The Basic Rule for Investors is Caveat Emptor

There was a letter in the press recently about the use of EPF funds to buy unit trusts and how some poor retiree lost quite a bit as he probably got convinced by some slick saleman.

Investing directly in the stock market is no less risky as seen in the IPO of one reliable and apparently low-risk company namely Ranhill Utilities Bhd, the company that owns and operates the water supply in Johor.
This company went public in June 2002 with the usual platitude of giving the public and consumers the opportunity to own part of the utility giant.

Within seventeen months of the public listing, Ranhill Bhd made a partial General Offer to acquire 70% of the company via a share swap without a cash alternative.
This is where the Securities Commission failed to protect minority shareholders when a cash alternative is not offered and simple investors have to consider offers at dubious valuations.

Meanwhile analysts still recommend a buy on this stock that has made good profits but still not paid a single sen in dividends since it went public in June 2002.

Shareholders of Ranhill Utilities will be pleased to hear that the company produced another set of good results last year.
Perhaps you should write to the directors that instead of giving themselves another fat bonus, they should consider declaring a maiden dividend of at least 5sen.

Even with a company with good income streams, you can lose much of your capital and receive no dividends. Compared to other utility companies, Ranhill Utilities can be considered a nightmare investment.