Hong Kong or London HSBC?

Just to share, got this in my mail

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Went to PBB's AGM last week. One of the shareholders asked the panel of directors why there were high volume of sales of PBB shares by some directors, where there was one who sold 100% of his shareholding. The guy asked if the reason behind was due to the directors knowing some info which the public dont. One of the director answered saying that PBB is very transparent and they dont get involve with insider dealing. He says the directors like any other directors have the right to buy and sell any shares as it's their investment.

If U see the share prices of the bank counters today, I guess maybe they have expected the share prices to go down. Maybe they have info on what is to happen in US ( which would affect the rest of the world which we dont )

As investor, there is nothing wrong with such strategy. Sell if U expect the price to plunge. Then when the price drops a lot, buy back. In that way, one could increase their shareholding % without having to increase the absolute sum.
Even I have done before.

When it was really bad back then ( cant remember which year ), PBB was below RM6. Even MBB was below RM 4.

Obviously, one cannot tell when the lows are until it turn back again. When would that be? I think at least one year from now

What is the best strategy now? Hold cash ( but dont spend it ). Keep aside until it 'best time' to go in - a level which U think it's low enough [ although it may not be lowest ]. OK for long-term investor. When the market turn, then sell it to make profit.

Happy investing.

rgds
Yeaw
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HK & London.

Err.... cannot compare price to price, it is not a fair and doesn't show the actual situation.

Better use PER, Ebitda etc as ratio comparison, only then we can have a fair comparison.

Also Citigroup if not being bail out, it might no longer exist anymore, while those massive preferred shares issued to US gov, basically will dilute existing shareholders's stake, that's why those financial stock price plunging.

Compare price to price is not a right thing to so, because at their peak they are hundreds of dollars per piece, where PBB only teens.

But the thin capital spread is a minus at the moment, especially when people think there are a lot to write down... even with good asset quality like PBB, there are still some to be write down very soon.

gogo2,

That is NOT the correct way to look at this. You need to look at TOTAL picture. How much interest that PBBank is giving out?? Aka, interest margin.

Interest margin = Interest on loan - Interest given to depositor

If interest given to depositor is going down too and interest margin stay at around 4%, it is okay.


Kamen Rider,

If a person is a DIVIDEND investor, the person will ONLY buy when the dividend yield is GOOD enough for them. As long as dividend stay or grow, they make money. Aka, they make money when they buy. Given that dividend of PBBank had grew over the past 2 or 3 years except last year, how could dividend investor lose money??

I bought PBBank at RM7 when the dividend was 50 cents. That was the dividend yield that I am expecting. And, now, I am still collecting annual dividend of at least 50 cents after a few years. My costs basis now is RM5. My effective dividend yield now is 10%. So, how did I lose in my portfolio?? I made money when I buy. My cost basis is going down every year.

I think you still have not grasp of concept of dividend investor fully.

Now, I probably wait for at least $6 before I start looking.


alfredfx,

1) What do you mean by dilution?? Are you assuming that PBBank will do right offering or secondary offering to sell more shares?? Please clarify.

2) I am in no hurry. This is a long and hard recession. I can wait. There will be plenty of people with no staying power and need cash. They will be forced to liquidate.

Dreamer

dreamer,

if you read the reports carefully, it actually addresses a few issue

1. NIM squeezed, loan growth slows, fee base income reduced, and NPL pressure is greater than last time, eventhough it has the lowest NPL among its peer

2. pbb is trading at 3.x bv, compare to its peers tat are trading 0.8 - 1.x bv; do you think it should enjoy such a high premium; in this deteriorating environment

3. im not sure staff cost would increase their cost not ... you might want to have a look

4. PER , banks look at BV

5. its capital ratio is low , at 6-7% cant really remember, go dig it out. although it has no equity call at the moment; it is going to issue innovative tier 1 hybrid to strengthen its tier 1 capital. Market will punish you whether you do it or not .... and after all these banks have sucked out the liquidity ....

6. sell for reason, look at other anchor banks, they are much affected, why pbb?

quote from a friend:

Public Bank is one of the pillar that supported/cushion KLCI strength for the past years as this stock is a “must own” for all, local and foreign. Its strong asset quality (NPL less than 2%) and conservative management record have render this stock trading at 3x P/BV during peak valuation. However, this premium has started to diminish and its share price hit RM7.30 yesterday. Downgrade from foreign brokers exacerbates the decline while selling pressure build up. CLSA issue a research report, pegging Public Bank at 2.2x P/BV of RM6.20. After a heavy selling and steep fall, Public may find some resting in today’s trading session. While regional and local bank are trading at P/BV of 0.8x – 1.5x, we may ascribe some premium to Public Bank for its track record, pegging them at 2x P/BV will see its stock trading at RM5.68, a more reasonable level for financial institution with excellent history.

