Yeap,

Difference between sapura and armada is this.

Sapura question is, whether i want to go bankrupt.

Armada is, whether i want to lose my ships are stupid prices due to bad contracts. (not with the banks, with customers)

Raider,

Yes, however if sapura had ringfenced funding, by now share price still RM3-4.

I don't know, up to you.

I just cannot buy, you however can. I hope you make money, ill just study/buy opensys more.

Well, how much of it do you think was due to the vinyl glove factory shut down in China in 2018?

Is that effect fully felt and market conditions will now go back to normal, or is this wonderful effect still around?

Or the effect was actually small, and there happened to be a structural shift in the economics of the industry last year making it an even more wonderful one, despite the extremely high capacity expansion by all the competitors?

Raider,

Non-recourse or ring fenced debt means.

It is tied to the asset. If i cannot pay, you just take the asset. You wont chase after me.

If its recourse. If my asset not worth enough after auction, you can still chase me!

Either way, if you screw up to the extend that they need to take the asset, you are probably not doing well.

But imagine if HYFLUX got a ring fenced debt agreement for their TUAS water plant. In that case, bank bankrupt, not them.

Raider, i doubt the turnaround will be strong enough for me to justify paying that for the company.

However, there is a good chance it will be enough for many and push the price up.

I dont invest based on what i think other people will think its worth. I'm stupid like that.

Haha icon,

I go at it with a very owner perspective, as if i actually have the money to privatize it.

Now they are exceptions. If the debt is non-recourse debt, ie ring fenced to certain assets. Then its a different story.

In this case, the risk is all passed to the bank, and i get the free money, as long as i meet certain financial ratios as per the loan agreement.

If it earns at least around 10% of enterprise value, ill take a look.

I dont just look at Market Cap.

I also look at debt.

When you are in a highly cyclical industry and you have a lot of debt. Things can get very interesting.

Masteel, Annjoo etc

I won't accept 10% earning yield (earning over PE). I need at least 17-20%. Because the next 10 years is so cloudy.

However, people do tend to think fair value is roughly 10 times PE regardless of capital structure. So if you are aware of this, there is some intelligent speculative money to be made.

Raider,

I'm a pure bottom up guy, i don't take into account industry average p/e or sentiment etc.

For Sapura to make sense for me, i need to see it being able to make 1.3-1.7 billion a year in profit after tax (or preferably owners earnings) reliably by the next year, and grow moving forward.

I don't think that is probable.

If you do, please illustrate and teach.

The price however, will go wherever it wants to.

Phillip,

I am an ex-auditor.

I have done or checked the deferred tax computations for hundreds of companies, many of them PLC's. Both foreign and local.

I know what i'm talking about.

Yes Phillip,

Let me put it this way, since 2009 when Afzal took over, the company has made a lot more than one billion in profit. Whatever the old allowances they are is already used.

Now, you are right that it is not common for a company to have such large capital allowances. However there are a few things you need to be aware off.

From an audit perspective, one of the things that auditors do when auditing a PLC. Is that they will give the tax and deferred tax computations to the tax director to have a quick look and ensure its materially accurate.

What i'm pointing out here is that the figures in Q4 are likely to be materially correct.




Th question now is that is there such a large capital allowances, which relate to recent years?

My guess is, the company depreciates the majority of their telecommunications assets such as fibre lines etc, over the life of the asset, which can be as long as 20 years, or 5%

But when it comes to capital allowances, its classification may require say 14% for initial capital allowance, and 10% subsequently.

If you were to have alot of capex over the last 10 years (which they did) there will be naturally be a mismatch this large, as it does not just relate to the current year purchases, but the mismatch in capital allowance compared to depreciation for assets bought in the last 10 years as well.

There is new unutilised capital allowance every year for asset bought previously. Remember, 10% capital allowance for every subsequent year, while depreciation is at 5%.

Yes i am aware of this method. Its an investment partnership type co. The same used by Li Lu, Buffet in his early days, as well as Mohnish Pabrai.

I was thinking of this type of structure, 3-5 years from now if my track record is set, as the requirements to do fund management activity in malaysia is very stringent, and with high barriers of entry.

It would be a quite of a compounding and performance miracle for me to turn the few hundred k i have now into 5 mil required by SC, in 3 years.

Nice to know we are not going to be cellmates.

====
(S = Qr) Philip FYI this only works if I don't have to take money from the public, the investors/partners are clearly stated, percentages fixed. We are all partners in the company, wth me as technical manager.
13/03/2019 06:11

Raider look how much allowance they use per year versus the amount of the Recognised deferred tax in relation to ppe.

