March Update

It has been a while since the last update. Here is the summary of the transactions done:

1) JTiasa sold at RM1.69 for a paltry 7% return. It was a good sell in the end. Just take a look at its current price of RM1.37.

2) Purchase of additional 2000 units of Inari at RM3.30. This makes Inari to have a weightage of 33% of the total portfolio. Such high dependence is highly risky but as long as you know what you are doing, it should not be a problem. I am confident that Inari will be higher in two years time. 

Some comments on the market:

The oil price is really tanking and it seems that bad news are all over the oil sector. Being a major oil exporter, Malaysia is naturally impacted. Petronas just announced to slash 1000 jobs and to reduce capex by 15 to 20 billion ringgit. This will have major effect on the economy. 

AirAsia is finally gathering some steam and moving north. All the provisions for AirAsia Indonesia and Phillipines have been done last financial year so that they can start afresh this financial year. Look forward to a sustained rally. It would not surprise me if it goes back to RM2.50. 

Then there is the risk of "Brexit" in June. I personally think the risk is minimal but market will be trading sideways or slightly down until then. Then we can have chance to buy in before June. 

Lastly, as of now, Huat Fund is really low in cash and looks like this:

Happy New Year 2016

It has been a long time since I updated this blog. In the past two months, I have been trigger happy, adding some new members to Huat Fund as well as increasing holdings in Inari.

Welcome, 

Fibon, Maybank, OCK and Jaya Tiasa. 

The short rationale behind these purchases:

Fibon: This is a speculative purchase to get short term gain.

Maybank: This is a move to shift into dividend orientation, Maybank at this price is really attractive because its overseas operation is till growing yearly. Long term buy.

OCK: The company recently expended into Myanmar and will reap the rewards soon. Medium term buy.

Jaya Tiasa: This is also a short term buy to gain revenge over the earlier loss. 

Huat Fund is running low on cash after adding all these new members. It is a pity because the current China fiasco presents a good opportunity to accummulate more stocks. 

Huat Fund looks like this today:

Wa si CFA Candidate

Certified Financial Analyst (CFA) is a program that I found out a few years ago and I have always wanted to study it. Finally I got the chance to enroll in a part time workshop locally after returning to Malaysia and I am proud to say that I am a candidate for the level 1 exam in June this year.

CFA emphasizes a lot on the ethical investing. For example, the interest of clients always come first and we should take the last bite of any cherries. As a matter of fact, as a candidate or Charterholder of CFA, I am not allowed to give guaranteed returns for that is not realistic in the real world and thus considered not ethical.

Therefore, the objective of Huat Fund will have to be altered. Previously, I guarantee a 10% annual return on Huat Fund. Now, I will try my best to achieve a 10% annual return on Huat Fund.

Meanwhile, a little update on Huat Fund. Paper gain increases as the market improved over the last few weeks. Bulk of the gains come from Inari. SK Petro is almost near my 30% target and Hovid is finally showing some sign of life after hibernating for the past half a year. I suspect the renewed interest in Hovid is due to the fall in ringgit as most of it's export products are priced in USD. Heck, even Pestech and QL have broken even. Jaya Tiasa remains the problem child. Huat Fund looks like this today:

Averaging down - Jaya tiasa

Last week I bought additional 2000 units of Jaya Tiasa. This is in anticipation of the stronger demand for palm oil from developing countries like China and India next year and the implementation of B7-Biodiesel in Malaysia.

After this purchase, the cash level of Huat Fund is low again. I might need to sell some stocks when the rights issue for Inari comes. The Huat Fund has recovered from the stock slump for the last few weeks. Huat Fund looks like this as of today:

Huat Fund grows - capital injection

After investing in QL last week, the cash holding in this fund was quite low and stood at about RM 5k . At the moment I do not intend to sell any stocks in the portfolio since these stocks still have quite some upsides in them. Some comments on these stocks:

Inari - this company is still growing very fast organically. The recently in Oct 2013 completed factory #5 in Penang is now almost fully utilized at 85%. The rights issue announced will be used to fund another expansion and the rights issue is at reasonable price. Will buy more to average up.

