Introduction: The Complete Dividend Investing Guide That Works by K C ChongAuthor: kcchongnz  When we buy a stock, we are investing in part of a business. The business must make good money and grow. We will be rewarded with dividends which increase year after year and capital appreciation over the long term, better than other alternative investments. I started dabbling in the stock market a long time ago soon after I started work in 1980. The above mindset had not evolved until much later. My earlier years dabbling in the stock market were speculating and gambling activities. Been there, done that. Anyway, it is better late than never to do investing in a proper and a correct way. Most individual stock market participants lost money. We used to hear this 7:2:1 formula which states that out of 10 stock market participants, 7 have lost money, 2 broke even and only one made money. Recently I was surprised to read an article on research by a Nobel Prize winner in economics, Robert Shiller which mentioned that 93% of individuals who dabbled in the stock market lost money. Think about it, it may not be a surprise as most are speculators in the stock market. In my circle of friends and classmates in high school and university, golf mates, many of them are highly intelligent and smart people and had dabbled in the stock market. I have hardly heard of anyone who had made money, except for very few of them. Speculation is a zero-sum game, how can an individual beats the institutional investors, the syndicates, and the big-time market manipulators with huge financial and computing power? It is a no-brainer. However, it has been shown that the stock markets around the world, with dividends reinvested, returned a compounded annual rate of about 10% over the long term. That has been much better than putting money in banks. Any investor would be able to earn satisfactory return over the long term if he invests wisely. How could you be one of them? That is the motivation of this book. It provides comprehensive guidance on how to search for good dividend stocks to invest in. This book introduces the dividend investing strategy. This is suitable for investors who require regular income and those hoping to obtain a higher return than the broad market in the long-term. It is a safe investing strategy with less risk which gives investors a peace of mind. There is substantial empirical evidence to show that high dividend yield stocks provided attractive total return in the US and around the world, and with lower risks. More importantly, if the dividends were reinvested, over a period of 100 years, it had produced nearly 85 times the wealth generated by the same portfolio relying solely on capital gains. Several research has also shown that if the high dividend yield is combined with low pay-out ratio, or with a low price to earnings ratio, or low price to book value, it produced much better return than just based on high dividend yield alone. Research also shows that the high dividend yield investing strategy outperform other value investing strategies. The strategy is not only simply investing in the highest dividend yield stocks. The high dividend must be sustainable. High dividend is only sustainable if it meets various criteria such as continued growth in revenue and income, low pay-out ratio, high return on equity, healthy balance sheet, and the business must produce free cash flows. More importantly, stocks must be purchased with reasonable or better still, low price. With all these criteria, the strategy would produce the highest total expected return. My personal experience has shown that. Readers will be guided step-by-step with plenty of examples of stocks listed in Bursa on how to compute those important performance and valuation metrics and use them to evaluate if a high dividend yield stock is worth investing, or if it is a value trap. This will assist investors in maximizing returns from this dividend investing strategy. The effective use of stock screener is introduced to scout for a wide range of high dividend stocks meeting various criteria to invest in, not only in Bursa, but other regional markets with better opportunities such as Singapore, Hong Kong, the US, and other parts of the world. A list of stocks using this dividend investing strategy was obtained from Bursa and Singapore Stock Exchange from screening and shared in this book. Each stock was discussed at length on the reasons why it represents good investment candidate, and why it was omitted. Investors would find some good dividend stock ideas with potential good return in the long-term and avoid investing in dividend traps. If you are interested to have passive regular and higher income and building your long-term wealth in a safe manner with peace of mind, be the first to get hold of an autographed copy of the book shipped to your house or office in the link below. https://shopee.com.my/product/243958840/19444486281/ Please remember to claim the free shop vouchers as shown in the link above when order. Alternately you may email me at the email address below with your details below, My email address: ckc13invest@gmail.com Your Name: Your Email address: Your Physical Address: Postcode Number of copies required: Your Phone number: (required by courier service) Please pay the cost of RM69.90 for the book to my Hong Leong Bank account below, Hong Leong Bank Saving account name: Chong Kaw Choi Account no. 31650134679 Please capture a shot of the payment slip and email to me as well. This book may worth hundreds of times for the small price you pay for it. For those who have placed the orders, I am pleased to inform that they will be couriered to your address in about a week’s time free of postage charge for all Malaysian addresses. For overseas purchasers, the appropriate postage cost is applied. Best regards, KC Chong What Is Value Investing? kcchongnzAuthor: kcchongnz In my last article on A serious problem with the steel related industries in Bursa, there were a few comments as below. Posted by qqq3333 Value investing? what is that? Posted by qqq3333 losing money on low PE? that is what kcchong the value investor is a specialist. I wonder how many retail investors in the stock market know what value investing is. My hunch is that when asked, the reply, if any, would be buying cheap stocks – those that are trading at low price to earnings, just like what the above fellow said. I am not surprised that he even thinks that value investing as buying low-priced stocks selling for a few cents. If this kind of thinking comes out from an accountant (He said he was an accounting, not I say), what do you expect what the public think about what value investing is? But what he said is far from truth in the perspective of a true value investor. Charlie Munger, who has influenced Buffet in purchase of Coca Cola and other seemingly high price acquisitions mentioned it out clearly. “All intelligent investing is value investing- acquiring more that you are paying for. You must value the business in order to value the stock.”
