PBB - One Truly Great Share in Bursa Malaysia

PBB -  One Truly

Great Share in

Bursa Malaysia

If there is a share that most investors will regret for not buying and keeping it  until today, what share would that be? Yes, this is an interesting question and I am sure many investors would start to scratch their heads and think and think.

After all, there are over one thousands companies in Bursa Malaysia and it is definitely not an easy question for an right or wrong answer from any investor.

But if someone were to pose this name one great share in Bursa Malaysia, my answer must be that solid as a rock banking company, Public Bank Berhad. (PBB). A fifty year old company having listed in 1967 (at that time I was just five years old), PBB today is one of Malaysia's biggest banking giant with business spawning throughout many regions in the world.

Just recently PBB reported its 4th Quarterly Result for Financial Year 2017.  It earned RM1.49bil from revenue of RM5.08bil. For full financial year ended Dec 31, 2016, its revenue broke the RM20bil mark underpinned by continued growth in the net interest income and fee and commission income. Net profit increased to RM5.2bil.

Now I am going to say this. I am very poor in Mathematics or even accounting. But when we are talking about revenue in business, am I right to say that it mean all money collected by the company is considered revenue and then it will be used to offset all operating expenses including tax before we derive to the final net profit figure.

If this is so, then its full year net profit of RM5.2bil is something like a 25% margin from its revenue of RM20.1bil. This is considered a very high margin business. Although I or most of the average Joes will never understand the very complicated of banking accounting, but in a simple layer way of looking at it, the profit margins must be tantalising.

Just imagine if you are a air conditioner seller and your profit margin is 25%. Anyway I am most probably wrong because I shall never understand how banking business or its system is run.

PBB also continues to be profitable year after year despite going through several world crisis that sent many other companies to their knees. Its profits continue to ascend steadily and gradually over the years with their prudent management way of running a typical business.

To many Chinese, they see PBB as being managed properly in a China man style of way that will always be safe to put in their money and secured business dealings like taking car or housing loans.

Many customers particularly the Chinese would feel very comfortable and ease to do their banking needs at any PBB banks. Not because they are racist, but because the working culture is very customers friendly.

I am not saying other banks are not customers friendly. They are, too. But the feeling when you step in a PBB bank is you can feel all the staffs are ready on their toes to attend virtually to your needs most of the times.

I know of one particular PBB branch in Bayan Baru where the newly branch head was seen busily assisting in the front counter apart from the occasional moments she has to approve or sign endless documents.

I didn't realise she was a branch head until a customer service staff introduced her to me. When the head is also on the ground actions, you can imagine the motivation feeling of all those under her striving to do even better.

Back to PBB, the remarkable thing is its share price generated immense wealth for those early enough to invest in it.

According to its 2015 Annual Report, assuming a shareholder of PBB had bought 1,000 shares in 1967 and subscribed for all rights issues to date and not sold any PBB shares, his shares would balloon to 148,938 PBB shares worth RM2.7 million based on the share price at RM18.52 at the end of 2015. Total gross dividends received amounted to RM1 million whilst having a capital outlay of RM235,612, including subscription for all rights issues.

How many companies can generate such kind of gigantic returns all those fifty years? In fact, even those late investors investing in any period from year one right up to 2015 would see their investment remaining positive and receiving regular dividends.

Even at this very moment, PBB closed at RM20.00 on Feb 17, 2017. At RM20, it is trading near its new 52-week high of RM20.28.

Why I did not pick up a single PBB shares since I started investing in 1993 is a mystery to me? How could I have missed out such steady company all these while? How could my radar not pick up PBB at all?

Nevertheless I have decided to add banking share to my Basket of Defensive Stocks portfolio. I don't think I have ever bought any banking stock at all in my lifetime if my memory is still vivid.

Buying 4,000 shares of

Affin Holdings Berhad

on Feb 13, 2017 at RM2.49

Affin is a very small banking company that has a fair yield record of paying dividends. It continues to be stay profitable  for many quarters.  At this purchase price, it is not far from its 52-week high price of RM2.57 done on Feb 17.

Well, for the first time ever, my Basket of Defensive Stocks have seen more stocks in positive territory than negative. At closing time on Feb 17, 2017, there are six positive stocks and four negative stocks. But the more pertinent question is did the portfolios makes any return at this stage so far?

Well, I am glad to report that the answer is YES, albeit a mere profit of RM1,140.00.