Saturday, May 27, 2017

97 - Rising cash hoard of Fima Corp

97 - Rising cash
hoard of Fima Corp

Fima Corporation Berhad (Fima Corp) is one company yours truly is quiet well versed with its steady and easy to understand business since becoming a shareholder since October 2004.

That is more than twelve years already of becoming a silent  minority shareholder and doing nothing at all other than receiving consistent dividends every year without fail and of course more free shares. My original 4,000 shares has also become 12,000 shares after its bonus and split corporate exercise in Oct 2014.

The business of Fima Corp is easy to understand as it mainly derives its steady income from its security printing business. In its efforts to diversify for more income, it ventured into plantations in 2007 and done remarkably well too.

But last year, Fima Corp's 80% owned PT Nunukan Jaya Lestari (PTNJL) suffered a speed bump when the Indonesian government decided to revoked its cultivation rights, the reasons were it had been improperly issued resulting in the overlapping of some of its planted areas with forestry areas.

Although Fima Corp started legal proceedings to challenge the ministerial order, there has been no latest or updates on this. It has been more than   eight months already.

However in the interest of good order, the local government has given its undertaking and allowed PTNJL to continue to lawfully operate its plantation operations until the final determination of the matter by the Indonesian courts.

In the event of the worst scenario where its loses out its legal proceedings  and loses out all its plantation business, it will have to fall back to its main core security printing business for income.

However there might be twist of turns of events in the outcome. Will there be some form of compensations for Fima Corp? After all, Fima Corp paid a total of RM96 million for PTNJL "legally". If there is, what will be the quantum amount?

Or perhaps there will be some form of alienation of its cultivation lands resulting in smaller areas for Fima Corp as a form of mutual settlement? All these are only my guesses and I might even be totally wrong.

On the other hand, should Fima Corp gets a positive outcome from its legal proceeding, it will be business back as usual albeit a big sigh of relief for all its shareholders including yours truly.

Fima Corp remains a very well managed company throughout the years despite taking a loan for the purchase of PTNJL. The plantation business produced another set of consistent profits, sometimes higher, some times lower depending on the price of palm oil.

Since its purchase of PTNJL in 2007, it has not only managed to pare down its debts to zero levels (taken to finance PTNJL), Fima Corp has also grown its cash reserves significantly especially the last few quarters.

Since its announcement of its 4th Quarterly results on May 24, 2017 for Financial Year ended March 2017, its cash hoard has risen to a record high of RM336 Mil compared to just RM177 Million a year ago. Besides it has also done well with its collections of Trade Receivables against Trade Payables.

The table below will illustrate how its cash has risen to an all time record high from the Jan-Mar 2016 to Jan-Mar 2017 period. Besides its Trade Receivables has also been in healthy proportion to its Trade Payables.

With RM336 Mil in hand now, its cash per share has also risen to RM1.39 Based on its share base of 241,404,497 shares and at its current price of around RM2.30 after minus off its cash per share of RM1.39 means an investor is just paying around 91 sen for its solid security printing business.

Based on its latest security printing business profits of RM 59 Mil  (Financial Year 2017 ended March), it is almost double when compared to oil palm production and processing division which recorded RM 28 Mil.

Fima Corp's current cash hoard of RM336 Mil in hand  is the highest ever recorded as far as I know.  Such remarkable of healthy balance sheet has enable Fima Corp to continue to pay above average bank dividends rate.

After its bonus and share split exercise in 2014, its last two years of dividends has stayed at 12.5 sen. But this year, Fima Corp has decided to even increase its dividend with a 5 sen special dividend apart from its final 7.5 sen dividend which was announced together with its 4th Qtr results on May 24, 2017.

Yours truly is confident such generous amount of dividends including the occasional special dividends will continue in years to come. Fima Corp has remained one of my most top dividend yield stock in my portfolios besides another steady and generous dividend stock, Harrisons Holdings (M) Bhd.

