Posted by Probability > 2015-10-24 19:42 | Report Abuse

Feels like a 'reality check' after getting swayed by a lot hypothesis surfacing recently.....lets bring these art closer to science - :)

Posted by Alphabeta > 2015-10-24 21:25 | Report Abuse

Take Uchitec and Sunreit as example, i have quite a substantial investment in these two counters.

I bought Uchitec in Dec 2012 at an average cost (including transaction costs) of RM 1.1644, holding period till 24/10/15 is 2.89 years. At current price of RM1.59, the unrealized (CAGR) compounding annual growth rate is about 18%, Uchitec paid dividend twice a year, amounting to 11 cents per annum, this give a yield (over acq. cost) of around 9.5% (its dividend yield at current price is 6.9%). The total return per annum is 27.5%.

The company is debt free with strong positive free cash free. Its capex investments in FY11,12,13 and 14 amounting to RM 66 million are all funded with internal generated funds.

I have bought SUNREIT in July 2010 at an average cost of RM 0.8966, holding period till date is 5.26 years. At current price of RM 1.53, the unrealized CAGR is 13.4%.
Sunreit paid dividend four times a year which gave a net yield of 8.4% at acq. cost. The total annual return is around 21.8%.

I will continue to hold them unless there is a sudden surge in price or their business models have changed that affect their ability to paid a decent dividend.

Posted by SuperMan 99 > 2015-10-24 21:49 | Report Abuse

I wonder if i3 pay Mr Chong for his articles uploaded here & also wonder how i3 earn to maintain the operations of this website. Such great writing & great source of info here.

Mr Chong, love to read your articles, hope you can keep writing and wish good health to you & your family!

Posted by SuperMan 99 > 2015-10-24 21:50 | Report Abuse

Alpha, thanks for sharing.

Posted by donfollowblindly > 2015-10-24 23:40 | Report Abuse

SuperMan 99 actually the counters you have is not bad eg Gadang and KSL. However some KC Chong counters high dividend sustainability is questionable eg Pres Bhd, Jobstreet, NTPM, etc because business is not static as in the past.

Posted by Alphabeta > 2015-10-25 08:31 | Report Abuse

The good thing of Uchitec management is it worked hand in glove with clients on R&D effort. So far,it has managed to come up with new product lines that qualified for pioneer status. Its earning is exempted from tax.

As for Sunreit, the promoter is a reputable developer with the ability to inject quality assets into the REIT. Beside the diverse portfolio of 12 properties; 4 in retails, 3 in offices, 4 in hotels and one hospital. 60% of the REIT's net income contributed by Sunway Pyramid. Sunway Putra Mall which recently reopened after an asset enhancement exercise will contribute positively in future. Other than regularly enhancing its assets value, the management also actively managed its debts portfolio, 60% of its debts is on fixed rate and the rest on floating rate. Should the interest rate rises in future, the risk of hike in interest expense is mitigated. Sunreit capitalization rate is around 10.3% for FYE 06/15, its a ratio of net investment income (net rental income+Depn+fair value gain/loss+other income) over book value of investment properties. One of the highest among the REITs.

Posted by DreamPredator > 2015-10-25 08:39 | Report Abuse

Dividend investing is only for roti canai & teh tarik money. For serious money, there is only capital appreciation.

Posted by Kevin Wong > 2015-10-25 08:51 | Report Abuse

Dividend investing is also win-win way of making money.
Good karma everybody!

Posted by DreamPredator > 2015-10-25 08:56 | Report Abuse

Dividend investing is only for roti canai & teh tarik money. A serious investor does not allow any thoughts of mediocre dividends from distracting him from the real, more substantial, more worthwhile pursuit of capital appreciation.

Posted by bsngpg > 2015-10-25 09:45 | Report Abuse

Nearby my area, there is a Roti Canai hawker in one of the coffee shop just 500m away from my house. Yes the whole family work very hard earning tiny money but they stay in 3 storeys semi-D and having motorcycle as well as Nissan Murano in the car pouch.

Posted by bsngpg > 2015-10-25 09:52 | Report Abuse

One of my Singapore friend only want to earn big money such as venturing into Tin Mining, Arowana fish farming etc. After knowing him for the last 20 years, he is still occasionally borrow money from me for Chinese New Year Angpao for kids in M'sia.

Posted by Ben Gan > 2015-10-25 09:57 | Report Abuse

Dividend is only for roti canai & Teh tarik when your capital invested is very small. If it is big, then it is different.

