Koon Yew Yin's Blog
VS shuts up all my critics - Koon Yew Yin
Koon Yew Yin
Publish date: Tue, 20 Oct 2015, 10:27 AM
Koon Yew Yin
0 1,446
An official blog in i3investor to publish sharing by Mr. Koon Yew Yin.
All materials published here are prepared by Mr. Koon Yew Yin
All materials published here are prepared by Mr. Koon Yew Yin
The above chart shows that VS has gone up from Rm 2.50 to Rm 7.60 in less than 12 months. It went up 7.8% or 11 sen yesterday from Rm 1.41 to Rm 1.52 which is equivalent to Rm 7.60 because of the share split 1 into 5.
As readers know, I have been writing several articles with the good intention of teaching people how to make more money from the stock market but I often receive a lot of abusive comments from stupid critics. They said that I wanted people to buy so that I could sell. Did you buy yesterday when more than 28 million shares were traded?
One famous accountant KC Chong wrote a few articles that he would not buy VS because the company has too much borrowing, very poor cash flow, poor return of equity and many other accounting jargons. He even put up some complicating formulas to impress you. The following is an extract of his article:
But wait, just cool down and be rational. Think first, is V.S really a NBI at this price as described here? http://klse.i3investor.com/blogs/kcchongnz/76694.jsp
For a NBI, we look at cash. No cash comes in from the business, no talk. That is what most successful businessmen think, don’t they? Let us look at its cash flow in Table 1 below.
Table 1: Cash flow of V.S
Year 2014 2013 2012 2011 2010
CFFO 46368 19666 34111 94277 49046
Net Capital -52371 -39639 -52371 -40360 -43268
Expenses
Free cash -6003 -19973 -6249 51009 28468
Flow
What happened to the last three years? There aren’t any cash left after spending money in capital expenses. Cash yield calculated from FCF/Price is negative, or “Not Applicable”. So how?
Unfortunately, KC Chong cannot forecast figures for the next few years. His bull shit attracted so many ignorant admirers. Currently VS is being traded above Rm 7.60 showing that KC Chong is wrong. I hope he realizes his mistake in misleading readers.
I am not an accountant. I buy shares like a businessman because I understand the process of doing business.
When VS receives a big supply contract from Kuerig Green Mountain Coffee USA, it has to borrow more money to buy more land to extend its manufacturing capacity. It needs more borrowing to buy equipment, raw materials and employ more workers.
The poor cash floor is because it takes time to extend the factory and to manufacture the products. It takes time to pact and put the products into containers. It takes time to wait for the ship to carry the goods to USA. It takes another 60-90 days to receive payment. Normally buyers buy on delay payment terms.
How did I discover VS?
As our Ringgit is 17 year low, I look for companies that export their products in US$. That was how I found VS, Latitude and Lii Hen.
I started buying VS as soon as I saw there was a sudden jump in profit. I cannot lose money if I strictly follow my golden rule in buying shares which is I must be sure that the company can make more profit this year than last year.
VS’s earning per share for last 3 quarters were 1.5, 2.58 and 4.80 sen and the price went up to Rm 1.52. Can the price still climb up further?
I am obliged to declare that I am a substantial shareholder of VS and if you decide to buy VS, you are doing it at your own risk.
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Discussions
9 people like this. Showing 50 of 114 comments
Good point about being a businessmen
Cash is what define a rich
Poor in cash is poor
It is literally corrected
2015-10-20 17:21
Let's be honest, there is no winner. If you buy something at an 'overvalued' price, considered that you hold it for long term, you return will just be lower than those that buy something at an 'undervalued' price.
What needs to be hyped about VS has all already been build into the price, if you buy it right now, it is very likely your return will be poor in the long term, if you buy it from where it is 50% before, then you are likely to do well in the long term. Simple as that.
2015-10-20 17:24
Delay the payment on time is typical very serious offenses in account
Try to pay late on your house loan and you will guaranteed in big troubles
2015-10-20 17:24
None will ask to buy IFCA like me at 40cents, anyone? and ride all the way to RM1.80, when it collapsed, even I sold at RM1.20, I still make a decent 200%
How to make sure SCIENTEX goes up to RM20? maybe you pray for valuecap to sailing, if not it will only be a dream
It all depends on your risk and reward, if you are so active in forum, you should not look for safe shares recommended by Kc Chong, those shares you buy and you can sleep well and don't look at the market, yes, but you can't beat a 300% return like IFCA
2015-10-20 17:28
I bought VS too, I have bought it before Koon's recommendation. However, this time I will have to disagree with Koon on this article. VS is a good or not, depends on which area you look at it. Cash flow, especially operating cash flow is very important and many has use it instead or earning to calculate IV. KC Chong did not predict anything, he just highlighted this is just not his cup of tea. It is a free forum, as long as there are good knowledge sharing, nothing is bullshit. Only those ppl that keep on giving TP without any sense or shout to sell without any facts are bullshit.
