KLCI FINALLY SURGE > 1,060

3 weeks since last post on 30/10/06, the KLCI has surge to 1,060 point.

Many may wonder will this rally sustainable ? Will foreign fund finally come or will they hit & go again.

Judging from the KLCI upward momentum & lead by big blue chips, we may foresee better time ahead for Bursa Malaysia. Optimistic due to the following development :-

1) GLS reform getting momentum by Merger of Sime Darby, Guthrie & Golden Hope .

2) New foreign investor for AMMB

3) Proton retructuring by 51% disposal to Foreign Partner ( most likely to happen this round)

4) Roll out of 9th Malaysia plan

5) The Govt is supportive to let Ringgit to appreciate.

We can expect better performance for STEEL counter in the immediate term mainly due to the roll out of 9th Malaysia Plan. All the Mega projects will make the steel counter busy for the whole year of 2007 .

Highlighted below personal comments on some STEEL COUNTER :-

LionCor ------------ 0.62, undervalue but not recommended due to high borrowing.

LionInd ------------ 0.985, undervalue, good returns expected once the Lion Group completed their restructuring. Main assets is holding in LionFib & LionDiv.

Ornasteel ---------- 1.07, undervalue, simple biz model, healthy balance sheet, good dividend yield. Good counter for long term investor.

Engtex ----------- 1.09, undervalue, profits will expand on water projects starting next year.

Hiapteck ---------- 1.20, fair value. not so attrative pricing. Not cheap to buy compare to abovementioned company.

Mycron ------------ 0.85, under value, but not recommended due to management capabilities not proven.

REMINDER: EVEN BULL IS FINALLY COME, DON'T GET INTO SPECULATIVE COUNTER ( HIGH RISK NOT NECCESSARY HIGH RETURNS), LOOKING FOR UNDERVALUE, GOOD FUNDAMENTAL COUNTER WHEN INVEST YOUR HARD EARNED $$$$$$$$$$$$.

Sugar Bun = Iris = Mobif

The BSKL has reach 990 point last week, the volume has surpass 1 billion units to day, the top 10 most active counter are all penny stock, it seems that the retail player has come back to the mkt again.

The leading gain counter is ' Sugar Bun', all sort of rumours & insider information pertaining to this speculative counter has surface, which tell you that it will go up to 3.50. (last week closing is 2.80, to day closing 3.08).

Believe it or not ? it don't matter. But one must not forget the insident in July this year where Iris , Mobif & Kosmo's prices collapse.

Please do your homework before you trade, chose company that with good fundamental, AVOID counter like sugar, iris, mobis & kosmo.

It's ok for not making profits, but don't be a fool by lossing all your hard earned money in BSKL.

Sigh ! Sigh ! Sigh

A) Extracts from Malaysia-Finance Blogspot :-

The Malaysian bourse seems to be just catching up to the highs being registered by Dow Jones, Hang Seng, etc... For all Malaysian dealers and remisiers, stop for a moment and ponder, this is a 6 year high and just look at the market activity, look at your take home pay... does it feel like a 6 year high??? When your market is at a 6 year high and you are still not taking friends and families out for dinner and stuffs, ... can you imagine what it will be like if its not at any kind of highs?? The Bursa and Finance Ministry must take a lot responsibility for the capital markets road map we have taken for the past few years. In all probablity, we have adequate people at the top, but even more obvious is probably the people we have are not good enough. Anyone with the political will to do something??? !! Sometimes, its not enough to have average employees, especially when the stakes are so high. The secondary institutions deemed to be responsible would be Khazanah and EPU. The right people at the top will make the right things to happen. Right now, we are basically going with the flow, not making inroads in things that really matter.

B) Extracts from icapital.biz :-

When Lee Kuan Yew said that the Chinese in Malaysia were systemically marginalised, it was not surprising. What surprised many people was the angry and high profile reaction from some Malaysians to this already well-known, matter-of-fact statement. However, the biggest surprise in this event was that these people and the Cabinet had missed an even more important point - the whole Malaysia has been marginalised. Foreign direct investors are not coming in droves; neither are portfolio investors. Malaysia is simply not on the radar screen. The fact that the problem of a marginalised Malaysia is less important than having to react to a statement by Lee Kuan Yew shows the decline Malaysia has sunk into. We devote pages after pages to rebutting Lee Kuan Yew’s statement. Why do we not devote pages after pages to the bigger issue of a marginalised Malaysia ?

