Saturday, 27 August 2011

Decent UOA Dev Hits New Low

From a retail IPO price of RM2.52 just over 2 months ago, UOA development share price has fallen 42% to close at RM1.47 yesterday, while touching a historical low of RM1.40. A set of promising FY11Q2 financial results do not seem to offset the selling pressure resulting from the gloomy global economy outlook.

UOADEV has a cash and equivalent of RM368mil, compare to a total borrowings of RM21mil only. Some people may worry that after the Bangsar South mega project completes, UOA Dev may run out of source of revenue. However, it still has future development Sri Petaling, Segambut & Glenmarie, and is in a strong cash position to acquire new land.

Can UOA Dev share price rebound next week? Will it dive further? Well, it all depends on the whole market sentiment. Yesterday US market is up, even though no concrete good news from Bernanke. Next week there will be a long holiday in between the week. So, expect the trade to be cautious with low volume in Bursa.

     UOADEV: going south



Kuala Lumpur, 25 August 2011 - UOA Development Bhd on 23 August 2011 announced its financial results for the second quarter ended 30 June 2011.

For the quarter under review, UOA recorded positive growth in revenue at RM173.33 million, marking an 18.9% quarter-on-quarter (QoQ) increase. Current quarter’s gross profit is 12.1% higher with a gross profit margin of 50.6% for the first half of 2011. Normalised Profit After Tax and Minority Interests (PATAMI) excluding fair value adjustments rose considerably by 44.6% against the preceding quarter from RM42 million to RM60 million.

The results are also reflected by a significant shift in revenue and gross profit contribution from commercial to residential segment. For the first half of this year, UOA recorded strong sales of RM533 million on the back of strong demand for its development properties. The total revenue contribution from the residential segment increased from 25% (over RM36 million) in the first quarter (Q1) of 2011 to 59% (approximately RM101 million) in the second quarter (Q2) of 2011 in line with increasing focus by UOA to meet the growing demand for residential properties in Klang Valley.

UOA maintains a strong balance sheet position with cash and equivalent of RM368.37mil as at 30 June 2011, which together with the low gearing ratio, allows for potential future land acquisition and development.

UOA will continue to actively address the demand for quality commercial and residential properties with the development of its land bank that constitutes a saleable area of over 1.4 million sq m including its flagship project, Bangsar South and other upcoming developments in key locations such as Taman Desa, Sri Petaling, Segambut and Glenmarie that will form a solid basis for its growth over the next five to seven years.

UOA will capitalise on its strong balance sheet and continue to seek opportune and strategic development lands while maintaining a focus on strategic locations within the Greater Kuala Lumpur.

In the pipeline for the remaining part of the year are various UOA’s project launches including Villa Botanica and One@Bukit Ceylon Hotel Suites with a total estimated GDV of RM420 million which are expected to increase the total new sales for 2011.

Analysts are of the opinion that UOA is on track to meet the expectation for 2011 barring any unforeseen circumstances.

    Bangsar south: transform Kg Kerinchi & Pantai Dalam

KUALA LUMPUR: CIMB Equities Research is maintaining its Outperform rating on UOA Developments Bhd after its annualised 1H core net profit met expectations at 93% of its forecast and 94% of consensus projections.

The research house said on Wednesday, Aug 24 that future quarters should be stronger as recognition of the strong year-to-date sales picks up pace.

CIMB Research said the good results should also boost confidence in the group’s ability to meet the research house’s FY11 core profit forecast of RM224 milllion.

“However, in view of the stock market turbulence of late and global slowdown fears, we now value UOA Dev at a 20% discount to market P/E instead of 10% given the higher risks inherent in its large exposure to high-rise residential and commercial development.

“Our target price falls from RM3.25 to RM2.89 as we lower our P/E target from 13.1x to 11.6x. We maintain our OUTPERFORM call in light of the potential catalysts of 1) improving earnings, 2) continued strong sales and 3) landbank acquisition,” it said.

