Bursawinners 15

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Bursa Winners
Winners 2008
Discover How You Can Become Rich During A Stock Market Crash
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Bursa Winners
2008
How You Can Become Rich During A Stock Market Crash
No part of this e-book may be reproduced or transmitted in any form or by any means -
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The reports in this e-book contain the opinions and ideas of its author and are designed to
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Copyright ©2008 by Andrew Chia, AndrewChia.com. All Rights Reserved.
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Bursa Winners
2008
Version 1.5
Andrew Chia

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Praise for Bursa Winners
"Bursa Winners is a comprehensive guide for anyone who aspires to be a stock market
investor in Bursa Malaysia. You can't go wrong with this book."
Eric Chong
Galaxy Connections
"Reading Bursa Winners is such a transforming experience. It is compact. It is informative.

It is revolutionary, clearly presented and challenging. You get to explore the minds of the
greatest investors to see how winning strategies are turned into cash."
Nicolas Siah
IT Consultant
“Andrew cuts and trims stock market intelligence to its barest and goes right to the core
strategies without taking cutting any corners. It solves all the problems that most beginners
like me face in our journey to stock market success. This book is unique."
Tung Tung
Fashion Consultant, Quinn Marketing
"The ideas in Bursa Winners are so deceptively simple that you enjoy re-reading it many
times just fully grasp the wisdom of the world's richest investors.
Caroline Chong
CEO, Canhill Tours & Travel
"Bursa Winners contains bite-sized stock market intelligence. A great help for busy people
like me."
YC Liaw
Banker
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valuable insight."
Joanna Chey
Rejoice Care Centre
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on money management and emotional control..."
Don Hor
Marketing Director, Pacific Carbon Sdn Bhd
"Read this e-book first before you invest in the stock market."
Christopher Heng, D Sc
Auditor
"This e-book helped me understand the basics of stock investing."

Poon Chak Cheong
Entrepreneur
"These e-reports cover a big portion of what we need to know about basic stock investing
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"Bursa Winners is neat, compact and easy-to-read. It's really a time-saver."

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Jane Yap
Entrepreneur, Wearline Marketing
"Reading this e-book is quite an exciting experience. The principles are rock solid and
delivered in crystal-clear terms. It is really relevant in educating would-be investors on the
basics of generating wealth from the stock market."
Saranjeet Singh
Charity Resources
"If there were one pill that could make us a stock market veteran overnight, that pill would be
Bursa Winners."
Bryan Choong
Senior Property Negotiator
"Andrew Chia deserves my respect for arranging such an innovative document in a read-
less-learn-more presentation. He has done a good job in arranging powerful stock investing
concepts in very small helpings suitable for beginners."
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this book."
Aziz Kudah
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"Bursa Winners is a must-read book if you are looking for information on how to invest in the
stock market. It shortens your learning curve by a great deal."
Richard Ng
Agency Manager, Great Eastern Life

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To,
Kenneth Chia

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Bursa Winners 2008

CONTENTS
Introduction
Report 1 Best dividend stocks listed on Bursa Malaysia 2008

Report 2 Best EPS growth rate stocks listed on Bursa Malaysia 2008
Report 3 Best return-on-equity stocks listed on Bursa Malaysia 2008
Report 4 Dynaquest's best performers on Bursa Malaysia 2008
Report 5 Best capital gains stocks listed on Bursa Malaysia 2008
Report 6 Highest returns stocks listed on Bursa Malaysia 2008
Report 7 Stock valuation of the best companies listed on Bursa Malaysia 2008
Report 8 Tips on investing in Bursa Malaysia for beginners and beyond

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Introduction
1. The Dow Jones surpassed 14,000 points in late 2007. Today, about a year
later, it is struggling to stay above 8,000 points. That is a drop of more than
40%. Generally, if you had $1,000,000 in shares a year ago, you would have
lost $400,000. If you had shares in the financial sector you may have lost
more than $700,000.
2. A big secret is that true investors make more money in bad markets. This is
not limited to the stock market but to all markets, including property or
commodities like crude oil, for example. About six months ago, crude oil
was on the verge of breaching the $150 per barrel mark. Today, it is broken
the southern limit of $50 a barrel.
If you have bought at the peak, your $1,000,000 investment would have been
reduced to $600,000.
Conversely, if you have bought something at $50 and sold for it $150, your
$1,000,000 you would have become $3,000,000. You make you a clean profit
of $2,000,000.
3. This e-book on stock investing is simple enough for a beginner to understand.

Nevertheless it contains the most powerful strategies used by the richest and
most successful investors in the world. It is designed to turn you into a first-
class stock investor.
This e-book is not for the average investor who just wishes to learn some
stock strategies.
If you lack the hunger for success and are too lazy to do homework before
investing, you should stick back to the easy way of looking for the best
investing tips from the most "reliable" sources.
If you are willing to work hard to master the skill of stock investing, this e-
book with its reports, will be of great help to you in extracting and compiling
the performance of the best companies in Malaysia. You will still need to do
more homework especially in understanding the business, marketing,
economic and political climate, and the cashflow of the companies you wish
to invest in.
Do not be discouraged, it is not as difficult as you may think. It took me only

less than a year to digest all the information contained in these reports. It
was a small sacrifice considering the fact that I do not need to be at the
mercy of my boss anymore. Neither do I need to attend any more petty
grouses or complaints from my business customers.

