When the drum stops beating for Keck Seng

 

When the drum stops beating

for Keck Seng

Towards the beginning of Sep 2, 2013, the beating sound of the drum was getting louder and louder for the shareholders of "then" hot stock Keck Seng (M) Bhd. The much eagerly awaited news of a bumper dividend of 95sen plus minus was like a powerful tsunami wave for investors to chase madly for the shares.

Keck Seng's share price of RM5.37 on Sep 2 shot up to a peak of RM7.97 on Nov 4. A rise of  RM2.60 or a whopping 48.4% gain in just a matter of two months showed how powerful those tsunami waves were! Nothing was going to stand in its way.

It was abnormal not to see Keck Seng in the top ten gainers' list during those period. If one has been reading the online comments in the i3investor.com blogspot, one would have felt the thunderous drumming sound from all those bullish investors. Nothing was going to stop Keck Seng from scaling another new Mount Everest again! The non-stop online comments from one Superdaddy was something like endless great wars going on and on the verge of a big victory after another! You should have read them. Creativity was at its best!

Alas, all good things must come to an end (or shall we say just a temporary end?), the share price declined gradually all the way from that peak price to the current price of RM6.94 at the time of posting on Dec 20. At one stage, Keck Seng fell down to as low as RM6.65 on Dec 17.

Even after the release of its 3rd Qtr results on Nov 27, which was an impressive one did not help to stop the sliding share price. Keck Seng reported an eps of 11.82sen which was 6.53sen more than the corresponding period. Similarly, its total 9 months' eps was 30.85sen which was 14.28sen more than the corresponding period. Cash and cash equivalents stood at a high RM936 Million.

Still time for bumper dividends payout?

So what will happen to this much anticipated bumper dividend? Is there still time for the management to declare it? I really don't know because I am just an ordinary layman like most of you. I really don't know much about the Bursa Malaysia's regulations regarding what will happens to its cash hoard should Keck Seng decides not to declare the dividend payout.

What will happen to the cash hoard then? I read from the online comments that the Inland Revenue Department will benefit from it should Keck Seng does not declare the dividend? I am at a total loss. Perhaps someone familiar with those regulations will share with me and others. I am more than 100% sure that there are many Keck Seng shareholders waiting very anxious to know about this situation.

Should there be a confirmed answer from the management of Keck Seng that there would not be no bumper dividend payout, it is a sure bet that there would be a lot of unpleasant comments for the "kiam siap" directors of Keck Seng. Yes, I have seen them all. Some of the comments were so extremely critical that I would not dare to reprint them here. You need to go to some of the online websites and have a jolly good time reading them.

Personally as a long time shareholder (on behalf of my spouse) of Keck Seng since Nov 2, 1999,  I must admit that I only have good praises for the directors. They have been very cautious (or perhaps too over cautious) in managing the company. They did not simply expand the business or acquire other companies hastily.  Several years back, I remembered reading the usual statement in one of the annual reports that the company was always looking for opportunities to scout for business expansion when the time is ripe. Guess it did not happen until today.

Good in securities investments

But Keck Seng is good in securities investments. See how much they generated from their investment in Parkway shares for a profit of RM260 million just a few years back. How many company can do that? Did any shareholder give the management a good pat for it?

Is the management of Keck Seng "kiam siap?"

(Stingy in Chinese Hokkien dialect)

Since the first year I invested in this company, I have never fail to receive an average of 10sen plus dividend per 1000 shares until today. Even after the post bonus of one for two, the dividend was still 10sen plus for every 1000 shares. Again, how many company has been able to maintain this kind of consistent dividend payment for more than a decade? Remember that there were also major crisis happening during that time. The ability to pay consistent dividends must be due to the cautious management to ensure the company remained profitable all the time. Yes, profitable all those years. I can't recall any single year that Keck Seng reported a loss since my first day of investing in it.

Share price rising several folds

Early birds "investors" would have been very pleased to see their investment in any company increasing several folds. The management must be doing something very right to be able to see the share price rising so massively by the chasing investors all these years. Ask yourself, how many company that you have invested in the last ten years and hold until today is able to generated this kind of returns for you?

