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3iii | Joined since 2015-02-07

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News & Blogs

3 weeks ago | Report Abuse

Developer No 1: He developed a piece of land for industrial purposes. He completed building these small factories and sold all. He kept the prime locations for his own company, for rental purposes. His excess cash, he reinvested into a piece of land where he built a high rise. He did not sell this property and kept it for rental purposes.

Developer 2: A small time developer. Developed a piece of land he bought many years ago. Mixed development. He sold most of the residential units. Sold many of the shop lots too. His company kept some prime shop lots for rental purposes. He made a good profit and had some excess cash to spend and distribute. Today, he collects rentals. To develop another project, he would need more capital. Land and development costs keep escalating, and these are challenges he faces.

Developer 3: He obtained a prime piece of land in the town. He developed this into a commercial business district. Many shoplots, including a high rise complex. He had difficulty selling these units. Some were popular and snapped up. Many were left unsold and only sold gradually. Upon completion of the project, he still have many unsold units. He experienced cash flow problems, and had to restructure his company with his bankers, suppliers and others. Finally, he managed to sell of the complex to another group. Till today, this complex is poorly occupied, virtually empty. This is a decade or more old story.

News & Blogs

3 weeks ago | Report Abuse

It is not easy to value a property development company. Almost impossible for the long term.

It belongs to the too hard to analyse tray in my book.

News & Blogs

3 weeks ago | Report Abuse

Are you able to value KSL? Valueing a property company is extremely difficult. I find that it is better to put these companies in the too hard to understand tray. Look for other "easier" companies to study and value.

General

3 weeks ago | Report Abuse

Is it not true, that the really big fortunes from common stocks have been garnered by those who made a substantial commitment in the early years of a company in whose future they had great confidence and who held their original shares unwaveringly while they increased 10-fold or 100-fold or more in value?

The answer is "Yes."

General

3 weeks ago | Report Abuse

I have DLady and Nestle in my portfolio since 1993.

Over these long years, the prices of these 2 stocks fluctuated: nothing surprising here.

Over these long years, the prices of these stocks have increased multiple folds. These are facts.

Over these long years, there were periods when their share prices stagnated for many years too. These are facts.

Over these long years, there were periods when their share prices fell. Recently DLady's share price fell a lot. These are facts.

Stocks are safe for the long term, and very unsafe for tomorrow. If you think you can jump in and out, and know the time to come in and to get out, you are making a mistake.

General

3 weeks ago | Report Abuse

I have DLady and Nestle in my portfolio since 1993.

Over these long years, the prices of these 2 stocks fluctuated: nothing surprising here.

Over these long years, the prices of these stocks have increased multiple folds. These are facts.

Over these long years, there were periods when their share prices stagnated for many years too. These are facts.

Over these long years, there were periods when their share prices fell. Recently DLady's share price fell a lot. These are facts.

Stocks are safe for the long term, and very unsafe for tomorrow. If you think you can jump in and out, and know the time to come in and to get out, you are making a mistake.

General

3 weeks ago | Report Abuse

Selling is often a harder decision than buying
"If you have bought a good quality stock at bargain or reasonable price, you can often hold forever."

Investing is fun. For every rule, there is always an exception.

The main reasons for selling a stock are:

1. When the fundamental has deteriorated permanently, (Sell urgently)
2. When it is overpriced, whereby the upside gain will be unlikely or very small and the downside loss will be big or certain.

We shall examine reason No. 2 through the property market. The property market is also cyclical. There were periods of booms and dooms.


If you have a good piece of property that is always 100% tenanted and which gives you good consistent return (let's say 2x or 3x risk free FD rates), would you not hold this property forever? The answer is probably yes.

Then, when would you sell this property?

Note that the valuation of property, as with stocks, is both objective and subjective.

Would you sell when someone offered to buy at 500% above your perceived market price?

Probably yes, as this is obviously overpriced. You could cash out and probably easily re-employ the money to earn better returns in another property (or properties) or other assets.

Would you sell when someone offered to buy at 50% above your perceived market price?

Maybe yes or maybe no. You can offer your many reasons.

However, all these will be based on the perceived future returns you can hope to get from this property in the future. This is both objective based on past returns obtained and subjective and speculative on future returns.

However, unlike reason No.1 when you would need to sell urgently to another buyer to prevent sustaining a permanent loss, you need not sell just because someone offered to buy the property at high price. (However, there are also those who "flip properties" for their earnings; they will sell quickly for a quick profit.) You will not suffer a loss but only a diminished return at worse. You can take your time to work out the mathematics.

You maybe surprised that you may still achieve a return higher at a time in the near future by rejecting the present immediate gain based on the present high price offered.

Also, you would need to price in the lost opportunity cost when the property is sold at this price, even though it is 50% above the perceived normal market price. Could you buy a similar quality property with the same sustainable increasing income or return by offering the same price?



