This is my second post, following on from my earlier one on Realised Gain: PECCA(Dividend2030 Portfolio) Here I would like to discuss about the realised gain with regards to Mahsing (Syariah compliant), another stock in my portfolio, which I divested on Friday (16/10/2020).
Mahsing was one of the earliest stock that caught my attention when I researched for stocks to be included in this portfolio.
It has given me my first 5 figure gains for this portfolio.
Famous property developer?
Relatively well know for their mid range high rise property developments, Mahsing is a Malaysian based company that is also involved in plastics, investment holdings and others.
Most of its revenue is derived from its property segment
How I found this stock? This is one of the earlier stock that I found when I started this portfolio.
Many people discourage penny stocks investing. However, I noticed Mahsing was a Penny stock with good fundamentals.
Furthermore, it took a big hit during the March 2020 stock market crash, the PE ratio was very low at that time, at single digits.
Dividends, Dividends, Dividends
Another important point that attracted my attention was this:
At around 0.40++++ cents per share in April and May 2020, I noticed that yield was pretty attractive, at around 7% to 8% again.
The dividend was proposed in February 2020, was approve in May 2020, went Ex on 15th September 2020 and payment was received on 29th September 2020.
I also had a feeling the price will increase nearing september due to the dividends.
Mahsing, was a consistent dividend pay master, with a payout ratio of 40% to 60% every year. Furthermore It had a strong Balance Sheet from what I noticed.
The one that really attracted my attention was that It had slightly more than $ 1 billion dollars in cash and cash equivalents.
Why I invested in Mahsing..
The decision to invest in Mahsing was not made as easily as Pecca. I had some concerns:
- The fact that Property market outlook wasn’t that good in Malaysia
- Covid 19 crisis affecting people’s eligibility for housing loans and loan defaults issues.
- Mahsing’s performance itself was declining, i.e earnings per share was declining for the last few years.
- The dividends were also declining from 0.08cents (2014) per share to 0.065 cents (2015 to 2018) per share to 0.045 cents per share (2019) to 0.0335 cents (in 2020).
I did however know, that in the very long term, property market will recover, and Mah sing is bound to perform well with its range of products.
Furthermore, Malaysia managed to really control the out break of Covid 19 in May, and stimulate the economy by encouraging home ownership etc etc.
I decided to invest in Mahsing for the long term. (5 to 10 years)
In fact I did do some trading of the shares when prices started going up by few cents, I had already made some gains at around $3k.
Finally, I decided to stop trading the share and invest for the long term. I invested in 30k shares at an average price of RM 0.565 per share (RM 16,950).
News about new venture
In July 2020, there were already a lot of news circulating about Mahsing’s potential entry into the healthcare sector, through its Plastics division.
As an example, the following was seen in News Strait Times…
I slowly noticed the market getting excited about this, as the price was increasing from RM 0.50+/- TO RM 0.70+/-. I was already thinking about selling my shares for a healthy gain.
However at that time, I did not notice any actual announcement from Mahsing itself. So I told myself perhaps the market will heat up once and official announcement was made.
I was waiting patiently.
Official Announcement & My Exit
So, Mahsing’s management decided to make the long waited announcement on 15th October 2020 (Thursday). The announcement was made in the afternoon.
Now this is going to be interesting, I hope you read carefully. The official announcement was made on Thursday afternoon around 1p.m.
The market was closed for lunch and was about to open at 2.30pm.
Mahsing actually issued a very detailed PDF document about its venture.
I cut short my lunch time to 15 minutes to really read it through (The sacrifices you need to make in investing).
Honestly, it was very detailed but I am not gonna bore you with the details here.
Profits were expected to be realised in 2021 onwards (So 2020 is indeed a dry year). To my surprise, when the market opened at 2.30pm, there were no reaction to the share.
The shares price was not having much movement, it was still lingering at around 0.70+/-.
There were a lot of rumuors around claiming, this venture had been priced into the 0.70+/-. For me this is somewhat true, but I also thought that perhaps the market need time to digest the information.
Many people wouldn’t have read the announcement immediately after it was released.
Furthermore most investors first point of reference are the newspaper articles and not the actual Bursa announcement.
So I decided not to sell the shares, and wait for another day to see if there is going to be any action on Friday. I told my self I will be selling of the shares no matter what happens because the rise to RM 0.70+/- was already satisfactory to me.
The day of action. As the market opened early morning, Mahsing sprang into action, the price went all the way up to 0.97 per share.
I wasn’t really looking into the screen, but an ex student, messaged me to look into it. As a lecturer, I am very happy to see some of my students taking monitoring my portfolio for me. This is something I will be forever grateful for.
The prices were hovering at around 0.90+/-, and I duly sold off my shares at RM 0.905. At average cost of RM 0.565 per share, it netted me a profit of RM 10,200 (60% gain).
Together with my trading gains earlier, the total profit made was RM 13,465.
In addition, I collected my dividend of RM 1,005. So total earned from Mahsing’s shares are 14,470. I am happy.
Added on with the gains from Pecca (RM 6k+++). Total profits realised is at around RM 20k, and this was totally unexpected, and I will take it as 70% luck, 30% effort.
So, why didnt I wait till monday to see if the prices are going up somemore?
For me, there few possible scenarios that may unfold:-
- The price will stay stagnant around RM 0.90 to 0.95 per share
- There maybe another limit up performace, where the prices surges up to RM 1.20+/-
- The prices drops back to 0.70-0.80+/-. (Perhaps, because operators were in action on Friday)
For me, I cash out as long as it has exceeded my expectations. 2020 is indeed going to be a dry year for Mahsing. The revenue and profit from glove venture will only be seen in 2021.
So I have concerns about its ability to increase its dividends for 2020 (although I maybe wrong). I will definitely keep Mahsing in my watchlist and revisit this company from time to time.
Remember? Dividend is my first priority for this portfolio. So anything else is a sweet bonus.
Now that I have sold 2 of my most profitable stocks, my dividend 2020 portfolio is at a huge unrealised loss. I will update this in my month end blog post later.
Thank you so much for you patience in reading this post.