KPJ revenue recorded another year high

FY31/12/10
Financial Result
Quarter-to quarter comparison, company revenue up 12.5% to RM433.43m from RM385.34m 4Q09. However, net profit had drop RM6.5m to RM30.81m. 4Q09 net profit was RM37.36m. I cannot find any explanation from the report, i guess is something to do with some sort of adjustment on minority interest.

Year-to-year comparison sees revenue recorded another high of RM1656.2m. Revenue on last preceding year was RM1456.35m. PBT also increase 16% to RM168.13m vs RM144.92m for FY09. As say in the report, the increase in PBT is in line with the revenue and contribution from the hospitals.

Technical Outlook
KPJ share price was on uptrend from July 09, until Dec 10. A period of 14 months. Since then, it hovering around RM3.80, ups and down between MA(50d), but well above MA(100d).

From my point of view, warrant issue during Jan 10 much or less effect the share price, as profit will be diluted when they are exercise.

Stock Valuation
Base on annual EPS RM0.212, KPJ is trading at PE18x. I think it about right for the price we pay for this share(RM3.82 as at 15/3/11).

Future Prospect
From financial report, board of directors are optimistic about KPJ's performance in FY11, in tandem with increasing hospital capacity and activities.

Acquire 100% in Sibu Medical Centre Corporation for RM26.9m, and 100% in Sibu Geriatric Health & Nursing Centre Corporation for RM1.24m. The acquisition is expected to be complete by 1H11.

Into condition Subscription Deed for acquisition of up to 51% equity interest in Jeta Garden Waterfront Trust(JGWT) and up to 3,308,415 10-year convertible notes for total cash consideration up to  RM19m. JGWT is primarily involved in operating a retirement village in Queensland, Australia. Go here or here

Overall
KPJ is a fundamentally strong company. Company's revenue has been growing for the past 6 years(i only have data for this long). Inline with revenue growth, Shareholder's Equity has nearly double (0.86 times) since FY05. ROE averaging 13%(6 yrs) also prove that company always manage to generate profit for the shareholders.
In short term, share price may be drifting side way as more warrants to be exercise, diluted EPS. Both acquisition to be completed during FY11 shall generate more income to the company, push up the bottom line.
Long term prospect remain good.

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Warren Buffet Watch

Warren Buffet appeared live in CNBC on March 2,2011. I manage to download a copy transcript of his interview. Its a 60 pages long pdf file, attached below with my highlight.

CNBC Warren Buffet Interview
To make it easy to review, i list down the majors :

Some of Warren Buffet's associate company : Coca-Cola,Wells Fargo, Wrigley,See's Candy,Iscar,Wal-Mart,BNSF Railway,GEICO,Johns Manville,Dairy Queen,Flight Safety,American Express,Fruit of the Loom,Marmon,Netjets,MarquisJet,

• He is not worry about the oil prices issue regarding what's happening in Libya. It isn't a real supply situation yet, but market anticipate.
• TTI, a world class leader in quality consumer, professional and industrial products is booming in Asia. I think its a Hong Kong company. Its main product including power tools and accessories, outdoor products, and floor care.
• The demand for housing comes from household formation. For example, if we build 2 million houses and they were no 2 million families created, it will be a excess supply. The only way to solve that is to underproduce compared to household formations.
• Warren do not like bonds. He think its a terrible mistake to buy into fixed dollar investments at this kind of rates.
• While commodities price are going up and up everyday, Warren just don't like them. He like income producing assets.
• Investment is about you buy the asset now and the asset itself deliver more money over time. For example, Coca-Cola, Wells Fargo and McDonalds.
• The problem with commodities is you are buying something and hope somebody else will pay you more for the item. The item itself is not doing you anything. Its speculation.
• An example about gold. If you took all the gold in the world, it makes a cube 67 feet and worth about $7 trillion. Its roughly 1/3 of the value of all stocks in US. Do you prefer to have 1/3 of all the stocks in US or owning that block of gold, which can't do anything.

Warren Buffet :" I like business or i like my earning power as the best assets in a time of inflation. They really can't be taken away"

• A fair price to buy a company is one that we think we're going to get our money worth in terms of future earnings.
• US Dollar will become less important over time because America's dominance of world economic system will diminish.
• Importance of liquidity and not getting overleveraged.
• People want to be entertained and want to be informed. The demand for media is huge, is worldwide, its going to go on forever. 