Both stocks remain my money-good sons of Bursa Malaysia. Both are free and continuing to bank in generous dividends like "duit minum kopi" allowance for me year in year out.

Sunday, May 7, 2017

96 - An update on my Basket of Defensive Stocks

96 - An update on
my Basket of
Defensive Stocks

It has been more than two months since I lasted updated my portfolios of stocks in my Basket of Defensive Stocks. Some of my readers might be curious why I did not update it after several of my recent blogs.

The reason is simple. I have like to believe that the stock market is just another piece of jigsaw in our daily lives and nothing more than that. Its movement in share prices should not effect our everyday daily lives or even set the tone for our mood of the day.

I know of many people who are constantly bothered or affected by the movement of stocks prices everyday. It is like the stock market is a  monster that is controlling the lives of those investors who are too emotionally attached.

If you are one of them, perhaps it is about time to pause for a reflection and see the bigger picture of life has to offer. There is so much in life if one is able to shut off from the frenzy pace movement of stocks prices.

I have done that many times. There are instances that for several days in a row, I didn't check the closing share prices at all. And the feeling is fantastic. I could discover that I could focus more sharply in many things I wanted to do. And with less pressure too.

It is not that I am worried about the movements of share prices. My portion of share investment allocation has been well diversified out. So any movement of ups and down will be just be like that unless of course there is a major prices movement of a particular stock which I also happened to hold significant amount of shares.

But it is easier said than done. There are bounds to be articles written by bloggers or in the newspapers about a particular stock that has attracted their attention from time to time.

It could be due to that stock has just reported a sharply rise in quarterly earnings and looked set to repeat it again in subsequent quarters, or involved in a major cooperate exercise that benefits the company or a sudden pleasant surprise announcement of significant higher dividends payment.

So when these happens, even if you do not check on share prices, someone will interact with you and ask you that your that share is up so much and do you have any ideas? Or you could be reading a write up by bloggers heaping praises for this stock.

The impact of unexpected
higher dividend

A recent case of a stock attracting investors' and famous bloggers' attention is low profile trading house Harrisons Holdings (M) Bhd. Normally a quiet stock with not much trading volume, it quietly announced a surprise higher dividends of 25 sen (which investors expected 15 sen conservatively) on April 12, 2017.

And the next day onwards, life has never been the same anymore for Harrisons. Investors chased after Harrisons while famous bloggers came out with admirable articles for the company. It is like suddenly many came to the same realisation that Harrisons is such a wonderful and valuable company after all.

At the time of writing, Harrisons is traded at RM4.18 at the close on May 5, near its 52 week high of RM4.24. Note that at this stage, my purpose of this blog is not to ask you to buy Harrisons shares. The decision is always yours as I trust most of us are rather intelligent and able to analyse better than many others.

Back to my Basket of Defensive Stocks, Harrisons is the first stock from the portfolios to achieve the either 100% up or crossed the RM1 margin which ever comes first.

Truth is I didn't expect much from my portfolios of shares to surge to this level as most of them were chosen based on their consistent regular earnings which in turn can pay regular average dividends.

I believe such stocks are not so vulnerable to the occasionally market shocks which can jolt shares prices swinging wildly. But one important factor is that such defensive stocks are best purchased near their 52 week lows or after a retreat following a rally in share prices.

Except for Cycle and Carriage Bintang (CCB) which reported dismal results during the last two quarters, the others more or less maintain their earnings and dividends without much surprise. The only exception is Harrisons which raised its dividends to 25 sen instead of 15 sen which has a big impact on its share prices.

So this is how my latest Basket of Defensive Stocks performed to date.


Saturday, April 22, 2017

95 - Harrisons - The King of dividends

95 - Harrisons
- The King of dividends

The trading house division is one sector I have always like to pay attention to it especially every reporting session of each quarter. The recent closing Financial Year 2016 for the three main listed players : DKSH Holdings (M) Bhd, Harrisons Holdings (M) Bhd and Yee Lee Corporation Bhd. is one I like to compare each other with particularly their earnings and how much dividends they reward their respective shareholders.

