Investment and Portfolio Management

Group Assignment 3

Prepared for: Mr. Lai Fong Woon

Prepared by: Muhammad Aizuddin Paiman (11277) Muhamad Wafi Muhamed (11276) Fahmi Shairazi Bin Sulaiman (11259)

Portfolio Objectives: 1. To apply moderate diversification, and having a low tolerance for market volatility or a shorter time frame in which to invest. 2. Primarily to preserve capital and secondarily to attain capital appreciation.

From the investment fund sum of RM 100,000 receiv by the bank, we will allocate the fund ed as follow: No. Stock Share Price as of 15 June 2011 (RM) 7.23 2.90 15.80 Allocation (%) of RM 100,000 0 50,830( 50.83%) 49,700 (49.7%) Numbers of shares bought 0 17 3 Value in RM 0 49,300 47,400 Total Total

1 2 3

MISC IJMLAND PETDAG

0 49,300 47,400 96,700

Fund Allocation
0%

49%
51%

MISC
IJMLAND PETDAG

With 100K in hand for use in portfolio investment, we choose to diversify the risk by splitting the portion of the money into certain amount in different percentages respectively. For MISC, we decided to put 0.00% because of the stocks expected return does not seem promising good return in future, with only 1.38% expected return for MISC. For IJM LAND, we choose to spent 50.83% from the capital of 100K into this stock because as for the expectedreturn for this stock is high in volume of percentage which is 18.91%. For PETRONAS Dagangan, we choose to have the capital investment about 49.17% for this stock due to the expected return for this stock is quite promising with 10.45%.

P P Ex V i

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22 J

ISC IJ L ND PETD V i R A I T m T m t A St l til D

Y / h

2011 ISC 0.00% . % ix ISC . % . % . % 0.00% 0.00% t PE i i i it it l ,t A . i i .

IJ L ND 0. % . % IJ L . . . . . t ND % % % % % t i

PETD . 0. % %

l 00%

PETD . % . % . % . . l . % % IS ,

St i ti : 47. 0% . . . % % %f

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STD (%)

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115.

2009 2008 2007 2006 2005 2004 2003 7Y

-2.21 -12.31 10.80 -11.56 -33.67 35.40 64.96 6.21

21. 9 52.38 37.15 65.26

245.59 -77.59 468.63 27.50 -61.90 -1.85 77.05 87.

1. 9

26.11 -11.45 76.29 25.66 -44.43 10.91 42.12 20.16

65.47 51.57 110.68 22.20 111.48 19.91 46.76 212.07

68.19 85.19 5.81 21.65 17.65 21.81 77.44

135.61 22.54 48.27 31.50 71.32 50.82

359.71 95.42 150.66 279.4

y y y y y y

P tf li t i t l t t , t t St i ti i t i t I A PE AS . t , Hi i I A P tf li t i t i t t it l t St i ti l Hi t t , t i PE AS i it i i , it it l t . P tf li t i it i , i li it tf li t i ti l . H ,t tf li t i ffl t t , ti i tf li . t t t i tl t i tf t l t , B fi tt t l t i l i t tt t i .

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(%) 1.19

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STD (%)

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P R

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70.55 3.84

135.63 37.94 247.60 22.04 14.25 18.93 17.74 47.37

li STD 19.05

ISC

IJ L ND

PETD

 

 

 

P i D 1 1 3 2 1 1 2 4 3 R D 1 3 2 1 1 2 4 3

D ISC 6.85 11.30 15.00 9.95 8.80 9.75 8.60 8.51 7.65 IJ L ND 0.61 1.08 1.05 0.40 0.51 2.90 0.68 2.36 2.77 PETD 5.20 6.95 7.40 3.96 4.98 8.65 7.30 8.80 12.00

03 04 05 06 07 08 09 10 11 D

04 05 06 07 08 09 10 11

ISC 50.06% 28.32% -41.05% -12.28% 10.25% -12.55% -1.05% -10.65%

IJ L ND 57.13% -2.82% -96.51% 24.29% 173.81% -145.04% 124.43% 16.02%

PETD 29.01% 6.27% -62.52% 22.92% 55.21% -16.97% 18.69% 31.02%

C IS

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ix IS 1.000 0.4622 0.5977 I A 0.4622 1.000 0.8122 PE A 0.5977 0.8122 1.000

I A PE A

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INSI HT
ISC B h Feb-11, e expect et t be challenging f the pet leum and chemical

tanker businesses due t

ercapacit in the industry. alaysia arine & Heavy Engineering holdings

ct-10, he company listed its subsidiaries HE on the main market at une-10,

3.61 per offer share.

ompanys subsidiary AE , ordered 4 Suezmax crude oild tankers from Samsung ct -12.

