Highlights

the bursa journey that worked for me. 2000-2019

Author: (S = Qr) Philip   |   Latest post: Sun, 3 Feb 2019, 11:43 AM

 

THE PERCEPTION OF P/E or: How I learned to fear my Wife

Author:   |    Publish date:


Hi all,

I realized more and more that there is a growing misconception of of PRIME PRINCPLES in investing, aka:

LOW PE STOCKS = UNDERVALUED,HIGH MARGIN OF SAFETY, SAFE BUY

HIGH PE STOCKS = OVERVALUED, LOW MARGIN OF SAFETY, RISKY BUY

This as a basic principle in investing is something that all fundamental and technical analysts put at the back of their mind.

HOWEVER:

Let me try to explain the BUSINESS SENSE behind the usage of PE.

PE, or price to earnings RATIO , is simply what MADAM MARKET (here I put the irrationality that is my WIFE) is willing to pay you for your business. And as you know all women, they would buy 10 things that they dont need just because it is CHEAP in comparison to normal supermaket prices, rather than buy something EXPENSIVE  that they really need.

ALLOW ME TO ILLUSTRATE:

Take for example.

If you went ahead and bought a stock that had a finite life, let say for example  (bursa: FIXED4) which is a fixed deposit company that would pay you 1 year of earnings and dissapear forever, how much would you pay?

Imagine after 4 quarters of earnings report using 1 dollar of revenue, you will earn exactly 4 cents. (it says so in the prospectus). How much would you be willing to hold this stock? (of course assuming you live in Germany, with its negative interest rate)

Exactly: The share price of the stock would be exactly 4 cents.

Or more importantly: PE= 1.

Does this make this a good share or bad share? NO. all it means is that Madam Market know EXACTLY how much they will get from this business during its entire lifecycle. Why should you pay more for something that has no UTILITY OR GROWTH PROSPECTS?

HOW THIS WORKS IN THE REAL LIFE

I would like to use a particular stock comparison:

LEONFB: 

in 2017, it did 577,357 million on 80 million net profit, with a PE = 1.93. it has a net equity of 334 million, today we are valueing the whole company at 155 million.

Now, is low PE = good undervalued company that will perform over time?

No, definitely not.

https://www.google.com/search?q=leonfb+share+price&oq=leonfb+share+price&aqs=chrome..69i57j0j69i60l2j35i39j0.3038j0j9&sourceid=chrome&ie=UTF-8

Low PE merely means either:

1. My wife has no confidence in this company in the long term

2. My wife has calculated the terminal value and cash flow possibilities for this company for the long term, and she decided that she is willing to pay only 50 cents for this 25 cent earning company, because this is how much she knows she will get over its entire lifetime

3. My wife does not know basic algebra, and does not realize that if you force sell the entire company, you will get more than the share value in terms of assets. (however on hindsight, she does realize that as a minority shareholder you cant do anything in the company, and a stock can go years of mismanagement before declaring bankruptcy or privatization)

But how does this unconfidence come about?

Financial Year Ended               2013           2014            2015            2016          2017

Revenue                                  455,268      489,194       505,404       498,716      577,357

Profit After Tax                         25,773        27,547        18,479          27,678        80,369 

Net worth                                 202,532      222,344       234,606      257,641       334,199

so if you ignore the gain from the compulsory acquisition of land by government, you would realize that the business itself is barely growing its earnings and equity. And if you use your business sense, you would realize a steel trading and processing company is usually a high capex company with a lot of leverage selling products that have no pricing power and is easily obtainable everywhere.

Ergo, if the business does well, everyone will come in and do the same thing, lowering your revenues. And if the business is not doing well, it is not making money anyway, so no one will be doing it.

SO, MY WIFE DOES KNOW WHAT SHE IS DOING AND HAS CHOSEN TO PAY BOTTOM DOLLAR FOR A COMPANY THAT DOES NOT GROW AND HAS NO GROWTH TRIGGERS IN THE 5-10 YEAR ESTIMATE.

With the opposite,

a high PE stock also does not automatically mean that the stock is an overvalued bad stock.

