Aboi's Updates For February 2014 (Welcoming the Horse)

PROSPEROUS CHINESE NEW YEAR

IKEA please no more horse meat scandal....

KLSE TECH REVIEW

Here's the link for the previous month's market sense: Aboi's Updates for January 2014

For those who find it hard to follow I suggest reading through my previous posting on how I am using technical indicators as a trend seeker.

1. First Attempt on Tech Analysis Part 1
2. First Attempt on Tech Analysis Part 2

As I have anticipated in Jan-> "trend looks increasingly bearish". "Therefore hold Bursa would be back to trading sideways in January between 1800-1850. Though I am tempted to add another support line of 1750 let's hold that until the month of February." Bursa has now slipped past my 1st support line even before the month of February; this proves that market are very jittery at the moment. My risk evaluation still stands firm. For the year 2014, the main risks are likely to be on the sharp sell in US bond yields backed by news on Fed tapering or much stronger US economy growth. The latter is already taking shape with money flowing back to advanced economies after foreign holdings are selling off EM assets as evident from fumbling stock exchanges across EMs and their currencies weakening against the US dollar. This is not going to end yet as there is still $65 billion more to taper. What we saw was just $10 billion! 

However some good news to RIDE ON; [1] recent sell off looks to be supported, I suspect money from weak holdings are transferring hands towards more resilient fundamentally backed counters as blue chips are keeping Bursa steady. [2] RSI and MACD indicators are trending towards a reverse in trend. As such my new resistance levels are 1825 and 1850 with the new support lines at 1780 and 1750. In my opinion, I think February will be a month where Bursa trade sideways as companies continue to release their 2013 earnings report.

Second my portfolio managed to crawl up by a commendable ~RM1500 in value across most of my holdings even though Bursa has deteriorated by -4.4%! (1872 to 1789). This also makes me confident that my portfolio has strong holdings backed with enough diversity. As published in one of my Jan article I am going to invest roughly about 25% of my cash balance in Aberdeen's Islamic World Equity Fund. I will still reserve some cash for I am looking at another fund (focusing on small caps because I don't have the time for it) and also for possible gold buy when the price is right. 

As usual AMP Capital has a really good compressed weekly information (freely available, no sign ups) on weekly global market & global economic updates. It is usually updated every Monday afternoon so go read it when you have the time.

About my others thoughts for 2014 pls look at: 
#1 A possible buy of gold asset: A fool and his gold are soon parted
#2 What to be aware of: (MYR, The Gohmen, Interest Rates, Property - The Linkages

PORTFOLIO REVIEW

Portfolio composition. Equities 50%, Mixed Assets 15%, REITs 10%, Bonds 5% and Cash 20%.
Targets for returns p.a. Equities type 12%, Mixed Assets 8%, REITs 6%, Bonds 5% and Cash 3.75%.

Notes
*Supermax First Interim Single-Tier Dividend of 4%.

Comments
#1 Portfolio target for the fourth portfolio year @ RM140k for April 2014 has already EXCEEDED. The TWRR (time weighted annual return rate is now at 11.33% vs my target of 8.80%).
#2 Overall awesome gains in 2013. I am more optimistic about my buying chances in 2014 yet at the same time I must be cautious as upside is more limited.

Disclaimer: The reports, analysis and recommendations in this blog are solely my personal views. I do not link to any investment body or company. As such, I will not be responsible of any of your investment decision. Consult your investment adviser or come to your own conclusions before making any investment decision.

Changing 'My' Perceptions About Israel..You Should Too

Start-up Nation: The Story of Israel's Economic Miracle

This is an enjoyable read that highlights how Israel has come to become such a leader in high tech startups. It is quick, light reading that explores the historical and cultural aspects that lead so many Israelis to pursue entrepreneurship. In Israel, it seems, there is a culture that embraces the questioning of authority, a flat hierarchical structure across society, and risk seeking behavior. It is amazing how a small country surrounded by enemies (the Arabs), no natural resources, constant state of war (14 military conflicts since 1948) and cut off from several major ports of commerce is able to do so much. Did you know these facts about Israel?

With a population of only 7.1 million:
[1] As of 2012, Israel ranks 16th among 187 nations on the UN's Human Development Index, which places it in the category of "Very Highly Developed".

[2] After the USA, Israel has more companies listed on the NASDAQ (US tech stock exchange) than any other country in the world, including India, China, Korea, Singapore, Ireland and all of Europe combined.