Heavy Industries for US$67.8m each, expected to be delivered by

ay-10, In-line strategy to grow tank terminal biz, company proposed to acquire 50% stake in VV I from utch firm Vitol, for US$735m.

9M11 revenue fell 10.2% mainly attributed to lower sales from liner and heavy engineering businesses. However, earning surged more than 4 times due to gain on disposal of 33.5% stake in MMHE. IJ L ND B h

une-22, I M and Berhad announced that additional 444,650 new ordinary shares of MYR 1.00 each arising from the exercise of warrants 2008/2013 will be granted listing and quotation with effect from une 22, 2011. ec-10, he memorandum of understanding MOU between companys and Malaysian orp had been terminated as both parties had not been able to reach an

Resources

agreement on the proposed merger. ov-10, he company entered a MOU with and Malaysian Resources orp in relation to the

proposed merger between the two company. he merger if successful will propel the merged group to one leading listed property dev elopment cost locally with significantly larger land bank and increased geographical presence. 9M11 earnings nearly doubled despite a 3% dip in revenue, due to improved gross profit margin and a gain from the disposal of elta Awana. he lower revenue was dragged down by decreased contribution from the construction segment.

PETR N S D

B h

Apr-11, company introduced a new fuel called PE RONAS Primax 95 which will replace its previous brand, Primax 95. he new fuel contains an advanced multifunctional additive package that delivers top tier performance and maintain engine cleanliness. Feb-11, company continues to improve margin through cost optimization and operational efficiency initiatives. However, with fluctuations in international oil price, petroleum product costing and weak global economy. ompany expects current year profits to be affected. Nov-10, Petronas agangan Berhad announced that the Board of irectors has declared an interim dividend and special interim dividend of MYR0.30 and MYR0.10 per share less tax at 25% for the six months ended Se ptember 30, 2010, respectively. he entitlement date and payment date are ecember 13, 2010 and ecember 28, 2010, respectively. Nov-9, IMB kept ompany at Neutral but raised P to RM 9.90 from RM 8.42 after revising uo FY09-10 earning forecasts by 2% -3%. Broker say 1H09 net profit within expectations. 9M11 revenue increased 10.6% due to higher pdt average selling prices and higher sales volume. oupled with lower operation expenditures, earnings increased 8.4%.

Attachm ISC -

t: ISC tranger ti es

Stock Name: MISC ompany Name: MISC BHD Research House: SK

Maintain neutral at RM7.31 with reduced fair value of RM7.44 from RM8.20): MIS reported FY11 core earnings of RM910 million year -on-year: 21%, quarter -on-quarter: 216%) on the back of revenue of RM12.3 billion y -o-y: -10.5%, q-o-q: -4%). Its bottom-line was 27% below our forecast but in line with consensus. For the full year the shipping conglomerate recorded a total net exceptional gain of RM922 million. A big chunk of thi s was the gain on the disposal of its 33.5% stake in Malaysia Marine And Heavy Engineering Holdings Bhd RM1.4 billion) after netting sizeable impairment losses totalling RM576.6 million. he market value of its vessels has significantly depreciated in val ue given the oversupply of vessels along with other provisions related to its loans and investments. MIS announced a final dividend of 10 sen per share with full year dividend coming in at 25 sen, which represents a payout ratio of over 100% of its core earnings. MIS 's revenue was relatively weaker, attributed to the lower contribution from the engineering division coupled with lower shipping rates seen on its tanker and liner division amid three catastrophic black swan events globally. Shipping rates co ntinue to be depressed due to the oversupply of vessels, which is likely to persist over the immediate to medium term, in line with our bearish view on the overall shipping industry. Ailing rates coupled with higher bunker fuel costs continue to keep MIS ' s liner, petroleum and chemical divisions in loss-making territory over the past few quarters. Nonetheless, MIS 's offshore, NG and fabrication businesses remain in the black and will continue to cushion earnings. MIS 's deteriorating outlook and fundame ntals enforce a further downgrade to our forecasts, which we slash by 34% on the back of a 13.6% cut in revenue premised on lower petroleum and chemical tanker rates which we have now trimmed by 4.2% to 6.3% over the e have also adjusted o ur forecasts to reflect the new financial year next two years. estimates in line with the entire Petroliam Nasional Bhd group. Following the downgrade, we retain our 'hold' recommendation at a lower fair value of RM7.44 from RM8.20) pegged at 1.5 times FY11 ending ece mber book value of equity per share. ' OSK Research, May 12 . his article appeared in he Edge Financial aily, May 13, 2011.

