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There is scarcely any doubt that common stocks selling well below liquidating value represent on the whole a class of undervalued securities. They have declined in price more severely than the actual conditions justify. This must mean that on the whole these stocks afford profitable opportunities for purchase.
Nevertheless, the securities analyst should exercise as much discrimination as possible in the choice of issues falling within this category. He will lean toward those for which he sees a fairly imminent prospect of some one of the favorable developments listed in "previous post."
Or else he will be partial to such as reveal other attractive statistical features besides their liquid-asset position, eg., satisfactory current earnings and dividends or a high average earning power in the past.
The analyst will avoid issues that have been losing their current assets at a rapid rate and show no definite signs of ceasing to do so.
Saturday, December 11, 2010
Apply Clear, Accurate Thinking
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Examples of "UN-Clear" thinking are :
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1. Blaming others or circumstances for our shortcomings.
2. Waiting for others to lead us instead of leading ourselves.
3. Wishing things were easier, instead of making ourselves better.
4. Wanting fewer chanllenges instead of developing more skills to handle them.
5. Wanting to be a millionaire without first becoming a thousandaire.
6. Saying things cost too much, instead of admitting we can't afford them.
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CLEAR, Accurate thinking is vital to success.
Here are some tips :
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1. Learn to separate facts from information.
2. Deal only with relevant facts.
3. Don't exaggerate or over-react.
4. Look for evidence before drawing conclusions.
5. Question everything, including your own assumptions.
6. Concentrate your effort and thought.
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Examples of "UN-Clear" thinking are :
.
1. Blaming others or circumstances for our shortcomings.
2. Waiting for others to lead us instead of leading ourselves.
3. Wishing things were easier, instead of making ourselves better.
4. Wanting fewer chanllenges instead of developing more skills to handle them.
5. Wanting to be a millionaire without first becoming a thousandaire.
6. Saying things cost too much, instead of admitting we can't afford them.
.
.
CLEAR, Accurate thinking is vital to success.
Here are some tips :
.
1. Learn to separate facts from information.
2. Deal only with relevant facts.
3. Don't exaggerate or over-react.
4. Look for evidence before drawing conclusions.
5. Question everything, including your own assumptions.
6. Concentrate your effort and thought.
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Sarawak Energy to finish six more projects by 2020
Saturday December 11, 2010
SIBU: Sarawak Energy Bhd (SEB) is focused on delivering six other hydro electricity dam projects besides the RM7.4bil Bakun and the RM3bil Murum dams before 2020. Chief executive officer Torstein Dale Sjotveit said these additions would represent 6,000- to 7,000-megawatt new capacity, which in turn would produce around 35,000 to 40,000 gigawatt hours of energy units. This is eight to nine times what we produce today, he said, adding that by 2020, SEB would be the leading producer of renewable energy in South-East Asia.
SESCO is a subsidiary of SEB.
Sjotveit said this clean renewable energy will power the development of the growing local markets, the establishment of new major industries and export to neighbouring countries like Brunei and Indonesia.
On the Bakun dam, he said SEB was committed to ensuring that energy from the dam, which is to be operational by next year, would be used to drive the state's economic growth. He also said SEB, on behalf of the state government, was now in the midst of a challenging negotiation with the federal government for Bakun's successful takeover.
On the Murum dam, he said its diversion tunnel was completed while the construction of the main dam was underway. On other projects, he said SEB had progressed negotiations with around 20 potential energy customers in Sarawak Corridor of Renewable Energy.
We are achieving price offering from them at 25% to 40% above what they offered last year. By this month too, we will be able to firm up agreements with at least four new customers in addition to the MEMC branch in Kuching and the Mukah Press Metal (second phase), he said.
Sjotveit is confident of a very strong financial performance for SEB this year. - Bernama
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SIBU: Sarawak Energy Bhd (SEB) is focused on delivering six other hydro electricity dam projects besides the RM7.4bil Bakun and the RM3bil Murum dams before 2020. Chief executive officer Torstein Dale Sjotveit said these additions would represent 6,000- to 7,000-megawatt new capacity, which in turn would produce around 35,000 to 40,000 gigawatt hours of energy units. This is eight to nine times what we produce today, he said, adding that by 2020, SEB would be the leading producer of renewable energy in South-East Asia.