2015-10-20 17:31
Posted by Alpha Trader > Oct 20, 2015 05:09 PM | Report Abuse
KC said SUCCESS WAS NOT INVESTABLE AT 1.40, LOOK AT TODAY'S PRICE AT RM1.82, where is KC now?
that is not fair to KC !
KC also had said ptaras can move from 3.00 to 7.20, where were you then?
2015-10-20 17:31
Posted by JT Yeo > Oct 20, 2015 05:24 PM | Report Abuse
Let's be honest, there is no winner. If you buy something at an 'overvalued' price, considered that you hold it for long term, you return will just be lower than those that buy something at an 'undervalued' price.
What needs to be hyped about VS has all already been build into the price, if you buy it right now, it is very likely your return will be poor in the long term, if you buy it from where it is 50% before, then you are likely to do well in the long term. Simple as that.
i will answer on iiinvestsmart behalf.
how do you know vs at rm3+ is not overvalued or fully valued?
i use harsh word now.the empty tong kc analyse VS intrinsic value at RM3+ and you said 50% before at rm3+ good for long term?contradicting right.lose is lose.wrong is wrong.
proof the bursa statement past 3-5 years sure shuts up all critics.no proof no point talk why value investing is right!
2015-10-20 17:48
Posted by Alpha Trader > Oct 20, 2015 05:28 PM | Report Abuse
How to make sure SCIENTEX goes up to RM20? maybe you pray for valuecap to sailing, if not it will only be a dream
Be fair to KC, he does not recommend me to buy any shares, he just use it to explain his theory, do not get him wrong
scientx is one of the counter he quoted, I bought at 5.1 and sold at 6.8 , a reasonable gain of 30% with the knowledge I learnt from him.
I also had made reasonable gain on frontkn, superln, prolexus, IQ, .. he did not recommend these counter to me , but I know these are value buys with the knowledge I had gained from him,
Now I am holding gadang, flb ,matrix, favco waiting to harvest within one year. do you think there are not worth to hold for one year? I am willing to learn from you.
2015-10-20 17:54
KYY is a good man because he is willing to help the poor the poor and needy and talk politic we like to hear
KC is a good man because he is unselfish and generous to share his knowledge
KC fail to predict the price of VS does not mean he is wrong
KYY fail in mudajaya and rsawit does not mean he is a lousy investor
one thing that I feel uneasy is that at the current high price of VS, why KYY still keep on promoting VS as if it still can go up very much more, may be his intention is just to prove to the whole world he is right not a buy call
2015-10-20 18:10
Alpha, from the sound of it, 200% per year shouldnt be that hard for you, and more so irony when you say 'if you are so active here, you shouldnt looking for safe shares', considered that to achieve an outrageous return like 200% consistently year in year out, one must need a lot of knowledge and skills, and i believe being active on forum has no correlation with making 200%, if indeed you can achieve that consistently for 10 years, you should have 2000%.
If you believe jumping in and out can easily net you 100-200% per year, let's just say everyone outside your fence is trying to do that as well. Whether you can achieve that or not, only you know your own record. Superinvestors making 20-30% in the long run is considered rare breed. Maybe you're the rare breed so rare you can do 100% in the long run.
2015-10-20 19:27
Long time winners like Nestle, P Bank, LPi, QL, TopGlov...are truly win-win stocks for all their investors
2015-10-20 19:35
Growthinvestor, i dont see how it is contradicting. First, KC intrinsic value is his own, nothing to do with mine. 2nd, his IV is at RM3+ and i say RM3+ is good for long term, whats wrong with that? Buying it at fair value, if you want.
If stock A will go from RM1 to RM2 in 10 years, means if you hold for 10 years, you will earn average of 10% a year. IF you buy at fair value, you will earn 10% in long run, if you buy at overvalued, you will earn less than 10%. Simple as that. This is a scenario considered you dont sell but hold for long term.
