Tycoon Koon tells his side of story about his stocks

Author: Tan KW   |   Publish date: Mon, 16 May 2016, 10:20 AM 

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Monday, 16 May 2016

by tee lin say

Lower volume: Koon may restrict his buying of stocks to less than 5 so that it would need no disclosures.

PETALING JAYA: Savvy investor and philantropist Koon Yew Yin reasoned that his age, wealth and ability to pick the right stocks have contributed to his late disclosures in dealing with his shares becoming an issue.

The 83-year old former civil engineer, who has a large following among retail investors, also alluded that he failed to disclose his buying and selling of shares on time to the company because of the cumbersome system of reporting share transactions on a daily basis.

“The main problem is that I have too much money which is why I need to buy above 5%. I am too good at buying shares (which has got him a lot of followers). But when I say it like that, it sounds like a bad word,” says Koon when asked on his late disclosures in shares he buys and sells.

Koon has been in the spotlight lately for untimely disclosures on companies such as VS Industry Bhd, Latitude Tree Holdings Bhd and Focus Lumber Bhd.

 

 

According to the regulations, a substantial shareholder must notify the company within seven days of any changes in his or her shareholding.

However, Koon’s disclosures were late by between two weeks to up to two months. This has caused a stir among his followers on social media who are of the view that Koon should have made timely disclosures for them to decide on their portfolio.

Going forward, Koon indicated that he might restrict his buying of stocks to less than 5% so that it would need no disclosures.

In his blog, Koon explained in detail the reasons for his delay in notifying the company.

Koon said that he needed to fill up Form 29A & B which required details such as the number of shares and the date he bought or sold. Moreover, the buying or selling price frequently changes. To report the price he has to work out the average price that he traded on the whole day.

He has margin accounts with six brokers and his total margin loan amount is RM150mil.

“My average daily trading exceeds RM1mil and the number of shares I buy and sell every day is quite a lot,” said Koon in his blog. Koon has many trading accounts and simply gives instructions to his remisiers to buy or sell at a certain price.

“A few times I made the mistake of instructing one remisier to sell in the morning the same share that I instructed another remisier to buy in the afternoon. In fact, the authorities had reprimanded my remisers who were involved in these transactions that might seem to mislead investors. Those were honest mistakes,” he said in his blog.

As a result of the above difficulties, Koon said he had timed his disclosures on his dealings with shares until he had sold enough to own less than 5% of the total issued shares of the company.

Following this, he just needed to fill up one form to state that he has ceased to be a substantial shareholder without the requirement of stating the dates and the prices that he sold.

Koon, who founded IJM Corp, Gamuda Bhd and Mudajaya Group Bhd, has a large following among retail investors on his investments in stocks.

Among investors, Koon is seen as a sort of “hero” who understands the market well. His stock picks are followed closely by most in the investing community.

Koon assures his followers that he has no intention to mislead people to lose money.

“I have never recommend readers to buy any share if I am selling. As you know, I have written many articles about Latitude, VS and Lii Hen which have gone up a few hundred per cent over the last 2 years. If you have followed my recommendations, you would have made a huge profit. Of course, if you were too greedy and did not sell, you cannot blame me,” he said.

An observer who is familiar with Bursa’s reporting procedure, acknowledges that it is a tedious process to report dealings in shares for substantial shareholders.

“Even if a substantial shareholder managed to sell only 5,000 shares a day, he would have to make the filing with Bursa. He will have to file with Bursa no matter how little he managed to buy or sell on a daily basis. This becomes difficult especially when the company is illiquid and the substantial shareholder can sell a low volume of shares in one day and yet have to make an announcement,” said the observer.

In Latitude Tree, for example, a company which Koon was previously a substantial shareholder, average daily trading volume is under 100,000 shares. This means that it would have been very difficult for Koon to dispose of the amount he wanted.

Koon’s untimely disclosures came to the forefront when VS Industry announced to Bursa on May 4 that Koon was no longer a substantial shareholder after having sold in the market a staggering 44.08 million shares between March 18 and April 11.

The announcement was only made on May 4, which was seven weeks later.

Last week, Koon had emerged as a substantial shareholder in Focus Lumber. However, disclosure was only made on May 9, with filings showing that Koon had acquired a 6.71% stake, representing 6.93 million shares, in the Sabah-based hardwood manufacturer on April 11 at an undisclosed price.

In the case of Latitude Tree, Koon who was a major shareholder with a 5.01% stake, only gave notice of his disposals in January, two months later. Based on filings on Jan 11 this year, he acquired, disposed and transferred Latitude shares between Nov 16 and 23.

