Back pain means business for YSP Sah again

Back pain means

business for

YSP Sah again

Recently my wife started to experience irritating back pain again, so much so that she had to start consuming back her regular herb supplement known as Elgucare. (In case you are new, Elgucare is a capsule supplement formulated herbs traditionally used for relieving waist ache and backache. The main pharmacological effects are dilating the blood vessels to improve blood circulation, restring the fibro-elastic potential of vertebral cartilages and improving immune system).

Just few days ago, I went to buy Elgucare again (the fifth bottle since her recurring back pain one month ago). On bottle costs around RM160 (no thanks to GST, otherwise I would be paying less than that). The cost of five bottles would set me back by RM800. And it looks like a few bottles are still needed for the next several months.

Well, thanks to my good decision years back to be the stakeholder of that company (that is distributing this Elgucare supplement), I can use the dividends (paid by the company to shareholder) to help pay the purchase.

And in case you do not know or have forgotten about it, Elgucare is distributed under the famous brand "Shine" by a company called YSP Southeast Asia Holding (YSP Sah).

This small size cash-rich company YSP Sah manufactures and trades various kinds of pharmaceutical products. It also provides prescription products comprising antibacterial and analgesic lozenges, antibiotics, antidiarrheals, antiemetics, antihistamines, etc.

It operates in Malaysia, Singapore, the Philippines, Vietnam, Cambodia, Myanmar, Brunei, and internationally. The company was founded in 1987 and is headquartered in Kuala Lumpur, Malaysia.

Laggard of pharmaceutical stocks' rally

For some time, several or shall I say mostly pharmaceutical stocks have rallied especially led by the leader Pharmaniaga Berhad (This is one stock I sold off TOO EARLY just because I WANT TO HAVE THE FEEL of PROFIT TAKING. I AM STILL LIVING TO REGRET WITH that decision UNTIL TODAY).

Somehow, YSP Sah seemed to be one forgotten stock that remained in the doldrum. Why? No thanks to its INCONSISTENTLY yo-yo quarterly earnings especially last year. It earned 4.1 sen, 0.72 sen, 2.3 sen and 5.27 sen for 1st Qtr to 4th Qtr 2014 respectively.

Such inconsistently earnings can deter investors from owning the stock as the earnings are also fluctuating and not showing any slow gradual or consistent pace or steady range of earning levels.

Sterling 1st Qtr 2015 results

Then on May 14, YSP Sah announced its 1st Qtr 2015 results, an earning per share of 7.02 sen! This is the first time YSP Sah has earned the most in a quarter. It is a record quarterly earning and it is just the 1st Qtr only for 2015. What if the subsequent quarterly results are somewhere near this 7.02 sen earning? (This will remain to be seen).

So, which division shined for YSP Sah this time? YSP Sah has three divisions i.e. Investment holding (RM1.27 Million), Trading (RM0.96 Million) and Manufacturing (RM11.31 Million) respectively for 1st Qtr 2015.

The Manufacturing Division was the star performer this time, posting a higher profit before tax of RM22.31 Million compared to RM6.80 Million in 1st Qtr 2014, an increase of 66% mainly due to lower cost margin in product mix and growth in revenue of RM6.90 Million in 1st Qtr 2015.

Surging Share Price

Investors wasted no time immediately and the next day on May 15, YSP Sah posted a gain of 34 sen to close at RM1.95 in heavy trading volume. Since then, YSP Sah has remained actively over the next several days with the share price notching multiple new high every now and then.

The current price of YSP Sah is at RM2.06.

This new high price of YSP Sah has resulted in more paper profit for me. It means the current price of over RM2 plus has resulted in more than 100% return (not to mention the three dividends totalling RM1,900.00)  since my early investment at RM1.05 (10,000 shares) on June 5, 2012.

Regular readers might remember YSP Sah was featured on Aug 9, 2013 entitled : Customer-turned-Stakeholder of YSP Sah and again on Sep 15, 2014 entitled : Revisiting YSP Sah.

Wrong Timing on both occasions

 

So Star Publications (M) Berhad has revamped and changed its new name to Star Media Group Berhad recently.

The leading English newspaper has from time to time revamped itself to suit the trend of today's newspaper readers. Gone are the time when you can afford to stay the same for years. Today's demand for changes are so constant that it is a credit that The Star has already done its best to stay relevant with technology today.

Anyway, my good friend recently told me that the company has continued to implement cost-cutting measures in its operation. He confidently told me that gone are the good days when bonuses were in the range of 5-7 months per year in the early 1990s to the last few years.

My good friend who had been with the company for more than 30 years told me when the company went for listing in 1995, several criterias were used to ensure the number of shares employees would qualify to buy.

Among them were the years of service, positions and .... surprisingly or not, salary range.

My friend's colleague (let us call him B) had been given an additional share compared to my friend (although both had the same number of working years) because B's salary was just more than RM50.

But because it so happened that B's salary was RM1,515.00 (one more share given to those earning RM1,500.00 and above), my good friend (earning RM1,490.00) could just curse his luck.

Fast forward to last year, Star decided to give shopping voucher RM900 to its employees, but this time only for those whose salary are RM3,000.00 and below ONLY!

My good friend's salary has exceeded the RM3,000.00 range over the years, but he is not entitled to the shopping voucher.

