Dividend Magic

Saving and Investing towards Financial Independence in Malaysia

Companies in the News

Nestle (Malaysia) Berhad – Household Food Products in Malaysia

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Here’s a company whose products you’d definitely find around your household as a Malaysian. Boasting a huge range of food products, NESTLE has its tentacles everywhere.

While NESTLE has had to deal with its fair share of criticisms (aka the Milo incident), it has bounced back from it with a range of new products. And new profits.

Nestle Malaysia 2017 Annual Report

This here analysis is based on NESTLE’s 2017 annual report which can be downloaded here: nestle_annual_report_2017

Being awarded the ‘Highest Return on Equity Over the Past Three Years’ is no small feat.

NESTLE AGM

Also, NESTLE had quite a turnout at this year’s AGM with a very supportive base of shareholders.

I’ve got videos of the fun-filled fare up on my instagram.

Understanding the Business and its Products

Nestle's Product Portfolio
Nestle’s Product Portfolio

You would’ve been living under a rock if you fail to recognise just one of these household names. The products shown here has crept into the lives of Malaysians since we were children.

Let me paint you a picture.

You’ve had Nestle Milk when you were young. You remember the Milo trucks parked at your school compound serving free cups of chocolate goodness. You somehow recall that annoying Mat Kool song cruising round your neighbourhood.

And as you got older, you went to college where you had to tighten your belt and save some money so you filled your stomach with Maggi for breakfast, lunch and dinner. You stayed up late at night studying, buzzed on Nescafe.

What’s next you say?

You get a new job at some high-flying company, what’s that coffee machine you find in your pantry? Nestle again. Your boss pays Nestle every month to keep the machines churning. You enjoyed late night outs with your friends and colleagues at the mamak. Guess what your resident Ah-ne uses in his food and drink? Nestle.

Hell, you even remember them ‘Take a Break, Take a Kit Kat’ ads! Your parents and grandparents are probably taking Nestum in the morning and Omega at night for their bones and stuff.

My point being, Nestle’s products are here to stay for the foreseeable future. And you my friend, have been lining the pockets of NESTLE shareholders since you were 5.

 

Facts and Figures

Nestle Malaysia Growth
Source: Yahoo Finance

Investor’s realized the value of NESTLE in 2018, in a huge way. The company’s stock price has almost doubled since 2017, despite their latest Milo Incident.

I do not foresee any big jumps in the share price in the near future. Neither do I see too big of a dip for the company. At the current price of RM147.90, NESTLE’s dividend yield is below 2% the mark. My dividend yield for the stock, because I bought it at an average price of RM66.88 is at 4.04%.

NESTLE has had a continuous increase in net profit since 2014. As a rule of thumb, companies offering food products like Nestle are able to keep up with inflation.

 

Dividend Growth Perspective

NESTLE has been paying dividends consistently. I’ve held the shares since 2014.

Dividend yield was at 4.56% (2015), 4.04% (2016) and 4.04% (2017). However, with the sudden surge in share price and company growth, we should see dividends increase over the coming years.

Investors shouldn’t expect this metric to go sky-high since growth in the industry is somewhat limited.

Valuation

With the recent price increase, NESTLE is trading at 53.71 P/E.

They’re currently overvalued in my opinion. With everything factored in, I would definitely wait on this stock. Dividend history isn’t there to back up a strong buy signal.

An added note, I’m sure I’ll get many comments and messages saying Nestle is ‘expensive’. Technically it is because to buy the minimum number of 100 shares, you’d have to pay RM147.90 * 100, which comes up to RM14,790 at the current price.

However, if you’re serious about investing, get serious about saving your money. NESTLE is a worthwhile investment and it has been an invaluable defensive stock in my portfolio.

 

End.

NESTLE

Bought Price – RM66.88

Current Price – RM147.90

Capital Gain – 121.14%

Total 2018 Dividends – RM410 (so far)

Dividend Yield – 3.07%

Disclosure: I hold 200 units of NESTLE shares in my Freedom Fund portfolio. At its current trading price of RM147.90, I’m up 121% on the stock.