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Success seldom comes easy, but I assure you that you will be thoroughly and
deservedly rewarded for your efforts. You will soon be on your way to
financial independence and a fat bank account.
4. Warren Buffett (WB), "The true investor welcomes volatility."
5. Robert Kiyosaki (RK), "The best investors get interested in companies when
their share prices go down."
(Robert Kiyosaki is the author of a best-selling book on making money, Rich

Dad Poor Dad. The book has sold 26 million copies.)
Ref: http://en.wikipedia.org/wiki/List_of_best-selling_books
6. People who trained their minds to see money had tremendous power over
those who didn't. - RK
7. Investing is like flying; after flight school and years of experience it's fun,
not risky. - RK
8. Investing does not require high IQ but it does need a lot of common sense.
Unfortunately, when it comes to money common sense is uncommon. - RK
9. The Government in the US has mismanaged big time. Promises made sixty
years ago cannot be kept. - RK. In recent times, the markets appear really
gloomy. This may be due to the bubbles, which had been created much
earlier, starting to burst now. And it certainly looks as if the current
markets will be bearish for some time.
10. A little history of stock market crashes - The Great Depression in 1929,
"Tulipomania" crash 1610, "South Seas Bubble" meltdown 1620, "Junk Bond"
bombshell 1990. What we need to pay attention to is that every stock
market crash transfers wealth from the poor to rich.
11. Financial freedom is found in the stock market. That is why Benjamin
Graham advised us to invest not less than 25% of our total funds in the stock
market. However, we should not have more than 75% of our total funds in
the stock market.
(Benjamin Graham was Warren Buffett's teacher. He wrote the classic book
The Intelligent Investor (TII). On the cover of the book, Warren Buffett
wrote, "By far the best book on investing ever written.")
Ref: http://en.wikipedia.org/wiki/Benjamin_Graham
12. Some of life's greatest enjoyments and most of life's greatest

disappointments are linked to money. You can never have true freedom
without financial freedom.

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13. More than 90% of people want to get rich, but less than 10% will do anything
about it.
14. You have got to work at it to become rich. It takes a bit of time to do
homework. The heights by great men reached and kept were not attained
by sudden flight. But they, while their companions slept, were toiling
upward in the night. - Sir Winston Churchill
15. In this set of stock market reports, you will find out what 90% of the people
on this planet don't know and will never find out about stock investing.
16. Stock investment is not based on luck. You can calculate your chances and
control your own destiny. On the other hand, buying a lottery is. Robert
Allen says, "Lotteries are for people who are bad at mathematics."
(Robert Allen is the author of four international best-selling books on making

money. His first, all-time best-selling financial book, Nothing Down, was
written in 1980.)
http://en.wikipedia.org/wiki/Robert_G._Allen_(author)
17. Allow your judgment to be swayed by the facts, figures and numbers that
you will find in these reports. As you run through them I believe you will be
affected by the "Oh..." factor. You will slowly form a correct opinion about
companies with strong performances measured by track record and real
numbers of dividends, earnings per share growth, return on equity, debt
equity ratios, cashflow and others.
You may begin to understand why some companies deserve to be labelled

"glamour" or blue chips stocks, whereas you can conclusively say that others
are just hype. You may be amazed at how many companies that are not
worthy of your attention but are generally accepted as "great" stocks.
You will begin to see patterns emerging. For example, you may find that the
businesses run by some of Malaysia's richest men all have the same high
dividends, EPS, ROE and low debt equity ratios. You may be surprised to see
the striking similarities as you start to understand good business
management and practice. You will feel your mouth watering as the desire
to own a piece of such businesses well up in you.
Conversely, as you develope your business analysis skills by simply observing

and comparing, you will be immediately alerted to the red flags of
companies overstepping their boundaries of good management and prudence.
These figures have helped me over the years in correctly predicting the fall
of businesses, and of course, their share prices. With a little bit of practice,
you, too, can see how easy it is.

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18. It is not my intention to form any opinion for you but rather to inform you on
the criteria and tools used by the world's greatest investors. I believe that
with these criteria and tools coupled with unbiased, third party guides, you
will form your own correct opinion.
19. We make money by separating facts from opinions. Facts and opinions:
there are few lessons more important than this. - RK
Most people struggle financially because they use opinions when making
financial decisions. - RK
Most people's lives are determined by their opinions, not facts. - RK
If you cannot verify something is a fact, then it is an opinion. - RK
Due diligence-finding out what are opinions and what are facts. - RK
Numbers tell the facts. Your financial survival depends on it. - RK. In the
stock market, numbers mean things like annual reports and financial
statements, actual dividend figures, ratios, and historical charts.
Financial blindness is when a person cannot read numbers. - RK
If you can read financial statements you can tell how an individual or a
business is doing.
Financial vision lowers risk, being financial blind increases risk. - RK
It is financial suicide to be an investor if you lack knowledge. - RK
20. The strategies outlined in these e-reports are based almost entirely, but not
solely, on Warren Buffett's style of investing. There is a certain level of
influence from local experts like Ho Kok Mun who wrote How To Make Money
From Your Stock Investment Even In The Falling Market.
I have chosen WB's strategies of stock investment because they have been
time-tested by his forty-five years of success.
The other compelling reason for adopting his strategies, instead of other
more popular strategies, is that they have made him the richest man on the
planet, with a personal net worth of about $60 billion currently.
A single share in his company, Berkshire Hathaway, sells for about $100,000
($150,000 at its peak). This means that you need to have $10 million in
order to invest in just one lot of his company's shares!

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Ref:
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=indu
&time=&freq=
By contrast, one Google share sells for only $300 today.
Ref:
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=indu
&time=&freq=
There has been no shortage of investors who think they are smarter or
possess better investment strategies than WB, but the fact remains that the
man is still the richest on this planet.
If you are in doubt, let me reassure you that WB's strategies can be applied
in other parts of this world, particularly in Malaysia. And you don't need to
be as smart, or have as much capital as him for his strategies to work. This
is because his strategies are based on principles of wealth that are as old as
the hills.
21. The figures found in these reports are all extracted from Dynaquest's Stock
Performance Guide (SPG) for Main Board companies and their Second Board
Guide (SBG) for Second Board companies. Dynaquest is the company which
compiles financial data for all companies listed on the stock exchange in
Malaysia. (Dynaquest.com.my)
You are advised to purchase at least the SPG so that you may be able to
make informed decisions pertaining to your stock investments. It is
currently selling at only RM70 and is available at all leading bookstores.
You should also double-check the author's figures and calculations pertaining
to a specific share you wish to invest in, to ensure they are correct and
accurate before you put in your hard-earned funds.
Andrew Chia
Kuala Lumpur
December 2008

