Thursday 22 March 2012

Why China will dictate the America?

In the past few years, many pundits have been arguing that china will be taking over the America and renminbi will be trade as international currency around the globe. After analysing some data, true enough that 10 years down the road, if the Americans are still not growing, China might take over the U.S. Why?

First and foremost, comparatively, China Gdp is growing at a much faster pace for the pass few years than the U.S. China debt to GDP is much lower and China reserve is around 3.2 trillion. What about U.S? U.S growth has came to a halt and stagnant after the global financial crisis in 2008. Many parts of the US economy were imploding or had ceased to function. The U.S central bank has been pumping money like there is no tomorrow. But the question that ponders one's m is that where does the money come from? Interestingly, Washington has lose out of cash and had been borrowing money from China.

Secondly, China tax revenue is increasing nearly 30% for the pas few years while the U.S tax revenue is plummeting due to sluggish economy. China has 810 million workers and US has only 160 million workers. Which is a tremendously 5 times more than U.S and the unemployment in China is only 3%. On the other hand, U.S unemployment is at the all time high of 8.6% that is around 14 millions people that is unemployed.

In the case of U.S, gasoline prices have skyrocketed, heating oil futures are escalating, milk and cheese prices are up around 18% and 15% respectively. All this are causing the decline in the dollar's buying power. As a result, IMF, UN are also calling for the end of the dollar's reign as the world reserve currency. For instance, Caterpillar and Macdonald's recently finance their mainland china projects directly via yuan bond offerings instead of the U.S dollars. Besides, Apple computer is even accepting itunes payments in yuan. Therefore, why is U.S claiming the China authority to unpegged the yuan and their claiming the yuan is undervalued which causes the demand for china product to be more attractive. But, the average U,S worker earns 6.5 times more than his or her chinese counterpart. These skyhigh labour costs are cooked into every product in America. Thus, a simple term can make one's understand that why product in America is much more expensive comparatively to China.

However, the only reason i can think of why the U.S is demanding the Yuan to appreciate their value is because by raising the value of the chinese yuan, U.S and china will automatically crush the value of the U.S dollar. So the U.S can repay its otherwise unpayable debts with cheaper value. U.S debt which is standing at 15 Trillion while Europe debt is standing at a high of 5.8 Trillion. U.S debt is 5 times more than the Europe debt. In fact, U.S only hope of avoiding default is to destroy the value of its own currency. In addition, the weaker dollar and stronger chinese yuan, China will be able to buy up even more of U.S debt and protect the massive investment it has already made in America by helping U.S to avoid default.

Saturday 3 March 2012

Malton

Malton Overview

Malton Berhad is an investment holding company which operate in property development, construction and project management segment. Malton is also launching few property development projects.

Projects coming up
1) Ukay Springs, Ampang semi-detached and bungalow houses
2) Sungai long mixed development
3) Sungai Buloh commercial development
4) Nova Saujana serviced apartments
5) V Square at Petaling jaya city center phase 2 (expect to complete in june 2012)
6) Amaya Maluri at Kuala Lumpur ( Expect to be completed by end of 2012)

Fundamental Analysis
MARKET CAP = RM273.86MILLION
SHARE OUTSTANDING = 418.10
PAR VALUE = 1.00
CURRENT SHARE PRICE = 0.65
ROE = 14%
ROI = 11%
PROFIT MARGIN = 15.6%
AVERAGE EARNING GROWTH RATE = 45%
QUICK RATIO = 2.5
CURRENT RATIO = 2.7
DEBT TO EQUITY = 33.1%
CURRENT EV/EBITDA = 5.27
NTA = 1.40
DIVIDEND YIELD = 3%
CASH PER SHARE = 0.76

Comment on fundamental view
Base on fundamental view, i will reckon or recommend investor to buy and hold this share at the price of 0.67. Fundamentally, this company has a strong cash holding and they have increase around 200% to 0.76 cash per share. With this amount of cash position, the company will be able to pay out more dividend or clear some of their debt in bad times. Besides, the company earning have been growing since the past 5 years and i am expecting for the year 2012, the company will remain resilient with the uncertainty around the globe.However, the management remain positive on the earnings of the company as there are few more properties that will be completing this year.

Intrinsic value of Malton
However, for property company, i prefer to take a look at their asset they have and the upcoming projects.
With their NTA o 1.40 its 50% discount base on their share price, therefore, Malton is the only company that are trading way below their NTA. Moreover, their historical PE is around 7. With their earning remain around 20 sen per share, their share price should be 1.40 per share and this is exact the same as their NTA. Therefore, I am predicting a 20% discount and giving my target price for malton a 1.20 per share. Although their earning may be looking down, but for property company, their value is on the property they have and  the upcoming projects inclusive the completion of some projects. On the other hand, It is also estimated that their total GDV of 1185m which is three times more than their enterprise value. After deducting their debt that will be incur for all the projects, it is estimated that their gdv will be around 680m and with a discount rate of 5%, it will come to a 537m base on their GDV. On per share price basis, their share price suppose to be approximately 1.38 per share.


Technical view
Technically, i will recommend investor to accumulate at 0.65 to 0.67. Support will be 0.65 and resistance will be 0.70 follow with a strong resistance of 0.76. Lastly, buy at your own risk and invest wisely! happy investing!