Teh Hong Piow – Malaysian's Warren Buffett

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Mar 16 2007
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How many times do you see the minority shareholders attending an AGM (Annual General Meeting) of a listed company give a standing ovation to the captain of the ship, especially in Malaysia? Very rare – the latest in Malaysia could be the one held by Public Bank Berhad (KLSE: PBBANK, stock-code 1295) yesterday. Public Bank founder Tan Sri Teh Hong Piow was given a huge standing ovation for a job well done by an estimated 3,000 shareholders who packed the vast ballroom at Shangri-la Hotel Kuala Lumpur.

Instead of confrontational tone set during question and answer session which is a norm with most of the listed companies AGM in Malaysia, Public Bank’s was full of praise, applause and laughter amid a sprinkling of serious queries from shareholders who had scrutinised the accounts of the bank.

The Minority Shareholders Watchdog Group CEO Abdul Wahab Jaafar Sidek, who was full of praise for Public Bank’s management and performance and described the way the AGM was conducted as professional, set the tone for the rest of the meeting. And you can’t blame them for being so tame if you haven’t seen the performance of Public Bank yourself.

After 40 years of uninterrupted profit growth, a shareholder of 1,000 Public Bank shares in 1967 would now be owner of 129,720 Public Bank shares worth a whopping RM1.16mil. Together with RM 391,000 paid out in gross dividends, Teh said the net worth of the 1,000 shares would be RM1.55mil, which represented a compounded annual return of 20% for each of the 39 years. Teh Hong Piow could be the only person who can matches Warren Buffett’s record as far as generating profit to shareholders in Malaysia.

Supposing you’re not so lucky and only able to own Public Bank stocks since the start of 2002 when the shares were worth RM5 each. That would have reaped a return of 122% over the five-year period to date, compared with a 58% rise in the KL Composite Index.

The country’s second largest bank by market capitalisation has ruled out further mergers and acquisitions, telling its shareholders at its AGM yesterday that Public Bank’s focus on expansion lies in tapping new markets, especially abroad where it has a presence. Public Bank said its international focus was to grow its business in Hong Kong and Indochina, as contribution from operations in China was still small.

The group’s Hong Kong operation now comprises 56 branches and it has two branches in Shenzhen, China. Public Bank aims to open between 10 and 15 new branches in Hong Kong and a minimum of five in Cambodia this year. The banking group’s international operations contributed 14% of pre-tax profit last year and that came mainly from Hong Kong and Indo-China.

In response to questions raised by the Minority Shareholders Watchdog Group, Public Bank Bhd said it is targeting to start an Islamic banking subsidiary by the end of the year or early next year (2008). Public Bank expects its Islamic banking and finance business to contribute a higher proportion of its income in future as it expands this business. If only Malaysian’s public listed companies’ captain takes care of all the shareholders’ interest the way Teh Hong Piow did…

# TIP: Investing in Public Bank stock (on stages and on pullback) for long-term as part of your diversification strategy.

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