Take for example this company, my favourite:

Financial Year Ended               2014           2015            2016            2017            2018

Revenue                                  2,457.19      2,706.91      2,853.23      3,012.00      3,263.14

Profit After Tax                        159.93          191.40        192.08         195.92          206.24

Net worth                                1,278.86       1,420.32     1,584.51      1,737.24       1,781.98

 

Financial Year Ended       2009                2010                 2011                2012              2013

Revenue                          1,397.91         1,476.40            1,777.08         1,946.67         2,146.31

Profit After Tax                 89.33              106.91               124.55             131.41           131.71

Net worth                         412.40            496.45                727.30            804.01            883.55

 

Now, compare it to this company. This is also a trading and processing company that has high capex requirements selling livestock products that have no pricing power and are available everywhere.

in 2018, it did 3.263 billion  on 206 million net profit , with a PE = 53.89. it has a net equity of 1.781 billion, today we are valueing the whole company at 11.14 billion dollars.

PE= 54?

Wow isn't that horrible? Buying a company with PE that high should be a wrong move, right?

Not exactly. High PE merely means either:

1. My wife has overconfidence in this company because her market lady told her this stock is chun chun win one!

2. My wife has calculated the terminal value and cash flow possibilities for this company for the long term, and she decided that she is willing to pay up for the company growth as it has shown capability of transitions into multiple revenue streams.

3. My wife does not know basic algebra, and does not realize that if you force sell the entire company, you will get 20 cents to the dollar.

So you see, if you think of it in business terms. High PE is merely the mark of a company outperformance (or 99% of the time admittedly sadly investor greed). But assuming major shareholders are minimally educated investors (and not i3 speculators), how do we look at high PE companies? We should  look in terms of growth patterns and triggers, ADJACENCY EXPANSION, ORGANIC GROWTH.

How to look at business sense of  PE  via GROWTH TRIGGERS:

Pre 2000 - Feedmill trader company (penny stock, low expectations of future, low PE)

2000 - paid up capital 40 million, small surimi trader, feedmill plants open up - On 15th December 2000, QL acquired the poultry layer farm assets of Syarikat Wim Hing Poultry Farm. Diversification and vertical integration of feedstuff and poultry farming (some slight confidence in their ability to grow, but its just a company like any other)

2001 - On 23rd April 2001, QL acquired 80% of the shares in Figo Marketing Sdn Bhd and Figo Foods Sdn Bhd. (higher confidence now, they are doing organic growth into food for human consumption, they have decided to stop being subcon and become maincon)

2002 - QL acquired 65% of the shares in QL Breeder Farm Sdn Bhd and QL Tawau Feedmill Sdn Bhd, further diversifying our farming activities to encompass breeder and broiler farming in Tawau (even more confidence now, they have gained the management capability to manage territorial expansion. No more jaguh kampung, reach LAYHONG LEVEL)

2003 - QL commenced operation of the second CPO mill in Tawau region. The opening of the second oil mill increased our palm fresh fruit bunch (FFB) processing capacity to 500,000MT per annum. (exploding confidence now, they started the first one in 1998, now fully diversifying into palm oil plantation + vertical integration into refining business via boilermech, reach UNITED PLANTATIONS LEVEL CONFIDENCE

2004, QL’s marine business expanded its business beyond Peninsula Malaysia by establishing an integrated marine base in Kota Kinabalu. The Kota Kinabalu operation includes upstream fishing, as well as downstream surimi, frozen seafood and fishmeal processing. The operation diversifies our marine resources supply and added processing capacity of the group. (even more confidence now, as they have fully diversified into marine and are doing well in multi region expansion, become from maincon into developer level)

2005, QL ventured into deep sea fishing operations with 5(after 13) fleets of purse seiners in Endau, Johor. (integrated and expanding in all the right areas. The magic word no diversification into silly stuff like property development etc, staying in their core capabilities, adjacent expansion of revenue streams. Excellent, ECSTATIC CONFIDENCE)

August 2006, QL made its debut foreign investment in Eastern Kalimantan, Indonesia. A joint venture of 74.5% (QL): 25.5% (Indonesian partner) was established for the purpose of oil palm plantation project. The project involved developing two parcels of plantation land into oil palm plantations in East Kalimantan, Indonesia, measuring approximately 20,000 hectares. This investment in Indonesia represents QL first regional replication of our business activities. (NOTE THE WORD SUCCESSFUL REPLICATION OF BUSINESS ACTIVITIES OUTSIDE MALAYSIA. enlightenedenlightenedenlightened GROWTH TRIGGER