On a moral note, Koon said that after having given more than 300 scholarships to help poor students to complete their tertiary education, fewer than 10 scholarship recipients had come to thank him.

“The remaining students continue to complain that the amount I gave them is not sufficient. That is human nature,” he said.

He added that he had pledged to donate RM50mil to the Penang government to build student hostels. All the architectural and engineering plans are being approved and tenders will be called soon.

“I have written in my will that all my remaining assets will be for charity to help poor people after I die,” he said.

http://www.thestar.com.my/business/business-news/2016/05/16/koon-tells-his-side-of-story/

Why Malaysia is Lagging Behind: The NEP and Corruption - Koon Yew Yin

Author: Koon Yew Yin   |   Publish date: Tue, 24 Jun 17:44

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Koon Yew Yin
As we all know statistics cannot lie. The Gross Domestic Product Per Capita chart shows that Malaysia is continously falling behind our neighbours. My object in writing this is to show how badly we are performing so that we can improve for the benefit of all Malaysians irrespective of race.
My intention is also to support Professor Dato Dr. Woo Wing Thye’s lecture on 12^th April 2013 in Syuen Hotel, Ipoh.  In his lecture he listed 5 root causes for our poor performance in comparison with South Korea and Taiwan.
Prof. Woo, possibly because of the election fever, tried to be politically correct and made little mention of the New Economic Policy role in our failure to keep up with our neighbours.  In fact it is not only Prof. Woo who is silent on the NEP – most analysts appear to have sidelined this policy in the election debate to date.
This is a mistake as the real policy culprit explaining our failure to devlop as quickly as our neighbours (see table attached) is the New Economic Policy (NEP) and the abuse of power in the B.N. Government’s implimentation.
As a result, our neighbours are doing much better than us in spite of the fact that they all did not have the natural resources such as oil, gas, timber,tin, rubber and palm oil.

The culture of corruption in this country is systemic and built into the policy framework of the NEP. Over the years, this ethnic-based policy has been abused to benefit only a select group of Bumiputera, although the policy was originally targeted at helping the larger community of poorer Bumiputera. Despite the government’s strong defence of the NEP and its attempt to demonise those who are critical of it, no less an authoritative source than the government appointed National Economic Advisory Council has admitted that although ethnic-based economic policies have worked by reducing poverty and addressing interethnic economic imbalances, its “implementation has also increasingly and inadvertently raised the cost of doing business due to rent-seeking, patronage and often opaque government procurement,” which “has engendered corruption.”
This analysis is the same as the one that I have been making in my public writings and speeches. In the profession where I have worked for many years, a system where contractors get jobs because of their ethnicity will invariably breed a culture of ethnic-based cronyism and inefficiency.
For example, IJM Corporation Bhd of which I was one of the founders, did most of their highway contracts as sub-contractors to some Bumiputera Concessionaires. Yet IJM could win a few highways toll concessions on open competitive tenders in India.  It is ironical for IJM with a market capitalisation of more than 9 billion ringgit to work primarily as a sub- contractor in our own country.
The same applies in the procurement policies of Petronas.  Because of this race based requirement, contracts and concessions were awarded to Bumiputeras who do not have the expertise to carry out and complete the projects. As a result project costs balloon due to the number of layers of sub-contractors required to complete the job.
The percentage mark-ups imposed by each layer are, in essence, a leakage in itself. This has created an underground economy of rent-seekers, which the government has finally acknowledged. However, it still refuses to discuss this matter in an open and transparent manner or seek solutions to it.
Hence, it is not surprising that the culture of corruption has become the norm rather than the exception. Malaysians are accustomed to the culture of having to pay a sum of money (or in kind) to complete a certain transaction, whether in business or in other sectors. Large-scale corruption as mentioned above is rarely caught by the authorities. The Malaysian Anti- Corruption Commission (MACC) prefers to target lower-level corruption and harass opposition members instead of going after the big fishes which enjoy immunity because of their political affiliation with the ruling elite.
It is frustrating for many Malaysians that the BN government has not learnt from the past mistakes and persist in making decisions that bleed the nation of increasingly scarce resources.  Hopefully the Pakatan Rakyat will do better.  For them to get the country out if its deep hole, they must recognise that the NEP is a crucial road block in our road map to development that must be redressed immediately. We cannot become a fully developed nation by even the 22^nd century let alone 2020 if the NEP remains the main policy framework , corruption continues on the same scale and if corrupt leaders keep abusing their powers for self-gain.