Friday, 26 August 2011

CIMB Below Forecast?

In a bear market, good news are generally ignored. Investors do not react much to good news, but tend to react excessively to bad news.

For CIMB, it seems like there is no single special reason for its recent dive in share price. It's below RM7 today, a psychological support? The major concern seems to be the slower than expected growth, which does not meet some people's forecast, and of course the Indonesia issue may also weigh in.

Anyway, EPF and Mitsubishi Financial group are accumulating CIMB's shares in August.

Everyone is waiting for Bernanke's speech today.


KUALA LUMPUR: The stock of Malaysia's number two lender took a beating yesterday, closing 4.6 per cent down to a one-year low of RM7.25, on concerns of slower growth this year.

Analysts said as the stock has a lot of foreign owners, it was no surprise that there were more sellers than buyers since Wednesday, despite CIMB Group Holdings Bhd's record second quarter earnings on Tuesday.

"It is similar to Axiata's stock. Axiata also has high foreign shareholding and it suffered the same fate," said one analyst.

The analyst said since CIMB has always commanded a high valua-tion, a slight concern over its performance can easily affect the stock price.

CIMB's earnings rose 9.1 per cent to a record RM970.01 million in the second quarter ended June 30 2011 from RM889.46 million a year ago.

Despite that, it was considered to be still 9.2 per cent below the consensus of most analysts.

They attributed the sell down of the stock to mostly concerns over slower loans and non-interest income growth.

MIDF Research for one has cut CIMB's earnings forecast for 2011 by 6 per cent due to the low loan growth.

OSK Investment Bank equity capital market head Gan Kim Khoon said CIMB's results were below the expectations of many.

"And there are concerns over its stake in Indonesia's Bank Niaga as CIMB has got more to lose with the new ruling compared to Maybank," he said.

Thursday, 25 August 2011

CIMB: Why 2 Long Black Candlesticks?

CIMB has just achieved a record in its 2011Q2 profit. However, its share price fell 54sen (7%) with high volume from RM7.79 to RM7.25 in just 2 days! Why? I also want to know. Generally market sentiment is currently lifted a bit. If no particular devastating bad news, then may be can consider to buy already...??

From Reuters:

CIMB’s second-quarter net profit of RM970.02 million exceeded a JP Morgan forecast, which pegged the quarter’s earnings at RM942 million. 

Eighteen out of 24 analysts tracked by Thomson I/B/E/S have a “Strong Buy” or “Buy” call on CIMB, while five have “Hold” calls. 

     CIMB is facing selling pressure

Perhaps the CEO is too "honest" and pessimistic?


Group chief executive Datuk Seri Nazir Razak said: 

“We had another quarter of record profits in the second quarter, underpinned by a strong uplift from our Malaysian consumer banking operations and continued high growth at CIMB Niaga.

“We are, however, still behind our return on equity (ROE) and balance sheet growth targets for the year as we have been treading more cautiously given the uncertain global environment.”

“We are maintaining our 17% ROE target, but with a cautious outlook, meaning that we are more conservative to risk. We maintain more liquidity, more capital and more diversification of portfolio,” 

Nazir said his caution stemmed from the weakness in Western economies, which were not just volatile, but also diminishing in trust.

This could potentially cause a repeat of 2008 (credit crisis in the United States).

“Right now, India, China and the Middle East are pre-occupied and cannot offset the impact like what they did in 2008,” he said.

“The Asean region is strong, but it doesn't have much fiscal space to offset the deteriorating external outlook. Unlike in 2008, we may not be as immune to that crisis this time.”

Some of the indicators to watch out for would include a more credible debt resolution plan from the Western world, he said, adding that a more concrete plan by the West was absolutely needed.

“Another thing favourable could be a big drop in oil prices which will lower cost to the United States and could be a big boost to the US economy. These are some of the indicators we would be looking at.”

