I understand that some may be impatient, but if something gets more and more valuable with no change in the price, just buy more.

Personally, i don't think i will beyond reinvesting dividend, because its close to double my second largest position, and i have other things im thinking about and buying.

But ill be holding.

The key thing you guys need to look at, is if there is a new boom in the government servant personal loan space (this is bad, because i dont see civil servants or their salaries increasing much), is rcecap starting to act very aggressively?

If the growth in revenue or profit is more than 10%, ill be quite worried and studying hard, because i dont think you should be getting those growths level unless you lower standards by alot.

Right now, average loan size is Rm18,000 instead of RM15,000. Im not sure if i like this or if its a good thing, or neutral.

===
Tan Issac all time high earnings but share no moving ,why???
26/02/2019 18:46

LaoTzeAhSir controlled ma.
26/02/2019 19:35

Instead of buying auric, with that amount, the owners can privatize DKSH with internal generated loan at half the valuation.

way better value imho.

Good acquisition or not,

Lets put it this way. The earnings from Auric is not even enough to cover the interest expense of the loan taken out to acquire it.

Unless Auric had a rubbish management previously, and DKSH will double the profits or smtg, i don't think its a good acq.

I don't think you consider me your idol, but i would love being goreng-ed by you. Haha.

Email me if you want an airport pickup. We can go grab breakfast after.

===
(S = Qr) Philip Anyone going? I wonder if got q&a session. Night be interesting to meet some of my idols and goreng them. Hahaha.
22/02/2019 08:10

That plane is sold in the same batch as the Airasia sale .

Fantastic book

I still go back to it every other month.

Phillip,

I don't give a damn about the refinery. It's just a feed to the retail. I expect over the long term, the irr of the refinery to be at most 2-3% over the risk free rate if management is good.

You are wonderfully sharp. I suggest you study, the two kinds of government controlled business (price wise). The first is chicken, egg, onions etc. The second is power plants, petroleum, concessions, insurance, banking etc.

And why the Malaysian retail petroleum business is so different from their overseas counterparts. Its a horrifying business in most parts of the world, but not here. Why?

I don't hedge my statements to not end up foolish. Id rather be proven foolish so i can learn quickly and save money.

I just use common sense to identify the potential outcome. I wrote many times that hedges are not perfect, and seeing how they handled previous volatility, i knew they do their hedging. But it will unlikely to be enough to cover all the inventory losses. There is no difference in effect between a small loss and a small profit. Would you guys here be ecstatic if it was a profit of Rm20m instead?

Why small profit? Well retail contributes about RM100m in gross profit per quarter, so there's a buffer there.

Hedges are insurance after all, it is the poor to the middle class that cannot bear that risk, that buy and pass it on. But you don't buy the most expensive medical plan available, even though it ensures you pay absolutely nothing if you get cancer.

Because you know its cost, and there comes a point, when the cost far exceed the value of the risk transferred on a discounted basis.

====
(S = Qr) Philip Actually qqq, Jon choivo not wrong leh. He hedged. He said either make a small lost or a small profit.

Lets make a bet.

Find me one person who identified a very low PE stock that could (and did) grow its EPS for 15% per annum for 10 years with low debt. He bought alot of it with cash and did not sell for 10 years.

If you can show me one person who did this and ended up poor, ill pay you RM10,000. If you cannot within a week, you pay me RM5,000.

There is nothing that can guarantee success in investing better than the ability to identify and buy companies with a resilient current and Growth in EPS, for a cheap price, with no leverage.

====
PotentialGhost Stay calm , just be quite buy enough , market no much like petronm company . If eps is everything investing are easy everyone can suscess , market have a lot of very low PE stock ,but finally they always trade at low PE they price never up, some stock they dont have good eps but they can shoot to sky. Kekeke
22/02/2019 16:10

Ask rhb go sell it down to RM5.5.

Integrity is doing the right thing. This includes not front running KYY.

