Friday, April 1, 2011

March Portfolio Stable but 12% down YTD

 I am looking at my portfolio and wondering, " it's down 10 percent?!"

Although the broader stock market has recovered to pre-Fukushima levels, my portfolio has stayed submerged mainly due to C&O Pharma and Etika International. The antibiotics maker has shed close to 10 cents off its share price since Sumitomo bought a 30 percent stake. This could be that the Japanese had overpaid for the acquisition.

For Etika, my explanation for its decline has been the rapid increase in raw material prices. EPS for the first quarter of its financial year is around RM 0.8 cents. Annualise it and it works out to be RM 3.2, which is about 8 times smaller than the EPS for the financial year 2010 of RM 24 cents.

There are some bright spots. Biosensors has managed to surge recently despite having a placement. However, you have got to be careful and gauge the growth possibilities of the company. This is perhaps the n-th time that the company is raising cash from the market. I am not sure if their product is going to dominate the geographical market that it intends to penetrate, but it is burning cash for sure.

The nuclear crisis in Japan does not look like reaching a conclusion soon. But the worse for the rest of the world has been avoided. Now, we have to wait and see how the Japanese government is going to deal with the run off into the ocean, that is affecting the sea food. The impact on the stock market as a result of limited sea food is limited.

The outlook ahead looks brighter than the previous review. I am guessing that April will be a positive month and there should be no surprises that can cause the market to tumble.

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