May 2008, QL incorporated a subsidiary, QL Vietnam AgroResources Liability Limited Company. This subsidiary is to carry out poultry layer activities in Tay Ninh province, near Ho Chi Minh. In November 2008, QL incorporated a subsidiary, PT QL Hasil Laut, in Indonesia. This subsidiary is to carry out surimi and fishmeal manufacturing. Both the above investments are our efforts to further replicate our existing business model and activities in the region. (FULL EXPANSION BEYOND MALAYSIA INTO ASEAN REGION. WE HAVE GONE BEYOND BORDERS. CAPSLOCK TIME!!!! OVERCONFIDENCE)

2009 - WE HAVE GONE MAXIMUM OVERCONFIDENCE OVERLOAD. THEY HAVE SHOWN THE ABILITY TO OPERATE WELL IN A BUSINESS WITH LOW MARGINS AND HIGH CAPEX. THEN TRANSITION INTO MARINE, POULTRY AND AGRICULTURE. THEN VERTICAL INTEGRATION WITH BOILERMECH, FOOD PROCESSING AND PRODUCTION. THEN GLOBALISE WITH STABLE EXPANSION PLANS BEYOND MALAYSIA BORDERS!!!! LETS NOT BUY THAT HOUSE! LETS PUT MY FUTURE IN QL STOCK, 200K WORTH! LETS GO! LETS MARGIN LOAN THIS! 500K!

And the rest is that.

My summary is simple.

Dont look at PE as another indicator to buy or sell a stock. Use PE as a guide to tell you what the business confidence(or business performance) is in the stock. If PE is termporarily low, then there might be a mispricing. (which is very rare these days in the age of the internet) If the PE is consistently low, it may be a sign that the business is not growing, not earning, or not rewarding shareholders.

Same as the inverse, a high PE can mean overconfidence (which is very highly possible, especially in the days of the internet), or it can be a indicator of business performance. IF a business can guarantee safety, stability, high vertical integration and moat-like qualities, it deserves a PREMIUM.

I hope you learned something,

Philip

- free Philip quote of the day. If you only have the free time to be a part time investor in a company, then you are a full time gambler.

 

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  4 people like this.
 
3iii Make sure you have the cash and courage to add more when your predicted correction comes true.

Do you not notice that stock prices do fluctuate a lot even in a 52 week period - up 50% and down its equivalent 1/3? Hopefully, you have a good strategy in place to benefit from this market price fluctuation (Mr. Market).
18/01/2019 18:29
3iii Finally:


MARKET FLUCTUATIONS OF INVESTOR'S PORTFOLIO
Note carefully what Graham is saying here.

It is not just possible, but probable, that most of the stocks you own will gain at least 50% from their lowest price and lose at least 33% ("equivalent one-third") from their highest price -regardless of which stocks you own or whether the market as a whole goes up or down.

If you can't live with that - or you think your portfolio is somehow magically exempt from it - then you are not yet entitled to call yourself an investor.




BENJAMIN GRAHAM'S 113 WISE WORDS
The true investor scarcely ever is forced to sell his shares, and at all times he is free to disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more. Thus the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons' mistakes of judgement."
18/01/2019 18:38
stockraider This Ben Graham wise comment below is applicable to margin of safety stock like insas share price rm 0.70 with Nta rm 2.54 and nett cash Rm 0.70 per share with PE less than 10x and with decent div yield of about 3% pa loh..!!

Not applicable to overvalue stock like QL and Nestle, if u encounter big selloff on this type of counter u better cut n lari kuat kuat loh...bcos no margin of safety mah with Pe 50x, dividend yield of o.5% to 2.0% pa loh.....!!


Posted by 3iii > Jan 18, 2019 06:38 PM | Report Abuse

Finally:

MARKET FLUCTUATIONS OF INVESTOR'S PORTFOLIO
Note carefully what Graham is saying here.

It is not just possible, but probable, that most of the stocks you own will gain at least 50% from their lowest price and lose at least 33% ("equivalent one-third") from their highest price -regardless of which stocks you own or whether the market as a whole goes up or down.

If you can't live with that - or you think your portfolio is somehow magically exempt from it - then you are not yet entitled to call yourself an investor.