On talk that the Indonesian central bank was to enforce a ruling for foreigners to pare down their stake to below 50%, Nazir said this was the prerogative of the Indonesian government, and if it really happened, then CIMB would abide by the rules. Presently, CIMB holds a 96% stake in PT Bank CIMB Niaga Tbk.

“We will be disappointed if we have to reduce our stake in Bank Niaga, but we hope to be able to continue to fully invest in it. My pre-emptive measure is to pray very hard,” said Nazir.


Is it because of the concern on Indonesia CIMB Niaga's stake? Is it something related to MBF holdings? Is it because of the decreasing revenue despite raised profit? Is it because Maybank has better financial results and dividend payout? Is it just panic-selling? Is it others?

Perhaps CIMB's CEO should talk in KNM's style (dead also can talk until alive).

Wednesday, 24 August 2011


KNM disappoints again. Its FY11Q2 registered a profit after tax of RM9.9mil. However, a big chunk of it comes from tax incentive given by the government. Without it, the profit before tax is a mere RM1.8mil this quarter for such a "big" company. This figure means the PBT is down 71% QoQ and down 78% YoY, despite a better revenue.

RM mil Revenue PBT Debt
FY10 Q1 373 0.2 1160
FY10 Q2 383 8.3 1080
FY10 Q3 418 41.0 1070
FY10 Q4 384 6.9 1050
FY11 Q1 413 6.3 1010
FY11 Q2 544 1.8 1030

With a profit like this, how is it going repay the big sum of debt? 

A bit of positive is the rising revenue, order backlogs of  RM5.5bil and tender book of RM17bil. If the overall market is slow to improve and the profit margin continue to diminish, will we see KNM making loss in future quarters?

How about KNM's profit guidance of EBITDA of RM363mil for FY2011???

Tuesday, 23 August 2011

Local Banks: CIMB in Focus?

The market has been volatile since the drastic slide on 5th Aug. Some people start to worry about a double dip, some not. The Bursa Index has fallen almost 75 points or 5%. Not so much actually. However, is the market just taking a breather and will continue to slide soon?

Perhaps it may be time to hunt for some blue chips. Here are the price movement of major local banks since 4th Aug 2011.

4 Aug 22 Aug % Drop
AMMB 6.49 6.40 1.40
CIMB 8.40 7.77 7.50
HLBANK 13.56 12.78 5.70
MAYBANK 8.85 8.64 2.40
PBB 13.42 12.90 3.90
RHB 9.22 8.93 3.10

Maybank and CIMB actually started their down trend journey in early July when Indonesia government plans to restrict foreign ownership of commercial banks there. This regulation may go into effect as early as Q4 this year. Both CIMB and Maybank have business there, especially CIMB, with its 97.9% owned PT Bank CIMB Niaga.

So, CIMB's share fell the most among all the banks. Then, is it the most "valuable" buy at the moment?

Indonesia has about 100 banks and 47 of them have foreign ownership. CIMB Niaga is Indonesia's fifth largest bank by asset size with 845 outlets! It just recorded a RM545mil net profit for the 1HFY11 ended June 2011, a 37% increase from a corresponding period a year ago. If foreign ownership restriction is implemented, it will affect CIMB's earning.

CIMB recently entered into India market for the first time with its opening of Mumbai's office.

There is a source which says that MBF holdings is keen to offload its credit card business and CIMB will be the one who will take over it. This news may be announced "very soon" and surely will benefit CIMB a lot.

CIMB is going to announce its latest financial result soon. So lets see how it is.

HDD Players Head-to-Head

Eng, JCY and Notion all have released their latest financial results this month. Lets see all of them in a glance.

