Investment and Portfolio Management in Relationship with Society!!!

Does Investment and Portfolio Management have a relationship with the society?

From my point of view, this subject is in direct relation with the society for its betterment. Now the question arises is How & what benefits does an individual can get from this subject?

To investigate this question there is need to understand the core values of this subject? It primarily relates to Investing and managing investments.

Investment is to put money into something to earn profit which is associated with risk.

Money should not be put idol, it should be invested somewhere either in business, or in the shape of stock, bonds etc. The prime focus of this subject is to put some light on the Investment banking, which adds to society primarily by providing valuable intermediation services. They actually linked individuals within the society and provided them capital to those who need it. This particular system allows people to invest their money directly or indirectly and along with that helps companies, government and individual to raise funds by bond selling, security sales and issuing of IPO. Investments in stocks are meant to be direct investments, individuals invest directly whereas indirect investments are in Mutual funds where asset management companies provide and develop different portfolios and manage them for their investors. This facilitates and encourages those people who are Risk inverse.

I have a strong feeling that investment is one of the rare subjects that one individual person as a whole  or as a part of an organization can be of  immense value in increasing the wealth of an individual or the wealth of corporation or an organization in which you may be associated with.

Economies those wants growing financial status requires the services of an Investment consultants or more specifically Investment bankers which play a vital role to boost the economy of the commercial sections of the society. In other words, they create more opportunities for both the employed and unemployed individuals to raise capital and make a profit. Both can invest in stock or bond or contact an asset manager who can guide him and he could earn dividend or capital gain as a plus to their regular income. Investment bankers are an essential part of any society and make society more efficient. They provide money for businesses to grow through debt and equity capital markets.

My personal experience regarding investment i want to mention here. In July 2011, an IPO of a company was issued at PKR. 25. At that time, one of my friends was doing internship in a brokerage firm. Implementing the in-depth knowledge of this subject along with the guidance from his seniors carefully analyzed the company and come up with the results that this company could be a blue chip for future. So he purchased 20,000 shares by invested PKR 5, 00,000. With the passage of time the price of the share kept on increasing and reached the highest level of PKR 80 per share.  Again using the analysis and technical aspects of the stock market, he concluded that now it’s time to get out of the market, and he sold all the shares getting a capital gain of PKR 16, 00,000.  Earning this many amounts in short period of 10 months is not an easy task. If he had not invested that money than probability is that he might have the same amount of money saved i.e. PKR 5,00,000 and in a country with inflation in double figures most probably his buying power could have been dropped down.

From the above real life example, come up with result that how he utilized his knowledge and increased his wealth. Although he had studied this particular subject but it doesn’t mean that people who don’t have this knowledge cannot benefit from it. Investment consultants are there to help the individual of the society to generate income. So what we concluded is that Investment & Portfolio Management provides an open plat form to everyone, even people with low level of incomes, job holders, students, and retired individuals can also become a shareholder of a company. It provides opportunities to the every individual of the society. People can secure their future by investing in retirement plans. It creates employment, profit generating opportunities, business, healthy returns, development of economy and all this leads to development of Society.

“What is necessary to change a person is to change his awareness of himself.”

Engro Foods 20012 Results Overview

In 2011 Engro Foods aimed to raise Capital of PKR. 675 million through Initial Public Offering (IPO) of 27 million shares, which were offered to the general public at PKR. 25 per share included PKR 15 per share premium. Capital worth PKR 1. 2 billion was already been generated through sale of 48 million shares to Private investors. The company earned PKR 171 million profit after tax in 2010.

Engro Corporation started business in food industry in 2006 and within a small time frame of Five year, it became a major player in the food industry of Pakistan. 70 million shares of or in other words 93.58% of  Engro Foods paid-up capital is owned by Engro Corporation while remaining 48 million or 6. 42% are owned by private investors. Currently, Engro Foods is engaged in the business of dairy, juices and nectars, ice cream, dairy farms and rice processing.

Engro Foods has also made some investment outside Pakistan by acquiring a Halal food chain. As its first venture EFOODS acquired Al Safa - the oldest Halal meat brand in North America in May this year. During the first quarter, Al Safa brand sales were Canadian $ 2.5 million and loss after tax was Canadian $ 313 thousand. These losses are directly consolidated in Engro corporation financial statements and are not included in the financial performance of Engro Foods.