BENJAMIN GRAHAM'S 113 WISE WORDS
The true investor scarcely ever is forced to sell his shares, and at all times he is free to disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more. Thus the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons' mistakes of judgement."
18/01/2019 18:48
qqq3 truth be told, I never see shares like LCTITAN as investment shares like QL and Nestle...shares like LC is and always a trading share...a good trading share because it follows logics....
18/01/2019 18:50
lazycat well, what stocks would you recommend as low risk + high return for this year?
18/01/2019 19:10
3iii Margin of Safety for those who are invested in Nestle, DLady, PBB, Petdag and HEIM, as explained and taught by Benjamin Graham, the father of value investing.
:thumbsup: :thumbsup:

In the ordinary common stock, bought for investment under normal conditions, the margin of safety lies in an expected earning power considerably above the going rate for bonds.

Over a ten-year period the typical excess of stock earning power over bond interest may aggregate 50% of the price paid.

This figure is sufficient to provide a very real margin of safety— which, under favorable conditions, will prevent or minimize a loss.


That is why the policy of investing in representative common stocks does not require high qualities of insight and foresight to work out successfully.


If the purchases are made at the average level of the market over a span of years, the prices paid should carry with them assurance of an adequate margin of safety.

The danger to investors lies in concentrating their purchases in the upper levels of the market, or in buying nonrepresentative common stocks that carry more than average risk of diminished earning power.

# “Earning power” is Graham’s term for a company’s potential profits or, as he puts it, the amount that a firm “might be expected to earn year after year if the business conditions prevailing during the period were to continue unchanged” (Security Analysis, 1934 ed., p. 354). Some of his lectures make it clear that Graham intended the term to cover periods of five years or more. You can crudely but conveniently approximate a company’s earning power per share by taking the inverse of its price/earnings ratio; a stock with a P/E ratio of 11 can be said to have earning power of 9% (or 1 divided by 11). Today “earning power” is often called “earnings yield.”


* This problem is discussed extensively in the commentary on Chapter 19.

** Graham elegantly summarized the discussion that follows in a lecture he gave in 1972: “The margin of safety is the difference between the percentage rate of the earnings on the stock at the price you pay for it and the rate of interest on bonds, and that margin of safety is the difference which would absorb unsatisfactory developments. At the time the 1965 edition of The Intelligent Investor was written the typical stock was selling at 11 times earnings, giving about 9% return as against 4% on bonds. In that case you had a margin of safety of over 100 per cent. Now [in 1972] there is no difference between the earnings rate on stocks and the interest rate on stocks, and I say there is no margin of safety . . . you have a negative margin of safety on stocks . . .” See “Benjamin Graham: Thoughts on Security Analysis” [transcript of lecture at the Northeast Missouri State University business school, March, 1972], Financial History, no. 42, March, 1991, p. 9.

*** This paragraph—which Graham wrote in early 1972—is an uncannily precise description of market conditions in early 2003. (For more detail, see the commentary on Chapter 3.)

Ref: The Intelligent Investor by Benjamin Graham

CHAPTER 20 “Margin of Safety” as the Central Concept of Investment
18/01/2019 20:04
stockraider U ask yourself what type of earning power ??
When Nestle earnings yield is less than 2% pa based on PE above 50%...even u put monies in fixed deposits u get an earning power of 4% pa mah....!!

If u buy insas got earning power as Pe less than 10x...earning yield already exceed 10% pa mah...!!

Margin of Safety for those who are invested in Nestle, DLady, PBB, Petdag and HEIM, as explained and taught by Benjamin Graham, the father of value investing.
:thumbsup: :thumbsup:

In the ordinary common stock, bought for investment under normal conditions, the margin of safety lies in an expected earning power considerably above the going rate for bonds.

Over a ten-year period the typical excess of stock earning power over bond interest may aggregate 50% of the price paid.

This figure is sufficient to provide a very real margin of safety— which, under favorable conditions, will prevent or minimize a loss.
18/01/2019 20:19
stockraider U need understand what is real earning power loh...!!

Insas ROE only 4% pa....but based on rm 2.54 u generating eps of Rm 0.10 pa loh....!!

so if u buy insas at rm 0.70 u r getting yield of 14% pa....this is what we call earning power loh...!!
18/01/2019 20:31
stockraider Nestle ROE very terror 120% pa with NTA of Rm 3.00 it generate earnings of Rm 3.60....but u need to buy nestle for Rm 140.00...so ur earnings yield is less than 2.6 % pa loh...!!