Sunreit - this company is quite undervalued due to the impending launch of renovated Putra Place. Earnings and dividend will improve once it is operational.

Cypark - the renewable energy quota for this year will be released soon. Will be interesting to see how many Megawatts this company wins.

Westport - One of the long term buys. Proxy to the economic growth of Klang Valley industries.

Jaya Tiasa - One of the long term buys. Proxy to the palm oil consumption worldwide.

Hovid - One of the long term buys. Proxy to increasing healthcare cost in Malaysia and its' export markets.

QL - New addition.

Since the cash holding in this fund is low, I decided to solicit some extra capitals and expand the fund size in order to grow it further. Starting 15th of July 2014, Sister Ying will inject RM 20k into Huat Fund with the same return rate i.e. guaranteed 10% annual return with capital protection. After this capital injection, the cash holding increases to RM 25k. This could come handy in the next few months if and when the market corrects.  

Another long term entry - Joining the fun - Jaya tiasa

Two days ago I received a research report on Jaya Tiasa, a timber and plantation company from Sarawak. Although the projected growth in revenue and profit is too optimistic, the potential growth of this company in the next few years is real. I reckon the revenue for this year 2014 will be equal to 2013 and EPS in the region of 10 - 13 cents. An overview of the report:

Jaya Tiasa was previously a pure timber play with 713 211 hectares of forest concessions and 94500 m3 monthly extraction quota but marked its entry into oil palm plantations when it acquired a 90% stake in Simalau Plantation Sdn Bhd in 2001 to diversify their income stream to complement the cyclical timber earnings. Now its principal activities are extraction and trading of logs, manufacturing of timber products, development of oil palm estate, management of CPO mill and reforestation. 

Since 2002, Jaya Tiasa has planted a total of 63996 ha (average of 5229 ha per year) of oil palm in Sarawak. As a matter of fact, the peak planting was 12k in 2008. 

The pulling factors are:

1. Impending strong production: The average age of Jaya Tiasa's oil palm trees are around 6 years, with prime mature trees accounting only 12% of them all. The Fresh Fruit Brunch (FFB) from younger trees contain less oil. Thus the company's FFB and Oil Extraction Rate (OER) are below industry average at 13.9 tonnes/ha and 17% respectively. Prime mature trees can produce about 20 tonnes/ha and has OER of 21%. That is 6 more tonnes/ha without doing anything! So Jaya Tiasa will start to enjoy the productivity windfall soon, from 2014 and at the same time the plantation division should surpass timber division as the main earning driver.
   
2. Bright outlook for CPO price: CPO price is expected to remain resilient at RM2700 at the back of tight global supply of vegetable oils and high crude oil prices. Should prolonged dry weather occurs, then the prices will be even higher.
   
3. Timber division also contributing: Due to ban in log exports by Myanmar (effective 1st April 2014) and stable demand from India and increase in Japan economic activities, the outlook for timber division should be very good in the second half of the year.
   

So I bought an initial 2000 units today @ RM2.73 with a long term view of 1-2 years. Huat Fund looks like this now:

Financial assets at 24.04.2014
	Name	Purchase Date	Purchase Price	Current Price	Unit	Current Value	P/L ex Dividend (%)	Dividend	P/L inc Dividend (%)
Cash	Hle-Broking			18355,46
	Inari	24.02.14	2,30	2,8	10000	28000	21,9	72,5	22,2
	Sunreit	04.10.13	1,40	1,38	5000	6900	-1,2	188,8	1,5
	Cypark	22.10.13	2,17	2,99	3000	8970	37,7		37,7
	Jaya Tiasa	24.04.14	2,74	2,73	2000	5460	-0,5		-0,5
	Hovid	14.04.14	0,34	0,375	20000	7500	9,7		9,7
Total Stock				56830,00	75,6	%
Total cash				18355,46	24,4	%
Total				75185,46
Current profit				8301,27
Total profit				25185,46	50,4	%
Total dividend				611,13