I will continue to hold onto my Nestle stocks for now, without adding any to the portfolio.

As always, my opinions and strategies are never intended to be a buy/sell recommendation. The strategy used has worked for me and it is for you to decide if it can be implemented into your own financial plan. Always do your own research and due diligence before investing.

A list of good dividend stocks in Malaysia can be found hERE.

 

 

 

AirAsia AGM 2017 – RM500 Flight Voucher

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AirAsia’s 2017 AGM

First off, do forgive me for the lack of Facebook updates this time around as I was feeling a little under the weather throughout the day. That being said, I had a marvelous time attending AirAsia’s 2017 AGM this year with my newfound friends – Steve and Heng.

I arranged to meet up with them at Subang’s LRT station at 8 am. Steve had graciously volunteered to give us a ride to the Asian Aviation Centre Of Excellence where AirAsia’s AGM was to be held at 10 am. We arrived with an hour to spare and set about registering ourselves for the meeting first. Next up was the food!

The Food

There were significantly fewer shareholders attending the AGM this year so registration was swift and smooth for us.

We headed for the food next and this was what AirAsia served up. I think it’s similar to what you’d get on their flights. Compared to some of the other AGMs I attended, AirAsia’s nasi lemak was amazing!

Air Asia AGM 2017
AirAsia’s Nasi Lemak

The Annual General Meeting

AirAsia’s 2017 AGM was truly well run. The questions posed by shareholders were well-thought out and intelligent. The management revealed their capabilities and experience through their answers as well as video presentations.

AirAsia AGM 2017
The AGM
Air Asia AGM 2017
People rushing forward after the AGM
AirAsia AGM 2017
Sir Francis!

AirAsia 2017 Doorgift / Goody Bag

AirAsia AGM 2017
RM500 Flight Voucher

The doorgift this year was similar to the previous year’s. All attending shareholders got a RM500 flight voucher. Holiday, here I come!

The terms and conditions of the voucher will be delivered together with the vouchers. I’ll update accordingly. Another fantastic thing about AirAsia is their annual report, they’re actually making money through endorsements and sponsors with their reports! I’ve requested for mine to be delivered so again, I’ll update when I get it.

My very lucky friend Steve managed to get his cap signed by Tan Sri Tony Fernandes and Ms. Aireen Omar.

AirAsia AGM 2017
Autographed Cap

Findings from AirAsia’s 2017 AGM

Logistics for AirAsia

The management’s plan to venture into the logistics industry was one of the airline’s strategies I found to be the most exciting. With over 200 aircraft at AirAsia’s command and tons of belly space in those said aircraft, the plan seems to be a remarkably viable one.

“Companies like Amazon were planning to buy airlines and incorporate them into their logistics operations. AirAsia already has an airline.” Tony Fernandes on the management’s vision of AirAsia as a future logistics player. AirAsia is currently in talks with POS Malaysia and Singapore Post with possible partnerships and cooperations.

No Merger with AAX

At the AGM today, AirAsia Group CEO Tan Sri Tony Fernandes said the merger was never tabled to the board of directors, and the management remains in their belief that both short and long haul operations should be separated.

“AirAsia’s position is very clear, the board has never discussed this and there is no merger at all,” he said.

“The whole purpose of setting up AAX as a separate company, is because we believe it should be separated, and 10 years on we still believe that,” he added.

This came amid wild speculations from research analysts on potential mergers between the two airlines. The statement from Fernandes should put them to rest.

Special Dividends

Tony Fernandes also mentioned his plans for several special dividends for shareholders as AirAsia unlocks value from the assets it currently owns. Currently in the mix are the sale and disposal of Asia Aviation Capital (AAC), AirAsia’s leasing arm. Other potential assets mentioned were the 50% owned Academy – Asian Aviation Centre Of Excellence as well as stakes in companies such as Expedia.

Fernandes plans to pay out special dividends every 2 -3 years if and when AirAsia manages to dispose of their many assets and stakes.