Munger explained further, “You’re looking for a mispriced gamble. That’s what investing is. And you have to know enough to know whether the gamble is mispriced. That’s value investing.” So, value investing is intelligent investing. Value investing is about looking for a mispriced gamble, getting more than you are paying for. It is not just about buying cheap stocks. You must know about the business and hence the value the business. It is still a gamble, not a riskless endeavour, but by knowing the business and its value, the probability of winning is higher. What did Buffett say about value investing? In his 1992 letter to Berkshire Hathaway shareholders, Warren Buffett wrote… “We think the very term ‘value investing’ is redundant. What is ‘investing’ if it is not the act of seeking value at least sufficient to justify the amount paid? Consciously paying more for a stock than its calculated value – in the hope that it can soon be sold for a still-higher price – should be labelled speculation (which is neither illegal, immoral nor – in our view – financially fattening).” “Whether appropriate or not, the term ‘value investing’ is widely used. Typically, it connotes the purchase of stocks having attributes such as a low ratio of price to book value, a low price-earnings ratio, or a high dividend yield. Unfortunately, such characteristics, even if they appear in combination, are far from determinative as to whether an investor is indeed buying something for what it is worth and is therefore truly operating on the principle of obtaining value in his investments.” “Correspondingly, opposite characteristics – a high ratio of price to book value, a high price-earnings ratio, and a low dividend yield – are in no way inconsistent with a ‘value’ purchase.” What Buffett means is an investment should logically be done by acquiring something which has a value more than the price paid. Whereas buying a stock at high price and hope for its price to rise further is not investing at all but speculating. Buffett also emphasizes that buying a stock at low P/E, low P/B, high dividend yield, or a combination of those metrics may or may not truly getting the value for the price paid. Many great investors focus on buying stocks of quality companies with high growth potential. That is also a form of value investing as the future growth in earnings and cash flows are part of their present values. Warren Buffet used to say, “Growth and value investing are joined at the hip” Joel Greenblatt, a billionaire fund manager, and university professor of the Magic Formula fame, and the author of the book, “The little book that beats the market” mentioned this below, “The secret to investing is to figure out the value of something – and then pay a lot less.”
So, value investing is the processes of value the something you buy and pay a price a lot less than the estimated value to that thing. Qualitatively, the process of value investing can be looking into and evaluating value, quality, or growth stock. However, this is what another famous hedge fund manager says, “A high-quality asset can constitute a good or bad buy, and a low-quality asset can constitute a good or bad buy. The tendency to mistake objective merit for investment opportunity, and the failure to distinguish between good assets and good buys, get most investors in trouble.”
It implies even if you buy a quality and high growth asset, but if you overpay for it, you can lose a lot of money too, and vice versa. That is what value investing is all about; that you must carry out the assessment of the value of something and pay a lot less than it. In another words, invest with a high margin of safety. Do value investors lose money in the stock market now? Well, if a value investor looks at his portfolio from the beginning of this year, most likely there is a decrease of the value. If not, he will be very lucky. But does it mean he has lost money as this guy said? Posted by qqq3333 > 8 hours ago | Report Abuse ks......... there is definitely enough shares for people to lose money. ...and that includes enough shares for kc chong to lose money Not for me. I have been a value investor from about 15 years ago, not very long. There have been a few years when the value of my portfolio declined, just like this year, in double-digits. However, value investors buy good companies at good price, and they don’t sell a good company because of it has gone down in price, just because others get panic do. Over the last 13 years during which I have proper record, the compounded annual return is still managed to be in double-digits. No, I don’t lose money as a value investor. I wish I had become a value investor much earlier than 15 years ago. Anyway, it is not too late than never. But I do know speculators and gamblers in the stock market, 93% lost money, many of them all their money, just like the one being commented below by someone who knows him well. Posted by ks55 > 8 hours ago | Report Abuse qqq, What has happened to your 100k capital? All gone by now? Don’t get too disheartened. My portfolio declined many times more than your 100k capital, in just the last 7 months. Speculators and gamblers buy shares at high price because they are hot and hope to sell to the next greater fool in days, and sometimes even on the same day. So, in a continuous downtrend market, how not to lose money? That is the big difference between a true value investor and a speculator or gambler in the stock market. A serious problem with the steel related industries in BursaAuthor: kcchongnz The steel related industries in Bursa
There have been numerous and persistent promotions of steel related stocks in this i3investor public forums. The theme is steel related companies are trading at ridiculous low valuation. Most of them trade at low valuation. Some of them with PE ratio of less than 2! Are there big fat frogs jumping around Bursa? The manufacturing and distributions of steel products in Malaysian can be classified into 2 product groups:
With the pickup of commodity prices in 2021, the iron and steel industry had a bumper harvest year too. Steel Rebar price hit a high close to CNY6,000 per ton in October 2021. As a result, steel related companies made huge profits for the year. Investors expected this augured well for the iron and steel companies. If one reads public forums such as the i3investor, you will find plenty of promotions on the steel related companies, touting the cheapness of steel stocks selling at low single-digit price-to-earnings ratio. But why are those companies selling so cheap? Firstly, steel is a commodity with cyclical prices. There is a close correlation between the performance of the sector and the commodity prices. The earnings reported in the most recent year are a function of where they are in the cycle. Investors must look at the earnings over a cycle to determine if the price is low, and not based on the upcycle when earnings are at their peaks. That is misleading. Next, we must closely examine what the earnings, the “E” in the price-to-earnings ratio, is made up of. It is something of real cash which the company can use to pay dividends, reduce bank borrowings, to invest in other profitable ventures? Or is it just an accounting number, something like gain in the inventories of steel due to the sharp rise of steel price, but cannot be converted to cash? Yes, we should focus on free cash flows. Is there really cash that the company earns through the conversion of accounting earnings to cash, like the company sells a lot of steel products and customers eventually pay all in cash? Most steel companies had big jump in profits for year 2021, and most paid very good dividends, with some stocks having dividend yield of high single-digit, or even in double digit percentage. Did the company pay the dividends with any cash received from the core operations? Otherwise, a company, even though making good accounting profit, has to find cash somewhere to pay those dividends. Let us examine further. Let’s start with AYS, the most touted steel stock in the public forum such as the i3investor forum. AYS Ventures Berhad More interestingly, with earnings per share of 26 sen and book value per share of 94 sen for year ending 31 March 2022, it is trading at a ridiculous low price of less than 2 times earnings, and about half its book value. Any value investor, or even speculators would be attracted to the stock. But why hasn’t the share price gone up to match its “value”? Table 2 below shows some information on the financial statements of AYS.
The outcome of the above is there was a net outflow of RM157.3 million in cash for 2022. Although AYS earned 26 sen per share for 2022, it had to cough out 40 sen per share in cash to keep the business running. So, how could the company manage to pay out 4 sen per share in dividend. From additional borrowings, obviously. As a result, the net debt of AYS increased by 49% from RM276 million to RM411 million in the year. Its total borrowings had exceeded its total equity now. The combination of persistent negative free cash flows every year, and an unhealthy balance sheet make AYS a risky investment, and hence its extreme and persistent low valuation. Let’s look at another steel related company which also has been touted heavily in public forum, Leon Fuat Berhad. Leon Fuat Berhad LeonFB also distributed a total 4 sen in dividends for financial year ending 31 December 2021. At a price of 57 sen on 30 June 2022, the dividend yield is also very high at 7.0% with a pay-out ratio of just less than 10%. With earnings per share of 41 sen, at a share price of 57 sen, it is also trading at a ridiculous low price of 1.4 times earnings. Why?