[3] Israel is also the world leader in the percentage of the economy devoted to research and development at 4.5% of GDP. Japan is at a distant 2nd with 3.2% of GDP and United States in third place at 2.7% of GDP.

[4] Israel is the world leader in venture capital dollars raised per capita - coming at 2.5 times the next most venture capital intensive country - United States. More than x30 greater than the entire Europe, x80 greater than China and x350 greater than India.

[5]  Israel has the highest number of scientists, technicians, and engineers per capita in the world with 140 scientists, technicians, and engineers per 10,000 employees. In comparison, the same is 85 per 10,000 in the United States and 83 per 10,000 in Japan.

[6] The Israeli economy is ranked as the world's most durable economy in the face of crises, and is also ranked first in the rate research and development center investments.

At 295 pages, it's very difficult for me to summarize the book into a few statements let alone paragraphs. You have to read it to believe it. Believe me..it's pretty illuminating not only for other countries, but also for business people, organizations, investors and entrepreneurs. Meanwhile this is also a good read: Changing Perceptions About Israel and a short video about the country of Israel.

NAP 2014 Really Take A Nap

What is NAP?
It actually stands for National Automotive Policy. It was enforced by the Malaysian Government in the interests of national cars. Under the NAP, imported vehicles are subjected to varying degrees of import duties depending on the vehicle's origin of manufacture and engine displacement hence why they cost a bomb here in Malaysia. There are import duty, excise duties and sales tax being imposed on cars.
These taxes are also one of the highest in the world. This makes most foreign cars extremely expensive for the local buyers. These explain why a Honda Civic here cost RM120,000 meanwhile only US$17,000 in USA. See the table below (From MAA org):

And just today the revised National Automotive Policy (NAP) version 2014 was unveiled by the International Trade and Industry Minister Datuk Seri Mustapa Mohamed. The highlight splashing every news portal now is "Prices of cars in Malaysia are expected to be between 20% and 30% cheaper by 2018, as part of an automotive policy announced by Putrajaya today." Betul ke? How is this going to be achieved?

CKD = Completely Knocked Down a.k.a locally made and assembled.

CBU = Completely Built Up a.k.a fully imported

"This is expected to be brought about by offering more incentives to encourage the assembling of completely knocked-down (CKD) vehicles locally. That will mean higher local component content, which in turn will help to reduce the selling price. CKD mesti hilang banyak function for sure. CKD also means quality wise, things are going to suffer." 

----When quality suffers, safety is compromised. It is just a big merry go round, prices are reduced 20% to 30%, at the same time you are just paying for inferior goods. Best example currently: CKD Honda Jazz Hybrid, Hilang ESP, Hilang airbag, Hilang other parts, reduce few hundreds only, then say price reduced. Koreans are heading for globalisation, we are doing localisation. 

"NAP hopes to create 150,000 jobs by 2020 and it also hopes to sees production of 1.25 million cars from 570,000 by 2020".

----To give the government credit, the only plus side is of encouraging CKD is the fact that it reduces unemployment as it creates more jobs. However this also indirectly impact CBUs (fully imported cars) because it discourages tax rebates or discounts for CBU cars. Because when CBU cars are too cheap, car makers will just shutdown the CKDs, causing folks to go jobless which is the opposite of setting up shop in the first place.

"By 2016 there will be 0% import duties of CBU from Japan due to the Malaysia Japan Economic Partnership Agreement." 

----0% from what? From 10% only. Not much actually. A RM120,000 Honda Civic is still going cost you a whopping RM110,000. The hefty excise taxes ranging from 60% to 105% are going remain still until 2020 where the new NAP gets revised again. Also full import/excise exemption for CBU hybrids and EVs has been discontinued. It affects popular hybrid models with engine capacity below 2.0 litres such as the Toyota Prius and Prius c, Honda Civic Hybrid, Honda Insight, Honda CR-Z, Lexus CT200h and Audi A6 Hybrid. On the electric vehicle side, two models are affected, the Mitsubishi i-MiEV and just-launched (at KLIMS13) Nissan Leaf. The government's stance is clear here. Cheaper cars are going to be from CKDs only. 

"The government is open to possibilities to reduce excise duties gradually when the fiscal situation permits." 

