SOMETIMES timing is everything in the game of investing – even in promoting one’s favourite counter so to speak.
Moreover, there are times when past experiences do tamper with the decision to invest in a particular stock. Other times, even when one is already adamant to invest in a particular stock, there are third parties who dissuaded the individual from realising his wishes.
The above sentiments probably encapsulate savvy investor-cum-philanthropist Koon Yew Yin’s a.k.a Uncle Koon’s bitter sweet success with steel maker Leon Fuat Bhd if compared with his two former favourites in recent times – Dayang Enterprise Holdings Bhd and Supermax Corp Bhd.
Recall that both stocks were propelled by the global upcycle of the oil & gas (O&G) boom and glove stock rally respectively. Leon Fuat is not exception going by Uncle Koon’s justification that steel price has risen about 50% in the past 12 months.
Even as the commodity price boom has boosted steel price internationally, Uncle Koon must be aware that the timing factor – domestically at least – is not in favour of the rolled long and flat products specialist.
While last year’s glove stock rally at this time of the year had very much fuelled Bursa Malaysia into a regional star performer, the same cannot be said for this year with the FBM KLCI having contracted 5.75% year-to-date.
No matter how forward looking the stock market is, investors have started being wary about the pace of recovery from economic and financial devastation brought about by the unabating COVID-19 health crisis on the local front.
Daily infection rate is still hovering in the 6,000-mark level at the time of writing with escalating concerns over a potential fourth or fifth wave with the Delta variant becoming dominant in most countries.
Even amid a low interest rate environment, that a loan moratorium has been made available once again to deserving individuals and businesses or i-Sinar EPF (Employees Provident Fund) withdrawals have been extended – not to mention various forms of aids from the various economic stimulus packages, one thing is obvious – the well is quickly drying up!
With both foreign and institutional investors emerging net sellers at the local bourse to the tune of -RM3.89 bil and -RM4.31 bil respectively as of the week ended July 2, one wonders whether the retailers are able to sustain the trading momentum going forward (they are the only net buyers YTD to the tune of RM8.21 bil).
Moreover, the unconducive political climate made worst by a weak-yet-bloated Government is surely making Uncle Koon’s lobby for Leon Fuat a difficult task even if the steelmaker boasts an earnings per share (EPS) of 11.65 sen compared to its peers – Astino Bhd (RM1.32 and EPS 8.46 sen); Prestar Resources Bhd (RM1.09 and EPS 9.45 sen) and Hiap Teck Venture Bhd (52.5 sen and EPS 4.79 sen).
In retrospect, perhaps Uncle Koon should feel grateful that Leon Fuat was only traded at 52 sen back on February 15 as opposed to RM1.02 as at 3pm today (the stock has a 52-week trading range of 29 sen and RM1.31). – July 6, 2021