SESCO is a subsidiary of SEB.
Sjotveit said this clean renewable energy will power the development of the growing local markets, the establishment of new major industries and export to neighbouring countries like Brunei and Indonesia.
On the Bakun dam, he said SEB was committed to ensuring that energy from the dam, which is to be operational by next year, would be used to drive the state's economic growth. He also said SEB, on behalf of the state government, was now in the midst of a challenging negotiation with the federal government for Bakun's successful takeover.
On the Murum dam, he said its diversion tunnel was completed while the construction of the main dam was underway. On other projects, he said SEB had progressed negotiations with around 20 potential energy customers in Sarawak Corridor of Renewable Energy.
We are achieving price offering from them at 25% to 40% above what they offered last year. By this month too, we will be able to firm up agreements with at least four new customers in addition to the MEMC branch in Kuching and the Mukah Press Metal (second phase), he said.
Sjotveit is confident of a very strong financial performance for SEB this year. - Bernama
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Friday, December 10, 2010
Psychology
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The problem with trying to understand people, though, is that people are complex, and change all the time. We learn from our experiences, we form good intentions, and we are acted on by circumstances. So what we do can be influenced by a great many different factors. Also, everyone has their own ideas and opinions about what people are really like. These ideas can influenced what we do and also how we interpret what other people are doing. And since we each have had different lives, and have learned from our experiences, these ideas can be very different from one person to the next.
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Collected 123,600 LCTH shares at 27.74 sen avg.
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22.11.10 Buy LCTH 62,000 @ 0.2875
30.11.10 Buy LCTH 50,000 @ 0.2700
08.12.10 Buy LCTH 11,600 @ 0.2550
_____________________________
Total 123,600 LCTH shares @ 0.2774
_____________________________
Wish me LUCK !
Thanks.
.
22.11.10 Buy LCTH 62,000 @ 0.2875
30.11.10 Buy LCTH 50,000 @ 0.2700
08.12.10 Buy LCTH 11,600 @ 0.2550
_____________________________
Total 123,600 LCTH shares @ 0.2774
_____________________________
Wish me LUCK !
Thanks.
.
Perodua eyes bigger slice of car market in Nepal
Friday December 10, 2010
KATHMANDU: Perusahaan Otomobil Kedua Sdn Bhd (Perodua) aims to grab a bigger slice of the motor vehicle market in Nepal, despite the congested market which is largely dominated by Indian and Japanese makers.
Mihika Dhakhwa, managing director of Nemlink International Traders Pvt Ltd, the sole distributor of Perodua vehicles in Nepal, said regardless of the slow-paced economy and sluggish motor vehicle sector growth, demand was steadily rising.
“Next year will be better compared with 2010.
“We sold about 300 units of all Perodua models last year and hope to sell 400 units next year,” she told Bernama yesterday.
Mihika said the market was competitive and it was not easy to sell a third (brand) car.
“People did not have confidence in Malaysian cars earlier. But after nearly five years, we saw a major breakthrough. We rolled out about 100 units in 2006,” she said.
Though Nepal is grappling under a shaky government and a weak economy, it’s largely surviving on inflow of billion-dollar remittances from its nationals working overseas.
Its economy is growing at about 4.5% annually.
Ironically, car sales had shot up tremendously in recent years.
According to the Nepal Automobile Dealers Association, only 6,850 units (in the car/jeep/van category) were sold last year, but figures had easily doubled in 2010, touching nearly 12,268 units.
Mihika said overall, the car sector was growing in Nepal and more cars were on the road these days. “Now people are also confident of Malaysian cars.
“The customers are satisfied because of our after-sales service and Perodua’s maintenance cost is about 40% cheaper than the others,” she said.
