Latest trip to Penang for company visits

3 April 2016

 

Dear Fellow Investor,

 

We just returned from Penang where we visited 2 companies for possible investment.  Both are promising.

One is PBA which is the licensed water operator servicing Penang for its water needs.

 

PBA is well managed with cash on the balance sheet and is the most efficient water utility in Malaysia based on the water wastage metric.  They are trading at a price to book of only .5 and are undervalued.

 

Penang according to the MD of PBA has never had water rationing or service interruption and that serves the needs of the pharmaceutical and semiconductor industries. Many of these companies have made Penang their base as they cannot suffer water shortages and interruptions. This will result in increased demand for water. 

 

PBA is presently out of favour by most traders and speculators because of a rise in material costs and a hold on a water tariff increase.  Penang, however; has the lowest water tariff in Malaysia so there is room to increase the tariff.

As Penang is growing, the demographics are favourable for PBA.

 

The other company we visited was Inari, a manufacture of smart phone components.  They also have cash on the balance sheet, are well managed with increasing revenues and cash flow.  Money is moving into companies like Inari as sales of smart phones worldwide continue in an upward trend.

 

On the ground research in the Penang malls show the 2 best businesses. One are restaurants and the other are smart phone sellers.  Clothing and consumer outlets are starving for customers.  This is also true in Singapore where we visited a month ago.

 

For 2016 we must follow the smart money. Foreign funds are pouring into Asia. The RM is the strongest world currency for 2016.

 

Smart money is coming to Asia/ Malaysia to escape the low growth economies and negative interest rates in most of Europe and Japan.

 

Singapore is also benefiting from China trade and a shift of capital out of Europe.

 

Invest well and grow your wealth,

 

Bill

 

 

There is gold in Penang. There are undervalued off the radar screen companies and finding them is like treasure hunting. If you have time on your next trip to Penang do visit the new PG gold museum on Lebuh Bishop St. It is open 7 days a week. When you see all the gold that will motivate you to make more money.