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Report 1
Best dividend stocks listed on Bursa Malaysia 2008
This stock investment strategy or criterion should be read together with other criteria, including but not
restricted to, Dividends, Return on Equity (ROE), Net Tangible Assets, Earnings per share growth rate
(EPS GR), Cashflow statement, Dynaquest Star Rating, Industry, Gross profit margin, Net profit margin,
Debt Equity (DE) Ratio and Price Earnings (PE). You should never assume that stocks that meet this
criterion automatically deserve your attention, or vice-versa.
1. WB, "I never attempt to make money in stock market; I buy on the
assumption they could close the market the next day and not reopen it for
five years."
2. Avoid predicting the future.
On 7-1-1973, Alan Greenspan made his wrongest prediction about the stock
market. He said that 1973 was going to be the greatest bull year. It turned
out that 1973 and 1974 were the worst years for the stock market since the
Great Depression in 1929.
Alan Greenspan was Federal Reserve Chairman from 1987 to 2006. During his
regime, he was believed to be the most powerful financial man in the world.
Now, if a man of his stature could be so wrong, it serves as a solemn lesson
for us never to attempt to predict the market. Instead, we should prepare
for whatever the market is capable of doing.
3. Once a market has crashed, it will not recover in less than 5 to 10 years. - RK.
4. Analysts do not analyze businesses, only future stock prices. That is one of
the main reasons why they often turn out to be wrong.
5. The market is a pendulum that swings between unsustainable optimism and

unjustified pessimism. - TII
6. Buying shares on margin means speculating. - TII
7. If you worry about protecting your account from harm first, the rest takes
care of itself.
8. Discount backwards for 45 years, and you will find that Warren Buffett's
fortune of more than $50 billion today started with less than $5 million.
9. WB says the first consideration of share investing is dividends.
10. Dividends are the greatest force in stock investing. - TII

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11. However, stock dividends are disapproved by most academics including

Nobel laureates. - TII. I believe there are no Nobel laureates in the top 100
richest men in the world.
12. Do not make the mistake of looking at the latest year's dividends. Instead,
take an average of 10 years' dividends. In the US, WB takes an average of 20
years.
13. WB buys shares of companies with uninterrupted dividend payment record

for 20 straight years.
14. However, we need still need to be careful when looking at 10-year averages.
This is because there are companies who may pay a high dividend in one year
(perhaps ten years ago), and declare much lower dividends subsequently.
(Ref: AZRB).
That is why I strongly advise you to have a copy of the SPG with you at all
times if you want to be a serious investor.
15. Shares that give capital gains are dividend shares. Most people buy shares
wanting to make a "killing", ie. they go for capital gains. The secret is that
dividend stocks are the ones that eventually give you the highest capital
gains. (Think Public Bank.) Patience is a virtue.
16. Focus on dividends and you will get your capital gains, focus on capital gains
and you may get roasted and become a statistic in Bursa Malaysia.
17. Blue chip companies used to last 65 years, now lasting only 10. - RK
18. The greatest mathematical discovery of all time is compound interest -

Einstein.
19. In order to become financially free, we must understand the concept of

residual income. This means doing work only once and receiving income
many times after that. Examples are, writing a book like Harry Potter,
recording albums like Elvis Presley did, and setting up franchises like
Oldtown Kopitiam.
Doing research, once, before buying a share could be the source of a huge
stream of residual income which may last a very long time.

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20. If one does not have residual income he is actually in danger of losing a lot.
This is because sometimes our stream of earned income may dry up. For
example, our money-making project or business may have been completed.
Or, worse still, our business may have to close shop. When this happens,
and a stream of income is wiped out, it may take years for one to recover.
For a comprehensive explanation on the importance and how to secure

residual income, you may join my The Final Winner membership to learn
more.
http://andrewchia.com/FinalWinner
21. Without financial freedom, we will not have time freedom. The more
successful Poor Dad was, the less time he had for his family.
22. Old Chinese saying: "The best time to plant a tree was 20 years ago; the
second best time is now." Think about this. If you invest for dividends, you
may take many years to be financially independent or to be rich. But once
you have residual income, not only you do not need to work; your children,
and perhaps, grandchildren, may not need to work.
23. A defensive investor (one that goes for dividends) runs and wins the race by
sitting still.
24. Prosperous people practise delayed gratification instead of instant

gratification. This means that we should refrain from spending our savings
but to plough it back to share investments in order to multiply our account.
Once our account has grown in size we will find that we are just spending
part of the dividends without touching our capital, which continues to grow.
We will then be financially independent forever.
25. Your direction is more important than your speed. Most people study a
hundred ways to make money from the stock market. They read financial
books and crunch financial data at a breakneck speed. Unfortunately, they
sometimes read the wrong books. Or, they may be reading the right books,
but their speed ensures that they do not get the right message. The answer
to successful stock investing lies simply in dividends.
26. That is why WB can say, "My favourite holding period is forever." With high
dividend-yielding stocks you have nothing to worry about; you keep receiving
lucrative income year after year. And you may keep doing that regardless of
how bad an economy is doing!
27. Dividends are extremely important in making investment decisions. The

dividend yields mentioned in Dynaquest's reports are directly comparable to
our FD rates from the bank.

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28. Choosing dividends as my first criteria is just my preference, due to various

reasons mentioned above. You may choose other criteria such as ROE as
your main investment criterion.
29. I have omitted high dividend yielding stocks for companies on Bursa Malaysia
with less than 5.5 stars as valued by Dynaquest. The total number of
companies with 5.5 stars or more, is more than a hundred. I feel that this
number represents a good pool of companies to choose from. Please refer to
the report on "Dynaquest's best performers on Bursa Malaysia" for further
information on their rating summary.

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Report 2
Best EPS growth rate stocks listed on Bursa Malaysia
This stock investment strategy or criterion should be read together with other criteria including but not
criterion automatically deserve your attention, and vice-versa.
1. EPS is the company's entire profits or earnings for the year divided by
number of shares.
2. EPS GR measures how a company's earnings grow over a long period of time,
say, 10 years at least. This will give an indication of how they will grow over
the next 10 years. This criterion is used by Warren Buffett. However, he
only chooses companies with at least 20 years of history.
3. A strong EPS growth in a recent year is not good enough; we need a company
whose growth has been stable, preferably increasing, over the last ten years.
Thus, the chances of a company continuing its growth trend are higher.
4. EPS GR is a very good indicator of a good company. It is the second

criteria that Ho Kok Mun adopts in evaluating a stock. He will not buy a
stock if the company's EPS GR is less than 15%.
5. I have omitted companies with less than ten years of dividend track record.
6. I have omitted companies that have a dividend track record averaging less
than 2%, over a period ten years or more.
7. I have omitted companies with less than 6 stars as valued by Dynaquest. The
total number of companies with 6 stars or more is about a hundred. I feel
that this number represents a good pool of companies to choose from.
Please refer to the report on "Dynaquest's best performers on Bursa Malaysia"
for further information on their rating summary.
8. Through this process of elimination, there are still about sixty companies left
in this report.
I believe these are the companies that you should be focusing on in order to
create wealth from Bursa Malaysia.