In 2021, LeonFB had net income of RM136 million. There was an increase of RM169 million in inventories. There was also an exceptional capital expenses for the year of RM66 million. Hence, there was a net outflow of RM155.1 million in cash for 2021. Although LeonFB earned 41 sen per share for 2021, it had to cough out 47 sen per share in cash to keep the business running. Like AYS, LeonFB paid out 4 sen per share, or RM13.64 million in dividend, all from additional borrowings. As a result, the net debt of LeonFB increased by 58% from RM248 million to RM393 million. Over the last 5 years, even though LeonFB made a total of RM293 million in accounting earnings, there was a total net outflow of cash of RM221 million. The earnings and free cash flows of LeonFB also diverge in completely opposite direction. Other steel related companies The situation is similar for most other steel related companies, Ann Joo, CSC Steel, Hiaptek, Prestar, Tashin, Melawar. With the huge increase in earnings in the last twelve months, it exaggerated the revenue and earnings growth of all the companies. With the spike in earnings, they paid very high dividends too, resulting in high dividend yields, some DYs were even in double digits. However, all the above companies had negative FCF for the last twelve months due to spike in inventories and capital expenses, and the high dividends were paid out from increased borrowings or new share issues, none form cash flows from operations. There was no exception. Cumulatively over the last 5 years, all the companies above had net outflows of cash, except for Ann Joo and CSC Steel. But none had enough FCF to pay the dividends distributed. As a result of negative FCF and high dividend payment, the net borrowings of almost all steel related companies increased steadily over the years. The only steel company originally in the list of dividend stocks which has a net cash position is CSC Steel. All steel related companies are trading at single-digit PE ratio, some even at less than 2 such as AYS, Leon Fuat, Hiaptek, and Prestar. Are these steel stocks undervalued? I don’t think so. They are cheap for good reasons. The main reason is the lack of free cash flows, the lifeblood of a business. With persistent negative free cash flows, companies will not be able to do well, some may even go bankrupt, and you lose everything. So, be very careful about the persistent touting of stocks in public forums. Learn about the fundamentals of investing. Be good at it. Then you can do your own homework and able to separate the wheat from the chaff. There is no short cut to become rich in the stock market. If you are keen to learn about the fundamentals of investing to build long-term wealth in the stock market, you may contact me through the following email, ckcbookorder@gmail.com KCChong   NEL7989 Price of iron and steel has dropped significantly and will continue to drop as demand in China is slow at the moment. Some companies have high inventories due to forward buying when the price were rising (purchases were made around March-April) in anticipation of higher price of steel in months to come - this never materialize of course. Some are currently off loading it at a loss. It also impacted some building material companies. We will see the impact in next quarter reporting. 22/07/2022 10:00 PM  firehawk Thanks for the posting .......... seemed that their capex in 2021 /22 were very high ... they think years coming would be good for their product? 23/07/2022 7:57 AM scweehan Thank you for your writeup. I too lost on the steel counters, buying into the hype of low PE. 23/07/2022 8:44 AM CharlesT Learn how to catch cyclical stocks such as steels, oil n gas, plantation etc Timing is everything. Buy at low n buy more when prices started to climb n sell phase by phase along the uptrend. Of course talk cock (buy low sell high or sell high buy low) is easy. In real life it's not as simple as that. But one golden rule when u see lots of sifus or seafood started to give sky high TPs with essays long calculations then it's time to...... 23/07/2022 11:32 AM CharlesT After Glove Saga it seems to me the goreng cycle (plantation n refineries) becomes shorter n faster. 23/07/2022 11:35 AM PureBULL ... WE R IN AN ENDLESS FIN EXAM Players capable of spotting the topic or theme.play will be the national top scorers. There r 2 to 4 cycles p.a. of BIG money on KLSE. In this 1st half of 2022, there were 3. all of them, ev.metal, palm oil n oil refinery themes were GG bcos: their weekly prices, C ; C < ema18 = purebear C < ema42 = big purebear = could take long long time to be played by Mr Mkt again. at best could REBOUND. PLAY WHAT MR MKT WANTS TO PLAY UP Nobody knows what Mr Mkt wants to play yet in the 2nd half of 2022. Am just too early to guess GLOVE as TG is showing high daily vol consistently. it could not be TECH or what not! When Mr Mkt shows the THEME, it will be outstanding n majestic,,, always,, we will follow u, Mr Mkt,, NB: Each theme.play enter at right.timing has potential profit of 40 to 80%. tis the way to CAGR. nobody losses by taking a profit, advised by sir templeton. 23/07/2022 11:46 AM PureBULL ... WHO DO U FOLLOW IN STOCKS? wallstreet pro said; there is only 1 warren B + Charlie M in the entire world BUT there r many g Soros. It just prompt us that g Soros has the invincible model: G SOROS - "Economic history is a never-ending series of episodes based on falsehood and lies, not truths. It represents the path to big money. The object is to recognize the TREND whose premise is false, ride that trend, and step OFF before it is discredited" G Soros is an uptrend purebull follower n is advising us to focus on the big money. Jim Rogers - "Figure out the money and you’ll figure out what’s going on." Jim Rogers is asking us where is the big money in charts n to find them ourselves. 23/07/2022 11:57 AM  Tobby Steel hard to say! Cannot just lump sum together! Vietnam and Indonesia are booming! So those steel providers for this markets are thriving! those mainly focus on China will die! 23/07/2022 12:12 PM BLee A very good write up and very easy to understand the effects of unsold stocks valuation. I hope the next write up will be on palm oil and crude oil refinery stocks. A recent report on palm oil storage fully filled up all available storage in our neighboring country could be a big concern for future palm oil prices. It is the same for crude oil refineries, the refineries with bigger storage capacity will have bigger profit margin when crude oil price increases. It is vice versa if the prices drop. It will not be accurate for crack spread calculation if based on another neighboring country due to its massive storage capacity. Happy Trading and TradeAtYourOwnRisk 23/07/2022 1:32 PM kcchongnz qqq3333 to cut a long story short, steel is not a popular theme at the moment, every thing else is just rationalisation and justifications because investors didn't make money. .........losing money on low PE? that is what kcchong the value investor is a specialist. Losing money in low PE? Which stock? Jaks at RM1.50? Sendai at RM1.40? I have written numerous article about your dynamite investing, margin financing on those two stocks. Anybody can google them in i3investor. Or was it London Biscuits at RM2+? KNM at RM1+? Alcom at RM1.20+?, AYS at 90 sen+? Or Subur tiasa at RM2.50? Or was it your English is so bloody poor that when I say North and you go the opposite direction to South? 