Blogger's Dilemma

Blogging is not easy.

To many people, it's not easy to start a blog, and it's even more difficult to maintain it.

Investment bloggers come and go. Even though some are still "alive", they are significantly less active.

You don't need to be an investment expert to start an investment blog. You just need passion and writing skills.

Surely there are many great investors out there who are not good in writing. Sometimes they wish to have a blog to share their investment ideas but they just cannot start or maintain.

Personally I'm better in writing compared to speaking. So, writing is not a big problem for me and I can start an investment blog and write a post at will.

Nevertheless, those who own an investment blog are not necessarily good in investment.

As long as the passion is still there, I will continue to write.

Sometimes I feel that I have many topics to write in a single day, sometimes I don't have any idea or mood to write in a whole week.

I don't know when this blog will be abandoned. May be next year, may be 10 years later.

Some bloggers blog just for fun & sharing, some for business purpose and some may have some hidden agendas.

Nothing is 100% safe in internet world and we shouldn't trust all the information in the internet including this blog.

My intention of blogging are mainly to record my investment journey and save my "investment homework" online so that I can have access to them anytime anywhere.

I guess that it will be fun when I look back at early posts 10 years from now and realize how "childish" and stupid I was, and how I grow as an investor.

Apart from that, by making this blog public, I can share those investment information and personal experience with readers while getting a chance to earn some extra income through advertisement in the blog. Why not?

I don't think my posts in this blog can influence stock price movement, but I try not to reveal my buy/sell transaction immediately after I buy/sell shares.

Some bloggers may feel obliged to declare their sell transaction immediately just in case someone follows his/her stock recommendations.

I don't think there is a need to do so as this is actually encouraging others to follow blindly.

Sometimes I give positive view on a stock, sometimes negative and sometimes mixed.

Bloggers tend to get blamed because their "recommendation" has influenced readers to make an investment decision that turns out to be a wrong one.

Anything that involves money is like that, agree?

If someone writes negatively about a stock you own, it's natural that you will be upset at first.

If the stock price falls after this, you may get angry and started to blame and attack the writer.

Readers should think rationally. If the writer points out the valid negatives that you overlooked, then you should reevaluate your investment and act accordingly.

If you agree that it is not a good investment, you may want to thank the writer for the reminder.

If you don't agree with the writer and you are confident with your own judgement, then you should not worry that you will lose money in your investment. 

Instead you may need to thank the writer if the stock price falls as it gives you opportunity to collect more shares cheaply.

Time will tell whether the writer is right or wrong, but does this really matter?

There is also a problem when bloggers talk too positively about a stock. Readers might be tempted to buy that stock and later find out that they make a wrong decision.

Bloggers are just like normal people who cannot escape from making mistakes. If everything they write is 100% accurate, then they will already a billionaire and there is no need to entertain others.

Some people may think that bloggers should be responsible fully for articles they publish and they shouldn't publish anything if they don't study the stocks in detail or don't understand the stock inside out.

Again, most bloggers blog for sharing purpose and they are not professional analysts. Sometimes it's not uncommon to see even professionals making wrong calls.

If it needs to be that strict before you can post an article in a blog, then basically no one will be dare to share information in blogs.

Is it an offence for bloggers without qualification or license to write something in a blog that can influence others to buy or sell stocks?

I heard someone mentioned about this regulation by security commission but I'm not sure how is it applied in real life.

Anyway, I hope all blog readers can take full responsibility on their own investment decision.

All bloggers have their followers and haters. If you don't like a blogger because of his/her writing style, face, stupidity, ego, failure, success, or you think he/she is a hypocrite, a nobody or has hidden agendas, try not to read his/her blog that's all.

I will run a poll to see what most readers prefer to get when they visit an investment blog:

• Simple analysis & updates on listed companies
• Stock market investment skills & tutorials
• Blogger's stock portfolio & performance for comparison
• Blogger's immediate buy/sell transaction & target price for stocks
• Blogger's casual sharing on his/her investment journey

This poll will be on the right side bar of this blog and will run for a week.

Most readers would probably want to choose all of the above but unfortunately you can only choose one which best represent yourself.

