When to buy, when to sell - relevance with 冷眼方程式

There is a formula put forward by a renowned investor in Malaysia, cold eye (冷眼) for those who wish to build long-term wealth in share market. The formula is called  冷眼方程式, consisting of 3 elements:

(1) Growth (成长）

(2) Contrarian (反向）

(3) Time (时间）

Undoubtedly, to succeed in share market investment, these 3 elements are indispensable. 

But, how to implement these strategies in practice? Let us get into each element in more detail.

Element 1: Growth (成长）

One must ensure that the business of the company we invested in is growing. As such, puzzles such as BUSINESS. MANAGEMENT and NUMBER that I'd mentioned earlier in my previous post (4 puzzles) should be intact. 

The logic is like this: A company run by a good management team (MANAGEMENT puzzle) could generate more business (BUSINESS puzzle) and bring in more free cash flow (NUMBER puzzle), leading to greater potential of distributing higher dividends to shareholders. As dividend increases, more investors would be interested in buying the shares of the company, hence driving up the share price. Hence, investors would be able to enjoy both the increasing dividend and capital gain. This is how we could build our wealth from the share market in long term.

From my point of view, if one is willing spend time in researching into the business of the company (via financial statements, web info, etc.), he/she should be able to identify the growth potential of the company. Therefore, in terms of implementation, I would think it is less difficult as compared to the other twos.

Element 2: Contrarian (反向）

"Be fearful when peoples are greedy, and be greedy when peoples are fearful." 

This is a very common quote amongst investors. 

I have heard a lot of auntie and uncle saying that when the share price drops, they will just "sapu".. In most cases, they will tell me about their "sapu" story only after the share price goes up to prove that they "sapu" at the correct timing. If they "sapu" and the share price drops further, most of them will just keep quiet, I presume. Some of them might just cut loss.

Not many peoples discuss about the exact implementation of this contrarian (反向）element. In fact, it is hard to implement this psychologically, as our brain is programmed to follow crowd behavior/social norms by natural instinct. So, the key is to act against this instinct, using the second-level thinking. This is not easy, frankly speaking, as you need to be confident on the business prospect on the company you've invested in. That could be the reason why Warren Buffet always advocate the idea of "circle of competence", i.e. investing only on those companies that you're familiar with.

Say you are confident on the business prospect of the company you are interested in. Shall we buy the stock as soon as peoples dump their holdings crazily? We could, from my point of view, if we have a lot of reserved fund to back us up. We could keep on buying at different stages as what those legendary investors (like Warren Buffett) did. However, for an ordinary investor where he/she has limited fund, do you think keep on buying the shares when the share price keeps on falling is a good strategy? How many monies you have to keep on "sapu-ing"?

From my opinion, in order to execute this contrarian (反向）element effectively, we need to look into the last piece of puzzle, i.e. VALUATION. A lot of peoples (including my friends with a PhD degree) just look at the historical share price to make investment decision. For example, they might say the share price has dropped from RM1.0 to RM 0.8 (20% drop), so it is a good time to buy, according to them. The word historical is fine, but NOT historical price definitely. Instead, we should look into historical valuation metric instead, such as historical price-to-earning ratio (PER), historical price-to-book (PB) ratio, historical dividend yield, etc. For example, let say market offers you a ridiculously high price to buy your share. At the offered price, you find that the current PER is way higher than the averaged PER (say 5 years averaged historical data), you should sell. In contrast, if the offered share price is low, and your find that the current PER is way lower than the averaged PER this time (with huge Margin of Safety say > 20%), you should buy. This is the essence of contrarian (反向) element .

In bear market, share price of most companies would drop substantially, regardless of how good is the fundamental aspect of the company. An ordinary investor might run out of fund before the share price hits the bottom, if the investor keeps on buying the shares when the market keeps on selling. Therefore, to implement 反向 effectively, we need an extra tool. This tool is called timing.

Timing on when to buy

From my point of view, we could refer to technical analysis to spot for a good timing for buying. Of course, I should emphasize that technical analysis is only secondary here; fundamental analysis (the FOUR puzzles) should always precede technical analysis before making any investment decision. I noticed that before a stock picks up its uptrend pattern, its share price would normally consolidate at a fairly low level with limited trading volumes (meaning that not many peoples are interested in this stock). When you see the share price finally moves up (with the low trading volume in particular), it could be an indicator that some long-term investors are accumulating the shares slowly in small batches. This could indicate the beginning of an uptrend, according to the legendary investor from Germany, André Bartholomew Kostolany. At this stage, if you think that the business of the company is still intact, and the traded price is way below your calculated intrinsic value (say with margin of safety MOS > 20%), this is a strong buying signal, from my opinion. GPMMA (i.e. fast moving averaged lines are above those slow ones) and the "Higher Low + Higher High" pattern (see below) are some strong technical indicators for an uptrending share price.

In other words, buy when the valuation is cheap & the share price has finished its consolidation stage and begins its uptrend. This would reduce the opportunity cost substantially.

