Monday, February 05, 2007

People Say I Am Pretty!
Are You Prepared For Re-entry?

Many investors may be shaking their heads at the rise and rise of blue chips in most Asian markets. The trouble is once you have taken your profits, it feels silly to reenter at higher prices. For once in a very long time, foreign funds and research analysts think Malaysia (and Asia) is beautiful. Not just pretty but looking pretty even when compared to other Asian beauties!

Do we need people to say we are pretty? Ladies should know better, when someone says you are pretty, they usually want something from you (yes, they want to f___ and f___ over you). Before you get all hyped up, they stand for flatter and fawn.

When did Malaysia get to be so pretty? Are we really pretty? The truth is, we are what we are, country themes are just like fashion fads, they come and go. When you are hot, do not fight it, just join in the trend but gotta be careful when the party is over. Once the pretty one has been partied on too long, and the guests all have left, you are left intoxicated, feeling like a barf-bag, and wondering why no one calls you pretty anymore.

Why Malaysia is pretty now:
Currency - Everyone thinks it will have a good chance of reaching 3.3 this year. Even now, Bank Negara is having to buy dollar to keep it above 3.5 .
Plantations - Good outlook still.
GLCs - Many following KPIs and turning more professional and better managed.
Dividend yield - 12 months back, Malaysian stocks offered the best dividend yield but nobody bothered. Now, we still offerred the best dividend yield and that is touted as a strong point. Whether you are pretty or ugly, I can always think of reasons to support the opposing views (kudos to analysts).
M&A - Synergy Drive is more than just a trend setter. The size and ambition have made people notice that GLCs are jumping onto global best practices, and taking advantage of leverage and economies of scales.
Trend - Don't fight the trend. When the research houses have to find new "country themes", they seem to be running out of options. HK and Singapore while still good, looks a bit frothy. More are putting Malaysia as the new prom queen for 2007 - a lot like HK's music awards, its basically your turn, not that you deserved the award!

The most important factor to me is TIMING - foreign investors and analysts are not stupid, history have shown that the year leading to elections will have a strong positive bias on markets and projects.

There will be a pullback as the index has not even paused for any consolidation. Hence investors who have taken cash from the table should ready themselves on what to buy for re-entry. For re-entry purposes, I have highlighted good covered warrants to aim for. I believe there will be a healthy pullback soon to 1,190 to 1,200.

Hit List

Astro-CB 8/2007: Single digit premiums, stock has not really moved much. Indonesia no longer a story but a good potential, same as India. In-house production good long term strategy, becoming a content player as well. Buy when covered warrant nears 0.40 or thereabouts.

KL Kepong-CA 11/2007: Best exposure in oil palm as the IOI covered will be expiring soon. Story for CPO still solid. Covered warrant can be bought around 1.00 even now, with or without pullbacks.

Maybank-CA & CB 1/2008 & 11/2007: Rotational play will pick up on Maybank as it has lagged the rest. Look for Maybank-CA around 2.80 and CB around 2.00 .

Tenaga-CB 10/2007: Probably the best covered warrant around. Low premium, great upside for the stock in 2007. Buy now or later, its great if you can get them below 2.00 .

TM-CA 11/2007: The sceond best covered I guess. Tenaga, TM and Maybank are likely leaders to push the index higher over the next few weeks and months. Very low premium. Great if you can get them below 1.60 .


The Mumbling Priest said...

Thanks for the heads up on the CWs. Hehehe I saw the launch of CIMB's CW portal. I went in but found it lame. None of the links work or perhaps I don't have the patience to wait. Anyone else tried it?

Will the correction come or is it here already? Noticed that though the CI was +10-12pts, there were more losers than gainers .....hmmmmmmm (scratch head)

doraiddd said...

Oi Dali!!!

your good comrade, Yusli, is talking outta his nether regions, again! Now he wants more young remisiers. Ah yes, young impressionable souls, these will be great fodder for the likes of coper aul's and his ilk's varied 'win-win' remisier 'participation' schemes. There's one born every minute, but that obviously lacks the 'velocity' Yusli so craves.

Aniways back to topic - Fortune Favors the Brave but at this point, i've turned into an insignificant speck of chicken shite.

Looking forward to the tipping point as i'm now really, really, heavy on cash.

you good friends with credit suisse? care to intro Yusli to them? Hahahah.

you write great hard work. keep it up. Highly enjoyable. Many eyes are reading.


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