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9. Another word of caution: some companies show consistency and gradual

increase in EPS GR; some show erratic growth. EPS GR for each company
needs to be scrutinized. That is why every stock investor should have a
Dynaquest guide for reference.
The more consistent the growth, the more reliable its valuation and future
price forecasts would be. On the other hand, inconsistent EPS performance
casts doubts on its price valuations later on (in Report #6 Stock valuation of
the best companies listed on Bursa Malaysia). For some companies, growth
may even be negative at times. And this may cause our formula for
calculating valuation to break down.
For this reason, investors are always reminded not to overly rely on EPS GR
and the subsequent price valuation calculated based on EPS GR. Other
factors such as the business itself, the industry, dividends, ROE, NTA (net
tangible assets) or even DE ratio should take precedence over EPS GR.
10. WB - The first rule of investing is, don't lose money. The second rule says to
remember the first rule. Investing in high EPS GR companies can help ensure
that we follow WB's rules of investing.
11. How do we do that? We need to understand the important concept of

"margin of safety".
12. Margin of safety means buying a stock at 2/3 of its intrinsic value.
13. What is intrinsic value? This value is tied closely to a company's earnings, or
EPS. We need to look into a company's growth rate in terms of EPS.
14. A lot of people want to know how to value a share. WB says it is more
difficult to identify a good company. The valuation part is easy.
15. Once WB buys a good company's shares, his favourite holding period is
"forever". Besides dividends, the next most important thing about a
company could be its earnings growth.
16. TII: Buy companies with earnings for 10 straight years.
17. TII: Buy companies with at least 1/3 increase in EPS for the past 10 years.

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Report 3
Best return-on-equity stocks listed on Bursa Malaysia
1. Return on equity measures how efficiently a company employs its capital

to generate profits. This is a very good indicator of a good company. This is
the first criteria that Ho Kok Mun looks for in evaluating a stock. He will not
buy a stock if the company's ROE is less than 15%.
2. Wealth is when small efforts produce big results. Poverty is vice-versa.

Therefore, when we look at ROE from this perspective we understand that a
company will try to recover its capital in the shortest time possible. If it is
able to do that, it is an indication that the business is good.
For example, if you invest a million dollars to start a business and you get a
ROE of 10%, you will recover your capital invested in just ten years. On the
other hand, if your ROE is only 5%, you will only get back your capital
invested in twenty years.
Therefore, it is obvious that a good company or business will exhibit a high

ROE, and vice-versa.
3. An ROE of more than 10% is attractive. Even a 6-7% return can be tempting.
But we see many Bursa Malaysia companies performing lower than that.
Therefore, it doesn't make much sense investing in companies like that.
4. For ROE we take only the latest year's performance. One of the reasons is
that we do not have the historical figures listed in Dynaquest's report.
5. As such, this ROE criterion must be read together with other important
criteria like dividends, EPS growth rate, cashflow and debt equity ratio in
order to get a clearer picture on what is a good Bursa company to invest in.
6. I have omitted ROE stocks for companies on Bursa Malaysia with less than 6
stars as valued by Dynaquest. The total number of companies with 6 stars or
more is about a hundred. I feel that this number represents a good pool of
companies to choose from. Please refer to the report on "Dynaquest's best
performers on Bursa Malaysia" for further information on their rating
summary.

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Report 4
Dynaquest's best performers on Bursa Malaysia
1. Dynaquest Sdn Bhd, based in Penang, is the company that publishes the
Stock Performance Guide for Main Board companies as well as the KLSE
Second Board Guide for Second Board companies.
These guides contain critical information such as ownership, activities,

corporate structure, past and future performance and capital of the
company including annual price range, EPS, DPS, DY range and PER range for
12 years, or from the year of listing.
2. Dynaquest summarises their opinion on a particular stock by assigning a

star rating to it. The greater number of stars, the more highly they think of
the stock. The overall rating is obtained by adding together their individual
ratings along four dimensions - stability of dividend and earnings, financial
strength, management strength and future growth of dividend/earnings.
(Note the compatibility of Dynaquest's analysis with Warren Buffett's
strategies.)
The theoretically highest number of stars obtainable is 12 but no company

actually obtains 12*. There is only one company on the Bursa currently with
a 9*; all other companies rank lower than that.
Roughly the rating may be divided into four categories:-
a. More than 7* - High

b. 5* - 7* - Above average
c. 2.5* - 4.5* - Average
d. Less than 2.5* - Not Classified/Unclassified
3. This report is a listing of Dynaquest's companies with 6* and more. There are
almost 100 companies that meet this criterion.
4. We should not assume that all of these companies are good for investment.

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5. A case in point is Transmile, a 7.5* company whose majority shareholder is

Robert Kuok, the richest man in Malaysia. Its share price breached the RM15
mark in early 2007 before it crashed in mid-2007 due to accounting fraud.
Its current price is less than RM1.
6. There could be many companies with 5* or less which are worth investing in.
7. This could be because Dynaquest's rating system does not give high
weightage to track record, but rather current performances.
For example, HOVID has got only three years of track record but have been
awarded 7* in 2007, which is relatively high. (It was subsequently
downgraded to 4.5* in 2008.) There are many companies with only about 5
years track record that have been rated 6* or more.
8. Having worked in a bank before, I tend to believe that track record is a very
important criterion in appraising a company's future performance. Banks
will usually not give a business loan to any company with less than three
years of track record.
9. It is not likely, though possible, that companies that are rated less than 5*
that will turn out to be winners within say, five years.
10. One of the criteria for companies that Warren Buffett invests in is big, good
companies with sound management.
In 2006, there was only one company rated 8* in the Second Board, ie.
TIENWAH. (It was subsequently transferred to the Main Board.) There were
no 7* rated companies. There were four 6* rated companies. There were
numerous companies rated 1*, 2* or U (Unclassified).
For this reason, I have omitted Second Board companies completely from my
list of stocks short listed for your consideration.

