Where To Find (WTF) Investment Tools

You must be wondering now: What stocks to buy? Do I just simply buy? What if I bought the right stocks? 

What stocks to buy?

To buy or sell stocks, it is a decision making. For you to make a decision, you must equip yourself with intelligent tools to back up your decision. Where to find (WTF) Investment tools that will assist your decision making in buying or selling stocks? You cannot rely on others on your decision. Your money is your responsible. You have to make due diligent analysis on your decision. Otherwise, you tend to blame others if you are making wrong decision.

Here, I will share intelligent data that may help you making intelligent decision

1. Information of companies listed in Bursa Malaysia: there are over 1000 companies listed in Bursa Malaysia. The first source to go is to go to Bursa Malaysia website itself:

http://www.bursamalaysia.com/market/listed-companies/

For Muslims, if there are interested whether a company operates according to syariah, Securities Commission Malaysia provides such list which is updated twice a year:

http://www.sc.com.my/paper.asp?pageid=877&year=2011

2. Financial Data on Annual Report (Balance Sheet, Profit and Loss Statement, Cash flow): This information is very crucial in stock market decision making. You don't call yourself as an investor if you didn't look at any part of financial information of a company.

Same case as the above, Bursa Malaysia also provides financial data particularly on the annual report as well as quarterly report. Example is Dutch Lady Milk Industries:

http://www.bursamalaysia.com/market/listed-companies/list-of-companies/plc-profile.html?stock_code=3026

Dutch Lady Milk Industries - Leader in Diary Product in Malaysia

Corporate Announcement on Dutch Lady Milk

Disadvantage of Bursa Malaysia Financial Data is that, it is just data. You have to interpret and do you financial ratio calculation (Like Return of Equity, Debt to Equity Ratio etc). It may be available in the annual reports still.

3. Financial Ratio Calculation:You can also find on other financial data and financial ratio on companies listed in Bursa Malaysia. You don't need to be mathematical genius or financial expert on how to do ratio calculation, what formula etc. This is given and free of charge:

- Reuters: http://www.reuters.com/finance/stocks/overview?symbol=DBMS.KL

- Bloomberg: http://www.bloomberg.com/quote/DLM:MK

 

- Financial Times: http://markets.ft.com/research/Markets/Tearsheets/Financials?s=DLADY:KLS

All of the above is free. There are a few companies that provide services giving financial data and ratio analysis:

http://klsenew.klsetracker.com.my/ (if you open trading account with Jupiter Securities or Apex Securities, they provide data from EquitiesTracker as well but limited to 5 years data)

https://www.insage.com.my (if you subscribe with Malacca Securities, they provide financial data from Insage with limited to 8 years of Financial Historical Data)

4. Financial Analysis on Companies: I really recommend you to buy (in fact, it is a must have for every investors in Malaysia. This book is available at MPH Bookstore, Popular Bookstore, Kinokuniya etc. It provides quite reasonable analysis. But you shouldn't follow blindly. The price of this is RM70.00. It is updated and published twice a year (March and September).

Stock Performance Guide Malaysia

Sample Analysis in Stock Performance Guide

Looking forward your investment journey 

Hunting The Value Bargain in Stock Market

Price vs Value

Would you buy a property or land that's worth RM10 million at price of RM100k? May be you think the person who is selling to you is a nutcase. But who would want to sell that if they knew the true value. That's what happening in stock market. Most of the time, the value of a stock sometimes is mispriced. Investor feels that a stock's market price doesn't match the value of the underlying business.

If you remember this famous saying by Warren Buffett: "Price is what you buy. Value is what you get"

I will bring you a real business case example that happened in Bursa Malaysia Stock Exchange recently. Sometimes, we don't really understand why it is being ignored, why investors tend to wait and only take action last minutes. And there are so many question that will make you think, market is really irrational and doesn't make sense.

Example 1: KRISASSETS HOLDINGS BERHAD

Kris Assets (KASSETS) used to own Midvalley Megamall (one of the biggest and crowded mall in Malaysia). They have sold Midvalley to new entity called IGB REIT. From the sale proceed (billion of ringgit) has been returned to Shareholder in the form of Cash dividends and Free unit of IGB REIT shares. Also, KASSETS still has some  amount of cash in bank. To avoid KASSETS from becoming PN17 company (which will give a lot of hassles later to a company), the company must be winding up (de-listed from stock exchange) at a reasonable value.

Kris Assets Value

They have hired liquidator to value delisted price and announced delisted price at RM0.08 on March 26th 2013 (as above). The market price of KASSETS was RM0.05. Huge discount of value 60%. How the market react on this announcement? Nothing! The price only moved on April 2nd to RM0.06. Why investors hesitate to buy at 60% discount of value? The only answer that I know, market is irrational. They only act when market react on the price. The winding exercise will only take 2 months with 60% gain. This is great deal, isn't it? 

