hai-o all is strong. but what to do now?

early this week, before the hai-o price continue its surge from RM8 to current RM8.7, i have being comtemplating my choice as to what i should do with it. The main idea is circled on how to deal or avoid the odd lots which i am to get if stay on without doing anything. (note: odd lots due to bonus issue)

i have a choice to either buy 100 shares or dump 400 shares. eventually just as its price surge through RM8.13, i decided i should buy. But thanks to the overhot market it shoots all the way up to current stratosphere level. Should i still buy?

back to my objective, it is to avoid odd lots. but, actually holding odd lots also won't be losing $. in fact if i still want to make up my odd lots to even, i may as well buy odd lots in the market in future. So, based on this i think should do nothing now due to the too hot price.

as per fundamental, it seems it has reached a fully valued price, with PE of 14.2, ROE 31.78%, and dividend yield still at 5% (as in my previous blog, if the company stick with its dividend payout policy, there is some chance that dividend will be increased as per increase in EPS). Current EPS stood at 63.12 sen.

on technical wise, i am no expert, so i consulted my guru friend. The answer is if the price reaches new level, technical couldnt tell how high the price could go... so technical is a HOLD. why HOLD but not BUY ?? because the buying shd be done when it broke 8.05 level (was a resistance) but now seems too late to BUY.

so the decision is clearly a HOLD for the moment.

some good books to read for clues on how to invest

The market is pretty high now. Will it continue to improve as economic condition improves, or will it correct itself? There are many conflicting bulls and bears out there. Just today, the star published a news whereby Mohamed El-Erian, chief executive of giant bond manager Pimco, says the market is gonna correct by at least 10%. So, investor like us should listen to them or not? (well i have not listened to the bears since half year ago, and am happy to reap the rewards now).

i think it is pretty futile to try to predict the macroeconomic condition. We should rather have long term strategy with the companies we invested into by analyzing their actual business. Now is a good time to go and read some books or refresh one's memory from the books that we have read. From the many investment books i have read, today i would like to recommend The Five Rules for Successful Stock Investing: Morningstar's Guide to Building Wealth and Winning in the Market by Pat Dorsey. Reading it isn't just a matter of understanding PE ratios and other ratios or metrics, which most other books explain more or less adequately. Instead, the author has in a lively and clever way, presents analyzing balance sheets and cash flow and income statements clearly. It has a simplified hot dog business and some real companies to compare with as example. It has shows how bad companies cook their account by popping up some figures. In fact this book has helped me to avoid myself investing in a hot stock (Megan Media) listed in Malaysia years ago which has since gone burst due to account irregularities. In that case, one can see that the debt of the company has increased way faster than it sales.

Koperasi Tentera - capital guranteed with 12% return annually

today i made my maiden investment into Koperasi Tentera

it needs RM100 as starting modal, RM10 as account opening fee. Subsequenty one can put money into fee advance (simpanan pendahuluan yuran) whereby each month a maximum of RM300 will be deducted into the account that enjoys 12% dividend per year. i also bank in some money into the special savings account (akaun simpanan khas) where one enjoys 5% interest

so for people who has access to this, it is a good place to park your money as part of a diversified portfolio

hai-o the real cause of the surging stock price

rather than the 'market inefficiencies' citing insider information of bonus issue, another real reason for the run up of the stock price is its stellar business performance in 1HFY10 results
you can get the report from bursa malaysia

from annual report, it is cited that
The Group is adhering to its dividend policy by paying not less
than 50% of Profi t After Tax as dividends to shareholders.

what this means?
Hai-o profit jumps 57.8% year on year. This will virtually means more dividend in the future.
in addition, PE is going to be down due to improving EPS. Added with more liquidity post the enlarged share capital, it has all the ingredients to go up in next level, at least in term of stock price performance.

let's not forget that stock price is not the only concern here, in fact the real concern should be the real business that it is doing. Its MLM business, which make up 70% of the profit, can perform so strong even in economic crisis time. And this is only mainly from Malaysian operation. I would want to imagine that there will be another surge when they are opening up Indonesian market.