Similarly, the same line of thinking can be applied to your selling of shares.

When should you sell your shares?

Yes, definitely when the fundamentals have deteriorated permanently. The business has suffered for various reasons and going forward, the earnings will be permanently impaired and deteriorating.

Yes, when the price is very very overpriced. However, you need not sell your shares in good quality companies that you bought at fair or bargain price. As long as the fundamentals are strong and the business is adding value, selling now at a higher price may mean losing the return that you could have obtained in the future years from owning this stock and the opportunity cost of reinvesting the cash into another stock of similar quality and returns.

Once again, the importance of sound reasoning and doing the mathematics in making a decision whether to sell or not.

Is it not true, that the really big fortunes from common stocks have been garnered by those
who made a substantial commitment in theearly years of a company in whose future they had great confidence and
who held their original shares unwaveringly while they increased 10-fold or 100-fold or more in value?

The answer is "Yes."

ht tp://myinvestingnotes.blogspot.com/2012/07/my-18-points-guide-to-successfully.html



Additional notes:

Other reasons for selling a stock (or property) are:
To raise cash to reinvest into another asset with better return.
A certain stock (or property sector) may be over-represented in your portfolio due to recent rapid price rises and you need to reduce its weightage to reduce your risk of over-exposure in this single stock (or property sector).


Footnote:

This is a true story. A rich man was approached by a buyer to sell his property. A few neighbouring lots were sold for $1.6 m the last 2 years. What offer will ensure that you sell your property to me? Please let me know. The unwilling owner replied, "$5 million". There is a lesson here too. :-)

News & Blogs

3 weeks ago | Report Abuse

Selling is often a harder decision than buying
"If you have bought a good quality stock at bargain or reasonable price, you can often hold forever."

Investing is fun. For every rule, there is always an exception.

The main reasons for selling a stock are:

1. When the fundamental has deteriorated permanently, (Sell urgently)
2. When it is overpriced, whereby the upside gain will be unlikely or very small and the downside loss will be big or certain.

We shall examine reason No. 2 through the property market. The property market is also cyclical. There were periods of booms and dooms.


If you have a good piece of property that is always 100% tenanted and which gives you good consistent return (let's say 2x or 3x risk free FD rates), would you not hold this property forever? The answer is probably yes.

Then, when would you sell this property?

Note that the valuation of property, as with stocks, is both objective and subjective.

Would you sell when someone offered to buy at 500% above your perceived market price?

Probably yes, as this is obviously overpriced. You could cash out and probably easily re-employ the money to earn better returns in another property (or properties) or other assets.

Would you sell when someone offered to buy at 50% above your perceived market price?

Maybe yes or maybe no. You can offer your many reasons.

However, all these will be based on the perceived future returns you can hope to get from this property in the future. This is both objective based on past returns obtained and subjective and speculative on future returns.

However, unlike reason No.1 when you would need to sell urgently to another buyer to prevent sustaining a permanent loss, you need not sell just because someone offered to buy the property at high price. (However, there are also those who "flip properties" for their earnings; they will sell quickly for a quick profit.) You will not suffer a loss but only a diminished return at worse. You can take your time to work out the mathematics.

You maybe surprised that you may still achieve a return higher at a time in the near future by rejecting the present immediate gain based on the present high price offered.

Also, you would need to price in the lost opportunity cost when the property is sold at this price, even though it is 50% above the perceived normal market price. Could you buy a similar quality property with the same sustainable increasing income or return by offering the same price?



Similarly, the same line of thinking can be applied to your selling of shares.

When should you sell your shares?

Yes, definitely when the fundamentals have deteriorated permanently. The business has suffered for various reasons and going forward, the earnings will be permanently impaired and deteriorating.

Yes, when the price is very very overpriced. However, you need not sell your shares in good quality companies that you bought at fair or bargain price. As long as the fundamentals are strong and the business is adding value, selling now at a higher price may mean losing the return that you could have obtained in the future years from owning this stock and the opportunity cost of reinvesting the cash into another stock of similar quality and returns.

Once again, the importance of sound reasoning and doing the mathematics in making a decision whether to sell or not.

Is it not true, that the really big fortunes from common stocks have been garnered by those
who made a substantial commitment in theearly years of a company in whose future they had great confidence and
who held their original shares unwaveringly while they increased 10-fold or 100-fold or more in value?

The answer is "Yes."

ht tp://myinvestingnotes.blogspot.com/2012/07/my-18-points-guide-to-successfully.html



Additional notes:

Other reasons for selling a stock (or property) are:
To raise cash to reinvest into another asset with better return.
A certain stock (or property sector) may be over-represented in your portfolio due to recent rapid price rises and you need to reduce its weightage to reduce your risk of over-exposure in this single stock (or property sector).