Now u compare nestle 2.6% pa v insas 14% pa, u ask who got more earnings power leh ??
Of course Insas mah...14& pa warnings yield even kindy student understand 14% pa is more than 2.6% pa mah..!

But growth proponent may argue, nestle have growth woh ??

Raider ask very logical question loh...how much growth & for how long nestle need to grow from 2.6% pa to catch up with insas yield of 14% pa even, if u assume insas has no growth at all loh...!!

The answer is very long and very uncertain when nestle can catch up mah...!!

An english old saying a bird in hand is better than 2 in the bush mah...!!
Insas yield is already there with 14%pa...now u want to speculate nestle yield 2.6% pa can catch up, but when leh ??

Thus insas has definitely has higher margin of safety than nestle loh..!!
18/01/2019 20:49
lazycat mr loh..!!

the fact that insas is thong kok khee personal piggy bank meant margin of safety is completely meaningless loh..!!

u understand mah...?
18/01/2019 21:04
stockraider That is a separate issue under psychological investment aspect of share loh...!!
If u read sslee comment carefully, he has already dealt and risk manage this aspect u have highlighted mah...!!

Posted by lazycat > Jan 18, 2019 09:04 PM | Report Abuse

mr loh..!!

the fact that insas is thong kok khee personal piggy bank meant margin of safety is completely meaningless loh..!!

u understand mah...?
18/01/2019 21:09
calvintaneng Whoa Sifu Stockraider telling 2 Dinosaurs, One Quack duck, one lazycat and one smart alex

AhFah sure clever street smart!!
18/01/2019 21:11
KLCI Going Heaven all these uncle comment so long, can read whole day also can't finish haih
18/01/2019 22:01
qqq3 cal and raid...Insas is a stock for novices..fact.......everyday shout for what? can go up meh?
18/01/2019 22:26
lazycat mr qqq3 , what stocks would you recommend to buy as a low risk + high return investment for this year?
18/01/2019 22:32
qqq3 in my dictionary where got low risk high return one?
18/01/2019 22:47
qqq3 risk and return is what one makes of it....stocks by itself is risk is related to return....
18/01/2019 22:47
qqq3 qL is a low risk high return share for philip because he knows how to handle it and already so much unrealized profits....
18/01/2019 22:51
qqq3 risk and return is inherent in the share, any share...high risk high return....low risk low return...u wouldn't know it flips left or right until the future has come ....risk and return is what one makes of it....

just because a share goes up after purchase, it does not mean it is a high return low risk share......
18/01/2019 22:54
qqq3 lazycat > Jan 18, 2019 10:32 PM | Report Abuse

mr qqq3 , what stocks would you recommend to buy as a low risk + high return investment for this year?

======

however if u are talking about share with growth characteristics that i like , I can give u ...Vitrox.....
18/01/2019 22:57
lazycat what stocks you considered as a low risk yet high return for year 2019?
would you like to share your stock picks?
18/01/2019 22:58
qqq3 azycat > Jan 18, 2019 10:58 PM | Report Abuse

what stocks you considered as a low risk yet high return for year 2019?
=========

I thought I have answer u above....
18/01/2019 23:04
qqq3 first, I am a high frequency trader.....today I just bought Armada....
18/01/2019 23:05
qqq3 I can talk about it...but I am not naturally a buy and hold guy......I just don't have the temperament for it....but I respect and I like people who do....
18/01/2019 23:07
qqq3 for 2019....I am naturally bearish..as I was naturally bearish for whole for 2018....

I wrote this...

https://klse.i3investor.com/blogs/qqq3/188428.jsp

I seems time to trade now...so I trade la.......
18/01/2019 23:09
qqq3 I think Jaks is a good bet for 2019....
18/01/2019 23:10
lazycat why u choose vitrox over penta?
18/01/2019 23:16
qqq3 read the vitrox report, I challenge anyone who is not impressed.

Penta? Penta is another level lower. Analysts are right when analyst don't like their listing of subsidiary in HK.
19/01/2019 00:48
qqq3 I can't even understand how Penta can compete against Vitrox
19/01/2019 01:17
lazycat link of the vitrox report please
19/01/2019 01:25
qqq3 annual report I mean.
19/01/2019 01:33
Haw Liao thats why u need 4 wifes to have an edge...
19/01/2019 11:46
3iii Can someone do a comparative study of these 4 growing companies in Bursa:

Nestle
QL
Topglove
Hartalega

This study should be both educational and fun, and may even be rewarding too.
19/01/2019 12:20
stockraider These stocks are old hags & their success are already price in lah....!!

