I just sold all my Top Glove stocks for RM9.660. Bought at RM8.840.

Okay-lah. Reasonable profit. Can't have everything in life.

Hmm...what other stocks to fry next?

[Wrong thread]

This post has been edited by Vanguard 2015: Jun 22 2020, 05:04 PM

For sharing, an extract of an article from Absolutely Stock on RCE Capital.

Disclosure : I am currently holding it. Buy at your own risk!

"For the Income Portfolio, our stocks are more defensive to protect the principal. This means sticking to stocks with resilient outlook, robust financials and steady dividend income payments to steer through volatile times. This week, we wish to shine the light on RCE Capital, a financial institution that, we believe, is comparatively sheltered from the Covid-19 Pandemic.

To recap, RCE Capital disburses 100% of its loans to civil servants, a group whose salaries are not affected by the pandemic. For banks, their net interest margins are under pressure with falling interest rates and the 6 months loan moratoriums. RCE is in a unique position because it is not required to offer moratoriums, as a non-bank lender. That said, the company selectively allowed less than 1% of its gross receivables for moratoriums. Their main collection agency, ANGKASA is operating business as usual.

RCE Capital’s core competence lies in its fast processing time – just 48 hours for loan approval. More crucially, there is little friction in repayment collection, which is done through direct salary deduction from the civil servant’s payroll.

With no liquidity issues, RCE Capital is able to grow its loan books by 12% to RM169 million. With increased customer base and bigger loan books, the company generates higher interest income over time. Case in point, its latest interest income was 11% higher in 1Q2020 compared to the previous corresponding quarter. RCE Capital has steadily grown its loan books by 68% since 2013.
On cost of funds, RCE Capital turned to the issuance of sukuk, enjoying lower interest rates over the past 4 issuances since 2016, from 5.5% to 4.26% pegged to a declining 10-year MGS yield. With an even lower MGS rate of less than 3% now, the company could obtain even cheaper funding at less than 4% profit rate for sukuk.

Due to the short tenure and micro financing nature of its loans, lending yield is as high as 6.5% - 14% depending on borrower risk profile. The high margin enables it to earn a net interest income yield of 8%, and plenty of headroom for dividend payout.

RCE Capital declared dividend of 11 sen per share this year, representing 6% yield at current price, based on low payout ratio of only 33%. The steady growth path, resilient business nature and strong income profile provide stability in its stock price, making it a high conviction textbook example of dividend stock in our Income Portfolio".