Footnote:

This is a true story. A rich man was approached by a buyer to sell his property. A few neighbouring lots were sold for $1.6 m the last 2 years. What offer will ensure that you sell your property to me? Please let me know. The unwilling owner replied, "$5 million". There is a lesson here too. :-)

News & Blogs

3 weeks ago | Report Abuse

Selling is often a harder decision than buying
"If you have bought a good quality stock at bargain or reasonable price, you can often hold forever."

Investing is fun. For every rule, there is always an exception.

The main reasons for selling a stock are:

1. When the fundamental has deteriorated permanently, (Sell urgently)
2. When it is overpriced, whereby the upside gain will be unlikely or very small and the downside loss will be big or certain.

We shall examine reason No. 2 through the property market. The property market is also cyclical. There were periods of booms and dooms.


If you have a good piece of property that is always 100% tenanted and which gives you good consistent return (let's say 2x or 3x risk free FD rates), would you not hold this property forever? The answer is probably yes.

Then, when would you sell this property?

Note that the valuation of property, as with stocks, is both objective and subjective.

Would you sell when someone offered to buy at 500% above your perceived market price?

Probably yes, as this is obviously overpriced. You could cash out and probably easily re-employ the money to earn better returns in another property (or properties) or other assets.

Would you sell when someone offered to buy at 50% above your perceived market price?

Maybe yes or maybe no. You can offer your many reasons.

However, all these will be based on the perceived future returns you can hope to get from this property in the future. This is both objective based on past returns obtained and subjective and speculative on future returns.

However, unlike reason No.1 when you would need to sell urgently to another buyer to prevent sustaining a permanent loss, you need not sell just because someone offered to buy the property at high price. (However, there are also those who "flip properties" for their earnings; they will sell quickly for a quick profit.) You will not suffer a loss but only a diminished return at worse. You can take your time to work out the mathematics.

You maybe surprised that you may still achieve a return higher at a time in the near future by rejecting the present immediate gain based on the present high price offered.

Also, you would need to price in the lost opportunity cost when the property is sold at this price, even though it is 50% above the perceived normal market price. Could you buy a similar quality property with the same sustainable increasing income or return by offering the same price?



Similarly, the same line of thinking can be applied to your selling of shares.

When should you sell your shares?

Yes, definitely when the fundamentals have deteriorated permanently. The business has suffered for various reasons and going forward, the earnings will be permanently impaired and deteriorating.

Yes, when the price is very very overpriced. However, you need not sell your shares in good quality companies that you bought at fair or bargain price. As long as the fundamentals are strong and the business is adding value, selling now at a higher price may mean losing the return that you could have obtained in the future years from owning this stock and the opportunity cost of reinvesting the cash into another stock of similar quality and returns.

Once again, the importance of sound reasoning and doing the mathematics in making a decision whether to sell or not.

Is it not true, that the really big fortunes from common stocks have been garnered by those
who made a substantial commitment in theearly years of a company in whose future they had great confidence and
who held their original shares unwaveringly while they increased 10-fold or 100-fold or more in value?

The answer is "Yes."

http://myinvestingnotes.blogspot.com/2012/07/my-18-points-guide-to-successfully.html



Additional notes:

Other reasons for selling a stock (or property) are:
To raise cash to reinvest into another asset with better return.
A certain stock (or property sector) may be over-represented in your portfolio due to recent rapid price rises and you need to reduce its weightage to reduce your risk of over-exposure in this single stock (or property sector).


Footnote:

This is a true story. A rich man was approached by a buyer to sell his property. A few neighbouring lots were sold for $1.6 m the last 2 years. What offer will ensure that you sell your property to me? Please let me know. The unwilling owner replied, "$5 million". There is a lesson here too. :-)

Stock

3 weeks ago | Report Abuse

>>>>

Posted by JohnD0ugh > 43 minutes ago | Report Abuse

At the beginning, I asked a very vital question - should we still think and focus on the long term. It is very easy to sell an investment. You are told it is never wrong to take a profit or do not get emotional with your investment. Charlie Munger has a simple answer for this question.

"The first rule of compounding: Never interrupt it unnecessarily" - Charlie Munger

Munger's advice is one of the most important principles of compounding and a principle that few investors are aware of. Everyone acknowledges the power of compounding.

If you earn 15% per year for 35 years, you will end up with 133 times your money. Unfortunately, investors forget the arithmetic of this is heavily back-end loaded. After 35 years, you have 133 times; after 20, about 16 times and after 10 years, you have about 4 times. So, you do not want to interrupt that compounding unnecessarily.

You better have a compelling reason to sell a winning investment just because the stock has risen 50% for example. Otherwise, your sale is going to look really expensive years later.

A willingness to see your portfolio value rise, fall, and rise anew is required. You cannot get blown out or abandon ship every time the market has a correction. Otherwise, you interrupt the compounding of your investment, which in this case is icapital.biz Berhad.

