You may be Right but They are so Expensive!

Playing It Safe ONLY for the Moment

For the moment, UBS has this to comment on the state of Bursa KL. In their words, it is "defying gravity".


Characteristics?


An All-time high with KLCI at 1,607 on April 3rd, despite weak external economic climate. That the election may be postponed yet again keeps the market going with stimuli galore. 


Also foreign players seeking safe haven from the financial storm in Europe are getting onto defensive stocks.


So, for the moment, UBS suggest the following stocks for consideration as defensive play only. These include: Berjaya Sports Toto,Genting Malaysia, Sime Darby, Hong Leong Bank, Public Bank, IGB and Axiata.


Except for IGB, Genting Malaysia and BJ Sports Toto which are buyable by the retail layman; Axiata has gone mid-range beyond RM5.00.   As for Sime Darby, it is on the cusp on touching RM10.00. Hong Leong Bank is beyond RM12.50 and Public Bank is in the high eavens almost touching RM14.00.


I am sure there are other stocks worth looking at from BJ Foods, Mesiniaga, YTL Corp to  Tasco.


What say you?

Door gifts and Ugly Bursa KL Companies

It is THE practice of publicity seeking companies on BSKL to give door-gifts its its loyal shareholders as well as to ensure a good feeling turnout at the AGM. It is a measure of their personal success of the Chairman and his management, the corporate image and  a kind of yearly deja vu they savour.

While some companies reward shareholders well, others provide token gifts and those with generous hearts in their bosoms give truly good gifts worthy of their thanksgivign to loyal sahreholders.

In my experience attending AGMs the last three years, let me just look at those that are stingy,thankless and graceless.

Not friendly

First on the list for all times is the so called oil giant. ESSO. Compared to Boustead Petroleum and Shell who give great gifts, ESSO is Sylock personified. It gives nothing except for light refreshment. Do not attend their meeting. Do so, if the new pinoy owners give more than chicken adobo.

Poor Start on Debut

Eversendai- another stingy counter. Making oil and gas money galore from Bahrain to Dubai. Stingy as the Nizam of Hyderabad. No door gift. Keep away!

Sad shareholders attending their AGMs

Next, we have Tasco. They say that Japanese are kind. Not these. Only a drink on the house. Pay for food!
Never let your shadow fall at the doors of the company when they hold their AGM.

Hollow hearts

Then,let us look at this big bank- After consuming EON Bank, it's share moved up to RM12.50. Yes, at their AGM, no morning breakfast or a drop of water-not even for old folks from faraway places. lousy AGM follows by cheapskate nasi lemak. Keep away again from the Kwek company.

Kedukut with a Capital K 

We must not forget KAF. No, 1000 shares-no door gift. You are an investment bank. Tak akan hanya gantung to big boys. Many small retailers can help your bottom line, too.  Imagine 999 shares-tak dpat juga. Mana ada justice! Don't buy their shares as their fortunes are tied to Bursa KL. When Bursa go, they go down further.

We are stingy-lah

Yes, not forget the Red-coloured Airline-Air Asia. Now anyone can fly but if you have 999 shares, no door door gift as well. You are tuned out, so says Tony.

So are we!

Also remember Mulpha International, won't you? No door-gift lah. We also like Tony's airline.

Premier No go!

Top premier development but good friend of the Nizam as well. Poor hi-tea and no door gifts. "Everything for me me me!" Don't even think of going.

The Malu Bank?

Another joke for a bank. Gives out odd plastic bags at the AGM that you can find better ones at the local pasar malam. Don't go to their AGMS.

Discriminatory Policies?

Poor door gifts can be expected at IOI Corp and MBf. IOI differentiate its shareholders. If you have less than a 1000 shares, you get RM30 voucher;otherwise it is RM50 food voucher. Anyway, siapa mahu pergi makan di Putrajaya?

No wonder nak jual card business

MBf Holdings is engrossed on giving organisers as door gift year after year? Do you need a gift catalogue? Need a consultant?

Sugar Jester?

MSM and Bumi Armada are so lousy-lah. Claim to be international O&G contractors. One gave small sedekah size table sugar and Bumi give Colonel Sanders RM20.00 only. Disproportionate-lah!

Nice logo,lousy door gifts

Cheapened product?