23/07/2022 9:44 PM kcchongnz Posted by BLee > 18 hours ago | Report Abuse A very good write up and very easy to understand the effects of unsold stocks valuation. I hope the next write up will be on palm oil and crude oil refinery stocks. A recent report on palm oil storage fully filled up all available storage in our neighboring country could be a big concern for future palm oil prices. It is the same for crude oil refineries, the refineries with bigger storage capacity will have bigger profit margin when crude oil price increases. It is vice versa if the prices drop. It will not be accurate for crack spread calculation if based on another neighboring country due to its massive storage capacity. Happy Trading and TradeAtYourOwnRisk Palm oil is different from the steel. You can't simply open up new land and plant palm oil like open up new factories to produce steel. You can't plant palm oil in China. The industry is cyclic though. If you look at the financials of palm oil company, ignoring company like TDM and Subur Tiasa, most of them have positive cash flows from operations much higher than their net income every year. They have free cash flows 70% of the time in all those years. Most steel company overall can't even have positive cash flows from operation most of the years, not to mention about free cash flows. 24/07/2022 9:37 AM kcchongnz CharlesT Learn how to catch cyclical stocks such as steels, oil n gas, plantation etc Timing is everything. Buy at low n buy more when prices started to climb n sell phase by phase along the uptrend. Of course talk cock (buy low sell high or sell high buy low) is easy. In real life it's not as simple as that. But one golden rule when u see lots of sifus or seafood started to give sky high TPs with essays long calculations then it's time to...... Wonderful comment, especially the last two sentences. Thank you. 24/07/2022 10:40 AM BLee @kcchongnz: Palm oil is different from the steel. You can't simply open up new land and plant palm oil like open up new factories… BLee: Hi Uncle @kcchongnz, agreed Palm oil is different from steel as we cannot compare apples with oranges. We are on the topic of "Storage Capital Gain and Losses"; Steel does not have expiry date but Palm oil does. Certain Steels have their own strength and usage, but Palm oil is just an alternative to some others edible oil. Cost plays a very important part in marketing of Palm oil, once the cost is no more affordable, alternatives will be found. I now prefer Butter over Palm oil based products for my bread spread… This is just a topic for discussion, no malice intended. Thank you for a very interesting article. 24/07/2022 11:48 AM anthonytkh Steel counters own considerable assets that they can monetise without actually losing any revenue by disposing them to raise much needed cash to pare down their large borrowings (which has gotten more expensive and likely even more by year’s end due to rising interest rates) but they steadfastly refused, or declined to use a more diplomatic word, after I approached a number of the companies for such a fund raising exercised based on my proposals. I wish them well. I own free shares in one of the companies mentioned by the article author 24/07/2022 4:50 PM  Sslee Steel counters own considerable assets that they can monetise without actually losing any revenue by disposing them to raise much needed cash to pare down their large borrowings??? Please elaborate! 24/07/2022 8:01 PM anthonytkh Sslee, please check steel counters (and even metal counters, including aluminium) and majority constituents of their non-current assets (which plays a HUGE role in their balance sheet especially regarding their leverage). Read their annual reports (usually either right before or right after major shareholders page) 24/07/2022 8:30 PM stockraider Negative cashflow usually not so good mah! Bcos less cash and more borrowing mah! 25/07/2022 2:48 PM ks55 kcchongnz vs qqq. Close both eyes also support kcchongnz. Proven time after time. 25/07/2022 3:00 PM ks55 What happen to Since Die? Anybody need to dig back those comments ever since already die? 25/07/2022 3:11 PM ks55 Stock: [HENGYUAN]: HENGYUAN REFINING CO BHD Jul 15, 2022 12:37 PM | Report Abuse Look at Jaks. Look at Sendai. And look at Hiap Teik. All these stocks were heavily promoted at the time sifu gave all the 'facts' and 'figures'. Are those so-called 'facts' and 'figures' still good? All those 'facts' and 'figures' had changed because those companies fundamentals all changed? Can someone please explain? Now again look at HYR. Had the fundamental of this company changed since it was first heavily promoted in 2018, then in the year of 2022? Can you tell the difference when its was promoted during that period? Was there any cut loss mechanism in play? 25/07/2022 3:35 PM ks55 Do you need my help to get back your 100k capital? Ask and you will be taught! 25/07/2022 3:54 PM anthonytkh The various steel counters gotta seriously think about monetising their fixed assets and turn them into current assets. The “problem” is that their steel biz is only half of their bosses’ thinking… the other significant half are their fixed assets. If their steel biz, and the entire steel industry, collapsed… they still have their fixed assets as insurance. The issue of shareholders concern will be dealt with when such a dire situation arrives I still have hope for the steel industry in Bolehland. But it’s just a bad time now and has been for quite a few months with major infra projects being the way they have transpired…. 25/07/2022 5:09 PM kcchongnz Posted by qqq3333 > 3 hours ago | Report Abuse negative cash flow/ positive cash flow...............neither good or bad. U have to know the company well and spoken to the directors to have the full picture. Just like increases in debtors/ stocks is not good or bad, ..... the devil is in the details , it always Depends ............................... of course, in bear markets , people want to avoid risks , that is normal.........in bull markets, people seeks risks........... that is also normal. A few years ago with your dynamite investing and sex factor, you disputed with me the poor cash flows of Sendai. You wrote articles touting that stock and I said the cash flows were precarious. That time the share price was RM1 +. So you must have attended the talk by the super investor, and listened to the boss of Sendai that everything okay and no problem. Do you still hold Sendai shares? 