The combination of Malaysia entering a new and better era, icapital.biz Berhad being able to hold more investments (although this is a function of stock valuation) and a high quality share ownership structure can produce an exciting future for your Fund's NAV and share price.

In the process, let us build and leave behind an icapital.biz Berhad that will be a role model for Malaysian individual investors, and other listed companies to emulate. This way, we can also do our part to contribute to a better Malaysia.


i Capital.biz Berhad 2023 Annual Report

>>>>

The power of compounding is truly magical at the end of a long period. Everytime the value of your portfolio doubled, the incremental value is greater than sum of all the values of all the previous period doublings added together.

News & Blogs

3 weeks ago | Report Abuse

Usually a discount or premium percentage is multiplied with the RNAV base on the developers other qualities such as management capabiltiies, branding, track record, etc. A smaller developer with poor record of continuously generating consistent income is usually given a significant discount to its RNAV.

Using the RNAV approach only takes into account of what the developer can earn with the assets that it has in its books at the time of the valuation. If properly applied, it is usually more conservative than the market approach such as P/E multiples.

However, to use this method, it requires a lot of work in revaluing the properties held by the developer, making it difficult to implement by most people as information needed to determine RNAV needs some skill in obtaining.

The price earnings ratio method could also be useful to cross check the RNAV method.

News & Blogs

3 weeks ago | Report Abuse

Valuing Real Estate Developers

A common method to value real estate developers is using the Revalued Net Asset Value ("RNAV") approach which basically determines the net asset value of a real estate developer by adding up

(1) the change in value of the investment properties held by the company,
(2) the surplus value of properties held for development using Discounted Cash Flow method and
(3) the net asset value of the company with any other adjustments that are deemed necessary.

News & Blogs

3 weeks ago | Report Abuse

Factors that Affect Value


1. Land bank
2. Inventories
Completed developments - properties whose construction has been completed
Construction-in-progress - means the value of properties under construction.
Land held for development - value of land help for future developments.
Investment properties - properties held for rent or sale
3. Customers deposits
4. Housing prices
5. Rental rates
6. Industry consolidation
7. Macro economic factors - government policies play a huge role in controlling property prices and will determine the direction of property prices.

News & Blogs

3 weeks ago | Report Abuse

1. Profit model of residential real estate developers

Residential real estate developers are more dependent on economies of scale than ever because of increasing land prices and declining rate of increase in residential property prices. In many developing countries, developers used to be able to acquire land at cheap prices and hope for rapid increase in home prices to make huge profits. In developed countries, land prices are higher, and price increases are more muted. Hence, brands and good management are playing an increasingly important role.


2. Profit model of commercial real estate developers

As prime real estate for commercial developments become more scare, commercial real estate developers tend to prefer to have rental incomes rather than selling units so that they can have consistent income and manage the properties. These developers are also more likely to sell their commercial properties to real estate investment trusts to free up capital and many are REITs that also develop properties.


3. Profit model of industrial real estate developers

Industrial real estate developers operate more like commercial real estate developers as they seek to have stable rental incomes and also sometimes selling their properties. Some industrial estate developers might even have a fund to invest in promising industrial companies so as to achieve higher profits.

News & Blogs

3 weeks ago | Report Abuse

Profit Model

Real estate industry can be separated into the following sub-industries or types of real estate developers:

Residential real estate developers
Commercial and mixed use real estate developers
Industrial real estate developers

News & Blogs

3 weeks ago | Report Abuse

How to analyze real estate developers

Real estate stocks make up a significant number of companies in Asian stock exchanges and many of them are among the the most volatile stocks. Whether the real estate developer is listed or not, they are influenced by a host of cyclical factors ranging from government policies, interest rates, unemployment rates, affordability, etc. Hence, it is important to understand how real estate companies can be analyzed.

General

3 weeks ago | Report Abuse

What factors drive the housing prices?

Among the factors are:
1. A dropping interest rate
2. Increasing liquidity in the banking system
3. A growing economy

All the above factors drive the demand for residential and other real estate. This causes the prices of these real estate properties to rise.

Property prices in Malaysia
Are they rising or have real estate prices softened in the Klang Valley?
Are property transactions rising or dropping compared to the previous years?


Asking the right questions

Will property prices in the Klang Valley soften?
Will interest rates rise and adversely affect the demand from the end-users or end-buyers?
Is there a rise in the inventory of unsold property in the real estate sector?
Are builders able to meet their loan repayment liability as well as complete their already started projects?
Are builders turning prudent through cutting prices to sell their units and to generate cash?

News & Blogs

3 weeks ago | Report Abuse

Property counters: How are shareholders rewarded? How exciting are property counters in terms of investment returns?


Property counters
1. Land held for development.
2. Land being developed and properties for sale.
3. Investment properties held for rental income.

How are shareholders rewarded?
1. After successful development and realisation of profits from the projects, the property counter may choose to reward the shareholders by paying half their earnings as dividends.
2. The investment income from properties held as investment can also be partially disbursed as dividends.