hai-o corporate maneuver explains the share price rise

Hai-o just made announcement on some corporate maneuver which include bonus shares, shares split and placement. the bonus is a real bonus given presumably from retained profit. this explains the rise of its price over the last week. This also reminds me of what NTPM did less than 1 year ago, by share split. One thing that puzzles me is if this is the reason of the rise, why investors know about it? isn't that we should live by efficient market theory? does this mean market is not efficient and we are not on a level playing field? certain people has insider information

(i) Proposed bonus issue of up to 16,891,469 new ordinary share of RM1.00 each held in Hai-O (“Hai-O Shares” or “Shares”) (“Bonus Shares”), to be credited as fully paid-up, on the basis of one Bonus Share for every five existing Shares (“Proposed Bonus Issue”) held in the Company on an entitlement date to be determined later (“Entitlement Date”) (“Proposed Bonus Issue”);
(ii) Proposed share split involving the subdivision of each Hai-O Share held in the Company into two ordinary shares of RM0.50 each in Hai-O (“Subdivided Shares”) (“Proposed Share Split”);
(iii) Proposed amendment to the Memorandum and Articles of Association of Hai-O (“Proposed M&A Amendment”); and
(iv) Proposed private placement of up to 10.0% of the then enlarged issued and paid-up capital of Hai-O (“Placement Shares”) (“Proposed Private Placement”).

For the full announcement please refer at bursa malaysia

wire transfer to hong kong public bank

i transfer some money to my public bank hong kong account lately. it cost RM30 for the transaction charge. So it is more worthwhile to transfer a big sum rather than small sum. in fact it cost more to transact a small sum. In fact i have transfered it before i get access to the .net banking. Tonight i got my .net banking activated. It is a surprise that the process is easier than having me going to branch to activate a local bank .net banking. "money can let the ghost push the grind", there seems to be truth with this old wisdom. In order to facilitate my trading of stock, the broker has to help me with such account opening.

today Haio is drop to RM7.5. as i have said i will hold it long term. now that i have received the dividend, i am thinking whether to reinvest it into Haio or other stocks. Yesterday i received dividend from Digi. In fact after 1.5 months switching to digi i find the customer service at digi is actually better than maxis, despite the latter size and better network coverage. I would think digi will be able to continue its growth in Malaysia. Holding digi stock, which yield a higher dividend than Haio, may be a good supplemental choice

Haio swing and its near future growth to be driven by Indonesian penetration

With the 'phenomenm' swing by Haio from RM8 down to RM6.2 and now back to RM7.6, a 22.5% swing over the course of 1.5 month. i decided to find some trace as to why this happen. i couldn't find any relevant infor and has to conclude that it is purely sentimental driven.

i have a friend who has, under my constant promotioning of the shares, having some discussion with me on haio. He has previously shunt the stock, preferring glove stocks, which i shunt. However, months back he has said haio has forged some alliance in china and will probably do some great business in china. Referring to this actually what i do understand is indeed Haio has forged some alliance in china but its near future growth is not in china. In fact it is targetting Indonesia. Here is related report on this matter. In fact i feel more comfortable with Indonesia than china as china business scene is bit different from what Haio is exceling in Malaysia, where its majority Malay driven MLM business is very successful. Indonesia is having a more similar environment than china and that's why i am optimisitic with its Indon's venture. Below is the announcement regarding this matter

Article entitled "Hai-O aims to strengthen Indonesian ops"
We refer to the news article, appearing in the New Straits Times, Biznews page
B6 on Thursday, October 29, 2009 in particular pertaining to the sentence
which is reproduced as follows :-
"Tan said the group is on track to achieve over 10 per cent growth in profit
and revenue for the current financial year ending April 30 2010, . "
The quoted statement is strictly an aspiration set to be achieved by the
Company after taking into consideration the Companys recent performance,
growing in the number of distributors in our multi level marketing division and
the ongoing sales promotion activities in plan. For the 1st quarter ended 31
July 2009, the Company had achieved financial performance with growth rate of
about 32% and 36% increase in revenue and profit after taxation respectively as
compared to the corresponding quarter of the preceding year.
The targeted revenue and profit to grow by 10% per cent this financial year is
an internal target set by the Company to achieve and not in any way intended to
refer to any financial estimates, forecasts or projections of the Company and
have not been reviewed by the external auditors of the Company.
The announcement is dated 29 October 2009.