----Look at the table below. Do you really think the gohmen is gonna let go ~RM7 billion tax revenue? May our dreams come true laaa. Potong import tax from Japanese imported cars...kasi u sikit sikit la. Meanwhile AFTA has been delayed three times  Automakers Urge Malaysia not to Delay AFTA. 2002 -> 2005 -> 2008 -> 2013 -> keep rolling barrels. AFTA means a common preferential import duty rate of no more than 5% for goods exchanged between ASEAN countries and cover a wide range of products, including automobiles.

"The controversial vehicle import Approved Permits (APs) will remain for now. NAP 2009 had 

earlier specified for termination of open AP by 31 Dec 2015 and franchise AP by 31 Dec 2020. The govt has decided that an in-depth study will be undertaken to assess impact of this termination on Bumiputera participation in the auto industry." 

----Dah 28 tahun, kaji lagi? Crony makan abalone, Rakyat makan kangkung.

"Meanwhile, the government announces various measures and incentives to attract foreign direct investment (FDI), especially in the Energy Efficient Vehicles (EEV) productions segment. The move is seen as having a significant economic multiplier effect in increasing competitiveness, providing business opportunities to automotive companies and vendors, technology transfer and innovation and create more high-skilled jobs. The license will only be given to car installations with an engine capacity of not less than 1800cc and the price should be more than RM150, 000 per unit, according to sources. Such a move would not have a negative impact for the national carmaker Proton Holdings Bhd as it is a different car segment which involves high-tech engine system with a more expensive price category."

----Kantoi la...RM150k for CKD Hybrid car? Saya ulang sekali lagi-> Also full import/excise exemption for CBU hybrids and EVs has been discontinued. The government's stance is clear here. Cheaper cars are going to be from CKDs only. Aiyo actually only cheaper for specless, interiorless, internal combustion engine. Other folks have started hybrids and shifting to hydrogen fuel cells.     

And when one thinks it has all the stuffs, more bits are delayed again. Key things missing:

- AP policy as explained above

- Euro 4 fuel (to be announced in two months)

- Proposed end of life for vehicles

The feared ELV. Vehicles' inspection policy that are extended to private vehicles compared to commercial vehicles. If implemented, the government had to pay RM5, 000 cash coupon to consumers who dispose the vehicle. Based on the current governments's fiscal position, I do not think the policy will be implemented anytime soon.

Conclusion

Nothing exciting. See you again in 2020. For the moment to reduce commitments continue to buy second hand foreign CBU cars (cost 40% less after 4-5 years) or go for more worthy local Perodua cars. The NAP is about reducing all the specs in exchange for cheaper prices. We used to see a certain pariah brand name, now we are going to see even more assorted pariahs.

The full text of NAP 2014 is available here: http://paultan.org/2014/01/20/nap-2014-full-text/

P.S.

Quiz: How long more can you survive?

Aberdeen Funds in Malaysia..Are They "Iron" Clad Investments?

Note: I am NOT a fund agent. Some folks are asking whether I am. I have unit trust stakes in three different fund houses: Kenanga, Hwang and AmBank (see Aboi's portfolio). How to be agent for all three at once? I am also NOT associated with Fundsupermart. Even If I refer you, I will only get a 1% sales token discount that expires in three months. Because I don't buy that often. Only 4 times in the last 3 years that benefit is of little use to me. Even If I do so, I only save RM60 per RM6000 invested. RM60? That's hardly part time income. Sell nasi lemak and water bottle can give me more. Hence my articles on mutual funds are unbiased and objective.

Aberdeen Asset Management PLC is an international investment management group, managing assets for both institutions and private investors from offices around the world. Its head office is in Aberdeen, Scotland. Aberdeen Asset Management the largest listed fund manager in Europe, managing $200 billion with 2200 employees. The company operates mainly in the United Kingdom but has a growing presence worldwide, particularly Asia, Oceania and the Americas, with over 2,200 staff, across 33 offices in 26 countries. Its headquarters is in the city of Aberdeen, where Group functions including legal, group information and human resources are located, and has its major investment desks in London, Philadelphia and Singapore.

I first heard about this group when I attended the Fundsupermart 2014 flagship event last weekend in Penang: Unit Trust Investment Fair: What & Where To Invest In 2014 and gave me an impressive initial impression. So I started digging more information: Aberdeen's presence is seen on every four corners of the world. Client profile (obtained from 2013 Annual Report): UK (30%), Europe excluding UK (27%), Middle East and Africa (7%), Asia (13%), Americas; US & South America (23%). As you can see, Aberdeen operates on a global scale.