Posted by DreamPredator > 2015-10-25 10:04 | Report Abuse

If they're staying in a 3-storey bungalow, then they cannot be earning tiny money. Becos they wud be paying like 7k a monthly instalment for their housing loan. Add to that some modest food & entertainment money, they'd be spending about 12k a month, at the very least.

So their 'small roti' canai business would be generating, what 20 - 25k a month, to cover for labour, capital, utilities etc. costs.

And if they're even smarter, they'd also be owning instead of renting their shop premises, which wud mean they'll be getting capital appreciation on that property as well.

But if one is investing like 500k in stocks, how much wud one be getting from dividends. Lucky if it beats bank FD interest rate. Whereas, capital appreciation could gv easily 100% a year, with a bit of luck.

Posted by DreamPredator > 2015-10-25 10:07 | Report Abuse

Posted by Ben Gan > Oct 25, 2015 09:57 AM | Report Abuse

Dividend is only for roti canai & Teh tarik when your capital invested is very small. If it is big, then it is different.
_______________________________________________________________________

Key word is, ROI. Whether you're investing 10 mil or 100k, which wud you rather be getting, 2% per year or 100% per year.

Posted by Alphabeta > 2015-10-25 10:18 | Report Abuse

I think it all boil down to whether you are looking for exciting ride on a roller coaster based on momentum trading or you prefer being constantly rewarded with steady stream of dividend payments and sustainable capital growth over longer term based on sound business fundamental.

Don't forget you can reinvest those steady stream of dividends for more income if you don't need it support your lifestyle.

I agreed with bsngpg, it is very tough to get quick lunch on every trade. Momentum trading is like gambling, depending on the skill of the player and required frequently on-line monitoring in case Mr. Market mood turned against you.

I have a friend with good family background and career liked to bet in index future, he is also a property flipper earning good return during good time. Now he has lost his job for embezzlement and being sued for bankruptcy.

Posted by DreamPredator > 2015-10-25 10:27 | Report Abuse

Any investing system heavily dependent on margin financing, be it index futures, commodity futures, or forex is obviously designed to favour the broking house against the investor. It is certainly not for the small time investor with limited capital.

Posted by DreamPredator > 2015-10-25 10:29 | Report Abuse

Posted by bsngpg > Oct 25, 2015 09:45 AM | Report Abuse

Nearby my area, there is a Roti Canai hawker in one of the coffee shop just 500m away from my house. Yes the whole family work very hard earning tiny money but they stay in 3 storeys semi-D and having motorcycle as well as Nissan Murano in the car pouch.
_______________________________________________________________________

We can see these kinds of low-cost, low-overheads operators everywhere and all the time. Just down the stairs & across the inside road from my shophouse apartment in Cheras, there is an Indian entrepreneur from Chennai operating a roadside (bawah pokok) eating stall, and also a cuci kereta besides it. He is kind of in a 'kao tim' partnership with a local Indian - who owns a proper mamak restaurant nearby - who helps to 'takes care' of any problems arising with MPAJ, Immigration etc. etc.

He only rides a Honda kapchai to go everywhere, including to the nearby Segi supermarket for his daily shopping. He has about a dozen employees, so workers' gaji alone wud be costing him easily 10k. So, I estimate his monthly revenue to be 25k, at least.

Posted by DreamPredator > 2015-10-25 10:35 | Report Abuse

It is not about roller coasting or momentum trading. Not at all. And dudes also tend to make too much talk of so called 'fundamentals. Tell me one company, just one company, with such good , strong, solid 'fundamentals', that its price has not dropped within the last one year.

Posted by DreamPredator > 2015-10-25 10:38 | Report Abuse

Fundamentals? What fundamentals. It is 75% perception, 25% fundamentals, in practically any bourse in the world. This is the reality.

Posted by AyamTua > 2015-10-25 10:55 | Report Abuse

spot on! pasai itu lah gua tak percaya fundamental...
itu fundamental celita ah.. jangan percaya sangat

nenek saya kata esok juga hali hujan tapi kalau snow?

apa maciam celita geh?

Posted by DreamPredator > Oct 25, 2015 10:35 AM | Report Abuse

It is not about roller coasting or momentum trading. Not at all. And dudes also tend to make too much talk of so called 'fundamentals. Tell me one company, just one company, with such good , strong, solid 'fundamentals', that its price has not dropped within the last one year.


DreamPredator
59 posts
Posted by DreamPredator > Oct 25, 2015 10:38 AM | Report Abuse

Fundamentals? What fundamentals. It is 75% perception, 25% fundamentals, in practically any bourse in the world. This is the reality.

