Real Financial Blog

  It seems like I have been posting many unrelated issues or things with financial world which I shouldn't do much in this blog. Although I do it just for myself but somehow I have never made any financial research record since months ago. This shows that more concern should be done on financial issues.

  No older posts will be deleted but will refocus my view on financial stuff start from now. I will separate my personal life and thoughts from this blog to this blog.

 

 

 

Certification Myth

  Long time ago, we were told that certification is very matter in terms of recognition and job-seeking in the future, where you are just nothing without it. Since then, my friends strive for the cert without any hesitation.

  Before entering Univeristy, I strongly believed that what we would care about is the job after graduate by getting the cert, with good grade, if able. It's a belief among all the students. However, this faith has been questionable for me since I have experienced the reality.

  Cert, now is the undisputed, undoubtedly,and inarguable to the students who are putting their efforts in the study just because of superficially believing the cert would definitely bring them into good companies, good paid, good benefits, good bosses, luxury car, big houses. and perfect family, even lift their life up.

  For sure they are looking forward to the day of their graduation. In reality, cert is still unquestionable to be the  first impression you could deliver to your boss, so that you can convince him or her to hire you because of the cert---a proof that you are the capable person for the company. Unfortunately, this is already out-of-dated.

  No doubt, cert is still needed but no longer the only evaluation to a fresh graduate. People who are only fighting hard for the cert should be advised to other than that, if not they would sooner be eliminated. The ambitious, the wide-range of knowledge, the way of delivering presentation, the quickly-response, the think-out-of-box mindset, the soft skill (not mean the soft skill cert in this case) and the capability to catch up the main point are those most wanted skills.

An Expensive Lesson

  When the holiday began, all university students were rushing up to going back hometown. Even I myself, did not notice that I was actually leaving the hostel without clearing off the bills, which it caused a lot of problems after I came back.

  Here comes the problems. When I first came back, I was expecting a dirty house with full of dusts and spiderweb was weaved on the wall while there were grains of sand all over the floor. However, the real situation was much more complicated. 

  Such situation is never unfamiliar for me but how about when you wanted to clean up the house and there was a water shortage? Even worst, I did not know why it happened and just stood over there helplessly. Any possible way had been tried out but none of it could solve the problem. Picking up the phone and trying to call friends who might know how to solve the problem, with a hope to ask some help from them. Unfortunately, they seemed never face up such problem before. I was feeling lost again. 

  I had no idea why the water just stopped flowing out from water pipe. My initial plan to clean up the house was obstructed. The house was still very dirty. Luckily, I asked help from fourth student house. Although I had yet to find out the reason why there was a water shortage, at least I had a place for me to stay overnight.

  Not only water shortage but the streamyx was also cut off by TM (the modern vampire). In Kampar, the only entertainment is online. I was wondering why it was cut off or I did not pay off the bill(s)? Apparently, the letter is the real reason.

 Okay, there were no other ways but to get the bills paid. Where are the bills? Again, I tried to find out the bills like a nut. I still got nothing even Tipping over the tables. What else? The phone rang and I picked up and answered. It was my ex-house(room)mate, Cheng Xun. After some greeting, I started asking about the bills and I was told that the bills were on weixian's hand. Without wasting any time, I quickly called up weixian. Thank god! Finally, I got the bills ! I ran to my room and got the money.

  Despite the bills problem was settled, but how about the water shortage?At the night, I still thought of no ways and fell asleep after getting down from the whole day.

  Surprisingly, I managed to wake up early in the morning (since I used to wake up at the afternoon), I was hoping the miracle could happen, where the problem would just go away from me. No, it didn't happen. After having breakfast, I knelt down and started chanting to pray that I would definitely solve the problem wisely and with the help of shoten senji.

  After that, I suddenly thought of that---since I didn't know which department is responsible for the water management in Kampar, why didn't I just check it through internet? Yes, I got it. It is LAP (lembaga Air Perak) responsible for it. I dialed the number that displayed on the webpage and knew that either I didn't clear off the bill (Oh My God ! Bill again?) or someone had switched off  the meter. I went back and checked. Now, I knew that there was somebody switched off the meter. Thank gohonzon !!

