I'm not a fan of MLM, at least i won't get myself to be one of its distributor. But most MLM business is carrying out a legitimate and honourable business, and it provides dream and income to many. There are many MLM in Malaysia, both local and foreign. Over the years, many have come and leave, some leaves after some scams.
Anyhow, of those remains, couple of them are listed on Bursa and its earning is pretty attractive. I plan to diversify my portfolio to include on of this. The current aim is Haio.
Wednesday, May 27, 2009
Wednesday, May 6, 2009
Dreamgate : seems not very much a good choice
I used to have Dreamgate shares, but have sold them long time ago. Lately it is laden with bad news (Kemboja not allow casino operation, which is affecting Dreamgate operation).
anyway, let's look at it data from 2004 up to 2007. From the accounts (Balance sheet, P&L, CF), i have calculated some ratios. It shows that dreamgate is pretty aggressive in executing its business (in term of leveraging).
The rule of thumbs for Accrual ratio is it should be not exceed 10%.
the BS accrual ratio is a new ratio which i have just picked up from my friend @ http://calvinthebuffetts.blogspot.com/
on 2005, Sales/Cash collected ratio is very high and may signify that Dreamgate management has been using aggressive revenue recognition to push up their revenue growing rate. Luckily,
Sales/Cash collected ratio is somewhat lower nowadays.
if we look at the % increase in receivables Vs increase in turnover, from 2006 to 2007 we see that it has increase in receivables but decrease turnover. This seems to spell another trouble in brewing.
as such, better avoid this stock at the moment.
disclaimer:
1) for simplicity stake, some of the info' (such as total debt) i take lumped value and this will introduce some inaccuracies, but it won't be too significantly affecting the validity of the ratios calculated.
2)2008 data will be quite bad, which i haven't got the time to include in this calculation.
anyway, let's look at it data from 2004 up to 2007. From the accounts (Balance sheet, P&L, CF), i have calculated some ratios. It shows that dreamgate is pretty aggressive in executing its business (in term of leveraging).
The rule of thumbs for Accrual ratio is it should be not exceed 10%.
the BS accrual ratio is a new ratio which i have just picked up from my friend @ http://calvinthebuffetts.blogspot.com/
on 2005, Sales/Cash collected ratio is very high and may signify that Dreamgate management has been using aggressive revenue recognition to push up their revenue growing rate. Luckily,
Sales/Cash collected ratio is somewhat lower nowadays.
| financial year ended | 2007 | 2006 | 2005 | 2004 |
| increase in receivables | 31,388 | 19,573 | 36,376 | |
| % increase in receivables | 30.44% | 23.43% | 77.15% | |
| %increase in turnover | 28.29% | 39.77% | 33.60% | |
| total assets | 402,625 | 283,965 | 246,096 | 158,507 |
| total cash | 42,937 | 21,575 | 17,509 | 25,735 |
| total liabilities | 226,615 | 145,266 | 133,581 | 71,595 |
| total debt | 141,463 | 68,963 | 61,283 | 26,013 |
| NOA (net operating asset) | 274,536 | 186,087 | 156,289 | 87,190 |
| average NOA for past 2 yrs | 230,312 | 171,188 | 121,740 | 43,595 |
| cash collected | 244,918 | 195,807 | 117,723 | |
| b/s accrual ratio | 38.40% | 17.41% | 56.76% | |
| sales cash collected ratio | 112.82% | 110.00% | 130.90% |
if we look at the % increase in receivables Vs increase in turnover, from 2006 to 2007 we see that it has increase in receivables but decrease turnover. This seems to spell another trouble in brewing.
as such, better avoid this stock at the moment.
disclaimer:
1) for simplicity stake, some of the info' (such as total debt) i take lumped value and this will introduce some inaccuracies, but it won't be too significantly affecting the validity of the ratios calculated.
2)2008 data will be quite bad, which i haven't got the time to include in this calculation.
Monday, May 4, 2009
ASN 3, ASW 2020, ASM are they worth buying?
The funds under PNB (permodalan nasional bhd) have always cast a cloud of mystery on my minds. Despite having invested in it for more than 10 years, i still not sure about its feature. Yesterday i read an artical in The Edge which covers PNB and it has clear up many of my doubts. Here i share what i think is useful enough for every layman investor like me.