Thanks :)

Coastal: Navigates On Rough Sea

Coastal Contracts is one of the company that I like.

Its business is relatively simple and is easier to understand. 

Although it has 2 divisions namely shipbuilding and vessels chartering, contribution from the latter is negligible.

So, Coastal builds and sells boats/ships, it's that simple.

The performance of Coastal (and its stock price) will depend on how many orders it can get and how well it can grow/protect the profit margin.

The vessels that Coastal build can be used in various fields including Oil & Gas, logistics etc. 

However, since a big chunk of its orders and profit come from customers in O&G sector, Coastal is usually "classified" as an O&G stock.

Thus, it can't escape recent sell-down in O&G stocks amid low crude oil price.

Table below shows Coastal's past financial performance.

Coastal has a great track record, and I think its management team is brilliant.

Since listed in 2003, Coastal produces uninterrupted revenue growth for 11 consecutive years til 2014 apart from a slight RM1.8mil revenue drop in 2013.

However, net profit reached a peak at RM200mil in year 2010 and this record remains to be broken until now.

Why is it so?

In mid-2008, crude oil price fell sharply from its peak of USD140 to below USD50 in just a few months time. Isn't it almost similar to current situation?

Though I rarely read any financial news that time, it's not hard to guess that O&G sector was in deep shxt then.

How did it affect Coastal?

In 2008, Coastal's outstanding orders (unbilled orders) in shipbuilding stood at RM1.7bil, which was even higher than recent high of RM1.5bil.

This showed how robust O&G industry was before it crashed in 2008.

Coastal still manage to secure RM698mil new orders in 2008 but they were mainly in the first 3 quarters.

After that, new orders plunged substantially in which it could only get RM119mil new order in 2009 and then ZERO order in 2010.

The bar chart below shows Coastal's new orders and approximate unbilled orders since FY08 to first half of FY15.

Just like a property developer, if the sales is poor in this year, then we can expect poor financial results in about 2 years time.

Furthermore, competition to fight for orders among shipbuilders was intense at that time thus profit margin was eroded.

This may explain why the revenue still grew but in slower pace and net profit fell from 2010 to 2012.

Crude oil price recovered quite swiftly since 2010 and new orders started to flow in again from year 2011 and peaked in year 2013 with RM1.495bil of new orders in year 2013 alone.

Profit margin also increases due to more orders for higher margin & high-specification offshore support vessels (OSV) used in O&G industry.

Since new order of RM197mil secured from a new Mexico customer in Q1 of FY15, there is still no news of further orders until mid-July 2015.

Though it is good that Coastal can get a new customer, further new orders seem hard to come by as crude oil hit new recent low after news of Iran sanction lift.

Unbilled order has dropped to RM1.01bil and surely it will drop further to around RM700-800mil when Q2 result is announced next month.

Nevertheless, Coastal will have a new stream of income starting from second half of FY15.

I view it positively when Coastal started to venture upstream in O&G sector a couple of years ago.

In Feb 2014, Coastal has secured a charter contract for a Jack-Up Gas Compression Service Unit (JUGCSU) worth RM1.24bil for 8+4 years from a Mexican customer.

Construction of the JUGCSU is on track and set to be delivered in Q3 of 2015.

It is reported that this contract is estimated to deliver profit (pre/post-tax?) of RM30-40mil a year to Coastal.

It will still be a good recurring profit even though it is not that much if compared to FY14's net profit of RM190mil from shipbuilding.

Meanwhile, Coastal is also building 2 Jack-Up Rigs in which it targets to charter to other O&G companies.

However, it can't find a suitor thus the first JU Rig which is to be completed in Q3 of 2015, was sold in April 2015 for RM807mil. Net profit from this sale is not expected to be too significant from RM10mil (Alliance) to RM30mil (Kenanga).

Coastal still intends to secure a charter contract for its second JU Rig pending completion in end of 2015 but it may still sell it like the first rig.

If the rig is kept without generating income, there will be a sum of maintenance and depreciation charge involved which will harm its financial results.

