My Bet on Integrax was Spot On!

My Bet on Integrax

was Spot On!

One of the most important traits in investing is to have that ability to be early enough to spot on potential undiscovered good stocks trading at very undemanding value.

Should one has that ability and spotted one, one should have the courage to buy some shares in that company and patiently wait for the time to come.

In 2013, I went for a two day one night trip at Pulau Pangkor. I had the opportunity to see the ports at Lumut were having a very busy schedule all day long. Coming home, I did some research and was thrilled to see that the busy ports belonged to Integrax Berhad.

A further "check" revealed that Integrax is in cash rich position and not one single individual or company owned a very substantial stakes in the company, examples 40% or 51% stakes.

In fact, the three major share holders holds  a total collectively 60.67% - 22.81% by Amin Halim Rasip (original founding shareholder), 22.12% by Tenaga Nasional Berhad and 15.74% by Perak Corporation Berhad.

A thought came up to me that if these three major shareholders decided to take Integrax private one day, it would not face much resistance. Perhaps the major resistance would have come from the Integrax's number five top shareholders i.e. TSM Global Berhad holding 12,000 million shares or 3.99%.

Based on that, I bought a handful of Integrax shares at an average price of RM1.85 in 2013.

When I posted the blog : Integrax's Future Potential Kingmaker on January 27, 2014,  at that time, I believed that Tenaga, being a government-linked stock and Perak Corp - also a state agency under the government would have no problem teaming up together and if they can get the support of Amin, would possibly launch a takeover offer for Integrax at any time.

Should that happens, then TSM would be in a Kingmaker's position to support or even ask for a higher offer. But things are not what we expect to be. Instead it was Tenaga alone launching the takeover offer.

Why Tenaga wants Integrax?

It is not difficult to understand why Tenaga wants to own Integrax fully or at least having strong management control, but of course it would be better to fully own it rather than not.

Being the major user of the port and with more coals shipment coming in the future, it makes sense to fully own the port and dictate control. But now it cannot because the other two major shareholders have different plans, directions and social responsibilities for Integrax.

I strongly believe Tenaga has big plans for Integrax once it is fully under its control or privatised. But of course, Tenaga would not be telling us right now. Instead, Tenaga is "supported" by some "stupid" analysts who recommended that at RM2.75, it is a fantastic offer considering that Integrax never traded at the price during the last ten years.

Sorry if I am a little blunt in calling those analysts stupid. Analysts are supposed to be very educated people who graduated with high honours. That is why they are able to analyse this and that and come out with a recommendation. This time, they think the minorities shareholders are easy to misled them in parting with Integrax shares to Tenaga.

Did they think of the future potential business of Integrax or are they talking about the past performance of Integrax only? The present offer price doesn't mean it is fair based on the past performance of Integrax.

Obviously there is a hidden agenda from Tenaga which of course we can only guess this and that only.

Why Amin refused to sell at RM2.75?

Amin Halim Rasip (the original founding shareholder) is someone who knows the enterprising values of Integrax more than anyone else. If not for his statement issued, I sincerely would not have known so much the potential earnings and future business of Integrax.

For example, I did not know that Integrax is one of the few ports in the world with one of the main terminals operating in deep water.

Furthermore, Integrax holds cash as much as RM154 million which translated into cash per share of 50 sen. That means Tenaga is only valuing Integrax at a PE of only 16.5 and not 20.

That also means Tenaga is effectively paying only RM2.25 per share for each Integrax share which is even lower than the pre-offer price!

If Tenaga is sincere enough, Tenaga should offer significantly higher then RM2.75 per share plus the distribution of RM154 million to each shareholder. Then perhaps this might sound a bit tempting. Otherwise, it is not an attractive offer at all.

I am with you, Encik Amin.

It is about time those "Davids" team up with Encik Amin and show it to Tenaga that the offer price is extremely too low! Interestingly, TSM with a 12,000 millions shares are now pondering which sides to take. Years back, my 36,000 shares of TSM was forcefully taken privatised by the company even though I could not be bothered to  go to the stock broking firm to sign the documents to hand over my shares to them. They simply sent me a check.

So what goes around must come around. This time, TSM are in a position  as I was several years back. And this time, ironically, TSM and I owned shares of the same company together!

So to Encik Amin, you have my supports and my followers' as well. I appeal to other minorities to join Encik Amin to challenge Tenaga this time.

Minorities should be brave enough  to show their support. When we have strong support, Tenaga would be forced to make a revised offer which must be attractive enough.