Digitalization and Market Share

AirAsia is moving ahead of its competitors through technology. The airline plans to utilize their vast database of customers via their many planned digital platforms. From increasing ancillary sales on flights by understanding their customers better to grabbing and retaining market share through their BIG loyalty program.

There are many innovations and new things coming to AirAsia in the not too distant future. While I’m excited by some, I’m equally unsure about some of the initiatives mentioned. We shall see.

End.

At 6 pm yesterday, AirAsia released their Q1 2017 results which saw net profit drop by 29.8% to RM615.81 million. A key contribution to the drop in net profit is the sharp increase in staff cost by 27% as the airline aims to prevent a shortage of pilots by offering more attractive remuneration packages.

Many of you would’ve been shocked at the dip in AirAsia’s price on 24 May 2017 mainly due to the bad results of AAX. I am hoping for a further drop in price today as I am looking to purchase more of the stock.

I very much still believe in the management team at AirAsia and I’m confident of a good year ahead for the airline.

What do you think of AirAsia? 

Thanks for reading and a special thanks to Steve for the ride to the AGM!

For more AGMs, head over hERE for a long list of Malaysian companies and their door gifts.

Tune Protect Group Berhad – Insurance Made Easy

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Tune Protect Group

Overview

Tune Protect Group Berhad (“Tune Protect”), previously known as Tune Insurance Holdings Berhad is listed on the main market of Bursa Malaysia since its initial public offering in February 2013. The main business of Tune Protect is in insurance and reinsurance, primarily travel insurance and general insurance. Through its alliance with AirAsia and its affiliates, Tune Protect has been one of the major travel insurance players in Malaysia and the ASEAN region.

I purchased a total of 10,800 shares in Tune Protect (TUNEPRO 5230) back in February and July 2015 for an average price of RM1.7133.

Tune Protect Fundamentals – Annual Report 2016

The financial year 2016 has been a positive one for Tune Protect when compared to the dismal year of 2015. The company grew revenue by 7.6% to RM516.6 million. Profit after tax increased by 18.8% to RM86.6 million. Shareholders equity also grew 10.1% to RM496.6 million. Earnings per share of the company have grown to 10.64 sen from 9.17 sen a year ago.

Profitability metrics are more than suitable. Tune Protect has a return on equity of 16.1%. A good, solid number here.

For a more comprehensive view of the company’s financials, the 2016 Annual Report can be downloaded hERE.

Tune Protect, AirAsia and Tune Group

Tune Protect Ownership / Shareholders
Tune Protect Ownership

15.77% of Tune Protect is owned by Tune Group Sdn Bhd whose joint-shareholders are Tan Sri Tony Fernandes and Datuk Kamarudin Meranun. Another 13.65% is further owned by AirAsia Berhad. This strong correlation to AirAsia is the reason for the strong partnership between Tune Protect and the airline. I view this as a double-edged sword because Tune Protect is deriving most of its travel insurance income from AirAsia customers – a risk in my opinion.

That being said, this risk also creates a secure and all but guaranteed stream of income for Tune Protect. AirAsia and its owners Tan Sri Tony Fernandes and Datuk Kamarudin Meranun both have a significant interest in the company and I don’t foresee a break in the strategic alliance between the parties.

Tune Protect Insurance Structure
Tune Protect Corporate Structure – 2016 AR

Conclusion

All in all, I view Tune Protect as an insurance company with immense growth potential. I particularly like the direction the company is going in terms of digitalisation and ease of usage. The company’s partnership with AirAsia puts it in a strong position in the travel insurance industry.

In 2016, Tune Protect added RM540 to my annual dividend income, a 2.92% dividend yield for 2016. The stock is trading at RM1.58 today (22 May 2017), translating to a capital loss of 7.78% for me.

Have you taken a look at this stock? Like it? 

Tune Protect Group – AGM 2017

Tune Protect Group to face ‘Short-term Pains’ in 2017

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Tune Protect AGM Doorgift Tony Fernandes
Tony Fernandes and Kamarudin bin Meranun

The management stated in the AGM today that Tune Protect is quietly optimistic moving forward. They’re expecting to maintain single digit growth for the 2017 financial year.

