THE INVESTMENT APPROACH OF CALVIN TAN
A Deeper Look at A Cyclical Stock called L&G (Land & General) Calvin Tan Research
calvintaneng
Publish date: Wed, 12 Jul 2017, 12:45 AM
calvintaneng
0 1,805
Hi Guys,
I have An Investment Approach I which I would like to all.
I have An Investment Approach I which I would like to all.
Hi guys/gals,
Now Calvin would like to share a little more on a Cyclical Stock called L&G.
L&G has 3 main Focus
1) REAL ESTATE
2) Oil Palm & Rubber Cultivation
3) Education
Education is non cyclical and recession proof. So teachers' jobs are secured. Especially those working in Govt School.
Oil Palm/Rubber are some what cyclical.
The Major Part of L&G Business is in Real Estate. And Real Estate is a cyclical business.
Other Cyclical Businesses are
1) Prestar (Usually during Election Time Govt will dish out Major Infrar Highway Jobs to win votes) So Prestar's Guard Rails will do roaring business when Major highways are built.
Then was why Calvin called for an early buy on Prestar at 46 sen.
Same goes for Masteel at 66 sen due to Long Steel being needed for highways and MRT
2) Stock Brokering like INSAS
When Election time comes & during Market Bull run time more traders will come and join the party. So INSAS, TA, Hwang & Other Brokering Firm will do well. That was why Calvin called for a buy on INSAS at 65 sen
3) Real Estates Stocks
Yes, this one also Cyclical. And L&G is one of them. When Stocks of property meet good times - Sales go up & profit increased.
For L&G out of last 4 quarters One Quarter Did exceptionally well when it has niche properties for sale.
Just like Ski Resort. Business is good only one season during winter.
So let's take another look again at this One Quarter Result of L&G
SUMMARY OF KEY FINANCIAL INFORMATION
|
|
INDIVIDUAL PERIOD
|
CUMULATIVE PERIOD
|
||||
|
CURRENT YEAR QUARTER
|
PRECEDING YEAR
CORRESPONDING QUARTER |
CURRENT YEAR TO DATE
|
PRECEDING YEAR
CORRESPONDING PERIOD |
||
|
31 Mar 2016
|
31 Mar 2015
|
31 Mar 2016
|
31 Mar 2015
|
||
|
$$'000
|
$$'000
|
$$'000
|
$$'000
|
||
| 1 | Revenue |
184,194
|
56,368
|
342,061
|
465,366
|
| 2 | Profit/(loss) before tax |
76,039
|
6,436
|
127,344
|
192,338
|
| 3 | Profit/(loss) for the period |
53,083
|
1,988
|
91,765
|
143,414
|
| 4 | Profit/(loss) attributable to ordinary equity holders of the parent |
54,982
|
7,096
|
95,050
|
105,428
|
| 5 | Basic earnings/(loss) per share (Subunit) |
5.03
|
0.67
|
8.75
|
11.93
|
| 6 | Proposed/Declared dividend per share (Subunit) |
0.02
|
0.02
|
0.02
|
0.02
|
|
AS AT END OF CURRENT QUARTER
|
AS AT PRECEDING FINANCIAL YEAR END
|
||||
| 7 | Net assets per share attributable to ordinary equity holders of the parent ($$) |
0.6385
|
0.5823
|
||
From 31 March 2016 Results you can SEE that
REVENUE is Rm184,194 millions
Out of the Rm184 millions revenue L&G garnered a Gross profit of Rm76.039 millions
How much gross profit by percentage?
Let's divide Rm76.039 millions by Rm184.194 millions
= That's 41.28%!!
At 41.28% L&G beats many other Real Estate companies. It even beats many construction companies including PTaras Jaya. And it even beat construction material compaies which are also cyclical in nature. Of course superstock like KESM can generate a gross profit of 70% to 80% (But these are rare indeed!)
From this one quarter profit alone L&G has already generated a profit of 5.03 sen
And 5.03 sen profit means a P/E of 4.17 or growth of 23.9%
So you must not and should not see or judge cyclical stocks by just one or 2 quarters results.
If just One Quarter out of every 4 Quarters every year is doing exceptionally well - the stock is worth our attention.
It was said in Penang Island of Malaysia that One Type of Business depend entirely on just one month's sale.
They only do one month's business every year & can take holiday for the next 11 months.
What kind of business is that? you may ask?
It's selling "incense & joss sticks & paper articles like paper houses, paper cars, paper TV and what not which they burn for the dead"
They made an awful lot of monies selling these superstitious stuff! (Of course Calvin being a Christian does not endorse this superstitious waste of time and money!)
But this is one way of illustrating how a cyclical business operates.
Now coming back to L&G
it has just acquired 4 Assets recently.
Even if L&G separates these 4 new Acquisitions into new projects for 2, 3 or 4 years - their expertise of garnering high profit is assured.
That's why Calvin is bullish.
Extra bulllish as price has fallen to very attractive level now.
