenticeship programme initiated by MAI and UiTM for 60 mechanical engineering students is a timely intiative," he added.

Under the course, students will spend only three days in a week in the classroom acquiring theoritical knowledge, while the balance two days will be spent in acquiring industry related knowledge.

Mustapa also suggested that the programme model be used in other sectors.

Source: Business Times

Stock Holdings & Stocks Under Watch

There have been some requests from friends to inform them of my investment holdings and investments decisions I make. So, here it is. Hope this could help in some ways in your investment decisions and do feel free to provide feedback to me so that it could help improve my trades as well. Thanks.

Supermax (RM5.50):

Going to hold this for rather long-term until I see signs of negative turnaround for the glove industry such as supply glut, rising costs of energy/latexx, weakening USD and whether these factors can be passed on to customers. Supply glut might happen probably in another 2 years or more according to Stanley Thai. PER remains reasonable at 9.8x and 8.7x for 2010 and 2011 respectively, a huge discount to Top Glove which is trading at PE of 14.7x and 13.5x for 2010 and 2011 respectively. Earnings growth for 2011 is OK at 12.5%. The recent bonus shares (1 bonus share for 4 existing shares held) could further boost liquidity of the shares (They are already very liquid) as shares are cheaper with more shares in the market. Still like glove industry which is resilient and recession proof. Click here for more info.

Sunway Holdings (RM1.49):

The stock remains very cheap at PE of 7.4x and 6.4x for 2010 and 2011 respectively, which is at a huge discount of 50% as compared to its peers like Mudajaya, IJM, WCT or Gamuda. The company is poised to post record earnings this year coupled with huge project tenders of RM16bil with expected success rate of 10-15%. It is even cheaper than HSL or Naim which only concentrate in Sarawak and depend more on government projects whereas Sunway's orderbook is more diversified from Malaysia and government projects (Fear of overseas ventures being riskier???). It is also supported by project development and quarry business segments. Earnings growth at 15% in 2011 with strong orderbook of RM2.8bil which could last them comfortably for the next two years. Click here for more info.

Notion (RM3.04):

This stock is about growth, high margins and strong shareholders. PE of 9.35x and 7.3x for 2010 and 2011 respectively. Earnings growth expected to be more than 25-30% over the next 5 years (If I can recall, this figure came from the CEO himself). Nikon is a substantial shareholder of about 9%. Global electronics/semiconductor sector is thriving, driven by greater usage of digital devices. With more usage of laptops, game consoles (X-box, PS3), IPAD (more tablets coming from HP and Blackberry?), demand for HDDs continues to be strong. Click here for more info.

Latexx (RM3.49):

Smaller glove manufacturer, PE of 9.4x and 7.4x for 2010 and 2011 respectively. Earnings growth expected to be strong at 27% for 2011. Stock price is cheaper which allows investors to hold more shares. Better than Adventa for now due to Adventa's hiccups in its latest quarterly results and delay in production expansion.

Stocks under watch

1. Coastal Contracts (RM2.35): Cheap valuation and high earnings growth but looks riskier for this current market (Dependent on contracts, too narrowed to O&G sector, share trading cold, costs dependent on steel prices, reliability of subcontractors). Might consider going in again when sentiments are better and shares are more liquid/volatile. Click here for more info.

2. Eng Teknologi (RM2.55): Cheap valuation, PE around 4x (unbelievably low, wonder why?). Expansion plans? Earnings growth expected to be little. Will research more.

3. APM (RM3.90): PE still below 10x. Potential to go higher. Tan Chong, MBM, Proton have moved up after the recent selldown except for this counter.

4. Dufu (RM0.54): Nobody's playing. Shares are too cold. PE exceedingly low at less than 4x. Customers too concentrated on 3 players i.e. Western Digital, Seagate and Hitachi Global Storage. Share performance is soft like tauhu :p Click here for more info.

5. Naim (RM3.00): Beneficiary of Sarawak projects. Click here for more info.

Disclaimer: The above article does not represent an investment advisory service as no subscription or management fees are charged. The contents of the article are provided as general information only and should not be taken as investment advice or as a recommendation to buy or sell any security or financial instrument. Any investment decisions carried out based on information, analysis, or commentary provided above is solely your responsibility. You should consult your investment adviser before making any investment decisions.