At the time of IPO different analyst gave different point of views but which I like the most was  An equity portfolio manager at one of the largest asset management companies in Pakistan said

“Engro Foods is a long term growth story, It is definitely worth having in our portfolio and given that it is a small offering, I think this is the time to buy it.”

Engro Foods has raised the highest amount of Rs1.88 billion in the past three financial years through offering new shares. Currently its share price is PKR 67.

Yesterday July 7^th, 2012 EFOODS announced its 1HCY12 results where its Net profit after Tax (NPAT) stood at PkR1, 018mn against Net profit after Tax (NPAT) of PkR217mn in 1HCY11, depicting an EPS of 1.65 as against EPS of 0.29 an increase of 4.7%YoY.

Highlights for 1HCY12 result include:

i)                   Revenue increased by 40%YoY in 2QCY12 reaching PkR10,099mn against PkR7,221mn in 2QCY11 analyst strongly believe that this rapid growth is due to strong volumetric growth in the dairy segment.

ii)                Gross margin increased by 3.1pptsYoY in 1HCY12, keep in view this rise is most likely due to the variations in price like the increase of PKR 10/liter in Olpers and Tarang milk.

iii)              Other income showed a rapid increased of 294%YoY in 1HCY12 to PkR172mn likely due to a better cash position.

iv)              Financial charges decreased by 16%YoY in 1HCY11 to PkR441mn.

Children need your PRESENCE more than your PRESENTS.

I have a 17-year-old brother. It's interesting to observe a boy come of age, to changeover to maturity in these crazy times. I am anxious about his future and that if I don't equip him well, if I don't turn a boy into a smart person, he will not prevail in this fast-changing world.

He surprised me yesterday when we were having a chat in the evening. He'd seen that one day I might be talking about health, security and physical strength. And another day I would talk about what an asset and a liability is how financial markets work. And the other day advising him about his future prospects.

"I want be a Billionaire," my brother said to me, staring at a shiny black BMW standing next to our door. "But I don't know where to begin."

I was just surprised about the words coming out of his mouth. But politely I said you begin as you just did: By stating what you wanted, and most of all, by believing in yourself that you can do it. Being clear in your mind about money, how it works, and how to get it."

It just seems like such a big thing to achieve. My pocket money is just Rs.3000- 5000 for a month, depending on your mood, which hardly meets my personal expenses. In a country where inflation is in double figures, unemployment at its highest level unending problem of electricity, big time risk for business.

I said, "A journey of a thousand miles begins with a single step.'"

"What do you mean?" He looked surprised.

I said, "It's one of the biggest success secrets out there. It's what I call 'making molehills out of mountains.'"

"Don't you mean 'making mountains out of molehills'?" he said.

"No. That is something which every person does. I want you to do something out of the box. A mountain is a lot harder to conquer than a molehill. So what I want you to do is break up that mountain into many molehills. And if you're disciplined and patient all your molehills will weigh as much as a mountain. You'll just wake up one day and you'll be a Billionaire.

He took out his cell phone and opened the calculator application. I smiled as I figured out what he was doing.

"But bro... that would take me 16,667 years of saving my monthly pocket money to get a Billion rupees. And that's without me spending any of it."

"You get that monthly for doing your chores. In other words, you work for money. It's like I'm your employer."

"Yeah, and when I'm an adult I'll have more money to save."

"Yes, but when you're an adult the things get more expensive, it's not about just saving money. It's about the fact that you're working for money. You need money to work for you; you need to control the time and money of other people to make that Billion before you're too old to enjoy it."

"So don't be scared of going after what you want, because you can do it if you see things right. Don't back away.

“To the person who does not know where he wants to go there is no favorable wind.”

"That's right." Saying this we left out for prayers.

I know we're all busy with our own thoughts in these times, even we are becoming a frustrated nation with lots of social, ethical, psychological curse in our society, But I plead you to consider the challenges your kids, your younger’s face daily as well. They represent YOU; they are our future. We are all children of The Revolution, but this is their time now. Don't squander it.  They need your presence a lot more than your presents.