TDM Bhd - Dividends Don't Lie?

TDM Bhd (Current Price RM1.85) which involve in Plantation and Healthcare business declared a final dividends of 4 sen per ordinary share less 25% and 9 sen per ordinary share tax-exempted which still subject to Board approvals.
Just for information, TDM have a dividend policy statement of paying out at least 30% of its consolidated annual net profit which was approved on 12th April 2009. (you can refer to TDM website).
I am firm believer of Dividends Don’t Lie, but it should not be the only yardstick of stock selection. Understanding the business, balance sheet and their earnings should remain the main priority.

Some comments on this company by the readers for reference.

Healthcare business

Source: Data from KPJ AR2008

 Source: Data from TDM website and Q409 report

Source: TDM Q409 report

Not for comparison between both companies but to show the increase percentage of number of patients year-on-year.

I would like to add in the chart of healthcare cost in Malaysia but not able to locate it thus far. Please email to me if you have any for me to upload it.

Meaning of Deferred Revenue

Have you come across the term 'deferred revenue' in liabilities column of a company's balance sheet?
Here is the meaning,

What Does Deferred Revenue Mean?
A liability account used to collect deposits and other cash receipts prior to the completion of the sale. 

Investopedia explains Deferred Revenue
Deferred revenue is important because it's the money a company collects before it actually delivers a product. For example, a software company sells and receives payment for a computer program before it gets delivered or installed. This doesn't get recorded as straight revenue because, if something goes wrong with the job, the money is at risk.

Source: Investopedia.com

If you have any terms that you do not understand, you can almost able to look for it in Investopedia (Great site)

KJMC and TDM Bhd

Anyone who pass through Kelana Jaya via LDP should notice that there is one community hospital situated at the side of the highway called Kelana Jaya Medical Centre (KJMC). As I am visiting my friend today, I found out that KJMC actually belongs to a Public Listed company called TDM Bhd.
A check on the website of the TDM Bhd shows that the company actually having core business in Plantation and Healthcare. A quick glance through its latest quarterly report reveals that the earning is impressive and a healthy Balance Sheet. Need some time to digest the reports and get more information on this company. Keep in view.

Biofuel to be Mandatory?

Came across the news on biofuel from The Star yesterday. Which company will benefit from the implementation?

Mandatory sale of biofuel to start June next year

By WANI MUTHIAH

BANTING: The mandatory sale of biofuel will be implemented in the central region from June next year.
Plantation Industries and Commodities Minister Tan Sri Bernard Dompok, who said this, added that the mandatory sale would be implemented in phases beginning in Kuala Lumpur, Selangor, Putrajaya, Negri Sembilan and Malacca, and the southern, western and northern parts of Perak, Pahang and Johor.
The implementation was part of the Government’s biofuel initiative under the B5 Programme, with bio-fuel derived from blending 5% palm methyl ester with 95% diesel.
Dompok, who launched Sime Darby Bhd’s biodiesel fuel Bio-N and visited its biofuel plant in Carey Island on Wednesday, said petroleum companies had requested for some time before the implementation.
“They needed time to plan their facilities and capital expenditure,” said Dompok, adding that the Government would pay for the setting-up of biodiesel blending facilities at six petroleum depots in the central region.
The depots, which would be fitted with in-line blending facilities, would be located in Port Klang, the Klang Valley Distribution Terminal (KVDT) in Selangor, Port Dickson, Negri Sembilan and in Tangga Batu, Malacca.
An allocation of RM43.1mil would be made available for this purpose, Dompok said.
Dompok said that the price of biofuel would fluctuate according to the market price of crude palm oil and diesel.
“If there’s an increase in diesel price, it would be borne by the oil companies. They have agreed to take it on as operational expenditure,” said Dompok.
Earlier in his speech, the minister said the Government had released the National Biofuel Policy in March 2006 in line with global developments that saw nations pursuing aggressive agendas on the production and use of biofuels to reduce dependence on fossil fuels.
The policy outlined five strategic thrusts, namely the use of biofuel for transport and industry, production of biofuel for export, development of indigenous technologies and biofuels for a cleaner environment.