He could not understand why the company would only give the voucher to those earning RM3K and below? In fact, he told me many employees earning more the RM3K were feeling unhappy and frustrated the company is only "helping" a certain "group" of employees.

There were some jokes around that the company sees those earning RM3K and above as OK and those earning below as needing help.

I feel very sorry for my good friend. I have to say that it is a matter of wrong timing on both occasions! 

Mercury's Diversification into Construction

Mercury's Diversification

into Construction

One of the most important reasons why I invested in a particular company is its main focus on one single simple business that stays profitable from time to time.

Because their main attention is focused on one  business, they tend to become "master" of that trade. The management team are most probably experts or specialists in that field and would not be able to understand another kind of different business so easily as their first one.

But when a company with a main focus business suddenly announced that it is going to venture or diversify its business base with another different business, it raises interest amongst its investors.

One company that recently announced that it is diversifying its business base is Mercury Industries Berhad, the 2nd largest car paint maker in Malaysia. Mercury is going into construction business.

This announcement caught me by surprise as I did not anticipate that Mercury would diversify. I have always thought that Mercury would remain focus on its main car paint business.

I guess I am wrong about this. Nevertheless, as I have been someone who had challenged/invited/asked readers to dare to join me in the journey with Mercury in my previous blogs, I am most obliged to express my personal opinion about this new business Mercury is going to acquire.

After all, some of my friends and followers and possible readers who bought Mercury shares after reading my blogs  would surely like to know the "leader" i.e. me - what is my views on this.

First, I must acknowledge that diversification into other new business carries an element of risks. Not all companies are successful with new  acquired business. Some suffered losses and eventually have to let go of the business at a song price.

But some companies' diversification paid off after a period of times. These companies report higher profits with this new acquisition business and the reward is as usual ... higher share price and higher dividends.

One example is Tek Seng Holdings Berhad. When it ventured into solar business, hardly anyone took notice of it. In fact, the solar business was initially bleeding into its account. Its share price was trading below 30 sen at that time.

But over the next few years as the solar business was gaining momentum, Tek Seng's shares attracted attention and the share price even triple although the solar division is still at the break-even point.

Another company, TSM Global Berhad diversified in the die-casting and precision machining of parts for the hard-disk drive (HDD) industry. What happened? TSM suffered millions of losses. The hard-disk business was finally sold at a "pasar malam cheap sale" price.

Today TSM Global remains back to its main business, i.e. making automotive wiring harnesses, high-tension ignition cables and PVC wires and cables.

For your information, TSM Global was taken privatized a few years back.

Back to Mercury, only time will be the final judge of the days. At the moment, I am still holding on to my Mercury shares.

Employees Provident Fund (EPF) vs Unit Trust

From time to time, I have been asked about investment in unit trust especially those using their EPF fund. Many times I have politely refused to express my views because I did not follow the unit trust performance closely as there are so many categories of funds investing in various  different industries.

So I am not in a position to express my views. But what I can say is when one withdraws fund from EPF to invest in unit trust, there is the cost factor which means that after deducting the cost factor, the principle would be left only with around 95 - 97% for investment.

This also means that the fund must be able to generate a return of at least 10% the following year to make a return of 5 - 7% after deducting the cost factor.  How many fund can do that? And how many fund can CONSISTENTLY produce a return of 8 - 10% for several more years to come?

On the other hand, EPF has been delivering much improve rate of returns for contributors especially the last five years. The last five years' return are 5.8, 6, 6.15, 6.35 and 6.75% (for year 2010, 2011, 2012, 2013 and 2014 respectively) is rather quiet impressive.

The average returns of last five  is 6.21%. If a unit trust fund is able to generate even a 6% return CONSISTENTLY for several years, then it is a good fund to invest.

Unfortunately, I believe not many fund can do that. If you scout around, you would find that most of the fund would struggle to even achieve near it.

But that also doesn't mean I did not invest in unit trust fund. I have been regularly investing since 1997 using my EPF and (some cash from time to time). I also invested some money in Private Retirement Fund since two year ago.

My objective is to diversify my investment basket rather than all in Bursa Malaysia.

Buying more shares of Focus Lumber Berhad

Since my first investment in Focus Lumber Berhad, the share price surprisingly went up to a new high of RM1.64, and that started on a downtrend basis to a low of RM1.37 before rebounding to the current price of RM1.44.

There were two more purchase of Focus Lumber on two different dates. I called it "programme buying to average out the share price over a particular period of time. I prefer this method rather than buying massively at one particular price so that I would not be caught should market suddenly turns bearish.

I bought 12,000 shares of Focus Lumber at RM1.56 on Apr 23 and again 9,000 shares at RM1.43 on Apr 28.

Recently I received the annual report of 2014 and after going through, I compared the top 30 largest shareholders' holdings and discovered that they had reduced their total holdings to 77.26% or 79,714,916 shares.

Compared to 2013's top 30 largest share holdings of 91.47% or 94,382,400 shares means that there are now more free shares available in the open market, to be around 24,095,000 shares.

No wonder the share prices slide down after touching a high of RM1.64 on April? Is it a case of bad timing for me when I started my accumulation of Focus Lumber shares?

Nevertheless by the time you are reading this blog, the results might have been released and depending on how it earns, this will have a strong bearing on its share price.

I only hope I am right one more time.