Despite poor sentiment in O&G industry, Coastal's plan is clear.

First, it has a mission to reach RM5bil in market capitalization in medium term. For this to happen, its share price need to be at least RM8.50!

Its current share price and market cap stand at RM2.51 and RM1.35bil respectively.

Secondly, it will continue to look for more opportunities in O&G upstream activities, such as to own and operate jack up drilling rig, mobile offshore production unit or floating production unit/rig.

Coastal has already owned one upstream O&G asset. Can it get another contract for its JU rig by year end?

It is recently reported that it is in talks with several parties for potential merger & acquisition to grow the company inorganically.

Is it the right time to invest in Coastal? I think no one can answer this question confidently.

I learned that crude oil price is deliberately depressed by OPEC to gain more market share by forcing out less efficient US shale oil producers. Can it be done in such a short period of time?

Iran sanction on oil export is going to be lifted. How low the oil price can go after this and how long will it stay low?

Coastal does not pay attractive dividends. It paid 7.2sen dividend for FY14 which is 20% of its net profit.

Even though its share price has dropped to RM2.50 level again, dividend yield is still not that great at 2.8%.

It posted a superb result in FY15Q1, in which both quarterly revenue and net profit hit record high by a huge margin.

This is mainly due to more high margin OSVs (5) delivered in the quarter. Subsequent quarters are not expected to match FY15Q1 performance.

Balance sheet is healthy with plenty of net cash after getting RM207.8mil from private placement in Mac14.

Coastal's share price has fallen more than 50% from its high of RM5.40 in Aug last year to RM2.51 at the moment.

With FY14 EPS of 36.7sen, Coastal is currently traded at PE of merely 6.8x base on share price of RM2.51.

Fair PE for O&G sector should be at least 15x, isn't it?

Anyway, history has told us that Coastal will bounce back along with crude oil price.

It may come back stronger with its ambitious expansion plan.

The question is: When?

Huayang: Poor Sales A Concern

Huayang FY16Q1 Financial Result

Huayang	FY16Q1	FY15Q4	FY15Q3	FY15Q2	FY15Q1
Revenue	142.6	152.1	155.5	139.5	136.5
Gross Profit	51.5	53.2	59.3	45.2	43.2
Gross%	36.1	35.0	38.1	32.4	31.6
PBT	40.2	42.5	43.2	35.2	32.6
PBT%	28.2	27.9	27.8	25.2	23.9
PAT	29.9	29.7	30.9	26.0	23.9
Total Equity	495.8	465.9	449.4	436.9	410.9
Total Assets	944.2	923.2	877.3	828.0	811.0
Trade Receivables	72.9	88.9	73.3	68.1	62.6
Prop dev cost	161.5	167.7	175.5	159.5	145.1
Inventories	10.5	9.9	9.8	9.8	10.0
Other Current Assets	200.7	189.6	180.3	157.0	165.6
Cash	62.6	40.9	44.1	43.9	27.0
Bank Overdraft	4.6	7.4	14.4	10.9	15.0
Total Liabilities	448.5	457.4	427.9	391.1	400.0
Trade Payables	135.1	141.5	118.2	120.4	134.5
ST Borrowings	78.1	78.6	82.2	75.9	74.2
LT Borrowings	195.4	192.1	187.4	161.0	165.2
Net Cash Flow	24.4	3.4	-0.5	2.7	-18.2
Operation	25.6	115.9	71.1	58.1	26.1
Investment	-6.7	-86.6	-50.7	-23.9	-11.2
Financing	5.6	-26.0	-20.8	-31.5	-33.2
Dividend paid	0	44.9	31.7	13.2	13.2
EPS	11.32	11.25	11.72	9.84	9.07
NAS	1.88	1.76	1.70	1.65	1.56
D/E Ratio	0.43	0.51	0.53	0.47	0.55
Unbilled sales	660.8	701.9	733.3	717.9	756.4

I expect Huayang to post average quarterly net profit of RM25-30mil in its FY16, so its FY16Q1 net profit of RM29.9mil is not a surprise.