Not long ago (don't know exactly when) they "buka kedai" here in Kuala Lumpur, our financial capital with a regional office and has $5.2billion (RM 17 billion) worth of assets invested in Malaysia as of October 2013. Aberdeen is the first foreign fund manager to have been awarded a domestic asset management licence in Malaysia. The group launched two funds in early 2013: Aberdeen Islamic Malaysia Equity Fund & Aberdeen Islamic World Equity Fund. Both are not one year old yet, as such fund performance is not available. Sounds like a risky venture but I don't go and wager money without a solid hand in the first place. Here's what I found:

Start with the group's overall performance via share price. The company is a constituent of the FTSE 100 Index in the London Stock Exchange (4th largest exchange in the world, China/Shanghai index is no.6 in the world, Malaysia somewhere down there in the 'sungai'). Anyway, From Yahoo Finance:

Now let's drill down to more details of its performance.
From 2013 Aberdeen Annual Report:

Not happy? I have more. From Reuters:

With respect to its relatively stable PE ratio, the stock price and growth w.r.t earnings is not overblown (unlike the days of the U.S Tech bubble). At that kind of yield in the developed countries, dividends are extremely good.

Going back to PE ratio. See the growth rates here, it justifies the growing stock price->No MAGIC. Company has ZERO debts. Liquidity is there (current ratio is high), this is also reflected in the interest coverage. 

Profitability ratios are rock solid. In the mid 20s to mid 30s. And so is management effectiveness in generating returns to shareholders and indirectly fund holders.

With sufficient data above, this is not a joker's group nor is it run by some clueless folks. Now what? Since the funds are not even one year old I can't look at their performance. Thus I have to drill to their top current holdings and investment strategies (accurate as of October 2013).

Aberdeen Islamic Malaysia Equity Fund
Aeon Co (7.8%), Axiata Grp (6.3%), United Plantations (6.2%), Oriental Holdings (5.9%), Tasek Corporation (5.5%), Lafarge Malaysia (5.5%), United Malacca (5.5%), Digi (5.5%), POS Malaysia (5.0%), Nestle Malaysia (5.0%). Total of 58.2%. There's a lot of weight in consumer goods and services but almost none in Oil & Gas.
-Portfolio consists of companies that are market leaders in their respective areas with competitive advantages (monopolistic or oligopolistic with big market share).
-These holdings have good dividend payouts (~50% payout ratio) and have solid ROE (~15%) range.
-What impress me the most here is that they made over 200 visits to Malaysian main board companies in 2012 to do their selection process (I don't think they would "cock" in front of 400 over people in the hall).

Aberdeen Islamic World Equity Fund
Johnson & Johnson (3.9%), Novartis (3.9%), Vodafone Group (3.4%), Samsung Electronics (3.0%), ENI (3.0%), CVS Caremark Corp (3.0%), Nestle (2.9%), TSMC (2.9%), Tenaris (2.9%), EOG Resources (2.9%). Total of 31.8%. Again weights on consumer staples. Also in healthcare.
-Again I see the portfolio consist of global leaders in their own industry with a franchise that spans globally and have recurring revenue and strong IP (intellectual property).
-Invested in companies located around the world to improve investor's risk-return profile. Meaning if one part of the world under performs, another side will pick up the slack.
-Most importantly the fund does not prefer to invest in China-beng companies which I am totally in favour of. I want to see a portfolio of only good corporate governed companies.

Because both funds invest in resilient sectors in industry leaders (blue chips), more on sustainable growth rather than rapid expansion backed by solid balance sheets, risk is mainly on the medium side. Plus they don't trade as often much like Warren's Berkshire. It's a safe fund management group that I see.

Investment Strategies 
->I cut them short, list is by order from most important to the least
1. Treatment of minority shareholders (you and me) equal to major shareholders (founding family / conglomerate).
2. Remember that companies are about people (human capital development) not assets.
3. Balance sheet strength is critical (adequate cash flow and what it does with its cash).
4. Understand what you're buying (don't need to know how chips works but what they are used for for example)
5. Be wary of over ambition (over expansion or go outside of core area of expertise).
6. Think long term (adopts buy and hold strategy much like me).
7. Benchmarks are measuring devices not portfolio construction tools. (active divergence from benchmark a.k.a stock picker instead of following what some other fund houses buy)
8. Take advantage of irrational behaviour (buy on bad news or at cheaper valuation like I do).
9. Do your own research.
10. Focus on industries in which it is possible to have a sustainable competitive advantage.
This list came from Hugh Young (Aberdeen's Global Head of Equities who specializes in Asian equities).


