Tuesday, February 18, 2014

Take profit on YOCB. Switch to TSH.

1. YOCB Spot On! On 18-July-2013, I highlighted that YOCB is worth RM1.00 and investors should watch out on this stock. At that time, YOCB share price was only 69.5 sen. Check my previous post here http://wallstreetklci.blogspot.com/2013/07/watch-yocb-worth-rm100.html

2. 44% gain in 7 months. After 7 months (today 18-Feb-2014), the share price has indeed hit RM1.00. As a result, my paper portfolio of 14,000 shares of YOCB has grown 44% to RM14000 (begin = 14000 * 0.695 = RM9730).

3. Time to take profit on YOCB. YOCB valuation is no longer attractive at RM1.00 as:
i) It is now trading at fair 7.9x PE. While this is slightly lower than consumer stock PE of 10x, its market cap is smaller.
ii) Dividend yield is now compressed to 3.5%. This is assuming the Company pay same net dividend of 3.5 sen like last year. Seriously, with the outlook of higher interest rate in the 2H14, you might as well put your money into Fixed Deposit.
iii) It is now 10% higher than its book value of RM0.90. So my previous argument of buying because it is below book value no longer hold.

4. Switching to TSH (can touch RM4.00 by end-2014). I am buying this stock before CPO prices break RM2700 per tonne. This stock need no introduction. It is in palm oil plantation business and has young trees and high volume growth in FFB. Again, I am looking for 30% gain in 1 year and I believe this stock can hit RM4.00 by end-2014.

5. 30% gain = 20% growth from FFB volume growth, 10% from CPO price. CPO prices last year is very low at about RM2400 per tonne. Just assume 10% growth in price will give around RM2640 and this is still below yesterday CPO price of RM2680.

6. My paper portfolio made 43% so far due to gain in YOCB, hope TSH can grow another 30% in 2014!

     SharesTotal PortfolioReturn
18/7/2013 10000
18/7/2013Buy YOCB 10k shares0.695140009730270973010000
18/2/2014Sell YOCB 10k shares1.001400014000270140001427043%
18/2/2014Buy TSH3.004500135007701350014270