Posted by moolala > 2021-05-26 09:16 | Report Abuse

7c in july + 7c in Nov = 14c dividend this year

Posted by nextan > 2021-05-26 09:59 | Report Abuse

Very good company, longterm tp 5.00

Posted by kywoo > 2021-05-26 11:50 | Report Abuse

There is hardly any counter in Bursa that can show a steady and consistent growth in net profits and dividend in the past 6 years despite economic uncertainty. Before 2015, RCECap had some rough times and the dividends then were miserable. However, after some restructuring and change in management strategy since 2015, the company never look back but continue to grow from strength to strength. Even very good companies like Nestle, Maybank, F & N and Hong Leong Industries etc suffered downturn in profitability in 2020 because of the covid pandemic. However, RCECap was hardly affected but continued to strengthen.

The average PE of Bursa's counters is around 15. Some counters are in fact trading at PE of over 50. I really cant understand why the company's PE has always been under 8 or 7. This fantastic company should be given a PE of around 10 at least. One would only give a PE of 7 or 8 to a company that is without any growth prospect in profit or dividend or perhaps to a company with high volatility or uncertainty in profitability. This is certainly not the case with this company.

The market can be irrational in the short term but will be rational in the long run. I am sure the market will award a higher PE to RCECap in the medium term. Perhaps in the PE region of 11 to 14.

Posted by moolala > 2021-05-26 12:19 | Report Abuse

I second that

Posted by nextan > 2021-05-26 14:26 | Report Abuse

Sir if the PE 15 how much is the tp?

Posted by moolala > 2021-05-26 17:13 | Report Abuse

you can calculate yourself, use trailing EPS x PE

Posted by nextan > 2021-05-26 19:09 | Report Abuse

Thanks bro...

Posted by Goh123 > 2021-05-26 19:53 | Report Abuse

3.70?

Posted by zigua > 2021-06-02 17:11 | Report Abuse

290!

Posted by moolala > 2021-06-03 22:32 | Report Abuse

major shareholders buying shares, they know business is going to be good and share price is undervalued

Posted by kakashi1888 > 2021-06-04 00:59 | Report Abuse

@nextan @Goh123.... if PE 15 then the share price would be around RM5+-. Hope this help you. Cheers

Posted by Goh123 > 2021-06-08 18:35 | Report Abuse

Major shareholder buy back. ... something want happen?

Posted by Sureinvest > 2021-06-08 18:37 | Report Abuse

I think so. I think they are going to privatize this cash cow.

Posted by ming > 2021-06-08 18:42 | Report Abuse

Yea.. but price now alrdy exceed NTA. Even privatise dont think will offer good price

Posted by kelvin17 > 2021-06-10 05:01 | Report Abuse

there is basically no asset why should the boss wanted to privatise , he can set up another similar co at little cost instead of paying us rm 3

Posted by Bgt 9963 > 2021-06-10 08:30 |

Post removed.Why?

Posted by stevenlowcb > 2021-06-10 10:46 | Report Abuse

esos for staffs priced at RM 2.17 tomorrow list

Posted by JayC88 > 2021-06-10 12:51 | Report Abuse

hopefully got chance to buy tmr

Posted by Goh123 > 2021-06-11 17:24 | Report Abuse

Major shareholder buy in again huat ar

Posted by Moolala > 2021-06-11 18:55 | Report Abuse

good earnings up ahead

Posted by observatory > 2021-06-12 14:59 | Report Abuse

Published in The Edge today. "Positive views on RCE Capital maintained, despite FMCO"

Posted by Moolala > 2021-06-12 15:03 | Report Abuse

The Edge has been publishing quite a few articles on RCEcap as of late, hopefully more fund managers will notice this gem and push the price up higher

Posted by observatory > 2021-06-12 15:56 | Report Abuse

I’ll watch out for these few factors:

1. Revenue growth – can expect little growth given the loan book growth has slowed considerably. The management has turned cautious even before the pandemic. But I agree as it’s better to be too cautious than overly aggressive in this personal loan business

2. Asset quality – continues to hold up very well. It’s helped by the job security of its customer base (civil servant) where repayment is mostly through salary deduction.