25/07/2022 6:03 PM kcchongnz Posted by anthonytkh > 1 day ago | Report Abuse Steel counters own considerable assets that they can monetise without actually losing any revenue by disposing them to raise much needed cash to pare down their large borrowings (which has gotten more expensive and likely even more by year’s end due to rising interest rates) but they steadfastly refused, or declined to use a more diplomatic word, after I approached a number of the companies for such a fund raising exercised based on my proposals. I wish them well. I own free shares in one of the companies mentioned by the article author Thanks for your excellent comment. You know the industry well, better than me. I presume the fixed asset you mentioned is the property, and not plant and equipment which won't fetch much money on sales. Take Leon Futt as an example. its business has been sucking cash. Last 5 years, there was a total outflow of RM286m. How much the company has in land and property to sell without hurting its core business, and than do what later? Besides, many steel companies also got large amount of total debts of about RM400m. 25/07/2022 11:42 PM anthonytkh I had actually been invited by one of the steel companies to meet their team after I approached them quite a while ago When I mentioned sell their assets, I didn’t mean selling them outright. They need their assets for their core biz. I’m talking about sale-and-leaseback Yes, the company would have to pay rent. But they would make a profit from selling the asset due to capital appreciation. And investors that buy the asset are not like banks. You take a loan from the bank to buy the asset and the bank don’t care about the asset. Investors care about the asset 26/07/2022 7:22 AM stockraider The problem of the majority of steel companies are they speculate in their steel inventories loh! Meaning that they invest more than necessary on their steel inventories loh! Only 2 companies do not, do that namely choobee & csc.....these 2 are cash rich mah! So their earnings are of better quality loh! Posted by kcchongnz > 2 weeks ago | Report Abuse Posted by anthonytkh > 1 day ago | Report Abuse Steel counters own considerable assets that they can monetise without actually losing any revenue by disposing them to raise much needed cash to pare down their large borrowings (which has gotten more expensive and likely even more by year’s end due to rising interest rates) but they steadfastly refused, or declined to use a more diplomatic word, after I approached a number of the companies for such a fund raising exercised based on my proposals. I wish them well. I own free shares in one of the companies mentioned by the article author Thanks for your excellent comment. You know the industry well, better than me. I presume the fixed asset you mentioned is the property, and not plant and equipment which won't fetch much money on sales. Take Leon Futt as an example. its business has been sucking cash. Last 5 years, there was a total outflow of RM286m. How much the company has in land and property to sell without hurting its core business, and than do what later? Besides, many steel companies also got large amount of total debts of about RM400m. 09/08/2022 4:13 PM  “Golden Rule” or “Chart won’t lie? kcchongnzAuthor: kcchongnz Like others, I also like to share my opinion in the stock market, and hence this article. I read an article appearing in a popular investment website, i3investor about a couple of weeks ago. The title of the article was, “Hengyuan is dropping continuously” in the link below, As usual, this article, or any article written by the same author always appears as the top article in i3investor for a long time. What is so great about all the articles written by the said author? First and foremost, I think this article, and also other articles written by him, was popular because it provides great entertainment value for readers. For those who are not familiar with the author, he has been the biggest “contributor” in i3investor, one who has written and published the greatest number of articles in i3investor, and I believe he has the most readers, easily exceeding 10 million reads for his articles in i3investor. He is, at least was, the richest “investor” and the most famous one in i3investor, at one time, with multiple appearance in the media of investing, being the major shareholder of a number of public listed companies in Malaysia, with hundreds of million Ringgit invested. He also professed to be having the Holy Grail in investing, his “Golden Rule”, which he argued everyone must follows in order to make money in the stock market. He also claimed to be founder of many public companies, and a great philanthropist. The above credentials make the articles written by him popular, and more interesting. Let’s dissect the article and see why the above article is so interesting. The writer starts with the first sentence as below, “Mr Ooi Teik Bee has warned me that he would break his friendship with me if I posted any article to depress the share price of Hengyuan further. That was why I wrote to the admin of i3investors to withdraw all my previous postings on Hengyuan.” I have not been posting or commenting much in i3investor nowadays, but I still read articles and comments in i3investor for some stock investment ideas, and often to be entertained with all kinds of comments posted by others there. That includes all the articles posted by the writer, as well as the comments. I find myself highly confused with many articles written by him, one time like this and the next time totally different. Hence, here are my confusions and I hope someone can help me to clear all those confusions. Those articles are highly entertaining indeed, but I can’t see how any article by him has any impact on “depress the share price” of Hengyuan, or any stock as intended as stated in the article. In the comments section, I can see were all negative comments, mostly were so bad against him that I wonder why the writer wants to continue writing and get ridiculed so badly. Any fun with that kind of sharing? Why would one wish to continue getting his reputation dented further? Was there a need for the person to write to the administration to trouble them to withdraw all his articles for Hengyuan, especially from someone so famous? So, he really values his friendship with the other guy so much as claimed? Why should the administration of i3investor entertain such request? Then comes the next phrase below, “Introspect (?) I should not have withdrawn all my postings to encourage readers to sell as soon as possible to save their hard-earned money.” Well, the recent article on Hengyuan written by him had been missing. But as I have said, I do read most of the articles written by him for entertainment purpose. All I can remember was the most recent article which has been withdrawn was trying to justify the drop of share price of Hengyuan was not justifiable. The article went on to say sellers had erred by selling and they shouldn’t have done so. I seriously don’t remember reading on encouraging readers to sell in the withdrawn article. It was an article agreeing on the holding of Hengyuan because the next quarter results would be great. Correct me if I am wrong. However, since when the writer is so kind to have the interest of readers unknown to him, their interest in mind in the stock market? How much money his readers and followers had lost in his relentless promotions of Subur Tiasa at about RM2.50 most recently? What about other relentless promotions in steel companies, Alcom, Dayang a couple of years ago, Jaks and Sendai a few years ago, etc.? Which stock he promoted had made money for his readers, instead of losing like no