  Now I am going to wait the water being pumped up to the tangki and start my cleaning plan again. This lesson taught me that we should clear off the bill before leaving the hostel and record it to avoid such problem again. 

Banking Sector is collapsing ?

  When I flipped through the newspaper, probably news related to economy slowdown or financial crisis occupied most pages of the newspaper. Readers will find them bored when they always cannot find any news that is not related to the mentioned issues.

  Maybe you are wondering that why there are always analyst or marketers saying economy is going down and next financial crisis is coming soon if no action is taken by those authorities---while actually nothing is going to happen because these are just their own opinion and so-called "analysis" that is based on "anticipation of current situation".

  No, actually these aren't the main point of the topic. My concern is that whether the banking sector is going to collapse as I can see many of the banks are seeking for bailout from the government or international fund organisation which injection of capital to keep them survive is becoming a controversial issue.

  Certain European banks are seeking help from the international financial authority because of unable to repay debt. The current one is Slovenia---an Euro country which has little population and relatively small economy. Also, we can see that many finance companies are selling off their assets to repay the debt and trying to hold more cash during this difficult time.

  The opposite situation in Asia---many large corporations are buying out or bidding those sold-assets from these western companies which are facing financial difficulties.

  I would rather choose Asia Banks if I were to invest. Banking sector would not collapse unless the certain country wants to abolish monetary system.

  No figures here. I am lazy to find the figure to prove anything. From my observation, only few banks are strong enough to survive especially Asia Banks---including Malaysian Banks, such as Hong Leong Bank, Public Bank, and Maybank. Although they are still small in terms of assets and market capitalisation but due to stable and conservative policy, they are going through sustainable growth.

  Banks in Canada are also considered as good choices for those who are interested in investing banking corporations. They have no exposure much in U.S market---that is why they survived and able to make profit although financial crisis happened. One of my preference is Scotia Bank.

  Another potential market which is Southeast Asia. Banks in Asean are keeping up due to growing population and consumption power. But remind that most of the central banks make US dollar as major reverse currency, which means if there is any change in US dollar policy, no country can escape from it.

  The economic theory that we learn in school or university is taking the banks as the core of the economic.
In recent years, many of the banks collapsed or sought for bailout.

 To track back profit, many banks tried to play some tricks on their products and sold to public that brought nothing return to the investors and customers. Bankers are too smart to cheat nowadays. We still see a lot of people admire the bankers but it no longer happens in western. Many bankers are seen as cheater or vampires who like to "suck blood" from the people.

  Of course, all banks would not go bankrupt but gradually lose their reputation. Banks were created to be the intermediary of transaction and not gambling in the market.

 

 

People First

  People often change when they are in a environment which will influence their mindset frequently. Although minority will not change at all but mostly will. 

  How do people realize the change? Probably they are able to think and act differently if compared what have they done previously.Recently, I realize I have changed, where I always thought too much and could not stop when I started.However, it makes me worry about losing self-characteristics.

  A personal change could be resulted from experiencing something in daily life. Through accumulation, a person might try to re-think his or her current situation and determine to change. Why change? Sometimes we need to change to adapt to the environment or strengthen internal will.

  The first ever thing I experience is that a person cannot live lonely without any other person. Nobody is alone in this world. Since we are born, we live and interact with other people from day to day---this is unavoidable. 

  "Bond between people will not be broken and will be strengthened through connection of the heart." Through those SGM activities, I have learned that people should be considered as the priority in doing anything. This has become trend especially in entrepreneur world as there are a lot of people-oriented companies appear. In reality, we can see that labour forces being squeezed and less people dispute about that.

   It goes wrong when consideration of technology, structure, authority, or products are above the consideration of people.

  

  

  

Realized it is too late

  Assumption is always assumption, not necessary it would become true and indeed it is formed or made up by personal judgement which is said to be bias all the time since everyone has different perception over everything.