Posted by geary > 2015-10-25 11:03 | Report Abuse

Berkshire never paid dividend for years, because the management retained 100% of earnings and reinvested or allocated all the $ into fantastic growth companies. The rate of return keep on increasing, and the return average above 20% per year. The stock has a market capital of above 100 million per lot. Dividend is like father giving a bit of "ang pau" to his children. Company that can generate fantastic growth of EPS is the right one to invest and the ROE and ROTC automatically increased.

Posted by kcchongnz > 2015-10-25 12:01 | Report Abuse

Posted by Kevin Wong > Oct 25, 2015 08:51 AM | Report Abuse
Dividend investing is also win-win way of making money.
Good karma everybody!

Great comment.

Yes, you are sharing and enjoying the growth of a company giving growing dividends to every shareholder.

You are not "beating" others to make your money.

A win-win way.

Thanks Kevin.

Posted by DreamPredator > 2015-10-25 12:23 |

Post removed.Why?

Posted by BN_menang > 2015-10-25 12:38 | Report Abuse

Wait for CIMB to rebound strongly next year. See what happen to Pet Dagangan this year after dropping below RM 15 last year.

Posted by kcchongnz > 2015-10-25 13:17 | Report Abuse

Posted by DreamPredator > Oct 25, 2015 08:39 AM | Report Abuse
Dividend investing is only for roti canai & teh tarik money. For serious money, there is only capital appreciation.


Yes, capital appreciation is also important as it is part of the total return. But what drives the capital appreciation of a stock, or rather which is more reliable factor which cause the share price to go up if you invest for long-term?

Don't you think say in 5 years time if the dividend is double, share price will double due to that?

Posted by spermwhale > 2015-10-25 13:43 | Report Abuse

There is a difference in investing based on dividend yield and investing for dividend. At least if the company can give out dividend consistently it is making profit.

Posted by spermwhale > 2015-10-25 13:53 | Report Abuse

Someone was humbly quoted to say I was lucky the market moved in the direction I predicted.

Posted by DreamPredator > 2015-10-25 13:54 | Report Abuse

5 years time, KCChongNZ? I invested 200k in a penny stock in October - November 2013. And it wasn't even the Mother stock, but a newly issued Warrants. By mid-August 2014, it was worth 565k. Now why wud I want to bother with a strong-fundamentals 3rd liner, mid-cap or 2nd liner giving roti-canai dividends & then hv to wait for 5 years for it to double. That is, IF it does ever double.

Posted by DreamPredator > 2015-10-25 13:55 | Report Abuse

One has to do one's darndest best to remain on da best of terms wiff da Goddess of Fortune then, SpermWhale ...

Posted by Kevin Wong > 2015-10-25 14:01 | Report Abuse

more likely to make 10% per annum over 20 years using win-win investing method, or 700% over 20 months using "don't care win-win or win-lose" method?

Good luck and happy investing/trading everybody!

Posted by DreamPredator > 2015-10-25 14:06 | Report Abuse

Depends on which game one prefers to play, Kevin. As a defender, midfielder, goalkeeper, or striker.

Posted by geary > 2015-10-25 14:09 | Report Abuse

KC only makes investing look so complicated. One foot hurdle is so simple, but he want to cross a 7 footer. U know why Uncle Buffett becomes so rich, because he sold all his holdings in 1969, when d market was at its peak. Everyone in Wall Street laughed at him. Most of d stocks in Dow Jones were selling at 40 to 60 times PE, and he knew the bubble were going to POP. Uncle Munger never did that, he got stuck there when the market crashed in 1974. Dat the big differences in term of $$$.

Posted by spermwhale > 2015-10-25 14:12 | Report Abuse

There are games out there with some leverage like futures and currency that you can make few thousand percent a year. Why not give it a try instead of limiting yourself at second liners. What is the difference ?

Posted by DreamPredator > 2015-10-25 14:13 | Report Abuse

It's not the 'method' that is important. So, no need to be distracted by any talk of 'method'. One goes by what works for oneself.

My 'method' is based mostly on watching price action, feeling the pulse of the investing people via forums, biz section of newspapers, biz mags, gut insticnt etc. ... No FA, not TA, no MACD for me ... Only MacD I find inspiring ...

But I quite regularly beat the performance of my remisier ... Honestly ...

Posted by Alphabeta > 2015-10-25 14:16 | Report Abuse

Before you invest in a business, you must know what are the key drivers affecting its top line growth and cash flow performances.