Timing on when to sell

As a contrarian, how to sell a stock? Shall we sell the stock right after the stock price moves up crazily? Again, the VALUATION puzzle plays a key role again. We could sell the stock if it is selling at a price way above our calculated intrinsic value (say negative MOS). Or, we could sell certain portions of your shares to take back your original capital, leaving only the free shares with you. Leaving only the free shares would calm you down if the share price reverses its uptrend and plummets thereafter. This is quite straightforward to execute.

My common dilemma is: What if the stock price rises sharply to a level where it is still below our calculated intrinsic value? Some value investors might choose to hold, as there is no reason for a value investor to sell the share of a good company at a cheap price, right? However, recall that the intrinsic value is just based on our personal judgement and approximation. In other words, it is subjective (different peoples would come up with different intrinsic values of a company). So, if the share price is about to reach the calculated intrinsic value (say MOS of < 5%), and if your holding on this company is excessive (say > 20% of your portfolio), you might trim some of your holdings to bring down the weightage of the company shareholding (to say 10-15% of your entire portfolio). 

To execute selling, again, we could adopt some of the methods from technical analysis. I noticed that when the spike of share price is accompanied with BIG trading volume, we should at least get ready (mentally) to sell, if you are running out of reserved fund/wishing to trim your holdings. When the share price hardly goes up anymore regardless of the BIG trading volume, then we could start to sell some of our holdings. Also, the "Lower High + Lower Low" pattern as below:

is a strong indicator that the share price is downtrending. When the share price is off its first peak and its second peak is lower than its first peak, you might also consider to sell some shares to preserve more cash (if your reserved fund is limited or the share price has exceeded the intrinsic value).

Selling is harder to be executed, as compared to buying. This is normal. Nobody could sell at the highest price. Most experienced investors would sell their holding in batches when the share price is moving up, as long as they think the price is right.

Element 3: Time (时间）

The third element sounds simple. However, from my opinion, this is the most difficult element to master. A lot of people would start to lose patience when the share price hardly goes up after a few months. If you tell them to buy an undervalued company and ask them to hold the company share for another 3-4 years to see potential good returns, they might not interested to talk to you anymore, I guess :-) This embarrassing situation happened to me all the time. That's the main reason why I have decided NOT to talk about value investing in front of my friends/colleagues anymore. I believe most serious value investors would have the same feeling as mine, i.e. being lonely :-).

To master this element, we must really treat buying stocks like "owning the business", and should appreciate the fact that business needs time to grow. We must get rid of the "trader mindset (buy today, sell tomorrow)", in other words. My wife once said: "We should treat ourselves as a consumer (rather than a trader) after buying the stock". You might read the books authored by those renowned investors (such as those books written by 冷眼 and KC Chong) and listen to the interview of Warren Buffett to learn their investment philosophies, which I think their philosophies would help you to strengthen the belief that a company would move back towards its fair value in long term (the so-called "reversion to the mean"). To master this third element, you must train yourselves to be more persevering.

Sometimes, while you are waiting for a company to grow/return to its fair value, some bad things might happen on the company you invested in. If I think that those "bad things" would affect the long-term business prospect of the company, I will choose to sell even at a loss (a very hard decision) to preserve my capital. This happened to me several times (DANCO, TAKAFUL). 

Conclusion

Like in many kungfu movie, to master a kungfu, we need both elements: 外功 + 内功。

冷眼方程式 is a powerful (proven) kungfu to build wealth in share market. This powerful kungfu consists of 外功 + 内功 as well, i.e.

冷眼方程式:

外功 = Growth (成长）+  Contrarian (反向）

内功 = Time (时间）

Have you mastered both 外功 and 内功 of this kungfu?

My investment return in 2025

Year 2025 is definitely not a good year for me. 

I wish to summarize my thoughts and made some self-reflections on my investment journey this year.

HLFG

This is the largest holding in my portfolio (33%). Since Sept 2024, the share price has been downtrending from its peak at RM 20+ to RM 15+. My paper profit changes from +6 figure to -6 figure. During that time, I keep on holding the share as it is still below my calculated intrinsic value of RM 23+ (based on averaged PER). 

I dig further on the company to see if it is doing something wrong. After performing my research, there are a few factors that could contribute to its depressed share performance:

(1) Low dividend (around 2%++ per annum) in FY2024.

(2) Low liquidity.

(3) Heavy exposure to Bank of Chengdu (BoCD). Profit of BoCD is 30% of total profit of HLBANK, which is quite risky if BoCD's financial performance drops. China economy is weakening in 2024-2025 (US-China tariff war, property slowdown, etc.)

(4) Conglomerate discount applicable to holding company like HLFG. Well, this is the first time I heard about this in 2025.

Lesson: I should have sold some HLFG share to reduce my holding to say < 20% so that my portfolio is more balanced.