Meantime, for those who bought the shares at its peak and near peak and now must be suffering some small or large paper loss  (depending on how much you bought), they can only hope for the best. Definitely I don think they have the strength to beat the drum anymore.

What about those who bought it around RM7 or below? (Mind you, my spouse still owned 1,500 shares bought more than a decade ago). I believe they are equally disappointed with the absence of that bumper dividend payout. But at least, they are still sitting on some paper gain.

So it looked like no bumper dividends after all as time is running out, but surely those late comers are experiencing a bumper shock to see the declining share price. Although Christmas is just days away, it looks like Santa Claus is not going to say "Ho Ho Ho" to the shareholders of Keck Seng afterall.

Could you let us know what are the stocks

you still holding?

That was this question from alwayswin111 who posted this on Dec 11, 2013.

There is also another popular question we all like to know. For example, if we know of a famous fund manager of a top performing unit trust fund, I am again 100% sure we all like to know what stocks he is buying and holding.

Again, if our "guru" Mr Tan Teng Boo is to tell you that of his personal holdings of stocks, that would also interest you.

Actually all stocks investors should be keeping some shares  (due to whatever reasons) from time to time. Maybe some would keep them for decades, some for few years, some for just some time, some would sell them for a small or big profit depending on situation and some would sell even at a loss when fear become too fearful for them.

Some were forced to become long term shareholders especially those who has bought Keck Seng at more than RM7. Another stock, Daiman Development Berhad must have attracted a big number of new long term investors recently. Regular readers would have read about it in The Edge Weekly, on Issue No. 990 dated Nov 25 - Dec 1 2013. There was this article titled: Daiman - A stock for your children. (Incidentally, I have been keeping shares of Daiman since 2004!).

Personally whatever stocks one holds (for how long that doesn't matter), it is actuallyt the  difference of the entry price and the current price right now. Any stock that shows a POSITIVE return is already a winner. And it is actually the good winners that we want to keep for as long as possible.

Some of my holdings are nearly ten years ago. A few of them are actually FREE because of the total amount of dividends received being more than the original capital sum invested. I only wish at that time, I had bought more instead of just 1000 or 2000 shares. (See, human is always very greedy). It is only during the last few years that I started to buy more quantities in one stock rather than just 1000 shares.

So dear alwayswin111,

From time to time, I will be sharing those stocks that I have been holding for the last ten years.  But I can tell you that most of my stocks are cash-rich companies that pay reasonable good dividends. But I also have a few (luckily few counters and in small quantities only) rotten shares. That I will also be sharing in my future blogs.

For those who have been reading my blog all this while, I say "thank you" to you very much. I really hope you find my blog entertaining and useful and fruitful when it comes to investing. I look forward to share with you more interesting articles in my future blogs in 2014.

Have a very wonderful Merry Christmas

and let us all cheer to a very Happy New Year 2014!

Any good stock to buy?

Any good stock to buy?

The most common question usually being asked amongst retailers when they meet with others "kaki" retailers or someone from the stock broking firms is always this simple one: Any good stock to buy?

After all, we ask with some hope that perhaps that person may be able to provide us with the next mini Nestle or Public Bank stocks. Honestly if one is to ask this question to our Malaysian's stock "guru" of Capital Dynamics Asset Management Sdn Bhd Managing Director, Tan Teng Boo, and if  Tan is kind enough to say this to you, "Buy Company ABC". Chances are you will go and buy this stock called Company ABC.

Why? Because the reputation of Mr Tan Teng Boo is awesome enough to convince us to act based on his recommendation.

But if someone is to ask Kassim this question, I am sorry to say I have none. Why? In my many years of trading experience, I have always been asked this question from time to time by many of my close and good friends. And based on my feedbacks from them, only about less than 10% actually took some actions to purchase based on my sharing of ideas in investing (I wouldn't say it as a recommendation from me).

Followers with different thoughts

Even then, this less than 10% group of followers (I think "followers"  sound a better word) also consisted of several different kinds of followers with different thoughts. There was this lady follower who followed me, but she would wait until the recommended share's price has dropped to below my buying price. She reckoned that if she is able to buy lower than me, she is already safer in the first place! True enough, many times I bought some shares, the price will move down below my original price giving her a golden opportunity to buy at lower price!