My frequent readers would know that I would fall back to my usual mutual fund selection process which is the following:
#1 Avoid choosing big sized popular funds! - Both funds are just RM10 million in size.
#2 Compare fund expenses! - TER at 1.5% for Malaysia and 1.75% for World is nicely priced
#3 Information on the fund manager! - as listed above under Investment Strategies and more here: Hugh Young
#4 Good funds don't advertise. - indeed unlike you know laa refer to my old article
#5 Avoid the usual past performance > riskiness of fund > manager's rep (some don't) > fund expenses > popularity of fund.  Look from the opposite direction and do your filtering from there. - I just did

Conclusion
Being an Islamic fund there are certain limitations. Shariah-Compliant funds are prohibited from investing in companies which derives income from the sales of alcohol, pork products, pornography, gambling, military equipment or weapons. However the world is a big place, many sectors available to invest. Otherwise it is better to ride camels.

I am less keen on their Malaysia fund namely for two reasons. #1 I already have my Kenanga Growth Fund. #2 No Oil & Gas and too much weight in consumer though I understand their reasoning for Malaysia being a growing country with a young population. Nevertheless I'm upbeat about their World Equity Fund. It is exciting to see a foreign manager handling this because of several reasons (from my old post in April 2011)

"What other local funds in Malaysia that don't work and are hyped?
Equity Greater China class funds: I'm sorry man if you are in it, your agent missed out one thing, the stock market in China does not correlate with its economic growth.
Equity Global class funds: Our local managers don't seemed to have the expertise to tackle overseas market. This applies to all funds houses."

Aberdeen Islamic World Equity Fund solves my two concerns above by not investing in China-beng companies and they have the global team who are experienced. Finally I have a good reason to use my rotting cash. Because risk is medium here, I think 15% per annum returns is pausible. You can read my track record & credibility on choosing funds here (Aboi's Updates For Malaysian Mutual Funds for 1H'2014) or head to Archives for more past articles under the section Mutual Funds in Malaysia.

Happy long weekend folks.


Disclaimer: The reports, analysis and recommendations in this blog are solely my personal views. I do not link to any investment body or company. As such, I will not be responsible of any of your investment decision. Consult your investment adviser or come to your own conclusions before making any investment decision.

Oh Tissue Paper (NTPM Holdings Bhd Jan 2014)

NTPM Holdings Berhad (NTHB) is engaged in investment holding and provision of management services. NTHB and its subsidiaries are principally engaged in trading in paper, cotton, diapers and sanitary products; manufacturing and trading of paper products, such as toilet rolls, tissues and serviette; manufacturing and trading of personal care products, such as sanitary products and baby diapers; carrying out integrated logistics services, warehousing and trading of fast moving consumer goods, and carrying out information technology related businesses. It operates in two segments: manufacturing, which is engaged in manufacturing of paper products such as toilet rolls, tissues, serviette and personal care products such as sanitary products and baby diapers, and trading, which is engaged in trading of paper, cotton, diapers and sanitary products. Its subsidiaries include Nibong Tebal Enterprise Sendirian Berhad, Nibong Tebal Paper Mill Sdn. Bhd. and Nibong Tebal Personal Care Sdn. Bhd. Brand names under them are Premier (facial tissue), Cutie (toilet paper), Royal Gold (premium tissue paper), Intimate (sanitary napkins) and Diapex (baby diapers).

Stock Rating: UNDERPERFORM (HOLD)

Price: RM0.81

Discount Price/Fair Price: RM0.47/RM0.60  

based on average PE range of 12.5 and 15 respectively

Fundamentals: Long Term Outperform (5-year period)

Technical: Short Term Bearish (3-month period)

Risk Level: Medium-High

**Outperform: Stock expected to do better than market return; has upside or at discount price. Buy call.
**Market perform: Stock expected to be on neutral or trading sideways, can be + - 3% to 5%. Hold call.
**Underperform: Stock expected to do worse than market return; has downside or too expensive to purchase vs both discount price and fair price. Hold call if long term outlook is solid. Only if fundamentals change I would put a sell call.


