Investing

My opinion on the recommended shares

 

After I posted my article “Can you recommend shares for me to buy”, there were more than 30 recommendations. I must thank all those who bothered to send me their recommendations for my consideration.

It will take a long time to offer my opinion on each recommended stock but what I can say is that 70% of the recommendations cannot comply with my selection rule which I repeat below:

My simple requirement is that the company must show increasing profit in the last 2 consecutive quarters and with good profit growth prospect. In addition, it must be selling below P/E 12.

15% of the recommendations are stocks I would buy if I cannot find better alternatives. The remaining 15% which definitely comply with my selection rule and I am now collecting slowly.

Pleasant surprise

When I openly tell everybody my telephone number, many of my sincere friends including my dear wife advised me not to do it to avoid abuses especially from those senseless idiots from the i3investor.com forum.

I am pleasantly surprised to receive almost all the 30 recommendations by WhatsApp and all of them showed due respect and courtesy. No one dare to be rude because all of them have to expose their real identities. They cannot hide behind the fancy pen names or pseudonyms any more.   

I receive only a few recommendations by email and all of them are fairly good. They explain clearly why they bought those shares even though they did not fully comply with my selection rule.

Let me show you one example:

Dear Mr. Koon,

Referring to your article ‘Can you recommend shares for me to buy?’, I would like to recommend you with Malaysian Pacific Industries (3867:MPI).

Why MPI?

– PE is below 12.

– Latest Quarter Profit is showing an improvement.

– Share Price have taken a beating with a YTD decline of 33% provides an opportunity for a bargain. The plunge in share price is due to an increase in raw material cost as Gold and Copper’s price have increased lately as well as the recent appreciation of MYR against USD which affected profits.

– I believe it has a bright profit growth prospect as the company is primarily involved in automotive semiconductor industry and based on the 2017’s AR, MPI saw several new product launches into industrial applications including those for data centres.

– For almost everyday, the Global news talks about the continuous advancement in driver-less vehicles, Industrial 4.0 and IOE. All these are key drivers to the growth in MPI.

– Therefore, I trust that MPI belongs to an industry that will be relevant for a foreseeable future and should be viewed as a long-term investment.

– It’s FCF is one of the highest among all public listed semiconductor companies in M’sia. However, based on PE, it is lagging significantly compared to its peers. The main reason MPI is not fetching a high NP Margin as compared to its peers despite having the highest revenue in the sector is due to a high depreciation charge (a non-cash item). Once it’s PPE is fully depreciated and depreciation charges decrease, it will show an improving profit. Recently, MPI has been investing heavily in CAPEX which could add to Depreciation charges but I do believe it can be offset with a higher revenue from its investments.

You may not entirely agree on the opinions of my recommendation but I will truly appreciate if you could reply with your thoughts on MPI. It will be an honour to have your feedback to improve my investments skills.

Thank you.

Regars,

Ben

 

I must thank all the people who offer their recommendations and also those who expressed their appreciation of my writings.

Good luck and God bless you.

 

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