Recently PNB are selling more units for ASW 2020 and ASM to the general public. As always, this created a buying spree for many people. I have heard people started queing at the banks and post office as early as 7am. This is a good sign, at least it shows the Malaysians are still cash strong enough to save and invest.
Both ASM and ASW2020 are a hybrid of a savings account and unit trust. To be exact they are fixed price fund. The 'NAV' are always fixed at RM1. Every year, the investor will receive dividend from the fund, which is at around 7-8%. PNB also have variable priced funds such as ASN3, which is essentially a balanced fund. ASM, ASW2020 and ASN 3 are open for investment by all Malaysians while other funds under the PNB stabe are only open for Bumi'.
Here are the return of the funds for the past few years
source: The Edge, May 4-10 2009
note that the variable priced funds are identical with private sector unit trust funds, wheareas the fixed price funds are the uncommon ones. They are not capital guranteed fund because even capital gurantee fund can lose money if the investor go for early redemption. As opposed, investor can withdraw their investment anytime for the fixed price fund.
This make the funds are pretty good investment vehicle to most people who do not know how else to invest their $. With a rather respectable 'safe' return of about 7% annually, it is like a super savings account : you get a higher return than just savings in a typical savings account.
however, for the more 'adventurous' investors, there are actually many more choices around: but of course they comes with risk and needs certain level of skill.
For me, thanks to the long que needed to buy these units, i opt out from buying it and invest with other stuff. For example, i can 'save' in SSPN for my daughter and it gives a respectable return of at least 12% for your first RM3k. Why i say 12%? this is because every year up to RM3k invested to SSPN are eligible for tax deduction. SSPN currently has a return of around 4.5% and let say i have a tax bracket of 8% (which most ppl exceeding this), my return will be 12.5% :)
Also, given current still slightly depressed stock market, there are plenty of stocks that still offer dividend yield of more than 7%, which at least match those offered by the PNB funds. To cite one example, NTPM.
another thing that bother me at times are that the fixed priced funds of PNB are not trasparent. Once, utusan konsumer critize PNB for using the ppl money to earn money from ppl. for example, PNB virtually controls Maybank, while Maybank is selling ASB. Maybank actually persuades the investor to borrow $ from the bank to buy ASB (those days ASB still have return in the 12%++ range), citing that they can earn the arbitrage between the higheer return of the ASB and the lower loan interest rate. It turns out that eventually ASB not manage to maintain their high dividend, causing many people to run into debt. They are forced to sell their ASB to service the loan. ... a bad cycle ensues.
so, it is really up to investor to see what they want. Although not perfect, PNB are still managed 'professionally' by 74 certified fund managers and i believe they are doing legitimate business. Unlike EPF, they are also not 'corned' by politician to make stupid bailout of failed infrastructure projects (the LRT) or business (MAS).
Recently PNB are selling more units for ASW 2020 and ASM to the general public. As always, this created a buying spree for many people. I have heard people started queing at the banks and post office as early as 7am. This is a good sign, at least it shows the Malaysians are still cash strong enough to save and invest.
Both ASM and ASW2020 are a hybrid of a savings account and unit trust. To be exact they are fixed price fund. The 'NAV' are always fixed at RM1. Every year, the investor will receive dividend from the fund, which is at around 7-8%. PNB also have variable priced funds such as ASN3, which is essentially a balanced fund. ASM, ASW2020 and ASN 3 are open for investment by all Malaysians while other funds under the PNB stabe are only open for Bumi'.
Here are the return of the funds for the past few years
source: The Edge, May 4-10 2009
note that the variable priced funds are identical with private sector unit trust funds, wheareas the fixed price funds are the uncommon ones. They are not capital guranteed fund because even capital gurantee fund can lose money if the investor go for early redemption. As opposed, investor can withdraw their investment anytime for the fixed price fund.
This make the funds are pretty good investment vehicle to most people who do not know how else to invest their $. With a rather respectable 'safe' return of about 7% annually, it is like a super savings account : you get a higher return than just savings in a typical savings account.
however, for the more 'adventurous' investors, there are actually many more choices around: but of course they comes with risk and needs certain level of skill.
