Tafi sold.

For the second time, Tafi was sold from my value-stocks portfolio. The first time I sold Tafi was during Nov-2008, then I bought it back in early December.

Here's the summary for these investments in Tafi.

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1st investment。

• bought 3000 units at 39 sen in Mar-2008.
• received dividend of 1.5 sen per share (less tax 26%).
• sold all at 43 sen in Nov-2008.

Total return is 10.5% for a period of nearly 9 months. Annualized return rate is about 14% p.a.

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2nd investment.

• bought 3000 units at 32 sen in Dec-2009.
• received dividend of 0.75 sen per share (less tax 25%).
• sold all at 40 sen in Oct-2009.

Total return is 23.5% for a period of 10 months. Annualized return rate is about 28% p.a.

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Conclusion.

Taking the average of these two investments, the return rate I get from Tafi had just achieved the minimum requirement of my value-stocks portfolio, i.e. 20% p.a.

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Choo Bee Metal Industries Bhd.

This is the new member in my value-stock portfolio

I bought Choobee at price of RM1.53 per share, which is equal to 68% of its net-working-capital (according to its Jun-2009 reports).

Other criteria of ChooBee:

• Low debt position. (according to its Jun-09 report, debt-equity ratio only 10%+)
• Continuous dividend payment for more than 10 years. (though net DY only around 3%）
• Low PE ratio (about 5.5 based on three years average EPS).

The negative part is, its has a high inventories and receivables level.

However, after comparing its figure in the past ten years, a found that Choobee's inventories and receivables are maintained at a stable level as compared to its revenue. And the figures from others steel companies also show that high inventories level is quite common in this industry.

Thus I think it's quite safe to invest in ChooBee.

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UMS sold.

UMS was sold from my value-stock-portfolio yesterday.

Actually, the current share price of UMS is still below its net-working-capital per share. The reasons of selling include:

• I bought Triumpl into this portfolio few weeks ago. Since these two companies are in similar business and both of them have very high inventories level, I think it's better for me to hold just one of them.
• The return on UMS already exceed my target return rate.
• I had found some other (more attractive) companies for investment.

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The following is a short summary for my investment in UMS.

• bought 1500 unit at 70sen in Sep-2008.
• received dividend 6 sen per share (less 25% tax) during holding period.
• sold at RM1.14 per share in Oct-2009.

Total return is 65% in 13 months. The annualized figure is about 59% p.a.

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Reasons buying Hartalega

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Glove companies had always been one of my favorite choice on KLSE stocks.

Last year, I sold my holding on Supermx because I need some cash to build my "value-stock" portfolio. About two months ago, I decided to invest again into glove company. And this time I choose Hartalega.

The reasons:

• Good profit margin (around 15% ~ 20%), much higher than Topglove/Supermx/Kossan.
• Impressive ROE ( > 30%).
• Asset-equity-ratio only 1.5, leverage ratio even lower than Topglov.
• High growth rate.

Hartalega is still expanding fast while others glove-manufacturers are facing slow-down in growth. According to its report, the production capacity of Harta would be doubled in 2009, and increase for another 50% in 2010. This growth rate is similar to that of Topglove ten years ago.

And the most attractive point of Hartalega is its expansion into nitrile-glove business. Currently, the sales of nitrile-glove accounted for 80% of Harta's revenue. We known that the profit margin of nitrile-glove is much better than latex-glove. And the nitrile-glove market also had a higher growth potential in future.

(That's why Kimberley-Clark had decided to exit latex-glove business, and focus on nitrile-glove production since 2006.)

Hence, I believe that the high margin, high ROE and high growth rate of Hartalega are sustainable. According to its expansion plan, Hartalega may become the world's largest nitrile-glove manufacturer in the next few years.

My average entry price is around RM4.70 per share. Currently, Harta is the single stock that has the highest weight in my portfolio. I'm going hold it for at least 5 years.

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Triumphal Associates Bhd

This week, Triumpl had become a member of my value-stock portfolio.

According to its latest quarterly reports, Triumpl's net-working-capital per share is about RM1.50. I bought it at 75 sen per share, a 50% discount from its net-working-capital.

Other supporting points for buying Triumpl:

• nearly zero debt position.
• uninterrupted dividend payment for more than 10 years. (though the yield was quite low)
• low PE ratio. (about 5, three years average)
• cash per share about 34 sen. (about 45% of my buy price is for the cash)

The company's balance sheet condition is very similar to that of UMS Holdings Bhd (another company in my value-stocks portfolio). Triumpl also had very high inventories and receivables as compared to its profit. However, the level of these items are quite stable throughout the years.