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Added on March 12, 2009, 11:34 pmand yeah, it probably will maintain the payout, but what is the yield .... business contracted, deteriorating econ condition ... look at DY and look at DDM

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Added on March 12, 2009, 11:37 pmPBB 的loan Portfolio

RESIDENTIAL　PROPERTIES　 26%　 　32.2BIL
NON RESIDENTIAL PROPERTIEs　20％　　　23.8BIL
VEHICLE　　　　　　　　　　　　24％　　　29.3BIL　
WORKING CAPITAL 16% 18.8BIL
PERSONAL USE　　　　　　　　　6％　　　7.3BIL
OTHERS　　　　　　　　　　　　　8％　　　9.3BIL　　

This post has been edited by alfredfx: Mar 12 2009, 11:37 PM

alfredfx,

1) So, the bottom line is I might be able to pick it up at RM6 or below.

2) Most recent dividend is 55 cents. At RM5.50, that will be 10% yield.

Dreamer

Is it a good time to buy some now?

dreamer, it is just a guide, things change.

Make a good judgement, study it and good luck in your investment.

You can track o1 movement, as it is one of the indicator of foreign money flow to our market.

Invested 2,000 units of PBB @ RM 7.05/share yesterday.

Hoping for a technical rebound to RM 7.80 - 8.00.

Xuzen

alfredfx,

As a dividend investor, I only care about what is the right price level to buy. And, that is only related to 2 questions:

A) Can PBBank maintain and grow the dividend payout?

B) What is the price level that give me high enough dividend yield to justify investment??

RM is going down. We will have plenty of bank with foreign currency borrowing that will be in trouble. Do you know how to find out how much foreign currency debt that a bank has??

Thank you for your information.

Dreamer

A) Highly unlikely it can maintain or grow the dividend, dividend highly will shrink a little. Recently they are not paying out special dividend anymore, in compensate they give treasury share which is not sustainable in the future.
Don't get me wrong, it still able to give handsome dividend yield compared to FD rate, just it could come down a bit as they need to preserve cash for NPL problem in the future, which definitely will go up in the near future with recession economy.

B) With FD rate is heading to all time low and across the globe, anything dividend yield that more than 2-3% is better off than FD already.

Whether this level is suit to buy or not, it is up to individual to judge, above don't mean it is good nor bad. Invest at your own risk.

I will be happy with DIY of not less than 6% or anything which is higher than inflation rate.

Xuzen

in this environment , you are still talking about inflation rate? ROFL

IMHO + 2 cents,

There is 2 different valuations here ...
Dreamer is a dividend investor , so when the dividend numbers seems good, he is willing to go in.
For long term holding purpose , as long as the dividend yield is higher than others instruments , why not ?
Paper loss not meant to be sold. The P/BV valuation 3.X is an additional tool to make a good guts to evaluate an entry point. As long as it is higher than 2% FD , we have beat the FD benchmark.

E.g P at RM7 , DY is 0.55 = 7.8% ... seems ok for DY investor .
P at RM6 , DY is 0.55 = 9.1% ... seems great ...

The second op is the entry price is supported by fundamental valuation.
Numbers is logic at Rm5.68 base on 2x p/bv . Its a fair value given on bear market .
Whether or not to hit RM5.68 , we duno . We can choose to enter at Rm6.50 ...
if go against us , Average at RM6 ... and so on ... this is to max our capital gain base on fundamental valuation.
(personally i prefer this method)

Given the scenario for local banks to perform and yield like pbb ...
i doubt so, most DY investor are willing to park at Pbb as a safer bet.

2 cents ..

we can set the entry price as we want, but will it reach that low?
a bird in the hand is worth more than the 2 in the bush

ante5k,

<<we can set the entry price as we want, but will it reach that low?>>

So what?? You "make money when you buy". If and only if when the price is at the RIGHT level, then, you buy. Until then, you DO NOT BUY.

Why hurry?? You have the CASH. You DECIDE.

<<a bird in the hand is worth more than the 2 in the bush >>

What bird in the hand??

The other alternative is FD at 2%. So, to invest in PBBank, you are taking some risk.

YOU decide at what dividend level that it is worthwhile for you take the RISK.

Dreamer

P.S. Things will not get better any time soon. It will ONLY get worse. Before talking about investing, make sure that you have STAYING POWER.

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Added on March 14, 2009, 10:18 pmxuzen,

if you REALLY believe that you will be buying a lot of PBBank at RM7. But, I want MORE to compensate for my risk. The Malaysia government bond is at 5%. So, the dividend need to be higher than 7% to compensate for that.

Plus, the dividend was lower from 75 cents (2007) to 55 cents (2008). There are a lot of panicky people out there. This recession is VERY BAD and LONG. Many people will liquidate.

Dreamer



This post has been edited by dreamer101: Mar 14 2009, 10:18 PM

what's P/BV valuation? mind to explain more?

Stock price vs book value of the company.

Normally, banks fair value which previous acquisition being made is around 1.5~2X so generally market view at those range the share price valuation is fair.
Pbbank is a bit high on this ratio because people pay for premium for its generous dividend yield which is attractive enought as comparison to FD rate as well as quality asset they owned (quality of loan).

So the key criteria of support Pbbank share is its dividend, so if market preceives its dividend will shrink, we can see some sell off in this stock.

This post has been edited by cherroy: Mar 15 2009, 04:25 PM