Fundamental Analysis
Revenue (turnover) and Earnings per share (EPS): 7.5% from the past 5 years which is in line with the revenue growth of 7.62%. Even in the midst of a weaken global economy, demand for personal care products is robust and recession proof as evident from increasing turnover growth; no dips whatsoever. Neutral due to the single digit growth. NTPM has to expand quicker to other countries as the market is saturated in Malaysia.

Dividends per share (DPS): No doubt NTPM has been generous on their dividend payouts having consistency of between 30% to 70% ratio to the EPS. Good yields from between 3.8% to 5.8% for the last 10 years. Note of caution, though it has a strong free cashflow of roughly rm27mil to rm32mil, it is barely just enough to cover the dividend payouts and this seems to be the SOP for the company over the years judging from the balance sheet and cash flow statements.

Debt-to-equity ratio (DE): Hovering in the 0.30s level, this is on the neutral side. What is more worrisome is the liquid asset-to-share ratio of only 0.02-0.03. There's very little cash/bank balances/deposit ready for use. On the good side, NTPM have not need any of it because #1 it managed to weather the financial crisis even at those levels #2 dividend payout has been consistently good leaving me to believe that they don't require much and prefer to reward stockholders.

Return of capital employed (ROCE): 20.93% (2011), 15.84% (2012) and 15.83% (2013). Good based on my take that it should not be less than 10%. It's an indication that the management is making use of the assets of the company in generating return for its shareholders.

*Price earnings ratio range (PER): EPS is stable for NTPM for me to use this. The industry average PE for paper products/stationary & printing segment is 11.19. NTPM is trading now at PE 18.41 while it's rolling 4Q PE is 16.65. The differential value of 1.76 indicates that it is overvalued currently. Also if you look at the stock price chart, back in 2009 when the PE high range of 15 is similar to what is happening now leading to my conclusion that the NTPM stock is very expensive now. Because there is no listed competitor for me to compare the PE against the only assumption I am making is that the PE should not be able to go any higher >19 to justify the risk for profit. Stomach my assumption if you can.

*PER is only useful if EPS has NOT been volatile. This is because an abnormally low EPS would result in an amazingly high PE ratio and make the share look terribly expensive for that particular year. Also if the EPS of the stock is negative, PER cannot be computed as it is meaningless.

As a conservative analyst I will put 10 to 15 as the estimated PE range values for 2014 together with the forecasted EPS (4.7sen) and DPS (1.5 sen). As such my discount price @ RM0.47 and a fair price/hold price @ RM0.60 for 2014.

NTPM holds the market leadership position in Malaysia for tissue papers with more than 50% of the market share. 40% market share for toilet rolls. 20% market share for sanitary napkins & baby diapers (even though NTPM has only recently ventured into this market) and these are made possible because of cheaper prices vs competitor and aggressive marketing. NTPM's major competitor is Kimberly Clark (Kleenex and Scott paper products). Though NTPM's core market is still Malaysia, its 31% of the production line is dedicated for the export market: Singapore, Southern Oceanic and South Africa. Also the tissue manufacturing facility in Vietnam will commence 2H'2014 after construction began back in 2012. Management has commented (from the 2013 annual report) that they don't expect their investments in Vietnam to show fruit/produce profit at least until 2017. NTPM's long term plan is to tap the Indochina market and that remains to be seen.

NTPM is managed by the founder Lee See Jin, 74 who also holds 42.63% stake in the company and has been in the business for more than 30 years. His son Lee Chong Choon, 48 holds 11.90% stake and is known to be the process engineering & technical manufacturing guy behind the group. Overall this is solid family owned business. Sadly NTPM is very expensive to purchase now...the counter was in my Watchlist since 2012 but I did not have the time to research it and opportunity flew by. I am not going to make the same mistake again.

****For more information get my worksheet from dropbox (just look at the NTPM tab, I am in the process of updating the rest): Aboi_Hybrid_PEGGY_method


Disclaimer: The reports, analysis and recommendations in this blog are solely my personal views. I do not link to any investment body or company. As such, I will not be responsible of any of your investment decision. Consult your investment adviser or come to your own conclusions before making any investment decision.

Brick or Break Investment?

