1.75 RM

Praise for The Flaw of Averages

1. "Statistical uncertainties are pervasive in decisions we make every day in business, government, and our personal lives. Sam Savage's lively and engaging book gives any interested reader the insight and the tools to deal effectively with those uncertainties. I highly recommend The Flaw of Averages ." - William J. Perry , Former U.S. Secretary of Defense

2. "Enterprise analysis under uncertainty has long been an academic ideal...In this profound and entertaining book, Professor Savage shows how to make all this practical, practicable, and comprehensible." - Harry Markowitz , Nobel Laureate in Economics

In essence, F (E(x)) is not the same as E(f(x))....

:)

Instead of assuming a certain deterministic value of growth rate for Tien Wah, one should actually use a distribution of growth rate, and examine the impact of this distribution of growth rate on the final valuation, i.e. via Monte Carlo simulation...

It is all written in the book by Sam Savage..

http://web.stanford.edu/~savage/flaw/

Bad news continued to stack up against Tien Wah and New Toyo...

http://www.ft.com/cms/s/0/00d59d84-59ff-...z3QuVw39BJ

Bad news continued to stack up against Tien Wah

http://www.ft.com/cms/s/0/00d59d84-59ff-...z3QuVw39BJ

it is not about forecasting growth. It is about using probabilistic management to manage uncertainty in valuation analysis...

I think you have made a fundamental error in all your analysis because you have made the mistake called "the flaw of averages".

E.g. with reference to your article on "Tien Wah Valuation", you assumed that a company can grow certain average rate of growth annually. But, it will never happen in reality!!!

e.g. 3%, 4%, -2%, -5%, 4%, 5%, 5% ---- Growth Path 1

e.g. 2%, 2%, 2%, 2%, 2%, 2%, 2% --- Growth Path 2

The average of the above 2 series = 2% per annum.

If one were to apply the above 2 different path of growth rates to derive valuation for Tien Wah, one would end up with 2 totally different valuation!!!

Welcome to the world of "Flaw of Averages"...

http://flawofaverages.com/

Hope the writer can go and read up on the book "The Flaw of Averages" :)

The above article made a serious flaw. It assumed that Tien Wah can grow at a certain average rate of growth annually. It will never happen in reality!!!

e.g. 3%, 4%, -2%, -5%, 4%, 5%, 5% --- Growth Path (1)

e.g. 2%, 2%, 2%, 2%, 2%, 2%, 2% --- Growth Path (2)

The average of the above 2 series = 2% per annum.

If one were to apply the above 2 different paths of growth rates to derive valuation for Tien Wah, one would certainly end up with 2 totally different valuation!!!

Welcome to the world of "Flaw of Averages"...

http://flawofaverages.com/

Hope the writer can go and read up on the book "The Flaw of Averages" :)

this is one piece of GONE counter....it never had an economic moat to begin with. If BAT does not renew the contract, Tien Wah can close shop...

From the example of this so-called good counter, one can see that all the earlier theories being painted about HOW GOOD the stock is were all useless...

Tien Wah closed at 1.86 RM today. Close to 30% drop from its peak of 2.60 RM. Dying soon...

Any more defenders left?

it is going to drop below 2RM soon...dead cat...

Suddenly all the talk about how GREAT Tien Wah was and the sustainability of their business becomes DEAD SILENCE....

It is not about who is right or who is wrong. It is about people who bragged and boasted that Tien Wah's tobacco printing/packaging business is sustainable and gives Tien Wah such a high valuation.

Aren't these people "misleading" the market into thinking that Tien Wah is value for money and a good investment? I find it so ridiculous that these people were still recommending people to buy into Tien Wah when it reached 2.50RM and when its fundamentals were fast deteriorating..

Tien Wah might be value for money Below $2.00 RM. Even at $2.20, it is OVER-VALUED!!!

kcchongnz & CPNG - Any comments after seeing that Tien Wah earnings for Q1 and Q2 were so bad? speechless?

Tien Wah will become value for money if it drops below 2 RM...

Tien Wah just released its Q2 results. As expected, the results were terrible.
Half-yearly EPS has dropped to 9.41 (sen) from 16.65 (sen) or 44% DROP.
Interim dividend has also been cut to 3 (sen) from 7.74 (sen) or 61% DROP

Since New Toyo is largely dependent on Tien Wah for a large segment of its revenue/profit, we can expect the results for New Toyo to be quite bad as well, and we should be prepared for a possible dividend cut.

The "unsustainability" of tobacco printing/packing has been explained earlier - printing volume reduction without a compensating pricing adjustment, unlike the big tobacco companies.

tien wah has cut its dividend!!!
It should gap down to below 2.30 RM!!!!!!!

ended at 2.33 RM today....2.30 to be broken next..

Haikeyila - Good if u can explain what do u mean by "holding strong in the face of storm" ?? Holding Tien Wah at way below 2.65RM?

Are you contradicting yourself? Did u remember what u said back in Nov 2013?


"haikeyila:- holding strong in the face of a storm. while blue chips are being tossed around like houses in tacloban."
12/11/2013 10:27 "

I read your much earlier postings that said " still holding strong in the face of xxx"... Did u really sell all your holdings at 2.65 RM or still stuck at prices well below 2.65 RM?? haha

who dares to accumulate now? Tien Wah dropping like a knife. 2.36 RM...where are all the heros and defenders of Tien Wah?

Tien Wah finally dropped below 2.40 RM today....dying soon...

http://voicesofmalaysia.com/interviews/interview-tengku-tan-sri-dr-mahaleel-tengku-ariff-ceo-tien-wah-press

the chairman of tien wah is getting old. don't think he has enough DRIVE to bring tien wah to greater heights...

http://thanhniennews.com/business/vietnam-considers-increasing-tobacco-tax-26677.html

Another big trouble ahead for Tien Wah. The printing volume for Vietnam will reduce drastically with the impending tax increase...