Rev (Profit) RM mil Current quarter QoQ YoY
Eng 133 (5.6) 120 (4.8) 135 (12.6)
JCY 395 (-31.8) 397 (12.4) 481 (55.6)
Notion 61 (10.1) 54 (10.8) 61 (2.9)

Obviously JCY is the worst performer. Eng and Notion are able to hang on with their revenue. Even though Notion get the least revenue, but its profit margin is quite impressive with the greatest net profit.

Eng has the smallest amount of outstanding shares (122.5 mil), followed closely by Notion but JCY has almost 16x more. For FY2010, EPS of Eng is the greatest with 40sen with Notion 25sen and JCY 8.6sen. However, this is going to change in the current FY11 in which we will see Notion top the rank. Eng may be then be privatized if the takeover is successful.

JCY in Red Alert

JCY International just posted its FY11 Q3 financial result, it makes a loss of RM 32mil and for the first time since listed in Feb 2010, its cumulative net profit falls into red.

The loss in current quarter is mainly due to lower sales and high material cost, with global demand of PC weaken. Recent fear of another round of recession definitely does not help JCY.

I still remember the time when JCY was listed, it is regarded as one of the biggest tech IPO in south east Asia. It is the largest HDD manufacturer in Malaysia, with a revenue 10x more than Notion Vtec and 4x more than Eng Technology. Its revenue and profit in the first 3 quarters of 2010 are impressive. However after that, everything seems to go wrong with JCY.

RM mil Revenue Profit
FY10 Q1 528 77
FY10 Q2 550 66
FY10 Q3 481 55
FY10 Q4 486 -22
FY11 Q1 439 7
FY11 Q2 397 12
FY11 Q3 395 -32

There is a remarkable turn in JCY's profit, together with the worrying reduction in its revenue.

Today JCY opens at 45sen, down 2sen from yesterday's close. From an IPO price of RM1.52 merely one and half year ago, JCY has seen 70% of its value wiped off. Those who bought the share at its high of RM1.95 in April 2010 and hold until now will suffer a substantial paper loss.

     JCY since listed. Going downhill.

What about the whole FY2011 result 3 months later? Can JCY turn its fate around? I don't think so. Perhaps it will end the FY in red, from a RM176mil profit last year.

Tuesday, 16 August 2011

Notion FY11 Q3

Just a couple of weeks after Notion announced that it is still in talk of a possible stake sales, now seems like the talk has already collapsed!

Notion just announced its 3rd quarter 2011 results. There is no major surprise. However, it's good that it is on track to register a record revenue and net profit year, after breaking those records every year since listed in 2005.

In 2011Q3, Notion's revenue rises steadily, the net profit though increases 240% YoY, but reduces 6% QoQ. As an 80% importer mostly done in USD, the weakening of USD has a significant impact on Notion. However, the impact is slightly offset by its USD hedging at RM31.2-3.22.

RM mil Revenue Net Profit
2006 90 24
2007 105 26
2008 146 33
2009 173 36
2010 227 37
3Q2011 175 34

Bear in mind that Notion is primarily a hard disc drive (HDD) component manufacturer. While other counterparts in Malaysia such as JCY, Dufu and Eng suffers significant reduction in revenue and profit since the beginning of this year, Notion is able to sail through it convincingly, thanks to its shift from HDD to camera/auto segment (detail in previous post).

Notion announces recently that it has secured a new 4+3 years contract from TRW Automotive to manufacture parts for hydraulic braking system. This will contribute about RM20mil revenue in FY2012 with estimated margin of 15%. This is not bad as this single contract in Notion's smallest automotive segment already contribute ~10% of 2010's revenue. Moreover, the new aluminum ingot plant is starting to generate a new source of income.

   TRW: One of the largest automobile safety products provider

The management of Notion still remain cautious regarding future earning due to economy concern in the US and Europe. Its guided revenue for the final quarter 2011 is RM60-65mil.

Below is the latest analyst report by Maybank IB.

