Saturday, January 01, 2005

Stocks to year 2005

oh.. let's take a break from tsunami and focus on something practical here... which we are talking market prospect for the year 2005 ..

I am not a financial guy, so I would take things without prior-view. Means if i tell you the forecast GDP for next year is 5% to 5.5%, without the picture of what was happening (2004 GDP) 5% is pretty small value, compare to a 100%. But of course this is really childish, as in maybe the GDP value is always around this margin. So for this time, I would remember that our forecast GDP for 2005 is 5% to 5.5%.

but what i did learn from the following article are:
Stocks to watch next year

1. How finance gig select good stock; selection criteria ?
Their intelligence called it the "key area":
1a. has Growth
1b. has Divident
1c. has Undemanding valuation. - this will affect the P/E
2. There is another thing call price-earning(P/E) ratio which is technically price/earning (price over earning).Which would affect EPF(Earning per share)
The lower the better the stock is.
Digi P/E is 10 times.
Maxis P/E is 14 times.
Shell P/E is 4 or 5 times.
3. How they(CIMB) forecast Shell's price ?
By looking at the margin of the main activities - refinery; which has a growing margin.
4. How they(CIMB) forecast Digi price ?
Based on the following conclusion:
4a. The company(Digi) has done well in terms of marketing and re-branding. It has been able to find a niche in a very competitive mobile business against two giants, Maxis and Celcom.
4b. "DiGi is very good at introducing new products. Its micro-reload and all those things enable it to reposition itself in the consumer's mind. The only thing it lacks is network coverage, which is not as good as the others." This statement actually means Digi's marketing people are harder worker compared to Celcom and Maxis due to the fact that Celcom and Maxis has better coverage than Digi, and because of this it is understandable that Digi is the smallest among the three and thus still a underdog. In other works, credit is given for hardwork and I am just wondering how they assume this fact ?
Since I am in the same industry currently, the only way they can find out is through evaluation of media (advertising) coverage in the public. Digi has new services (new implementation) every few months.. and Celcom and Maxis would follow suit later. Of course to give credits mainly to the marketing department is not fair because the technical department must be competent enough to make allocation to cater the changes. In conclusion, CIMB thinks Digi has more activities than Celcom and Maxis and thus have better growth lor. Therefore, in the future, when I have a company, I must inform the public relation department to put up a show that my company has a lot of activities.
4c. It(Digi) has started to pay dividends as well.
5. They say KLCC property's stock is undervalued .. meaning no demand. They quoted the reason for people don't understand the business model and cash flow. So the "people" here actually meant player .. big player in the share trading market. Not the community at large who is like me, doesn't know much about finance. So the big player dont know how KLCC property makes money and so don't actually but the share.. they think KLCC Property is in the business of REIT (Real estate Investment Trust). So, this is pretty risky because if even if KLCC Property is making money but REIT is actually slowing down, people wouldn't want to buy the share. Now I finally understand that it is important to have good public relation and media coverage because let say you have a company called "AROJAK" which is selling Rojak. ANd you somehow find a way to be part of the news and get to tell everybody that you are selling Rojak. Then, when the government announced that Rojak can cure cancer, the big player will buy the stock. So i guess you company name also important... because if you are having a name like smelAss and you are doing the Rojak business, people actually think you are in the disinfectant business.

wow what a long blog... haven't finish..
the other panels seems having different opinions.

so CIMB chooses, Digi, Maxis, KLCC Property, Shell.
CIF of Allianze insurance picks mostly pipes manufacturer.
and manufacturer has other definitions to be familiar with.
1. Inventory profits.
2. Operations profits
and how this CIF chooses the favourite stock is based simple criteria:
1. Expansion (plants, countries)
2. New ventures
3. Technology investment - constant upgrade in the machine and and system. NOw i understand why people do upgrade also want to advertise in the newspaper.
4. Product quality
5. Published business deal.

now Kenanga pula picks the following:
1. Proton
2. Pos Malaysia
3. Affin Holding.
4. Southern Bank.
5. Plus expressway.

CIO of pacific mutual fund.
1. Redtone
2. Yi-Lai - Tile marker.
3. Tan Choong
4. Silver Bird - Bread market.
5. Genting bhd

So how do people pick stock for service industry ?
1. They answer customer service phone call during public holidays.
2. They sleep when people dont need them. Because if people find out that they don't sleep, people are scared that this might affect the productivity and thus won't buy the share.

They mentioned this term "ringgit-peg" few times and attributed Sin Chew to be able to cut cost from it.
They did mentioned Sime Darby twice, as well as Hiap Teck and Whitehouse.
They also attributed liquidity to "selling" of shares.

So, despite its educational contents for myself, I think this article is also another from of marketing the shares for their clients.

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