IJMLAND - IJM Land - right n target

Stock Name: IJMLAND ompany Name: IJM LAND BERHAD Research House: AMMB Maintain buy at RM2.80 with fair value of RM4: e reaffirm our 'buy' rating on I M and with our fair value unchanged at RM4, based on an unchanged 10% discount to our fully -diluted net asset value NAV) estimate of RM4.46. I M and's 4QFY11 net profit came in at RM44 m illion, bringing its full -year earnings to a record RM218 million two times FY10), meeting our bullish estimate but way ahead of consensus' by 25%. his underscores our strong belief in management's delivery capabilities. he company announced a dividend of four sen per share FY10: two sen per share). Although earnings were against the preceding quarter, this was due to the lumpy recognition of the earlier sale of the Aeon Mall in Melaka. Our earnings estimates for FY12F and FY13F remain largely unchang ed at RM285 million and RM314 million. Earnings will be underpinned by strong unbilled sales of about RM1 billion and a new sales assumption of RM1.5 billion over RM1.5 billion to RM2 billion of e introduce our FY13F earnings a t RM340 million, planned launches for FY12F. representing 8% year -on-year growth. he group plans to launch RM1.5 billion to RM2 billion worth of properties ' including ight ollections 3, he Address. New sales remain solid, amounting to RM450 million in the first three months of Y11. e believe the group would be able to register stronger sales against last year's robust RM1.5 billion. I M and is moving to capitalise on the maturity of its Seremban II township by divesting 15 to 20 acres of commercial land to Mydin hypermarket. his should accelerate the development potential of the remaining 300 acres of commercial land. Infrastructure and earthworks for its 50% -owned anal ity 1,877 acres) are slated to start soon. Acquired for about RM50 psf, anal ity is scheduled for l aunch in 2012 to take advantage of the lack of affordable landed homes priced below RM350,000 in the suburbs. I M and's valuations are very attractive ' trading on forward multiples of 11 to 13 times over FY12F to FY14F, and a 37% discount to fully -diluted NAV. espite its deep value, I M and's share price needs to get a kick from a meaningful land deal to reinvigorate excitement over the stock. his may soon take place. ' AmResearch, May 30 his article appeared in he Edge Financial aily, May 31, 201 1.

PETDAG - 'H ld' call n Petronas Dagangan

Stock Name: PETDAG ompany Name: PETR NAS DAGANGAN BHD Research House: HWANGDBS Petronas agangan Bhd P B), which had RM1 billion in net cash as at end March 2011, is expected to remain generous in its dividend payout for the upcoming financial year. HwangDBS Vickers Research said it was keeping the dividend payout assumption at 70 per cent which translates into 61.5 sen net dividend per share DPS). Yesterday, PDB declared a gross final and special DP S of 60 sen, which was above expectation, said the research house in a statement here, today. For the financial year ended March 31, 2011, the firm''s pre -tax profit jumped RM1.21 billion compared with the RM1.05 billion registered in 2010. Revenue was up at RM23.27 billion from RM20.69 billion previously. In a filing to Bursa, PDB said it expects profits for the current financial period to be lower. his is due to a nine -month financial period, arising from the change in its financial year end from March 31 previously to December 31, beginning 2011. However, HwangDBS told Bernama that the 70 per cent dividend payout outlook, is still based on the financial year ended March 31, 2012. For now, HwangDBS is making a "hold" call for PDB shares with a targe t price of RM12.75. At 11.33 am, PDB shares price stood 40 sen higher at RM15.70. -- Bernama

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