Property business profit announcement can be misleading

As I said many a time before, investors should not buy shares of any company if they do not understand the company’s business. Moreover, investors must also know how and where the company’s profit is derived.

All investors must know that there is currently an oversupply of properties in every town and cities in Malaysia.  Property prices are constantly coming down. As a result, all property companies will be reporting less profit in the next few years.

However, some property companies may report good profit now, but the profit is from property sales of previous years. For example, MKH 3rd quarter profit announcement as shown below.

Why the share price is coming down?

The above price chart shows that the share price is coming down in spite of the good profit announcement.  This shows that most investors are quite smart and are aware that there is an oversupply of properties in the market. The profit must be from sales concluded last year or the year before. It is most unlikely that they can continue to report increasing profit in the next few years.

My aim in writing this piece

I want you to avoid losses in share investment. I advise you not to buy MKH and shares from property companies even if it shows good profit now.

Don’t buy down trending stocks!

You must also remember that all expert chartists will advise you not to buy down trending stocks because the price can go further down.

Don’t be a foolish contrarian!

Smart contrarian investors do not rush to buy property shares blindly

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