LPI - Doing it rightly

LPI - Doing it rightly

LPI Capital Bhd (LPI)'s recently announced its 2nd Qtr results which was up by a whopping 67.5% jump in its net profit. The increased profits were due to LPI's selling a small percentage of Public Bank Berhad (PBB) shares in the open market in April and May at around the price between RM18.95 and RM19.14 per share.

As a result of those realised cash profits of RM39.2 million, LPI decided to utilise it in the best way for its loyal shareholders, i.e. returning the excess cash in the form of dividends.

The interim dividend is 20 sen which is actually a 50% increase compared to the interim (20 sen) of FY14. This is because LPI's one-for-two bonus issue went ex on Mar 25, 2015.

Yours truly's stakes in LPI also increased to 750 shares from 500 shares after the bonus exercise. Hence, my due dividend will be RM150.00.
 
Even after disposing of this "small" stakes of PBB shares in the open market, LPI still holds a sizable amount of 54.74 million PBB shares. Whether LPI will continue to practise this exercise of disposing a small portion of PBB shares in the coming quarters remains to be seen.

But if LPI continues to do so and it returns the realised profits back to its shareholders, nobody would be grumbling at all. In fact, shareholders should be smiling happily with the extra increased amount of dividends flowing into their respective bank accounts.

The balance of 54.74 millions PBB shares, assuming slowly being sold in the open market at say an average price of RM19 would yield in a big cash amount of around RM1 billion (I hope I am right with this rough calculation : 54.74 millions shares x RM19). Correct me if I am wrong as I am actually very poor when it comes to maths or accounting calculations. I actually flopped in the Maths subjects terribly.

The amount of money if redistributed to shareholders could mean a potential of around RM3 per share (I hope I am right again).

Kudos to the management of LPI for distributing the excess profits back to its shareholders.

Many companies should emulate the management of LPI. I know (and I know you know, too) that there are many cash and asset rich companies with zero debts that holds stakes in many good companies that actually do nothing at all with their holdings and bugling cash hoards.

These companies (with their china-man style of management or rather aggressive expanding style of business) are just contended to hold on the stakes of other companies for many many years.

Or they are always on the lookout for business expansion or setting up new ventures here and there, always utilising its good reserved cash for that purpose, thus rewarding shareholders with good dividends is definitely out of their minds.

Such companies are usually not in my criterias, if there are is due to those old days when I wasn't experienced enough to identify it.

Back to LPI, its' shareholders are likely to continue to enjoy generous dividends (and increased quantum as well) and as well also a slow gradual increase in its share price) over the time.

Yours truly is most fortunate that he had invest in LPI a few years back.

Since then, I have seen my investment appreciated in its share price by over several thousand and also received several hundred of ringgit dividends.

And both these double joys are likely to be repeated again and again in the coming years.


Buying during crisis is always safer

Remember during the last quarter of 2014 when oil price was crashing down severely and the market suffered panic selling for several weeks?

Many good companies' shares were sold down in a knee-reaction to it and many of the prices fell down to nearly new 52-week low. I took the opportunity to buy into three stocks that were down near its 52-week low, i.e. Thong Guan (bought 4,000 shares at RM1.86 on Dec 12, 2014), Supermax (bought 3,000 shares at RM1.67 on Dec 16, 2014) and Century Logistics (bought 6,000 shares at RM0.64 on Jan 6, 2015).

After these three purchases, the market recovered and many stocks's prices went up again. And I did not have the chance to purchase in the next several weeks.

It has been more than six months and I am pleased to find out that Century had appreciated by 40% (share price is now at RM0.90) and Supermax - up by 28% (share price is now at RM2.15). Thong Guan is the only odd one (RM1.78) - a loss of 4.3% because its last two quarters' results were .... well quiet disappointing for investors.

I am hoping Thong Guan will be able to turn itself in the coming subsequent quarters.

Currently I am still holding onto these three stocks. I have no idea how long I will keep on to these stocks at the moment.

So the next time there is a panic selling in the stock markets that last several weeks, one should be brave enough to start nibbling into those unjustified severely beaten down fundamental stocks.

The rewards could be very sweet when sentimental returns back again.

Goodbye YSP Sah & Hello Imaspro

Goodbye YSP Sah

& Hello Imaspro

What a big difference the price of a stock can move in a space of few months! Just on Dec 31, 2014, one of my stocks, Y.S.P. Southeast Asia Holdings (YSP Sah) was just trading at RM1.30.