2015-10-20 19:36
Posted by JT Yeo > Oct 20, 2015 07:36 PM | Report Abuse
Growthinvestor, i dont see how it is contradicting. First, KC intrinsic value is his own, nothing to do with mine. 2nd, his IV is at RM3+ and i say RM3+ is good for long term, whats wrong with that? Buying it at fair value, if you want.
If stock A will go from RM1 to RM2 in 10 years, means if you hold for 10 years, you will earn average of 10% a year. IF you buy at fair value, you will earn 10% in long run, if you buy at overvalued, you will earn less than 10%. Simple as that. This is a scenario considered you dont sell but hold for long term.
I will answer on growthinvestor's behalf.
A stock at its intrinsic value/fair value means margin of safety is closed. If you believe VS at RM3+ is good long term holding, you're saying KC's analysis on VS has been dead wrong.
How do you know VS at current price RM7+ is not fair value?
How do you know VS business can't improve and grow from current situation?
JT Yeo on mission to salvage lost pride by having the last word. I put a full stop.
2015-10-20 19:55
Another stock which was bad-mouthed by kc chong a few months back is Success. Boy, take a look at how the stock moved up recently. It proves this guy wrong again big time.
2015-10-20 20:20
When it went fully valued
It become fund manager favorited
Some famous public fund like to buy high
Value cap gonna be another fund buying at high
2015-10-20 20:30
When it is low fund manager didn't like to buy low
Because they are fund manager if they made a wrong move their trustee will blame them
2015-10-20 20:32
Hi Growthinvestor & iiinvestsmart, if you are switching in between ID please just say so, no need to behalf here and there.
Good long term holding is relative understand bro? You can buy something at overvalued price and in the long term earn CAGR 5%, it is still called 'good' if besides FD 4%, you can't find anything that can deliver 6% in this universe, get it bro?
I believe current price isn't fair value because historical ROE level does not justify current multiples over book value; 10 years historical record shows poor FCF, low barrier to entry thus does not justify multiples over BV, power of buyers will surpress margin and reduce return.
I never say that they can't grow from here, but rest assured at the current price you are 50% speculating the future of VS 50% anchoring to present value of the business. The bet is yours. If you want to earn avg 5% in the long term, this is probably a good price to buy now. If you want to earn avg >30% a year in the long term, this is not worth the chance.
2015-10-20 21:11
Warren Buffett’s appendix to the fourth revised edition of The Intelligent Investor describes a contest in which each of the 225 million Americans starts with $1 and flips a coin once a day. The people who get it right on day one collect a dollar from those who were wrong and go on to flip again on day two, and so forth. Ten days later, 220,000 people have called it right ten times in a row and won $1,000.
Buffett writes, “They may try to be modest, but at cocktail parties they will occasionally admit to attractive members of the opposite sex what their technique is, and what marvellous insights they bring to the field of flipping.”
After another ten days, we’re down to 215 survivors who’ve been right 20 times in a row and have each won $1 million. They write books titled How I Turned a Dollar into a Million in Twenty Days Working Thirty Seconds a Morning and sell tickets to seminars.
“Worse yet,” Buffett writes, “they’ll probably start jetting around the country attending seminars on efficient coin-flipping and tackling skeptical professors with, “If it can’t be done, why are there 215 of us?”
If you don’t know how to separate a good process from a bad one, you’ll surely fall for these ‘efficient coin-flipping’ wizards.
Learn to focus on the process more than the outcome. Use common sense and your own thinking to filter out the outcome-centric hindsight-heavy theories.
2015-10-20 21:17
Totally right
Company earn money..growing...got profit..give dividend..Company throw money to extend their business..make money again...Company earn money..growing...profit..give dividend..
Rolling rolling rolling.."
That's mean VS is very smart to use money to make money.
If company keep many cash on hand ,no extend business..no explore new business also no point.
Thanks uncle KYY.
2015-10-20 22:14
Boast himself again. Look at your Jtiasa again la, don't talk about a stock that gain in a yr time, see another 5 yrs. Feel disgusted with this old man condemning KC, very childish
2015-10-21 00:20
Winwinyarazhi, you got it right. A business man will always try to use OPM (other peoples' money) to make money.
2015-10-21 00:57
Hmmn while I have utmost respect for Mr Koon for his charities to help the poor students and his view for a better bolihland but to accuse Kc of bullshitting n misleading is sad to say the least :( especially when Kc is always unselfishly sharing value investing for many here which benefitted many readers including me. Those are strong words itself n are more applicable to many SKL here who constantly shout sell/buy without good basis. Kc has proven his method does work and his record in the past few years speaks for itself.