In fact, I am suggesting that first, Tenaga must make a very significant higher revised offer and also the distribution of Integrax's cash hoard of RM154 million to all shareholders!

Hear it, Tenaga Nasional Berhad?

Delloyd Ventures Bhd's privatisation is on!

Delloyd Ventures Bhd (DVB) obtained its shareholders' approval at the extraordinary general meeting held on Jan 15, 2015 for the takeover by major shareholders.

The Selective Capital Reduction will result in entitled shareholders receiving a total capital repayment of RM181.15 million, or RM5.15 per share.

DVB's Managing Director Datuk Seri Tee Boon Kee said that the privatization exercise will be completed by end-March and delisting of DVB from the bourse will take place in April.

Once again, I have lost another battle to keep my shares when it came to a privatisation exercise. Recall that on Aug 19, 2014, I bought 2,000 shares of Delloyd hoping that the privatisation exercise would not be a successful one. Well, it looked like the major minorities' approval were easily obtained at the extraordinary general meeting.

Stocks prices have recovered at the moment

During the last two weeks, I have not been able to purchase any stocks which fit into my requirements' lists.  Some which I have earlier identified have recovered substantially and some in between 52 week high and low.

But I am still monitoring and as such, should an opportunity presents itself, you can bet that I will be making a purchase on it. Stay tune.

Mr Sim on Jan 12, 2015 asked this question:

What do you think about Uchi Tech in these ringgit depreciation?

It give 5.6% of net dividend annually...

Dear Mr Sim,

Uchi Tech will benefit from the stronger dollar's rise as most of its revenue is quoted in the green back.

That is why Uchi Tech is now trading higher its 52 week high. Dividend payout is also attractive. What do you think?

   

Braveheart of Bursa Malaysia

Braveheart of Bursa Malaysia

Braveheart is a 1995 epic historical medieval war drama film directed by and starring Mel Gibson. Gibson portrays William Wallace, a 13th-century Scottish warrior who led the Scots in the First War of Scottish Independence against King Edward I of England.

The story is based on Blind Harry's epic poem The Actes and Deidis of the Illustre and Vallyeant Campioun Schir William Wallace and was adapted for the screen by Randall Wallace. It has been described as one of the most historically inaccurate modern films.

The film was nominated for ten Academy Awards at the 68th Academy Awards and won five: Best Picture, Best Makeup, Best Cinematography, Best Sound Editing, and Best Director.

I really like this movie and must have seen it several times. I like the fighting scenes and I like the bravery shown by William Wallace in inspiring the Scottish people to fight in that final dramatic battle against the superior undefeated English army.

In the current turbulence times at Bursa Malaysia where "red bloods" scenes are almost an every day affair, I am sure there are only few Bravehearts who would dare to pick up cheap fundamental shares to keep for the longer term.

But first, A true story about our own local Bravehearts. In the early part of 2008, my good friend, let us call him Braveheart seeked my advice about his decision to invest a 1,000 shares in Tenaga. At that time, Tenaga was traded at around RM6.50 to RM7.00. I shared with him my opinion but the final decision must come from him.

Braveheart went on to purchase at below RM7.00 and several months later sold at around RM8.50 plus level. Elated with his good profits within several months, he wanted to go for the next more expensive share, Public Bank at around RM9.00 level.

At RM9.00, the share price of Public Bank at that time was considered at its peak's high. But as good coverage and buys initiated by so many research houses were too much to resist at that time, Braveheart was brave enough to go ahead and became a 1,000 shareowners of Malaysia's bluest and most fundamental bank.

Braveheart's timing of purchasing Public Bank shares was just shortly before the beginning of early September 2008 when the US subprime mortage crisis reached a critical stage.

For the next several months and into 2009, the US subprime mortage crisis went on to snowball into the famous Global Financial Crisis of 2008-2009.

The whole world stock market plumented to unprecendental levels. Stock prices kept on falling. Those without fundamental and strong balance sheet and coupled with high debts fell faster than the speed of DC's famous comic hero, Flash.

If you were an investor at that time, you would have that wish that you had never touch the stock market and had contendedly kept your hard earned cash in bank earning paltry interest. At least you could sleep soundly at that time.

Those with strong balance sheet and with fundamental business such as Public Bank was also slowly and gradually declining in share price, day by day. Braveheart was worried by the days and the on-going turmoil that went on for several months affected him physically and mentally.