Thankfully, in FY2025, HLFG declared a big dividend (RM 0.72/share in FY2025 vs RM0.54/share in FY 2024), double digit growth yoy. This has stimulated the buying interest from the market (at least EPF is accumulating). At the end of calendar year 2025, its share price is positive yoy (~ 4-5%). 

I have taken this opportunity to reduce my holding of HLFG (around RM 19.0-RM19.2). My holding is reduced from 33% to 25% of my entire portfolio. 

ABLEGLOB

This company is now focusing on milk industry. In Malaysia, their more famous brand is "tarik-tarik" (a fish head noodle hawker is using this brand). I saw SC neighbourhood market is selling this brand as well. Of course, this brand is relatively small compared to other big brands like F&N. That could be the reason why the ABLEGLOB management decided to sell their milk products mainly to overseas, such as Mexico.

In early 2025, their executive chairman and CEO have been remanded by MACC. The share price dropped substantially. Market (including myself) has lost faith on the Management. I have no choice but to sell all my ABLEGLOB stakes at a lost (loss of RM30k++). This has affected the performance of my portfolio tremendously.

AEONCR

This company is my second largest holding after HLFG. Indeed, its share price skyrocketed to RM 7++ in June 2024. I choose to hold (instead of trimming my holding) as I believe it should worth more based on its current earning per share and fair PER value (based on 5 year averaged PE).

But, something unexpected happened thereafter. AEONCR made a lot of impairment loss (write-off as well) on its loan book (younger generation is unable to pay back the loan). Its share price plummeted to the lowest level at RM 4.8++ in 2025. 

Lesson: I should have trimmed my holdings when the share price skyrocketed with big volume, regardless of the share price is still below its intrinsic value (A well-respected investment guru in Bursa taught me this). He told me that when share price rises with big volume, big boys will likely take this opportunity to sell their shares (based on his experience, for reference only ya).

YSPSAH

This is another sad story. The share price skyrocketed to RM3++ after it reported a good quarter earning in Q1 FY2024 around May 2024. I bought more shares of this counter, without checking the reasons why its quarter earning is so good.

The following quarters saw a substantial drop in quarter earnings. Why?? In fact, its quarter earning is dependent heavily on the unrealized forex gain/loss (as overseas sales is almost 30% of its total sales). When USD is strengthening against MYR, it reported unrealized forex gain, which makes the accounting profit looking awesome in Q1 FY2024 (this is just accounting profit, not real cash in).

YSPSAH share price plummeted when USD weakened against MYR (when Fed reduces interest rate), as the reported quarter earning was looking ugly.

Lesson: Instead focusing on reported earning, I should focus on core earning instead. For example, if it reported unrealized forex gain of RM A, I should calculate the core earning as: Core earning = Reported Earning - A. This would tell me the real profit from the core business of the company. If I know this earlier, I should have sold my shares after it released its Q1 FY2024 report.

Anyway, I choose to hold this counter as its core profit is still intact. Plus, the company has invested on a new production line which is expected to start operating in early 2026. Its dividend yield is not bad either (> 5%).

TAKAFUL

I made a loss in this counter as I read from some reports saying that expansion of SST scope (JULY 2025 onwards) could affect the profitability of Banca insurance. I read somewhere saying that it is hard to pass the cost to customers. As TAKAFUL Malaysia focused a lot of Banca insurance, I worry that its profitability would be negatively impacted. I have decided to sell my shares.

DANCO

Originally, I made a handsome paper profit on this counter (based on technical analysis GPMMA + fundamental analysis based on averaged PER + good dividend yield). However, I choose not to sell as it is still below my calculated intrinsic value. What happened next? Well....

The share price drops as its business segments hardly grow. For example, its metal stamping business (serving HVAC customers) is unable to grow. From what I know, Panasonic (one of its customers) is doing bad (competition from china). Its trading segment (core segment) on pump/valve bought from overseas such as Europe is doing better and commands a higher margin. However, this company relies heavily on M&A to expand its business (bought businesses such as pump manufacturing, EV charging station, metal stamping), which I do not prefer to see unless there is a synergy between the business segments. The bought businesses hardly grow.

One thing I noticed during the AGM. The MD hardly speak anything when I ask him questions. His brother, and the CFO did most of the talking.

In 2025, its business experienced a double digit drop yoy. I sold my shares at a loss. I am so sorry to my sister as I have recommended this company to her.

Question: Could trading business on pumps/valves could secure a sustainable competitive advantage (moat)?

AJI

I started to buy in AJI around Sept 2025 as its operation in the new plant (Bandar Enstek) started to gain momentum. If it could retain the momentum, it should worth more than the current share price.

SCIENTX

I started to buy in SCIENTX after it reported its Q1 earning in 17 Dec 2025. Its affordable housing segment is strong, which has compensated the weakness in its plastic film business. Hopefully its plastic film segment would continue to shine again. I do not dare to buy in a lot as I am still monitoring the company performance.