Then there was this young male follower who would also try to use this practise. At least that was his theory. But in practise, it was the other way round! Several years back when TSM Global Berhad's shares price was at its peak (at that time) at RM2.15 plus, I was just starting to invest in it. I shared with him about my investment in TSM. But he said he could wait and would monitor the share price first and only start to buy at the RM2.00 levels. TSM fell down to RM1.95 and I continued to buy more.

But this follower did not buy at RM2.00 levels or below. He set a new buying target, that was RM1.80. Guess what? TSM recovered and went on to reach a new high of RM4.00. Did my friend buy any TSM shares? He did! He bought at the RM2.60 levels!

See, he would dare to buy at higher price, but would not dare to buy when it was trading at lower price. Well, to end this TSM issues, both of us sold at just above RM3.10 levels. We had a good laugh together when we talk about this. I am sure he would be grinning a smile when he reads this. Because he knows who I am referring to.

Another good follower who is an Indian who was retiring at that time came to see me. He said he has some spare cash (about RM10,000 plus) to invest. He asked if I could recommend him one counter which is not in debt, cash rich, pays dividends and in a steady business. I showed the sms message which my remisier sent to me. The details of the sms message was the numbers of TSM shares I bought and the amount due.

Isn't this proof enough to him that I wasn't just recommending to him any "Tom, Dick or Harry "stock? I was recommending him to this TSM Global shares which I had just committed ahead by investing a handful lots. Again, I shared with him that I would not recommend him any stock that I was not a shareholder of it.

I had to be in the firing line first! No question about it. Years later when we caught up again, I asked him if he had invested in TSM shares. The answer was no. The reasons for not investing in TSM were countless. I did not bother to ask also. But he was shocked when I told him that I sold off the shares for a five figure profits after holding the stock for more than a year. (Well, hopefully, I will be able to write about my lucky investment in TSM Global Berhad in my future blog. I am still "bitter" that TSM Global Bhd had agreed to the proposed takeover offer for its shares at RM1.25 a share from West River Capital Sdn Bhd (WRC) and the joint offerors, which hold a 28.07% stake in 2012).

My blog "Kassimsthoughts.blogspot.com" was set up in the first place with my intention to share about my involvement in the stock market. That is why I prefer to share my views on stocks which I have at least some interest or stakes in it. This way, I would be more committed to share my thoughts and views.

So to Mr Stanley Teo

who posted this to me on Nov 14, 2013.

Thank you so much for enjoying my blog and respect me for walking the talk. As for recommending you some undervalued stocks, I really do not have at the moment others than what I had bought and shared it on my blog.

Buying more shares of "Slow and Steady" Mercury Industries Berhad

Mercury Industries Berhad, as predictably posted a 3rd Qtr results that was very much expected recently. Mercury announced an earnings per share of 4.08sen which was 30% higher than the corresponding period of 2012. Latest cumulatively period of nine months is 12.4sen which is 5.7% higher than the corresponding period.  

Once again in an annualised basis, the earnings per share would be 16.5sen for financial year 2013. Based on the last three years' dividend record of 8sen each year, a 8sen dividend for 2013 (dividend announcement usually is on May) seems a highly probably happening.

I am also most aware that a stock with predictably boring earnings would not appear attractive to those seeking quick and fast gains or with high earnings growth story. Stock such as Mercury would perhaps be termed as another type of investment such as a "unit trust stock". We all know that when we invest in unit trust, we do not see our investment grow immediately. Only in the later years are we able to see the difference similar to investing in unit trust.

That is why I am very comfortable with my investment in Mercury. On one hand, there is the 8sen dividend per share to look forward  to (which I believe is payable some six to seven months away only) and yet the company is able to save another 8sen in its growing kitty.

As such, I have decided to increase my investment in Mercury by buying more shares. The writer bought an additional 5,000 shares at RM1.25 on Dec 3, 2013, thus bringing his total investment to 31,500 shares. That was the only 5,000 shares traded on that day.

