Looking Back On Returns

For the first quarter of 2009 I don't think I recommended to look at any one stock as I was not convinced of a rally or a substantive run. The good thing about blogging is that your views are all there to be examined, scrutinsed and criticised ... but it also allows you to reflect and note how your views evolve. Like a diary, the most notable postings started around April 24 this year (can go and check). Its fun to look at how things have turned out, bearing in mind that my assertion that stocks I like should have at least a 30% upside within 6 months, so far so good. If I can get a batting average of 65%, I am happy. There are not many runs in a year for a market like Malaysia, once its there, you have to seize the day and then exit when things are looking dowdy. Usually you can count on 2 runs a year lasting anywhere from 4 -15 weeks each time. Bull markets do not make us smarter, it makes picking winners easier.

FBM 100 Gainers and Losers In August 2009
Top 20 Gainers TR
IJM LAND BHD 23.13%
MULTI-PURPOSE 20.93%
SARAWAK OIL PALMS 18.57%
PROTON HOLDINGS BHD 12.13%
SUNWAY CITY BHD 11.51%
TITAN CHEMICALS CORP BHD 11.32%
MAH SING GROUP BHD 9.78%
BOUSTEAD HEAVY INDUSTRIES CO 9.66%
LINGKARAN TRANS KOTA HLDGS 7.57%
AXIATA GROUP BERHAD 7.14%
SELANGOR PROPERTIES BERHAD 7.14%
AEON CO (M) BHD 6.67% UBG BHD -4.94%
KUALA LUMPUR KEPONG BHD 6.40%
TAN CHONG MOTOR HOLDINGS BHD 5.95%
EON CAPITAL BHD 5.60%
AFFIN HOLDINGS BERHAD 5.56%
GUINNESS ANCHOR BHD 5.48%
AMMB HOLDINGS BHD 4.78%
PETRONAS DAGANGAN BHD 4.78%
PPB GROUP BERHAD 4.63%

Source: Bloomberg Note: TRs (total returns), CG (capital gain) & DY (div yield)

Looking Back

April 24 - Confirmation of A Bull Run For Bursa
April 24 - Stocks & Sectors I Like As CI Breaches 1,000 (Property: SP Setia, UEM Land, even Talam, Sunway City, even MK Land. Financials: AMMB, EON Cap). ... safe to say that these property and financial picks outperformed the market substantially ... so far
April 27 - Talam Coming Out Of PN17 0.08 ... had a good run for a while even at 0.14 or 0.15 at some point I believe, still the run should come when its officially out of PN17
April 28 - MK Land Is Pretty Oversold 0.28 ... now at 0.40 but went as high as 0.47, we got our 30% or more
May 1 - Sell In May & Go Away " History repeats itself for a reason, because they do, people never learn and they keep repeating their actions and decisions time in time out. This is the same posting I did 4 years back in May 2006, and repeated this in May 2008, so for all intents and purposes, I should also repost this for May 2009. Personally, I don't think this May-August will be a down period."
May 5 - Stock Picks For A Nice Trade ... these were ok performers, not spectacular, its for a quick trade, if it works good, if not, get out...
SAAG long up to 0.29
Sapuracrest long up to 1.24
IOI Corp long up to 4.50
Kulim-WB long up to 3.32
Kulim long up to 6.00
May 7 - Go Long On The Brokers .. these were good runs, TA went to 1.27 (now 1.20), Affin went to 2.04 (now 1.88), ECM went to 0.78 (now 0.63), HDBS went to 1.75 (now 1.58), Kenanga went to 0.75 (now 0.65), OSK went to 1.58 (now 1.39)
TA long up to 1.03
TA-WB long up to 0.06
Affin long up to 1.77
Affin-WC up to 0.14
ECM long up to 0.66
HDBS long up to 1.45
Kenanga up to 0.68
OSK long up to 1.38
May 29 - Why I Like Pelikan 0.98 ... possibly the best call so far, now still at 1.52, we got our 30% here
June 4 - A Timely Look At B-Land & B-Toto 3.26 / 4.74 .. both did well, especially B-Land
June 11 - Tanjong, This One Can Buy & Hold 13.00 ... now at 15.82, up 21% so far, a bit more to go to get our 30%
June 11 - Whoops! There It Is (GenM) 2.90 ... now at 2.79, not good, I would cut now ..
June 23 - I Like Green Packet At Current Levels 0.70 ... very good entry levels at 0.70, now share price still at 0.705 but I get 1 right and 1 warrant basically FREE for every 2 shares, great return, easily way past 30%
July 13 - Market Commentary - "I don't like many stocks now as I think markets do look tired, but if you point a gun to my head to force me to buy one stock to hold till rest of they year, I would probably say E&O" 1.04 ...if anybody read this closely, they would have made a bundle, went ballistic today to a high of 1.52
July 17 - Why I Would Buy Astro Now 3.62 .. 3.43 now, news did not filter out as I had hoped, wishy washy developments, sell
July 24 - Why I Am Keen On MPHB Now 1.58 ... 2.11 now, we got 33%, enough
August 4 - Why I Like DRB Hicom 1.13 ... went towards 1.30 but fizzled out, still very keen on this, can hold on
August 12 - Why I Like IJM Land 1.81 ... went to 2.05, now at 1.98, will wait for my 30%
August 21 - Why I Like Bumi-Commerce Bank 10.30 ...recent call...
August 27 - Why I Like QL Resources 3.34 ...recent call ...