But after it announced an impressive record 1st Qtr results 2015 on May 15, YSP Sah went on to post a gain of 34 sen to close at RM1.95 in heavy trading volume the very next day.

I still remembered vividly that morning on May 16, I was having my favourite breakfast with my spouse at Tesco (Udini), I showed the trading price to her from my phone. And we were discussing whether to take profits or not. We were looking at each other and there was no answer from neither one. Neither one seem to say yes, time to take profit.

See, when you don't make a decision when it comes to investment, it is actually making a decision already, i.e. you have decided NOT to take profit at that moment.

I believed the surge in the share price is due to the 1st Qtr impressive earning. I also convinced myself at that time that YSP Sah, trading around the RM2 level, the market has already priced in and there might just be, perhaps a bit of further rally. Perhaps a further rise of 10 or 20 sen more.

Also, there was this lingering thought of selling YSP Sah at that moment and using the entire proceeds to buy Focus Lumber shares. Luckily I did not execute that call to my remiser or else ......

Well, always expect the unexpected in the stock market. YSP Sah continued its ascend into new uncharted territory from weeks to weeks, rising more than the few times of occasional pullbacks (due to profit taking).

Whether there will be further rally for YSP Sah remains to be seen. Comes  August when YSP Sah announces its 2nd Qtr results will be keenly followed. Another strong results might push the price higher again while a poorer results could see the price trending opposite the other way.

At some point during the journey of our investment, one must be brave enough to take profits when there is an opportunity. Of course, one must not have too much sentimental for stocks. There is always opportunity to buy back again in the future. It is a question of buying at a higher or lower price when the time comes.

My decision to sell YSP Sah after holding more than three years has been more purely on taking profits. The fundamental strength of YSP Sah remains strong in my view.

Interestingly, the proceeds allowed me the opportunity to increase my cash holdings to scout for other undervalued stocks. And one that has been catching my eyes since early this year is Imaspro Corporation Berhad.

At that time, while my focus was on Focus Lumber Berhad, I had also taken a strong interest in Imaspro. But Imaspro experienced a very strong rally from March. It rallied from RM1 plus to a high of RM1.90. The reason is believed to be the emergence of Yu Neh Huat (famous for his tussling over Hong Leong Capital) who acquired a substantial stake.

But a few months down the road to this few days, the excitement evaporated. Fuelled further by the recent market sell-off and Imaspro's share price retraced to between RM1.40 - RM1.50. (My entry price target for Imaspro is anything below RM1.50).

Hence, the opportunity now to buy into Imaspro. There are several good points about Imaspro which I am comfortable with. It is cash rich and has zero debts. It cash per share is around 50 sen. It has been paying a consistent dividend of RM35 for the past nine years.

Since 2006, Imaspro has always recorded quarterly profit without a single  loss. That is remarkable feat for a small company. Does it sound like the making of another mini-YSP Sah?

Such consistent earnings (although not spectacular) over the past years allowed Imaspro to slowly build up its cash coffers. Its cash is somewhere around RM40 million at the moment.

Imaspro's first nine months' total earnings per share (eps) is 11 sen which is just one sen behind its total eps of 12 sen for Financial Year 2014. The end financial year of Imaspro is on every June. So when Imaspro announces its 4th Qtr results somewhere in August, it's eps is most likely to exceed its 2014s.

Selling 10,000 shares of

YSP Sah at RM2.95 on July 16, 2015.

After deducting the broker, stamp duty, clearing fee's charge & GST, the proceeds of YSP Sah is RM29,273.00.  (RM29,500.00 - RM227.00). Deducting my original capital RM10,567.09 (invested on June 5, 2012) gives me a profit of RM18,705.91. Added in the total three dividends of RM1900 received the last three years gives yours truly a profit of RM20,605.91.

This is good return of 195% for holding on to a period of three years and one month.

Buying 5,000 shares of Imaspro

at RM1.46 on July 16, 2015.

My target entry price to purchase Imaspro at anything below RM1.50 was triggered on July 16. Yours truly was delighted when there were Buying bids of RM1.45 vs Selling bids of RM1.46.

I did not want to wait anymore. I told my remiser to just buy at RM1.46. Should there will be further price weakness after my purchase, I would be most happy to buy more again. Until then, let us wait and see.

Oh, I almost forget again. Anyone dares to join me this time? I would understand if nobody dares (after the so-so performance of Focus Lumber). But you must understand that investment needs time to see the seed of your fruit grows.

And I am not talking about months. I am talking about few years down the road. If you don't believe, then you can refer back again to when I planted that YSP Sah seeds. 