Towards the end of 2016, the Malaysian Aviation Authority’s new requirement for airlines to provide an “Opt-in” facility for travelers purchasing travel insurance. This has huge negative implications for Tune Protect. However, management has several initiatives planned to offset this. The company is planning to collaborate with AirAsia, leveraging on the airline’s technology and digital platform.

AirAsia, Tune Protect ‘about to announce big tie up’

KUALA LUMPUR (May 22): AirAsia Bhd group chief executive Officer Tan Sri Tony Fernandes said the budget airline and Tune Protect Group Bhd will announce a major collaboration to further grow both companies’ income.

AirAsia is the largest shareholder in insurer Tune Protect with a 13.65% stake as at April 10, 2017. Tune Protect’s units include Tune Insurance Malaysia Bhd and Tune Insurance Labuan Ltd.

“Airasia and Tune Insurance about to announce big tie up. Both incomes will grow. PC (press conference) later.

“I believe Tune will create new markets through digital insurance,”
Fernandes said via Twitter.

The Edge Malaysia

Tune Protect 2017 AGM Doorgift / Goody Bag

I had a mini heart-attack today as I arrived to register for the AGM. They told us they ran out of door gifts again but fortunately more were on the way. I headed in to attend the AGM first after being told there would be enough gifts for everyone after the AGM. The AGM was conducted in GSC’s cinema theater and it was a well-run meeting.

Tune Protect AGM Doorgift
A tote bag that can be worn as a backpack is how I’d describe this.
Tune Protect AGM Doorgift
What was inside: A nice, fluffy round pillow for your travels.
Tune Protect AGM Doorgift
RM10 Secret Recipe Cash Voucher x2

End.

Surprisingly, the AGM today wasn’t filled with dumb questions. The shareholders today were much more sophisticated and involved.

The investor relations team from Tune Protect did a good job handling some rowdy shareholders who weren’t happy because they had to wait a few minutes for their door gifts. Some were even complaining because they wanted bottled waters to bring home.

To the Tune Protect IR team, thank you for a good AGM. And if it is of any consolation, I apologize for the garbage and self-entitled attitudes from some of my fellow shareholders.

Wanted to get a picture with Tony Fernandes but I was rushing to get some errands done. Doubt I’ll be able to during AirAsia’s AGM this coming Thursday (25/5/2017) due to the crowd.

Let me know if you’re attending the AGM this Thursday, we’ve still got 1 more slot in our little carpool squad.

After the AGM ended at around 11.30 am, I headed to Secret Recipe to redeem my RM20 cash vouchers. Had a plate of Stewed Australian Beef and a cup of coffee. Paid an extra 11 bucks for those.

As at 4 pm today, Tune Protect’s share price rose 11% to RM1.57, for a market value of a little over RM1 billion.

Thank you for reading!

Maybank DRP (Dividend Reinvestment Plan)

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What is a DRP (Dividend Reinvestment Plan)?

Completed my second Maybank DRP (Dividend Reinvestment Plan) today. One qualifies for a DRP if you’re a shareholder before the Ex-Dividend date. If you’re unsure of what a DRP is, I’ve written about it previously.

To recap, the things you need to do when applying for a DRP are:

  1. Decide how many shares you’d like to receive in lieu of cash dividends;
  2. Sign and date the Dividend Reinvestment Form (“DRF”);
  3. Fill in your CDS account number in the DRF;
  4. Affix a revenue stamp / setem hasil to the DRF; and
  5. Mail the form

Maybank DRP

So back in October, Maybank offered their shares at RM7.25 per share and I applied for the maximum allotted to me – 68 measly units. Back then, RM7.25 was a 5% discount to the current market price. I would’ve made a profit of RM27.88.

After including the cost of the revenue stamp of RM10 and the stamp to deliver the form of RM0.80, that left me with RM17.08 in savings. I vowed to first sort out the calculations before wasting an hour of my life waiting in line at the post office for RM17.

