MEGB - Shall i sell it in January 2011?

Critical growth factors:
1) No more delay to start full operation in Kuching and JB campuses and other future expansion and development;
2) Keeping track of its student population after new campuses opening; and
3) Offering more new courses or programs.

When shall i sell it?
1) if the market price does not match its upwarding forecast profits that to be drived by opening more new campuses, but the foundation is still back to growth of student population, rather than growth of new campuses opening. If running the operation inefficiently, opening more campuses may bring the company's profitablity even lower. Hence, keeping track of both its running costs and student population growth is inevitable.
2) Short term technical correction in stock price, it is hard to analyse rightly. For the time being, i prefer to make decision based on its fundamental financial performance. But, technical analysis can not be ignored in any time.

Higher coal prices could hurt Tenaga's profit (Published: 2011/01/05) (extracted from www.btimes.com.my)

Utility giant, Tenaga Nasional Bhd's share value has been dampened on concerns that the rising coal price, could hurt earnings, says AmResearch. Coal accounts for 40 per cent of Tenaga's power generation source.

At 11.44am, Tenaga shares were down four sen to RM6.68 as the massive flood situation in Australia, is disrupting coal supply from that country and partly contributing to the rise in thermal coal prices.

AmResearch in its company report also said based on the current price that is hovering above US$100 per tonne and the US/RM exchange rate, Tenaga's net profit for financial years 2011 to 2013, could drop by between 28-29 per cent.

Tenaga purchased 17 per cent of its annual coal requirement of 18 million tonnes in financial year 2010 from Australia, 71 per cent from Indonesia and 11 per cent from South Africa, said the research house.


Coal accounted for 48 per cent of Tenaga's 2010 financial year fuel cost. Most of the coal supply is purchased under term contracts with prices being negotiated annually based on current rates.

Newcastle coal spot prices have risen by 18 per cent over the past month to US$126 a tonne currently. This is 26 per cent of AmResearch's coal assumption of US$100 per tonne for the 2011-2013 financial years.

"We estimate that a US$10 increase per tonne in coal costs above our average coal cost projection, could shave Tenaga's 2011 financial net profit by 18 per cent.

"But we also note that the US dollar has appreciated against the ringgit by three per cent to RM3.06 a dollar currently. This could partly offset the impact of higher fuel costs," AMResearch said. -- Bernama

OMG!!!,  power plant's production costs is expected to increase. MFCB is operating its coal fired power plant in China and its diesel-fuelled power plant in Tawau. The increase in coal and diesel prices may erode its bottom line. But I shall hold it for the time being.

Mega First Corporation Bhd

Today i also bought 2000 shares of MFCB, based on the following:
1) Low PE at around 6-7 only
2) Existing major profit contribution from the following division seems very attractive:
    a) Power division -  2 power plan in full operation - 1 in Tawau, Sabah and 1 in Shaoxing, Zhejiang province of China. which contributed at least 80% of profit to the Company.
    b) Property division -  MFCB owns quite a number of vacant land in KL, Selangor, Perak, and Melaka. which can be used for property development.
    c) Limestone division - MFCB also owns a number of quarring and limestone hills in Perak.
3) Low gearing ratio - debt to equity ratio at 0.18

But, the following matters to be monitor closely:
1)  Don Sahong Hydropower Project in Laos, its investment cost is expected to be huge. the progress of project shall be monitored closely, esp on the area of what happened in SIME about project cost overran.
2) It appears that its management likes to invest in quote shares which may not related to MEGB's core businesses. The return on this kind investments need to be monitored very closely in fact. But I have limited accessability for immediate information, Hopefully, they can strike the right counter.

Masterskill Education Group Bhd

This counter seems to be my 1st favourite stock in 2011. Can this counter bring me a good return? by referring to what were reported in this article, MEGB has strong balance sheet, with a cash position of RM277 million as of 30 Sept 2010 which was improved by RM57 million from RM220 million as of 30 June 2010. MEGB's net profit margin is quite attractive at above 30%, i have to own this business, its PE is around 8.75 times based on RM2.08 closing price at 30 Dec 2010, which appears relatively lower as compared to HELP and SEG. it had been down 42% from its IPO price and the reason given from CEO was due to the disposal of shares by one of the foreign investors. if the reason given is true, buy low sell high strategy may be able to apply it here.

Althought there are some issues of the delay of operation in Kuching campus and JB campus and PTPTN matters, i will regard these issues as a bonus if MEGB's management can resolve it. Looking at current profit level which contributed from those campuses with currently in full operation, it is already good enough for me.

Other potential upsides are low gearing, high financial capability for future expansion, education counter is deemed as defensive stock.

I had just successfully bought 2000 shares of MEGB.

2011 a year of inflation

2011 is a year which i strongly feel that inflation will be coming, esp in 2H 2011. As a fixed salary receiver, inflation isn't a good thing to me, most of my living costs are expected to be increasing while income is fixed!!! I am quite anxious!!!
It may be a good idea to compensate something from stock market with a capital of what I have about RM10K, that doesn't even enough for downpayment of purchasing a unit of condo in view of hiking property price thoughtout the previous year 2009.
But, which stock counter is more suitable for me? is my option to invest in stock market right?