I'm no where near KC in terms of dissecting the figures but if I were to look at VS the main growth n expansion coming mostly from main buyer Keurig I will be a bit worried at the flat sales as competition creeping up
http://www.benzinga.com/analyst-ratings/analyst-color/15/10/5879913/how-much-worse-can-it-get-at-keurig-green-mountain-wedbu?utm_campaign=partner_feed&utm_source=marketwatch.com&utm_medium=partner_feed&utm_content=analyst_ratings_page
The shares price itself has taken a beating becoz of above
http://www.marketwatch.com/investing/Stock/GMCR?countrycode=US
but is this the worst since much euphoria especially VS holders about the launch of the Kold machine
http://www.cnet.com/products/keurig-kold/
and with reviews for Kold cup so frozen KOLD I'll be pretty worried if I were to hold or buy VS but since u bought at very low price u have the buffer but if they're not doing well with your massive shareholdings where will you find the buyers when u want to get out - definitely not the kechi mais in i3 LOL n am sure the insiders will be the first to bail out once they find the orders r not coming in.
something further to ponder - see if it makes sense - no accounting jargon here - juz simple math - basic logic - At 370USD for a machine that is bulky,noisy n slow n not even can imitate the original taste of Coke 100% how well this can do? My distant relative there tell me that The Cokes when it's on sale every week at different stores is only 99 cents for 2 liter bottle n this one cost 5 bucks to make 32 oz n if my math is correct that he can buy 1 bottle of 2 liters(Appr 67oz) ORIGINAL Coke for 99 cents straight off the shelf but have to spend 10 bucks to get 64 oz making something that is not even close to the original taste n u dun have to be Sherlock to tell u that this will not be a Hot seller since it's so KOLD :) unless they have many of Aunty Rosie there who can afford this kind of FAD and how many Aunty Rosie is there even in US LOL.in terms of size - yes plenty but am not talking about the size of $$$$$$$ here LOL
so now assuming the KOLD machine does not do well which looks like it based on above where will be the growth coming from since basically the high growth n the expansion was based on Keurig KOLD orders? The Hot machine is pretty saturated n increasing competitions will basically eat into them more. will VS be able to find another new keurig to keep the factory running? who knows maybe they can or Kold machine success cannot be ruled out entirely despite the disadvantages however unlikely since this world got many goats LOL then I will be another ignorant who missed the boat but I will still cheer u for your donations and betterment for the country and hope u cash more but not for the disrespectful accusations of Kc which all value investors here appreciate his honesty and his tireless effort to share his vast knowledge.
2015-10-21 04:01
@jonbravo, I don't think so. the score is 1-1 now.
http://klse.i3investor.com/blogs/kcchongnz/84797.jsp
2015-10-21 11:56
KYY is just trying to share his knowledge. If you don't think much of him as a stock picker, then don't follow his stock picks. Sometimes he gets it right like VS and sometimes he gets it wrong like Jaya Tiasa. He is no different than any other investor.
2015-10-22 11:18
Posted by unclejoe > Oct 22, 2015 10:37 AM | Report Abuse
Hi KC,
Please, don’t be affected by KYY, not worth it.
Time will tell, when reality set in.
Also, was told that KYY humiliated his own brother and nephew during his birthday lunch in front of 200 guests in Ipoh recently. Sigh….
Take care and keep up the good works.
2015-10-22 11:21
Ppl earn money ..will say VS good counter"
Ppl lose money will say VS no worth to invest.
How to measure?
Looking back the every qtr..
Got better and better?
Share price up and up?
Dividend pay and pay?
Enough.....that's all.
2015-10-22 14:09
Uncle Koon got an entrepreneur or businessman vision of how businesses are run. U think it is so easy to fully understand a business model n processes? Most of the company in Bursa has short term competitive advantage, so we need to check whether the EPS got positive every quarter. The main focus is the growth, how high the growth, and profit should be higher than last year. and project next year will be higher. If profit is negative u should sell the stock. FCF or free cash flow, need to be allocated efficiently. Debt should be reasonable, at least less than 5 times of net profits. Negative FCF does not equate that the company can't survive in d long run. If earnings growth is fantastic, within 5 years, they can settle all the total debts. Too much FCF, if the managements are not honest or candid, no efficiency in allocating the $, sure the company will be dead. Actually investing are very simple, only some geniuses want to make it so... difficult.