  I admit that I misunderstood something. This is something that I have made up to convince myself it is true but the reality is cruel.

  Judge a person based on some characteristics but not all. When I realized that I actually only understand part of his or her characteristics, I felt like I was the stupid. Of course, they are good and bad at the same time because nobody is perfect but I just cannot accept all.

  People are sharing one common---always focus on one side of a person while lack of ability to look at the things in bigger and multi-dimensions(sides).

  Well, finally I know it. Hopefully I can see more clearly about that.

Choices?

  Having a relationship with others is not easy as we think of especially if you were to choose a person who is going to accompany you in your entire life.

  I had a girlfriend but ended up with broke up. I knew it was going to happen because both of us were not confident and felt uncertainty for our future. My mother told me that not to have a girlfriend too early due to immaturity.

  3 and half years. I have remained single state for 3 and half years. Well, I am already used to it. In Uni, I see a lot of couples. However, many of them cannot persist. Sometimes, people often make decision emotionally without thinking too much of their future. Consequently, they keep on suffering and trying to find a new one to avoid---it doesn't work at all.

  Now, I have choices. Of course, I may lose both choices. Two of them have attracted me. Somehow I have seen things unclear, therefore I can't even make a decision to choose one. They do not know actually I like them. We just remain friends.

  As a man, I should focus on my study and future career. But I as a man, need love too.

Twelfth day---Move on

  Usually I could speak anything fluently during a conversation. Of course, everybody can, too. However, everything goes wrong when you are asked (required) to speak in front of the people in formal way which will take your performance into account---marks.

  I have been gone through some presentations but it seems like I have never made it well. Although most of the time I was given introduction part or conclusion part because of lacking of English proficiency.

  There is someone says that any challenge that we may face will finally turn into victory if we are going to strive for it with confidence and courageous. Indeed, if we are not prepared well or not taking serious, the consequence is that we will lose.

  When I was looking at the presentation of my classmates, I was quite scared that I would make the same mistake again for next week presentation---not prepared well. I must strive for it because I believe that whatever task that is given, we should make it as good as we can. This is the reality, no matter you like it or not, you have to do it or you just quit.

  People often avoid problems rather than fix or solve it. Other case is that people solve it but repeat again because people always forget the causes.

  Let's not make this happen again. I will definitely deliver the best presentation than what I did in this university!

Eleventh day---Invest in myself

  Finally, I have received the subscribed international newspaper---The Wall Street Journal. I have been waiting for this print newspaper for a long time. As a business student, the first ever investment that should be made is not shares or property but our brain---knowledge.

  Indeed, invest in any financial tool would result in making good return if you are making the right decision.  However, there are less people able to do so as they do not take "learning" or "studying" as consideration.

  When mention about learning, it's not about buy-and-sell but what is return that the financial tool can bring it to you and what should you know about the chosen financial tool.

  Financial tool is just a tool for you to invest in any kind of instrument that you believe it can bring the expected return to you. You must ensure that you know what are you doing.

  Before really start investing, go and get some knowledge about investment. Also, you must learn and concern the basis of economy and politic as well as the most influential factors in financial markets. A prominent investor is always aware of international events.

  Most of the people are not often reading newspaper or any book that is considered educational for themselves, yet they are more believing in those "insider"news, which finally would bring them to the hell. You must analyse although you read a lot of materials---too much would not good, too, that leads information overload.

  I was quite excited when I got the newspaper---the first ever step to be more global view.

Tenth day---Figures about Kian Joo

   I have been spending for whole day to key in the data of Kian Joo into Excel. Better than what I did for Jobstreet last time which spent me about 1 week to complete the 7years data while Kian Joo has about 11 years data but just took me 4 hours.

  Maybe I could make it more efficient next time by spending only 2-3 hours. Most of the people wouldn't understand why I was willing to take time just to key in such data. Initially I doubted on that---Will I get any information by doing such?