Summary

Overall, I could grow +2.89% only of my portfolio this year. This is truly below my initial target (> 10% yearly), but above my expectation as I was anticipating a loss initially. Thankfully, the share price rally of HLFG during the year end (window dressing?? MYR strengthening??) has helped a lot.

Hopefully 2026 is a good year for me.

Is HLBANK/HLFG Really That Giam Siap?

 

I always like to ask my friends which bank stocks they would buy in Malaysia. Most of the time, the answers are the same: Maybank, Public Bank, CIMB, or RHB.

Then I ask, “Eh, how about Hong Leong Bank (HLBANK)?” Straight away, the comments come:

• Aiya, the boss too giam siap lah (means stingy in Hokkien dialect).
• Wah, price so high somemore — around RM19+. One biji (1 biji = 100 shares) already nearly RM1,900 leh! (typical retail mindset).

So I push further: “Then would you consider Hong Leong Financial Group (HLFG)?”

They just laugh and say: “HLFG? Even more giam siap than HLBANK!”

I believe most retail investors share the same mindset as my friends à HLBANK and HLFG are never on their list of investment choices. The typical reasons? Low dividend payout ratio and low dividend yield.

For retail investors (and even some fund managers), the priority is securing a steady, high-dividend income stream. That’s why when it comes to banking stocks, they naturally prefer banks with higher dividend yields, while bank asset quality often becomes a secondary concern.

 

But has anyone stopped to wonder why HLBANK/HLFG pays out relatively lower dividends compared to other banks? Is it really because the boss is stingy and doesn’t want to share profits with minority shareholders as my friends like to claim? If that’s true, then why does the very same boss, who controls HLBANK/HLFG, allow such high dividends in other of his/her companies like Hong Leong Industries (HLIND)? For reference, HLIND’s dividend payout was above 56 % since FY 2020 (reaching 87% in FY2024, including the special dividend).

 

To understand why HLBANK gives a relatively low dividend, perhaps it is good to look at a key capital ratio in banking industry, i.e. the CET-1 ratio, defined as:

 

CET-1 ratio = CET-1 capital / Risk-Weighted Assets (RWA)

 

Simply put, a higher CET-1 ratio means the bank has a stronger capital buffer and better ability to withstand an economic crisis. Retained earnings form part of CET-1 capital, and these are calculated after deducting dividends from net profit.

 

Now, what about Risk-Weighted Assets (RWA)? In simple terms, they represent the loans disbursed to customers, adjusted for their riskiness. Since lending always carries the risk of default, banks must hold sufficient capital against these loans.

 

In Malaysia, banks are required by BNM to maintain a minimum CET-1 ratio of 7.0% (4.5% minimum + 2.5% Capital Conservation Buffer). Put another way, a higher CET-1 ratio means the bank has more cushion, either by keeping more capital on hand or by controlling the size of its RWA (lending less).

 

Good news: All Malaysia banks are well above the regulatory requirement of BNM as shown in Table 1 below. Our banks are indeed well capitalized.

 

But how exactly does dividend payout tie in with the CET-1 ratio? Well, BNM requires banks to maintain at least 7%. If a bank is currently sitting at, say, 15% (almost double the requirement), it means the bank can afford to pay out more dividends. Of course, that reduces retained earnings → lowers CET-1 capital → and brings down the CET-1 ratio. But even then, the ratio would still be comfortably above BNM’s minimum, right?

 

Let us have a look in the CET-1 ratio on several banks in Malaysia (extracted from their 2024/2025 Annual Report) shown in Table 1 below:

Table 1: Key metrics for Malaysian banks (2024/2025)

RHB Bank has the highest CET-1 ratio and hence it could afford to declare a dividend payout of 60%, which is amazing. Meanwhile, Alliance Bank has the lowest CET-1 ratio, which could be attributed to the double-digit loan growth of 12% in 2024. Still, it declared a dividend payout of 40%, which is quite impressive. However, to preserve the CET-1 ratio at a comfortable level, Alliance Bank would need additional capital. This may be the reason why the Bank recently offered a rights issue to its shareholders.

 

How about Hong Leong Bank (HLBANK)? Its loan growth looks solid at 7.3% in FY2024, and yet its bad loans (GIL ratio) are among the lowest in the industry. The only catch is its CET-1 ratio — at 13.3%, which is slightly below the bigger banks.

 

Why lower? Mainly because HLBANK grew loans faster (which increases RWA) than its larger peers, plus it injected capital into its associate, i.e., Bank of Chengdu (BoCD) in China (note: HLBANK holds 17.8% stake in BoCD). To keep its CET-1 ratio at a relatively comfortable level, the bank has to retain more earnings, rather than paying more dividends from the net profit. That’s why its dividend payout is only around 33%, much lower than its peers.