Forgot you are a hospitality stock?

The last two companies I would like to delve on are the two Genting companies and Tradewinds(TWS). These three companies are no longer generous. Gentings have cheapen their door-gifts just like they have cheapen all the drinks at their casinos on the hill. AS Genting is in the hospitality industry, they cannot cut down on servings of Milo and teh-tarik. Mak more money, not cut down on freebies for gamblers and tourists. You have lost goodwill, my buddy. Very difficult to get back. As door-gifts, they have now decided to give Old Town Coffee. No more gratis hotel stay and Holiday cards. Another absolute letdown!

Finally, we have Tradewinds, the former Pernas. Used to give good door gifts but this year, it turned into Stooge and gave a goody bag of less than RM10.00 in value and worse, they do not have enough supply of door gifts for shareholders after having them line up for an hour just to register! Blame Symphony too!


I will touch on the other lousy counters in the next posting so that shareholders need not attend those meeting ever

BJFoods-Selling Down by Weakholders

Food for Thought  

In spite of a call to hold to your horses by AmResearch, some 352 lots got sold at low prices of RM1.22 knocking off 4 sen.

Looks like this seasonal stock needs to gather traction sometime.

I would not look to tomorrow as Friday is always Seller's Day.

Let us watch for a price resistance before commenting further.

Meanwhile, in the next posting, I will review the best bits of the AmResearch paper.

I have just noted that the conversion of each BJFoods warrants comes with a tag of 70 sen. That would mean that one free warrant plus 70 sen will beget you one sweet baby of a  BJFood share.

At today's price of RM1.23, that would work out to a haircut percentage of  56%. Yet another bonanza, don't you think so?

Let us create a simulated situation when one buys  1000  shares of BJFoods.

You will have to pay (exclude charges) RM1,230.

When it goes ex-rights, the price should not go own at all.

If it lekat as they say in Bahasa Malaysia, then the new rights of 800 shares(800 shares for each 1000 shares held cum rights) should trade at current value. This will put you ahead with a gross profit gain of  RM1.23 x 800 =RM984.00. Minusing the rights price of  RM520.00, the net gain to you will be RM464.00. That would mean a return of (464 divided by 520)=89% in a short window from cum to rights.

So, given today's price of RM1.23, this will amount to about 37.7% return.

Each warrant is convertible at 70 sen. A fair discounted conversion price should prove attractive to speculators and short term holders. Expect any price. Even at 10% of conversion price, it will bring you profits of 12 sen per lot of 1000 at current price or RM120.00. So, at 800 warrants, you stand to gain RM96.00 for your warrants.

Let us see whether it will pan out well.

A Funny Thing Happened on the Way to Paradigm Mall GSC

Brand New Disappointment 

We really did not expect the outcome though it did end up well and not to our detriment.

So, there we were rushing to finish our martabab at the Teh Tarik Restaurant. At 5 minutes to 12.40 pm, we were snugly seated in Hall 9 but the show did not go on. We did not get to see Snow White and the Huntsman. 


One of the cinema staff then announced that there will be no show because of a technical hitch and we could get our refund. Obviously, no one was going to take that lying down. So demands were made for complimentary ticket beside the return of our cash.

The manager came in and accede to our request.

So, we got the cash back and the two complimentary tickets.

Snow White will have to wait, I guess.

What a day!

BJFoods-A Fair Value at RM1.45

Berjaya Foods and Berjaya Land looks Good

Berjaya Foods (BJF) went ex-dividend today,sliding a wee bit in the opening bell before strengthening towards the closing seconds of trading today. It ended at RM1.28 for a 6 sen gain. Volume,as usual, was low, which has been the pattern for BJF for quite sometime now except for a volume spike on 11 June and a price spike on 21 June 2012.

Ambank Research today picked BJF as the stock focus today.

Its recommendation: Hold and not let go as it is poised for rapid expansion. However, it foresees a limited upside and pegged the counter at a fair value of RM1.45, based on a 13x PE on CY13F earnings. Since 25 May (97 sen) , BJF has risen 39% to the current price.

Jewel in the Crown

Ambank foresees the earnings trajectory to remain strong with a greater certainty in growth as its expansion spree remains well on track. The impending acquisition of a 50% stake in Starbucks is expected to be completed in August. Starbucks, apparently has achieved growth of 26% in the last six months-the highest in South-east Asia.