Page 22 of 38
Report 5
Best capital gains stocks listed on Bursa Malaysia 2008
1. A true investor goes for dividends instead of capital gains.
2. One who goes for capital gains is usually a trader. Although there is nothing
wrong with being a trader, an investor receives residual income whereas a
trader's income is linear.
If you are not sure what linear income is, it means you earn money each
time you do work. Residual income means you do work once and receive
income many times after that.
3. Therefore, this report on capital gains serves only as a reference on the

performance of the stock.
4. The market is full of average investors driven by greed who will not
understand this. Their failure to grasp the concept of residual income means
that they only go for capital gains. That is the reason why most "investors"
fail and lose miserably in the stock market. They are not investors in the
first place.
5. As we refer to the companies with the best capital gains in Malaysia, we find
that many companies with high capital gains also give high dividend yields.

Page 23 of 38
Report 6
Highest returns stocks listed on Bursa Malaysia 2008
1. This report shows the best companies in Malaysia with the highest combined
dividend yields and capital gains for a period of more than ten years.

Page 24 of 38
Report 7
Stock valuation of the best companies listed on Bursa Malaysia
2008
This stock investment strategy or criterion should be read together with other criteria
including but not restricted to, Dividends, Return on Equity (ROE), Net Tangible Assets,
Earnings per share growth rate (EPS GR), Cashflow statement, Dynaquest Star Rating,
Industry, Gross profit margin, Net profit margin, Debt Equity (DE) Ratio and Price Earnings
(PE). You should never assume that stocks that meet this criterion automatically deserve
your attention, and vice-versa.
1. We know the drill - be greedy when others are fearful. We should be buying
when a market is crashing. But what do we buy? At what price do we buy?
2. With the above reports I hope you have a good idea as to what to buy.
There is no such thing as good or bad stocks, only cheap or expensive stocks.
3. Now comes the very tricky part, at what price do we buy? If

you do not know how to value a stock, you will not be able to answer the
question, "How low is low?"
Investors and traders alike, if they do not have a good idea what their
entry price should be, their success will be greatly hampered.
4. Most people, including seasoned traders, struggle for decades because they
cannot understand price, let alone value. How embarrassing it is for anyone
who cannot answer such a seemingly simple question, "What is price?"
Traders who cannot give a clear definition of price do not know what they
are analyzing. A trader's success or failure depends on handling prices. He
had better know what they mean. Most of the time he doesn't! (Note that I
refer to traders and not investors.)
The following statements serve to show the utter confusion in the market
place.
• Price is perceived value.
• Price is what a person at one particular point in time is willing to pay another
person for a commodity.
• Price is what the last person paid for it. That's the price right now.
• No, price is what the next person will pay.
• Transmile was selling at RM15 one day and a few months later its price was
RM1.50.

Page 25 of 38
• Price is what the greater fool is ready to pay.
• If there is no buyer, how am I going to sell? There is no value.
• There is no such thing as no buyer. There is always a bid and and an ask.
• A stock has intrinsic dividend value.
• What if the company doesn't pay dividends?
• Doesn't a company have assets?
• The company that issued the stock has value, cash flow. (You see, even cash
flow comes into the picture.)
• Price is the intersection of demand and supply curves.
To understand price, we need to first of all know that there are three groups
of traders in the market: buyers, sellers and the undecided traders. "Ask" is
what the seller wants. "Bid" is what the buyer wants. Buyers and sellers are
always in conflict. Buyers want to buy as low as possible. Sellers want to
sell as high as possible. If these two groups insist on having their own way,
no trade can take place. No trade means no price - only wishful quotes of
buyers and sellers.
A seller can wait for prices to rise, or accept a lower offer. A buyer can wait
for prices to come down, or accept a higher offer. A trade occurs when
there is a momentary meeting of two minds: an eager bull agrees to a
seller's terms, or an eager bear agrees to a buyer's terms. The presence of
undecided traders puts pressure on both bulls and bears.
Each blink on your online broker's screen represents a deal between a buyer
and a seller. Buyers buy because they are expecting prices to rise. Sellers
sell because they are expecting prices to fall. Buyers and sellers trade while
surrounded by crowds of undecided traders who may become buyers or
sellers as prices change or as time passes.
Each price is a momentary consensus of value of all market participants,

expressed in action. Price is a psychological event - a momentary balance of
opinion between bulls and bears. Prices are created by masses of traders -
buyers, sellers and undecided people. The patterns of prices and volume
reflect the mass psychology of the markets.
5. Investors are different from traders. They focus on value instead of price.
6. Investors go for dividends and think long term. Traders buy low and sell high
for a profit, they usually think short term.

Page 26 of 38
7. There is nothing wrong with being a trader. However, investors receive

residual income from their investment. The trader gets earned income. He
needs to repeat his task each time to make a profit. His income stops when
he stops trading.
8. The buying prices found in this report are calculated based on value. (This
strategy is also known as value investing.)
It is intellectually easy as the prices may be calculated mathematically.
But this strategy is psychologically difficult. This is because the constant

bombardment of opinions reflected in the wild swings in prices provokes
greed and fear in the investor. It may cause him to break down mentally.
9. For example, if the stock price of Transmile is calculated at RM2.50, at

RM15.00 it is grossly over-valued. Buyers are over-paying. At RM1.50 it is
cheap and worth buying. The "momentary consensus" of buyers and sellers
does not take anything away from the fact that its value is RM2.50.
10. Another word of caution: some companies show consistency and gradual
increase in EPS GR; some show erratic growth. EPS GR for each company
needs to be scrutinized. That is why every stock investor should have a
Dynaquest guide for reference.
The more consistent the growth, the more reliable its valuation and future
price forecasts would be. On the other hand, inconsistent EPS performance
casts doubts on its price valuations. For some companies, growth may even
be negative at times. And this may cause our formula for calculating
valuation to break down.
For this reason, investors are always reminded not to over-rely on EPS GR
and the subsequent price valuation calculated based on EPS GR. Other
factors such as the business itself, the company's management, the industry,
dividends, ROE or even DE ratio should take precedence over EPS GR.
11. WB says that finding great companies is never easy; it takes time and effort.
Determining the value is easy. However, almost all the stock investment
books do not give you examples on how to calculate the value for a stock.
Even The Intelligent Investor does not help you do that. Coupled with the
powerful but rather vague idea of intrinsic value (which some mistake for
NTA), an investor is now has the full knowledge of how stock investment
works, but is left without the last piece of the puzzle! You would not be
surprised to see a lot of bald stock investors because they keep tearing their
hair out.
In fact, some investors are so frustrated that they claim that nobody on the
planet knows how to calculate intrinsic value. It is just a novel idea.