[How exciting are property counters in terms of investment returns?]

General

3 weeks ago | Report Abuse

Is it not true, that the really big fortunes from common stocks have been garnered by those
who made a substantial commitment in the early years of a company in whose future they had great confidence and
who held their original shares unwaveringly while they increased 10-fold or 100-fold or more in value?

The answer is "Yes."

General

3 weeks ago | Report Abuse

Selling is often a harder decision than buying

"If you have bought a good quality stock at bargain or reasonable price, you can often hold forever."

Investing is fun. For every rule, there is always an exception.

The main reasons for selling a stock are:

1. When the fundamental has deteriorated permanently, (Sell urgently)
2. When it is overpriced, whereby the upside gain will be unlikely or very small and the downside loss will be big or certain.

We shall examine reason No. 2 through the property market. The property market is also cyclical. There were periods of booms and dooms.


If you have a good piece of property that is always 100% tenanted and which gives you good consistent return (let's say 2x or 3x risk free FD rates), would you not hold this property forever? The answer is probably yes.

Then, when would you sell this property?

Note that the valuation of property, as with stocks, is both objective and subjective.

Would you sell when someone offered to buy at 500% above your perceived market price? Probably yes, as this is obviously overpriced. You could cash out and probably easily re-employ the money to earn better returns in another property (or properties) or other assets.

Would you sell when someone offered to buy at 50% above your perceived market price? Maybe yes or maybe no. You can offer your many reasons. However, all these will be based on the perceived future returns you can hope to get from this property in the future. This is both objective based on past returns obtained and subjective and speculative on future returns.

However, unlike reason No.1 when you would need to sell urgently to another buyer to prevent sustaining a permanent loss, you need not sell just because someone offered to buy the property at high price. (However, there are also those who "flip properties" for their earnings; they will sell quickly for a quick profit.) You will not suffer a loss but only a diminished return at worse. You can take your time to work out the mathematics. You maybe surprised that you may still achieve a return higher at a time in the near future by rejecting the present immediate gain based on the present high price offered. Also, you would need to price in the lost opportunity cost when the property is sold at this price, even though it is 50% above the perceived normal market price. Could you buy a similar quality property with the same sustainable increasing income or return by offering the same price?

Similarly, the same line of thinking can be applied to your selling of shares. When should you sell your shares? Yes, definitely when the fundamentals have deteoriorated permanently. The business has suffered for various reasons and going forward, the earnings will be permanently impaired and deteriorating. Yes, when the price is very very overpriced. However, you need not sell your shares in good quality companies that you bought at fair or bargain price. As long as the fundamentals are strong and the business is adding value, selling now at a higher price may mean losing the return that you could have obtained in the future years from owning this stock and the opportunity cost of reinvesting the cash into another stock of similar quality and returns. Once again, the importance of sound reasoning and doing the mathematics in making a decision whether to sell or not.

Additional notes: Other reasons for selling a stock (or property) are:
To raise cash to reinvest into another asset with better return.
A certain stock (or property sector) may be over-represented in your portfolio due to recent rapid price rises and you need to reduce its weightage to reduce your risk of over-exposure in this single stock (or property sector).
Footnote: This is a true story. A rich man was approached by a buyer to sell his property. A few neighbouring lots were sold for $1.6 m the last 2 years. What offer will ensure that you sell your property to me? Please let me know. The unwilling owner replied, "$5 million". There is a lesson here too.

News & Blogs

3 weeks ago | Report Abuse

Depreciation and amortisation is an expense for a business. By depreciating and amortisation an asset slower or faster, earnings can be boosted or shrunk accordingly. Therefore, when comparing the earnings of 2 companies in a same sector, understanding the differences in the depreciation and amortisation policies is valuable too.

Quality of earnings. How much of the reported earnings translated into cash flow from operation or free cash flow? The more cash generated from earnings, the higher the quality of these earnings. Higher earnings that translated into more account receivables or higher working capital, less or negative cash and more borrowings, huge capital expenditures are less favourable compared to those that generated a lot of operating cash flows and free cash flows. Those companies with huge free cash flows (high quality earnings) are most desired. The strong free cash flows, also known as the "owner's earnings", can be used to pay down debt, to grow the company organically or through acquisition, to be distributed as dividends or to buy back company's own shares.

Sudden increase in earnings in a company need to be analysed and studied. Are these from increasing sales of products or services of the company? Growing revenues and profits in this manner is good, indicating strong organic growth. Some companies reported increasing earnings through frequent acquisitions. At times, growth through acquisitions did not work out for various reasons (paying too high a price, a poor quality business was acquired, cultural integration was difficult, incurring too much borrowings, etc), harming the overall profitability of the company, at times permanently. (An example of this was KNM in its formative years, its acquisition of Borsig and the subsequent change in the business environment in its sector).