The future of the Palm Oil Industry -

Author: Koon Yew Yin   |   Publish date: Thu, 15 May 15:24

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Koon Yew Yin
Since most of my investment is on oil palm plantation companies, it is essential that I must to find out the future prospect of this industry on the whole.
At the recent round table conference as reported by The Star on 25^th Aug 2012, an additional 6 million tons of editable oil is required annually to feed the additional world population. It is also due to the general economic growth of the people, especially in India and China. There are less people on starvation.
Where can you find additional land annually to produce 6 million ton of editable oil?
Although China is the largest soyabean producer, they still need to import more to meet their requirement. America being the 2^nd largest soybean producer has an average annual growth rate of only 5% soybean production over the past 4 decades compared to Brazil’s more robust 14% average annual increase. Experts expect Brazil to overtake America as the world’s largest soybean producer within a few years.
Soybean Oil Production by Country in 1000 MT
Rank    Country           Production (1000 MT)
1          China   12,246
2          United States   8,920 
3          Brazil   7,100 
4          Argentina        6,975 
5          EU-27  2,242 
6          India    1,688 
It is a fact that one hectare of land can produce half ton of soya oil while one hectare can produce 4 ton of palm oil. Assuming that soya oil can increase 3 million ton and palm oil can increase the other 3 million ton.  They will need 6 million hectare of land to produce 3 million ton of soya oil and 750,000 ha to produce 3 million ton of palm oil. Looking at these figures, it is most unlikely they can find so much of additional land for soya every year.  As a result, they will have to rely more on palm oil to cater for the annual additional 6 million ton of oil.
Fortunately or unfortunately both China and India our biggest buyers of palm oil cannot grow oil palms. Indonesia and Malaysia produce more than 95% of the total palm oil.
Indonesia Palm Oil production
2010    23600  (1000 MT)       7.27 % increase
2011    26200  (1000 MT)       11.02 % increase
2012    28500  (1000 MT)       8.78 %  ‘’ ‘’
2013    31000  (1000 MT)       8.77 %  “’””
Malaysian Palm Oil Production
2010    18211  (1000 MT)       2.52 % increase
2011    18202  (1000 MT)       -0.05 % “”
2012    19321  (1000 MT)       6.15 %  “”””
2013    19200  (1000 MT)       -0.63 % Increase
Source: United States Department of Agriculture
Recently the Indonesian Government mandated the use of 10% biodiesel. As a result,  Indonesia, the world ’s biggest supplier, will not increase their export this year for the first time since 2010 even as production climbs to a record. Exports may total 21 million metric tons, similar to 2013, while consumption climbs to 10 million tons
According to the latest statistics, Malaysia produced about 19.2 million ton and Indonesia produced 31 million ton in 2013. Most of the larger Malaysian plantation companies own plantation land in Indonesia.
The average production cost per ton of crude palm oil is about Rm 1,300 and the average selling price is about Rm 2,600 in the last few years. The price went above Rm 4,000 per ton not so long ago. What kind of business will give you the much margin of profit?
Moreover, plantation land always appreciates in value and palms will start to fruit after 3 years of planting  and will continue to bear fruits for another 20 or more years.
Unlike other manufacturing industries, you cannot simply increase production by working overtime or use more automation to meet demand.
Even when the CPO price is at its lowest level, well managed plantation company can still make profit. Have you seen any plantation company losing money?
I am sure readers want to know which are the best plantation shares to buy. I shall make some research and prepare a list for you.
Investment in undervalued plantation companies is a good long term strategy. The future of the Palm Oil industry is bright

Best Time to buy Oil Palm Plantation Stocks -

Author: Koon Yew Yin   |   Publish date: Thu, 27 Mar 21:59

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Koon Yew Yin 27^th March 2014
Like most commodities, palm oil price also moves in cycle. There are several reasons why commodity price is cyclical in nature. The price of any product depends largely on the theory of supply and demand which also depends on other economic factors such as economic expansion, recession, interest rate and other factors, all of which are also cyclical in nature.
A few weeks ago, I posted an article under the title ‘Palm Oil Price Trend’ on this forum where I said the average CPO price was Rm 2,250 for last year per ton and in the recent Malaysian Palm Oil conference, all the experts expect CPO price to rise to Rm 3,000 soon. The average CPO price for this year will most likely be about Rm 2,750 per ton. As a result, all plantation companies will enjoy an additional profit of RM 500 per ton for no additional effort, literally for doing nothing.
As we all know, due to the poor CPO price for last year, the share price for all plantation companies have been depressed. Most of them are on cheap sale.
Since the CPO price is at the beginning of the uptrend cycle, all plantation companies will show increasing quarterly profit in the next several quarters.