Example 2: HUA YANG BERHAD

HUAYANG is one of small capital property developer. If you looked at the below report analysis by CIMB, the land bank owned by HUAYANG against its liabilities, the Revalued Net Asset Value (RNAV) per share  is RM3.96 versus the current market price RM2.03, huge value discount against its market price. This exclude dividend payment around 5-6%. Imagine huge discount.

Huayang Asset Value

What can you understand in the above 2 cases? The above is one of the example on how to value a stock using accounting (balance sheet) valuation. Of course, there are more methods to  value a stock. Sometimes, when you do valuation, a stock can be undervalued or overvalued. The equation is very simple, Undervalue = buy, Overvalue = Sell, Fairly Value = Hold/Wait. Please note that this shouldn't be the only criteria to buy a stock (in certain cases, it can be the only criteria i.e. de-listing of a stock from stock exchange). We will discuss more about the criteria in the future chapters. 

Rule of investing is to buy a stock value that is above its market price. You do not want to overpay the price of a stock that you buy.

“In the short run, the market is a voting machine, but in the long run it is a weighing machine.” —Benjamin Graham (Warren Buffett Sifoo)

Disclaimer: This is only for discussion purpose, not a buy nor sell call.

How to Open An Investment Account in Bursa Malaysia

Steps to become stock investor is to open an account with Bursa Malaysia. Below are the steps:

Step 1: Open CDS account with Bursa Malaysia. CDS is an acronym for “Central Depository System”. The Central Depository System is a system that is fully owned and operated by Bursa Malaysia Depository Sdn Bhd (formerly known as Malaysian Central Depository Sdn Bhd), a wholly owned subsidiary of Bursa Malaysia Berhad. There are 3 forms that you need to fill in:

CDS Card Form

Open account with Bursa

E-Dividend Form: This is for crediting dividend direct into your bank account

Investors who wish to trade in securities listed on Bursa Malaysia must open CDS accounts with Authorised Depository Agents (ADAs), i.e. stockbroking companies. Securities bought will be credited into CDS accounts that the investors have opened. Likewise for securities sold, these securities will be debited from the CDS accounts.

You need to pay RM10.00 fee to open an account. But some brokers do waive this fee.

Step 2: For your trading account (trust account) with authorized brokers with Bursa. You can call them and ask them to meet you which is nearest to your home:

Bursa Registered Brokers

The buy and sell activities will be transacted with brokers. If you asked me, i am biased for CIMB Securities, Malacca Securities and Jupiter Securities

What you should be looking for when choosing brokers for investment?:

1. Cheaper brokerage fee. Normal standard fee is around 0.40%. The cheapest would be around 0.05%
2. Excellent, efficient service and definitely fast response or feedback from them
3. Extensive Report analysis for stock. CIMB Securities provides excellent analysis on this.
4. Easier to transfer money from and to your trust account. You can withdraw the money from trust account and transfer your saving account if you need the money (only once you sell off your shares)

Sample screen of Trust Account

Step 3: Start transferring your money into your trust account. Don’t worry, your trust account is safe and secure.

Step 4: Set your investment goals and strategies

Step 5: Start your investment transaction – buy and sell stocks

Contact me if you are interested to open with any of the above brokers. I can refer to my dealers to arrange your account opening.

See ya around!

The Stock Market Pillar: Buy and Sell

The foundation of economy is supply and demand. there will be someone who will supply good (seller) and services and the parties who demand (buyer) for it. The price of good and services are determine by the forces of demand and supply. The price of good and services will be determined at the point of agreement between willing buyer seller and willing buyer. This sample is free market definition. Of course, in some cases, price is being controlled. Example, petrol price in Malaysia is regulated by Malaysian Government.

Demand and Supply Equilibrium

Whatever happen in world economy will be reflected in Stock Market. What is being traded in stock market? The product that is being bought and sold is called Stock (Definition: What is Stock?) Just like economy, price of a stock is determined when there’s a willing buyer and seller at the agreed price. If there’s no agreement, no transaction will happen; no stock ownership is transfer between 2 parties. The mechanism of buy and sell has been computerized. The stock price is very volatile, it moves up and down on daily basis. In some stocks, price doesn’t move much.

 Let’s have a look how does this buy and sell is done in stock market particularly Bursa Malaysia. Bursa Malaysia is the exchange where a stock is being traded. Since I am one of the CIMB customer, what you will see is the screen shot on my trading account with CIMB. There are plenty of investment broker in Malaysia. You can choose to open with any of them. The brokerage fee is more or less the same. All brokers in Malaysia are now operated online and can be accessed in the internet.