tomorrow? Here is another one, “In fact, just a few days ago, on 11th June Mr Ooi sent out his circular letter to encourage all his subscribers to hold on to their Hengyuan shares to win big or to make more money. All his subscribers have been misled. I am one of the victims. That was why I delayed selling all my holdings. Now I regret that I did not sell all my Hengyuan shares earlier. If I sold earlier, I would save some money.” The writer declared he was misled by the other guy for not selling his Hengyuan shares, and he is regretting like hell now. For a big-time stock market player with hundreds of million Ringgit to dabble in the market at one time, one claimed to have the Holy Grail in investing, now blamed that he was misled! How could it happen? Hasn’t he carried out his own analysis and made his own decision? Why didn’t he apply his formidable “Golden Rule” of sure-win strategy? In fact, I was wondering whether he was asking for tips from the other guy and the tip didn’t turn out well and he started the blame game? Well, knowing the on-and-off close relationship of him with the other guy, you can’t blame me for suspecting, can you? Next, “The price chart cannot lie. It is a record of the daily trading. Down trend can only mean there are more sellers than buyers every day. I should have followed the price chart which is showing down trend instead of following the advice given by Mr Ooi.” So, if you made a big mistake, whose fault was that, Mr. Ooi’s, or yours? Who should be blamed? How long have you been in the stock market? You invest with millions, but you follow other people’s tips? What about this, “Its next quarter result ending June might be fantastic. But the result will only be announced before the end of August which is about 2.5 months’ time. At the meantime, every day there are more sellers than buyers to support the share price.” I do not really see the logic of the phrase here. If the results will be fantastic, and if you are playing on the “Golden Rule”, based on quarter-to-quarter result, why would you think there should be more sellers than buyers now? Don’t you think investors should start buying now as the next “fantastic results” will be published in just 2 months’ time? Isn’t 2.5 months a short time that you should capitalise and buy big now, instead of buying it later when the share price has gone up? I really don’t understand his implementation of his “Golden Rule”. More so, I really don’t understand why such as article comes from a self-proclaimed “super investor”. The writer finished his post with this, “Is my friendship with Mr Ooi more important than saving hundreds of investors’ hard warned (?) money?” Once again, from all the articles I have read, not only this article, I found no evidence that he has the interest on saving hundreds of investors’ hard earned money in mind. As I can see, he speculates in the market with hope of making quick money with his relentless promotional articles, and everybody should know speculating is a zero-sum game. What he makes other lose, and vice versa. The next day, a new article appeared, “Hengyuan: investors must follow the chart” as below, And here is his declaration of his noble intention again, “My sole purpose for writing this piece is to prevent my readers from losing their hard-earned money or lifetime savings.” Nevertheless, if people speculate in the stock market and lose money, they should take responsibility of their own greed. You don’t need to “save”” them, do you? Meanwhile, after his articles above, Hengyuan share price spike up by 8.3% the next day! What a great transformation from the “Golden Rule” to “Chart won’t lie”! But what happened a few days later? Here is a new article, “AYS has profit growth and is undervalued”. Let’s look at the chart of AYS below, (How to insert a chart?)
So, what does the chart tells you about the share price of AYS? Uptrend? Chart won’t lie? the “Golden Rule” takes precedence over the “Chart won’t lie”, again? Or is it because there is a little kink in the chart just before the above article is written, signifying a change in trend? What would other chartists here say? A trend reversal? I am confused. But in the next few days, maybe someone can manufacture a nice chart for AYS as the small amount of shares outstanding can easily be manipulated. Were the results of AYS so great as described in the article? Well, everyone has his own opinion. If you only know how to see “earnings” alone, you would have missed the forest from the tree, just like for all your previous stocks. This is purely my opinion, which may be wrong. information before senile itself the fellow is a symbol of mutated human without the integrity gene, even his kids dont trust him at this age, he is as good as garbage with the only use to attract attention since he has money good to use him and throw like OTB does 26/06/2022 5:37 PM Sslee The current market preception is when KYY start to promote, it is time to sell. So his promotion articles on HY need to withdrawn to stop the selling. Watch out for tomorrow, AYS will drop like a stone. 26/06/2022 6:45 PM Sslee Insas is called value investing because Insas market cap now is below its net cash. AYS too much borrowings, high inventories and receivables, it look like another subur. qqq3 are feel to chase high on AYS for KYY to make some money 26/06/2022 7:16 PM sherlockman Welcome back KCChong! great article as usual! calling a spade a spade. Not only KYY, same applies to Calvin Tan. Sounding noble in wanting to help you achieve your financial freedom by selling you a dream to easy money while front running orders and skimming off poor unknowing retailers 26/06/2022 7:26 PM kcchongnz Posted by arv18 > 4 hours ago | Report Abuse Hi KC. Long time no see. Some thoughts. I wouldn't devote any time or an article to validating the Great Con. I am also having this "Noble intention" to share my thoughts so that newbies can have an opposing view to evaluate, rather than being bombarded non-stop and flip-flopping propaganda. 26/06/2022 9:51 PM kcchongnz Posted by qqq3333 > 2 hours ago | Report Abuse ays is call value investing....kcchonv favourite way You have never learnt thes few years, have you? 26/06/2022 9:53 PM kcchongnz Posted by Sslee > 2 hours ago | Report Abuse AYS too much borrowings, high inventories and receivables, it look like another subur. qqq3 are feel to chase high on AYS for KYY to make some money Somehow engineers seem to have much better analytical mind than accountant. Oh, sorry, I mean certain accountant. No, in general, engineers not necessary have better analytical mind in accounting and finance matter than accountants. 26/06/2022 9:56 PM kcchongnz Posted by sherlockman > 2 hours ago | Report Abuse Welcome back KCChong! great article as usual! calling a spade a spade. Not only KYY, same applies to Calvin Tan. Sounding noble in wanting to help you achieve your financial freedom by selling you a dream to easy money while front running orders and skimming off poor unknowing retailers I bet to differ. Calvin Tan has his way of investing. In fact, it has been proven that his deep value investing worked. It is ok to share each individual's investing strategy. He may have bought the shares and then share his promising thesis on the stocks. But it is okay as he actually believe in it, and never flip flop like someone. 