About 80% of my total investment is on the plantation sector. I have Kulim, FGV, SOP, TH Plantation and Jaya Tiasa and their closing prices are Rm 3.40, 4.46, 6.40, 2.00 and 2.75 respectively. I must warn you that if you decide to buy, you are doing it at your own risk.

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Proton is a big expensive mistake -

Author: Koon Yew Yin   |   Publish date: Sat, 22 Feb 01:16

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Another investment lesson

Koon Yew Yin
The founding of Proton National Bhd in 1983 was a big expensive mistake to begin with. Billions of ringgit from taxpayers have been lost in the process.
The haemorrhage could not be stanched until only recently when Khazanah Nasional Berhad sold off its 43 percent stake in Proton to DRB-Hicom some months ago. Malaysians have been wondering – is this finally an end to the unhappy saga of the government’s foray into the production of a so-called ‘national car’ or will the burden on taxpayers and car owners be continued in other new ways?
A revisit of this white elephant project is necessary to generate a larger public discourse especially amongst taxpayers who should be more concerned as to where all the tax money they’ve been paying has gone to.
One simplistic assumption which appears to have been made by the initiator of the national car project Dr Mahathir Mohamad is that an industry that is growing yearly should be profitable. It is not. In fact, industry data shows that the total profits of all the car companies over the last decades amount to only a modest return, and that only for the fittest in the industry.

The British experience

Consider the case of British Leyland, a vehicle-manufacturing company formed in the United Kingdom in 1968. It was partly nationalised in 1975 with the government creating a new holding company. The company incorporated much of the British- owned motor vehicle industry, and held 40% of the UK car market.
Despite containing profitable marques such as Jaguar, Rover and Land Rover, as well as the best-selling Mini, British Leyland had a troubled history. In 1986 it was renamed as the Rover Group, later to become MG Rover Group, which went into administration in 2005. This ended mass car production by British-owned manufacturers.
Today, many British car marques have transferred their ownership to foreign companies. For example MG and the Austin, Morris and Wolseley marques have all become part of China’s SAIC Motor Corporation Ltd.

Mistake avoidable

Why Dr Mahathir failed to learn anything from the disastrous British car industry experience is something that completely escapes many Malaysians. Surely any good leader would have gotten his officers to do due diligence.
If they had done so, they would have found that the industry even with year-on-year rises in sales is not guaranteed to generate good returns to shareholders. Notwithstanding its long tradition of successful car manufacture and the country’s highly developed economy, the industry in the UK still failed to make profits.
The reason for this situation is because one of the forces that limit profitability is the intensity of rivalry between car companies from around the world. This leads to oversupply and pressure on prices, further exacerbated by a high degree of freedom for new competitors to enter the industry.
Unless there is an enormous internal market such as China’s or the United States, and we can take advantage of the economy of scale, small producers such as Malaysia are forever doomed to a minor placing, or bankruptcy, in the marketplace.

Played out by Mitsubishi

As far as Proton is concerned, Mahathir’s mistake in ignoring the economic fundamentals of the industry was compounded by our lack of expertise or comparative advantage to produce cars. The anticipated technology transfer from Mitsubishi did not take place.
This should have been anticipated. Why should Mitsubishi transfer their know-how to Malaysia when it can control the pace of transfer to maximize its profits? In fact, the top management of Proton should ask Mitsubishi to open their books to see how much profit they have made from Proton since it began operation.
Mitsubishi knew that Proton could not do without them and they were quite happy to continue making money from Proton while the company here continued to bleed to death.
Equally important was the poor quality of management. Just before the privatization exercise, Proton had accumulated RM4 billion during Tengku Mahaleel Ariff’s tenure as chief executive officer but its cash reserves had dropped to RM600 million during his successor Mohammed Azlan Hashim’s stewardship, according to Mahathir.
To encourage people to buy Proton, the government increased the import duty for other cars and car parts. As a result, the consumers have suffered. For over 30 years we have had to pay higher prices for all cars including Proton. Even this has not been sufficient to save Proton which has been sold five times already.
Another question to ask is why few car manufacturers, until recently, seem to get into bankruptcy? If so, then prices can rise relative to cost and shareholders can get a fair return.
There are two main reasons. In some countries there is always the perennial optimism of managers and shareholders. In Malaysia, the reason is different. Here, our government has been changing rules and regulations to obstruct other cars from entering our market whilst providing special favours including an ever ready supply of financial assistance to keep Proton afloat.
The end result is that some Malaysians have ended up with more expensive cars of other brands whilst most Malaysians have had little choice but to buy Proton – a poor substitute.
This is the price we have to pay for brainless patriotism.