 

The good news is, under the new Basel rules, the capital ratios of certain banks are expected to look stronger, and HLBANK’s management has hinted they may raise dividend payout closer to peers in the future. The new Basel rules would concentrate on the calculation of RWA, as the Basel Committee highlighted a worrying degree of variability in banks’ calculation of their RWA. The new Basel framework aims to restore credibility in those calculations by constraining banks’ use of internal risk models à some internal risk models give banks the most freedom to estimate their credit risk of RWA, often yielding a much lower risk (hence CET-1 ratio rises) than the regulator’s standard model. Hence, some banks that rely heavily on “internal models” to calculate their credit risk may see changes to their capital ratios once the new rules kick in, and that could affect their future dividends payout.

 

How about Hong Leong Financial Group (HLFG)? HLFG is essentially a holding company — it owns shares in Hong Leong Bank (HLBANK), Hong Leong Capital (HLCAP), and HLA Holdings (insurance arm). Naturally, its dividend payout depends on what it receives from these subsidiaries.

Table 2: Total dividends contributed by HLFG subsidiaries in FY 2024 (in RM)

Looking at FY2024 (see Table 2), HLFG declared total dividends of about RM620 million, which means it distributed almost 65% of the dividends it received to shareholders. The tricky part is HLA Holdings, which is unlisted, so its dividend contribution isn’t publicly available. But if we assume HLA Holdings paid out 50% of its FY2024 profit after tax (RM511m) as dividends to HLFG, then the effective payout to HLFG shareholders still comes up to around 51% of total dividends received from its subsidiaries.

 

So, is HLFG really “giam siap” and unwilling to share profits with minority shareholders?

Honestly, it depends on how you look at it. Some investors might only consider HLFG generous if it paid out 100% of what it receives. But in practice, retaining part of the earnings/dividends gives the group more flexibility to reinvest, support subsidiaries, and preserve capital buffers.

DKSH proposed privatization at RM6.15 - Fair deal?

 

Again, another low-profile company in Bursa Malaysia, DKSH Malaysia Berhad, is looking for delisting.

 

The major shareholder, DKSH Holding Ltd. via its subsidiary DKSH Resources (Malaysia) Sdn. Bhd. plans to privatize the company at RM6.15 per share, via the Share Capital Reduction (SCR).

 

When I received this privatization deal from the DKSH’s largest shareholder, frankly speaking, I have mixed feelings about this news.

I am happy because I could liquidate my DKSH stocks. Meanwhile....

I am sad because I might not be able to enjoy the subsequent growth phase of DKSH, after DKSH reported very strong Q3-2025 quarter earnings.

 

A very minor shareholder like me, of course, has no bargaining power about the plan. After all, my stake portion in DKSH is simply too insignificant to have any major impact on the ultimate decision made during the upcoming EGM. However, the 2^nd largest shareholder of DKSH, i.e., Pangolin Asia Fund, could have some bargaining power on this privatization offer.

 

Pangolin Asia Fund holds about 4.3 million DKSH shares, representing about 2.71% of total DKSH shares issued (~158 million shares). The largest shareholder DKSH Resources (Malaysia) Sdn. Bhd., the one that intends to privatize DKSH at RM 6.15/share, holds ~117 million shares. In other words, Pangolin holds 10.6% of total minority shares, which is more than enough to vote against the privatization offer via SCR. Note that SCR exercises to take a company private require high thresholds (often ≥75% approval and ≤10% rejection among minorities).

 

Recently, Pangolin has openly rejected the offer (Source: https://www.enanyang.my/news/20251213/Finance/1101091). In short, if Pangolin votes against the offer during EGM, story ends and privatization fails. And, DKSH share price might fall to the pre-offer level, around RM 5.2+.

 

A pain for minor shareholder, isn't it?

 

Now, let us look into the reason why Pangolin Asia Fund rejects the offer.

Well, it is all about valuation. Pangolin argued that the offer price does not reflect the full potential of DKSH Malaysia (which I agree totally). Pangolin believes that in 10 years’ time, DKSH might trade at around 15x PER, as the company is growing and might attract more liquidity to the stock. Let us delve into the earning power of DKSH (see below), which is impressive as both revenue and profit are growing since year 2020, thanks to their operational efficiency and market expansion effort (consistently securing new clients in both the consumer & healthcare sectors).

 

Now, back to the opinion of Pangolin that DKSH could trade at 15x in 10 years’ time. For me, frankly speaking, the chance is rather slim. DKSH is a good company all this while, but why not many peoples bother to even look at it? Well, I think the main reason is the low liquidity of the stock (low-profile company), and the company is not operating in “sexy” themes like AI, data centre and stuffs like that. Other small fund managers would not dare to buy in as it could be hard for them to exit later. Plus, the dividend is not that high (at least at the current moment) that can attract those dividend-seekers to buy the stock.

 

Of course, I am not denying that DKSH should trade at higher PE multiple. It should. That’s the reason why I am accumulating the stocks since 2022. However, coming to the reality of market perception, it is quite challenging for DKSH to enjoy a fair PE multiple (at least the same as its peers in F&B and healthcare industries) considering all the constraints I mentioned above, isn’t it? The same story goes to another favourite stock of mine, HLFG.