An unutilised capital allowance is created each year when they buy PPE, and used each year when they are profitable. This means the probabilities of it being older than 7 years is more like zero.

Now if it was, it would have been charged out AT the fourth quarter. Before the fourth quarter results is released, the auditors will have already been auditing the company for 1-2 months, and ensure everything is materially accurate by the last quarter.

Why? Because the fourth quarter results is not supposed to have a more than 10% difference with the audited results. If it were, you will see a bursa and sc query on variance of result and potential admonishment.

Very embarrassing for the auditor.

Now this item, is a standard checklist item when the audit is performed before the fourth quarter. Especially since there is such a loud announcement by the government.

Now there is a very small chance, that the entire unutilised capital allowance is more than 7 years old, and KPMG actually failed to notice it. In which case , we would see, potentially, 300 million adjustment in the audited accounts.

Which well, would be an absolute sight to behold.

Do note, im an ex-auditor.

Phillip,

The reason why its illegal to collect other people money into your account, is because it constitutes deposit taking activity. Which you definitely need a license for.

If you're doing so, i suggest you consider splitting it up into their own individual accounts, and try and manage it by making the proportion of shares similar across all accounts.

i3value,

Thanks.

Yeah i know. I spoke with my remisier as well as a friend in SC on this before.

Still you never know i suppose.

Un-absorbed capital allowances, not underutilized tax losses, two completely different things.

Well, this is interesting.

Now I know, when I think back to the all the times why icon whack me left right centre.

I damn touched. Brings tears to my eyes. TT


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Posted by Icon8888 > Mar 12, 2019 07:27 PM | Report Abuse

KC, never compliment a young man in front of him, even if you genuinely feel that he is good. Especially one so full of himself. Not good for him

whack him, help him to learn to be a humble person

Raider,

Style can change, but philosophy cannot.

I have value investor friends who think highly of sapura at this price. I don't, despite trying very hard to see it as well.

Good luck.

raider,

you know my style.

I think opensys is a better investment, it may not suit you as you are more of a trader.

Think about it, its quite interesting.

https://potsandpansbyccg.com/2017/09/29/is-5g-really-a-fiber-replacement/

nah this one give to you for free.

I think phillips's bipolar extends to his reading comprehension.

That 900m thing, use finish long time ago d. Now only 14m unused losses, which is allowable.

I think i can tell you 50 times also your bipolar will stop you from reading it.



And yes, the only real risk for me is 5G. Meeting a huawei engineer soon to goreng him properly and understand this technology to the bone. I will tell you the 5g related capex currently done by our telcos, seem to indicate 5G will only roll out by 2022.

Raider, your opensys way better than saprng.

Connie,

If you're not paying it, you're not the customer, you're the product!

People are not creating value by sharing their sure win hot hot stock.

They are taking value away, the typical person just doesn't realize it.

I charge 1k, because my time is not free. In exchange, i'll sit down with you for three hours to go through your portfolio, talk about investment or your philosophy etc. Whatever the person wants.

And you're paying because they see the value in it, otherwise, they wont even bother. They can ask for a refund if they dont see the value.




If someone wants it cheaper, go and buy the books and read them all, it will teach you far better than i can.

Or, put 150k in an account and give me the password (or give a good enough impression beforehand). There, you get 3 hours of my time for free.




Or even better, message me on my site, i'll ask you what you find interesting or if you feel i am wrong on anything, or miss out on anything. If you give an answer than reflects a rational, logical, wise, patient and deep mind.

This time, when go out, I'll pay!

It all boils down to incentives.

I don't see buffet telling the whole world what stock he's buying, unless he had to by virtue of holding size.

Only weak fund managers like Ackman (fund down a ton), do presentation on their stocks.

Seth Klarman doesn't even want you to read his quarterly letters.

Yes often, the writer himself gets caught up in the sentiment of the market, and actually believes his research that shows Masteel is worth 1.69.

But he gets burnt of his own foolishness, and burnt far less as he bought at the beginning, which is probably near the lowest cost.

Soojinhou,

Most people may not feel that malicious feeling of wanting to con others when they share their research.

But if its so good, share for what? Quiet and buy lah. Why need to motivate volume to come in? Why need others to know?

Everyone who writes an article extolling the virtues of the stock, looks at the stock closely the next day with the hope (secret or not) that it will now go up.