Just look for future growth stock, don waste time always looking at the rear mirror, telling us how good, how good loh ??

If u want to look at the rear mirror maybe can engage a Phd student to do an academic study mah...!!


Posted by 3iii > Jan 19, 2019 12:20 PM | Report Abuse

Can someone do a comparative study of these 4 growing companies in Bursa:

Nestle
QL
Topglove
Hartalega

This study should be both educational and fun, and may even be rewarding too.
19/01/2019 12:27
Haw Liao nestle not many can invest lah...over priced just like gold

QL everyday u eat chicken and egg and seafood won't make the share price go higher

glove stocks danger stock...wait for clear rebound

stock market is about perception, price and value can be made up by market makers
19/01/2019 12:32
Haw Liao just before glove stock crashed, they say dividend defensive stock lol then they say overvalued crash until mother father no eyes see...

controlled by market makers
19/01/2019 12:37
Haw Liao when u talk like professor in stock market, u are falling prey to the stock operators...

because they can read your next move...

learn to be the hunter, not the hunted
19/01/2019 12:44
3iii How do you value QL?

Value of an asset is the discounted value of all its future cash flows.

DCF is a concept I carry in my head but rarely dwell in great detail when I value my companies. The reason being DCF can be easily manipulated to fit any value you have in your mind.

It is better to understand the business of the company. Know its operations well. How are its revenues generated? How are its earnings generated? Are the earnings of high quality, that is, translating into a lot of cash from operations? Are these revenues, earnings and cash from operations growing? How fast or slow are these? Are growth achieved through increase in sales or increase in efficiency (profit margin expansion)? What are the capital expenditures in relation to its cash generated from operations or earnings? Does the company need a lot of capital expenditure to maintain its operations or growth? What are the new areas of growth? Organic or through acquisition? Is growth increasing the company's value or destroying company's value?




2018 Annual Report of QL


CASH FLOW STATEMENT (m)

CFO
PBT 255.3
D&A 123.7
FFO 411.5
NET CFO 298.6

CFI
CAPEX 339

CFF
DIVIDENDS PAID 90.5
INTEREST PAID 34
INCREASE IN LOANS 169

DPS 4.25



INCOME STATEMENT (m)

REVENUE 3263
GROSS PROFIT 605.6
OTHER INCOME 24.3
EBIT 286
INTEREST (48.6)
INT INC 7.9
PBT 255.3
PAT 215.7

EPS 13 SEN



BALANCE SHEET (m)

ASSETS
NCA 2073
CA 1252
TA 3326


LIABILITIES
NCL 646
CL 788.7
TL 788.7

EQ 1890

TEQ & TL 3326



CASH 304
STL 466
LTL 548

AR 384
AP 283

INTANGIBLE ASSETS 10.6

DEFERRED TAX 91


NAV 1.16

NO OF SHARES OUTSTANDING 1622.4 m
19/01/2019 12:50
3iii Segmental businesses of QL

4 segments:

MPM (Marine Products Manufacturing)
ILF (Integrated Livestock Farming)
POA (Palm Oil Activities)
Family Mart (New)


2018 Annual Report
(m)

MPM
Rev 905
Profit 124.1
Assets 1076.6
Liabilities 258.3
Equity 818.3
Finance cost (6)

ILF
Reve 1971
Profit 103
Assets 1762.5
Liabilities 1017.7
Equity 744.8
Finance cost (36.7)

POA
Rev 387
Profit 27.9
Assets 486.9
Liabilities 159
Equity 327.9
Finance cost (6)



Revenues by countries

Malaysia 2601 (2018) 2446 (2017)
Indonesia 560.4 (2018) 471 (2017)
Vietnam 93.6 (2018) 90.5 (2017)
Others (China & Singapore) 7.7 (2018) 4.9 (2017)
19/01/2019 13:04
lazycat pos used to trade above PE 50
gdex above PE 100

look at this 2 stocks price now
19/01/2019 13:06
3iii The shareholdings distribution of QL is interesting:

less than 100 (0%)
274

101 to 1000 (0.03%)
843

1001 to 10,000 (0.82%)
2882

10,001 to 100,000 (4.09%)
2093

100,001 to 5% (41.39%)
604

5%+ (53.67%)
2


Total no of shareholders: 6698



The number of shareholders with 100,001 + shares in QL is
606 (collectively own 95.06%)


Breakdown
2 own 53.67%
28 own 21.07%
576 own 20.32%

6092 own 4.94%
19/01/2019 13:27
3iii Therefore, 9.1% of shareholders own 95.06% of QL.