His daily life was not the same anymore. His daily work was also affected as he could not concentrate properly. Braveheart asked me again if holding on or selling at a loss was a better option. I shared with him my opinion that I would not know the future direction of the stock market, either it goes down or it goes up again.

But Braveheart was worried that his Public Bank share price would keep on declining further, possible from RM7 to RM6 and then to RM5 or keep on going down. If that happened, Braveheart would not be able to stomach such "colossal" loss as that money meant a lot to him. Worse, he would  be highly stressed for as long as that situation persisted.

Eventually, Braveheart decided enough is enough and sold his Public Bank shares at just the RM7 level to another investor (let us called him the New Braveheart).

Well, we shall never know what happened to this New Braveheart who bought this Public Bank share at just RM7. But if this New Braveheart had kept the shares until today, the New Braveheart would have reaped massive profits from his purchase - done at that very turbulence time when all shares were "offered" at a massive bargain by weak investors.

The REWARDS for this New Braveheart is if he had kept the shares until today is something like this ..... Dividends from 2010 until 2014 is a total of RM2560.00. There was a share dividend of 1 for 68 shares in 2010. In June 2014, there was a right issue of 1 for 10 at RM13.80.

The current share price of Public Bank is RM17.50 plus. Yet Public Bank touched a record high of RM21.60 this year.

Today, I am sure my good friend Braveheart must have rued his decision to let go of Public Bank share at times ....when everything seemed gone.

What can we learn

from this above story?

For one, when crisis happens, stock market prices tend to be affected. Weak shareholders would sell in droves after droves. Strong investors who can hold on for a longer time frame will try to bid at lower price. Hence, we see many good companies trading at a huge discount.

It is at this time that those with bravehearts would venture in to buy at bargain prices for some of the most fundamental companies with strong balance sheet and sound management and with a good dividend policy.

We should be the BRAVEHEARTS now with this oil plunging regime offering us opportunities to buy many good stocks trading at near 52-week low.

Only few months back, we would be dreaming to buy those good stocks as there were trading at 52-week high or near that.

As such, I am continuing to purchase more shares that trade near its 52-week low.

Buying 6,000 shares of

Century Logistics Holdings Berhad.

at RM0.64 on Jan 6, 2015.

Century Logistics Holdings Berhad is a Malaysia-based investment holding company. It operates in two divisions: total logistics services and procurement logistics services.

In oil and gas logistics, the Company provides floating storage and transshipment services for international oil trading companies. It also provides procurement logistics services to electrical and electronics customers.

The Company is involved in the supply chain management and ship husbandry for fuel oil traders, including the services for floating storage units (FSU) within the port limits of PTP and Pasir Gudang in Johor.

Century Logistics pays reasonable good dividends, normally an interim followed by a final dividend. Recently it paid out a 2 sen interim dividend on Dec 19, 2014. Let us hope that there will be a usual final dividend when it announces its 4th Qtr results on Feb 2015.

On Sep 23, Century undertook a Bonus Split of 1 : 2 and then a Bonus Issue of 1 : 2. On Oct 2, it closed at RM2.34 and the next day following the adjusted price, closed at 78 sen.

At the height of the oil crisis, it touched a low of 53 sen on Dec 16. So I am not exactly buying at the the 52 week low, but also not near its adjusted high of 78 sen.

Health is richer than Wealth

Health is richer

than Wealth

When we are young, we strive hard to chase after riches or money so as to accumulate enough wealth for our future. As we get older and having accumulated some wealth, we begin to be concerned with our health.

Without good health, what is the point of having vast amount of wealth when one cannot live to enjoy it?

The journey to achieve wealth comes in many ways. Some invested in properties in the early stage of their working lives, some invested in the financial investment world, and some in commodities such as well, gold.

Some climb up the ladder of the corporate world. But I would like to believe that at some point of the journey, many would have invested some amount big or small in equities such as the stock markets.

For those who invested mostly in properties during the last two or three decades, the rewards are immensely huge if one is to use the expensive property price as a gauge today. Investment in property has been quite stable and steady until today.

What about gold? Sometimes back, when gold price was shooting up the roof, and overnight, many new gold investment consultants and gold funds sprouted up everywhere. Many ordinary people joined in the bandwagon to invest in gold fund. We all know what happened. Today all is very quiet when we mention about gold.

Now comes the main menu

of the day, the stock market.

After a good gradual steady rise in share prices from early January till end of September for most counters on Bursa Malaysia, most investors were looking forward happily to a wonderful year end closing with Christmas and New Year celebrations programmes in the list, the unthinkable happened.