The closing price of Mercury was at RM1.27 on Dec 11. The price was just 2sen higher than my latest additional purchase price. As a matter of fact, the price was traded at  between RM1.20 to RM1.27 prior to the closing date on Dec 11, proving once again that what ever price I bought, there is always the very high probability of the price going lower at a later stage. But as I have always share, you need to be brave to invest more when your conviction told you so.

So once again, Kassim is walking the talk.

Mr Stanley Teo, would you dare to join me?

Ajinomoto (M) Berhad

Dear Mr Sim who asked if I have any comment for this stock?

A kind Mr CMH replied : Cash rich share

By the time this blog go for posting, Ajinomoto's share has risen to a 52-week high of  RM5.15 from a 52-week low of RM4.16. Ajinomoto closed at RM5.02 on Dec 11. Good for you Sim if you have bought it earlier.

Apollo vs Hup Seng

Apollo vs Hup Seng

I must confess I loved this One Good “Seng” stock called Hup Seng Industries Berhad. Otherwise, it would not have been the number one stock I chose to feature in my maiden blog on July 21st 2013.

Every time I enter the supermarket or hypermarket with my spouse for shopping, my eyes will surely look out for the Hup Seng biscuit counter and observe the passing shoppers’ reaction when they are near the Hup Seng biscuit counter. Normally, there must be some shoppers picking up one or two packages of the biscuit!

The cream cracker biscuit (Hokkien people called it “kiam piah”  or salty biscuit) is a very big business fiercely fought amongst by the several biscuit companies in Malaysia. If you want to know how competitive it is, I can tell you that at the biscuit counter at one big hyper market in Penang, a potential cream cracker customer would be confronted by a big list of eye-cathing brands, i.e. Jacobs, Hwa Tai, Munchy’s, Tiger, Julie’s, Lee Biscuits and the hyper-market’s own-in-house brand.

Indeed it is remarkable for Hup Seng to do so well consistently during the last several years when one sees the very stiff competition the cream cracker biscuit business is.

On November 21st 2013, Hup Seng announced a Proposed Share Split and a Proposed Bonus Issue at a later date to be determined. This cash rich biscuit maker can afford to do so. The announcement has a big immediate impact on its share price the very next day. Investors chased after the stock after the opening bell on November 22nd and sent its share price to an all time record high of RM6.40 before profit taking set in to allow the stock to close at RM6.18.

Seriously, the writer was pleasantly surprised by this aggressive surging share price. After all, do you think honestly that a Proposed Share Split and a Proposed Bonus Issue really make a difference? I really don’t know. Maybe the investors know better than I do.

Well, Hup Seng isn’t the only consumer stock to enjoy the share price rally. Another quiet consumer counter, Apollo Food Holdings Berhad has also seen its sharing price rallying to new and newer highs every few days.

Regular readers would have noticed that Apollo was featured in my blog on October 7th 2013. At that time, the price was at RM4.80. Since then, it has appreciated by almost 15% to RM5.50 at the time of writing on November 27th.

Both these counters’ rally prompted the writer to make if possible a fair way of  comparing Apollo with Hup Seng. Can we really compare them? Apollo is obviously the King of layer cakes maker in Malaysia apart from its waffles and swiss rolls whereas Hup Seng is more famous for its delicious cream cracker.

If you want to know how popular the products of Apollo are, take a stroll to the supermarket/hyper-market to observe and you will find that Apollo’s products command a very big and premium space on the shelf compared to its competitors Oriental Food Industries from Melaka and London Biscuits Berhad.

Comparison of Apollo with Hup Seng

Anyway, I will try to make some comparison (although there will be readers who will not agree with me totally) in my personal opinion. There are four areas which I think is fair to be used.

Earning Per Share (EPS)

Apollo earned 40sen for its financial year April 2013 while Hup Seng earned 30sen for its financial year December 2012. If one is to use their latest quarterly eps, then Apollo’s current 1st quarter is 13sen while Hup Seng currently is 22sen, up to its latest 3rd quarter. On an annualised basis, Apollo’s eps would be 50sen plus compared to Hup Seng’s eps of 30sen.

Shall we say round one to Apollo?

