The Administration of i3investor.com wrote to me quote:
Dear Mr Koon,
We’ve received many feedback from our users on this specific blog post from you. Some have mentioned that Mr Ooi Teik Bee, who manages some of your funds, is recommending Buy on this stock. That clearly contradicts your recommendation in this blog post.
May I know what is your comment on this? So that we can provide positive clarification to our users to avoid further confusion.
I refer to your email regarding your readers’ comments on my article ‘Is Choo Bee a Miss Universe Stock’.
For your information, I spoke to Ooi Teik Bee about my opinion of Choo Bee before I sent my article to you for posting. He said that his recommendation is based on his TA and FA and I told him that TA and FA cannot tell you the future profit. I did not agree with him basing on Choo Bee’s future profit.
If you read my article carefully you will understand my reasoning. In fact, before I finalise my article, I spoke to someone in Choo Bee to make sure that their major revenue is from small diameter water pipes for domestic houses and condominiums. There are already an oversupply of houses and condominiums in every town and city in Malaysia. As a result, the demand for Choo Bee’s water pipes will be greatly reduced as shown by its reduced revenue in the last 2 quarters.
Buying Choo Bee shares is the same as buying any property company shares. Will you buy property company’s share?
I believe OTB is very good and that is why I have given him Rm 13 million to manage for me. About 3 months ago, he made Rm 1.96 million for me and I paid him Rm 196,000, 10% of the net profit. Now he has made more than Rm 2 million profit for me and soon I will have to pay his management fee.
I seldom disagree with OTB. Beside Choo Bee, I also disagree with his buy recommendation on MKH whose major profit is from properties.
Only time can tell who is right. Obviously OTB has a much wider followers who are still buying continuously to push the price up higher. Be careful!
My intention is honorable. I have nothing to hide. I just want to teach your readers how to make more money from the stock market. Final decision is yours!
I wish to take this opportunity to elaborate more on MKH. As I said before, there is already an oversupply of properties in every town and city in Malaysia. Property sales will definitely slow down and all property companies’ profit will be reduced. That is why I do not agree with his buy recommendation for MKH.
MKH’s 3rd Quarter announcement in Bursa confirms what I said quote:
Third quarter ended 30 June 2016 The Group recorded higher revenue and profit before tax for the current quarter of RM282.1 million and RM62.6 million as compared to the preceding year correspondence quarter of RM255.8 million and RM30.3 million respectively. The increase in the Group’s revenue by 10.3% and profit before tax by 106.6% was mainly contributed by the property and construction division from its on-going and new development projects and the unrealised foreign exchange gains of RM4.9 million from the plantation division following the strengthening of Indonesia Rupiah against the United States Dollar borrowings as compared to the unrealised foreign exchange losses of RM5.4 million in the preceding year correspondence quarter.
(ii) Financial year-to-date (“YTD”) ended 30 June 2016 by Segments Property and construction The division recorded higher revenue and profit before tax of RM620.6 million and RM149.8 million for the current YTD as compared to the preceding YTD of RM445.0 million and RM73.5 million respectively following the higher revenue and profit recognition from the ongoing projects, namely Hill Park Shah Alam, Pelangi Heights, Kajang East, MKH Avenue, MKH Boulevard, Saville @ Kajang, Pelangi Semenyih (built then sell), and new projects, namely Saville @ Cheras and Hillpark 3 and a project grant from government of RM11.7 million. As at 30 June 2016, the Group has locked-in unbilled sales value of RM800.6 million from which attributed sales revenue and profits will be recognised progressively as their development percentage of completion progresses.
You do not need to be a rocket scientist to know that MKH’s huge increase of profit as announced is from previous sales. I expect MKH’s future profit will be reduced due to poorer property sales and its share price will drop.
Investors must always use their limited funds to buy shares that comply with my share selection golden rule which is the company must make more profit in the current year than last year. Investors must bear in mind that MKH’s profit is from previous sales.
Final decision is yours!