Perodua models, such as Viva and MyVi, are gaining popularity in the Himalayan state, as these slick and economical vehicles best suit city driving. — Bernama
KATHMANDU: Perusahaan Otomobil Kedua Sdn Bhd (Perodua) aims to grab a bigger slice of the motor vehicle market in Nepal, despite the congested market which is largely dominated by Indian and Japanese makers.
Mihika Dhakhwa, managing director of Nemlink International Traders Pvt Ltd, the sole distributor of Perodua vehicles in Nepal, said regardless of the slow-paced economy and sluggish motor vehicle sector growth, demand was steadily rising.
“Next year will be better compared with 2010.
“We sold about 300 units of all Perodua models last year and hope to sell 400 units next year,” she told Bernama yesterday.
Mihika said the market was competitive and it was not easy to sell a third (brand) car.
“People did not have confidence in Malaysian cars earlier. But after nearly five years, we saw a major breakthrough. We rolled out about 100 units in 2006,” she said.
Though Nepal is grappling under a shaky government and a weak economy, it’s largely surviving on inflow of billion-dollar remittances from its nationals working overseas.
Its economy is growing at about 4.5% annually.
Ironically, car sales had shot up tremendously in recent years.
According to the Nepal Automobile Dealers Association, only 6,850 units (in the car/jeep/van category) were sold last year, but figures had easily doubled in 2010, touching nearly 12,268 units.
Mihika said overall, the car sector was growing in Nepal and more cars were on the road these days. “Now people are also confident of Malaysian cars.
“The customers are satisfied because of our after-sales service and Perodua’s maintenance cost is about 40% cheaper than the others,” she said.
Perodua models, such as Viva and MyVi, are gaining popularity in the Himalayan state, as these slick and economical vehicles best suit city driving. — Bernama
Thursday, December 9, 2010
Attractiveness of Stocks selling below Liquidating Value
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Common stocks in this category practically always have an unsatisfactory trend of earnings. If the profits had been increasing steadily, it is obvious that the shares would not sell at so low a price.
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The objection to buying these issues lies in the probability, or at least the possibility, that earnings will decline or losses continue and that the resources will be dissipated and the intrinsic value ultimately become less than the price paid. It may not be denied that this does actually happen in individual cases.
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On the other hand, there is a much wider range of potential developments which may result in establishing a higher market price. These include the following:
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1. The creation of an earning power commensurate with the company's assets. This may result from :
a) General improvement in the industry.
b) Favorable change in the company's operating policies, with or without a change in management. These changes include more efficient methods, new products, abandonment of umprofitable lines, etc.
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2. A sale or merger, because some other concern is able to utilize the resources to better advantage and hence can pay at least liquidating value for assets.
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3. Complete or partial liquidation.
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Wednesday, December 8, 2010
Perodua to ramp up exports
KUALA LUMPUR: Perusahaan Otomobil Kedua Sdn Bhd (Perodua) aims to increase its exports to at least 10% or 20,000 units in line with its five-year roadmap besides developing further the vendor community so that they too boost their exports of auto parts.
Although we are relatively strong in the domestic market, at some point in time, the domestic car market will not grow as much, nearing saturation. By that time, we need to be globally competitive to survive, and this is why we need to seriously look into exports, managing director Datuk Aminar Rashid Salleh said in an interview recently. Currently, the national carmaker is exporting only 2% to 3% of its total output.
Things were not as rosy as they seemed for the local car market, Aminar said, adding that it could be approaching its saturation point based on demand and the population. This year alone, MAA (Malaysian Automotive Association) forecast the total industry volume (TIV) to hit 570,000 units, which will be the highest ever in the automotive history of the country, he said.
Comparing Malaysia with Taiwan based on the similarities in population, he said Taiwan reached its saturation point somewhere at a TIV of 800,000 units. We will be reaching the 600,000th mark next year and in the next five to seven years, the local car market may hit a saturation point, dampening any growth potential.