Page 27 of 38
No, that is not true. Warren Buffett is indeed right. In fact, the method is
described in TII, just that the actual calculation is not shown. It is a simple
discounted cashflow method. Perhaps the author thought it is too simple,
that he left it out? Perhaps he intentionally left it out so that people would
focus more on the business rather than on some "formula" for success? We
do not know.
But what we do know is that a local boy by the name of Ho Kok Mun, who is
a qualified engineer, has revealed the actual calculation in his best-selling
book, How To Make Money From Your Stock Investment Even In The Falling
Market.
I made use of this formula to calculate and put a price tag on each of our
short-listed companies' shares in this report. The formula is attached
together for you so that you may use it to calculate any stock on Bursa
Malaysia by just inserting the relevant figures into the spreadsheet.
(Allow me to give you a word of caution, though. Some people may not
agree with his method of calculation. It may not be accurate, or even
correct, depending on whom you ask.)
Needless to say, I made a lot of money by accurately valuing the shares I

bought. It was such an easy task and it really took all the stress out of stock
investing. I am indeed indebted to the book and its author for making my
life simple. I am sure you are able to repeat this success, because if you
crunch the numbers yourself you should arrive at the same answers I did.
That is not the difficult part.
The difficult part is the emotional process as described in my report, "Other

tips on investing in Bursa Malaysia".
12. WB's two important rules: (1) Never lose money, (2) Never forget Rule No. 1,
form the basis of stock valuation.
13. Investing means building a 30,000 lb bridge and driving only a 10,000 lb truck
across it.
14. 43 years after reading "margin of safety" WB still thinks those are the three
right words.
15. Graham's "margin of safety" means never over-paying. - TII
16. "Margin of safety" makes it unnecessary to estimate the future.
17. The "margin of safety" concept distinguishes investment from speculation.
18. The higher the price you pay, the lower your return. - TII

Page 28 of 38
19. Your profit is made when you buy, not when you sell. - RK. It took me a lot
of meditation to understand this statement. If I'm not mistaken, I think it
simply means that the amount of homework you have done has determined
the correct asset and its value. If you buy it at anything less than that value
you would definitely make a profit.
20. One of the meanings of "margin of safety" is - less than 2/3 of net asset value
and cheap PE.
21. WB: My favourite holding period is forever. You can only do that if you have
bought at the right price.
22. WB puts heavy weight on certainty; the idea of a risk factor does not make
any sense to him.
Risk is defined as paying excessive price in relation to the intrinsic worth of

the security.
Tolerance for risk is defined as how much time and energy you put into your
portfolio. This is one of the most common and serious mistakes made by
most financial consultants who are too lazy to do their homework.
They keep propagating this idea of risk tolerance (translated as "how much
money can you stand losing") to their clients. And they are happy that they
seldom meet with any resistance because most of their clients either
ignorant or gullible, or both. In any case, they are too lazy to analyse
anything. It is just too difficult. They leave it to their unit trust or financial
consultants, who are in fact, salesmen.
(Warren Buffett says that Wall Street is the only place on earth where
people in Rolls Royce take advice from people who use the subway. He is
referring to consultants working for big firms like Merill Lynch or Morgan
Stanley.)
This situation is bound to change with the recent collapse of Lehman

Brothers and a host of other banking giants. Financial consultants who have
sweet-talked clients into parting with their hard-earned money by
propounding the risk tolerance concept, may now find that they have a hard
time convincing their clients of anything at all.
People's tolerance for risk is founded on emotion. That is why the concept is
basically and totally wrong.
How much risk you can bear does not depend on age. This is also
perpetrated by many financial consultants. To me, it is just ridiculous that
your age has anything at all to do with how much money you are willing to
lose.

Page 29 of 38
Look in the mirror - that is risk gazing back at you. You are your biggest
asset as well as your biggest enemy, depending on whether you do your
homework or not. - TII
Ensure your loss if your analysis turns out to be wrong. Proper budgetting
and money management will help you manage risks.
You do have control over the consequences of being wrong. Always invest
with this idea in mind, "What if everything I believed in is wrong?" Work your
way from there and you will be in full control of risks. This concept applies
not only to stocks, but to all other forms of investment.
23. In a bull run, the market most generous to low-priced stocks.
24. Your comments, opinions and criticisms on these reports are welcome.
Please email me. If these reports have been helpful to you, do give me your
short testimonies and include the detail of which town you are living in.
25. If these reports have helped you create wealth from the stock market,
remember to give back to society and nature. One of the ways you can do
that is by visiting CharityMalaysia.com, a website I co-founded with my
buddies Saranjeet Singh and Dariff Din.
CharityMalaysia is a platform for fundraisers and donors to meet. All the

contact details of charity organisations listed there are displayed for donors
worldwide to view and scrutinize. Any individual or charity organisation may
request to be listed on CharityMalaysia. Donors may then make donations
directly to these charities or to CharityMalaysia.com via its online Paypal
payment gateway. Funds are then fully remitted to the charities; we do not
charge anything for this service.

Page 30 of 38
Report 8
Tips on investing in Bursa Malaysia for beginners and beyond
This stock investment strategy or criterion should be read together with other criteria
including but not restricted to, Dividends, Return on Equity (ROE), Net Tangible Assets,
Earnings per share growth rate (EPS GR), Cashflow statement, Dynaquest Star Rating,
Industry, Gross profit margin, Net profit margin, Debt Equity (DE) Ratio and Price Earnings
(PE). You should never assume that stocks that meet this criterion automatically deserve
your attention, and vice-versa.
1. We should have between 25% and 75% of our funds in stocks. This is one of
the first questions that an investor should ask.
2. You should not have more than 30% of your share account invested in one
single share.
3. It is recommended that we have 6 months to a year's expenses held in cash.