This is not unexpected. It is well known that 1% of the population owns 50% of the wealth, the next 9% of the population owns the next 40%. The majority (90%) owns less than 10% of the wealth.
19/01/2019 13:34
3iii At price of 6.87 per share, QL has a market cap of 11.146 billion.

Net earnings in 2018 was 215.7 m
Net CFO was 298.6 m
Capex was 339 m
Increase in debt was 169 m
Dividend 90.5 m


It is a good company, not a great company (by my definition).
It is also trading at a high valuation.

For these reasons, I shall not be buying this stock today. It will be in my radar screen though. I will spend a bit more time to understand its new business, Family Mart.
19/01/2019 13:43
3iii I group Nestle, DLady and perhaps, Harta in a group of their own (great companies).

I will put QL and Topglove in the same group (good companies).


http://myinvestingnotes.blogspot.com/2010/03/the-three-gs-of-buffett-great-good-and.html
19/01/2019 13:47
Haw Liao family mart too many competition from mushrooming cheaper convenience store...

the convenience store concept only works well in high income country because selling overpriced items...

implementation at the wrong timing
19/01/2019 14:02
3iii >>>>Haw Liao nestle not many can invest lah...over priced just like gold

QL everyday u eat chicken and egg and seafood won't make the share price go higher

glove stocks danger stock...wait for clear rebound

stock market is about perception, price and value can be made up by market makers
19/01/2019 12:32<<<<


Haw Liao


There are so many flaws in your statements.

Ignoring Nestle for the moment. Many think like you. This stock at RM 20 per share is overpriced. How many can afford to buy this? The corollary is a 20 sen per share stock is affordable.

This thinking is flaw. A RM 20 per share stock maybe the most undervalued and the 20 sen per share stock maybe most overvalued. (Think this true).

What is the difference between buying 10,000 shares of 20 sen per share stock and 100 shares of a $20 per share stock? The amount you pay is the same, RM 2000. To say that you cannot afford the $20 per share stock is not true.

Your concern is whether you are investing well. Is the stock you choose to buy of high quality (there is a lot of margin of safety in quality stocks, provided you do not overpay for it)? Then make sure you pay a price where your upside reward >>> downside risk and it meets your desired rate of return with a high degree of probability.


The greatest enemy of your investing is yourself. The others can be ignored but you will need to master yourself, your own worst enemy! :-)

Good luck to you in your education and investing.
19/01/2019 15:05
3iii >>>Haw Liao just before glove stock crashed, they say dividend defensive stock lol then they say overvalued crash until mother father no eyes see...

controlled by market makers
19/01/2019 12:37<<<<


Do you have in place a good strategy to take advantage of the market fluctuations? Do not fall folly to it.
19/01/2019 15:06
3iii >>>>Haw Liao when u talk like professor in stock market, u are falling prey to the stock operators...

because they can read your next move...

learn to be the hunter, not the hunted
19/01/2019 12:44<<<<


These operators do not fancy the stocks I like.
19/01/2019 15:07
stockraider The best strategy is to take profit & put monies in deep margin of safety stock like insas loh...!!

Posted by 3iii > Jan 19, 2019 03:06 PM | Report Abuse

>>>Haw Liao just before glove stock crashed, they say dividend defensive stock lol then they say overvalued crash until mother father no eyes see...

controlled by market makers
19/01/2019 12:37<<<<


Do you have in place a good strategy to take advantage of the market fluctuations? Do not fall folly to it.
19/01/2019 15:08
Sslee Dear all,
My response to Mr. Philip: THE PERCEPTION OF P/E
Definition of High PE or growth trap: Growth, again, has little meaning without any reference to the future return of the business. Growth is only good if it is above the cost of capital.
https://klse.i3investor.com/blogs/Sslee_blog/190733.jsp

Thank you
19/01/2019 19:06


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