Crude oil prices tanked towards the last few months of the year to touch new five years low, no thanks to OPEC's refusal to cut down production in order to maintain price low as to see off the shale oil producers from USA. How long and low will oil price remains in the next several months?

Because of this, share prices of most counters dipped superbly fast to near or new 52 week lows! For mostly individual or retailer like me or you, our paper wealth is depreciating fast by the days.

Should one cuts losses now? Should one takes whatever amount of profits including meagre amount now? Should one stands by and watch and pray for the best? Should one buys now? What should one do now?

Under such immense pressure in this turbulence times, many affected investors are bound to be very stressful. And that stress will not go away as long as share prices keep going down or under pressure from the oil crisis, from time to time.

One day you see the KLCI declining 20 points, up 5 points another day, down 15 points again and down some more. More downsides than even any small upside is the way the KLCI is moving these days.

Stress from the declining share market affects our health in many ways. Some will be moody in their everyday lives, some cannot concentrate on their work anymore, some will even not be able to smile when at home with their family, some will find their wife's delicious dinners no longer delicious any more, some will even cut down on their life style (My meaning is downgrading their lifestyle!)

My purpose of writing this blog this time is to help alleviate those who are feeling this damn stressful moment right now just because of the share market.

Firstly, one has to accept that declining and appreciating share prices is part and parcel of investment the very first moment you decide you want to invest in the stock. If you can't accept this, DO NOT INVEST and keep your money in the bank. You are guaranteed to be able to sleep peacefully and soundly at night.

Secondly, one should always practise asset allocations when it comes to investment. One should only invest with the comfortable amount within one's mean, so that one still has other reserved cash to rely on. If you are able to do so, you are considered a well disciplined investor who knows how to invest within one's comfortable range.

Thirdly, an investor MUST be able to maintain his current standard of lifestyle no matter what happens to his investment. This is extremely important as one's current lifestyle should not be tied up to the volatility swing of share prices.

If you have the above three criterias, then congratulations! You will find that life is indeed wonderful because you will remain healthy and without stress and pressure from your investment.

As I have always shared with my followers and readers that in anything we do, do it with fun and not stress. When the prices go up, we are happy. When the prices go down, we are just a bit "hati-sakit" only. And we continue with our happy daily life.

I hope any investor who are under great stress in the current market crisis will feel much better after reading this post. And you will see market rally and market crashes in a different way instead of the extremely highly stress way.

Buying 3,000 shares of

Supermax Corporation Berhad

at RM1.67 on Dec 16, 2014.

As market continues to trade lower as fear grips investors as long as oil prices remain low and in uncertain direction, many good fundamental companies are being sold down at the slightest of bad news.

The share price of Supermax hits a 52-week low at RM1.58 on Dec 15 following news of the boss CEO Datuk Seri Stanley Thai was being charged for insider trading related to APL Industries Berhad (APLI). Supermax's 52-week high was RM3.08.

Datuk Seri Stanley Thai, claimed trial to communicating insider information to remisier Tiong Kiong Choon, 54, that was expected to have a material effect on the price and value of APLI.

Bad news will always send shivers down on weak investors who will just throw down their shares at whatever price they can salvage. It is because of such opportunity that brave investors come in to buy at depressed prices.

As my purchased price of RM1.67 is not at 52-week low, but near that low when you considered its 52-week high of RM3.08, my risk has already been heavily discounted.

And I also know that Supermax is a leading international manufacturer, distributor and marketer of high quality medical gloves.

In case I do not have time to post another blog before the year end, I take this opportunity in advance to thank you - my readers and my followers for taking time to read my blogs.

As promised in my last blog that I would be posting my contract note for buying Thong Guan shares, here it is at the bottom. 

I sincerely wish you a Merry Christmas and Happy New Year 2015!

Life is great and wonderful as long as one stays healthy!

OPEC vs USA in Oil Crisis

OPEC vs USA in Oil Crisis

The recent sharp decline in oil prices has a devastating effect on Bursa Malaysia. Many, many stocks are now staring at 52-week low or new 52-week low in a space of two months. Yet in the beginning of the year until end of September and towards October, many stocks were trading near a new 52-week high or around there.

What causes oil prices to drop so sharply? Only a couple of months ago, nobody would have believed that oil prices would be selling at around US70 per barrel, especially during the conflict between Ukraine and Russia. At that time, many were fearful of oil price surging higher in the event the conflict turned into a full scale war with possible, other countries joining in to support Ukraine. Thankfully, the Ukraine-Russia conflict is not that severe as it seem to be.

