Accumulating Wealth

Accumulating Wealth 13

Has the Bull Lost its Steam?

Recently, while everyone was talking about which counters to buy, the bull seemed to have lost its steam. Since the second week of April, the strong uptrend counters have turned sideways, mainly due to the geopolitical tension arisen in Syria and Afghanistan. To make things worse, pressure has risen after the US deployed an aircraft carrier off the Korean peninsula amid its joint military exercise with South Korea.

As a result, gold and the yen rallied to five-month highs while Treasury note approached the lowest levels of the year as investors sought to traditional havens from geopolitical risk. Likewise, oil has surged from the previous low of $48 to $53 per barrel in a few days, which helped the Ringgit strengthen in some way.

Domestically, we can sense the ambience of panic selling. On 14th April 2017, the KLCI fell 7.2 points, with losers outweighing gainers at 810 to 171. In such a sudden change of sentiment around the globe, how does our portfolio fare?

Let’s have a look at our portfolio:

Accumulating Wealth 12

From the table, since its inception in November 2015, we’ve gained 155% returns till 14th April 2017. Compared to KLCI of 4.5% gain, it’s a much better result. Apart from luck factor, our stocks-pick criteria, such as company’s track record, growth prospect and technical uptrend have helped.

Bought HSSEB (0185)

On 5th April 2017, The Star paper published an article entitled “HSS Seeks to Transfer to Main Market’.

HSSEB is an engineering and project management firm that only listed in Ace market since August 2016. The company specialises in infrastructure, such as MRT, LRT and highways. More than half of its employees are engineers. Its strong track record in project delivery would enable the company to capture many growth opportunities ahead.

According to its annual report (2016), HSSEB has an unbilled order book amounting to RM378.4 million, which will keep the company busy for the next three to five years. With the market riding on the construction boom this year, the company is expected to be awarded more contracts in the coming months.

We took the chance to buy 50000 shares of HSSEB at 0.91 per share on 14th April when the market was panic selling, as we saw the war tension as a temporary situation. With the intention to preserve cash, we’ve sold 20000 shares of Hevea at RM1.39 and 20000 shares of Pohuat-wb at RM0.85. With the cash brought forward plus the transactions performed above, and the 6 cents dividend received from Superlon (RM1500 received), our new cash level has gone up slightly to RM26360.

Proposed Bonus issue of JHM and Share Split of Superlon

In April this year, there were bonus issue proposal for JHM and share split for Superlon.

For JHM, it’s a bonus issue of one for one, followed by a private placement, whereas for Superlon, it’s a share split involving the sub-division of every one share into two. What is the indication?

While the bonus or share split will create more liquidity for its share trading, it doesn’t change the company’s fundamentals because the valuation remains the same. So if you’re wondering to buy before or after the bonus or share split, I’d say so long as the company’s prospect remains bright, it’s good to invest earlier. But if you’re unclear to the company’s future, it’s better to exit.

Conclusion

So has the bull lost its steam? It doesn’t matter, because stock investment is about doing the right thing. If you buy on valuation and growth prospect, gaining profit is just a matter of time.

Binyuen is the founder of BY Enrich Resources and the author of ‘Life beyond the Comfort Zone’ and ‘Profit from Share Investment’. His books are available in major bookstores in Malaysia, Singapore or online http://www.teybinyuen.com/profitfromshareinvestment .

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