Notion VTec Bhd
(Aug 12, RM1.97)

Maintain buy at RM1.95 with target price of RM2.40:
9MFY11 net profit of RM34 million (+17% year-on-year) made up 71% and 76% of ours and consensus full-year forecasts. We maintain our “buy” call as valuation is inexpensive at 4.1 times CY12 PER, backed by a solid growth trend (38% two-year net profit CAGR). Our RM2.40 target price pegs Notion on 4.5 times FY11 EV/Ebitda, reflecting regional peers’ (ex-Japan) valuations. Our target price also indicates an undemanding forward PER of 5.1 times, significantly below the eight times average for our small-cap universe.

Despite a seasonally soft quarter, Notion reported stronger revenue of RM61 million (+13% quarter-on-quarter) owing to growth from all segments, especially camera (+20% q-o-q). Growth in camera sales was underpinned by lens body mount and lens sub-assembly works for Nikon, which commenced in April this year. Product mix continued to be skewed towards the camera segment, accounting for 48% of total revenue, while HDD and auto account for 36% and 16%, respectively.

Net profit of RM10 million was, however, down 6% q-o-q, primarily due to higher tax rate of 23% (+12 percentage points q-o-q). Pretax profit rose 9% q-o-q despite a slight contraction in earnings before interest, tax, depreciation and amortisation (Ebitda) margin by 1.8 percentage points on higher costs (i.e. labour, packaging, transport) and the weaker US dollar. Additionally, Notion reported a RM2 million derivative gain on its hedge contract in 3Q (2Q: RM3 million).

We understand that the company is in the midst of securing new customers/orders: Nidec (2.5” HDD baseplate), Axix (camera), TRW (auto) and Continental (auto). However, we also caution that there may be a pullback in orders due to the global recession outlook. We maintain our 38% two-year net profit CAGR forecasts for now, pending an analysts’ briefing. — Maybank IB Research, Aug 12

    Decent EPS and ROE. The forecast is rather optimistic here.

Notion Latest Target Price

Aug 2011 Target Price
Maybank 2.40
ECM 2.43
OSK 2.25


Live with Special Neighbours

Penang island is so short of land until the dead have to give way.

The newly launched residential development Shineville villas (3-storey terrace) and Shineville park (condominium) by OHM Group sit above graveyard situated along Lebuhraya Thean Teik. There has been a lot of high-rise residential development around this huge graveyard such as All Season Park, Melody Home, BL Garden etc but I guess this is the first one which sit exactly above the graveyard?

     Shineville Villas

    Shineville Park

The Star did report back in 2010 that 60 graves will be exhumed to give way for this development. Thus a lot of people may not wish to buy this property because of this factor. However, if the price is cheap, then it may be another story. 

Let's check the price, Shineville villas 3-storey terrace with land of 1367 sq ft starts from RM890,000. I'm not very sure what is the current market price of other 3ST at bandar baru Air Itam but I guess should be around RM1 mil or more. About the condominium, the price starts from RM366,000 for 1300 sq ft (RM281psf). The opposite All Season Park condo should be around RM300-350psf. Please correct me if I'm wrong.

Any condo with good facility below RM300 psf  in Penang island is considered very cheap in my opinion, and the Shineville is located close to the city center and just next to Chung Ling High School! However, this area's traffic is congested and surrounded by graveyards.

     Location of Shineville. Graveyard is not mentioned as usual.

Because of the exhumation news, a lot of people may imagine that the to-be-developed land is full of graves. However, this may not be true if we check the development site map and google map. The development is 4 hectares or 10 acres (5 football fields), and it only contains 60 graves. 

     Shineville site map

    Shineville: the condo will have a great graveyard view

From the google map we can see that the Shineville is actually developed on a non-graveyard land, may be the 60 graves that need to be exhumed are located at the periphery of its border.

So, for the indicative price above, is it worth to buy/invest here?

Monday, 15 August 2011

Section 17 New Look Soon?