Very high earnings during times of extremely favourable business environment (eg glove companies during the pandemic) are not sustainable or temporary and often, a low PE is appropriate. Also, a one off sale of an asset leads to high reported earnings for a year or two and the low PE is appropriate, as such earnings are non-recurrent and forecasted future earnings and projected future PE should be adjusted accordingly. Observation over many years has taught us that the chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions (quoting Benjamin Graham).

Summary:

For the above reasons, EPS can be unreliable and you should not rely on PE alone.

Once again, PE has may pitfalls that can give investors a misleading view of how cheap or expensive some shares really are.

News & Blogs

3 weeks ago | Report Abuse

The PE ratio's drawbacks are all to do with the "E" or EPS, part of the calculation


1. EPS is easy to manipulate.

Companies can boost EPS by changing accounting policies.

For example, they can extend the useful lives of fixed assets such as plant and machinery, which lowers the depreciation expense and boosts profits.

2. EPS says nothing about the quality of profits.

It doesn't take into account whether profits have changed due to sales of existing products or services - the best source of profits growth - or whether the company has invested heavily in new assets or bought another company (acquisition).

Share buybacks boost EPS by shrinking the number of shares outstanding, even if profits are static or shrinking. Buyback can be done when the shares are expensive. By paying too much, a large chunk of shareholder value is destroyed; the cash spent is wasted.

3. EPS may not resemble true cash profits.

Quite often a company's true cash profits are significantly more or less than its EPS (more often less).

4. EPS may be based on profits that are unsustainably high or temporarily low.

This means that the PE ratio could be misleadingly low or high.

This is a particular problem for cyclical companies.



News & Blogs

3 weeks ago | Report Abuse

Don't use the PE ratio

The price to earnings ratio (PE) s the most commonly used valuation yardstick by investors.

It is very easy to calculate.

PE ratio = share price / earnings per share (EPS)


In simple terms, shares with high PE ratios are seen as being expensive whilst those with low ones are seen as being cheaper.

Despite its simplicity, PE ratio has many pitfalls that can give investors a misleading view of how cheap or expensive some share really are.

News & Blogs

3 weeks ago | Report Abuse

KSL latest traded share price was Rm 1.53. It is selling at the cheapest price in terms of PE ratio.

Don't use the PE ratio in isolation.

A stock is at a low PE for a reason.

General

3 weeks ago | Report Abuse

Don't use the PE ratio

The price to earnings ratio (PE) s the most commonly used valuation yardstick by investors.

It is very easy to calculate.

PE ratio = share price / earnings per share (EPS)


In simple terms, shares with high PE ratios are seen as being expensive whilst those with low ones are seen as being cheaper.

Despite its simplicity, PE ratio has many pitfalls that can give investors a misleading view of how cheap or expensive some share really are.

The PE ratio's drawbacks are all to do with the "E" or EPS, part of the calculation


1. EPS is easy to manipulate.

Companies can boost EPS by changing accounting policies.

For example, they can extend the useful lives of fixed assets such as plant and machinery, which lowers the depreciation expense and boosts profits.

2. EPS says nothing about the quality of profits.

It doesn't take into account whether profits have changed due to sales of existing products or services - the best source of profits growth - or whether the company has invested heavily in new assets or bought another company (acquisition).

Share buybacks boost EPS by shrinking the number of shares outstanding, even if profits are static or shrinking. Buyback can be done when the shares are expensive. By paying too much, a large chunk of shareholder value is destroyed; the cash spent is wasted.

3. EPS may not resemble true cash profits.

Quite often a company's true cash profits are significantly more or less than its EPS (more often less).

4. EPS may be based on profits that are unsustainably high or temporarily low.

This means that the PE ratio could be misleadingly low or high.

This is a particular problem for cyclical companies.



Summary:

For the above reasons, EPS can be unreliable and you should not rely on PE alone.

Once again, PE has may pitfalls that can give investors a misleading view of how cheap or expensive some shares really are.

General

3 weeks ago | Report Abuse

Behavioural Finance: We are hardwired to be lousy investors.

1. We are hardwired from birth to be lousy investors.

Our survival instincts make us fear loss much more than we enjoy gain. We run from danger first and ask questions later. We panic out of our investments when things look bleakest - we are just trying to survive! We have a herd mentality that makes us feel more comfortable staying with the pack. So buying high when everyone else is buying and selling low when everyone else is selling comes quite naturally - it just makes us feel better!

We use our primitive instincts to make quick decisions based on limited data and we weight most heavily what has just happened. We run from managers who performed poorly most recently and into the arms of last year's winners - that just seems like the right thing to do! We all think we are above average! We consistently overestimate our ability to pick good stocks or to find above-average managers. It is also this outsized ego that likely gives us the confidence to keep trading too much. We keep making the same investing mistakes over and over - we just figure this time we will get it right!