 

In fact, the story of DKSH privatization via SCR is quite alike to the privatization deal of Selangor Properties Berhad (SPB) in 2018. During that time, again, the same (and vocal) minor shareholder Pangolin Asia Fund rejected the first offer in public (Source: https://theedgemalaysia.com/article/dissenting-voices-selangor-properties-privatisation-offer). What happened next? Let us look at the timeline below:

 

Oct 2018: Offer Price RM5.70 (rejected by Pangolin in public)

Dec 2018: Offer Price revised to RM 6.00

Jan 2019: Offer Price revised to RM 6.30 (accepted during EGM in Feb 2019)

 

Could the same price revision of SPB happen to DKSH?

Well, I am not sure though. It could, if the offeror (DKSH Resources Malaysia Sdn. Bhd.) is very desperate to delist the company. If not, they might just abandon their plan and life moves on.

 

For me, personally, the offer price is very close to my calculated intrinsic value of the company, based on the current earning level of DKSH. Of course, if DKSH’s business growth persists, it should worth more than the current offer price of RM 6.15. But who could read the future?

 

To minimize the risk, I sell a minor portion of my stake in DKSH. The remaining portion of my stake, hopefully, could be sold at a higher price if the take-over price is revised (hopefully).

Making good return in share market requires good education background?

 Most of my colleagues are PhD holders.

I am not exaggerating. Indeed, they are PhD holders from reputable universities in Australia, UK, Japan and Singapore. I am a PhD holder too. But, due to certain reasons, I do not have the luxury to graduate from overseas. We share a common interest though, i.e. share market.

We often talk about the companies that we invested in during lunch hour. Due to the illiquid market condition in Bursa Malaysia, most of my colleagues chose to invest in the US market, which is rather common during the time of writing (hopefully it would change in the near future). Well, I am not saying that US market is not worth for investment at all; however, as soon as I know the counters my colleagues have invested, I am puzzled, and wordless.

For them, the primary reason to invest in the US market is liquidity. Fast in fast out, that's the key. As long as the counter is liquid and if it fits the hot investment themes to date (i.e., AI, data center, clean energy, etc.), they would go for it, regardless of valuation. For example, they would invest their money in those companies at a high double-digit PE ratio (or even triple digit) just because of the company has painted a beautiful picture that fits the current hot investment themes. Reading the financial statements of the company & find out the intrinsic value of the company?? Well, no need, according to them.

So far, they have made quite a good money though, by following their strategy. Some of them could make a handsome profit of almost 20%-30% within just a few months time. 

In 2025, I start to wonder whether my existing investment strategy, i.e. buy a good company below its intrinsic value and hold until the share price exceeds its intrinsic value, is working. The value of my portfolio shrinks by around 10%, partly due to the fact that a blue-chip company that I've invested heavily has been experiencing a sharp drop in share price (with no fundamental reason). Another reason is another company of mine, a F&B company, where one of the key management team members had been remanded by MACC, causing its share price to plunge. I have lost 5 digits on that counter alone as I have decided to sell the shares at a lost (lost faith to the company). 

So, at the first glance, my colleagues who'd graduated from those renowned universities, have indeed outperformed me in terms of investment return in 2025. Getting a profit of 20% - 30% is just a piece of cake, according to them. 

I started to reflect on the counters that I've invested in. Fundamentally, they are intact. Their core profits are growing, and there are no reasons for me to sell them, according to my investment standard. I talked to an investment guru in Bursa, who has made a 8-digit wealth from the share market after 20 years. I am quite relief that even an experienced investor like him is making a loss in 2025. We share a common investment philosophy though, i.e. never chase hot thematic counters at unreasonable price. Therefore, I guess my underperformance in 2025 is mainly due to the nature of my counters, where none of them are related to those hot themes such as construction, data center, solar energy, and AI.

 

Some stories:

Sir Isaac Newton, a renowned scientist, had lost money in the stock market by getting caught in the 1720 South Sea Bubble, giving in to greed and FOMO (Fear of Missing Out) after making early profits; he sold, then bought back in at the peak, only to see the speculative stock collapse, losing significant wealth due to emotional trading rather than sound analysis.

Warren Buffet, a legendary investor from the US, once said during his interview at Georgetown University: "Share investment does not need high IQ. If you have IQ of 160, sell 30 to others, you do not need it. Temperament is more important than intellect for investors".

 

I decided to stick to my existing investment strategy. It is painful to see the plunging value of my portfolio. Who loves it, right? But, I know my strategy would work, in long term....... Investment is a long journey and patience is the key to survive in the market. At the time of writing on Dec 2025, my portfolio turns green finally at around 1%. It is not up to my expectation yet, however, I believe it will.

So, does making good return in share market require good education background? Well, the investment story of Sir Isaac Newton has told us the answer, isn't it?