So what caused oil prices to drop to this new five year low price? According to some reports, it is the ramping up production of shale oil by US due to their drillers becoming more efficient. Production per well was projected to increase in fields in North Dakota, Texas and Colorado.

The current production of shale oil grows 65 percent in the past five years to the highest level since 1986. The International Energy Agency said technological and organizational improvements that have enabled faster drilling rates, greater drilling density and higher new-well production have all been important to maintain production even in the face of increasingly steep decline oil prices.

However, there is a production cost for US shale oil drillers to break even.  It varies from drillers to drillers. According to Morgan Stanley, the break-even cost for producer Eagle Ford varies between US30 to US$60 per barrel. But most U.S. tight-oil reserves break even from US$60 to US$80.

A bi-monthly Malaysian business magazine published that the average cost is US55 per barrel from the U.S. producer. This means that as long as oil price stays above US60, shale oil will continue to be sold, thus competing with crude oil from OPEC countries.

Major crude oil producer Saudi Arabia is currently engaged in the price war with shale oil export US. Saudi Arabia can afford to even allow oil price to drop below US40 per barrel, but it remains to be seen if the US shale oil producers can withstand that price or beyond it.

Four of the world's largest economies countries, the United States, Japan, China and India are actually enjoying this unusual phenomenon of cheap oil prices. Cheaper energy will fuel their industries and economies and create a healthy growth from these largest economies and this should be a boon to global economic growth.

But the falling oil prices affects mainly emerging economies which are net exporters of oil or very dependent on oil revenues to finance the growth of their economies.

Malaysia is unfortunate to be caught in this declining price war situation as Malaysia is an oil exporter although some said Malaysia is actually an oil importer. Nevertheless, the declining oil prices has caused many oil and gas related companies to see their share prices dropping massively, thus causing an overspill into so many other counters.

Another factor is the depreciating ringgit against the green backs. A weakening ringgit also weakens the stock market, one way or another.

Investors or retailers or fund managers or who so ever simply sold down their shares. Strong good fundamental companies are suddenly painted in one master stroke with other "not-so-strong" companies and sold down every day and all the way.

Suddenly a few volume of 15,000 shares can cause a share price to drop by as much as 20 sen. Suddenly, many investors who hold fundamental stocks were dismayed by their declining "paper wealth". Suddenly in a space of two months, many investors who invested in the early parts of 2014 are staring at losses instead as the year comes to an end!

So for the stock market to recover back, oil prices must rebound back to the around US100 level. Will it rebound? When will it rebound? How much will it rebound? Will it stay there should it rebound back? See, these are all important questions that everyone is concerned to know.

Personally, I am not an economist. I am just like the ordinary guy who reads and try to understand the current oil crisis situation which affected the ringgit and the stock market.

But I like to offer my personal opinion that oil prices will not likely go down much further to as low as US40 per barrel because at the price, shale oil producers from US would not find it profitable  and attractive enough to drill and produce anymore.

Population growth continues and this will spur demand for oil from oil imported countries. China for one is now the number one customer for Saudi Arabia's crude oil.

Crude oil or shale oil are natural resources that cannot be simply produced by other raw materials. Hence, it is a resource that can be depleted over a period of times.

In fact, some analysts and research house are forecasting oil prices to bottom out in a matter of times and rebound back to the pre-levels soon. Should it happens before Christmas, share prices of most beaten down stocks are also likely to rally back especially those fundamental oversold companies.

Buying 4,000 shares of

Thong Guan Industries Berhad

at RM1.86 on Dec 12, 2014.

Today, I have started to accumulate quality and fundamental stocks with strong business and also paying reasonable good dividends as well. Another preferable criteria is that the buying share price should be trading to its near or new 52-week low rather than the other way round.

The risk of buying shares at near 52-week low is lower than at near 52- week high. But the reward is higher if one buys at near 52-week low and prepare to even average down.

The 52-week high of Thong Guan is RM3.10 and its 52-week low is RM1.83. Based on my purchase price of RM1.86, I am buying at its near 52-week low, hence my risk is not that great anymore.

Thong Guan is one such company that is cash-rich and has a sound fundamental business.

Thong Guan is principally engaged in investment holding activities, and trading of plastic and paper products. The Company's business segments include plastic products, food and beverages, and consumable products and machinery.

I shall be posting my buying contract note in my next blog, hopefully before Christmas. Cheers! Life is still wonderful and colourful despite the declining shares prices.