Nov 21 2008, 11:49 AM
QUOTE(benghooi @ Nov 21 2008, 10:37 AM)
How many counters in KLSE has monopoly business?
Which counter meets the above criteria and at the same time is considered one of the safest counter in KLSE? (‘Safe’ here is referring not to capital loss due to drop in share price but unlikelihood of the company/ business collapses.)
One counter that share investors should not neglect is BURSA MALAYSIA BERHAD.
Why so?
The chance of a stock exchange goes bankrupt is very small. Referring to the most recent 5 years financial statement for year 2003 till 2007, the company recorded both operating and net profit. It is very highly unlikely but in the event the company faces financial difficulty, I can’t imagine a stock exchange not been rescued from collapse as long as capitalism survives.
About 58% of its operating income is from clearing fee. This revenue has no concern on receivables.
No inventory in this business. No inventory management required and no inventory shrinkage loss or write downs of inventory.
Let’s look at the company’s business from Porter’s 5 competitive forces model:
Potential new entrants
- Will the government approved another stock exchange? This risk from the threat is almost negligible.
b. Bargaining power of customers
- It is menu-driven pricing. The clearing fee is fixed at 0.03% and the customers cannot bargain on the rate.
c. Bargaining of suppliers.
- Suppliers are basically information technology suppliers. The threat from this force is considered low as there are competition among suppliers and BURSA has bargain power as the orders usually involve huge amount of money.
d. Threat of substitute products
- With fast growing pace of unit trust, retail investors have option to invest in unit trust instead of investing directly in share market. Somehow, unit trust fund manager will put part of the investment amount into equities market (except those unit trust funds invested overseas). With advance development of information technology and telecommunication, international and local news can be disseminated to public within very short time. It very convenient to trade online and share investment has become more user-friendly with availability of more ready customer support to the retail investors.
e. Rivalry among competitors
- While there is no local rivalry, the penetration of overseas investment by retail investors is increasing. However, this threat has not caused real concern in foreseeable future.
Re-quoted this post after moving this post from another topic.Which counter meets the above criteria and at the same time is considered one of the safest counter in KLSE? (‘Safe’ here is referring not to capital loss due to drop in share price but unlikelihood of the company/ business collapses.)
One counter that share investors should not neglect is BURSA MALAYSIA BERHAD.
Why so?
The chance of a stock exchange goes bankrupt is very small. Referring to the most recent 5 years financial statement for year 2003 till 2007, the company recorded both operating and net profit. It is very highly unlikely but in the event the company faces financial difficulty, I can’t imagine a stock exchange not been rescued from collapse as long as capitalism survives.
About 58% of its operating income is from clearing fee. This revenue has no concern on receivables.
No inventory in this business. No inventory management required and no inventory shrinkage loss or write downs of inventory.
Let’s look at the company’s business from Porter’s 5 competitive forces model:
Potential new entrants
- Will the government approved another stock exchange? This risk from the threat is almost negligible.
b. Bargaining power of customers
- It is menu-driven pricing. The clearing fee is fixed at 0.03% and the customers cannot bargain on the rate.
c. Bargaining of suppliers.
- Suppliers are basically information technology suppliers. The threat from this force is considered low as there are competition among suppliers and BURSA has bargain power as the orders usually involve huge amount of money.
d. Threat of substitute products
- With fast growing pace of unit trust, retail investors have option to invest in unit trust instead of investing directly in share market. Somehow, unit trust fund manager will put part of the investment amount into equities market (except those unit trust funds invested overseas). With advance development of information technology and telecommunication, international and local news can be disseminated to public within very short time. It very convenient to trade online and share investment has become more user-friendly with availability of more ready customer support to the retail investors.
e. Rivalry among competitors
- While there is no local rivalry, the penetration of overseas investment by retail investors is increasing. However, this threat has not caused real concern in foreseeable future.
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