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!
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