Can you make decent money from collectibles? Yes and no, that depends on what kind of toy or collectibles you are looking at. I have a sizable collection of these at home from LEGO to Hard Rock limited edition pins, some selected Magic The Gathering rare cards, Shell car sets and Shell Select Doraemon display figures and even some Real Grade Gundams. Unknown to many folks, these items really do fetch a premium later on after the sets go EOL (end-of-life) from production or they stop selling in retail. Take for example the LEGO Harry Potter 4708-1: Hogwarts Express introduced in 2001 for $39.99, went EOL in 2003 and is now selling for ~$230 on the secondary market e.g. Ebay (x6 the original price). I did a more thorough research on LEGO back in June 2013 and started to add some into my portfolio.

Here are some good reads (And I mean really good ones):

#1 Making Money from LEGO Bricks…

#2 LEGO Investment Bubble: Fact or Fiction?

Bear in mind that not all sets will bear fruit e.g. Lone Ranger sets are not doing well. I picked my sets carefully putting more weights largely on Lord Of The Rings (because of the adult fan base and Hobbit will definitely help spur interest in Middle Earth) and Star Wars (well known series and being rebooted with Episodes 7/8/9 soon). Also some of the more kinda limited special sets like Minecraft, Volkswagen Camper, Haunted House (the green bricks are very very rare, some people use for MOC: my own creation) and Seasonal sets like the Winter ones. 

You can view my LEGO brick collection here: http://my.brickpicker.com/nchoong (with charts and price values). To date it has appreciated by 11.44% (in less than 6 months due to some LOTR sets being sold out and approaching end of life). Overall if you are interested to spend some $$ on these, do store them carefully. From my experience the most interesting part is when you are actively researching their potential and looking for them. Happy hunting. This is the lighter side of investing in physical assets. Risk level is relatively medium as long as you pick popular & highly sought after collectibles which will outperform in the long-term horizon (5-years+). Heck anytime better than dumping $$ into FD for 3.50% p.a.

Disclaimer: The reports, analysis and recommendations in this blog are solely my personal views. I do not link to any investment body or company. As such, I will not be responsible of any of your investment decision. Consult your investment adviser or come to your own conclusions before making any investment decision.

Aboi's Updates For Malaysian Mutual Funds for 1H'2014

I am starting a new posting series for mutual funds selection within Malaysia; to be published every half of the year: January/July *unless something urgent calls for an ad-hoc post. I've actually started this by myself since 2010 but was never shared to the public until 2012. You can head to my Archives tab and refer to the section entitled "Mutual Funds in Malaysia". There are 10 useful posts if you have the time for it. Before you say aiyoo...so many ah. Next time la...Btw next time in Malaysia is always never. 

What is my ultimate goal investing in mutual funds? "At 15% returns p.a. target, my RM10,000 will grow to RM662,000 in 30 years!" Why 30 years? Because I started at age 24, so after 30 years I am near retirement age, at least that's what I hope :) To those who still live in the Fixed Deposit heaven, please don't especially for the long term (short term I agree) mainly because the Malaysian inflation rate figure is seriously flawed. (2-3%/year for the last decade? It's just making fun of you and me.

Let just say you continue to invest cash in your FD 3.5% returns p.a., how much will it grow? Your money will only grow 2x times (double) in 20 years. But what if you can maximize it to say 10%, your money will double in 7.5 years (three times the speed yay). 15% and it will grow 4 times every 10 years. If you eat enough ginseng and bird’s nest, you will probably have a lot of 10 years in your life! If you are 25 and you live until 75, you have five 10 years. Eat more ginseng and maybe you have six, seven or eight 10 years more. Enuff ka with ya FD?? If you live in kampung maybe can survive la...on 'nasi lemak'


**P.S. The total expense ratio, or TER, is a measure of the total cost of a fund to the investor. Total costs may include various fees (purchase, redemption, auditing) and other expenses. The TER is calculated by dividing the total annual cost by the fund's total assets averaged over that year, and is denoted as a percentage.

Bonds

No deletions in my recommendations, added AMB Dana Arif.
I have AmDynamic Bond (purchased on Sept 2013) back when subscriptions was reopened. Loss is -0.48% to date. Expected loss due to more units being opened up causing NAV to be diluted. However loss has been declining rapidly from -2.31% to -0.48%. I expect it be in +ve region in Q1'14.


Mixed Assets

No deletions or additions in my recommendations.
I have Hwang Select Income (purchased on March 2010) Profit is 22% to date or 6.53% annualized TWRR. Doing very good as expected.


