Eyeing more export-oriented stocks

Eyeing more

export-oriented

stocks

Once the flavour boys of last year's market rally, export-oriented stocks since late January this year has been bashed again and again for weeks after weeks due to one simple reason : the strengthening ringgit vs USD.

The ringgit has appreciated to the RM4 level from RM4.40 plus range this year. As such, oriented-export stocks are perceived to be affected as their  main bulk  of profits are denominated in USD.

Investors are bracing for lower profits this year from all these export-oriented stocks and have been selling very aggressively regardless of whether the companies concerned are of good quality ones.

Several good fundamental companies have seen their share price peaked as early as January only to plummet down by as much as 30%. An example is Supermax Corporation Berhad which peaked at RM3.56 on Jan 7 and plunged down to the current price of RM2.55 on Mar 30. It is a plunge of as much as 28 %. I was lucky enough to sell off at RM3.52 in January during near its peak.

Another of my favourites Focus Lumber Berhad has seen its share price peaked at its all time high on Jan 11 at RM3.09. In fact, I was on the screen witnessing the buy and sell bids on that day. I just did not do anything and I believed you know what I am talking about. It is a decision I am living to regret with it today as its share price has been hammered down like nobody's business. It closed at RM2.12 on Mar 30, down by as much as

32 %.

As I have shared before, sometimes not taking big profits can be a huge mistake when market sentiment changes. At times taking profits too early can also be not such a wise one as one sees its share price continues to rise further.

Apart from selling Supermax, I did sell off five "unlisted shares" during the month of January. All those were bought years back and resulted in good profits. One reason I sold was to position myself with cash to pick those badly beaten down export-oriented stocks especially those cash-rich, paying good dividends and getting on seriously with their business and managed by competent management.

One such stock is Chin Well Holdings Berhad which I managed to purchase at RM1.69 on Mar or Feb 15. Note that Chin Well's share price reached a peak on Jan 7 at RM2.34. My purchase price of RM1.69 means it has dropped by as much as 27%. Furthermore, its 52-week low is at RM1.30 which means my purchase price is just 39 sen above it and 65 sen from its peak price. I would call it some margin of safety though one can never be sure of what can happen to the stock's future price.

The Ringgit vs USD issue has a lot to do with the investors' perception on export-oriented stocks. Will the Ringgit claws back its way to the RM3.60-RM3.80 range in the next one year or two or will the Ringgit remains traded at the range of RM4 plus minus? I do not have any idea although according to RAM Ratings, oils are likely to trade at average of USD40 in 2016 and USD45 in 2017.

If this is the case, then the Ringgit is likely to remain subdued at RM4.00 plus range for the next two years. Will then export-oriented stocks capitalize on this for the next two years?

One must note that investors should not put too much emphasis on the Ringgit vs USD factors when it comes to investing in export-oriented stocks. Rather I seriously think we should look into their business and fundamental levels.

Many export-oriented stocks had a great year in 2015. Several had recorded big bumper profits and their cash hoards have increased tremendously. Several have become richer than before and hence in a stronger position than ever before.

It is of my very personal view that those heavily beaten down export-oriented stocks are worth to invest especially those paying good dividends ones.

Chin Well won't be the first and last of export-oriented stock for me. I have eyes on several ones. But I prefer to use a staggered-buying basis meaning I will be buying from time to time to average out my investment.

A comment from ck on March 19, 2016

What do you think of IQ Bhd and Prolexus ?

Reply

Unfortunately, I do not know much or what to think of IQ Berhad or Prolexus stocks.

There are over 1000 numbers of stocks and I don't think it is possible for anyone to know well such a high numbers of companies. I will only study certain particular stocks once I am interested. Otherwise I will just skip even any reports of any companies.

Perhaps there are some others bloggers familiar with these two companies who might be keen to share.

When two great Shifus clash

When two great Shifus clash

The title Shifu is not simply accorded to any Tom, Dick or Harry or similarly to any Mary, Susie or Jane. The person being accorded with this title must have attained an expertise or a skills or even talent that have earned the respect of many. One does not simply become a Shifu instantly. Many times it comes with countless of failures to propel the person to rise and strive further ahead in what the person wants to excel.