These trio of companies more or less are agencies that are mainly involved in distribution of products produced by all those multinationals companies in Malaysia and also from other parts of the world.

All these companies continued to do well in Financial Year 2016 despite the tough challenging marketing environment. Worse still, the weakening ringgit did not help at all and resulted in dearer imported goods for an already subdued consumer market.

Nevertheless, these three companies still posted profits that are considered commendable in such trying times. DKSH, Harrisons and Yee Lee recorded earnings per share of 32.01 sen, 29.75 sen and 23.78 sen respectively for Financial Year 2016.

Despite the tight close range of their earnings between 23.38 sen to 32.01 sen, their share prices differ as much as a RM1 range. Currently Yee Lee is traded at RM2.73 while Harrisons is at RM3.87 and the biggest brother DKSh is at RM4.75.

If one is to use Price Earnings ratio as a comparison, then DKSH, Harrisons and Yee Lee is trading at PE of 15, 13 and 11.5 respectively. At this juncture, using PE as a gauge, Yee Lee is considered the cheapest of the trio while DKSH is considered the most expensive while Harrisons stand in between.

But using PE is just a figure guide and not a realistic one. In investment, one should look beyond the PE guide and in this instance, DKSH must have the better growth prospects (in the eyes of investors)  in years to come, hence the higher PE accorded is fair and justified.

There are also reasons why Yee Lee is accorded with the lowest PE. Admittedly Yee Lee's business is not as much as DKSH and Harrisons and as such might need to consistently maintain such yearly earnings in the longer term to convince investors to invest.

Traditionally all these three companies continue to be consistent dividends paymasters over the years without fail. While DKSH has consistently maintained its 9.5 sen dividend for the last three years, Yee Lee has slowly inched up its dividends from 3.5 sen for Financial Year 2014 and 2015 and raised it to 4.5 sen for Financial Year 2016.

Harrisons which has been consistently paying 15 sen dividends from Financial Year 2012 to 2015 were expected to declare the same amount for Financial Year 2016. But instead declared an above expectation dividends of 25 sen which surprised many investors including yours truly. I have to say such nice kind of above expectations surprise dividends announcement is definitely a wonderful dose for the days.

Such high dividends is amounting to almost 85% of its 2016 earnings. A check on its financial statement revealed a rather healthy balance sheet for Harrisons ended December 2016.

Harrisons has a total of RM520 million (Inventories RM181 million, Trade & Other Receivables RM242 million and Deposits RM97 million) against RMRM300 million (Trade and Other Payable RM175 million and Borrowings RM125 million).

Assuming Harrisons chooses to liquate its business totally (sorry, this won't happen  at all, this assumption is just used as a calculations basis only), then there is a positive figure of RM220 million. When one considers Harrisons has only a share base of just 68,476.00, it literally translates into a possible RM3 for each share.

Regular readers would have recalled Harrisons is one stock I have written several times (you can termed me as a "Harrisons Crusader", ha ha).

My first posting was on April 11, 2014 titled : Harrisons - The Kingpin of East Malaysia and the second one on Nov 11, 2014 titled : Harrisons - The Kingpin Strikes Back. My latest posting about Harrisons was on Oct 8, 2016 titled : Harrisons - A stable high dividend yield stock.

Its consistently good dividends (rising in tandem with its earnings as well) over the decades has prompted me to add Harrisons into my long term portfolios of dividends-paying stocks. So far its dividends payout has not disappointed me at all.

Even if the share price maintains its RM3 to RM4 range over the next several years together with its just conservative dividends of 15 sen, I would be more than happy enough than ever.