Lol dude, im not sure if that metaphor makes sense tbh. Haha

Probability bro or sis (really not sure now),

Im going to be real with you. They were so many times, looking at the rise in NAIM, CARIMIN, PENERGY etc etc. And now GKENT.

I was and am so tempted to do it. And the feeling that comes when you see stupid people make more money than you, even though i know they will all die at some point (the shrewd traders know who they are, no need me say), was difficult to bear.

This feeling was particularly strong in 2017, i could barely sleep and was thinking of just buying everyone out and putting it in the china index. These days, i know myself and my philosophy alot better.

Last friday, I just had this moment of weakness where i was wondering, what am i doing this value thing for? So what if it makes perfect sense to me? My 500% trader friend is probably up 30% -40% by now and im only roughly 10% plus, if i tried maybe i'll be 20-30%. Imagine showing that to my investors instead, value investing be damned!

This cleared up by saturday afternoon, when a value investor friend/trader asked me about dayang. We discussed about it, and afterwards, he admitted he was chasing the last dollar, the cardinal sin of trading and investing.

And this friend reads his howard marks, and is very shrewd on market and sentiment cycles.

At the end of day, we are all in the market to make money. And for some people who are shrewd traders, they can make money from all these market forces, and sentiment, without being caught up in it. Good for them.

I doubt i would be anywhere as clear minded as i appear now if i tried to. From experience, i think i will be caught up with the emotion, and get screwed. I would be the foolish retailer and trader. God knows i did some stupid, panicky and emotional shit when i traded back in the day.

And i'm not willing to pay the tuition money to learn or find out if i have the skill, the odds are not in my favor.

I only know one outstanding trader despite meeting so many. And the statistics i saw directly from a large local brokerage is clear. Barely 15% have positive P/L. And the vast majority of them have low yearly turnover (yearly transaction volume).

The number of people with yearly turnover above 150% and profitable for more than 5 years, i can count with my hands and leg, the really good ones, less than one hand.

There is a reason why "star traders" in malaysia teach courses where you pay 2-8k to attend. They probably lose money in the market too.

At the end of the day, you have to choose the philosophy that works for you, and suits you.

If i tried to be a trader, i would not be as good (i might be presumptuous here) at understanding a business/industry and its 5-10 year competitiveness, and this is damn bloody hard as it is.

Especially with innovation disruption increasing the speed at which, companies become great and go back to being mediocre. S&P 500 companies used to stay in the list for 50 plus years on average. The average now is around 10 years.

The number of these companies is getting smaller, and much harder to catch as some will grow so fast.

Given my age, and that i probably have around 50-60 years before i hit the can, it would probably be better if i spend my time studying and learning as hard i can in understanding business/life, and do my best in finding the next hartalega, pbbank, QL, topglov, facebook, google, amazon or inari amverton at the early stage.

These companies, just 100k somewhere near the start, and you will be set for life. I met some in penang, just 200k or so in inari when it listed, constantly reinvested dividends. Now, i dont even need to tell you how much its worth.

And needless to say, they are so extremely rare. If you're lucky two or three may show up in your lifetime, a couple more if you look and search really hard, i'd like to catch at least one or two of these tens to hundred baggers.

And if i dont, i think i could settle a few ten baggers! Not to mention that the process of being better at this is a lot more enjoyable for me.

And while i get myself good enough to recognize these opportunities when it comes, i have to be ok with my 500% trader friend making alot more money than me now.

I'm happy for him, and a little jealous!

===
probability Actually Jon can beat Warren Buffet easily if he wants...but then it will be considered he had used an unethical method (not 100% pure value investing) - as such he wont.
11/03/2019 18:40

Calvin,

I lose weight from when I came back to johor actually.

Phillip, you better quiet abiut selling black 4d

If people don't like you and go report police, you may go jail, now crackdown like mad.

This advice give you free.

Probability.

Just try reading his first letter in the partnership, in 1957. Not even close, and that was 1957.

He had 62 years to improve his thought process and gain experience.

The only advantage i had over him, is that i have a warren buffet and so many others to learn from, while he only had Benjamin Graham.

Im not even worth buffets little finger.

but im not handicapped by such a huge fund size. So theres that.

Yeah i know.

You always thought it was going to be a good investment. Not really relying on people frying it up, or where the price was going to be in the near future.

Sounds like an investment to me.

I just felt there was better ones.

I dont think jaks was a punt for icon.

Was i the guy in charge for the rise in the morning as well?

haha.