The above were views on stocks and sectors that I like, not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees (donations are welcomed though). The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

p/s photo: Fiona Xie

Why I Like Bumi-Commerce Bank

I rarely feature big companies as they tend to be sluggish and unexciting. I have been monitoring Bumiputra Commerce Bank for some time now. In 2006-2008, the company has had a transformation, they started to pay top dollar for talents. BCHB was becoming proactive and aggressive. Cynics would say its the government's banker - well, it is not easy to get that accolade or brickbat, whichever you want to refer that as. The markets have not been entirely persuaded by its sharp jumps in revenue and profits - analysts still see the company as largely an investment bank rather than a safe and solid banking operations. Investors somehow rather value solid and reliable consumer banking business more than what BCHB brings to the table.

Despite a more difficult 2008, its ROE is still very solid at 11.31% even though it recorded an unsustainable 17.56% in 2007 (an exuberant year). ROE is a critical measure to me in assessing how well they are deploying capital and putting them to work. Annualised 1HFY09 core net profit was RM2.58bn. The stronger-than-expected results were largely driven by an exceptionally strong earnings by CIMB Niaga (+65% q-o-q). Annualised core ROE came in at an estimated 14.5%, and as mentioned earlier, this is a critical measure. Take that together with their cost of equity at 9%-10% and you have a solid platform. Considering that the company aims to bring ROE for future years to at least 18%, that would certainly bring a premium to the underlying earnings.

How are you going to grow a RM38bn market cap company? The company is just doing what it is doing better, keep ROE high, manage capital deployment, invest well and turn them around quickly, keep the professional hiring policies and aggressive profit sharing motive, and RM50bn won't be far away at all.

On the domestic front, consumer banking was the main growth driver registering a y-o-y loans growth of 11.1% with mortgages being the top performer (+21.0% y-o-y) followed by trade lines and OD facility (+18.4% y-o-y).The group’s total gross NPL increased 2.2% q-o-q, with net NPL ratio declining to 2.4% from 2.5% in 1Q09. The increase in gross NPLs were largely attributed to lumpy loans granted to corporates operating out of the ASEAN region (Middle East), which attributed to nearly 70% of the increase in overall NPLs of close to RM251m q-o-q. Domestic asset quality remained intact, where gross NPLs actually declined 1.5% q-o-q. Stock trades at 12x 2010 P/E (versus local peers at 14-18x), 2x P/BV with 16% 2010E ROE. Roll all that, I see BCHB moving to the next level, no looking back now, say goodbye to RM10 a share.

Major Shareholders: Khazanah 28.0%, EPF 14.8. Just look at this equation. this is where I think the catalyst for the stock's next upswing will be. The company has proven itself, and its overseas acquisitions are doing well overall - it would be very silly for Khazanah and EPF to keep stakes at this level only. Coupled with the new FBM KLCI index, PNB will have to ramp up buying in order not to be left out of a critical outperformer of the index. I expect sustained buying.

This one can keep and hold.


p/s photo: Kathy Chow Mun Kei