Price Earning Ratio (PE)

Hup Seng is trading at around the RM6 level and with eps of 30sen, the PE is a high of 20. On the other hand, Apollo is trading at RM5.50 plus level and with eps of 40sen, the PE is only 14. If one is to use the Apollo’s 1st Qtr eps as a guide, the eps would be a conservative 50sen plus level and that would even lower its PE to only 11!

Round Two to Apollo again!

Cash Per Share

It would be more appropriate to use their latest quarterly results to calculate their current cash holdings and then divided by the number of shares issued.

As at July 31st 2013, being the latest 1st Qtr for financial year ended April 2014, Apollo holds cash of RM72 Million. (Trade and other receivables is RM38 Million while trade and other payables is only RM6.6 Million). Divided by its number of 80,000 shares issued and each Apollo share is backed by a cash per share of RM900.00.

As at September 30th 2013, being the latest 3rd Qtr for financial year ended December 2013, Hup Seng holds cash of RM85 Million. (Trade and other receivables is RM35 Million while trade and other payables is also RM35 Million). Divided by its number of 120,000 shares issued and each Apollo share is backed by a cash per share of RM700.00.

So from the above, while Hup Seng has more cash than Apollo, but it is the individual shareholder of Apollo who will receive more in the event both companies decided to pay out all their cash to shareholders (This is an unlikely event, though).

Can we agree that round three also goes to Apollo?

Dividends

Hup Seng paid a dividend of 30sen for its financial year December 2012. Apollo is paying 25sen dividend for its financial year April 2013. Hup Seng is paying 5sen more than Apollo.

So for dividends, my point goes to the cream cracker

biscuit maker, Hup Seng.

The final score is Apollo 3 Hup Seng 1

Perhaps if there are any readers who may feel it is not fair for me to compare the two companies in these ways, you are invited to email me back with your views and to be shared with other readers as well. I am very sure you guys out there will have your own ways of comparisons. Maybe even better than Kassim. Don’t keep it to yourself. Learn to be generous to share with others. The more we can share, the more we all can learn from each other.

Saying Goodbye to One Good “Seng”

Saying goodbye is sometimes very difficult, especially when our loved ones are going to overseas for a long period of time. But when it comes to investing in stocks, one must also not be too emotionally attached to have any sentimental feelings for a particular stock.

But I know I thing for sure, that is one must be brave enough to take profits at a certain time of their investment especially when the profits to be realised is more than 200%!

The writer said  goodbye to Hup Seng on November 22nd 2013 by selling his 3,000 shares at RM6.11. After deducting all the necessary charges, the net proceeds is RM18,195.52. Minus the original investment cost of RM5,717.71 gives a profit of RM12,477.81 and added in  total dividends of RM2,310.00 received, the total net profit is RM14,787.81. This is a return of over 250% for an investment period of 35 months!

Would you take this kind of profit if you were in my shoes?

The Three Wishes for Uchi

The Three Wishes for Uchi

There are quite a few old folk tales out there that feature "The Three Wishes". One of this is a story about three wishes with really bad consequences. It  is from One Thousand and One Nights (a.k.a. Arabian Nights), a very famous collection of stories from the Middle East and South Asia.

In the story in One Thousand and One Nights, a man is granted three wishes. His wife urges him to wish for a bigger, um, you know (the translation we read rather hysterically calls this bit the male anatomy a "prickle" and a "yard"). It's a disaster and his wife is horrified, so the man wishes it smaller, but then it totally disappears. His final wish is used to put things back the way they were before he ever made a wish. Ha, ha.

Other folk tales feature this basic formula: two foolish wishes are made and the third wish is used to bring things back to the way they were.

So, what has "The Three Wishes" got to do with Penang-based company Uchi Technologies Bhd?

Well, shareholders of Uchi must be wishing too that "The Three Wishes" will come true for this high-dividend paying company.

Uchi Technologies Bhd.

Uchi Technologies Bhd. is one real generous stock that really paid good dividends to its shareholders during the last many years. Although its policy is to pay out at least 70% of its profit after tax, there were usually many years when its dividends was almost 100% or even exceeded more than 100%.