I've made very clear, i have a good idea of the long term intrinsic value of this company, and i feel the price now is far below it. And so i'll buy, with only a small bias towards short term price movements.

Imagine 2008 recession the house auction market. You go to the auction, literally nobody. You buy a house at almost 8% yield, you feel smart, cover installment comfortably.

Every 2 weeks new auction, every time nobody come, the houses in the same area is selling 10% cheaper every time there is new auction. 6 weeks later, you could have bought it for 30% cheaper.

What do you do? Ball shake get nervous and sell? No what. You check, double check and triple check to make sure you know what you're buying and what its worth.

And try to buy more. The price can drop more for all you care.

Drop even more? good, can make 11% yield on a house you can leverage 10X. Literally 110% gain in a year. No need think so much.

Same thing here. Just much harder.

Anyway, ive spoken too much to this particularly odd specimen of humanity. Got better things to do.
=======


Posted by qqq3 > Feb 22, 2019 02:35 PM | Report Abuse

Now RHB says worth only $ 5.50 how?

Posted by qqq3 > Feb 22, 2019 02:34 PM | Report Abuse

I am not talking strategy and share price....I am talking about integrity............

No need for u to say u expected disappointing results and go buy it before results......anyway, its just being you....cannot lose.

My margin loan is 10% of portfolio size. I can settle it tmr if i want. Im paying 4.85% FD is now 4.65% for MBSB. Sounds like a good deal to take a small one. My max is 30-40% of portfolio, but i doubt ill use that much unless KLSE is less than 1400 points.

Haha i think you need to queue behind the many others who want my kidneys!


===
(S = Qr) Philip Actually qqq, Jon choivo not wrong leh. He hedged. He said either make a small lost or a small profit.

Either way he say he will take that queue at 5.4 from woolei.

Whether falling knife or shooting cannon tomorrow no one will know.

But probability states that if you didn't go on margin it should be ok la.

Oh wait, did Jonathan Choi portfolio invest on margin? Good luck! My advice, if you don't know what you are doing, don't take margin.

If you need a loan, I can take payment in kidneys.
22/02/2019 08:02

That is roughly 15% IRR. I can tell you companies in Bursa with 15% ROE consistently less than 20.

Buying topglove now is 30 year ROI.

====
mamatede I do not have stake in petronm la, but I think it is a good company but not at this price. they are aggressively opennning new station which is good but it takes average 7 years to break even. so year don't ask you to sell or buy
22/02/2019 12:06

Because the 3,5,10 year intrinsic value of this company is alot more.

And when i know what its really worth, i dont like to speculate in short term price movements.

One can argue that i should have probably read the sentiment abit better and sold it a few days ago and bought it after.

But i have no intention of using my short term trading muscles. I intend to kill it.

However, imagine if the HIBISCUS scenario happens, and it drops like 10 sen before gaining 20 sen the next day. And i feel horrible and wait for it to go down, but it keeps going up, making me even more stressed and thus impairing decision making.

No thanks, investing is hard as it is, no point making it even harder by having a short term perspective.

In any event, that's why i saved my last batch money for after results.

====
qqq3 but why would he (Choivo) have bought Petron if he actually know it will be reporting disappointing results?

Believe the guy or not?

What do u call people like Choivo? People who cannot lose.
22/02/2019 07:31

Haha I'm wondering if I should share my research since some of you are asking.

You know what, I'll share it when

1) End of the year, when I collect enough.
2) if the price is rm14 or so and I don't really want to hold that much anymore.
3) I'm completely wrong and I sold it all. Feel free to humiliate me then.

I don't really care if this year 15% (my current) or negative 15%.

I only care about improving my thought process, making as decisions as rationally as i can, and have an extremely long term perspective. Let time take care of the rest.

I'll end up very rich in the future anyway, why stress. If i got very rich today, no idea what to do with the money also. Still eat chicken rice at the same place.