Our Cabinet was very efficient and fast when in came to declaring 23 Oct as a holiday for civil servants. Wah, it must really be of National Strategic Importance. At the same time, they are very silent and slow on the perpetual haze problem. This health threatening problem has been around for so long and yet no concrete and decisive action has been taken. We guess that since it has been around for so long, we might as well accept it. After all, solving this problem would not translate into more thanks or appreciation while declaring a holiday makes one popular instantaneously. The same goes for the review of the sacking of the judges and the former Lord President. Let us make those decisions that would quickly make us look good and competent. Don’t bother with the bigger and more important problems. They will go away by themselves because Malaysians would forget about them and by the time the consequences of ignoring these problems are felt or experienced, I would have retired. By then, it will be somebody else’s problem-lah. The way we solve our problems is best illustrated by the announcement that the speed limit would be lowered by 10 kmh during the coming festive period. This is typical of the quick-fix mentality of our leaders. Instead of solving problems at the fundamental levels, the Malaysian political leaders and government simply adore the quickies.

After the festive season is over, the problem solving will then have to wait until the next major festival, when another famous Malaysian quickie would be announced. In the meantime, the whole country gets more and more marginalised and our political leaders and policymakers would scream and shout when some one reminds us of the harsh realities. Welcome to Malaysia, the Land of Quickies.

When it comes to the KLSE, we should rename this NDNA market as the Market of Quickies – it can only manage a quick spurt and then a long pause.

Lion Diversified Unlock Value (1+1=3)

LionDiv latest move to segregate it's retail biz (Parkson China, M'sia & Vietnam) & other biz (Steel, Property, Computer etc) into 2 listed company is long anticipated & wellcome by small shareholders.

This will unlock the value in the group, the Company existing share price of below 5.00 is under value mostly due to most investor ignore the Company's other assets & only focus on Parkson HK.. Even Parkson HK Biz by itself will justified for valuation of 5.00 base on the existing share price of HK28.50.

For those investors who critisies Lion Group for never benefited the small shareholder can smile now, the latest restructuring excersise to inject Parkson's retail biz into ACB & distribute all the ACB shares to LionDiv's shareholder will enable the shareholders to hold 2 listed companies shares (Liondiv & ACB, after restructuring) instead of only one now (Liondiv).

After restructuring, it is most likely Liondiv will hold biz in Steel, Properties, Computer and CASH RICH. It has the capabilities to grow the existing biz to new height with cash in hand.

On ACB, the Parkson HK is the main assets, other biz like Parkson Malaysia, Vietnam will made the valuation higher.

In short, before restructuring it's 1+1=1, after restructuring it will be 1+1=3.

I will not sell it below RM7.00, how about you ?

Use bank facilities smartly to save interest

If you can't avoid from using bank loan to purchase house, then use it smartly to save interest. I have 2 ways for you to consider:-

1) Use flexible home loan to finance your house, the loan must be realy flexible that it allow :-

• daily compound interest
• can bank in money anytime, anyday.
• can withdraw money (by ATM machine) anytime, any day without letter or notice to bank
• the bank's location must be near your house or work place, so that you can bank-in your monthly pay cheque in your home loan account every month,keep the money in home loan account to reduce interest, draw it tro ATM only when you need it to spend or used as petty cash .

2) Use credit card to purchase the necessity, only go to supermarket that offer lowest price, and at the same time allow you to spend on credit card without extra charges. This allow you to keep the cash in home loan account for extra 1 month or at least 21 days which can reduce your housing loan interest.

BUT you must be discipline enough to settle your credit card bill on due date. Never let your credit card bill overdue.

The above 2 ways can save you a lot on interest expenses, it can be a significant amount for 20-30 years housing loan period.

Do U know Your Personal Finance

If you have not done this before, just try to calculate out what is your net worth (your personal assets - debts) and your monthly cash flow ( Income - expenses ).

After completed the above 2 statement, you will at least have some idea on 'how much you have' and 'how your monthly income being used every month' on this simple calculation.

You are able to monitor your 'financial health' monthly by doing this calculation and to see whether your finance are improving or worsen each month.