The main concern is the fact that Huayang just achieved RM81.7mil new sales in its FY16Q1 (Apr-Jun15), which is only 16% of its target annual sales of RM500mil, or 18% of FY15 overall sales of RM460mil.

As a result, unbilled sales drop to RM661mil from RM702mil a quarter ago.

Nevertheless, latest sales were achieved without any launch of new project in the last 2 consecutive quarters. So the RM81.7mil figure are not too bad I think.

Huayang is unlikely to launch new project in current quarter of FY16Q2 (Jul-Sep15). Upcoming project Mines South will probably be launched in the end of CY15.

Targeted new launch for FY16 remains at RM633mil. Huayang still keeps its FY16 sales target intact at RM500mil, with RM426mil of already-launched projects available for sale.

Take-up rate of its final phases at One South has been poor so far. Sales of Cube and Zeta Residence improve slightly to 36-39% from 20-29% in previous quarter.

Citywoods's take up rate is even worse at 31% so far, up from 25% a quarter ago despite attractive selling price at RM500-600 psf compared to other high-rise projects at RM700-1000 psf in Johor Bahru, according to TA Securities.

While Huayang's financial results in FY16 should remain good, it certainly needs to improve its sales to at least RM500mil a year to sustain this performance.

In near term, its Klang Valley projects such as Mine South and Puchong West will be key.

The remaining unsold units at One South should get a boost from the proposed MRT2 route which has a station right opposite One South across the KL-Seremban Highway. A dedicated link bridge between the MRT station and One South has been proposed.

Meanwhile, the management will continue to acquire strategic land to expand its GDV.

Huayang's TTM EPS stands at 44.1sen. At share price of RM1.90, it is currently trading at PE ratio of merely 4.3x.

Huayang paid 12sen dividend for its FY14, which means a 38% payout ratio. If it decide to pay 35% in FY15, then it will be total 14.5sen. 

It has given 5sen for FY15, and final dividend should be declared  at the end of this month.

I think it is more likely to pay out 30% which means 12.5sen in FY15. If this is the case, dividend yield will still be an attractive 6.6% at current share price.

Eco Meadows: In A Class Of Its Own

The sales office of Eco Meadows in Simpang Ampat has quietly opened to public last weekend.

This 60-acre freehold development will be Eco World's second project in Penang state after Eco Terraces, and first in mainland Penang.

The site is visible from North-South Highway near Penang second bridge interchange.

First project to be launched, probably very soon within July 15, will be gated & guarded double-storey terrace houses.

If not mistaken, there are total 375 units of DST planned for Eco Meadows and there is no semi-D or bungalow.

The facilities provided include swimming pool, gym, kindergarten, park and clubhouse.

Four types of DST are available which are Type 1A/1B and 2A/2B, with land size of 20 x 70 and 22 x 70 feet respectively.

The final layout plan is still not available at this moment but some units will come without a balcony.

Type A is called Bay Window Collection which is without balcony. Type B is Balcony Collection.

There will be no other landed residential property after this. Future launch will be shop offices, service apartments and probably a shopping mall.

Here comes the most important question... What is the price?

In Oct 2013, I predicted that DST in Eco Meadows will start from RM500k, while DST in Pearl City is about RM350k at that time.

Obviously this prediction is already outdated.

One year ago in mid-2014, Asas Dunia priced its DST in Hijauan Valdor, which is about 2km from Eco Meadows, at RM550k.

Apparently Eco Meadows will certainly price its DST at at least RM700k now to show that it is in different class. Agree?

True enough, though  official selling price of Eco Meadows's DST is not confirmed yet but according to sales person, it will be approximately RM700k.

Management fees is expected to be around 15-20sen per sq ft.

Now, gated DST (22 x 60 ft) in Raintree Park of Pearl City is priced from RM478k. If Eco Meadows sells its DST at RM700k, then it really makes Tambun Indah's DST looks cheap.

Despite its premium price, I think Eco Meadow's DST will still sell like hot cakes due to its brand power and lots of its well-to-do fans.

Anyway, what are the difference between Eco Meadows and Pearl City?