Equities

I deleted Public Focus Select (Equity Malaysia small cap) and replaced it with EastSpring Investment Small-cap fund, reasoning behind #1 small caps are volatile in nature and #2 preservation should be gauged from 1-3 instead of 1-5. Public has good preservation of 4 but their returns are abysmal ranking on at 2 instead of the highest 5. It's kinda of a trade off but for small cap funds, I think preservation is secondary. You may agree or not agree.  

I have Kenanga Growth Fund (purchased on February 2013) Profit is 27.59% to date. I am extremely pleased with the performance and was beyond expectation.

My five rules of choosing funds:
#1 Avoid choosing big sized popular funds!
#2 Compare fund expenses!
#3 Information on the fund manager!
#4 Good funds don't advertise.
#5 Avoid the usual past performance > riskiness of fund > manager's rep (some don't) > fund expenses > popularity of fund.  Look from the opposite direction and do your filtering from there.

Overall my portfolio weighted annualized MWRR across all 3 segments is at 13.12% (spanning 3 years), which is pretty close to my target 15%. Once the AmDynamic Bond crosses over to the profit region I am confident my target is achievable. However the portfolio is relatively new (2 new additions in 2013) but has already achieved a total return of 18.94% to date thus I am convinced that my way of filtering and selecting over 400 funds in Malaysia is MAKING THE PROFIT THAT I AM LOOKING FOR. Furthermore all the selections that I have done back in December 2012 are all paying handsome returns (none giving -ve losses) to date and ranked within the top 10. How long did I take to filter 400 of these? Only one Sunday afternoon with a cup of coffee. No need to find agent laa...I be yours for FREE :)

For a barrage of information to overload please get it from my Dropbox area at:
Fund Table Capital Investing. Look for the file 

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   Fund_Table_Capital_Investing_040114.xlsx
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Aboi's Updates For January 2014 (Happy New Year Everyone!)

HAPPY NEW YEAR, 2014 

KLSE TECH REVIEW

Here's the link for the previous month's market sense: Aboi's Updates for December 2013

For those who find it hard to follow I suggest reading through my previous posting on how I am using technical indicators as a trend seeker.

1. First Attempt on Tech Analysis Part 1
2. First Attempt on Tech Analysis Part 2

To my surprise Bursa ended higher than my top range of 1850 to close the year on high @ 1867 points. However the trend looks increasingly bearish - higher price cannot be supported with decreasing volumes moving on. RSI indicator is still at the overbought region and there is sign on crossover on the MACD indicator. Therefore hold Bursa would be back to trading sideways in January between 1800-1850. Though I am tempted to add another support line of 1750 let's hold that until the month of February. I will begin to update my Watchlist for the time being, it's been a long time since I have managed it.

Second my portfolio increased in value by ~RM3000 across all holdings mainly due to Bursa ending the year on high. This year's good gains were Supermx, BSD Reit and not forgetting the best: Kenanga Growth Fund (28.32% in a mere 8 months). As usual AMP Capital has a really good compressed weekly information (freely available, no sign ups) on weekly global market & global economic updates. It is usually updated every Monday afternoon so go read it when you have the time. For the year 2014, the main risk are likely to be on the sharp sell in US bond yields backed by news on Fed tapering or much stronger US economy growth.

About my others thoughts for 2014 pls look at: 
#1 A possible buy of gold asset: A fool and his gold are soon parted
#2 What to be aware of: (MYR, The Gohmen, Interest Rates, Property - The Linkages

PORTFOLIO REVIEW

Portfolio composition. Equities 50%, Mixed Assets 15%, REITs 10%, Bonds 5% and Cash 20%.
Targets for returns p.a. Equities type 12%, Mixed Assets 8%, REITs 6%, Bonds 5% and Cash 3.75%.

Notes
*Genting Berhad special interim cash dividend of RM0.50 less 25% tax. 
*Freight Management Berhad single tier final dividend of 3.0 sen.
*HwangDBS Select Income fund gross income declaration of RM0.01/unit (reinvested all into 164 new units)   

Comments
#1 Portfolio target for the fourth portfolio year @ RM140k for April 2014 has already EXCEEDED. The TWRR (time weighted annual return rate is now at 11.28% vs my target of 8.80%).
#2 Overall awesome gains in 2013. I am more optimistic about my buying chances in 2014 yet at the same time I must be cautious as upside is more limited.

Disclaimer: The reports, analysis and recommendations in this blog are solely my personal views. I do not link to any investment body or company. As such, I will not be responsible of any of your investment decision. Consult your investment adviser or come to your own conclusions before making any investment decision.