This is the reason we want to contribute and develop the local vendor community so that they can become globally paced as well, he said. Currently, the carmaker is supported by 141 vendors, with local vendors comprising 60%-70% while the rest are joint-venture companies with foreign partners or independent foreign companies.
This is something we are doing to give back to the community; by generating the socio-economic development needed, creating jobs, and purchasing local parts. We purchase these locally made parts to the tune of RM3bil to RM4bil a year, said Aminar.
However, he said vendors faced a high turnover of workers. There must be more concerted effort from the industry, manufacturers and the Government to tackle this problem; to reduce the dependency on foreign workers and increase the participation of locals. The quality of components will obviously be affected as new workers need to be retrained, he said.
These vendors had helped with the localisation of the cars, he said, citing the Perodua Alza which had 90% local content. Aminar said 75% of Perodua's sales and services were undertaken by independent entrepreneurs. We are creating business opportunities for our dealers and providing them not only with products, but also training development to make sure they are competent, he said.
To date, Perodua has invested about RM3bil mainly for its plant as well as its sales and distribution division, to the extent that there are more independent dealers than its own outlets. It currently has more than 11,000 employees, of whom 8,000 work at its plant in Rawang.
Aminar said Perodua also aimed to at least double its engine components export business to RM50mil by increasing trade around the South-East Asia region in the next three years. We are at the tail-end of a feasibility study to export to Thailand and we are currently exporting to countries like Pakistan, Indonesia and Japan, he said. The company is also looking at opportunities to export completely-built-up units to South Africa.
Perodua's shareholders are UMW Corp Sdn Bhd, which holds a 38% equity; Daihatsu Motor Co Ltd of Japan, 20%; MBM Resources Sdn Bhd also 20%; PNB Equity Resources Corp Sdn Bhd 10%; Mitsui & Co Ltd 7% and Daihatsu (M) Sdn Bhd 5%.
On Perodua's foreign partner, Aminar said the relationship with Daihatsu had been a successful partnership. The important factor with Daihatsu is that they have been around much longer and are more knowledgeable with vast experience, not just in technical aspects but also technology that involves huge sums of money. It helps small players like us understand the challenges to being export-driven, sharing of resources and platform, as well as huge amount of data that we can benchmark ourselves against, he said.
On car sales, he said as at end-October, Perodua was the top selling carmaker with a market share of 31.1% at 157,200 units. Our target to sell 185,000 cars this year is achievable and we have already revised upwards next year's target to 190,000 units. He attributed the stellar performance to star model, the Myvi, which contributed 41.1% to total sales this year, followed by the Viva, which accounted for 37%, and Alza 22%.
Competition is everywhere and it has kept us on our toes all the time. Customers have a choice and our performance is determined by them, he said. We are driven by market forces. We had put a lot of emphasis on the whole gambit of the auto business like our showrooms, networks, customer cars, product line-up improvement and retention programme.
Aminar said he hoped Perodua would retain its top spot on the country's car sellers list this year for the fifth consecutive year. - Bernama
Although we are relatively strong in the domestic market, at some point in time, the domestic car market will not grow as much, nearing saturation. By that time, we need to be globally competitive to survive, and this is why we need to seriously look into exports, managing director Datuk Aminar Rashid Salleh said in an interview recently. Currently, the national carmaker is exporting only 2% to 3% of its total output.
Things were not as rosy as they seemed for the local car market, Aminar said, adding that it could be approaching its saturation point based on demand and the population. This year alone, MAA (Malaysian Automotive Association) forecast the total industry volume (TIV) to hit 570,000 units, which will be the highest ever in the automotive history of the country, he said.
Comparing Malaysia with Taiwan based on the similarities in population, he said Taiwan reached its saturation point somewhere at a TIV of 800,000 units. We will be reaching the 600,000th mark next year and in the next five to seven years, the local car market may hit a saturation point, dampening any growth potential.
This is the reason we want to contribute and develop the local vendor community so that they can become globally paced as well, he said. Currently, the carmaker is supported by 141 vendors, with local vendors comprising 60%-70% while the rest are joint-venture companies with foreign partners or independent foreign companies.