3. Interest rate – It has benefited from lower funding cost in the past few years during the interest rate down cycle. But 10Y Malaysian government bond yield has recovered from the 2.5% low last year to current 3.2%. How fast will it rise in future, and how might it affect future cost of borrowing and therefore the net margin?

4. Valuation – This is a contentious topic. Some investors here feel that it’s undervalued. Based on Maybank’s projection of FY22E book value of RM2.37, currently RCE trades at 1.24X PB against expected FY22E ROE of 15.1%.

Instead of comparing against valuation of another lender like Aeon Credit (which stirs up a different kind of disagreement with AEONCR investors), I look up at BIMB, which also offers a lot of personal loan to civil servants (although also other banking, stock brokerage and insurance thrown in).

AM Invest projects 2021E BV at RM4.08, which is 0.84X PB, against FY21E ROE of 12.8%. In this not perfect comparison, RCE Capital doesn’t look too much undervalued in a relative sense. Besides, BIMB being a larger cap stock and more liquid could attract larger funds, and therefore in theory should enjoy higher valuation.

Anyway, like it or not, the share price is determined by the market. For me it's good enough to just hold and collect dividends regardless of share price movement, as long as fundamentals remain sound.

Posted by kywoo > 2021-06-15 21:51 | Report Abuse

I do not agree that we should emphasize too much on the price versus book value factor in determining the fair value of a profitable and well managed stock. We should look at the company as an on going concern and not on a liquidation basis. If a company is not doing well and has been losing money every year, then the book value or net asset value becomes important. If the net asset value is much higher compared to the share price, it makes sense for some party to take over the company and strip its assets for sale. This is especially true for non performing property companies.

Take for example the net asset value of Nestle Malaysia. It is only 3.16 and yet the share price today is 135.4. Hence, the share price is 43 times its net asset value. This is because everyone expect Nestle to operate indefinitely over the foreseeable future and liquidation of its assets as unlikely.

The same principle should apply to RCE Capital. As the company is well managed and has a track record of increasing profit and dividend over the years, the more important consideration would be PE ratio and dividend yield. Barring unforeseen circumstances, the company is expected to operate well into the foreseeable future and continues to grow. Hence, the book value to price ratio becomes less relevant.

As far as I am concerned, if the PE ratio of this company is well below 10 and its dividend yield is above 5.5%, I will continue to accumulate this counter slowly but surely. In fact, I started collecting this counter at around 1.60 early last year because I was attracted by its fundamentals. My only limitation is availability of cash to buy more.

Posted by observatory > 2021-06-16 00:00 | Report Abuse

Hi kywoo, I certainly agree RCE Capital is well managed.

I cited the PB and ROE valuation method not because I value it on liquidation basis, but because it’s commonly used for most financial stocks. Maybank and RHB analysts also use this method to derive their TPs for RCE.

Thanks for sharing your investment journey on RCE. I could imagine adding this stock if I have not owned it as I feel it’s fairly valued (though you think it’s still undervalued). But like you, I’ve accumulated before Covid-19, though not anymore now given it’s one of my top holdings and I want to avoid too much concentration.

Posted by JayC88 > 2021-06-17 18:19 | Report Abuse

rm3 surely is a tough nut to crack, but i'm happy buying up the dips. good one to hold long term and reap the dividends.

Posted by observatory > 2021-06-26 19:08 | Report Abuse

Last Sat The Edge ran an article with the title “Bank Rakyat’s continued reliance on personal financing raises questions”. It talks about the space of personal financing which could provide useful info to RCE Capital shareholders.