The last three years saw Uchi paying out dividends of 12 sen per share for each financial year. Shareholders who bought the shares especially the last three years must be very happy with the slow and steady share price from RM1.10 plus to its current share price of RM1.40 plus.

The business of Uchi is designing and making electronic control modules for coffee machines and precision weighing machines. Europe is its main focus and its revenue from the European continental is almost 96%.

Now, here are The Three Wishes for Uchi

What will propel Uchi's share price to move higher from its current price? As a shareholder myself, I have only three wishes for Uchi which I believed will be the catalysts.

Wish No. 1

The weakening ringgit vs the strengthening green backs. As Uchi trades 100% of its business in US dollars, a stronger dollar in currency exchange would translate into higher earnings. This is already happening as the ringgit has been on a weakening mode for several months. As the saying says, the stronger US dollar is either a bane or boon to different companies conducting export and import business. (Wish No. 1 is already happening!)

Wish No. 2

An improving economic environment in Europe. According to a  report from The Edge dated October 14th, 2013, encouraging economic data has been emerging from Europe. The retail sales for August were better than expected and the Markit's composite purchasing manager's index rose to a 27-month high in September. If this momentum continues, it could only means that more of Uchi's products would be sold there! The more, the better! (Wish No. 2 looks very encouraging and hopeful!).

Wish No. 3

Pioneer status of Uchi Optoelectronic Sdn Bhd expired on December 31st, 2012. This means profits generated are now subjected to a corporate tax rate of 25%, which bumped up income tax expenditure to RM3.2 million in the second quarter  ended June 30th, 2013 from RM200,000 a year ago.

Uchi is still waiting for a reply  from the authorities for its application submitted in September last year  for pioneer status for its new products. Note that companies with pioneer status enjoy different degrees of tax exemption for a minimum of five years. (Wish No. 3 is still pending from the authorities).

Recently, Public Investment Bank valued Uchi at RM1.34 a share based on a price-earning multiple of 13 times on the group's Financial Year 2014 earning per share. Somehow, the market do seem to agree with this. The price is now at RM1.46 at the time of writing.

Like all beautiful ending in fairy tale's story, the writer is hoping that the three wishes would eventually come true in the end for all Uchi shareholders. And that would mean bumper good dividends again! Watch out for the first two weeks of December 2013, that is the time Uchi will announce its first interim dividend and also normally payable by the end of the same month, i.e. December 2013.

One Good "Seng" continues to do well

One Good 'Seng" of Bursa Malaysia was my first posting featuring low-profile and high-paying dividend stock Hup Seng Industries Berhad on July 21st 2013.

At that time of posting, Hup Seng was trading at around RM4.30. Its share price closed at RM5.20 on November 14th 2013 at the time of writing, giving investor a gain of over 20% from its RM4.30 level (when you included the interim dividend of 15 sen paid on October 24th 2013).

Hup Seng's share price continues to do well. Why? Its recently 3rd Quarterly report showed its total nine months earning per share is 22.83 sen compared to last years' nine months of 20.09 sen, an improvement of 13.6%.

As a debt-free company, its cash and cash equivalents is RM85.5 million as at its 3rd Quarter 2013.

Investors of Hup Seng would be pleased to know that Hup Seng biscuits are being served to patients of Pantai Hospital Penang during meals. I learned about this only when my spouse was admitted for several days due to suspected of food poisoning recently. Kudos to the management of Pantai Hospital Penang for choosing Hup Seng as its biscuit provider. I do not know if other hospitals of the Pantai group in Malaysia are using Hup Seng too. Imagine if they are also using Hup Seng biscuits, definitely it must be a big regular business for Hup Seng.

The writer himself also a shareholder of the company, is confident that Hup Seng will reward shareholders with at least another final dividend of 15 sen most probably on April 2014. If that is the case, then the total dividend for 2013 will be 30 sen and the current price of Hup Seng at RM5.20 would mean its dividend yield is a commendable 5.7%!

Once again, a big applause to the Pantai Hospital Penang for choosing Hup Seng biscuits. The management definitely knows how to choose tasty and quality biscuits for its loyal patients!