Please note that if :-

The net worth is negative (Meaning your debts are higher that assets and you are rely on borrowing to live) or

The cash flow statement is negative ( Meaning your expenses is higher than income, your personal wealth is being eroded every month if no action to be taken to ractify it )

The interest expenses is high in proportionate to your income ( Meaning large portion of your income is being PAID to finance company, you are actually working for the finance company rather than for yourself )

RED is alarming, urgent actions need to be done to ractify it !

Attached above a sample of 'Personal Net Worth Statement' and 'Personal Cash Flow Statement' to help you to compute your own financial statement.

Have U Being Protected By Insurance Financially ??

Talking about having an emergency fund, it's not less important to have a well designed insurance plan. ( medical, life, personal accident etc )

For most of us who work for a living, It is highly difficult (not impossible ) to save "thousands of money" to set aside for urgent use in the event of emergency or critical point of time (like major illness, dealth, or fire ), therefore it's important that we use insurance to act as a tools to protect us so that we at least will be insured by certain amount of money if unwanted event strike us. (to prevent financial distress)

Make sure your objective clear, we buy insurance is for protection, not for saving or investment. ( cos we have better choice than insurance plan if we want saving/ Investment)

So, go for insurance policy that give you highest protection ( high insured sum) with lowest fee charged.

Have You Save An Emergency Fund ???

You need money when emergency or something unexpected happening. Instead of borrowing from someone to pay for this urgent expenses which you may end up to pay ' high interest' or you may suffer from financial distress if you can't get the money in times of urgent needs.

I suggest you to consider to save enough money as your own " Emergency Fund". A fund that equal to 6 months salary is consider ok for time of urgent needs.

If you have no such saving, pls save it!
If you have no such saving, think twice and again before you spent!

Added 2 New links

I have added 2 new credible links as below, I choose them because each of them has their own unique opinion on share investing, we can learn from them to enhance our understanding on investment, hence better chance to gain from equity investment :-

1) Where is Ze Moola ------ He used to critisice the listed company (Malaysia) on Corporate Gavernance, Financial Performance, Minority Interest .............

From his comment, we will have better understanding on how to differentiate a good company and a so so company.

2) Talking Stock With The Doc --------- He use Chart to trade stock (Technical Analysis). Eventhough I do not believing in using chart for equity investment, but the chart technique is important for us to make decision on when is the appropriate time to buy a good stock.

TIMING is important in share investment, a good timing to buy will make you buy a stock at low price, hence reducing the risk of making losses, then increase your investment returns.

Exciting time ahead for Lion Industries

*As per Lion Industries Annual Report 2005.

A) Lion Forest Industries Bhd:
Share price @ 1/9/06 : RM2.50
Market Cap : 525 mil
*Owned 80%= 420 mil

B) Lion Diversified
Share price @1/9/06 : RM4.70
Market Cap : 3,255 mil
*Owned 36% = 1,172 mil

Total Market Cap Owned (A+B) = RM1,592 mil

Lion Industries
Total paid up capital is 697 mil ordinary shares @ RM1.00.
It's NTA as at 30/6/06 is RM2.85
It's shares price as at 1/9/06 is 0.82,
Market cap is 697 mil x RM0.82 = 572 mil

There are a few reasons for us to believe Lion Industries is attrative :

1. The current price of 0.82 is only 28% of it's NTA of 2.85
2. The Market Cap of 572 mil is only 35% of the market cap owned on Lion Forest & Lion Diversified.(1,592 mil)
3. Lion Diversified is still undervalue at price of 4.70 ( she just disposed off 10% of Parkson Hong Kong with price above RM650 mil. Lion Diversified owened 65% shares of Parkson Hong Kong equalvalent to 650 x 6.5 = 4,225 mil, 30% higher than existing market cap of 3,255 mil ) Lion Industries will benefit from the upside potential on Lion Diversified through 36% shareholding.
4. If you notice that Lion Industries has substantial short & long term borrowing of 2,282 mil, however the borrowing will be reduced by capital reduction from Lion Forest.
5. Lion Industries shares price reached RM1.40 in May 2006, now down to 0.82, going down almost 40%, couple with reasons stated in 1 & 2 above, the down side risk is limited.
   
6. And the most important one,
   The current corporate exercise by Lion Diversified to sell 10% of Parkson Hong Kong shares will made this cash rich company flush with cash of above RM1,600 mil, we can expect more corporate exercise undertaken by Lion Diversified to “UNLOCK THE VALUE” in Lion Diversified, and within the companies under the Lion Group.