John Bogle, former CEO of Vanguard Fund or shall I say one of the most popular fund manager was interviewed on BFM two days ago.
While he is making Index Fund being popularised, shall I call it that one of the closest to index funds in Malaysia is EPF? When you are holding funds through EPF, you are basically buying closer to the Bursa Composite Index, as they typically holds almost all the larger companies in Bursa.
I do agree (if you listen to the interview) that the fees in Malaysia for unit trusts are way too high.
Tuesday, January 27, 2015
Friday, January 23, 2015
Insas' Rights
For those who would be wondering why Insas's share price dropped by more than 5%, it is possibly due to this as well as a 1 sen dividend (ex-date 23 Jan).
Besides the above, there are some important dates with regards to the rights, as below.
For those whom owned Insas shares prior to 23 Jan 2015, please take note of it. if you want to sell your rights, you may want to do so between 28 Jan 2015 to 5 Feb 2015. Otherwise, it is wise to pick up the Redeemable Preference Shares.
Besides the above, there are some important dates with regards to the rights, as below.
Saturday, January 3, 2015
Wednesday, December 31, 2014
Buy Insas and Sell Parkson
It is a huge mistake by me as I am behind the curve in terms of retailing. The next wave of retailing seems to be is for companies like Alibaba and Amazon. I am currently reading the book on Amazon (The Everything Store) and I came out quite impressed on the level of technology investments as well as how much changes have been made by Jeff Bezos. Similarly, I have seen interviews made to Jack Ma and I must say that these two guys will be changing the face (or already are) of retailing or how people will be buying things in the future.
This of course does not mean companies like Parkson or Aeon or even Tesco will be dead but they definitely are affected. I must say I am behind like 5 years in this as sitting in Malaysia, we are definitely not seeing the full force of the changing face of retailing. This year alone, Walmart, Tesco are affected and they are not seeing growth. Their competition are not just Sainzbury, Target but the new wave of online commerce. Obviously, Parkson which have significant businesses in China is affected and they seem to change the way they do business as rental rates seems to be tougher for these companies.
Parkson has gone towards the AEON Malaysia model, where they have started to look at owning real estates, however it seems to me they are 10 years late. I hope for Parkson, it is a case of better late than never.
Anyway, I think this is time for me to reposition my holdings and I have decided to sell Parkson taking a huge loss (percentage wise) - do not want to calculate as it is a case of me taking too much time to realise my mistake. I am just glad I did not put too much money into this.
Buy Insas
I have written a piece on this company before - in fact two as the second one is more about its holdings on Inari. The thing I wrote is still very relevant but just that fundamentally Insas has improved over the 1+ years. Inari seems to me is getting more solid by the years and I have done a careful look at Insas past and it seems to me their concentration is more on the technology sector (largely Inari's contribution) nowadays. I had the opportunity to meet one of the directors before and I must say that these are very careful and thinking people - so much so that they are really strategizing every steps they make. While they do seem to plan a lot, you hardly can go wrong with this kind of management.
In the past Insas seems to me were more dependent on its other businesses such as M&A Securities which to me is not too interesting although they do manage the business well I must say. It also had made good money in several investments such as a London property, Gleneagles KL etc. These goes to show that they are very solid investors who know what they are doing. The most recent success as mentioned was definitely Inari.
Insas is trading well below its registered book value (RM1.80/share) and for me this kind of companies they should be trading close to their book value. An investment company especially with large holdings in a securities firm will see huge swings in their profits but to me it is allright as long as they are good assets. Its current price of around RM0.80 is significantly below its book or revised book value which I can easily see at beyond RM2.00 per share. This is because it does not recognize the full market value of Inari which in terms of the holding value for Insas should be more than RM500 million. Note that Insas is now trading at around RM560 million market value - i.e. almost similar to its holding in Inari alone. Only thing is why they do not do share repurchases really beats me...
I am buying this also due to I can see there is a level of confident on Inari's future with the company calling for Redeemable Preference Shares to subscribe for the rights call by Inari. I personally feel that it must be due to there is a good mid term prospect for Inari for it to continue to expand.
As such I am buying a good 10,000 units of Insas.
Note that Insas is issuing a Redeemable Preference Shares at 1 for 5 shares held and they are also providing free warrants at 2 for 5 shares.
This of course does not mean companies like Parkson or Aeon or even Tesco will be dead but they definitely are affected. I must say I am behind like 5 years in this as sitting in Malaysia, we are definitely not seeing the full force of the changing face of retailing. This year alone, Walmart, Tesco are affected and they are not seeing growth. Their competition are not just Sainzbury, Target but the new wave of online commerce. Obviously, Parkson which have significant businesses in China is affected and they seem to change the way they do business as rental rates seems to be tougher for these companies.
Parkson has gone towards the AEON Malaysia model, where they have started to look at owning real estates, however it seems to me they are 10 years late. I hope for Parkson, it is a case of better late than never.
Anyway, I think this is time for me to reposition my holdings and I have decided to sell Parkson taking a huge loss (percentage wise) - do not want to calculate as it is a case of me taking too much time to realise my mistake. I am just glad I did not put too much money into this.