If I were New Toyo, I will just sell off Tien Wah first and keep the specialty paper business...

This is likely to be followed by dividend cut for both the interim and final dividends...

Seem that Tien Wah is finally going to break below 2.40 RM from its recent peak at 2.68 in Dec 2013...Finally, Mr Market is realizing that it has been overpriced..

Kcchongnz, maybe u should also report abuse by haikeyila for using "vulgarities" which might be legally liable...


"haikeyila ask a million more questions, squeeze your balls tight and watch the counter cross RM3 and pay special dividends."

12/11/2013 09:39

I am enjoying my life :)

Of course there are many stocks and counters out there better than Tien Wah and New Toyo with more credible history...

But the fact remains that the financials of Tien Wah has been deteriorating.
(just looked at the recent Q4-2013 and Q1-2014). Even company itself has acknowledged that its financial performance for FY2014 will be quite bad.

New Toyo is saved by the fact that it still has specialty paper business which is reviving. But it too has its own set of problems!

Where are all the strong supporters of Tien Wah?

Cowards hiding and still tied to your mother's apron strings ?

What I said a few quarters ago has come true for Tien Wah.
{Pls see data below - Nov 2013}

Just look at its deteriorating revenue and net profits.
It will be quite soon before its share price adjusts downwards accordingly to reflect its deteriorating financials!!!

Its market valuation is too rich now. RM$2 sounds more reasonable to me.


**************************
Robert Love Let's be rational about Tien Wah.

1. How big is the printing market (tobacco and non-tobacco sectors) in Asia Pacific and how much is Tien Wah's share of the market?

2. Smoking rates and legal volume for cigarette volumes has decreased and will continue to decrease in Malaysia and Australia, 2 of the 4 exclusive printing zones in the contract with BAT. How is Tien Wah going to expand its market share when the sector itself is shrinking? Tien Wah did not reveal its printing volumes in its financial statements. Even at constant revenue, the cost of products has gone up due to inflation. Hence, the real printing volume decrease would have been much greater. Is Tien Wah venturing into new markets to mitigate the printing volume drop in Malaysia and Australia?

3. The Australian dollar will continue to drop over the next few years. This will also translate into lower earnings for Tien Wah for its operations in Anzpac.

4. With the advent of e-cigarette, the traditional cigarette volume is going to decrease even more rapidly. Hence, the demand for conventional printing will drop as well. How is Tien Wah going to deal with this?

Quite unlikely for Tien Wah's share price to move up from here when its revenue and profit are already stagnating or declining rite?

tks.

21/11/2013 15:29
*******************************

Tien Wah 2 factories in Vietnam might be in trouble from the recent riots...

Growth
Even if the cash flow is great, investors would still hope for some growth of the business of the company, without which there will be no growth of the cash flow. It is hard to predict what would be the growth of the company in the future. But looking at its past, Tien Wah’s revenue and net profit has been growing at a commendable CAGR of 26% and 21% respectively for the past 5 years as shown in Figure 1 below and Table 2 in the appendix. I would be very happy if the growth can be just half or even a third of those achieved.

***

too bad. Revenue has reached a plateau and is declining....

http://www.bursamalaysia.com/market/listed-companies/company-announcements/1620613

Tien Wah Q1 2014 result was very bad....

Sunset tobacco industry in Australia..

Philip Morris to stop cigarette production in Australia
American cigarette and tobacco company Philip Morris International Inc said it will cease cigarette production in Australia this year because of restricted export opportunities due to government regulations.

Since New Toyo already owns more than 50% of Tien Wah, whoever buys over New Toyo will gain control of Tien Wah. No need to make a double effort to make an offer for Tien Wah.

can someone tabulate the 2013 financial results into the Table above as well. the revenue and profit have dropped. the trend has been reversed.

At the last AGM, Tien Wah said that it needed to step up its capex investment to keep abreast of their competitors. If we refer to latest Q4 results for Tien Wah, one can see that it has stepped up its capex again...

too capital intensive. Total Asset = 450mil (RM); total revenue = 380mil (RM). One dollar of asset is generating less than one dollar of revenue!!!

Next rights issue might be coming soon...

Yes, Mr Tobacco, you may be right in the above

But we need to see from a bigger perspective.

How much have Tien Wah taken from Shareholder since Day One?
Does it need to keep asking Shareholders for money every time it steps up capex or every time it needs to do an acquisition?

Sorry what does all these figures say? Has Tien Wah made back more than the $175mil RM purchase price?

$60mil Aussie dollar for Anzpac...

understand that Tien Wah/New Toyo might have paid a hefty price to BAT for the 7-yr exclusive contract...

does this mean that the factory space at Anzpac will be sold off or leased out? Will this lead to a mark-to-market valuation?

Some of my friends asked isn't buying Tien Wah similar to buying a business trust? Tien Wah asked Shareholders for money (i.e. rights issue) back then although it did give back some in dividends.

Is this kind of asset heavy business sustainable? If you look at Tien Wah, it looks like it is starting to ramp up is capex investment again (15mil RM)....

why is haikeyila so quiet?

"ask a million more questions, squeeze your balls tight and watch the counter cross RM3 and pay special dividends."

Cross RM3 dollars? must be dreaming until cow comes home...haha

New Toyo's full year results for FY13 has improved over FY12 (unlike Tien Wah). As mentioned before, New Toyo has other sources of income (e.g. specialty paper segment)...Much more diversified than Tien Wah and resilient as well!