For me, thanks to the long que needed to buy these units, i opt out from buying it and invest with other stuff. For example, i can 'save' in SSPN for my daughter and it gives a respectable return of at least 12% for your first RM3k. Why i say 12%? this is because every year up to RM3k invested to SSPN are eligible for tax deduction. SSPN currently has a return of around 4.5% and let say i have a tax bracket of 8% (which most ppl exceeding this), my return will be 12.5% :)
Also, given current still slightly depressed stock market, there are plenty of stocks that still offer dividend yield of more than 7%, which at least match those offered by the PNB funds. To cite one example, NTPM.
another thing that bother me at times are that the fixed priced funds of PNB are not trasparent. Once, utusan konsumer critize PNB for using the ppl money to earn money from ppl. for example, PNB virtually controls Maybank, while Maybank is selling ASB. Maybank actually persuades the investor to borrow $ from the bank to buy ASB (those days ASB still have return in the 12%++ range), citing that they can earn the arbitrage between the higheer return of the ASB and the lower loan interest rate. It turns out that eventually ASB not manage to maintain their high dividend, causing many people to run into debt. They are forced to sell their ASB to service the loan. ... a bad cycle ensues.
so, it is really up to investor to see what they want. Although not perfect, PNB are still managed 'professionally' by 74 certified fund managers and i believe they are doing legitimate business. Unlike EPF, they are also not 'corned' by politician to make stupid bailout of failed infrastructure projects (the LRT) or business (MAS).
NTPM - buy? hold? sell?
Nibong Tebal Paper Mill (NTPM) is one of the better performing stock i have in my portfolio. i actually couldn't really remember since when i bought it. It should be sometime in 2006 because by 2007 i've mentioned it as my choice of stock in an article in Personal Money magazine.
Bumping into the stock itself is sort of a story. One day my relatives in Alor Star asked me whether we should buy its stock. The boss of NTPM (i guess has retired) has sent his photocopy machine to my relatives' shop for repair and along the way he asked my relative to buy the stock, citing that they won't regret buying it. I remembered at that time the stock was trading at about RM0.26. I briefly looked at its data. Its price has just started a strong recovery from the bottom. But i couldn't be sure about whether it worth the buy. I surveyed it for few more months, both in term of stock price as well as its product. Whenever i went to supermarket i see its product dominates the shelves. (for those who don't know, NTPM carries the brand of Premier tissue paper). As time flies and its stock price keep going up, my interest in it grows stronger. After looking at its ROE and dividend yield (back then i heavily depends on this two ratio to judge a stock i wanna buy), i decided i should buy it as one of my portfolio stock. I started buying when it was around RM0.31 (almost the same price nowadays post split. It was as high as RM0.5 just one month ago). There was no turning back afer that. In addition to rather good capital gain, it has constantaly give me a dividend above 8% yearly. Along the way, i have also seen its product growth (capturing more sales, and launching even more product ranges such as sanitary napkins). My friend has also told me that the sales people of NTPM is very 'Geng' and successfully went all out to capture the direct client market such as factories, office and hotels. I don't know how to verify that but i do see quite a number of NTPM tissue paper roll in some office and hotel toilets.
So along the way i keep 'promoting' this stock to my relatives and friends and quite a number of them have bought them and stayed a happy investor. In fact this happen to be a stock that has not only survive the current global stock market collapse, but has in fact goes up in term of stock price while maintaining dividend.
One thing that keeps puzzling me is that the major shareholder has being almost constantly keep buying back the company shares. Another institutional investor, Tabung Haji, are also keep accumulating the stock. Although to me the investment reputation of Tabung Haji is so so, the point that the major shareholder have none stop buying back shares (it has kept happening for more than 1 year already by now) make me feel confident that holding NTPM stock is good.
As such i've never dump its stock. So, to answer my blog title, i will have a long standing BUY call on this stock.....until business situation has really changed for the company. As for now, with a cheap raw material price and a good size of market share plus a resilient consumer product, i see little risk in holding this stock. In fact i should keep buying it.
Table belows list some data for NTPM, for those who are interested to take a closer look onto it. One new thing that i learn from this table is that
the B/S ACCRUALS RATIO has improved over the years. Its sales/cash collected ratio is also improving and is already very healthy (next to no bad debt). Its debt increased a lot in 2007 for factory expansion but has since reduced a bit.
credit goes to my investment friend Calvin Kuek who is the original creator of this table.
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