Maybank DRP Setem Hasil
Malaysia’s Revenue Stamp / Setem Hasil

This time around, Maybank offered their shares at RM8.25 per share.  That’s roughly a 13% discount, considerably higher than the 5% offered the last time. Also, instead of 68 shares previously, I was allotted 84 shares this time around. Which translates to RM90.72 in savings for me (based on the market price of RM9.33 today). So this time, I decided to be a little more detailed / anal about my calculations.:

  • RM90.72 (savings) – RM10 (setem hasil) – RM0.80 (stamp) + RM 10 (estimated brokerage fees)
  • Final savings: RM89.92

PosLaju and Revenue Stamps

RM89.92 was worth my time. Went early to the PosLaju near my work area, arrived at 9.30 am sharp and got my number. I waited for about 5 minutes for my turn, purchased the RM10 Setem Hasil and RM0.80 stamp required for postage. I was done by 9.45 am. Wham, Bam! Thank you, Ma’am.

In my experience, it’s best to head to your local PosLaju as early as possible. Any time after 10 am or during lunch hour and you’d be faced with 1 hour-long queues. If your workplace has an office boy handling your mail, you can also seek his/her help out with this.

Also, you’re only able to get your revenue stamps / setem hasil at PosLaju outlets and from LHDN. I’ve tried enquiring at other more convenient places like Mailboxes etc but unfortunately, they don’t sell revenue stamps.

Maybank Dividend Reinvestment Plan DRP
Pos Laju
Dividend Reinvestment Plan (DRP) Malaysia
Affixed the 80 cents Stamp

Maybank 2017 Dividend

Maybank Dividend
Malayan Banking Berhad

Now, to the numbers. My gross investment in Maybank is RM25,723.21 with an average price of RM8.1197 per share. Notice the dividend totaling RM1,013.76 in value. That’s the first interim dividend Maybank is paying me which gives me a dividend yield so far of 3.94%. Opting for the 84 units in shares, I’ll be receiving the remaining RM316.80 in cash. Traditionally, Maybank’s final dividend payout in October will be slightly higher than their first dividend.

Think on that for a moment. This is Malaysia’s largest bank and I’ll be receiving (if all goes well) 8% in dividends from them. And I’m not even including my capital gain. So to those of you who’ve been asking and comparing my dividends to FDs. This is what I’m talking about. In the long term as the companies I invest in grow from strength to strength, so does my dividends. It may be 1-2% now but they’d be growing every year, some drastically like Maybank’s 8%. However, your FDs will follow the board rate, always hovering at 3-4%.

This 8% yield is possible because I managed to purchase their shares back when everyone was worried because Maybank lent money to 1MDB. With some common sense, you’d realize that the bank’s loan to 1MDB is minuscule and negligible compared to their entire loan portfolio. So why the fuss?

Even now at RM9.33 per share, the yield would be 5-6%. If I had been more diligent in watching Maybank, I’d have been able to snap them up at even lower prices. Learn how to start investing hERE.

End.

With Maybank DRP this time, I’d be adding 84 additional shares to my portfolio at the cost of RM10.80. Managed to save about 90 bucks with this exercise so I’d say it was a morning well spent. I even got to fill my stomach with some delicious prawn mee nearby at Restoran Fong Lie. It’s one of the best prawn mee in town.

Anyone else opted for Maybank’s DRP? Or did most of you take the dividends in cash instead? 

As always thank you for reading!

Prawn Mee Malaysia

Investing in AirAsia – Now Everyone Can Fly

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AirAsia – The Pride of Malaysia

AirAsia Special Dividend

We’ve really got a gem of a company to be proud of right here in Malaysia. AirAsia has been voted World’s Best Low-Cost Airline for 8 years running and the company is dominating the skies with their exceptionally low fares and unmatched talent displayed by the management.

