For Newbie : Shares (Part 2)

stevenglobal — Mon, 06 Feb 2012 13:43:51 +0800

For those have not read about For Newbie : Shares topic in this forum, below is the link :
http://forum.lowyat.net/topic/2200632

For this series, I'm gonna provide some links and tools for you to get involve into the shares world, updated and simple understanding of shares. However, there is no recommendation on which shares to be buy and sell, and kindly absorb whatever you feel comfortable in learning about shares.

Stay tuned....

For Newbie : Shares

stevenglobal — Tue, 24 Jan 2012 17:13:34 +0800

Ever wonder how many tools and different type of emotions comes into buying and selling shares? Each of us would have a lot of questions and skill need to be learnt throughout the investing process. Some answer just telling you going here and there as internet is having a lot of resources for research. There is no syllabus out there from where you should start from. Everyone has their own thoughts of sharing, but I would like to put it here in lowyat.

Firstly:
There is no 100% return in the investment without involving risk. We all might lose. Agree?
But, losing money = risk? What are the risk and ever thought of lowering the risk?

First Step : Simplify the basic information :
What type of company we are interested? What are the basic information?
- good profit?
- paying dividend?
- able to make payment?
- able to cover borrowings at all time?
- Gross profit Margin and achieve Net Profit through out the year?
- Industry that we are familiar with?

Wow, where could I find the resources? Well, bursa Malaysia has extract all the latest financial reports from the companies. Without looking at their reporting, it looks weird when we all say their company is profit or making the losses from the news. So does POS Malaysia make profit or loss to be exactly? or what happen to TENAGA?

[addedon]January 24, 2012, 9:04 pm[/addedon]As in general for the financial reports, just search for 4 items below :-

a) Gross Profit Divide by Revenue = Gross Profit Margin in %
b) Net Profit before taxation for the year
c) Current Assets divide by Current Liabilities = Current Ratio
d) Current Assets - Current Liabilities - Long Term Borrowing = Positive,
means does not need to sell fixed assets.

---------------------------------------------------------------------------------
Therefore,
i) Using (a) & (b) above.
A Good profit as in Gross Profit Margin consider above 20% and Positive Net Profit would be nice.
Let's see AirAsia (5099), Ajinomoto (2658), Axiata (6888) and etc...
But doesn't all should have achieve net profit before tax?
Let's see Ekowood (5091), Tiger Synergy (7079)

ii) Paying dividend?
This is quite simple, go to a website and check. Would the share prices up before ex-date?
Dividend Checker Click here

iii) Using © above. Able to make payment?
This is where Current Ratio should have at least 1.50
Ever wonder why Digi.com (6947) and maxis (6012) is lower than 1.00?
But both also could make net profit before taxation.

iv) Using (d) above. Able to cover borrowings at all time?
When current assets - current liabilities - borrowings, if it is still positive, it is better than negative.
We wonder which company is achieving negative...
Yeap, Maxis, Digi since the current ratio is below than 1.00, and even KFC(3492)

v) Industry that we are familiar with?
Telecommunication? Plantation? Food? Banking? .....
Well, once you read the financial reports of the industry we like, it's much more easy to understand to
feel the industry we interested in.

Talking about lowering our risk is simply understand the companies situations by reading their reports.
So what conclusion do we have here?
a) choosing companies with at least 20% profit and
b) achieve net profit previous year and
c) current ratio above 2.0 and
d) current assets - current liabilities - long term borrowing must be positive and
e) with yearly dividends and
f) industry we familiar with.

Ever wonder how many companies would survive with the above list of criteria? Click the following youtube for ideas and choose higher quality while viewing. Thanks.

[YOUTUBE]<object height="360" width="640"> <param name="movie" value="http://www.youtube.com/v/tlle3EEf9pE&rel=0"> </param> <param name="allowFullScreen" value="true"> </param> <param name="allowscriptaccess" value="always"> </param> <embed src="http://www.youtube.com/v/tlle3EEf9pE&rel=0" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="640" height="360"></embed> </object>[/YOUTUBE]

Click Here for the FILE EXCEL FILE

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For Newbie : Shares (Part 2)

For Newbie : Shares