Proton’s and our never-ending problems

Ours is a sorry saga which is a classic case study on how not to set up a car industry. As with the national airline, I propose that a special course on our experience with Proton be offered in the Institute of Tun Dr Mahathir Mohamad’s Thoughts.
What better way to honour the ex-premier than a post-graduate course on his pet project – the National Car – and inviting him to be a guest lecturer. I am sure he will have lots to share and many people to blame as to why the project has failed.

I did it my way - Koon Yew Yin

Author: Koon Yew Yin   |   Publish date: Sun, 9 Feb 08:09

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I did it my way  
Koon Yew Yin
My main aim in writing this piece is help you understand the difficulty of becoming a super investor. In my previous article ‘Why some of us cannot become super investors’, I have pointed out the 7 traits which you must overcome. Even if you can master all of them, the road to success has many obstacles and the biggest one is fear. Even if you have the knowledge, do you dare to commit so much money?  Do you dare to buy with margin loan?
Even if you have the guts to put so much money at risk, there will still be so many people disagree with you and some will try their best to discourage you. They themselves do not have a good track record, want you to follow their advice. Beware of such people especially those stupid idiots who ridiculed me with abusive language.
From the few hundreds of commentaries of my articles, I notice that most of them do not agree with my selection of Jaya Tiasa, yet I dare to buy more than 40 million shares. Am I a fool? Where can I hide my face if Jaya Tiasa could not perform?
The fact that there are so many people disagree with me, is quite reassuring of my own judgment. I recall that in 1984 when the Hong Kong market crashed, all my friends said that I was mad to buy HK shares when the Communists would take over HK. I ignored their opinion and I made so much money that I eventually bought 46% of a stock broking company in Hong Kong.   
I think most people are confused and cannot think clearly. As a result they cannot select good shares that can perform. They even doubt my sincerity. My intention is noble and altruistic.
Statistics shows that most fund managers cannot beat the market index because they cannot buy shares that are currently not showing good profit even they have tremendous profit growth prospect, like Jaya Tiasa. Sad to say that most investors also consider P/E ratio is the most important share selection criterion. As a result they miss buying really good shares with poor current profit but they have good future.
Most investors and professionals concentrate too much on fundamental and technical analysis and they do not think like a businessman.
What is the difference between fundamental and technical analysis?
These terms refer to two different stock-picking methodologies used for researching and forecasting the future growth trends of stocks. Like any investment strategy or philosophy, both have their advocates and adversaries. Here are the defining principles of each of these methods of stock analysis:
Fundamental analysis is a method of evaluating securities by attempting to measure the intrinsic value of a stock. Fundamental analysts study everything from the overall economy and industry conditions to the financial condition and management of companies.
Technical analysis is the evaluation of securities by means of studying statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value but instead use stock charts to identify patterns and trends that may suggest what a stock will do in the future.
In the world of stock analysis, fundamental and technical analysis are on completely opposite sides of the spectrum. Earnings, expenses, assets and liabilities are all important characteristics to fundamental analysts, whereas technical analysts could not care less about these numbers. Which strategy works best is always debatable.
What is the "random walk theory" and what does it mean for investors?
The random walk theory is the occurrence of an event determined by a series of random movements - in other words, events that cannot be predicted.
Applying the random walk theory to finance and stocks suggests that stock prices change randomly, making it impossible to predict stock prices. The random walk theory corresponds to the belief that markets are efficient, and that it is not possible to beat or predict the market because stock prices reflect all available information and the occurrence of new information is seemingly random as well.
The random walk theory is in direct opposition to technical analysis, which contends that a stock's future price can be forecasted based on historical information through observing chart patterns and technical indicators.
Conclusion: Now you are more confused than before but you can understand why most investors cannot beat the market index. I think the best way is to select shares like a businessman. He can always see the profit potential of a good business. He has the power to SMELL PROFIT.
I am obliged to tell you that JT is my major holdings and I am not asking you to buy. But if you buy, I am not responsible for your loss or profit.
For your information, JT has performed better than the KLCI since the start of 2014.
About 15 people wanted to meet me. I have fixed it on 16^th Feb 2014 Saturday 11 am at the Club House, Meru Golf Resort, Jelapang, Ipoh.
All those who are interested are welcome. If you write to me koonyewyin@gmail.com, I will arrange a good lunch for you free of charge.