I don't have to be right about everything or even understand about everything. I just have to right on the decisions i make. So i stay with the simple things. If i don't see any easy decision, i don't play

•  A century or so ago, nobody ever heard of monetary policy or fiscal policy. We had recession, it will cured themselves. Millions of American were trying to figure out how to do things better next day. Warren don't like fiscal policy to stimulate the economy.

Inflation is the ultimate Tax. It taxes people who don't know they're being taxed. It taxes people who believe in paper money. Paper money generally has a lousy future.

• Productivity has improved very significantly. If productivity hadn't improved, we'd have less unemployment right now. But, productivity is great over time. More output is what really solves problems over time. When we have more output per capita, then we'll fight for it.

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Warren Buffett says on the hunt for deals

Warren Buffett says on the hunt for deals

NEW YORK: Warren Buffett is looking for acquisitions as an outlet to deploy his $38 billion cash pile, the legendary investor said in his annual letter to Berkshire Hathaway Inc shareholders on Saturday, Feb 26.
Buffett also gave an aggressive earnings forecast for Berkshire's collection of businesses, said the company would engage in record capital spending and forecast a recovery in the housing market would start within a year.

Buffett acknowledged the need for Berkshire to expand to grow earnings at its non-insurance businesses, a broad collection that most prominently includes the railroad Burlington Northern and the electric utility MidAmerican.

"Our elephant gun has been reloaded, and my trigger finger is itchy," Buffett said. The letter was released just before 8 a.m. EST (1300 GMT on) Saturday, as it is in most years -- and many large investors say they get up early that day to read it the moment it comes online.

The so-called "Oracle of Omaha" said Berkshire will need "more major acquisitions" -- with an italicized emphasis on major -- to meet its goal.

One long-time Berkshire investor described the letter as "punchy" and "confidently American," among other things.

"I would say as an investor, I think it's a very upbeat letter, it's one that celebrates his courage on behalf of investors of going into the marketplace when the world was most fearful," said Tom Russo, a partner at Gardner Russo & Gardner in Lancaster, Pennsylvania, who is one of the 15 largest holders of Berkshire Class A shares.

SUCCESSION

Buffett also addressed the hot-button succession issue in the 26-page letter, something investors had anticipated given his age, 80, and the lack of a clear replacement.

Investment manager Todd Combs, hired late last year, will manage an initial portfolio of $1 billion to $3 billion, Buffett said, and Berkshire may add another one or two managers over time alongside him.

But Buffett said he will continue to manage the bulk of the portfolio while he is CEO. Berkshire's equity holdings topped $52 billion at year-end.

He said less in the letter about who might follow him as chief executive of the company, though he said there were a number of good candidates. The most frequently tipped is David Sokol, chairman of MidAmerican and private jet service NetJets, who Buffett praised in the letter.

THE ECONOMY

Buffett tends to give an economic outlook in his letter and this year's was no exception.

"A housing recovery will probably begin within a year or so," he noted, which has led Berkshire to ramp up spending and acquisitions at its housing-related businesses.

He was less bullish on interest rates, which have been low enough to earn the company a "pittance" on its cash in recent times. Buffett said rates will eventually rise enough to contribute more normal growth to the company's investment income, but it was "unlikely to come soon."

Another hit to the investment portfolio will come from the *redemption of crisis-era preferred investments in Goldman Sachs and General Electric. Buffett said that both are likely to be gone by year-end. The Goldman investment in particular famously pays Berkshire $15 every second.

All things being equal, Buffett forecast Berkshire's "normal" earnings power at about $12 billion a year after-tax.

In the meantime, Buffett is spending on growth. He said Berkshire would make a record $8 billion in capital spending this year, with the $2 billion growth over last year to be spent entirely in the United States.
"Berkshire has created within itself its own outlet to redeploy capital," Russo said. "The best thing about that is when you can by that spending create additional competitive advantage." - Reuters


* redemption of crisis-era preferred investments in Goldman Sachs and General Electric ->see this, Buffet does trade too. Remember that during 2008 recession, he bail out these company and is going to cash out now. I think he think both Goldman and GE are fully value already.

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