Posted by kcchongnz > Jun 1, 2013 03:53 PM

Posted by ZenZenD > Jun 1, 2013 12:25 PM | Report Abuse 
Tks for ur advice, kcchongnz. Wl sell it off and move on to something else. What do u think of Cuscapi? 

ZenZenD, please remember I never advise others whether to buy of sell a stock. I will never know how a stock will perform in the future. I only look at its business and its performance to come to a conclusion. And those are historical data. The future may be different but I am just an armchair investor, not a professional, and have no possession of any insider information. Nor am I having any privilege to talk to the management about its future plan and prospects. Don't come and blame me after you sell off your stock and its share price jumps. 

Regarding your question about Cuspati, below was my reply to somebody some time ago. I don't think things have changed for Cuspati. Judge yourself if it is a good company to invest. 

Posted by kcchongnz > Feb 3, 2013 12:31 PM | Report Abuse X 
necro, you seem to be very interested in apa ini cuscapi. Why? Insiders/big boys going to goreng? Somebody going to acquire it and pay big bucks? Going privatization with big payoff? Any plausable stories? You know I have never heard of Cuscapi until you mentioned it. But since you are so keen on this counter, I will try to look at it and give my litte informed opinion here. 

Cuscapi, a e-commerce outfit listed in Ace Market providing services such as call order delivery services and other F&B management solutions, operating locally and internationally especially in China. It obtained a couple of awards, ‘Top 10 Most Satisfying F&B Management Software’, and ‘Innovative Award for China E-Commerce Enterprise’ as mentioned in its 2011 annual report. Sounds interesting and unique business model. But how is its economic moat? Is the business in demand? Is there high barrier of entrance from other competitors? 
Let’s look its growth for the last few years to gauge its economic moat. Table 1 below shows it revenue and net profit for the last 5 years since listing in Mesdaq in 2007. 

Table 2: Growth, value in thousands 
2011 2010 2009 2008 2007 CAGR 
Revenue 53595 48903 38925 36280 38000 9.0% 
NI 8631 9123 262 980 8500 0.4% 

Revenue grows at a compounded annual rate of 9% for the last 5 years, doesn’t really appear to be a high growth company as claimed. Growth in net income (NI) of 0.4% a year is at best uninspiring. In fact during the last US sublime crisis in 2008 and 2009, NI was seriously affected with NI less than RM1 m as shown. How is its ROE? 

Table 2: DuPont Analysis 
Year 2011 2010 2009 2008 2007 
ROE 15% 21% 1% 3% 22% 
NI 16% 19% 1% 3% 22% 
AT 0.794 0.930 
FL 1.143 1.220 

Table 2 above shows that ROE bounces around and it is inconsistent. During better time say in 2010, ROE appears to be good at 21% achieved with NI of 19%, asset turnover (AT) of just 0.9, meaning not enough turnover or jobs. The financial leverage is low though which appears to be good. However other companies of similar service-based businesses have better metrics than these. Moreover, you can see the deterioration of its operating efficiencies from 2010 to 2011 when ROE worsen from 21% to only 15%. In fact there doesn’t seem to be any improving for the last 9 months ending 30/9/2012 with NI of RM4.8 m only. 

What about its cash flows? Table 3 below shows its cash flows for the last two years: 

Table 3: Cash flows 
Year 2011 2010 
CFFO 4560 11414 
Capex 5100 4933 
FCF -540 6481 

There are some free cash flows of 6.5 m in 2010. However, there is no free cash flow last year after spending money on software development and purchase of plant and equipment. So where is the beef? But never mind, a not so good stock can be a great investment if the price is cheap. 

At the closing price at 32 sen on 31/1/2013, PE ratio works out to be 8.4, not really very cheap for an ACE stock with not much of economic moat, in my opinion.