How it all started

Established in 1993, AirAsia was founded first by DRB-Hicom. You’ve all heard the tale of how Tony Fernandes purchased the airline for RM1. Here’s how it happened: On 2 December 2001, the almost bankrupt airline was purchased for a token sum of RM1 WITH RM40 million worth of debts. Within just one year,  Fernandes managed to turn the company around, producing a profit in 2002.

With all sorts of promotional fares, some as low as RM1, AirAsia managed to eat into former monopoly airline MAS. Malaysia Airlines will eventually decline to the point where they delisted from the KLSE. Fast forward to 2008, the company added a whopping 106 new routes to its list of 60. As they say, the rest is history. AirAsia is now an RM10 billion company with huge, HUGE growth potential.

AirAsia Annual Report 2016

Financial highlights

The airline reported an RM6.846 billion revenue and RM2 billion profit after tax in 2016. Shareholders’ equity also increased to RM6.628 billion. The company has also significantly reduced its net debt to just under the RM8 billion mark. This is an immense sum but it is typical in the airline industry.

Another key factor is the airline’s growth in passengers and it’s capacity every single year, maxing out at a total of 26 million passengers and a 30 million capacity in 2016.

AirAsia has one of the most interesting and engaging annual reports out there. Give it a read: AirAsia Annual Report 2016

AirAsia’s Special Dividend?

[UPDATE] 23 February 2017 – RM2.70
AirAsia Tony Fernandes

There has been a frenzy over AirAsia the past few days due to the potential special dividend that will be declared.

Market experts predict the special dividend to range from RM0.50 to RM1.10 per share. The most recent information is that it could be as high as RM1.50 per share. That’s a 50% dividend yield based on the current market price. The one-time special dividend comes from the sale of an 80% stake in Asia Aviation Capital (AAC) which is said to garner a valuation of at least RM3.5 billion.

Want more good news? With my analysis, and excluding this special dividend, AirAsia underlying value is roughly RM2.90 per share. Another food for thought, as of last month, CEO Tony Fernandes and Kamarudin Meranun have both raised their combined stake of 32.3% in the company which was largely funded by loans. I believe they will declare a large amount in the form of special dividends which would enable them to settle the aforementioned loans.

That being said, there are of course the ever hovering external risks associated with airlines ie. jet fuel prices and airport charges. Let’s not forget our weak Ringgit and the competition from MAS and Malindo.

Previously, I sold my AA shares at RM2.95, making a handsome 79% gain in the process.

AirAsia to Establish LCC in China

[UPDATE] 15 May 2017 – RM3.40
AirAsia China JV

AirAsia Bhd has signed a memorandum of understanding (MoU) with China Everbright Group and Henan Government Working Group to establish a low-cost carrier (LCC) in China.

It outlines how the parties will incorporate a joint-venture to be known as AirAsia (China) for the purposes of operating a low-cost aviation business based in Zhengzhou, the capital of Henan province in central China.

In addition, AirAsia (China) will invest in aviation infrastructure, including a dedicated LCC terminal at Zhengzhou airport and an aviation academy to train pilots, crew and engineers, as well as maintenance, repair and overhaul (MRO) facilities to service aircraft.

The MoU was exchanged between AirAsia Group Chief Executive Officer, Tan Sri Tony Fernandes, Everbright Financial Investment Holding Executive Director and President, Wang Weifeng and Henan Airport Group General Manager, Li Weidong at China World Hotel here on Sunday.

The ceremony was witnessed by Prime Minister Datuk Seri Najib Tun Razak who is on a five-day working visit to China.

AirAsia was the first foreign LCC to enter China and has carried more than 40 million guests since its inaugural route to China in April 2005. AirAsia and AirAsia X currently fly to 15 destinations in China and is the largest foreign LCC operating into the country.

(Bernama)

This is huge news for AirAsia and will translate to a big slice of the pie in China’s aviation market for the company if the deal materializes. China has 1.37 billion vs Malaysia’s 30 million. Malaysia is only 2% of China. Think of the possibilities!

