In term of valuation and it’s industry. We like Plabs at PE 15 to 20 times. In term recent profit if consistent with the next few quarters will push it’s PE down and potentially RM 0.40 only reflect PE of 10 times. But we have with both Plabs and Sunzen for a very long time. We suspect a corporate exercise may be on its way. But we sold 10% of our holding at RM 0.320 today. We will sell further when price trading upwards. We see RM 0.40 can be a reachable target for short term.
We have disposed Sasbadi above RM 1.82 as we think the valuation of the company is too high for us. We also disposed all Haio as we have disappointed with its earnings for many quarters without improvement.
We have changed all funds to MNRB, MBSB and Kawan.
Personally I am very positive towards ASEAN economy and also Malaysia. Except 1MDB issues must be solved fast and transparent enough. As it may drag the whole thing down even it is not end of the world.
Locally we just cover RM as we know USD is up too much against Asean and emerging market currencies. Again I strongly believe it is speculative in nature. I think the current economy situation in US compare to Malaysia may not have a big different a year to two ago.
Yes I do agree RM affected by political uncertainty and 1MDB debt issue. But looking at Malaysia strength of economy, asset, stock market valuation, governmental reserve and savings. The fair value of RM should be at least above RM 3.30 vs USD 1.0.
We do not expect the same crash like 1997 but we continue advise anyone to reduce their loan ratio, invest in asset related entity and also food industries. Perhaps even further on green industry.
We shifted back some HKD and SGD dividend from overseas and bought into Kawan. We will continue to do so and above 2.90 RM vs AUD will stop us from routine purchases.
We think the best thing to do now is to take a rest. As USD will likely continue to drift lower. Besides of food companies, we suggested a total stop buying in the market until more stable signal arises.
The best thing to do while RM is weak against dollar and Singapore dollar is to buy Gold and AUD.
We believe KLCI will track RM movement next week. USD 1 to RM 3.70 is a critical level. If RM weakness continue will prompt more hedging hence can be critical to the market in short term.
Looking at the current trend and coming events like Fed interest rate hike and 1MDB issue. We see 60% to 70% chance RM will break 3.70 level triggering more weakness in the market.
The argument prevailing the day weather it is a bubble or justified trend. Some argued it is due to low interest rate and strong cash flow of the tech. Some said when interest rate has no way to move north, the whole market will pop.
We think the market is expensive now. However those techs that leading the charge deliver real profit with good products for the market. Probably when PE hit average 30 times. A bubble will form.
Once again it proves the big bang theory in world economy. No matter up or down but eventually the universe is going to expand more. Also if you have a good idea in tech. You got to goto US as there is the only place will give a good environment for techs.
We think the world markets are expensive except consolidated emerging market. When low interest rate strategy ended and money shift again to emerging markets for historical new high. We will think of a real pull back at that moment and we hope we smart enough to offload some shares.
As we have mentioned that we are worrying about few uncertainties locally hovering around the market. We will now narrow our investment target into three (3) main defensive counters. We are still holding on all other portfolio but be focused at the moment.
1. MBSB – EPF own with strong EPS and turning to commercial bank as catalyst.
2. KAWAN – New expansion plant on its way with consistent sales and profit growth.
3. WHORSE – Consistent earnings with healthy dividend pay out.