I guess the screenshot is pretty self explanatory: Stock Name, Code, Quantity, Buy price, Sell Price. Stock is traded in lot: Odd and Normal. For normal lot, 1 lot = 100 units of shares. For odd lot, it represents the individual unit of share. Most of the time, investor or trader in Bursa Malaysia do not trade stock using odd lot. Screenshot below will tell more:

1. Stock name is PADINI (Padini Holding Berhad is one of retail brand store in Malaysia that manufacture and sell apparel for men, women and children)
2. # = the number of queue for buyer or seller
3. B/Qty. = Buy quantity offer – quantity lot for buying , S/Qty = Sell Quantity offer – quantity lot for selling
4. Buy = Buyer offer price
5. Sell = Seller offer price

Row No.1 Explanation:

There’s one buyer willing to buy PADINI stock at the price of RM1.92 at 30 lots (3000 units of shares), 4 willing sellers want to sell 730 lots of PADINI share at RM1.97.

This is how the stock transaction is done in Stock Exchange (Bursa Malaysia). Buy and sell is the easiest part. This buy and sell is no different from what you buy groceries at stores or hypermarkets. You will only buy rice/vegetables/cooking oil at the price you want and the seller only want to sell at the price they want. If both parties agreed, then the transaction is completed. Transfer of good move from seller to buyer.  Buying/Selling  a stock or share is buying the ownership of a company.  But the difficult part is when to buy a stock? at what price should we buy/sell it? In order to make money, you have to buy at a low price and sell at a high price. Till then, see you in the next topics.

What is Stock, Share and Equity?

Before you begin your Stock Investment journey, you must understand some terms that being used. They are 3 terms that are commonly used in stock market: Stock, share and equity. What is Stock?

“Stock” is a general term used to describe the ownership certificates of any company, in general, and “Shares” refers to a the ownership certificates of a particular company. So, if investors say they own stocks, they are generally referring to their overall ownership in one or more companies.

“Equity” means the value of an ownership interest in something.

Technically, if someone says that they own shares – the question then becomes – shares in what company?

Bottom line, stocks, equities and shares are the same thing. The minor distinction between stocks, equities and shares is usually overlooked, and it has more to do with syntax than financial or legal accuracy.

Let’s create a simple a scenario for better understanding. I have a company – Soy Bean Sdn Bhd – that sell Soy beans and it has been doing so well. I want to expand the business globally but I don’t have enough capital or fund to do so. In order to get capital, I have to find investors to inject capital into my company. Assuming I need RM1 million in order to expand the business. I manage to find 10 investors that equally invest RM100k. these 10 investors of course do not blindly give money to me. they seal an agreement with me as the company owner to protect their money. The agreement can be in the sense of Profit sharing and Ownership. Once these 10 investors invest the money, may be they expect 50% profit from the business. Or, I cannot simply use the money unless I get a written consent from investors first.

From the above scenario:

1. Agreement between owner and investor – Stock
2. 10 investors seal agreement with Soy Bean Sdn Bhd . Meaning they shares ownership in Soy Bean Sdn Bhd
3. The value of this agreement is RM1 million (10 investors x RM100k). Simpler term, Equity.

Imagine the above exercise involved 1 billion shares, Equity value of RM10 billion with 100k of investors. It gets more and more complex.

In capital market, a stock is being traded in stock exchange which is regulated and supervised by Securities Commissions. The agreement part has been simplified and computerized. You no longer receive certificates.

Sample Stock Certificate

But what you will receive is a statement of No. of shares that you own from a certain company. For Malaysia, particularly, the certificates is being shown in the form of statement that  generated and sent to investors by Bursa Malaysia (as below screen shot).

CDS Statement of Account

Remember, by buying shares, you become part of the ownership even if only 0.001% of total equity.

We would like to remind you that there are some companies provide investment scheme but not registered and supervised under securities commission to collect money from public. These could be scam and fraud scheme. Please avoid in putting your in this kind of company. Do your background check before you put your money. You are responsible for your own investment.

The Return

It has been quite a while that this blog has been unattended. reason being, i was busy with my works. last entries was in January 2010, 3 years...

what have i been doing within these 3 years?
- travelling to Europe, learning, reading etc.
- within the 3 years, a lot of changes happened functionally in blogspot

Most importantly, i have started to invest in stock market. Yeah, Stock Market. This is not new to my background. I am a graduate from Lehigh University in Business Finance. Somehow, due to dynamic of career demand, I have ventured myself into IT world and Finance world seems to be forgotten. What trigger to return to Finance world particularly in Investment is that:
1. World richest men they themselves are investor [be it in stock market, properties, own a company etc], they don't rely on others
2. A lot of friends been asking about my opinion on investment - u have to be an expert before you can advise someone. So, i decided to  return to my academic DNA.
3. Someone has given wrong advice on unit trust investment. I don't need Unit trust investment if I am very well verse in Stock Market.

First step to go back is to unlearn what I have learnt during my university day. things have changed with the internet era. And this is my new journey!!