====
probability Jon is the culprit for Dayang collapsed today...terrible fellow!
11/03/2019 15:04

You guys did actually read the title right?

The Art of Trading (DAYANG) Profitably Around Mr Koon Yew Yin and Mr Ooi Teik Bee.

Nowhere, does it describe where the price will go in the short term.

Thanks anyway for this post.

If this kind of hit-piece is the worst that someone as sharp as you (as long as we don't talk about QL) can come up with.

It must be a pretty good investment.

I guess all that poking on QL with you paid off. Now i'm a lot more certain on this company!

Thanks! I hope you live a long and peaceful life.

I wonder if the success of proton is spilling over to APM and PECCA anot, or is it a one off.

Are you by any chance bipolar?

Phillip ah, this one is so weak until....

Even the Unutilised tax losses you take wrong figure, the amount is RM15m, and it was not expensed off as its incurred recently in the subsidiary.

Now i just feel bad to be honest.

You know what. 走好,不送.

I think i better stop interacting with you, before you turn into someone like khatulistiwa on the forum.

good luck with your QL. PCHEM and Yinson dont need that much luck lah to be fair.

I look forward for humanity to move forward, with 5g, 6g ,7g.

And obviously, as these technologies move forward. Fibre will always stay the same with no technological development.

That the fact that fibre has literally infinite speed, but is limited by the technological ability by receiving stations to process it fast enough with no corruption.

There will definitely be no progress in technology when it comes to this.

Now, if rockets actually become cheap as hell, as we can put up a ton of satellites in space for global internet at fast speeds, that would be interesting.

Hmm ok.

I started reading with an eagerness that Phillip will finally teach me something and prove me wrong.

I prayed to god that, this will be my black swan.

Timecom has the highest PE in my portfolio, and is one where im actually paying for growth, at around fair value.

I wish that finally someone will prove me wrong once and for all on this company, and i can just sell it and buy something else.

And then you come up with this....

Disappointing man.

Now, shhhhhhhhh.

If you actually think its a great idea and a great investment. Keep quiet about it and buy.

Good ideas are rare.

Management is great. Just read the management analysis you know d. Alot of what you need to know is actually in there, which is rare.

I deleted my original comment as im thinking of buying some, and its cheap enough that i don't need other people's confirmation or critique. And so, i can keep my research to myself.

Your email however, should have a copy of my original comment.

Ill drop one hint, i don't really give a damn about the revenue growth from machine sales, or the profit from that. Its important as a feeder to the moneymaker, but its not key.

Did you even read ah, by my estimate, there is an IRR of roughly 11% on the cash paid.

But if i were to make one based on information given by KYY, it wasnt. Whether or not he say wrong or not, i have no idea.

Sometimes i wonder if klse traders got a few screws loose or something. Seem highly logical, before whacking a weird statement out of nowhere.



====
Posted by Icon8888 > Mar 10, 2019 10:07 PM | Report Abuse

dont believe me ? go back and read Jon's infamous article about how Jaks' power plant will loss money in the next twenty five years.

based on few tiny bits and pieces of info, he dreamed up a financial model and cash flow projections that extrapolates into the next twenty five years

from that article, I size up Jon Choivo, and tells myself this guy has a major flaw in his intellect

Icon8888,

How do you mean?

By the way, this mental model or concept. I learnt it from Micheal mouboussin. It made alot of sense for me when it comes to understanding certain things.

Siapa tu? One of the heads of legg Mason capital, the only fund to beat the market for 15 years consecutively. A 1 in 2.3million possibility event.

Dude was probably just lucky. And angmoh theory don't work in klse!

Did Phillip even read the fs before he comment.

Or just whack only, regardless of whether or not its in his circle of competence.

If it was so easy to build a working model that closely mirrors the market.

Mathematicians, engineers and computer science graduates, will be incredibly rich by now.

Make no mistake, the rise of algorithm trading means many get great salaries.

But they don't beat the index, because other people are doing the same thing as well, changing the dynamics of the market.

Icon8888,

In highly complex, reflexive and chaotic systems like the market, I don't think it makes sense to aim for precision.

Kyy saying he is buying now, versus him saying the same thing 5 years from now, will have very different effects.

It would be better to have a mental model, and a deep understanding of first principles, incentives, human nature etc

And then from there analyse what is going on.

I admire conscientiousness and the goal to have a very high confidence level. But I think, often the chase to get new information, to be more precise, is often a futile or low utility activity.