On Bursa Malaysia, investors should be grateful that there are several great Shifus with vast knowledge and experience in investing the stock market. Most of them are kind enough to share of their ideas and thoughts through the media social online.

I admit I personally have great respect and admirations for many of them.  The way they went to great lengths to share their deep thoughts, ideas, analysis of stocks actually amaze a humble man-in-the-street like yours truly deeply.

Without all these great Shifus willing to share their expertise, where would most of us have the opportunities to access all these valuables informations of companies?

Yes, there are the weekly The Edge, Focus Malaysia and the monthly Smart Investors magazines available and a few subscription-based online website. But all these require money as these companies are run based on profit-based.

But what we read from all these great Shifus are free and we should seriously say a word of thank you to them.

Each Shifu has his own methods of investing which he is comfortable with.  As investors, we should try to understand their ways of teachings and do our homework to see if the methods are applicable to us or not. Not all methods are applicable to everyone. In short, there is no such thing as A Shoe that fits all sizes.

Since last year, two of Bursa Malaysia's great Shifus seem to have a clash against each others about their ways of investing using share margin account. Of course, in case you are not familiar with what I am talking, I am referring to our highly respected senior Koon Yew Yin and the equally respected gentleman, Kcchongnz.

Both must be the most highly respected Shifus. Both have posted impeccable track records of winnings big in Bursa Malaysia. Both are very highly experienced investors with vastly different ways of analysing stocks.

My article here is not to say which side is right or not. Similarly I am also not here to enjoin readers to take camp either. Rather I am puzzled that in the first place, why this "clash" started in the first place?

It would not occur if either side has just strictly adhere to their own views/sharing rather than taking a swipe at someone's else published comment?

Interesting when one takes a swipe at it, the offended launch a counter-strike again and it becomes a game of "you-striked-me & I-striked-you back harder game".

How long will this clash of views/ideas/methods end? I do not think it will end soon. Sometimes I feel this clashes are similar to politics bickering which might confused many naive investors especially those inexperienced ones.

My personal views are as investors, we should be ready to be exposed to different types of investing methods by all those great Shifus. But we need to evaluate which one is applicable and which one in not and use it to help  us to make better investing decisions that ultimately resulting in more profitable trades!

Buying 4,000 shares of

Chin Well Holdings Berhad

at RM1.69 on March 15, 2016

Chin Well is engaged in the manufacture and trade of fastening and wire products. It is believed to have a worldwide market share of 3%. It has a new high growth product lines : gate wires and gabion which is possibly a beneficiary of new train routes in South East Asia.

According to one blogger, Chin Well has a lot of loyal customers including some even up to nearly 30 years of business relationship. Wow, this is amazing because it is not easy to forge a business relationship of such long periods considering competitors here and there are trying to prise away customers with attractive prices and new products.

What I also particularly like about Chin Well is its net cash position of 23 sen per share. It is still in a net cash position of RM71 Million plus. Chin Well also has a 40% Dividend Policy which is quiet an attractive dividend stock.

Chin Well is one of the group of so-called export-oriented stocks that was surging to new 52-week's high of RM2.34 during the rally of the export-oriented stocks. In line with poor market sentiment towards the strengthening of the Ringgit to RM4.10 plus against the USD, panic investors dumped many of those stocks like no body's business. I was actually keeping an eye on several of those oriented-export stocks. Many of them are just doing fine with their business with good cash flow and paying good dividends.

Chin Well was actually one such stock in my buying radar range when the appreciation of the USD against the Ringgit started since last year. It was a blessing that I have managed to patiently wait until recently when the sharp sell down allowed me to pick up the shares.

Chin Well has done extremely well in the first two Qtrs for Financial Year 2016 ended June. Its first two Qtrs of 6.07 sen and 6.23 sen are almost 90% of its whole earning of 14.69 sen for Financial Year 2015 ended June.

A similar repeat earnings of its two Qtrs for Qtr 3 and 4 could mean an earnings of 24 sen which will be 64% higher.

Besides, investors buying now will be rewarded with a 4 sen interim dividend (corresponding period was only 2 sen) which will be going ex-date on April 1st, 2016.