=====
Posted by Aseng > Feb 21, 2019 09:42 PM | Report Abuse

what unrealistic you are talking about
choivo wants to buy at 6.5 and you said 7.50 is unachievable
are trying to say choivo calculation is stupid or unrealistic
can't even achieve 15% gain ?

I have no idea what you're talking about or trying to say.

In any event, here is the formula's for love. Pretty cute haha

http://www.eoht.info/page/Equation+of+love

=====
Posted by Aseng > Feb 21, 2019 09:16 PM | Report Abuse

choivo,

I agree with your common sense provided you common makes sense
tell me which primary school teacher taught you to calculate how much your mother love you

pchem is gas feedstock, different i think.

Raider,

What explanation you need.

Which makes more sense, a scheduled shutdown which only affected 5% of volume in the current quarter.

Or the fact they did not fully hedge their inventories, which during the quarter, amounted to the revenue of RM2.9b? Last Q, gross profit margin of 5.6%. This q due to imperfect hedging, 30% drop in inventory prices and low to negative refinery margins, they have gross profit margin of (0.4%).

You think a scheduled maintenance that only affect 5% of volume for the quarter can have such a strong effect on the economy of scale that the gross margin drop from 5.6% to negative 0.4%?




Aseng,

You go try apply calculation in understanding the meaning love or and living a good life. Sure die straight. This is not calculation, this is just common sense (which includes some game theory), and primary school mathematics. The same applies to JAKS WA.

Raider,

Its scheduled. You think topglove no need to maintain their machine? Its just that theirs is easier. Every time topglove maintain machine must tell you? No mah.

Aiyah, next q good or bad, so what, who cares? You only alive till next q meh?

Why not you try and find out if next 3,5,10 years good anot.

Raider, your insurance only help for one quarter also. No mah.

Every time it finishes, you need to buy.

Small shutdown only. Its scheduled, not statutory. I don't need them to announce to me if they want to wipe ass after going to toilet. This is small item, does not affect my understanding of the company at all. Net effect on volume was 5%. like this also announce meh.

In any event, this q, refining margins so thin/negative, along with stockholding loss, if they refine more, may lose more money. This is the right time to do maintenance. As long as the petrol stations got enough oil to sell, i ok d.

====
stockraider Hedging can only help for 1 qtr mah....!!

It is due to statutory shutdown not disclose by Petron loh...!!

This is one of the dumber things i read this week.

Imagine someone said this, "To know the worth of a man, see how he acts when everything is going well".

Makes no sense at all.

====
Posted by qqq3 > Feb 21, 2019 08:12 PM | Report Abuse

to see their sustainable profits, see their results during a calm period.........

Haha yeah. Not sure i said that for HY or Petronm.

If the loss was like 100m or more, i would be worried. Because this would indicate weak decision making especially in Hedging (essentially buying insurance), unless your father is berkshire hathaway, you should be hedging.

If the loss was large, that would mean they have weak understanding towards reversion to the mean, points of ruin and potentially greedy for short term profits.

But they hedged well, 55mil deriv gain this q, lbt of 33m. Pretty ok with it and their hedging policies.

Anyway, i just set an alarm for below 6.5. Time to go back tidur.

===
Remain Calm @Choivo, your earlier wish of hoping a "A. Loss" has been realized now.
21/02/2019 18:20

Don't say didn't warn ah, way before quarter out already say.

====
Choivo Capital Yeah,

In general, a drop will definitelly cost a little on a net basis. Because derivatives do not cover with perfection. They usually aim to cover most, but not all. (if a company covers way more than the inventory etc, chances are they are now speculating on them, and its not just for the operations of the business.

There may be a slight timelag in crack, but this is really just conjecture.

At the end of the day, the above statements have very little bearing on the long term economic power of the company. They just need to be done right. If not done properly, we get that 900m stockholding loss in hy in 2014.

Having said that, the absolute best refineries are those that have the financial strength to never need to hedge. At the end of the day, the results from hedging over the long term is a negative. Hedging cost more than 4% of the underlying inventories per year, easily.