My total 15,000 shares of Harrisons (especially the 10,000 shares bought on Dec 7, 2004 and the subsequence purchase of 3,000 shares and 2,000 shares years the last few years) remains one of my core holding portfolios investment which I can classified as BORING INVESTMENTS but profitable ones.

Well, dividends lovers, the ball is in your court now.

Sunday, April 2, 2017

94 - Buy low, sell high and hibernating

94 - Buy low,
sell high and

Investors are constantly bombarded with so many good advices by many top stock masters or sifus these days.

The popular ones are buy low, sell high, when others are greedy, we should be fearful and sell vice versa. But there is one particular advice that is to try to buy near its low and sell near its high.

I think this buy near its low and sell near its high is more easier to follow if one really practise it although there is no guarantee it will always ends up profitably.

What is exactly buy near its low? To me, if a particular good fundamental stock has seen dramatic fall in its share price due to many reasons, especially if the share price keeps touching new 52-week low or several year low, then entering at this point can be construed as buying near its low because the risk has been hugely discounted off.

I like to share three stocks, Thong Guan Industries Bhd, Supermax Corporation Berhad and YSP Southeast Asia Holding (YSP Sah) which I had the privilege to experience buying near its lows and selling near its high.

After my purchase of Thong Guan at RM1.86 on Dec 12, 2014 (having fallen from as high as RM3 plus some six months earlier), Thong Guan even went down a bit more before stabilising around my purchase price for several months.

But once it resumed back its growing profitable quarters, its share price continued to ascend from time to time. Luckily Thong Guan is one share I have been holding on steadily and refusing to sell even when it went all the way to as high as RM4.87 recently.

Granted one is seldom able to sell at its highest peak or even near its high. In fact it is quiet for sure many who would have bought at below RM2 would have taken profit when it hits RM3 levels and there would even be more selling when it hits the RM4 levels.

I personally think Thong Guan is still a very attractive stock to keep for longer terms as it is continuously expanding its business in many areas. Its eps of 54 sen for Financial Year 2016 suggests its current price of RM4.50 + level is not expensive or over-valued in my very frank opinion.

Supermax on the other hand has just rebounded back the previous day from its 52-week low done which I entered at RM1.67 on Dec 16, 2014. It was trading slightly above RM3 in early January 2014.

I was actually lucky enough to sell off Supermax a year plus later in January 2016 at its almost 5 year high at RM3.50 +. (At that time of selling, I was just merely taking profit without regards to whether the fundamental is still going strong there or not).

Since then, Supermax share price has been trending all the way down since the last four quarterly results (its average eps of 2.5 sen for last four quarters can hardly been considered as good one, right?).

Its current share price of just merely at RM1.98 is at its 52-week low. So jestingly speaking, its it time to buy into Supermax at this point since it is at 52-week low and the risk can be considered as lower already?

You decide yourself.

The above two investments demonstrated it was genuinely cases of  buying near its low although it is different when coming to selling. As I said, my selling of Supermax at near its almost 5-year peak is merely luck or good timing and nothing to do with any skill.

What about selling near its high? Well, there is one stock YSP Southeast Asia Holding (YSP Sah) which I could claim as selling near its high.

YSP Sah was one stock I bought in June 2012 at RM1.05. YSP Sah was actually hibernating for several months at this tight range price of RM1 - RM1.10 levels.

When a stock has been hibernating for long months, is it safe to enter? I don't have a clear answer, it depends on individual's perception. For me, it means the short term or contra players have been weeded out hence the tight range price situation. Unless of course, a new development that will have an impact on its share price surfaces.

I sold off YPS Sah in July 2015 at RM2.95. Again there is no particular reason why I decided to sell other than just to enjoy some real cash profits.

After I sold off YSP Sah, it went up to touch a new high of RM3.49 within the same month before eventually profit taking and a string of rather disappointing quarterly results plunged its share down to below RM2. Currently YSP Sah is trading at RM2.20 + levels.