My Stock - HUAYANG (5062)

How HUAYANG fulfils my stock selection criteria?
1) Annual Dividend Yield 7% based on my average price of RM1.54
2) Business has been growing up for past 3 years (from 2010 to 2012)
3) ROE > 10%
4) However, like most of the property counter, it is not a net cash company which means it has more debt to cash.

I accumulated HUAYANG (5062) in Oct 2012 with average cost RM1.54 and i kept it till today.

HUAYANG is a very good fundamental company even though it is not in a net cash position and it has a lot other advantages as below:
1) Dividend Payout for past few years around 25%
2) HUAYANG is the well known developer in building the affordable house. The group's motto is "Affordable homes for all". This is one of the reason why i like it as the demand of the affordable house is the broadest and most resilient.
3) HUAYANG has a good management team and leading by a young CEO, HO WEN YAN. He is confident to lead the company to a higher high. He has set an internal goal to achieve RM500mil revenue in FY2014 and RM800mil in FY2018.
4) HUAYANG is one of the few companies in KLSE that issued bonus for 3 consecutive years, i.e. 2010, 2011 & 2012.

Back to 2012, the reason i bought HUAYANG is because of its business has been growing up well since 2008 and its attractive dividend yield almost 8%.

 Also, its main project, ONE SOUTH in Sri Kembangan received overwhelming response at the time of launch. Besides that, as outlined in the annual report 2012:

"Our goal is to achieve a revenue of RM500
million in FY 2014. With 30 years of
experience, and our corporate mission
geared towards affordable housing, we
have full confidence that our affordable
products will continue to fare well."

With this, i was confident that HUAYANG will be doing much better in the coming years.

My Investment Result
I almost double my initial capital, this is not included the RM0.12 dividend that i received in 2012. Also, my holding quantity was enlarged by the issue bonus 2012 and will be enlarging again by the coming issue bonus 2013. Again, this proved that being a long term investor is the right way to build and protect our money :).

About Future
Since it posted a bad result in Q1 of 2014, I will keep eye on the coming next quarter which is Q2 of 2014 to see if the initial goal of RM500mil revenue set by management will be achieved. Being a long term investor is not just buying the stock and then forgets about it. We need to always keep track how the company performs from time to time. We can choose to sell our holding if the company no longer performs as expected.

My Stock - TAMBUN (5191)

How TAMBUN fulfils my stock selection criteria?
1) Annual Dividend Yield 8.5% based on my average price of RM0.62
2) Business has been growing up for past 3 years (from 2010 to 2012)
3) ROE > 10%
4) As stated in Annual Report 2012, it has RM96mil cash vs RM84mil borrowing. So, it is still in a net cash position.

I accumulated TAMBUN (5191) from Sep of 2012 until Oct 2012 with average cost RM0.62 and i kept it till today.

TAMBUN is a very good fundamental company, it has a lot other advantages as below:
1) Dividend Policy 40%-60%
2) TAMBUN is the mainland Penang market leader with tremendous growth potential.
3) TAMBUN has a high visibility on future earning where it has future GDV of more than RM2 billion that can last till 2020.
4) Its main project, Pearl City is near to the new 2nd Penang bridge and 1 minute drive from the proposed Electrified Double Track Commuter Train Station.
5) A rising trend of population shift from the Penang Island to the mainland as the island properties are not longer affordable.

Back to 2012, the reason i bought TAMBUN is because of its business has been growing up well for past 3 years (2010-2012). Also, as i mentioned above, it has a high visibility on future earning due to the favour demand on mainland property. So, i am confident that i will be getting more and more dividend from TAMBUN.

My Investment Result
I gained more than 100% from initial capital, this is not included the RM0.053 dividend that i received in 2012. I'm glad that TAMBUN is similar  to My Stock - WELLCAL where i will receive more and more dividend for years to come.