PJ's Section 17's flats are planned to be redeveloped! I think it is good move as the flats are very run-down and this area which is fronting the busy Jalan University, can be a hot property area and is popular among UM students.

After a few years, may be we can see a row of modern shop offices with alfresco F&B outlets facing the main road, and a stretch of new apartments/condominiums behind it. From google map I just notice that Jaya One commercial area is just opposite the flats. It has been many years since I last visited this place, so please forgive my ignorant. Hope to have a chance to bring back the old memory soon.

     PJ Seksyen 17

It's good that the residents who are forced to move out will be compensated with a larger unit on the original site, but the RM500 a month compensation can only get you a room in that area I guess. Anyway, if got chance and fund, I wish to get a unit there...


THE Selangor State Development Corporation (PKNS) is planning to redevelop the Section 17 flats in Petaling Jaya.

PKNS business development engineer Yeo Cheng Chuan and DKLS Indsutries Bhd senior manager Yee Chee Yong have presented the compensation package to the residents.

“We are proposing a replacement unit at the new development in the same location,” Yee told reporters at a meeting attended by about 40 residents from Block A and B of the flats in Jalan 17/2 at the Section 17 community hall recently.

Each owner of the 592sq ft flat would be compensated with a 700sq ft unit.

Among the other compensation proposed were a RM5,000 moving out allowance, RM8,000 moving back allowance and rental subsidy of RM500 per month until the project was completed.

In addition to that, the leasehold period of the new development would be renewed to 99 years instead of 30 remaining on the existing titles.

The PKNS put the market value of the units at RM96,496 (592sq ft at RM163 per sq ft) each.
Yee said they were open for discussions with the residents.

“If they feel the compensation is not enough or have other suggestions they can let us know. We will only go through with the project when we have 100% agreement from the residents,” he said.

Several residents wanted to know the details of the proposed development but project consultant YTS Design Malaysia Sdn Bhd managing director Yap Teak Sing said they did not have any finalised proposal for the project.

     Quite run-down flat

“We have to get 100% agreement from owners before we can go ahead with the project and we are still in the discussion stage of the project,” he said.

“After we get the agreement, we must also work with the local council to change the status of the land from residential to commercial,” he said.

Yeo said they had had three rounds of discussions with the residents before this and still had many more to go with the others.

Flat owner Fong Ten Chee said the residents still had to review the compensation package as the market value proposed did not reflect the current value.

He said they would be getting people together to form a pro tem committee so that the owners could come to a consensus.

Another resident Chun Kok Meng said redeveloping the old flats was a good proposal but felt that PKNS could offer them a bigger unit.

Flat owner Mokhtar Stork said the developer would be building a lot more than the 500 units and that the compensation was below the projected profits.

His daughter, Maria Hadijah, said there were many senior citizens staying in the area and it would be difficult for them to find an alternative place.

“It would be hard for us to find a place within the same area to move to temporarily.

“The RM500 that they are offering per month can barely get us a room in Petaling Jaya, let alone a house for the whole family,” she said.

Eight other meetings with residents and owners have been planned at 9.30am over the weekends until Oct 1 at the same location.

Thursday, 11 August 2011

Now MAS Can Fly

MAS and Airasia now work hand-in-hand, could it mean no longer cheap air tickets from Airasia & Firefly?

From a share swap deal, now Tune Air (largest Airasia shareholder) holds 20.5% of MAS, and Khazanah (largest MAS shareholder) holds 10% of Airasia. However, surprisingly Tune Air which is owned by Airasia's chief Tony Fernandez & Kamarudin, just hold about 23% of Airasia's shares.

This collaboration is good for MAS and not so good for Airasia, as we can see from the share price reaction. Currently we all know that MAS is struggling in the mud, while Airasia is flying high with unlimited growth potential. Both airlines are from Malaysia, if given an equal chance to compete, I guess sooner or later MAS will become a history.