26/06/2022 9:59 PM sherlockman Hi KCChong, What amazes ne is despite the amount of negative comments and to some extent hate among the comments towards KYY, he still continues to write. I wonder if he is oblivious to the comments or his ego is just infallible? I am truly baffled! 26/06/2022 10:08 PM kcchongnz Sherlockman, I am as puzzled as you do. Imagine such a well respectable, with high standing (previously) elderly person who has so much money that he will never able to finish using it, writing flip-flopping articles, enticing the uninformed to buy his shares, so far, none is good and I don't know how many water fish were there. After that laugh at them for losing money. Making more money, for what? It is definite not some kind of noble intention. What is the results? Reputation dented beyond repair. 26/06/2022 10:40 PM Berlin Why does KYY still write despite being consistently wrong in his recent stock calls and being savaged by readers? I think he has nothing else meaningful to engage his remaining time. He also craves the attention writing stock articles garners. He may have lost so much money following his own calls there is little left for charity. Like many previously successful stock speculators, he went up the mountain once too often and finally met a tiger. Welcome back, kc. 27/06/2022 9:07 AM Sslee Personally KYY is a nice guy but when he wrote his ego/dark side take over. 27/06/2022 9:22 AM Tiger62 HI KC, The whole intention (KYY) very simple. He want to sell his "death" that stuck for quite some time. How to sell when the chart is down trend, golden rule cannot apply ? then go back to various fundamental value of the company. Does he care his reputation. I think he think more about money. Reputation talk only for show. 27/06/2022 10:23 AM Tiger62 If one evaluate the share price relationship to the fundamental value of company. There are more than 100 counters one can choose from that consider "cheap" Obviously AYS is not in the top 100 counters a smart investor will choose. Why AYS , KYY money stuck there 27/06/2022 10:30 AM kcchongnz Posted by Berlin > 2 hours ago | Report Abuse Why does KYY still write despite being consistently wrong in his recent stock calls and being savaged by readers? I think he has nothing else meaningful to engage his remaining time. He also craves the attention writing stock articles garners. He may have lost so much money following his own calls there is little left for charity. Like many previously successful stock speculators, he went up the mountain once too often and finally met a tiger. Welcome back, kc. Sharing his own investment thesis and getting wrong all the time I think is okay if the writer is sincere. But if the motive of the writing, and leveraging his "reputation", is to benefit himself at the expenses of the poor guys, that is a little too much. Actually, I don't know why he doesn't understand, at his age now, the reputation is worth a lot more all the money he made. The way he flip-flop clearly can gauge his motive, so much so none in the public forum has any trust in him now. Why want to get himself at this stage of life? It is okay to write and share your investment thoughts. But sincerely, most people should improve themselves. That the sharing will benefit others. If you only know about earnings, and earnings growth, without bothering and knowing how to read the balance sheet, and also the cash flows statements, you won't be able to evaluate a business well enough to be successful. That was also why hundreds of million Ringgit of value has been destroyed. 27/06/2022 12:09 PM Berlin @kcchongnz; That's why I have respect for you but not for KYY whose self professed good intentions and veneer of philanthropy hide much darker motives. The man is no super investor; more of a snake oil salesman. Past painful experience has taught me that much. 27/06/2022 12:33 PM kmohan62 I think all the readers or investors in this forum should avoid getting carried away by a certain writer and commenter who seems to been constantly giving conflicting ideas of how to invest successfully in the stock market.He has been around for some time now.Until the recent past,he was a paragon of virtue in extolling the importance of a stock's fundamentals as against relying on technical analysis as an investment decision tool. His litany of mantra to investors is to constantly pay attention to NTA,P/B value and profit margins as some of the most important criteria in investment decisions.As a matter of fact in order to give credence to his calls,he will produce charts to compare the price appreciation or depreciation of his favourite stocks with its NTA,P/B value and quarterly earnings.And recently to my utter surprise he seemed to have migrated to technical analysis as the better indicator when making decision to buy or sell. 27/06/2022 1:58 PM kcchongnz Tiger62 HI KC, The whole intention (KYY) very simple. He want to sell his "death" that stuck for quite some time. How to sell when the chart is down trend, golden rule cannot apply ? then go back to various fundamental value of the company. Does he care his reputation. I think he think more about money. Reputation talk only for show. Your argument sounds very logical, passing the hot potatoes to the naive and uninformed. So does it make sense that he claimed that he wanted to save the hard-earned money of small time investors? 27/06/2022 3:38 PM sherlockman many comments have pointed that KYY's calls are often very good contrarian indicators and has proven to be correct again this time with Heng Yuan 27/06/2022 5:13 PM Want2MakeMoney Aiya, enough with this old man lah, many said what he writes has influence on the direction of price, the fact is he is nobody lah, just a senile old man that doesn't know what he said or written yesterday. That's why all the conflicting articles. Make sense boh 28/06/2022 2:49 AM tehka While I also have personally been misled before by uncles flip flop articles, I hope readers show some kindness and avoid bad mouthing uncle. If zhuge_liang say is correct, uncle also loose a lot of money, sometimes loose money make people desperate and not think logically 28/06/2022 1:07 PM warrenchok90 not follow uncle die. but bursa is dead now. been how many days or month continuously drop. 28/06/2022 1:09 PM warrenchok90 save the money for purchase property more better. things you can see and touch at least. 28/06/2022 1:11 PM Gen2 KC Chong, I3investor forum is a free platform for anyone to publish their idea/suggestion/opinion/etc. It is no good to bad mouth on anyone even though you dislike his writing. Peoples who read his articles will judged by themself what next course of action and they themself take the responsibility. You couldn’t blamed others for your own action. I still believed you are a good investor but not a great one. Take good care. 28/06/2022 3:03 PM Grow Baby Grow! Lesson 2 on Serba Dinamik kcchongnzAuthor: kcchongnz This article is part of a series of articles on lessons learned from the saga of Serba Dinamik. So far, here were the articles already published in i3investor.