 

Ringgit is getting stronger vs. USD in 2025 – Impact on YSPSAH

 

Not many peoples are aware of this pharmaceutical company that manufactures generic drugs, i.e., YSPSAH that was established in Malaysia since 1987. It is a Taiwanese pharmaceutical company based in Bangi, Selangor. The company was listed in KLSE since 2004.

From the annual report 2024 of YSPSAH, the overseas revenue consists of almost 30% of the total revenue reported. Indeed, the weightage of overseas sales is quite heavy as compared to its competitors. I think it is part of the strategy of the management team, as they are aware that Malaysian market is relatively small as compared to other ASEAN countries and the local market is dominated by bigger players such as DPHARMA and AHEALTH.

 

But why this company grasps my attention? Firstly, it is cheap, not in price though, but in terms of valuation. Secondly, the traded share price on 19 Dec 2025 is discounted at almost 28% from its book value. Thirdly, strong operating and free cash flows, allowing the company to pay consistent dividend. At the time of writing, the traded share price is RM2.09, which translates to RM0.11/RM2.09 = 5.3% dividend yield.

 

The historical share price of YSPSAH (up to 19 Dec 2025) is shown below:

Figure 1: Historical share price of YSPSAH

Why is its share price plunging since June 2024? Well, I believe it is due to the cutting of interest rate in the US, thus weakening the USD against other currencies. From June 2024 to Dec 2025 (time of writing), USD has weakened against MYR from RM4.7/USD to RM 4.08/USD. See below:

 

Figure 2: USD to MYR rate

 

As an export-based pharmaceutical company like YSPSAH, foreign exchange loss is inevitable in the current condition. The foreign exchange loss would appear in the income statement (e.g. in Other Expenses), decreasing the reported bottom line (profit attributed to shareholder). The historical reported profit attributed to shareholder of YSPSAH looks like this:

Figure 3: Reported profits of YSPSAH

 

As seen from Figure 3 above, the reported profits experienced a more apparent fluctuation since 2016. However, do note that the reported profit has included non-cash item such as unrealized foreign exchange (forex) loss. As it is a non-cash item, it should be added back to the reported earning in Figure 3 to come out with the “core profit” of the company, which can provide a clearer, more consistent picture of a company's ongoing, primary business health. The historical core profit (after adding/deducting the forex loss/gain, respectively, with the reported profit) is shown below:

Figure 4: Core profits (after including the effect of unrealized forex gain/loss) of YSPSAH

 

As shown in Figure 4, the core profit is trending upwards generally, except during the Covid lock-down period. So, based on Figure 4, I believe that the core business of YSPSAH is still growing.

 

So, now we know the business of YSPSAH is still doing fine. The next question is its valuation. Can we accumulate the shares?

 

Following the approach of HLIB in valuing DKSH, the fair PE ratio (PER) based on core earnings per share (core EPS) is used. The historical PER based on core EPS, or the core PER, is shown in Figure 5 (last sub-figure at the bottom). 

Figure 5: Selection of core PER values

Averaging Process: Use of 5-year average PER to estimate the fair PER of a company

Many investors, including my respected investment guru (cold eye) advocated the use of 5-year average PER (some used median value) as the method to estimate the fair PER of a company. It is one of the relative valuation methods which is quite helpful. However, in 2024 (and even 2025), the share price of YSPSAH is depressed (due to low reported earnings, see Figures 1 & 3) regardless of the strengthening of its core profit (Figure 2). Hence, the core PER value of YSPSAH in 2024 is relatively low, which might not reflect the true valuation of the company. On the  other hand, in 2021, the core PER is very high as the company reported very weak earnings during the Covid period. 

Therefore, instead of taking the core PER directly from the most recent 5-years  (as what most peoples did) for the averaging process, the PER values used to perform the averaging must be selected carefully to get the fair PER of a company, from my point of view. My modified criterion is below:

To get the averaged core PER of a company, the core PER values should be obtained only from those years where both reported and core earnings are trending upward year on year. This is to make sure there is a close valuation alignment between the market perception (mainly based on reported EPS) and the core business operation (based on core EPS).

The core PER values that satisfy the above criterion is highlighted in the red box shown in Figure 5, obtained from years 2013, 2015, 2018 and 2022. Averaging the core PER values from these years, the mean and median values are around 12.35 and 11.94, respectively. One may set the fair core PER of YSPSAH at 11.94 (on the conservative side).

 

The reported core EPS in year 2024 is RM 0.25. Based on the closing price as of 19 Dec 2025 (RM 2.09), the core PER is currently at 8.36 merely, a very undemanding valuation. The margin of safety [MOS = (11.94-8.36)/8.36] is around 43%!!

 

Is it a safe bet? 

In terms of valuation, it is very attractive obviously. However, as long as USD stays weak against MYR, I believe the market would not favour YSPSAH, although the core profit is strong. Nevertheless, this might be a good opportunity for any value investors out there to accumulate the shares of a good company at a cheap price, isn’t it? As value investors, our role is to merely monitor its core earning and ensure it stays resilient.