About Future
TAMBUN will continue perform well for coming years with its unbill sell reached RM510mil as at Q2 of 2013. I'm targeting TAMBUN to give at least RM0.06 dividend in financial year 2013 which will be equal to nearly 10% dividend yield with my average cost of RM0.62. With this, i'm happy to keep it as long as it can give me 8-10% dividend yield every year.

My Stock - PIE (7095)

How PIE fulfils my stock selection criteria?
1) Annual Dividend Yield 8% based on my average price of RM3.76
2) Business has been growing up for past 3 years (from 2009 to 2011)
3) ROE > 10%
4) PIE is a debt free counter where it has cash on hand more than RM100mil and borrowing about RM20mil in 2011.

I accumulated PIE (7095) from Jun of 2011 until Oct 2011 with average cost RM3.76 and i kept it till today.

 

PIE is a very good fundamental company, it has a lot other advantages as below:
1) Dividend Policy around 67% (two thirds of net profit)
2) PIE has been giving high dividend at least RM0.30 starting from 2008
3) PIE has been in net cash position for at least past 10 years

Back to 2011, the reason i bought PIE is because of its business has been growing up well especially 2011. With its net cash position with more than RM100mil, it will be giving a good dividend for next few years if its business can be maintained. PIE is a slow but steady stock and it is suitable for those who want a stable investment and focus on dividend.

My Investment Result
I gained about 45% from initial capital, this is not included the dividend that i received over past few years. I have received RM0.71 dividend for financial year 2011 & 2012. However, it is unlike My Stock - Wellcal which is giving me more and more dividend. Its dividend payout is pretty flat which is about 30 cents. So, with my entry price, i will be getting around 8% dividend yield every year which is still pretty good if compare to fix deposit.

About Future
I don't expect PIE to have a major improvement in term of its revenue & profit. So, i would expect around 32-35 cents dividend for FY 2013. So, i am happy to keep it as long as it is able to maintain its business and giving at least 30 cents dividend.

My Stock - WELLCAL (7231)

How WELLCAL fulfils my stock selection criteria?
1) Annual Dividend Yield 10% based on my average price of RM1.20
2) Business has been growing up for past 3 years (from 2009 to 2011)
3) ROE > 10%
4) Wellcall has been debt free since its listing in 2006. As at end-June 2011, its balance sheet remained healthy with cash reserves of RM36.48 million.

I accumulated WELLCAL (7231) from Aug 2011 until Dec 2011 with average cost RM1.20 and i kept it till today.

WELLCAL is a very good fundamental company, it has a lot other plus points as below:
1) Dividend Policy 50%
2) Product for niche market (O&G, F&B, weld & mining and chemical)
3) Recurring business as the industrial hose average life span is around 6-12 months)

Back to 2011, the reason i bought WELLCAL is because of its business has been growing up well when i first noticed it in 2011. The revenue was growing strongly, but profit didn't grow at the same pace. As a serious investor, we should always try to find out the reason if there is something we are not sure. And, you will be rewarded at the end. I found out that the reason behind of it, it was because the rubber price has been going up drastically in 2011 and it caused the margin profit of WELLCAL dropped since the rubber is the main raw material of WELLCAL. The good news is, the rubber price was dropping when i decided to buy it. So, i am quite sure that the profit will be improved in near future if the revenue can be maintained.

My Investment Result

I gained more than 100% from initial capital, this is not included the dividend that i received over past few years. The most wonderful fact is that i'm receiving more than 13% dividend yield from WELLCAL this year. This is the beauty for being a real investor.

About Future
After completing the new plan in mid of 2014, there will be a 70% jump in its current production volume. So, i am expecting at least 50% improvement in the revenue & profit after the new plan commence. Below are the simple calculation to project its future prospect based on the latest quarter result (Q3 of 2013).

Current Quarterly Net Profit = RM6.8mil
New Quarterly Net Profit = RM6.8mil x 1.5 (50% jump in revenue & profit) = RM10.2mil
New Annually Net Profit = RM10.2 x 4 = RM40.8mil.