Location wise, both are located in Simpang Ampat but Eco Meadows is closer to PLUS Bukit Tambun toll and Batu Kawan while Pearl City is closer to Bukit Mertajam, AEON & Tesco Alma.

Pearl City is a big 1,000 over acres township which houses a new KTM station while Eco Meadows is just 60 acres though it will have its own commercial component.

Pearl City will be much more crowded so traffic and safety might be an issue. However, it will be more happening & convenient as GEMS International School, Pearl City Mall & Jit Sin SPS branch have been confirmed. Future plan includes a medical center as well.

Eco Meadows brings with it luxury and high quality feel in which buyers expect high quality materials, fittings and finish, on top of tastefully designed landscape.

Pearl City will also have its own high-end gated projects such as Raintree Park. However, it is not expected to match those" quality" & "features" offered by Eco Meadows.

Do you think it is worth to pay RM200k more to get Eco Meadows DST over Raintree Park DST?

       Location of Eco Meadows, Pearl City & Hijauan Valdor

If you are keen to get your dream homes in Eco Meadows, just prepare a RM10k cheque and go to the sales gallery at the actual site to book a priority of unit selection.

The RM10k is fully refundable if you can't get your preferred unit, but please reconfirm with sales person before you hand in your cheque.

Frankly speaking, my wife and I dream of staying in a community like Eco Meadows.

However, I know that it is not worth it and also not possible that at this stage of my life.

Should I buy for investment?

How much is the expected rental? RM2000 rental per month will be great I guess, but monthly loan repayment and management fee should be at least RM3000.

How fast will it appreciate? Do you think Eco Meadows DST price will appreciate to RM1mil upon completion in 3 years time?

Review of 1H2015

The first 6 months of 2015 has passed. Though KLCI drops 3.1%, a lot of small-mid cap stocks actually register good gain.

These high-flying stocks are mainly furniture & other export-orientated stocks.

I'm more than happy that my portfolio gains 37.7% in 1H15, temporarily exceeding my target of 30% a year.

However, anything can happen in the second half just like last year.

Last year, my portfolio posted 47.2% gain at this point of time. It even rose above 70% in Sep14 only to tumble to 30+% in the end of the year.

Portfolio Performance from Jan15-Jun15

Stocks	End Dec14	End Jun15	%
GESHEN	N/A	0.73	N/A
GTRONIC	4.30	5.95	38.4
HEVEA	N/A	3.48	N/A
HHGROUP	0.43	0.670	55.8
HUAYANG	2.05	1.92	-6.3
INARI	2.54	3.25	28.0
INARI-WB	N/A	1.37	N/A
JOHOTIN	N/A	1.51	N/A
LATITUD	3.65	5.85	60.3
MATRIX	2.70	3.10	14.8
SCIENTEX	7.09	6.89	-2.8
TAMBUN	1.62	1.66	2.5

Two tech stocks in my portfolio Globetronics (YTD +38.4%) & Inari Ametron (YTD +28.0%) have been doing quite well, with continuous high demand for smartphones and depreciation of MYR against USD.

If you ask me what is the stock in my portfolio that I like the most, it is Gtronic. I don't really know why. Perhaps it is because of its superb dividend payout & management team, as well as foreseeable high growth potential.

However, it has the highest PE ratio among all stocks in my portfolio, which means it is more likely to suffer most when time is bad. Its share price will also unlikely to advance rapidly at this stage.

Gtronic will start the production of new imaging sensors from end of 2015. Revenue from its sensor division is expected to double in 2016. 

As my shareholding in Gtronic is relatively small, I will not sell them unless its business deteriorates significantly.

Anyway, most Gtronic related posts in this blog get the least pageview. This shows how unpopular this stock is compared to others.

In contrary, Inari is a very popular stock, though it has been quiet lately.

Inari has been busy increasing its floor space. Its newly acquired factory building in Bayan Lepas has just started operation. It will also build a new 6-storey building next to it later this year.

Will it get a new outsource contract from Avago soon? I don't know.

       Global Smartphones Shipments trend

When I started to buy Geshen (+27.0%) shares in Mac15, I have the intention to promote it to my core portfolio because I feel that it has the potential for a 100% gain.