AEONCR - Q3-FY2026 result is getting better?

 

AEONCR has just released its Q3-FY2026 report. Indeed, it is an encouraging set of financial result as compared to its Q1 and Q2 results reported earlier. Earlier, the Management has insisted that the 2^nd half of FY2026 would be better in terms of financial performance.

As quoted from source: https://theedgemalaysia.com/node/767216

Maeda said stricter underwriting is already yielding results, with early signs of improved repayment collections. However, the consumer financier's near-term earnings are expected to remain under pressure due to elevated credit costs.

"Q2 (second quarter) is still challenging, but from Q3 and Q4 our performance will be better," he told The Edge after the signing ceremony between AEON Credit and its sister company AEON Co (M) Bhd on Tuesday to establish a joint venture (JV) entity.

Indeed, it happened. The year-to-date (YTD), or 9M-FY2026 net profit is ~RM242M, vs RM 240M reported in 9M-FY2025, a marginal increase of < 1%.

Figure 1: Quarter result Q3-FY2026 of AEONCR

 

AEONCR was once a darling for many investors before Covid. It has recorded uninterrupted net profit growth from 2011-2019, see Figure 2 below:

 

Figure 2: Historical net profit of AEONCR

 

However, after Covid, the net profit seems a bit bumpy, which I believe it is due to two reasons:

    (1) Huge impairment loss and write-off. Since FY2024, AEONCR has been very aggressive in expanding its loan book as shown in Figure 3. This can be witnessed from the relatively high growth of its gross financing receivable during that period. Unfortunately, the write-off is stubbornly high as well (see Figure 4 below). Since Q1-FY2024, the percentage of write-off on financing receivable is above 1.2% of total gross receivable consistently. According to the Management, the high write-off is coming from youths (< 25 years) and low-income customer category. Thankfully, there is a sign of down trending of the percentage recently.

 

Figure 3: Quarter gross financing receivable (in billion) of Aeon Credit

 

Figure 4: Historical percentage of write-off from the gross financing receivable of Aeon Credit

      (2) Loss from Aeon Bank. Since Q4-FY2024, the loss of Aeon Bank (associate of Aeon Credit where it holds 50% of stake in Aeon Bank) has been included in the income statement of AEONCR. A lot of peoples argued that this is the main reason dragging the net profit of AEONCR. However, if we look at the quarterly loss of Aeon Bank contributed to AEONCR, it hovers between RM 12 million – RM 22 million. On the other hand, the quarterly write-off declared is ranging between RM170 million – RM 200 million. Therefore, I strongly believe that the recent underperformance of Aeon Credit is mainly due to the huge quarterly write-off. Nevertheless, AEON Credit also indicated that AEON Bank is unlikely to achieve profitability before FY2029, in line with a previous guidance stating it projected losses to peak in FY2026, ease in FY2027 and break even in FY2028. (Source: https://theedgemalaysia.com/node/761238)

Hopefully, AEONCR could report better profit thereafter.

 

How AEONCR safeguard its asset quality?

Firstly, from the quarterly presentation Q3-FY2026 of AEONCR, the financing volumes coming from (a) Easy Payment and (b) Personal Financing segments have declined QoQ. But fear not, it is the strategic shift of AEONCR toward higher-quality asset portfolio acquisition, focusing on customers with good credit scores. So, I guess the youth (<25 years) and low-income groups that have been causing huge impairment loss/write-off mentioned earlier are mainly coming from the Easy Payment and Personal Financing business segments. The Management has started to get more prudent in lending in these two segments, in other words.

 

Figure 5: Performance of various business segments of AEONCR

 

Secondly, it seems that the collection performance has improved since July 2025. This would help reducing the impairment loss/write-off in the future.

 

Figure 6: Collection ratio of AEONCR

 

Valuation?

Again, I am using the 5-years averaged PER to derive the fair PER value of AEONCR. However, instead of taking the PER values from the most recent 5 years directly, I only pick the PER value of the year that the reported profit has experienced year-on-year growth. The most recent 5 years that fit to my criterion are 2018-2019, and 2022-2024. Based on these 5 PER values, the mean and median values are computed and it is found that they are quite similar, i.e. ~ 9.6.

 

As on 22 Dec 2025, the share price is around RM5.65. Considering the rolling 4Q EPS of RM0.73, the current PER is 7.74. The Margin of Safety (MOS) is around 24%. If the business of AEONCR is improving, I believe it would deserve a higher PER. Then, the Davis Double Play effect would emerge, pushing the share price to a higher level.

 

One thing to take note. The upcoming quarter result Q4-FY2026 could be weaker than that of Q4-FY2025 as the latter has booked in a relatively huge write-back of 88 million (vs 50 million in Q3-FY2026). If it occurs, the share price might dip again as short-sighted investors might lock in profit/cut loss. Long-term investors may accumulate the share at a cheaper price then.

 

Figure 7: Historical PER and net profit of AEONCR