  Actually I will and everybody who is passionate with fundamental type investing style will find the information by doing so.  Let's have a picture about what I have done:

  According to the data, the company has experienced growing stage in terms of revenue. However, its net profits are always fluctuating from year to year although revenue increasing. There are several factors causing unstable net profit---costs. In manufacturing, cost means everything. Whoever is able controlling the cost strictly while having huge volume of production, it is the winner of this game.

  What cost involved in Tim manufacturing company? the raw materials. When supply of raw materials shrinks, it means price goes up. Also, the company focuses on domestic market which its customers mostly are those big industry players such as F&N.

  Secondly, the company has its one quarter,on average, of its revenue made up by receivable form. For each RM 100 sales it makes, about RM25 is paper profit which has yet to be received. The cash flow is not strong enough as its borrowings always 2 to 4 times of its cash. For each RM1 cash it owns,there will be RM2 or RM4 of debt.

  Net profit margin still within expectation as it has about 5 to 10 per cent. It is the slightly above the average of the manufacturing industry.

  The most important is ROE. It has about 8 to 10 per cent, on average. Well, there is a room for improvement for it. Especially in Management, since the company was taken over by Can-One berhad, a can and tin manufacturing company, it is the time for Can-one to make things smoothly because changes are happening.

  In conclusion, it is a moderate performance company in terms of figures but the industry is still growing if the consumption of goods such beverages and foods, some industries used packaging and also some home used products are growing too.

Ninth day---Kian Joo Factory Berhad

  It is no doubt that Malaysia is transforming from export-oriented to domestic-demand-oriented economy. However, we have seen no improvement has been made although there are a lot of plans came out. It takes times and Malaysia needs a whole restructuring reformation to ensure the transformation is going to happen.

  Manufacturing is still the core of the Malaysia economy. We have many successful manufacturing firms which we should be concerned about such as Kian Joo---the can and tin makers.

  For those who has never heard about it, you should take note that Kian Joo is one of the most successful can&tin maker in Malaysia. Other than that, it also involves in packaging business although it is just a smart portion of company's revenue.

  Before 1999, the company had grown steadily and maintained net profit of RM50 million above but it came to turn down after 1999 when the company's net profit dropped to about RM 33 million although the revenue increased.

  Improvement was seen started at 2002, the company's net profit grew again steadily and achieved RM 50 million again in 2005 but fell again in 2006. It is due to the increasing raw materials costs and some of the associated companies faced losses during the year.

  The company's net profit fluctuated after 2006 and currently it has about RM 104.04 million net profit.

  We can see that this company is sensitive with raw materials prices. Although it has very huge volume production line and serves for various famous companies like Nestle and F&N, the net profit margin is low. It means that the company needs to control costs strictly in order to avoid losses.

Eighth day---Waste of time again

  Today I am having a bad day which I have spent my time on unnecessarily stuff without doing something more important for me.

  As I said before, human revolution is not going to be easy as people often can do the right thing but do the right thing consistently is much difficult. It's quite disappointed for spending my day in this way. I should have done something more important.

  It's time to change it again.

Seventh day---diary

  8th September is my big day. No, it should be gym boys' big day because of having performance during that day. Ok, I admit that actually I still can't get the feeling when I was in training everytime. I have made my partner injured and suffered from leg injury which could be turned into long term damage to him.

  I felt guilty during the moment he fell down while I was not able to catch him. This happened last week but it brought me a great impact, where it is irremovable bad feeling for me. He is just a 14 years old kid. I still remember I quit gym once before when I got injured during practice. Now I got back. I was afraid that he might quit too if he experienced what I did. Well, he didn't.

   When a formation is failed, it is not simply because of non-familiar feeling but the weak of basis. Yeah, basis is the most important when it comes to anything. We have our usual practice every Sunday. Usually not more than 20 are quite active in practice matter. Out of 20, almost half of the members do not take thing serious where it should be. Although I do but I never make it hardest. I should have tried my best to make myself more stronger.