Clarification

After receiving two emails asking about stock recommendation/advice, I think I need to clarify again that I am not a professionally-trained investment adviser. I am in no position to advise anyone about any stocks. Please seek advice from your professional investment adviser.
Furthermore, there are a lot of books about stock investment that you can get from any bookstores. You could even get information through many good blogs around about stock investment.

I just wonder why would anyone asking for stock recommendation from stranger?

There will be some changes to the way I blog. I will remove the simulation portfolio as well. My mistake perhaps as I am still new to blogging.

Good Sign for KFima

When the largest shareholder accumulating the share, it is normally presume that the share is undervalue.
What do you think?

Best Buy of 2010

One of my best buy in 2010,

Total Price: RM13 (from Pay Less Books Warehouse Sales)
PE : 0
'Book' Value: Priceless

Books are the bees which carry the quickening pollen from one to another mind.  

~James Russell Lowell

Books are the quietest and most constant of friends; they are the most accessible and wisest of counselors, and the most patient of teachers.  

~Charles W. Eliot

A man may as well expect to grow stronger by always eating as wiser by always reading.  ~Jeremy Collier

Capitalize on India’s Infrastructure Development?

With increasing priority given to infrastructure development in India, with 20,000km road earmarked to be completed in three years, it will not be a surprise if most of  infrastructure companies' focus will be shifted to India. India, which already has one of the largest networks of road in the world, hopefully will be another market for Protasco Bhd to penetrate in.

                                           (Taken from HCM Engineering website)

 A check on the website of HCM Engineering reveals that they indeed looking forward to participate in infrastructure development in India with large delegates from the company attended the India Infrastructure Forum in London on 2^nd February 2010. The ability to penetrate into India, hopefully will be another catalyst for Protasco Bhd although it might not happen so soon.

You can refer to my previous post below,

Protasco Bhd

Protasco Bhd - HCM Engineering & Kumpulan Ikram

Berkshire Hathaway Shareholder Letters

The 2009 Berkshire Shareholder Letter had been released. As usual, a lot of wisdom from the top investor.
You can find the letter from the link below,
Berkshire Hathaway Shareholder Letters

Kumpulan Fima Bhd and Fima Corporation Bhd

                                             Source: Kumpulan Fima AR2009

Fima Corp is 60.9% owned by Kumpulan Fima Bhd ( refer above taken from Kfima AR2009).

Fima Corp meanwhile 100% owned Percetakan Keselamatan Nasional Sdn Bhd, Security Printers Sdn Bhd
and 80% Nunukan Jaya Lestari. Hence, owning Fima Corp will have more direct exposure to those companies while owning Kumpulan Fima will have exposure to those companies plus bulking and food division.

                                             Source: Fimacorp AR2009

Hope this information give a clear relationship between both companies to all readers.

Planters Flying today

A look on KLSE today shows that Plantation sector have a good day. Unfortunately, Kumpulan Fima is not a pure plantation play but higher palm oil price should contribute significantly to their bottomline.
Some comparison on plantation landbank of plantation giant, IOI Corp and Kumpulan Fima.
IOI Corp - 251,000Hectares
Kumpulan Fima - 50000acres (approximately 20200Hectares)
Kumpulan Fima will need to increase their landbank significantly beside increasing their yield and efficiency
to get investors aware of their involvement in palm oil plantation.
Accumulate another 5000 units averaging 0.895 for my simulation portfolio today.

Know How or Know Who

Investing in company which have the bulk of earnings contributed directly or indirectly by the Government normally being labelled as 'politically-linked' company by the investing communities. Long term concession contract, monopoly, favourable incentives are some of the features normally associated with those companies. The advantages of having investing in those company definitely would be having the most reliable customer or business that is fairly recession proof. The downside of investing in those companies obviously would be changes of the guidelines or changing of the government altogether.
Some companies would try to shake off those unfair labelling by diversifying to other businesses while some trying to proof their abilities through expanding to other countries.
Hence, as an investor, we should look into the existing businesses and the future plan of those companies to minimise the downside risk while enjoying those advantages.
Two companies posted in this blog, Kumpulan Fima and Protasco might be unfairly labelled by some investors with Kumpulan Fima through their manufacturing of securities documents and Protasco through their long term road maintenance concessions.
From my opinion, Kumpulan Fima have done very well to proof their ability by diversifying to palm oil plantation which contributing significantly to their revenue and bottomline.
Protasco, meanwhile, having good management at helm with many other well planned businesses certainly prove to certain extent .Their ability to penetrate into Middle East is definitely a big big plus!