We are busy surviving, herding, fixating on what just happened and being overconfident! Maybe it helps explain why Mr. Market acts crazy at times.



2. So, how do we deal with all these primitive emotions and lousy investing instincts?

The answer is really quite simple: we don't!

Let's admit that we will probably keep making the same investing mistakes no matter how many books on behavioural investing we read.

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3 weeks ago | Report Abuse

NAV 3.80
Price 2.81
P/NAV = 0.74

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3 weeks ago | Report Abuse

>>>
Posted by Sslee > 7 hours ago | Report Abuse

I leave SAB in year 2001 and former CEO the late Dato' Loh pass away with resulting family members fighting among each other. Since then no new projects was implemented. SAB is now living on what the late Dato' Loh had built.

I had my highest respect and profound memories of SAB founder the late Dato' Loh. So out of this respect I will not comment on internal affair of SAB.
>>>

The late Dato Low Mong Hua

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3 weeks ago | Report Abuse

SSLee rightly pointed out the huge loans advanced to its customers and the AR. The company has to impair a lot of the AR.

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3 weeks ago | Report Abuse

Not so easy to value this business today. Too difficult a task.

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3 weeks ago | Report Abuse

SSLee

Please have a look at SAB, your previous employer in your early part of your long career. :-)
The company's financial accounts are easier to read and comprehend.
They retained so much cash and still paid the same small amount of dividends.
Imagine, if you can play activist to t his stock, it might be worth a lot more today, price wise.
Just tickling.😀

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3 weeks ago | Report Abuse

Most important is to focus on its growth in UHP and its recurrent revenues in this segment.

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3 weeks ago | Report Abuse

Fast growing company.
Most of the directors had worked in MOX ( a company I used to own, until it was taken private .. depriving Bursa of another great company).
Though it is in a competitive business, due to increase in demand for its UHP segment products, its revenues and profits grew rapidly.
Its balance sheet appears strong. Due to its many fold increase in revenue, its AR too grew accordingly. Its borrowing increased last year due to expansion of its business, the borrowings are mainly short term borrowings. Its long term debt remains low.
The management continues to reward the shareholders with dividends, through it retain most of its earnings for maintainance and future growth capex.

General

3 weeks ago | Report Abuse

Why are we getting so many promotions on plantation stocks for so many months?

How good are these articles from an investment information point of view?

The impression I get is the promoter may think that flooding the forum through his many posts is important for HIM.

Actually, the stocks do not know who own them.

In the long run, the stock market is a weighing machine (quoting Benjamin Graham), though in the short run, it may behave like a voting machine.

Perhaps, the promoter of plantation need reduce his posts to 1% of his present and provide a more intense, objective and balanced analysis.

At present, there are just too much noise, drowing perhaps, the little bit of useful information available in his articles.

Regards

Tunnel vision investor. :-)

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4 weeks ago | Report Abuse

Plantation Sector

Milling & Cultivation

We remain cautious on the outlook for Milling and Cultivation. CPO prices have
stabilised around RM3,780/MT currently, compared to the peak of approximately
RM6,500 – RM7,500/MT in 2022.

Looking forward, CPO prices may remain rangebound, impacted by factors such as
production output, the impact of weather conditions, government policies of exporting
countries and global demand, which is highly dependent on economic conditions.

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4 weeks ago | Report Abuse

Plantation Sector

Milling & Cultivation

We remain cautious on the outlook for Milling and Cultivation. CPO prices have
stabilised around RM3,780/MT currently, compared to the peak of approximately
RM6,500 – RM7,500/MT in 2022.

Looking forward, CPO prices may remain rangebound, impacted by factors such as
production output, the impact of weather conditions, government policies of exporting
countries and global demand, which is highly dependent on economic conditions.

General

4 weeks ago | Report Abuse

Plantation Sector

Milling & Cultivation

We remain cautious on the outlook for Milling and Cultivation. CPO prices have
stabilised around RM3,780/MT currently, compared to the peak of approximately
RM6,500 – RM7,500/MT in 2022.

Looking forward, CPO prices may remain rangebound, impacted by factors such as
production output, the impact of weather conditions, government policies of exporting
countries and global demand, which is highly dependent on economic conditions.

General

4 weeks ago | Report Abuse

VALUE OF AN ASSET

From The Essays of Warren Buffett: “In Theory of Investment Value, written over 50 years ago, John Burr Williams set forth the equation for value, which we condense here: The value of any stock, bond or business today is determined by the cash inflows and outflows—discounted at an appropriate interest rate—that can be expected to occur during the lifetime of the asset.”

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4 weeks ago | Report Abuse

My fair value for Inari is RM 1.60 per share!

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4 weeks ago | Report Abuse

SCIENTX MR LIM PENG JIN 19-Feb-2024 Acquired 130,000

General

4 weeks ago | Report Abuse

HLB, PBB and MAYBANK

All announced better quarter results and have declared slight increase in dividends.