Buy Insas
I have written a piece on this company before - in fact two as the second one is more about its holdings on Inari. The thing I wrote is still very relevant but just that fundamentally Insas has improved over the 1+ years. Inari seems to me is getting more solid by the years and I have done a careful look at Insas past and it seems to me their concentration is more on the technology sector (largely Inari's contribution) nowadays. I had the opportunity to meet one of the directors before and I must say that these are very careful and thinking people - so much so that they are really strategizing every steps they make. While they do seem to plan a lot, you hardly can go wrong with this kind of management.
In the past Insas seems to me were more dependent on its other businesses such as M&A Securities which to me is not too interesting although they do manage the business well I must say. It also had made good money in several investments such as a London property, Gleneagles KL etc. These goes to show that they are very solid investors who know what they are doing. The most recent success as mentioned was definitely Inari.
Insas is trading well below its registered book value (RM1.80/share) and for me this kind of companies they should be trading close to their book value. An investment company especially with large holdings in a securities firm will see huge swings in their profits but to me it is allright as long as they are good assets. Its current price of around RM0.80 is significantly below its book or revised book value which I can easily see at beyond RM2.00 per share. This is because it does not recognize the full market value of Inari which in terms of the holding value for Insas should be more than RM500 million. Note that Insas is now trading at around RM560 million market value - i.e. almost similar to its holding in Inari alone. Only thing is why they do not do share repurchases really beats me...
I am buying this also due to I can see there is a level of confident on Inari's future with the company calling for Redeemable Preference Shares to subscribe for the rights call by Inari. I personally feel that it must be due to there is a good mid term prospect for Inari for it to continue to expand.
As such I am buying a good 10,000 units of Insas.
Note that Insas is issuing a Redeemable Preference Shares at 1 for 5 shares held and they are also providing free warrants at 2 for 5 shares.
Friday, December 26, 2014
Food for thought: A look at MWE
I know this is a hugely uninteresting stock, but there is a reason for me to look at it. It owns about 25% of Keuro where I already have a decent exposure. I would also like to know why it has sold a business where it has been earning between RM20-25 million a year and part of that proceeds have been used to buy Keuro. MWE spent around RM280-RM290 million to have a hold of 25% of Keuro. They purchased the substantial stake from Chan Ah Chye at RM1.34 per share and later picked up the rights at RM1.08 per share. There could be a reason it sold controlling stake of a business to own an associate stake of another business. Usually business people do not do that. And I am very sure they are many times smarter than me.
Accounting Treatment
The company has taken equity accounting method for its investment in Keuro. Basically MWE has taken the following treatment for its investments.
Latest financial report
Now we know that it has borrowed some money to buy the 25% stake including the rights. What does that mean? Its borrowings is in the form of revolving credit and the borrowing costs seems low - around 5%. The dividend income from Magnum alone (see below) can cover for the interest to be paid from the borrowings.
Balance sheet wise it is definitely sound. It has a Net Asset Value of around RM2.88 per share against its share price today of RM1.47. Generally, I do not think that its business is much of a significant although if one is to read its annual report, nothing tells that. (This is the reason why reading Chairman's statement is NOT telling much). The value of the company is in the investments, not subsidiaries. However, in the Annual Report's statement by the chairman, he was dwelling on subsidiaries business which I do not get excited from. Nothing much is mentioned on the investments.
The three largest shareholdings are investments (investments in associates and Other Investments - largely Keuro (around RM270 million in value including Keuro-WE), Magnum and MPHB Capital which can be read through below.
Other than that, it owns textiles business, the remains of the electronics business after selling to General Lighting Co. (Note that Carlyle has sold the business after 2 years holding it to Philips at a profit of course), some properties and a plantation in Kelantan (MWE tried to sell it but was rejected by the state government).
Anyhow, I can see it interesting from this findings...it is trading at 50% of its NAV. Would you buy it? There are many things to think through though like dividends, share buyback etc.
Happy holidays to all the fellow bloggers and readers.
Accounting Treatment
The company has taken equity accounting method for its investment in Keuro. Basically MWE has taken the following treatment for its investments.
Latest financial report
Now we know that it has borrowed some money to buy the 25% stake including the rights. What does that mean? Its borrowings is in the form of revolving credit and the borrowing costs seems low - around 5%. The dividend income from Magnum alone (see below) can cover for the interest to be paid from the borrowings.
 |
| From MWE's 3Q14 financial report. The added on loans is after Keuro's rights |
Balance sheet wise it is definitely sound. It has a Net Asset Value of around RM2.88 per share against its share price today of RM1.47. Generally, I do not think that its business is much of a significant although if one is to read its annual report, nothing tells that. (This is the reason why reading Chairman's statement is NOT telling much). The value of the company is in the investments, not subsidiaries. However, in the Annual Report's statement by the chairman, he was dwelling on subsidiaries business which I do not get excited from. Nothing much is mentioned on the investments.
The three largest shareholdings are investments (investments in associates and Other Investments - largely Keuro (around RM270 million in value including Keuro-WE), Magnum and MPHB Capital which can be read through below.
 |
| Magnum's substantial shareholding with MWE ownerships worth around RM181.5 million |
 |
| MPHB Capital's substantial shareholding. MWE's shareholding value is around RM61.5 million |
Anyhow, I can see it interesting from this findings...it is trading at 50% of its NAV. Would you buy it? There are many things to think through though like dividends, share buyback etc.
Happy holidays to all the fellow bloggers and readers.
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