RK
4. The goal is to win big when you win, and lose small when you lose. - Soros
paraphrased. Therefore, budget your share account.
5. Stocks will gain 50% from lowest price and lose 33% from their highest price.
For example, when our KLCI goes from 1,000 points to 1,500 points, that is a
gain of 50%. But when it falls back from 1,500 to 1,000 points, that is
decline of only 33%. Most people don't know this simple arithmetic. Why?
That is because money is an emotional subject. Very smart people like Isaac
Newton can become blinded by emotions. We will have more on this topic
of emotional control later.
6. Limit the companies that you invest in to less than 20. If you have more
than that you may be asking for trouble.
7. Before you buy a share, prepare for your possible exit. You must be prepared
for the three possible scenarios. What would you do if after you buy, the
share price goes up, down or sideways?
If the price goes down, re-examine your analysis. Is there a problem with
the company or is there a problem with the market? If it is the company,
sell immediately. Do not hesitate. If it is the market, you should be ready
to buy more. That is where budgetting comes in.

Page 31 of 38
A case study would be Uchitec, an 8* company. (It has been recently

downgraded to 7.5*.) An acceptable buying price is calculated at RM3.00.
That is where institutions like Amanah Raya and Tabung Haji start going in.
Here, you see two different approaches. Amanah Raya goes in one lump sum
of 20 million shares in January 2008 when the share price is about RM3.00,
and holds while the share prices keep dropping. At the time of this writing,
it is at RM1.00. Tabung Haji uses a different approach. It buys bit by bit,
sometimes as little as 20,000 shares at a time and at other times, as much as
1,500,000 shares, as the share price keeps going down. Todate, it has made
more than twenty transactions, and still counting. Both approaches are
acceptable. Whichever one you adopt depends on your preference.
If the price shoots up unexpectedly by say, 30% after you bought, you may
want to consider selling and buying back later if and when it drops back to
the same level you bought. Then again, you may not want to do anything if
you are looking at dividends.
If the price holds steady, would you be prepared to "hold forever"?
8. A stock is an ownership interest; you are buying a part of the company's

business. - TII
9. You cannot buy stocks without doing homework.
10. Analyse a company thoroughly to protect against serious losses. - TII
11. WB, "A lot of great fortunes have been made by owning a single wonderful
business."
12. WB, "If you understand business you don't need to own very many of them."
13. Invest in businesses so simple that a moron can run. That is because
business can be a very complicated subject to understand, with many
variables.
14. There are two ways to be an intelligent investor - continually researching,

and creating a permanent portfolio.
15. Buying shares at NTA (net tangible asset) price may not be a sound
investment strategy. Some people do this. NTA measures how much a
company is worth on paper. However, NTA is just one of the criteria we
should look at.
16. Study a company's Statement of Cashflows to check whether cash from

operations is growing.
17. One of the most basic definitions of a good business is good cashflow.
18. Cash from operations must grow steadily for the past 10 years.

Page 32 of 38
19. Successful and well-managed companies usually have a low debt equity ratio.
WB, "When you combine ignorance and borrowed money, consequences can
get interesting." By ignorance, I think he means that people do not know
what the acceptable level of debt should be.
A company's long-term debt must be less than 50% of its total capital. This is
where a lot of seemingly good companies fail. They may not know it but
their debt situation - commonly known as gearing - is high. If any
unforeseen external event or events occur, they may be on their knees.
The recent subprime crisis which caused the downfall of gigantic

corporations and banks can be traced back simply to a gearing problem.
Even corporations like Lehman Brothers and General Electric have been
victims of this problem of high gearing. General Electric went a-begging to
WB who bailed them out with an investment of $5 billion, with many strings
attached, of course.
Back home, Public Bank's success may be attributed to prudent management.

Now, what is prudent management if it does not include the management of
a company's gearing?
The success of Tan & Tan, the developer of Mid Valley, may also be
attributed to prudent management. Only 35% of the total cost of
construction of Mid Valley was borrowed from banks. An average developer
borrows at least 70% of the construction cost.
One of the main reasons that caused the collapse of local banks in the not-
so-long-ago Asian financial crisis in 1997 was the high gearing of the banks.
Too many unsecured loans were given out easily during the boom years prior
to that. Most banks did not have any second thoughts about giving business
loans to companies with gearing as high as 4 times. This eventually led to
the creation of Danaharta, our Malaysian version of "toxic debt".
20. Price earnings ratio, or PE ratio, is an important consideration in stock

investment.
Paying a low price means buying shares of a company with low PE.
In general, a PE of less than 10 is considered low, 10 to 20 moderate, more

than 20 is considered expensive.
You should be able to see the PE on your screen as it fluctuates with its
share price if you have an online broker. (If are a new investor and do not
have an online broker yet, just send me an email and I will introduce you to
my favourite broker, Hong Leong eBroking. They have the lowest brokerage
rates in the market.)

Page 33 of 38
When you buy a share, its PE must not be more than 25 times, and 20 times
within the last 12 months.
PE is defined as market price divided by earnings per share (EPS).
A stock with a PE of 11 means earning power or earnings yield of 9% (1

divided by 11).
There are many so-called investors who buy shares based solely on PE.
Buying companies with PE is a very good strategy, but we must not be lazy
and ignore our homework, that is, to properly evaluate a company's business.
The market is not going to allow you to pick its pocket just by calculating PE
ratio. A lot of investors have been reduced to a statistic in Bursa Malaysia
just by adopting this PE strategy.
Regarding PE, Benjamin Graham says that we should not take a single year's
earnings seriously.
21. Buy big sized companies, companies that are large, prominent and
conservatively financed.
22. Go for low-tech companies. WB does not invest in any high-tech companies.
He says he does not understand their business.
During the dotcom boom prior to 2000, people thought that IT stocks were
all that an investor should own. The Dow went from 12,000 in early 2000 to
7,000 in late 2002.
In extreme economic conditions, shares of food companies like Nestle could

be the least affected as people will still buy Milo and Maggi mee. (I'm not
sure whether they still need to smoke.) I believe that is one of the main
reasons why WB loves low-tech stocks.
23. Go for companies with current ratio of two to one. Current ratio is current
assets divided by current liabilities. It indicates how liquid a company is. A
company with a current ratio of two to one means its current assets are
twice as much as its current liabilities.
24. Go for companies with strong consumer brands. These are positive signs for
a company - it has brand identity, it may even be a monopoly. These are
intangible assets and cannot be substituted.
25. Go for good companies that are currently facing scandals or have just taken
a beating. WB went for great companies like Coca Cola and Amex when they
were in temporary trouble, and their shares prices took a dive. He went in
big time with more than 30% of his total funds. Today, his company owns
about 10% of the Coca Cola business.