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4 weeks ago | Report Abuse

calvintaneng likes TSH to trade at a premium and at a multiple to its book value.

But, it is still trading at a discount to its book value. Why is the market valuing TSH thus?

Is it that calvintaneng is right and that the market is wrong?

But then, when has calvintaneng admitted he got it so wrong in NETX and his promoted 10 stocks that were the most undervalued a few years ago.

đŸ˜€đŸ€Ł

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4 weeks ago | Report Abuse

Nestle and DLady are stocks I have in my portfolio since 1993!

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4 weeks ago | Report Abuse

Outlook
Moving forward, we expect Nestlé to improve it GP margin back to prepandemic levels (around 34% whereas latest GP margin in 4QFY24 stood at 32.1%) attribute to the easing in raw materials price and effective cost measures.

Valuation
Upgrade to Hold with unchanged target price of RM132.60/share based on DDM valuation (k: 6.4%; g: 3.0%) due to the recent weakening in share price.

Source: TA Research - 28 Feb 2024

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4 weeks ago | Report Abuse



27-Feb-2024
Qtr ending 31-Dec-2023
Rev 358,885
PBT 79,865
NP 66,684
NPM 18.58%
ROE 2.70%
EPS 0.81
DPS 0.25
NAPS 0.30


Forecast EPS for next 4 qtrs:
0.81 sen x 4 = 3.24 sen

At 29 sen per share, P/E = 9.9x and P?NAPS = 0.97x,

General

4 weeks ago | Report Abuse

Writers find it useful to picture the reader they seek, and often they are hoping to attract a mass audience. At Berkshire, we have a more limited target: investors who trust Berkshire with their savings without any expectation of resale (resembling in attitude people who save in order to buy a farm or rental property rather than people who prefer using their excess funds to purchase lottery tickets or "hot" stocks).

Over the years, Berkshire has attracted an unusual number of such "lifetime" shareholders and their heirs. We cherish their presence and believe they are entitled to hear every year both the good and bad news, delivered directly from their CEO and not from an investor-relations officer or communications consultant forever serving up optimism and syrupy mush.


Berkshire Hathaway Inc. 2023 Shareholder Letter

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4 weeks ago | Report Abuse

28.2.2024

TONGHER Financial Information

Revenue (TTM) ... Net Profit (TTM) ... Net Margin (TTM)
598.03M ... 6.42M ... 1.10%

EPS (TTM) ... P/E Ratio ...ROE
4.08 ... 58.58 ... 1.13%

P/B Ratio ... NTA
0.66 ... 3.61

5y CAGR - Revenue .... 5y CAGR - Profit
2.50% .... -

Dividend (cent) .... Dividend Yield ....PRICE
20.000 ^ .... 8.37% .... 2.39

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4 weeks ago | Report Abuse

Tongher is well managed and profitable. It delivers dividends regularly and due to its low share prices (most of the time), the dividend yields are quite high (6% - 8%).

It is a cyclical stock. Those who bought this stock when its price was at a cyclical low should enjoy very good reward. This coincides with period when the EPS is low, the PE is obviously high and DY is high, compared to its historical trends. Those who bought when the price was at its cyclical high would have great difficulty recovering their losses or will take a long term to break even, even with the regular dividends received.

2022-04-07 17:47


The above was what I posted 2 years ago. The statement remains true. Keep it simple. Keep it safe.

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1 month ago | Report Abuse

Performance of Current Year Against the Financial Year Ended 31 December 2022 (“corresponding period”) (cont'd.)

Analysis of segmental performance against the corresponding year are as follows:

Drilling Services Segment
Drilling Services segment recorded RM316.4 million increase in revenue to RM799.5 million in the current year, mainly due to higher jack-up rig utilisation of 83% (corresponding year: 62%) and higher average daily charter rates of USD94k/day (corresponding year: USD77k/day).

The segment registered a profit before tax of RM159.8 million compared to a loss before tax of RM26.1 million in the corresponding year, in line with higher revenue.

Integrated Project Management
The Integrated Project Management segment recorded higher revenue of RM401.8 million in the current year as compared to RM86.7 million in the corresponding year, mainly due to higher utilisation of hydraulic workover units and progress of i-RDC project.

The segment recorded a profit before tax of RM22.5 million compared to a loss before tax of RM16.0 million in the corresponding year, in line with higher revenue.

Oilfield Services Segment
The Oilfield Services segment recorded higher revenue of RM12.0 million in the current year as compared to RM10.1 million in the corresponding year, mainly due to higher activities from operation in Tianjin.

The segment recorded profit before tax of RM3.0 million in the current year with marginal increase against corresponding year.

Others Segment (include corporate expenses)
Others segment which include corporate expenses recorded higher loss before tax of RM64.0 million in the current year against RM42.4 million loss in the corresponding year mainly due to higher IT related expenses, depreciation charge and other corporate costs.