Appreciate if you could repost my link instead of copy and paste the whole paragraph at other pages as I'm trying to make a living from blogging too! I need the traffic to get some pocket money from the ads by Nuffnang or else I will be starve til death and unable to share my views in here anymore! Thanks!!!
For 2014, I'm a quite skeptical about consumer stocks. Why?
Living Cost
1st I would like to share here is about rising living cost.
2nd I would like to share is about rising living cost too.
On the last working day of 2013, I went to tapao my favorite Meat floss bread as my breakfast and paid RM2.50 for it. After paying it, the uncle show me a very Pai Seh (shy) face telling me that the price of his "product" rise by RM0.20 each. I'm not angry as I do understand that its not his fault as all the cost of the ingredient had rose. What to do?
This gonna be a big pain to us in 2014!
Salary Increment?
Dear Boss, hope that you are reading my blog now. Hope that I can have some increment, I swear I'm going to double up my sales as much as my increment. XD..
It is certain that the 1st and 2nd issue above will come true and had already came true as now is already 7th January 2014, but did the 3rd issue came true for you?
Let's assume that your boss had given you increment and just like what being wrote on the newspaper, the average pay raise for this year is 6%. Hence, you were getting RM3,000 for the past year and now you will be taking home RM3,180. Let's ignore all those deduction like Socso or EPF, by making RM3,180 as take home amount.
Spending Power
After the pay rise, do we still have the same spending power as before?
Would like to use the details above as an example.
In 2013, I'm still getting salary of RM3,000 while the Nasi Lemak Ayam at that time was still RM5.
As a result, I'm afford to buy 600 plates of Nasi Lemak Ayam. Of course I'm not crazy, the example is just to show you my purchasing power.
Using that bread as an example.
In 2013, RM3,000 can buy 1,200 of that meat floss bread but after both of the increment in year 2014, I can now spend RM3,180 to buy 1,1778 pieces of bread. Now I can buy lesser bread. OK OK! I know, it's time for me to diet. (Spending power drop by 1.83%)
Using that Nasi Lemak as another example
In 2013, I'm able to purchase 600 plates but in 2014, my mamak friend (Don't ask me who, there are not much mamak stall around Wangsa Maju and Genting Klang) told me that he need to raise the price as the minimum wages were increased to RM900. As a result, the Nasi Lemak Ayam is now RM5.50
With my latest salary, I can only afford for 578 plates of Nasi Lemak Ayam instead of 600. (Spending power drop by 3.67%)
It's obvious that my spending power had gone DOWN!!!
Is the price of the goods rose by 10% only ???
According to Saves Money.com.my, our electricity rose by 11-29%++. Please don't tell me that your electricity bill is below RM77 and you are not affected. You will still get affected as the mamak stall or Warung will definitely have their bill above RM77, the ice factory will definitely have more than that. As a result, they gonna pass on the cost to you as they gonna maintain their profit margin. Who will be that kind to bear the pain for you? Wake up from your sweet dreams!
BELAJARLAH!!! This is CHAIN EFFECT!!!
Other than the electricity, there are petrol, diesel and sugar while toll and assessment rate is on their way too!
As we have lower spending power, what can we do?
SAVE MONEY LO!
But how to save??? I've been eating 5 slices of bread as my dinner so now I cut it down to 3 slices only? Ok, that can make me slim and healthier and won't get high cholestrol as well as diabetes. (Sorry Gardenia, I need to save money la..)
I've been drinking 2 cups of coffee per day (It can be OLDTOWN white coffee, or Ah huat White coffee or Kopi Tongkat Ali which both from POWERROOT or maybe Nescafe by NESTLE)
On the other hand, I will cut down the condense milk also (I'm sorry dutch lady, the govt wants me to be healthy)
Carlsberg? Anchor? Tiger? Budweiser? Heineken? Sorry la! No money la!
As I'm healthier now, I won't need to eat supplements anymore so I can save some money also (Sorry Zhulian, Hai-O as well as Amway!) Since I'm more healthier now, I can say good bye to medicine! (Sorry Hovid, CCMDbio)
Not sure will smoker smoke lesser as the price of ciggarettes had increased drastically. Maybe they might change to Gudang Garam. Haha...
LOWER REVENUE
As a result of lesser buying, the revenue streams of these companies will come down for sure!
Higher Cost
As we know, these companies need electricity for production as electricity bill had gone up, this will help to increase their cost!
On the other hand, Hike in petrol and diesel and sooner or later the toll price hike will bring up the transportation cost!
How bout the minimum wages? Bangla also needs to eat la!
Price Hike!
To maintain the margin, the company has no choice but to rose the price of the product. So now the cycle had turned sour. We gonna buy even lesser. So how could it make more profit than in 2013? Please be aware that this had yet to include the effect of GST!
Lower Profit???
Does that mean the share price will come down?
This is a million dollar question. Will it or will it not come down?
Appreciate if you could repost my link instead of copy and paste the whole paragraph at other pages as I'm trying to make a living from blogging too! I need the traffic to get some pocket money from the ads by Nuffnang or else I will be starve til death and unable to share my views in here anymore! Thanks!!!
As we can see from my "grandmother" story above, obviously the company will have lower revenue and higher cost which will brings down the profit. Fundamentally speaking, the price of the stock will be relatively expensive as the P/E will be higher for consumer stocks if their price remain.
For an example, (just as an example ok, this doesn't mean a buy or sell call, pls find ur remisier for more info)
Powerroot is now trading at RM2.04 where the EPS is 12.2883 cents and 16.6 time for the P/E.
As the issues I mentioned above comes in where their earnings come down by 10% where the EPS will be 11.05497 cents. As the price of Power Root remains, hence the P/E gonna be 18.45 time! Is it expensive?
How bout the dividends? Gonna come down? Will the fund managers still buy into it? Will the fundamental player still buys it? Maybe they will sell some? OR how??? What will the analyst do when the profit fall short from their expectation? Sell call?? Hold??
Well, I've no answer for those questions above, maybe U can try to consult some analyst or your remisier.
I think it's quite clear that why am I quite skeptical for consumer stocks. Anyway, I can be right only for the earning parts while the share price part is really unpredictable as Mr Market can be very irrational sometime!
On the other hand, the Singapore and Australia market had gone up before the implementation of GST. Will we follow? Not sure, but I guess they don't have such a price hike before the GST implementation.
That's all for Part 1 and will be sharing part 2 with some property stocks and something I can think of. These all are just 2 cents from me, please don't sue me for bringing u to holland or earn lesser.
Disclaimer: The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions
No comments:
Post a Comment