Banking industry is facing a tough time at the moment due to low loan growth, margin compression, rising non-performing loans and tighter banking regulations. Most of the banks with high cost to income ratio are trying hard to trim costs by consolidation its operation and offer VSS to improve bottom line.

With fewer IPOs and low corporate debt issuing exercises, the fees based income also shrinking.

That's why you see a lot of promotions by Kenanga, CIMB etc to encourage younger generation to trade. More trade, more volume and more business.

One year is too short a period for long term investment. If the business you are investing in cannot and has not demonstrate the resilient to withstand the test of time and become a PN17 victim on an economic down cycle, then your selection criteria were flaw in the first place.

In a down cycle with low sales and plunging price, rising NPL and interest rate are common. The moment it defaulted in repaying the principal and interest of secured loans for a period of six months, the secured creditors will take action to recover their debts once they sense the business is no longer viable. Usually this will happen to businesses that have high gearing level during growth phase and fail to manage their working capital and capex appropriately. In other word, it has over trade.

In a volatile market, it is not advisable to throw everything you have on one particular stock. It is prudent to set a limit for a single stock and enter in tranches. Average down should the price move against you.

Posted by DreamPredator > 2015-10-25 14:16 |

Post removed.Why?

Posted by DreamPredator > 2015-10-25 14:20 |

Post removed.Why?

Posted by DreamPredator > 2015-10-25 14:23 | Report Abuse

If one could succeed purely based on 'method' alone, then we would be seeing a helluva lot of methodicians transformed into multi-billionaires, by now ...

Posted by Kevin Wong > 2015-10-25 14:35 | Report Abuse

DreamPredator, any plan to continue trading stocks for the next 10 years or more. Very difficult to maintain that kind of return over the long term

Posted by DreamPredator > 2015-10-25 14:45 | Report Abuse

Kevin, lemme share a secret with you. Only a predator can do it. As for the prey, they will remain what they are. Fodder.

Posted by DreamPredator > 2015-10-25 14:46 | Report Abuse

LOL

Posted by Kevin Wong > 2015-10-25 14:46 | Report Abuse

Dream Predator, my best wishes to you then.

Posted by DreamPredator > 2015-10-25 14:47 | Report Abuse

Just kidding, kid. You stay cool, all right.

Posted by azmimerican > 2015-10-25 14:50 | Report Abuse

Besar kemungkinan return over 10 years bagi dua dua same jer

2% × 10 x 100%( chance) = 20% lwn 100% x 10 x 20%(chance) = 20%

Posted by minorities > 2015-10-25 15:09 | Report Abuse

You go it spot on. No point company reporting good profits if the directors pay themselves high salaries and no dividends.

Posted by DreamPredator > 2015-10-25 15:10 |

Post removed.Why?

Posted by DreamPredator > 2015-10-25 15:14 | Report Abuse

One would be surprised, not a few penny stock companies are making profits that could match or even exceed those reported by mid-cap & second-liner companies.

Now, one would not hope for dividends from these guys, but they give ya much better capital appreciation potential, and thereby much higher potential ROI.

Posted by JT Yeo > 2015-10-25 15:23 | Report Abuse

DreamPredator, im very impressed with your record, by the sound of it, 200-500% is easily achievable by the predator. All the more impressive when one just need to go forum, check magazine, feel ppl psychology and gut instinct.

Most of the superinvestors read 500 pages or 8 hours a day only managed to perform 20-30%, so i must give it to you. You are beyond superinvestors. Rarer than superman

Posted by kcchongnz > 2015-10-25 15:34 | Report Abuse

Posted by geary > Oct 25, 2015 11:03 AM | Report Abuse
Berkshire never paid dividend for years, because the management retained 100% of earnings and reinvested or allocated all the $ into fantastic growth companies. The rate of return keep on increasing, and the return average above 20% per year. The stock has a market capital of above 100 million per lot. Dividend is like father giving a bit of "ang pau" to his children. Company that can generate fantastic growth of EPS is the right one to invest and the ROE and ROTC automatically increased.

Great point. I used to use this argument last time as I did not believe in dividend.

Just make sure that the manager of the company you invest in, which does not pay dividend, is a good capital allocator like Warren Buffet.

And more important, is a credible CEO like WB.

Posted by globalvalueinvestor > 2015-10-25 15:36 | Report Abuse

This is why I love stock market, not many can think like a businessman, or entrepreneur. Tell me if you invested in a business, what do you guys expected? If you expected to sell your share to another person and gain 400% in 5 years or what?