This is something we are doing to give back to the community; by generating the socio-economic development needed, creating jobs, and purchasing local parts. We purchase these locally made parts to the tune of RM3bil to RM4bil a year, said Aminar.
However, he said vendors faced a high turnover of workers. There must be more concerted effort from the industry, manufacturers and the Government to tackle this problem; to reduce the dependency on foreign workers and increase the participation of locals. The quality of components will obviously be affected as new workers need to be retrained, he said.
These vendors had helped with the localisation of the cars, he said, citing the Perodua Alza which had 90% local content. Aminar said 75% of Perodua's sales and services were undertaken by independent entrepreneurs. We are creating business opportunities for our dealers and providing them not only with products, but also training development to make sure they are competent, he said.
To date, Perodua has invested about RM3bil mainly for its plant as well as its sales and distribution division, to the extent that there are more independent dealers than its own outlets. It currently has more than 11,000 employees, of whom 8,000 work at its plant in Rawang.
Aminar said Perodua also aimed to at least double its engine components export business to RM50mil by increasing trade around the South-East Asia region in the next three years. We are at the tail-end of a feasibility study to export to Thailand and we are currently exporting to countries like Pakistan, Indonesia and Japan, he said. The company is also looking at opportunities to export completely-built-up units to South Africa.
Perodua's shareholders are UMW Corp Sdn Bhd, which holds a 38% equity; Daihatsu Motor Co Ltd of Japan, 20%; MBM Resources Sdn Bhd also 20%; PNB Equity Resources Corp Sdn Bhd 10%; Mitsui & Co Ltd 7% and Daihatsu (M) Sdn Bhd 5%.
On Perodua's foreign partner, Aminar said the relationship with Daihatsu had been a successful partnership. The important factor with Daihatsu is that they have been around much longer and are more knowledgeable with vast experience, not just in technical aspects but also technology that involves huge sums of money. It helps small players like us understand the challenges to being export-driven, sharing of resources and platform, as well as huge amount of data that we can benchmark ourselves against, he said.
On car sales, he said as at end-October, Perodua was the top selling carmaker with a market share of 31.1% at 157,200 units. Our target to sell 185,000 cars this year is achievable and we have already revised upwards next year's target to 190,000 units. He attributed the stellar performance to star model, the Myvi, which contributed 41.1% to total sales this year, followed by the Viva, which accounted for 37%, and Alza 22%.
Competition is everywhere and it has kept us on our toes all the time. Customers have a choice and our performance is determined by them, he said. We are driven by market forces. We had put a lot of emphasis on the whole gambit of the auto business like our showrooms, networks, customer cars, product line-up improvement and retention programme.
Aminar said he hoped Perodua would retain its top spot on the country's car sellers list this year for the fifth consecutive year. - Bernama
Monday, December 6, 2010
Financial Reasoning vs Business Reasoning
We have here the point that brings home strikingly perhaps than any other the widened rift between financial thought and ordinary business thought. It is an almost unbelievable fact that Wall Street never asks, "How much is the business is selling for ?" Yet this should be the first question in considering a stock purchase.
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If a business man were offered a 5% interest in some concern for $10,000, his first mental process would be to multiply the asked priceby 20 and thus establish a proposed value of $200,000 for the entire undertaking. The rest of his calculation would turn about the question whether or not the business was a "good buy" at $200,000.
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This elementary and indispensable approach has been practically abandoned by those who purchase stocks.
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Recomendation.
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These examples, extreme as they are, suggest rather forcibly that the book value deserves at least a fleeting glance by the public before it buys or sells shares in a business undertaking. In any particular case the message that the book value conveys may well prove to be inconsequential and unworthy of attention.
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But this testimony should be examined before it is rejected. Let the stock buyer, if he lay any claim to intelligence, at least be able to tell himself, first, what value he is actually setting on the business and, second, what he is actually getting for his money in terms of tangible resources.
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