Sridge (0129)

Silver Ridge Holdings Bhd provides telecommunication system architecture, design, next generation network solution and telecommunication software solutions.

I discover this company after reading the "the busy weekly" at the article about "net cash per share is more than its share price".

After i go through the financial statement from its annual report year 2009, its cash on hand is about 17.1 million, short term borrowing is about 2.3 million, total outstanding shares are 100 million. It is exactly same as what the "the busy weekly" write in the paper, which will give 15 cents net cash and its share price now is trading at around 8 cents (net cash almost double on its share price)

It looks like it is trading at undervalue, but when you look at its trade payable, the amount is as high as 62.7 million! but trade receivable and amount due from customers are only 53.2 million~ so its mean the cash on hand is not totally free, the cash need to use as maintain the operation of the business.

Is it this business worth to invest?
Look back to its past 5 years earning record, 3 years earned, 2 years loss (loss is more than earn). This definitely not a good business.
Last year 2009, net profit of the business was RM 1,766,141.00 but executive director salaries & other benefits was RM 1,286,995.00. So whats wrong with the figure? The executive director salaries & other benefits already took out 42% of the income~ beware of this type of management, definitely management is at the interest of the minor shareholders.

Remarks: Above statement is my personal point of view, it doesn't recommend any sell or buy.

Bought Supermx @ 27Sept2010

Yesterday I bought Supermx @ RM 4.04

The reason bought is due to the bright future of glove industry and

low PE value if compare with its peers.

Is it market over react on glove industry already? part 3

Since the glove doesn't have brand royalty, so their profit margin will be very low. But however the demand of glove is very high and it always there, so there is no worries about this industry, the only main point we should focus is who is going to last till the end? The last survival will be a winner.

In order to survey in such a competitive industry, management efficiency, production efficiency and economy of scale will be the main focus point to analysis this industry. Who can provide the lower price to the customer will be the winner.

The material cost and currency difference will not different much from each and other. Hence, we need to look at their production efficiency and management efficiency. I have checked through the TopGlove and Supermx financial statement, it seems like either one want to cover some important data, so their financial statement presentation is different. So should be careful on this.

From TopGlove financial statement result, their gross profit margin is getting less and less from 25.2% to 16.5% (as stated as previous post). However, distribution & selling cost was reducing from 7% to 3.5%, administrative cost was reducing from 5% to 3.5%. As a result, the operating profit is able to maintain at around 10% to 11%.

From Supermx, I cannot define its gross profit margin, because the financial statement presentation is different. However, it did show some figure that are raw material cost, staff cost and depreciation value. Raw material cost was increasing from 64% to 74.8%, however stuff cost is reducing from 14.1% to 5.5%. Depreciation value is around 3.5% to 4.8% if compare with revenue. At the end, the operating profit is around 9% to 12%.

From the above, both companies are not able to pass on the cost to client but able to reduce their operating cost significantly. So at the end, both only able to get a operating profit around 10% to 11%. At this point, it is hard to determine who is more efficiency, who is not.

Is it market over react on glove industry already? part 2

Lets take a look at the latest two quarter EPS of Topglove, 11.42 and 10.44
Based on yesterday closing price RM 5.30 which convert to PE 11.6 and PE 12.69

How about supermx? lastest two quarter EPS were 15.18 and 13.51
Yesterday closed price was RM 4.04, which convert to PE 6.65 and PE 7.46

Harta lastest two quarter EPS were 12.18 and 11.42
Yesterday closed price was RM 4.35, which gives PE 8.93 and PE 9.52

Kossan latest two quarter EPS were 9.49 and 9.38 (not much different)
Yesterday closed price was RM 3.01, which gives PE around 8.

From the above, we notice that earning is dropping but the revenue is still increasing, what can this tell us? It means the demand is still there but the cost of production is increasing.

Cost of sales increase is due to strong ringgit and material cost. Now, we have to see how the management can do on the increasing cost. Can they pass on to their customer? I think it is hardly because from the financial statement past record, they are unable to pass on the cost to client, it is because they are in a competitive environment and there is no royal brand for glove.

If you go and look back topglove financial statement from year 2001 to 2008, their gross profit margin was decreasing every year from 25.2% to 16.5%. So very obviously, they hard to pass the cost to their client. I wonder why the market analyst keep on saying the glove maker can pass on the cost to client, it is nonsense. They want you to buy the stock to push up the price, I think this is the only reason why they want to do so.

I will discuss further again later on, is the glove stock worth to invest?

Is it market over react on glove industry already?

Recently glove industry stock price has dropped a lot from their historical high and most of them already drop to an very attractive price.

Topglove closed at RM 5.30, which down 28.7% from its historical high RM 7.43
Supermax closed at RM 4.04, which down 38.0% from its historical high RM 6.52
Kossan closed at RM 3.01, which down 28.7% from its historical high RM 4.22
Harta closed at RM 4.35, which down 23.6% from its historical high RM 5.70

Dropping range around 23.6% to 38.0%

Market believe glove industry will underperformed market due to strong ringgit, low demand, overcapacity and high material cost.