This is also equal to earning per share of RM0.30. With its dividend payout for past few years, there is a very good chance to get 25-30 cents dividend after commencing the new plan.

My Stock Selection Criterias

Stock selection criteria varies from person to person. You need time to build your own stock selection criterias. I spent few years to have my stock selection criterias firmed.
Please use this as your own reference ONLY.

MY STOCK SELECTION CRITERIAS
1) Annual Dividend Yield is more than 6% for past 3 years
2) Revenue & Profit have been growing up in past 3 years
3) ROE more than 10%
4) Preferably debt free

Yes, dividend yield is my first concern as Dividend doesn't lie because it is the real cash to be paid to every shareholder. Why 6%? This is because we should have the potential return at least double of the fix deposit since we put our money in risk.

Do you want to receive the same dividend amount every year? The answer of course NO. So, the criteria #2 play a very important role here. When the company is making more and more money, i.e. revenue & profit are going up. The chance of getting higher dividend amount is also higher. Otherwise, you will receive the same amount every year if the business of the company cannot grow or even going down.

ROE is the key for us to evaluate how effective the management of the company utilise the available asset of the company.

ROE = Net Profit of the financial year / Total Equity

10% is good enough for me since i'm more focus on the dividend income.

The last one is about the debt level of the company. I prefer zero debt company which mean company has more cash than the debt including the long term & short term debt. Yes, i do agree that debt can maximise the return of the business, but it will be a burden for a company if it is over leverage the debt. It will be good if you can understand how a company goes bankrupt or become a PN7 company.

Happy investing!

The most important element in stock investment

I used to think that capital is the most important thing when it comes to stock investment.
However, after my lesson learned in past few years, now i will say "mindset" is the most important element in stock investment. You will start making money when you have a right mindset, i.e. only invest in good fundamental company at attrative price for long term. I have my own stock selection criteria, and i think every serious investor should have their own. I will explain in details for each of my stock selection criteria in next chapter.

Why long term? This is because the powerful of compounding. You will see the magic of compounding in a longer period of time. Just do a simple mathematic calculation, you will see the magic. How many years do you need to achieve RM1,000,000 if you have initial capital of RM50,000 and 20% return per annum? The answer is 17 years.
Some people believe that compounding is the most powerful tool in the world.

Capital should not be the excuse for us to start investing in stock market. To me, stock investment is a MUST for a poor man but an optional for rich man. If you think you are not rich, you should put more effort in learning stock investment. You can start as low as RM1,000. If you have the right mindset and be discipline, you can be a millonaire one day. Everyone has the right to fight for their own future. 

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My Stock Trading Result

My stock trading life started in 2007 and ended in mid of 2011. I used to visit book shop very frequent to look for a trading method that works most of the time. I have spent most of my time in studying the so called technical analysis. I am now very familiar with most of the technical term such as RSI, stochastic, bollinger band, MACD, moving average and etc. I'm grad that i was able to earn back all my money that i lost in the crisis 2008 from the period between 2009 to 2011. It took me two and half years to do that.

If you are familiar with malaysia stock market, you should know that this is not a very good result as the stock market performed very well during 2009 to 2011. During this period, my best result was to gain more than 100% in 2 days by trading warrant. Does that sound very interesting to me? The answer is definetely NO. The reason is that if you are a trader, you will never put all your hard earn money into one single trade. So, you will just earn so pocket money, say few thousand. I have learned a very important lesson after i became a real investor. There is one thing that trader never achieve, i.e. very less of trader can earn money from few thousand to ten of thousand and then jump to hundred of thousand and finally earn more than a million dolar in stock market.

So, below are the summary:

In 2008 crisis, i lost 50% of my capital.
From 2009 to 2011, i earned 100% from the 50% balance of my initial capital.
For example, if my initial capital was RM100,000 before the crisis, my capital on hand in 2011 is still equal to RM100,000.