Only time will tell if my decisions to bet on Focus Lumber and Imaspro are right or not.

Correction

I mentioned that I had 36,000 shares of Focus Lumber Berhad in my blog on June 19, 2015 : titled : What is wrong with Focus Lumber?

My apology to you dear readers in case you are confused because it should read as 31,000 shares and not 36,000 shares.

Winning the major ones more

Winning the

major ones more

In our endless journey of our daily lives, we experience obstacles along the way. Some obstacles are more serious such as life threatening illness which sometimes even spending vast amount of money would also be a futile exercise. Apart from these, we may experience others kind of problems which wiht some money can help to solve.

Of course, we may also have some good luck along the way such as getting an unexpected windfall, promotion or even winning something good in a lucky draw contest.

Your truly experienced both these years. My one year old car had two brushes twice against other cars which caused slight dent and needed to be sent to the workshop for repair. Both incidents were as a result of loss of concentration at that critical times and the vehicle was driven by me. Both times, I must admit I were on the wrong end. Mind you, I am a very careful driver although after these two incidents, not many would be buying my story of being a careful driver.

Then early this year, I damaged my zoom lense while taking action pictures of a football match. I was so engrossed with the actions going on that I zoomed in and out in a fast pace (later I learned that we should only zoom in and out slowly as not to damage the motor inside) that my motor of the zoom lense was damaged.

Then I left it at home for nearly two months before deciding to bring it to the camera shop and see if it could be repaired. I had thought that the warranty period was for a year and it was almost two years from the initial date of purchase.

Imagine to my horror when the camera assistant told me that the warranty period was for two years and I was just late to send in for free repair by ... just three days!

Why did I let the damage zoom lense idled in my home for nearly two months before deciding to send it to the camera shop for repair?

Why did I lost concentration twice at that critical moments and brushed my car against other cars?

I am still trying to find out the answers ....

Nevertheless I shall call it unexpected self-inflicted problems of our daily lives. The good thing is all these can be solved using money. In the case of the damaged zoom lense, I decided to buy another new one after being told that the repair cost was running into several hundreds of ringgit.

Well, while I am experiencing these minor obstacles, I am rather lucky this year when it comes to investing in Bursa Malaysia. Readers would have recalled one of my spot-on stock, Integrax Berhad was taken private by Tenaga Nasional Berhad two months back at a revised offer price of RM3.25.

Integrax closed at RM2.28 on Dec 31, 2014. So the offer price of RM3.25 meant for year 2015, I am richer by RM17,460.00 as confirmed by the successful privatization exercise. (RM2.28 x 18,000 shares on Dec 31 was RM41,040.00. RM3.25 x 18,000 shares two months ago was RM58,500.00).

Another stock Y.S.P. Southeast Asia Holdings (YSPSah) which closed at RM1.30 on Dec 31, 2014 is currently trading around the RM2.60 plus minus level. This also meant yours truly is sitting on an additional paper profit of RM13,000.00 compared to end 2014. If I were to sell off YSP Sah at current price, I would be realising a total profit of RM30,000.00 plus. (Total of Integrax and YSP Sah).

These "windfall" money actually allowed me to pay for the repair of my car twice and the purchase of a new zoom lense with plenty of spare loose change. In fact, it can even cover my "small" few thousand paper lost in Focus Lumber at the moment.

I am most truly grateful that apart from maintaining my health (which is the main priority), I am also able to win this major ones from Bursa Malaysia while suffering some minor losses along the way.

As I shared with my spouse occasionally, we win some, we lose some. But it is always very important to win the major ones which will be more than enough to offset the minor ones that we lose.

Win some, lose some. But more important is to win the major ones more! It matters hugely!

Lily Khan on July 5, 2015 posted :

For spinal pain, the curing treatment is expensive. Can anyone use back brace?

Lily,

Seriously, I think back brace is more of giving support, balance and alignment to the back of the body. Naturally it helps a lot.

Whereas Elgucare is more of a herb supplement that goes into the body to help the blood vessels to improve blood circulation, restring the fibro-elastic potential of vertebral cartilages and improving immune system.

Imagine someone with a back pain problem can use back brace and at the same time consume supplement herb like Egulcare regularly. I would have to think that the back pain would be eased tremendously over the time.

Perhaps it would be advisable to consult a doctor first before using back brace because there are several types of them. I am sure you would want to use the RIGHT type.

Before I sign off, let me take this wonderful opportunity to wish all Muslims friends Selamat Hari Raya Aidil Fitri! We Malaysians are simply blessed to be able to share our festive season celebrations happily together for so many decades!