At below 60sen, I think it was undervalued after disposal of loss-making businesses and acquisition of profitable peer.

Furthermore, low crude oil price and stronger USD should be favourable for export-orientated plastic injection molding industry.

Nevertheless, I have been too cautious in buying more Geshen's shares and I'm still looking for a good top-up point.

       HDPE price - one of the raw materials in plastic injection molding

The heat on furniture & wood-based stocks seems to continue in 2015.

I have sold some shares of Latitude Tree (YTD +60.3%) in Feb15 at RM5.40 only to regret it later. Fortunately the fund has been used mainly to buy Geshen so it's a consolation.

Latitude which is the best performer in my portfolio in 1H15, still carries the most weight in my portfolio and it has pulled up overall portfolio return significantly.

Besides the external or broad market factor, I still find no reason to sell Latitude's shares at this stage. I expect its upcoming FY15Q4 result to be "enhanced" or "augmented" by relatively poorer FY14Q4 & FY15Q3 due to Vietnam riot & US West Port strike respectively.

Though Q4 is not traditionally a strong quarter for Latitude, I expect its PATAMI for FY15 to exceed RM80mil, which means FY15 EPS of at least 82sen.

As for Heveaboard (+12.3%), I felt that I must be crazy to start buying its shares as high as RM3.10 in end of May15. I just bought a little first, and waited for its share price to fall so that I can average down.

But its share price never really drop until now, and I actually feel a bit frustrated.

I always like Hevea and have plenty of chances to invest in it well below RM2.00 but I never take action, mainly due to worry of the high dilution effect of its warrants.

With such an impressive quarterly results for 2 consecutive quarters, I just feel that I should grab it first no matter what.

       US New & Existing Home Sales

Heng Huat (YTD +55.8%) is my second best performer in 1H15. This is mainly helped by news of bonus issue and main board transfer I guess.

However, its financial results are not as good as what I anticipated, though they are not bad either.

As this company has expansion plan which is on track, I will keep its shares and continue to monitor it.

Johore Tin (-1.9%) is not a good investment so far. In longer term, I still hope that it is. 

Its recent profit, balance sheet and cash flow do not looks good, that's why its share price stays depressed.

Its new milk packaging factory is expected to start operation only in Q3 of 2015. So shareholders are likely to endure another "unimpressive" quarterly result in August.

Anyway, I still hope for a positive surprise.

       Whole Milk price hit a low in Jul15 - positive or negative to Johotin?

Keep? Sell? Keep? Sell? Keep? Sell? Keep? Sell?

These questions have been spinning in my mind since end of last year. It is about property stocks.

I still have 3.5 property stocks in my portfolio. Some people may think that I am either crazy or stupid by not disposing all of them.

Yes, they are right, as these property-related stocks except Matrix Concept have negatively affected my portfolio return in 1H15.

I have been telling myself to limit exposure to property stocks since early 2014.

Nevertheless, property stocks were the star performers in KLCI that year until Sep14. Remember?

Somehow this has reduced my "defensiveness" and discipline in avoiding property related stocks.

As a result, I still added a few property stocks such as Asian Pac, Protasco & Hua Yang in year 2014 just before it crashed in Oct14.

Though Hua Yang is the only one remaining now, it turns out to be the worst performer in my portfolio so far.

For Hua Yang, Tambun Indah & Matrix, the more their share price fell, the more reluctant for me to sell their shares now.

Tambun (YTD +2.5%) was my heavyweight shareholding last year, I have sold quite a lot of its shares until it reached the level I'm comfortable to hold amid slow property market.

I opine that Tambun's Pearl City township will still have good demand, as development in south Seberang Perai gathers pace along with Batu Kawan.

Besides, I also like its latest land acquisition in Bukit Mertajam. I do hope that it will strike another good and huge land deal soon.

For Matrix (YTD +14.8), it is the same. Though I have never been to Sendayan, I feel that this township is viable and will have good demand. 

It feels great to be part of the prestigious Matrix Global School and d-Tempat Clubhouse too!