I summarize the key points as below:

1. Bank Rakyat has a personal financing portfolio of RM59 billion, making up the 76% of total financing portfolio of RM78 billion.
2. For comparison, the size of Malaysian personal financing/ loan is RM104 billion. (RCE Capital’s portfolio is only RM1.7 billion)
3. Gross impaired financing is 2.12% (total portfolio). Compare against RCE Capital GIL at 4.0%
4. A BNM study in 2018 showed that Malaysian civil servants spend more than half their monthly salaries repaying debts compared with one-third for average borrowers.
5. Personal financing amounted to 34% of civil servants’ total debt as opposed to national level of 15%

Posted by Moolala > 2021-06-27 14:59 | Report Abuse

Thanks for sharing

Posted by kywoo > 2021-06-29 22:44 | Report Abuse

Thanks for sharing Observatory. I think RCE Capital has learn an expensive lesson in 2013. They were then too aggressive in penetrating the loan market to civil servants. There was no proper internal controls. As a result of some changes to the lending rules, they made some big write offs. Since then, they are very careful in their lending, limiting the size and tenure of their loans.

It appears to me that they do not want quantity but rather quality in their loan portfolio. They try to control their portfolio growth to no more than 10% per annum. At the moment, their portfolio size of RM1.7 billion represent less than 2% of the total market potential. A lot of room for growth but they are in no hurry. I have full confidence in their management. Slow, steady and profitable.

Posted by Cheong88 > 2021-06-30 20:12 | Report Abuse

https://malaysiastock.biz/Company-Announcement.aspx?id=1330501

https://www.klsescreener.com/v2/news/view/848463/%E7%99%BE%E4%B9%90%E5%9B%AD%E8%81%94%E6%89%8B%E6%95%B0%E5%AE%B6%E5%85%AC%E5%8F%B8%E7%BB%84%E6%88%90%E8%B4%A2%E5%9B%A2-%E7%94%B3%E8%AF%B7%E6%95%B0%E7%A0%81%E9%93%B6%E8%A1%8C%E6%89%A7%E7%85%A7

Posted by keong118 > 2021-08-06 22:35 | Report Abuse

2.5

Posted by ooihk899 > 2021-08-12 17:19 | Report Abuse

QR sui, grats to all shareholders

Posted by ooihk899 > 2021-08-12 17:33 | Report Abuse

Good chance next Q will declare a higher interim dividend

Posted by Moolala > 2021-08-12 18:13 | Report Abuse

Solid as a rock

Posted by thesteward > 2021-08-31 20:41 | Report Abuse

I strongly believe this one stand a v high chance get the digital banking licence.

Posted by ooihk899 > 2021-08-31 21:55 | Report Abuse

The boss start buying since 3rd June until now. Hope something is brewing.

Posted by thesteward > 2021-09-06 13:25 | Report Abuse

Solid co

Posted by thesteward > 2021-09-06 13:25 | Report Abuse

Hope to cu at 5

Posted by thesteward > 2021-09-06 18:02 | Report Abuse

Holding tight long term investment

Posted by ipohwhitecoffee > 2021-09-06 20:41 | Report Abuse

Solid fundamental co. Tan Sri Azman keep on acquiring from open market.

Posted by thesteward > 2021-09-06 21:20 | Report Abuse

Yes indeed . V prudent businessman Tan Sri.

Posted by up2_sky > 2021-09-07 09:14 | Report Abuse

continue acquire..Up Up

Posted by Hu00mun > 2021-09-07 13:21 | Report Abuse

Up up up ⬆️

Posted by Beethoven > 2021-09-07 17:24 | Report Abuse

VCP liao la.. mari mari ohm

Posted by maximus . > 2021-09-07 18:48 | Report Abuse

this stock is a hidden gem....

Posted by thesteward > 2021-09-07 20:19 | Report Abuse

Holding tight tight

Posted by thesteward > 2021-09-10 12:11 | Report Abuse

Pattern splendid liao hopefully next week spike

Posted by thesteward > 2021-09-10 18:18 | Report Abuse

Wah beautiful close . Go down n then up above last high is a very nice pattern lo

Posted by 1345 > 2021-09-12 17:07 |

Post removed.Why?

Posted by thesteward > 2021-09-14 22:11 | Report Abuse

Switching my finance shares to rcecap