Buying Stock or Buying Business?

Do we buy stock or do we buy business?
Every now and then, I would keep on reminding myself that my purpose of investing in stockmarket because I would like to own businesses. By keep on reminding myself, I hope I am able to control my emotion when I make a decision to buy or sell.
When you know your own weakness, find a way to curb it.

Success Transformers Corporation Bhd

Core Business:
-manufacturing and trading of electrical apparatus and industrial lighting
-manufacturing process equipment

Two main wholly owned sudsidiaries,
Success Electronics & Transformer Manufacturer Sdn Bhd (SETM)
SETM which established in 1980 is one of the largest low voltage transformer and industrial lighting manufacturer in Malaysia. Their line of products include full comprehensive range of low voltage transformers, automatic voltage stabiliser, energy saving lumens regulators, battery chargers and tester,floodlights, highbay and street lighting. Emphasizing on quality, fast delivery, fully equipped factory and various certification (CE mark, TUV) that separate them from their competitor. They are even involve in green technology and one of the eight authorized service providers in Malaysia Building Integrated Photovoltaic (MBIV) projects.

Seremban Engineering Sdn Bhd
Seremban Engineering mainly involve in manufacturing process equipment like pressure vessels, storage tanks, silos and heat exchangers. These process equipment normally cater for Oil & Fats industry. With more refining plant being set-up especially palm oil refining, their growth should be sustainable.

With 2009 EPS at 21.54sen, which translate to PE around 5.6 (based on price RM1.20), it seems attractive coupled with the impending listing of wholly owned Seremban Engineering.

My Portolio

I will try to update my portfolio once a month as my portfolio might not have many changes. Please note that this is only a simulation portfolio.
By starting this blog, my first intention is to record all the findings of attractive company. By doing so, it will be easier for me to refer back and enhance my understanding of particular company.
Hopefully, it will benefit all the readers as well.

Protasco - HCM Engineering & Kumpulan Ikram

Looking into Protasco business would not be complete without looking into Protasco's two main and wholly owned subsidiary. I manage to get some information from both subsidiary through their respective website.

HCM Engineering Sdn Bhd
HCM Engineering which incorporated in 1991, is the specialist in pavement construction and rehabilitation. Their ability to produce high quality and cost effective works that separate them from their competitors. With their constant research, they are able to develop new and more cost effective techniques. They even strive to improve their environmental performance by adopting recycling techniques to rehabilitate distressed roads and highway pavements. HCM presently registered with Construction Industry Development Board (CIDB) and Pusat Khidmat Kontraktor (PKK) with a Class A Bumiputra Contracting License.

Kumpulan Ikram Sdn Bhd
Kumpulan Ikram Sdn Bhd is in business involving education, training, geotechnical consultancy, site investigation, project management and infrastucture research&development. They are one of few organisation capable of having self-funded R&D which speaks volumes of their capability.

From the information of both subsidiary, we can see this a well managed and planned company. All their businesses complement well with each other. From churning out talents to constant research & development, it will not only benefit Protasco but the nation as well. Impressive!

Protasco Bhd

Core Business:
-Road Construction, Maintenance, Upgrading & Rehabilitation.
-Engineering Services & Consultancy
-Buildings & Specialised Construction
-Education & Training
-Trading of Construction Related Materials
-Overseas Investment & Trade

Based on information dated 1/3/2010
Current Price: RM0.995
Total EPS 2009: 14.33sen
Total Dividen 2009: 8sen
PE: 99.5/14.33 = 6.9
Dividen yield = 8%

I find this company attractive due to
-Undemanding PE at around 7
-Strong Balance sheet (refer to latest Q4 BS above)
-High dividend yield around 8 %
-Strong incuring income from 3 long term 15years concesion with government for road
maintenance (refer to AR2008)
-Expanding to Middle East (Libya & Syria)