Buying L&G now at 21 sen now near Rock Bottom is buying below Calvn buying price, below L&G Directors & Insiders buying price. Buying before Sifu Tan Chong Koay buying price. Buying below savvy Investor Lim Pei Tiam buying price.
YESS!
Last time Calvin's Johor Sifu told Calvin to buy Pintaras Jaya at Rm1.40 when he saw Insiders of Ptaras exercising ESOS at Rm1.90. And also one PTaras Dr. Boss buying Ptaras Shares at Rm1.90 from the open market. If Directors of Ptaras dare to buy at Rm1.90 it is certainly safe for us to buy at Rm1.40.
As it turned out Ptaras Jaya powered up to Rm7.00 & split (Up 500%)
And same goes for L&G.
Success is repeated again and again.
May all Invest wisely,
CHEERS
Calvin Tan
Singapore
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Discussions
Be the first to like this. Showing 21 of 21 comments
Posted by John Lu > Jul 12, 2017 12:47 AM | Report Abuse
I wonder why rank 224?
Rank 224?
Come back in December 31st 2017 & See
https://www.youtube.com/watch?v=0_ySoCpqyGs
2017-07-12 00:54
Looks like Calvin is desperately trying to cash-in his chips as he now realises that he is on the wrong end of the real estate cycle. When property eventually moves up (ditto for L&G and Duta), he will say `I told you so'. Meanwhile, expect more promoting from him on L&G. Duta?
2017-07-12 01:48
choop818,
Calvin thinks you will miss the boat.
GEELY JV WITH PROTON IS A FOREGONE CONCLUSION.
And you should know that Sg Rengit and Bandar Penawar Property prices boomed because of PENGERANG's RAPID DRAWING IN 70,000 Strong population.
Likewise GEELY JV WITH PROTON TO INCREASE PRODUCTION OF CARS IN TG MALIM WILL DRAW IN 60,000 PROTON STAFF AND VENDORS.
POPULATION BOOM WILL LEAD TO MORE NEED FOR DWELLING PLACES AND BUSINESSES.
THUS CREATING REAL ESTATE SPILLOVER BOOM HERE. DESARU ALTHOUGH HALF HOUR FROM PENGERANG ALSO BOOMED.
SURELY, L&G'S 2,494 ACRES OF LANDS IN KERLING ONLY 15 MINUTES AWAY FROM TG MALIM WILL GO UP IN VALUE TOO.
2017-07-12 02:15
Dear calvintaneng,
Between Bpuri, Dutaland, Bjcorp, TalamT and L&G which all have deep value land assets. Please advice which one should I sell now and just concentrated on one of them that will give me the faster and biggest returned.
I only have limited fund and thus cannot invest in all of them hence your advice will be much sought after and appreciated.
Thank you
2017-07-12 08:38
Sslee
The one with the deepest land assets in
Bj Corp. This is a long term asset play if you can wait like waiting for mau sang wang durian.
OTHERS ARE ALSO FILLED WITH DEEP ASSETS.
ONLY TALAMT AND L&G WILL SEE UNLOCKING OF VALUE DUE TO GEELY COMING TO TG MALIM BIG TIME.
WHEN PEOPLE SEE GEELY DESIGNED CARS BEING BUILT IN TG MALIM THEY WILL RUSH TO INVEST IN ASSETS AND LANDS NEARBY.
SO INVEST WHERE COMING BOOM STARTS SOON
2017-07-12 08:48
Bpuri and Dutaland also very good in assets. For Dutaland results in August should be positive if sale of Kenny Hill lands are reported. And for Bpuri the ongoing projects should contribute positively.
2017-07-12 08:51
FOR L&G BY VIRTUE OF IT BEING SO GROSSLY UNVERVALUE NOW IT SHOULD ATTRACT A TAKE OVER OR PRIVATISATION LIKE TMAKMUR, KULIM, SUPER ENTERPRIZE, THESTORE OR WANGZHENG.
2017-07-12 08:52
Dear Calvintaneng,
I had be warned by many in the i3 community that some of the listed company tycoons are treating their listed company as their piggy bank and they are only interest to enrich themselves by even cheating all the minority shareholders. One on them is Vincent Tan.
So of all the 5 companies which one of them have a record of more honorable owner that readily share the wealth of the company with all the shareholders.
Thank you
2017-07-12 09:14
Not only you have to beware of these tycoons. You also need to be aware of number 1 holang king like Tan Eng.
2017-07-12 17:02
Sslee,
This is what i think though others might not agree.
TalamT boss by virtue of him being a Christian should be quite trasparent and safe.
Opcom's Boss is another honest guy.
Pba should be quite safe as Elder Lim sets a good example for his son LGE.
L&G bosses at first i thought were no good due to L&G being so cash rich yet asked for more monies by Rights Issue.
I was wrong. After studying their modus operandi i now believe they acted in the best interest of the company.
TSVT though thought to be questionable still has his own best interest to secure. Ultimately i think he hopes Bj Corp is doing well. That's why he has loaded up on Bj Corp shares in stead of selling.