  There is little chance for me to improve my body condition whereby I have left 2 years to go for it.

sixth day---Malaysians' proud

  Who would ever think that Malaysia has actually produced 50% gloves of the world? Do not surprise that Malaysia is able to do so as most of the Malaysians are not proud to be Malaysians (because of politics?)

  I have yet to do any analysis about the producers but quite surprised that Malaysia Producers have reached such international level. This is something we should be proud of and also it involves a lot of investment opportunities.

  From the long term prospective, those producers could generate huge profits as long as demand is there.

  People often cannot see any long term profit because lack of knowledge of history? what has history to do with investment?

  History will tell you.

Fifth day---What make Public Bank so special?

  I do not intend to own this shares and I have not really analysed Public Bank yet. What makes me wonder is that most of the value investors are interested in the bank. A lot of reasons behind, indeed.

  Let's not look at those ratios or whatever figures that might make your excited, but try to look at the people and company culture. Yes, people are the ones who make things work not the machines. They recruit a lot of graduates---as long as you are a degree holder, it doesn't matter with whatever course and grades.

   This is quite controversial because most of the banks or financial institutions recruit talents based on the grades and related field they study. I have a friend who worked for HSBC bank before, he wants to be banker again after graduate. He never agrees with the recruitment way of Public Bank which he thinks that recruiting based on the grades and study field should be best way to get the talents. He worries that if a bank recruits talents without looking at those two conditions, the bank would face a lot of problems.

  Does it mean Bank should only recruit banking or business related degree holders? It is unnecessary. It actually means that Tan Sri Teh already realizes that anybody could be the key people?

  I do not know the actual situation but I guess the employee turnover rate of the bank is lower than others.Why?My observation is that it may due to the company culture. People at the bank may really united and willing to contribute to the bank.

  Tan Sri Teh realizes that united of employees are the key to drive the company up and it is another way to reduce indirect cost because lack of political issues among the people. Like what AirAsia is doing now---employees should be the company's priority, if you make them happy, then they would also make customers happy. When all this happen, ability of generating profit should not be worried.

  I still remember what Lim Wee Chai (Founder of Top Glove) said before : Profit is important but you have to make your people united and happy then only your company can survive. Thus, you are able to compete with other by one absolute advantage---you have the people who have unlimited potential to be explored.

  In Malaysia Banking history, Public Bank is the only bank which generate profit by internal growth and make profit continuously for 36 years. It is a world record and no other banks in Malaysia could make it.
Also, the bank never merges with other or be merged, which means it is extremely strong that even competitors do not dare to "eat" it up?

  Sometimes, analysing company not only talking about the figures, but also some management style.

 

 

Fourth day---manufacturing companies

  Based on the information of wikipedia, half of the Malaysia economy is made up by agriculture and manufacturing sector which have about 49 % of Malaysia economy activities.

  What am I trying to prove is that Malaysia is still heavily relying on traditional business model and there is one problem with it---labour force. If you were non Malaysia and had been here before you would realize that majority of labour force in manufacturing and agriculture are double-LOWs (low skilled and low wages) foreign workers.

  This is extremely unhealthy. Indeed, manufacturing is concerned about costs of production. If cost is high, their profit would be affected. Another thing is we have less-advance-technology to support the sector and causing them demand a lot of low-cost workers to sustain their operation.

  We have a lot of good companies such as Hertalega, Kian Joo, F&N etc.They all have dominant positions in Malaysia or region. This indicates that we are still doing good in the prospective of business.

  Whatever how good they are, and how much they can generate in long term, the biggest problem is labour force. If they want to expand capacity of production within the country, then the only way to be efficient enough---employing low-cost foreign workers. It has become an essential. Otherwise, they have to move out to other country, or improve the production-technology (it takes a lot of times and costs), or they improve the employees benefits.

  Any method they adopt will have pros and cons. Nothing is perfect but could be done excellently. Somehow we as investors should concern about the whole picture too instead of over-focusing in micro stuff.

Third day---complexity of banking sector

  When you read the financial statement of a bank, usually you would only understand the terms or some complicated financial products if you are familiar enough with the banking sector.