Are the market over react already? and is it now a great chance for investor to go accumulate the shares? If so, which one glove stock should we accumulate it?

Undervalue or not have to be determine by their financial statement. Lets check it out~

How much you can save from PTPTN?

 

 

Above are the calculation taken from PTPTN website with a loan RM 28,000.00 but a difference of loan interest of 3% and 1%.

As you see, RM 28,000 with loan interest 3%, the interest you need to pay for 15 years is RM 6,805.43

But if with loan interest 1% for 15 years, the interest you need to pay is only RM 2,163.26.

All the difference is RM 4,642.17

So remember to take your time to fill in your information in the PTPTN website, by just taking your few minutes, you can save a few thousand.

You may check your loan payment on the following website:

http://www.ptptn.gov.my/web/guest/loan_calc

Remarks: Above calculation is based on loan RM 28,000, 15 years loan tenure and by paying a minimum flat amount of payment.

PTPTN is offering 1% interest on study loan

PTPTN now is offering graduate to convert their study loan from previous 3% to now 1% as show in the yellow box at below:

 

You may also refer it on the PTPTN website: http://www.ptptn.gov.my/web/guest/anjung
for further information.

Remember to update your personal information so that you only entitle to the loan offer, and please pay the loan as this is our responsible to pay back the loan and help our next generation to get loan.

Go and update your information here: http://www.ptptn.gov.my/gateway/ujrah.jsp

Never lose your capital and why??

I always stress to tell my friend if you want to join and play the investment game, the first rule is never never lose your money. Once you can avoid to lose your money, then it is the great chance for you to make a huge wealth.

Why i said so?

Imagine now you have 100k, but now you lost your capital 50% to 50k, now how much is the return you have to make in order for you to get back your initial 100k??

The answer is 100%!! you have to make 100% return in order for you to recover back your losses from 50k to 100k. Can you catch the number? You are actually losing 50% only, but what you need to do is make 100% to get back your losses. That is two times!

The number even goes worst if you lose your capital more~
You have to make 150% in return for 60% loss of your capital
You have to make 233% in return for 70% loss,
You have to make 400% in return for 80% loss, and
You have to make 900% in return  for 90% loss!!

See the magic?? So always remember Warren Buffett's golden first rule which is never never loss your capital and second golden rule which is never never forget the first rule!!

What is the different between investment and speculative?

Many people around us are thinking they are doing investment instead of speculative. So what is the different between investment and speculative?

According to Benjamin Graham from The Intelligent Investor,

An investment operation is one which, upon through analysis promises safety of principal and an adequate return. Operations not meeting these requirement are speculative.

So do your investment give you any safety promise? and adequate return?

I believe the safety that Graham mentioned is mean by no losing your capital and the investment you do always give you a safety of margin by buying a investment equity by a "bargain" or "discount" and the adequate return is mean by give you a reasonable return, not too high not too low.

Streamyx suck!

This is already 3rd times since August the streamyx server down... and each time taking about few days to recover it and this time is also the same, today is the 5th day of the server down.. how can you invest this type of business if they cannot giving the best service to their client?

I just realize how suck is streamyx, you just type "streamyx suck" and search in google, then you know why i say so~

I am considering to change to other server now even it is just a little more expensive~

Never! Never! Never invest TM!! Else you just waste your money!

how to play with PE ratio?

Market tends to give high PE ratio for growth securities, low PE ratio for lousy business..

So what it means for this?

Yes, it means do not buy the securities in lousy business even in low PE ratio, but invest in good business in low or moderate PE ratio.

Some might ask since everybody know the business is good, so it is hard for us to buy at attractive price, but believe me.. The market is always unreasonable, sometime they will give you a very attractive price even the business is good.

Investment is actually as simple as that.

Sure earn money in the share market?

Is it anywhere to sure earn money in the share market?

Generally, there are two methods in market. It is either Fundamental Analysis or Technical Analysis.

So far, I do not see anyone who using Technical Analysis method to get rich, unless those sellers who sell their technical analysis software to somebody else.

I believe I am not good in programming software, so technical analysis is definitely out of my choice.

How about fundamental analysis method? It is definitely yes and only yes, because there are many people proving it and it is proven. So now how to use this method to help us earn money?

Benjamin Graham did say this before “Stocks do well or poorly in the future because the businesses behind them do well or poorly – nothing more and nothing less”.

It is very important for us to understand this sentence, no matter how high the stock price goes, if it doesn’t have fundamental to support the share price, it will come down one day and vice versa.

So in order to make sure to earn money in market, what we need to do is invest on those sound fundamental securities, the securities must be able to grow in future, so that the share price will also grow together. Always treat it as you are buying the share as you are buying the whole company and cannot sell out the share after that, so you only will be serious on it.