This is Calvin's opinion. Others might differ from what i said. It does not matter.
l made my conclusions based on what i know best.
2017-07-12 18:17
Worth zero cent research report. A typical conflict of interest plus Holland way of suicidal recommendations. 伤人伤自己
2017-07-13 10:52
The book says,
Every prudent man deals with knowledge.
Present your counter arguments if you have any.
Don't just pour out foolishness.
All wise people can discern what is right from wrong.
Today is another opportunity to buy L&G (Land & Gold) on the cheap.
Once fly away all who failed to act now will surely miss the boat.
Don't cry father cry mother then
2017-07-13 13:51
Calvin, I see that your investment style is investing in undervalued companies with undervalued fixed assets such as land/property. They are long list of such companies around with some even hoarding more than 50% NTA as cash and with NO debts! Examples are : SPB, Keck Seng, MPHB capital and many more which you haven't touched on.
My investment style has been exactly like yours. But in the end of the day, my 10 years return holding such stocks see single digit annualised return. On the other hand, I also don't plunge into problem during crisis.
Now I give more weightage to whether the companies have a sound on-going business/venture that generate strong and sustainable profit and cashflow. I begin to emphasize on the quality of management and if the controlling shareholders has track record rewarding shareholders with dividend within the companies' financial capability.
Buying base on undervalued fixed asset proposition( esp land/property) may not guarantee anything if companies do not monetise the asset and even if companies do monetise the asset but refuse to reward shareholders. It may just be a waiting game.
Just share my thought
2017-08-12 07:44
Posted by chongyo > Aug 12, 2017 07:44 AM | Report Abuse
Calvin, I see that your investment style is investing in undervalued companies with undervalued fixed assets such as land/property. They are long list of such companies around with some even hoarding more than 50% NTA as cash and with NO debts! Examples are : SPB, Keck Seng, MPHB capital and many more which you haven't touched on.
My investment style has been exactly like yours. But in the end of the day, my 10 years return holding such stocks see single digit annualised return. On the other hand, I also don't plunge into problem during crisis.
Now I give more weightage to whether the companies have a sound on-going business/venture that generate strong and sustainable profit and cashflow. I begin to emphasize on the quality of management and if the controlling shareholders has track record rewarding shareholders with dividend within the companies' financial capability.
Buying base on undervalued fixed asset proposition( esp land/property) may not guarantee anything if companies do not monetise the asset and even if companies do monetise the asset but refuse to reward shareholders. It may just be a waiting game.
Just share my thought
Good morning chongyo,
Yes, you are correct to say
"Calvin, I see that your investment style is investing in undervalued companies with undervalued fixed assets such as land/property."
For 10 years I have followed this deep discount of price to asset approach since I read about Walter Schloss
These are the stocks I bought which saw success
Hignyiap, DNP, I&P, Paramount Garden, Pelangi Bhd, Johor Land, QSR, Triumphal. Harisson, Ajiya & many others
I also bought KSeng much earlier at Rm1.60, Selangor Property around Rm3.30 & Mphbcap at Rm1.38. All sold already for profits.
Of course there are those that did not perform as well.
But this has been a happy experiment. So far so good.
I found out that many of them under perform because Majority owners want to privatise it. That could be the reason why they under perform like Kulim, Tmakmur & TheStore.
In the case of Harrison selling at Rm1.40 with NTA of over Rm3.00 the Indonesia Owner wanted to take it private at Rm1.40 which was a ridiculous price. It was opposed & today Harrison is near Rm4.00
Yes, after watching all the past examples I think there are good & bad signs to watch out for
1) If a company is good Insiders will load up as share prices go down. Last time Yee Lee share price dropped from Rm2.00 to Rm1.00. I alerted my Johor Sifu & we both bought into YeeLee then. After bonus issue the average cost of YeeLee is only 35 sen. So YeeLee is an 8 baggars today. However, YeeLee is no longer cheap today & with rising commodity prices. YeeLee will also be impacted like F&N now due to high costs of operation.
2) A good company with high assets can be bad if Insiders took opportunity to dispose Assets on the cheap to 3rd party companies which they also own through proxies. This is a form of fraud.
3) And for a company of deep value to see excitement is by Disposal of Assets. Example is Lienhoe which sold a piece of Land in Bandar Sri Alam recently for 10 times its book value. At that Lienhoe price shot up.
4) I hold these ones due to these reasons
a) Mui Bhd (Divorce settlement will force Asset sale)
b) Bj Corp (Insiders buying & holding firm as prices weakened)
c) PBA (This utility stock has deep discount to Asset Value)
2017-08-12 09:34
@chongyu,
i suggest u not to quit ur day job to do full time trading.
@calvintaneng,
when i see u wrote booming iskandar, i know u r a joker. anyone who listens to u better prepare to have 80% chance to go jump cliff.
2017-08-12 12:50
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
John Lu
I wonder why rank 224?
2017-07-12 00:47