  Having spent a few hours to read it, I could conclude that banking sector is the most complicated industry. Specific terms like Banker Acceptance (link) which would kill your time to study its meaning and working. Although it's difficult, no doubt I have learned something from it.

  Bank is really difficult to manage as it acts as an intermediary between buyer and seller. Most of the time, bank is required to be effective and efficient enough. You could imagine how stress the bank managers are. Once the payment is not matched or error occurs, you would responsible for it.

  Bank is quite unique in terms of its operation and profitability. Loans should be the most profitable and traditional products the bank has. Once the bank lends out, expected interest would be its long-term income. Also, bank also provides various types of loan business which are in many form like hire purchase, a services which a bank would buy the demanded vehicle for the customer in advance and will be paid based on the interests.

  Also, the bank may buy some equipment or assets and lend it out to the manufactures by creating interest based income like rental.

  In order to judge a bank, we should look at the long term prospective. Yes, long term game. Banking is a long term game, unlike other sector can boom within a short time. If a bank always acts for short term profit like betting in high-risk securities, you should beware and better not to invest in the bank.

  So far, Hong Leong bank is quite complicated in terms of shareholding structure.

  Mr Quek is afraid of being eaten by big player?

Second day---Hong Leong Bank

  It's quite surprised that I am able to wake up at 6am today. Wake up early means I should treasure the time and do whatever I have planned for. So I research about Hong Leong bank.

  Hong Leong Bank was established more than 100 years ago during the time Malaysian Chineses rooted in Sarawak.Initially it was called Kwang Lee Mortgage & Remittance Company and it was incorporated with Kwang Lee Bank Limited in 1934. In 1989 it was renamed as MUI (Malayan United Industries Berhad) Bank and subsequently was merged under Hong Leong Credit berhad (now known as Hong Leong Financial Group) to become Hong Leong Bank 

  Here is some relevant information about the background of Hong Leong Bank---Wiki.

  Hong Leong Bank is controlled by Malaysia Tycoon Quek Leng Chan who has vast experiences in business and he is quite knowledgeable person. A super low profile and mystery tycoon, who realizes that POEPLE are the most valuable assets in the company---he treasures them although the group is largely controlled by his family.

  The core business for HLB is credit card business and various type loans. It is more focused on retail customers.

  So far, this is what I have known. The research is continued.

First day---Wake up

  After coming back from gymnastic practice, I am extremely exhausted. Any plan has gone away too. What I really needed was sleeping. Well, I have slept for at least 10 hours, yet I found myself too tired.

  I have done nothing about my investment. Maybe due to fluctuation of my heart. Some motivations are needed for my research.

  Start from Hong Leong group first. Tan Chee Hoong, you can do it!

Starting a new life

  I have forgotten how many times I have written this topic---most probably I have not improved myself and yet I need to reset my own target again and again in order to push myself to take action on it.

  Recently there is one set of word always come out, regardless where and who speak out. The Human Revolution. The simple definition of this word could be said as the inner change of a person in order to improve what he or she lacks of.  It does mean that. Actually we could look at it deeply based on the Buddhism teaching.

  A great human revolution can change the destiny of a person: thus, change the destiny of whole community, and change the destiny of whole country; finally, the world could be changed.

  This is the thing we cannot deny because we can see that a lot of people have changed their own destinies  and also the whole world although they are seen as "crazy" people who always keen for changes due to various reasons.

  Okay, make it short, what I want to say is I want to change myself first. Yes, I am currently changing myself  in terms of bad habit such as oversleep for 8pm class. Oversleeping is quite common among the university students nowadays. Most probably they (we) are having unhealthy life-style which sleep after 1 or 2 or even sleepless for whole night is seen as common.

   No more excuses for me not to change this bad habit. By the way, in order to wake up early, you must be having sufficient sleeping time like 7-8 hours per day should be the standard.

  Before this, what I want to do is actually to change the world. Well, I have no specific target yet for this. Anyhow one of the target I want to achieve is to become a successful investor.