However, MAS represents the country's pride and the government will not let it die. So, cooperation between MAS and Airasia is inevitable in the future, just I don't expect it to happen so soon. If not, Airasia may face a lot of problems when the government need to save MAS.

I must admit that Airasia, steered by its founder Tony Fernandes has been very well managed. For MAS, it is the other way round. MAS previous directors were unable to lift MAS effectively but no worry to them, they still can get a good job in the government after leaving MAS... Now with Tony & Kamarudin appointed as directors of MAS, I think it will only do good to MAS.

More than 50% of Airasia shareholders are foreigners. I don't know how much its share price will be pulled down and when will it find a bottom. However, the long term prospect of Airasia should still remain good, because of less competition in the country and more expansion overseas, unless the world market is going into a double dip. Airasia buys into a currently-loss-making, but business-wise-strategic company.

As for MAS, now it can concentrate more to compete with other countries' luxury airlines, without worrying too much about local competition. Its share price already took off and may see more upwards potential, but be careful of 2nd quarter's result which will be released soon this month.

Cooperation between 2 rivals should be good. The outcome depends on how is it going to be executed later on.

As for ordinary people like us, we just hope that air tickets price will remain low.

Stocks to Watch

US market fell more than 4% again yesterday. However, seems like Asian market refuses to follow its sell-down like 2-3 days ago. Is it a good sign?

Bursa today opens 13 points down then quickly dives to -26 points after just a few minutes. At noon now, it narrows its loss to around -7 points. Most other Asian markets recover a bit from early morning's dive, with some like Shanghai, NZ and Seoul even in green now.

Viewing as a big picture, the recent sell down may not finish yet, as there is no strong reason or good news to stage a trend reversal. However, short term correction may be on its way.

Listed below are a few non-blue chips stocks that I personally feel worth to consider at this moment, mainly because they are either fundamentally good, recently under the spot light or very much oversold. Of course, there are a few blue chips that look attractive too, and they should be included in your list.

This list of stocks is for reference only, not a buy call. There are still lots of good stocks not listed here. Thus, trade on your own risk.
  • UOADev

  • UEMLand
  • Mahsing
  • SPSetia
  • E&O

  • Coastal
  • Mudajaya

  • Gamuda

  • BJCorp

  • DRBHicom
  • Ivory
  • Huayang
  • Perwaja
  • Kinsteel
  • Tambun
  • IJMLand
  • UMLand
  • Leader
  • Airasia

  • WCT
  • Waseong
  • Yinson
  • MEGB
  • KianJoo

Anyone can share more?

Tuesday, 9 August 2011

Two 'A's is not Enough

If we get an A for exam or a project, we will be very happy. If we get AA, then we will have party. If we get AA+, then we will definitely fly to the sky.

United States credit rating gets AA+, but the stock is down like hell. Why? It is actually a downgrade from AAA to AA+ by Standard & Poor's. Still not bad what, at least still got 2 "A"s and a "+".... but apparently I still need to learn economy a lot.

What is credit rating, and how do people rate it? Here is some info from Wikipedia.


A credit rating evaluates the credit worthiness of an issuer of specific types of debt, specifically, debt issued by a business enterprise such as a corporation or a government. It is an evaluation made by credit rating agency of the debt issuers likelihood of default. Credit ratings are determined by credit ratings agencies. 

The credit rating represents the credit rating agency's evaluation of qualitative and quantitative information for a company or government; including non-public information obtained by the credit rating agencies analysts. 

Credit ratings are not based on mathematical formulas. Instead, credit rating agencies use their judgment and experience in determining what public and private information should be considered in giving a rating to a particular company or government. 

The credit rating is used by individuals and entities that purchase the bonds issued by companies and governments to determine the likelihood that the government will pay its bond obligations.

A poor credit rating indicates a credit rating agency's opinion that the company or government has a high risk of defaulting, based on the agency's analysis of the entity's history and analysis of long term economic prospects.