2015-10-24 13:06
Please be reminded don't fall in love with whatever company u buy, even it belongs to your beloved family members. Business is $ and Mr Market has no emotion, he treats everyone fairly, it is how u want to make use of Mr Market. Take advantage when he is so... pessimistic and be afraid when he is so... optimistic. The important facts are do u know which company to buy, when Mr Market is so... pessimistic? I tell u what u should do! Only maybe around less than 50 companies in Bursa are good, and within the 50 there are around 30 that are above average. So these 30 are having average ROE maybe 5 years average that are above 12%, plus above 12% of ROTC-Return of Total Capital. The most important facts are the EPS growth, the higher the better, and the price will shoot up like rocket, but sometimes u need to be very, very patient and be very, very discipline. If the company has a strong earnings per share trends, u got to buy when there are correction. The last thing u need to do, is when u should sell! That is crucial, this is when u earn tons of $$$. So when?, business environment changes, negative or earnings downward trends, management dishonest and the PE above 30 plus for Bursa. When earnings is negative or downward trends, the ROE and ROTC also go down, but PE goes up! When PE are all above 30, in these good companies, then the bubbles are going to POP!!!
2015-10-27 14:59
Ha...! why so quiet everyone? Okay now i would like to project the price of V.S. the next 2 years, to cut down margin of error. U can project for 5 years but maybe not so accurate. Since the per share earnings increased by average 50% of Rm 0.13, the compounding return using d per share earnings growth will be Rm 0.29 times average PE of 10. So u got maybe approximately Rm 2.90. So if u bought at maybe 1.45 per lot, in 2 years u got 100% return, dividend, free warrant, etc not included yet. So one year your return is 50% plus. If u can do it for more than 40 years, like what Buffett did, return of more than 20%, u will be better than Uncle Buffett, Ha...!
2015-10-29 21:59
The Tao of Warren Buffett. "Rule No. 1 : Never lose money. Rule No. 2 : Never forget rule No. 1.""Accounting is the language of business.""You should invest in a business that even a fool can run, because someday a fool will.""With enough inside info and a million dollars, you can go broke in a year.""If calculus or algebra were required to be a great investor, I'd have to go back delivering newspaper.""It amazes me how high IQ people mindlessly imitate, i never get good ideas talking to other people."The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective.""There seems to be some perverse human characteristic that likes to make easy things difficult.""Diversification is a protection against ignorance, it makes very little sense for those who know what they are doing.""When proper temperament joins up with proper intellectual framework, then you get rational behavior.""I buy stocks when lemmings are headed the other way."If you don't make mistakes, you can't make decisions.""The investors of today does not profit from yesterday's growth.""I am a better investor because i am a businessman, and a better businessman because i am an investor.""Turnarounds seldom turn.""Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway.""You should look at stocks as small pieces of a business.""It's only when the tide goes out that you learn who's been swimming naked."
2015-10-29 23:07
Uncle Koon I've followed your investment advice and did quite well - better in fact than ASB or Tabung Haji could give me.
For that, and your activism and philanthropy - both of which I admire and will try to emulate - thank you very much, sir.
2015-11-02 13:57
Projected earnings growth of approximately 20% per year, V.S intrinsic value should be approximately Rm 2.80. So it's selling at a discount of price of 45% to its intrinsic value.
2015-11-03 09:14
Funny , I can only remember mr koon and his mudajaya & rsawit
1 right doesnt erase 100 wrongs
2015-11-03 20:45
The best kind of business to own is one with high profit margins and high inventory turnover. The second-best kind of business to own is one with either high profit margins or a high enough inventory turnover to compensate for lower profit margins. The worst kind of business not to own is one with both low profit margins and low inventory turnover. V.S is the second-best kind of business to own!
2015-11-03 21:55
"The great personal fortunes in this country weren't built on a portfolio of fifty companies. They were built by someone who identified one Wonderful Business!"
2015-11-03 22:00
"I can't be involved in fifty or seventy-five things, you end up with a zoo that way. I like to put meaningful amounts of money in a few things."
2015-11-03 22:06
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JT Yeo
hi iiinvestsmart, i dont think uve answer my question.
How do you define winner? Do you declare winner for everyone that buy IFCAMC when it was at RM1.80, or when it is sitting below RM1 now?
How about DKSH? Do you declare winner when the price is on track to hit RM10 last time? or you declare it now at RM4?
2015-10-20 17:19