Given the strong franchise value, earnings of CAGR of 51% remains robust over FY13F to FY15F.


So, what is in store for shareholders? 


As the rights price is RM0.65 sen per share , if the share price maintains at this level, it means that one will stand to gain 0.63 sen when the exercise is over. Then there is the free warrants to boot. I am not sure of the conversion price as it has not been fixed.

If the Starbucks acquisition  is expected to b completed in August, I guess the rights exercise will take place in July.

Given the short time window of only a month or so, I expect dynamic action on BJF as speculators will come in to shore up prices. As it is a very tightly held counter by both the majority shareholder (Berjaya Group  etal ) and reluctant minority retail shareholders, the technical situation can see the share potentially breaching the RM1.50 level.

The Indonesian Revenue Factor

Then, there is the Kenny Rogers expansion into Indonesia. With the growing affluence in this republic and better purchasing power for restaurant-style fast-foods, it will certainly impact upon the revenue and profit of BJF in the ensuing years to come.


Also for fast food play, with KFC and QSR bidding farewell from Bursar KL, it looks like BJF will be the new leader in pole position way ahead of Old Town Coffee.


For now, let us watch how the counter will move in the near future given the technical shortage of sellers. 

Berjaya Foods-Will it Reward Shareholders?

Food for Thought

Yesterday, the counter could not cling to its gains and slid more than 5.7%. From RM1.38, Berjaya Foods (BJF) lost 8 sen to RM1.30, touching a low of RM1.29. Fortunately, there was no volume. Like an occasional rain in the desert, it will stay ever illusive on low volume trading; this time about 1,450 lots of 100 units each.

I think this is symptomatic of a tightly held counter by possibly a major shareholder or by reluctant minority shareholders who are not desperate to sell. That it has gone down may be indicative of some day traders disposing  to take advantage of the declining trend to get back on the bandwagon at a much lower price. Simple economics and might just work if selling persists.

At 65 sen for a right share,  this current price will fetch a clean 100% profit. So, a good strategy is to dispose a 1,000 unit lot  when it goes ex, collect the  800 rights at RM520, collect the warrants for free and subscribe for excess shares; hopefully they give you.

Today is the last day for the tax exempt dividend of 2.5 sen. So, any purchase price is effectively 2.5 sen cheaper. Fro instance, if you buy at RM1.30; it means it is a purchase of  RM1.275 which can offset a big portion of your overhead charges.

My guesstimate, they will still hold it above RM1.00 until it goes ex, giving you a profit berth of RM0.35 sen. This is a very conservative stand.

Happy speculating but caveat emptor!


PS: BJF declined by another 5 sen today to RM1.25 before ex-dividend day tomorrow.

Telecommunication Sector upgrade?

Revenue Churner with UNIFI

Just when you thought that with the breaching of the 1600 index would spell some sort of selling,more prophets are coming out of the woodwork.


The latest seems to be Kenanga Research  throwing in the gauntlet for the telecommunication sector. 


It is giving an  'overweight' to the sector based on the first quarter profit results ; the dividend yields and also what they have termed,"robust operating cash flow"


“These (factors) will provide the much-needed defensiveness required during the current volatile market,” so said Kenanga  in a note to clients. 

So let us see what Kenanga sees in their crystal gazing exercise.


The target price for GLC Telekom Malaysia Bhd is now moved up to RM6.36 (US$2.02) from RM5.65, another 10% while the much sought after third-largest Malaysian mobile phone operator  DiGi.Com Bhd is given a marginal push of 28 sen to RM4.68 from RM4.40. 

Well-Run, No Foreign Exchange Losses

Top mobile operator Maxis is now given a 30 sen price hike to RM6.76 while Axiata is now adjusted upwards to almost RM6.00(RM5.95) from the current RM5.52 price

Silent Climber, Superb Dividend Giver

Target price for Malaysia’s top mobile operator Maxis Bhd was also raised to RM6.76 from RM6.00 while Axiata had its target increased to RM5.95 from RM5.52. 

Growth Stock

What about the effect of YTL Power (Yes! 4G) then, and Time dot Com?