Credit rating are assigned by credit rating agencies such as A. M. Best, Dun & Bradstreet, Standard & Poor's, Moody's or Fitch Ratings and have letter designations such as A, B, C. 

The Standard & Poor's rating scale is as follows, from excellent to poor: AAA, AA+, AA, AA-, A+, A, A-, BBB+, BBB, BBB-, BB+, BB, BB-, B+, B, B-, CCC+, CCC, CCC-, CC, C, D. Anything lower than a BBB- rating is considered a speculative or junk bond. 

 The Moody's rating system is similar in concept but the naming is a little different. It is as follows, from excellent to poor: Aaa, Aa1, Aa2, Aa3, A1, A2, A3, Baa1, Baa2, Baa3, Ba1, Ba2, Ba3, B1, B2, B3, Caa1, Caa2, Caa3, Ca, C. 

A. M. Best rates from excellent to poor in the following manner: A++, A+, A, A-, B++, B+, B, B-, C++, C+, C, C-, D, E, F, and S. 

The CTRISKS rating system is as follows: CT3A, CT2A, CT1A, CT3B, CT2B, CT1B, CT3C, CT2C and CT1C. All these CTRISKS grades are mapped to one-year probability of default.

Long-term Short-term  
AAA A-1+ Prime
AA+ High grade
A+ A-1 Upper medium grade
A- A-2
BBB+ Lower medium grade
BB+ B Non-investment grade
B+ Highly speculative
CCC+ C Substantial risks
CCC Extremely speculative
CCC- In default with little
prospect for recovery
D / In default

The Bear Rules

Humpty Dumpty has a great fall - in the stock market. Some see it as disaster, some see it as opportunity. What do you see?

    No....... Help........

In Malaysia, I think the economy seems to be alright here. People has more buying power. Most business are earning better. Property are getting hotter. More construction projects are launched. Is the economy recovering too fast since 2008? Is everyone too panic now? Will there be a double-dip?

Most corporate financial results will be released in this month, hope it can be catalyst to the recovery. So, it might be wise to grab some stocks with good earning records.

    Don't blame me, I'm a good bear

The Dow Jones industrial average plunged 634 points, or 5.6 percent, to 10,810 on Monday (8/8/11).
Here's a look at the Dow's 10 worst days since 1899:

By percent decline:

-- Oct. 19, 1987: 22.6 percent, or 508 points
-- Oct. 28, 1929: 12.8 percent, or 38.33 points
-- Oct. 29, 1929: 11.7 percent, or 30.57 points
-- Nov. 6, 1929: 9.9 percent, or 25.55 points
-- Dec. 18, 1899: 8.7 percent, or 5.57 points
-- Aug. 12, 1932: 8.4 percent, or 5.79 points
-- March 14, 1907: 8.3 percent, or 6.89 points
-- Oct. 26, 1987: 8 percent, or 156.83 points
-- Oct. 15, 2008: 7.9 percent, or 733.08 points
-- July 21, 1933: 7.8 percent, or 7.55 points

By points:

-- Sept. 29, 2008: 777.68 points, or 7 percent
-- Oct. 15, 2008: 733.08 points, or 7.9 percent
-- Sept. 17, 2001: 684.81 points, or 7.1 percent
-- Dec. 1, 2008: 679.95 points, or 7.7 percent
-- Oct. 9, 2008: 678.92 points, or 7.3 percent
-- Aug. 8, 2011: 634.76 points, or 5.6 percent
-- April 14, 2000: 617.78 points, or 5.7 percent
-- Oct. 27, 1997: 554.26 points, or 7.2 percent
-- Oct. 22, 2008: 514.45 points, or 5.7 percent
-- Aug. 4, 2011: 512.61 points, or 4.3 percent
-- Aug. 31, 1998: 512.61 points, or 6.4 percent

Source: Dow Jones Indexes, a division of CME Group Inc.