Matrix has incorporated a wholly-owned subsidiary in Australia recently. So it may venture oversea in the near future.

Huayang (YTD -6.3%) is a bit worrying for me though, mainly due to its high gearing. I'm a bit disappointed that its land deal in Mukim Batu has been called off, though its balance sheet can take a breather.

Anyway, Tambun, Matrix and Huayang are supported by decent unbilled sales which more or less guarantee that profit & dividend in year 2015 & 2016 will still be good.

With great dividends, there is not much harm to hold their shares and wait for property market turnaround.

When will property market recover? I thought that it will take quite a long time perhaps 3-4 years but some analysts say that we can see it in year 2016. 

Really? Though no one can predict the future accurately, I hope that they are right.

I bought Scientex (YTD -2.8%) shares almost at the same time when buying Inari shares. Inari has shot up to the sky but Scientex is still slowly crawling up the hill.

Declining crude oil & resin price should benefit Scientex's manufacturing segment but it seems like the company passes the cost-saving to its customers, resulting in lower revenue.

I don't hold a lot of Scientex's shares and also not buying more mainly because I think its profit depends too much on property previously.

However, this "problem" of overdependent on property will probably be "solved" in the near future.

I feel that I will hold Scientex longer than any other stocks in my portfolio currently. It is no doubt a great company that keeps on enhancing shareholders value.

In order to keep those 3.5 property stocks in my portfolio, there is a compromise to be made - I will not add more property-related stocks into my portfolio.

So, Mitrajaya, MKH, Fututech, OSK, Sunway, and even the attractive-looking Tropicana etc, all I give them a miss.

What to expect in the 2nd half of 2015?

European countries might be negatively affected by Greece issue. Personally I don't feel that it can be too serious.

Among the stocks that I have, Geshen seems to have more exposure to Europe through Polyplas. I don't think that worldwide smartphones/tablets demand will be affected significantly.

Foreign fund continue to flee Malaysia, and MYR continue to depreciate against USD & SGD. Net exporters will continue to benefit while net importers will continue to suffer.

One quarter has passed since the implementation of GST.

I'm sure all of us can feel the post-GST effect, in which price of almost everything has gone up.

Even though international crude oil price drops substantially, RON95 fuel price that Malaysian pay at the moment (RM2.15) is even higher than 2014's level (RM2.10) after fuel subsidy was removed since Dec14.

I believe that cost of doing business generally went up, even though most GST can be claimed back. How will it affect the profit margin of all listed companies?

Can billions worth of existing construction contracts still able to generate enough profit to cover the escalating cost? Can property developers still able to enjoy high margin? Can manufacturing sector still able to protect their already thin margin?

How about pre-GST effect?

Investors have to beware of "false" jump in revenue & profit of some companies between Sep14 and Mac15 which is pre-GST period.

These companies are mainly in sectors such as consumer, pharmaceutical, local trading and even property sector.

It's a common sense that end-consumers, retailers and wholesalers will stock up more products or buy early in anticipation of imminent price increase in post-GST era.

This will directly increase revenue and profit of related companies but their subsequent results post-GST might be even worse than before.

I heard news that the government has been very slow in refunding 6% GST claimed back by manufacturers, wholesalers & retailers. This can seriously affect a company's cash flow.

As a result, borrowings might increase and will this benefit financial sector?

Another worrying part for me is potential local political turmoil. It has reached an unprecedented situation.

Anyway, if anything happen, it can be either good or bad for the country. 

Other than these, I think Malaysia's economy is still not in a very bad shape at near term despite low crude oil & CPO price.

All my opinions here might not be accurate though.

In conclusion, I think I should be more cautious in stock market in 2H15.

The problem is, can I have the discipline to practice it?