“Among all the stock selection criteria such as cash flow, NTA, healthy balance sheet, debt free etc, the most powerful catalyst that can push the stock price up is profit growth prospect. Never buy any stock if the company cannot report increasing profit.” A high-profile stock speculator “No growth no buy!” A low-profile stock investor
Investing in growth stocks can be a great way to earn life-changing wealth in the stock market. The key, of course, is to know which growth stocks to buy, and when. The other equally important thing is what to look out for. Growth stocks are companies that increase their revenue and earnings faster than the average business in their industry or the market. Businesses that can grow faster than average for long periods tend to be rewarded by the market, delivering handsome returns to shareholders in the process. And the faster they grow, the bigger the returns can be. That has been the prevailing maxim in the stock market investing. Nobody can find fault in this belief as multi-baggers and even 100-baggers were born, almost all from high growth companies. Serba Dinamik: A high growth stock Since its listing in early 2017, Serba Dinamik has been growing at a very impressive manner. Its revenue and net profit have been growing at a compounded annual growth rate (CAGR) of 39% and 35% to RM8.6 billion and RM758 million respectively in the last 5 years as shown in Figure 1 below.
The financial results for year 2021 as shown in Figure 1 above was based on the 18 months unaudited account ended 30 June 2021. The financial year was pushed 6 months later, on hight sight, was probably due to its inability to produce the audited account on time. That increase in net profit was 400% in just 5 years. Serba definite fit in as a high growth stock. Despite the advent of Covid-19 pandemic, where there were lock downs all over the world, including in the Middle East in Qatar, United Emirates and North Africa, where most of its lucrative jobs were secured, its revenue and net income continued to grow at higher rate as shown in Figure 1 above, as if nothing had happened. The rise and rise of Serba’s share price What resulted was the unabated steep rise of its share price from the beginning of year 2017 at an adjusted price of about 75 sen, when the oil and gas industry was still in doldrum, to a peak of RM2.42 (Point A) at the beginning of year 2020 as shown in Figure 2 below.
Serba became the darling high growth stock in Bursa everyone knew and well sought after, including many institutional investors. EPF was also a major shareholder. Yes, that is you and me, our money. The continuous rise of Serba’s share price was only hindered by the advent of the Covid-19 Pandemic when it plunged from RM2.42 to RM1.33 as shown in figure 2 above (Point B). It did recover a little, but it was far cry from its share price before the pandemic. Its share price hovered between RM1.50 to RM1.70 range subsequently. Suddenly, it was announced that its external auditor, KPMG, had problems of verifying some transactions in Middle East amounting to billions of Ringgits. The share price of Serba plunged subsequently. What happened? The disparity between accounting profit and cash flows Cash flows are lumpy as it depends on the timing of working capital requirements and capital expenses which vary widely from year to year. A high growth company also requires a lot of cash for working capitals and capital expenses needs. However, for a normal business, over a period of time, cash flows from operations (CFFO) should be closely resemble net income. The cash flows from operations of Serba had been just a small fraction of the net income for all the years as shown in figure 3 below.
In 2021, CFFO even went negative of RM235 million, although net profit was astounding at RM758 million! What it means is, hey, I made a lot of money on paper, but I need more money, in real cash, just to keep our doors open. OOp, I forgot. We need a lot more money than the deficit of CFFO above, a lot more as we need to spend on capital expenses, to maintain our plant and equipment to be operational, as well as more money to buy more plant and equipment for the new projects we got. Figure 4 below shows the free cash flows of the company for the last 6 years.
Free cash flows = CFFO – Capital expenses Though the company had been making increasing profit every year as shown in figure 1, the business had been sucking cash from the operations, every year without fail. That was really something! In 2021, the company needed RM1.54 billion, yes, billion and not million, to be injected into the business as shown in Figure 4.
Why is that the company was making huge amount of profit, but it had been sucking enormous amount of cash? What are the results of this dilemma? That would be the next lessons. Serba Dinamik’s share were suspended from trading on 24 May 2021 for a short period when the saga unfolded, and it was last traded at RM1.61. It went limit down a couple of times when trading was resumed. It was suspended again at 35 sen in middle of October 2021 when it was unable to provide its audited account, followed by a series of dramas. When trading resumed, its share price went down to a low of 6 sen, before recovering and closed at 11.5 sen on 3 June 2022. This was described in the link below,
KCChong
Labels: SERBADK mickey77 Bernie Madoff was a darling with consistent dividends. Why he was even the NASDAQ chairman. And yet this guy was an American fraudster and financier who ran the largest Ponzi scheme in history, worth about $64.8 billion. The fact of not one rubber stamp but tens or it found should raise flags. 07/06/2022 6:39 AM  Sami_Value I think can make money but the moment there is sign of trouble appearing, be the 1st one to get alighted from the ride. 07/06/2022 7:07 AM kcchongnz There was a post dedicated to you especially. https://klse.i3investor.com/web/blog/detail/kcchongnz/2022-05-24-story-h1623390006-Can_you_cari_makan_from_speculating_Lesson_1_on_Serba_Dinamik_kcchongnz So, how much have you made now? 07/06/2022 9:23 AM kcchongnz Posted by qqq3333 > 43 minutes ago | Report Abuse u talking nonsense again..................................this year I buy Xinte HK, make a lot of money...............people says negative cash flow cannot buy but negative cash flows also got negative cash flow fans. Geng ah! King of negative cash flows investing! 07/06/2022 1:21 PM Zhuge_Liang If he is so good, should make million. RM100k pun tak ada to buy shares. What a joke here !! At least I make million in 2015 and 2020. 07/06/2022 2:59 PM Can you cari makan from speculating? Lesson 1 on Serba Dinamik kcchongnzAuthor: kcchongnz
want some pocket money, buy some serba at current price. at less than 15 Want some pocket money? Buy some Serba. Yesterday just 1 day too early Buy Serba 6 Sen make money faster than all other methods. @qqq3333 you are an experienced trader (ET). You know very well that nobody can time the market. Will you still buy Serbadk at 12 sen now? I won't. I am thinking whether I should sell at 15 or wait for 19............................
Have you ever heard of people claiming to have made money speculating on the share price of stocks? I am sure you have if you have been long in i3investor. The above were comments appeared in my last post, also on someone speculating on a particular stock listed in Bursa in the link below, which the outcome has not been good too. The comments were posted by an “experienced trader” (ET), thanks for his comments. The ET was speculating on the shares of Serba Dinamik when it was lifted from suspensions a couple of weeks ago. The last traded price before the lifting of suspension was 35 sen since 22 October 2021. The figure below shows the share price movement of Serba dinamik shares (The share).
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