With this latest piece of good news, I’m pretty sure the counter will go past the RM3.50 per share mark. Please be aware that the deal has yet to materialize and even if it does, it’ll be a few years before it adds to the company’s bottom line. But again! Think of the possibilities and growth potential AirAsia has. We’ve conquered ASEAN and we’re establishing ourselves and gaining a strong foothold in the world’s most populous nation.

AirAsia is looking to become one of THE long term stocks to hold on to.

AirAsia’s Special Dividends

[UPDATE] 29 August 2019 – RM1.75

Tony Fernandes and gang have so far declared and paid out two rounds of special dividends during my tenure so far as an AirAsia shareholder.

Round 1 – 28 December 2018

The first round was back in December 2018.

The company declared a 40 sen dividend per share and I received a total of RM5,320 in dividend income then.

Round 2 – 29 August 2019

This year, AirAsia again declared 90 sen in dividend per share. Giving me a total of RM11,970.

Total AirAsia Special Dividends

In total, I’ve received RM17,290 in special dividends from the airline.

Total dividends received – RM22,462.00
Gross Investment – RM41,481.37

That’s about 54% of my capital back in my pocket in dividends alone. The average bought price for me, however, is at RM3.1189, today it is at RM1.75. That’s a 43% drop.

End.

In pure numbers, AirAsia is still positive in the Freedom Fund.

Can’t wait to see where the budget airline goes from here. I am especially excited about its role in the logistics industry.

As always, invest at your own risk.

Maybank – Annual Report 2015

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Maybank

Face: Tigress

Photo source: Flickr – John Ragai

Some of you may have noticed my purchase of 1,500 units of Malayan Banking Berhad stocks back in January 2016. I managed to snag the units at a very low price – RM8.30 per share at the time during a brief loss of confidence in Malaysia’s banking industry then. The price of Maybank has since risen to RM9.12 as at 7 April 2016 which translates to a 9.88% unrealized profit for me in 3 months. What’s even more amazing is that at RM9.12, Maybank’s dividend yield is at a cool 5.9% per annum (based on previous dividends), even higher than some of the REITs out there.

Annual Report

Maybank Annual Report 2015

I’ve had Malayan Banking Berhad in my sights for awhile and when the opportunity came this year due to some minor turbulence, I did not hesitate and pounced when the price dropped back in January 2016. Maybank’s annual report came in the mail recently and I’ve uploaded it here for your convenience. I’ve had a brief stint working for Maybank Investment a few years back in the research department. I learnt a lot from them and I’ve been reading their reports every week without fail. I especially like the analysts who cover the airlines industry, develepoers & construction, banking and gaming.

In terms of assets, Maybank is the largest in Malaysia and 4th in ASEAN. I don’t see them catching up to the likes of UOB, OCBC and DBS any time soon though. I’m fine with Maybank being the largest in Malaysia, they are the most recognized and widely used bank in Malaysia, with most government institutions as well as MNCs using their services, for that reason alone the company is worth looking at.

Maybank’s foothold in Indonesia is getting stronger by the year, their branches there outnumber branches in Malaysia. Profits from Indonesia also increases y-o-y. Provided that Maybank is allowed to do business in Indonesia uninterrupted by the government there, I strongly believe Indonesia will be a major cash generator for Maybank. With the huge population there, the banking fees alone will be mind numbing.

Maybank_AR2015

Maybank_AR2015 Maybank_AR2015-Financial_Statements

I will be brief and summarize simply the Annual Report and let you go through it in your own time. Key items to note in regards to Maybank’s 2015 financial performance:

  1. Increased net profit;
  2. Increased deposits from customers;
  3. Increase in net assets; and
  4. Increased shareholder’s equity.

I do believe that the bank did not do as well as expected for the year 2015. I will continue to monitor the quarterly reports as well as compare 2016’s annual report next year.  The other outstanding bank in the country is Public Bank headed by very experienced leaders and managers. Observant readers will notice that I recently added Public Bank to my portfolio – The Freedom Fund. I will be writing on Public Bank in the near future.

For now, thank you all for reading.

Do you own shares in any banks or financial institutions in Malaysia? How do you like them how did they perform in 2015?

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