Scientex: On-going Expansion In Manufacturing & Property

Scientex FY15Q3 Financial Result

SCIENTEX	FY15Q3	FY15Q2	FY15Q1	FY14Q4	FY14Q3
Revenue	455.3	462.9	431.1	415.4	426.8
PBT	56.5	47.3	40.2	56.0	48.1
PBT%	12.4	10.2	9.3	13.5	11.3
PATAMI	42.9	36.1	30.3	48.8	37.2
Manu Rev	318.8	327.0	320.3	297.3	317.2
Manu OP	20.0	17.4	14.7	18.8	16.4
Prop Rev	136.5	135.9	110.8	118.1	109.6
Prop OP	41.5	40.3	32.0	36.9	32.5
Total Equity	851.6	808.6	769.8	712.7	686.2
Total Assets	1488.9	1533.3	1475.8	1400.4	1333.2
Trade Receivables	325.2	340.2	303.2	243.5	274.8
Inventories	85.9	81.3	83.7	109.0	82.1
Cash	63.5	121.7	102.9	83.8	56.4
Prop Dev Cost	110.5	117.0	104.0	104.6	71.8
Total Liabilities	593.7	681.4	664.7	665.0	624.9
Trade Payables	255.6	232.1	246.6	272.1	238.9
ST Borrowings	202.5	311.4	297.9	262.9	179.1
LT Borrowings	80.2	50.2	66.6	77.5	156.2
Net Cash Flow	-20.3	38.0	19.1	-68.4	-95.8
Operation	93.2	16.4	1.5	153.5	89.5
Investment	-29.6	-4.0	13.2	-149.2	-106.7
Financing	-83.9	25.5	4.5	-72.7	-78.6
Dividend paid	47.1	17.7	17.7	57.5	57.5
EPS	19.02	15.98	13.69	22.09	16.43
NAS	3.77	3.58	3.47	3.22	3.10
D/E Ratio	0.26	0.30	0.34	0.36	0.41

In FY15Q3, Scientex's revenue drops 1.6% compared to preceding quarter of FY15Q2 but PBT increases by 19.5%.

This is mainly due to reduction in forex loss from RM9.7mil to RM3.1mil in the same period, besides better profit margin in its consumer packaging segment.

As a measure to reduce exposure to risk of weakening Ringgit against USD, borrowing (mainly USD-denominated) has been pared down by 20% in the last quarter.

An interim dividend of 9sen was declared. It is 1sen higher than previous year.

For its manufacturing arm, new CPP and BOPP plants are on track to start operation by end-2015 and mid-2016 respectively.

Once completed, BOPP film capacity will increase 10-fold from current 6k MT pa to 60k MT pa.

There is also a further expansion of its PE film capacity from current 48k MT pa to 60k MT pa, targeted to be completed by mid-2016.

PE film has just completed the first round of expansion in end-2014 from 24k to 48k MT pa.

It will install a new 10-colour printing machine in July-2015 to increase sales of more value-added products.

      BOPP film - very commonly used in consumer packaging

Scientex's property arm is equally exciting. It will acquire 326 acres of land in Mukim Pulai, Johor Bahru for RM219mil. This translates into RM15.41psf which I think is quite attractive.

The land is located close to its existing Taman Mutiara Mas and adjacent to Huayang's Taman Pulai Indah township.

This new acquisition will increase its ongoing/undeveloped landbank from 870 acres to 1200 acres.

Even though borrowings will certainly jump after the acquisition, I'm still happy that Scientex can replenish its landbank especially with such a sizable one.

The land size of 326 acres is smaller than Huayang's Pulai Indah at 477 acres.

Scientex has 7 new launches in 9MFY15 (til Apr15) worth RM359mil which comprises 65% of affordable housing. 

This means that it just launched one new project worth RM83mil in Q3 of FY15.

Thus, latest unbilled sales drop from RM640mil a quarter ago to RM599mil.

Scientex will build 1,420 units of affordable houses under Johor Affordable Housing Scheme, in which first phase 718 unit has been launched in May15. The selling price is just RM80k-150k.

       Location of newly acquired land in Pulai

With sluggish property market, I don't expect Scientex to grow impressively in FY15.

Hopefully the performance of its property segment can at least maintained at current level so that when expansion of its manufacturing segment is completed, Scientex can enjoy remarkable growth from 2016-17.

I feel that Scientex has a great management team. Though its share price movement is not that exciting compared to others, my plan is still to hold for really long term.