Page 34 of 38
26. Invest in a business that you understand, that is, within your circle of
competence. This Circle of Competence concept is an important
cornerstone in WB's investment strategy. He never invests in anything
outside his scope of competence.
27. Invest in a share only if you are comfortable with not knowing its daily share
price. You can only do this if you are a long-term investor.
28. Watch for industries that are not fashionable or unloved; there may be
potential for big gains.
29. Be careful of industries that are cyclical. The steel industry is one of these
types of industries.
30. Airlines are a very competitive industry. There is not much customer loyalty.
Passengers usually choose the cheapest way to fly.
31. Avoid growth stocks; they are too uncertain and risky.
32. "Sin" stocks like gambling, liquor and cigarettes make a lot of profits.
33. Benjamin Graham detested warrants. Warrants are too technical.

Speculators or punters love warrants because they can make a killing trading
in them. They enjoy pumping adrenalin and these counters fit in perfectly
with the universally accepted concept of "no risk no gain and, high risk high
gain."
Investors who have not yet graduated from such an outdated and wrong
concept stand in danger of losing their pants. People holding on to this
concept show a clear lack of financial intelligence.
34. Be aware of financial scams. They can come in many sizes and shapes.
Enron was once the seventh largest company in America. Accountants can
do gymnastics with figures. They are usually hired by corporate crooks who
scheme daily to punish and fleece the public for their ignorance and laziness.
WB says that most annual reports are a sham.
35. Stay away from Wall Street if you want to make money. That is WB's advice.
It means that insiders possess only the illusion of knowledge, not the real
thing. The real thing is found in the track record of a company which goes
back ten or twenty years. As Dynaquest says, the past is a good indication of
the future.
36. Day trading is one of the best weapons invented for committing financial
suicide. Traders who have their eyes glued to their computer screens not
only suffer from eye problems and fatigue, they may even suffer from cancer
of the wallet.

Page 35 of 38
37. Most CFAs (certified financial analysts) ignore Graham's teachings. Most
traders and investors today do not believe in WB's style of investing. More
often than not, his method of making money and holding forever is "too slow"
for them.
38. Be careful of blue chip companies - while the company is safer the market is
not.
39. Emotional control is critical for success in stock investing, or any other type
of investment for that matter. I hope that the following long list of tips will
help you in becoming an investor who has mastered the emotions of fear and
greed.
When Robert Kiyosaki got excited with his first investment venture, his logic
went out of the window. He could not analyse the deal because he got
emotional and greedy.

Page 36 of 38
Financial IQ is 90% Emotional IQ plus 10% technical information. - RK
Emotions are about 24 times stronger than the rational mind. - RK
The pain of financial loss is twice as intense as pleasure of an equivalent

gain.
In most markets there is no logic, only emotions of fear and greed. - RK
Making and losing money are emotional topics - the secret of success is to
learn to be emotionally neutral.
RK thinks the greatest cause of financial struggle is the fear of losing money.
Wounds will heal in about 12 years; after that markets will peak again. - RK
By discipline and courage we refuse to let others' mood swings govern our
financial destiny - TII
You are neither right nor wrong because the crowd disagrees with you.
To achieve satisfactory investment results is easier than most people realise.

- TII
To achieve superior results is harder than it looks.
In WB 2002 said, "We don't have to be smarter, only more disciplined."
Be fearful when others are greedy; be greedy when others are fearful.
You should develop discipline and courage. Successful investors are

disciplined, consistent, and they pay little attention to the market.
Discipline is essential for success in any field. Sometimes it is not a lack of

knowledge that contributes to failure. For example, a lot of Malaysians are
obese nowadays. Many don't exercise and eat junk food. But today's
Malaysians are more knowledgeable and health conscious! They just "don't
have time" for exercise and they cannot resist unhealthy food.
WB, "If you cannot control your emotions you cannot control your money."
Successful investing does not require high IQ, unusual business insights or
inside information. - TII
To invest successfully we need a sound intellectual framework, and to

control our emotions. - TII
Many people have vision, but not everyone has sustainable faith and courage.
- RK

Page 37 of 38
When it comes to money we all experience fear… even the rich. - RK
One of the most important lessons as a teacher is to understand that true

learning is mental, emotional, and physical.
Remisiers or brokers are usually gamblers. A friend of mine who worked for
more than ten years in a leading securities firm confided to me one day that
she can't remember a single remisier in her firm who did not gamble.
This is because when they see their clients making money from "good" tips
they cannot resist the temptation to follow. It also underlines the fact that
emotions alone can determine the eventual success or failure in an investor's
life.
40. Success in stock investing consists of knowledge, money management skills

and emotional control and discipline. When knowledge and money
management skills are secured, the ultimate determining factor is emotional
control and discipline.
The ultimate winner not only has superb knowledge and money management
skills; he is above all, an emotionally stable person.
41. Should you need more reading material in the areas of financial intelligence
and emotional control, my e-book membership The Final Winner will be of
help to you.

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2. Avoid predicting the future.

5. The market is a pendulum that swings between unsustainable optimism and

6. Buying shares on margin means speculating. - TII

9. WB says the first consideration of share investing is dividends.

10. Dividends are the greatest force in stock investing. - TII

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11. However, stock dividends are disapproved by most academics including

13. WB buys shares of companies with uninterrupted dividend payment record

18. The greatest mathematical discovery of all time is compound interest -

19. In order to become financially free, we must understand the concept of

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For a comprehensive explanation on the importance and how to secure

24. Prosperous people practise delayed gratification instead of instant

27. Dividends are extremely important in making investment decisions. The

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28. Choosing dividends as my first criteria is just my preference, due to various

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4. EPS GR is a very good indicator of a good company. It is the second

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9. Another word of caution: some companies show consistency and gradual

11. How do we do that? We need to understand the important concept of

16. TII: Buy companies with earnings for 10 straight years.

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1. Return on equity measures how efficiently a company employs its capital

2. Wealth is when small efforts produce big results. Poverty is vice-versa.

Therefore, it is obvious that a good company or business will exhibit a high