But very few can do that, due to the strong dividend payouts. Except for the ones under berkshire hathaway.
06/12/2018 10:17

This is weak reasoning.

Don't jinx it, later really only fall a bit then you know. My cash for the final 20% portion is still pending, i want the price as low as possible, so that i can buy as much as possible. After that enough d. Don't dare d, unless i manage to get them to answer me properly on a few more questions during the AGM.

=====
stockraider Put it this way loh....!!
Petron EPS Rm 0.80
Dividend per share Rm 0.20
Share price Rm 7.50 mah...!!

PE 9.3x
Div yield 2.67%.

The yield & PE is still better & comparable to Petdag, Pchem and LCTtitan mah.....!!

Petron share price will not fall much despite losses loh...!!
21/02/2019 19:49

Haha i expected either a small profit or a small loss. Which was why i was waiting for the results to come out before buying my final batch. Despite the constant increase in price making me feel like an idiot.

Hedges are not perfect, most hedge only 70% or so. If your inventory drops in value by 30% or so over 3 months and you only hedge 70% or less. You will definitely kena. And top it off with negative refining to extremely thin margins, things will get interesting

But, the real economic power of this company is still unaffected. I look forward for the chance to buy below 6.5. =D

Just remembered the company name, Avarga. Paper packaging, myanmar powerplant and Building materials co in canada.

They paid like 4x EV/EBITDA for the canadian building material co, one of the biggest in that country.

For malaysia, Opensys is pretty good in their FS writing.

The company owned by Tong Ooi Kong, listed in SGX. Is pretty good as well. No surprises, with Tong being such a big buffett fan.

===
Posted by (S = Qr) Philip > Feb 20, 2019 09:38 PM | Report Abuse

Hi Fabien,

To be honest I haven't looked at LCTITAN closely ever since I saw that their IPO was priced too high. I usually wait for companies to perform for a few years to get more clarity on their business strategy, advantages and growth prospects.

I did drive by their plant in pasir gudang, I thought that their space was limited and not so easy to grow in size and efficiency. Their plant turnover for maintenance was a bit slow for the size, and I felt their feedstock source would have difficulty in hedging and planning prices properly.

Other than that your guess is as good as mine. I don't even know who their end customers are ( Korea local?) So I wouldn't know much.

Sometimes I wish all annual reports are written similar to Berkshire, less pretty pictures and filler info, more info on what they have done to the business, the thought process behind it, the challenges they are facing and what they are doing about it. More pertinent information I guess. You basically have to start everything in reverse i.e. from the major shareholders, notes on the financial statements and backward to analyze properly what it going on...

>>>
Phillip, i bet you have done your comparison between PCHEM and LCTITAN of which you choose the former. Mind to shed some light on your choice?

Whats the difference between healthy and unhealthy retracement?

====

Posted by Huat1 > Feb 19, 2019 01:50 PM | Report Abuse

Healthy retracement and it is over now! Time for the next wave UP

Haha cute post.

Very quick reminder, cost of electricity from solar compared to coal is double.

And solar fits the same profile as coal in terms of electricity generation, ie baseload.

====
Posted by (S = Qr) Philip > Feb 17, 2019 07:06 AM | Report Abuse

A few simple questions to ponder,

Why did solar industry die the moment no more FIT was announced?

Why is no one taking up the net energy metering on the industrial side?

If "green" energy is sustainable, why did FIT in Thailand and many other countries fall apart? Why did Sarawak not participate in feed in tariff?

Why does SolarCity and many solar companies keep going bankrupt?

Why did the biomass industry in Sabah and Sarawak for the moment people realized there was value in fruit bunches?

And the main one, is cypark business sustainable if the government stopped supporting the seda programs today? Will it make financial sense to general industry?

This is a good try. But its too surface level, and the reasoning is not deep enough.

You did not illuminate the audience on the real economic power of Airasia or whatever edge it has.

I look forward to your future pieces.

Now your thesis is
1) Economy of scale, some probably.
2) Cheap feedstocks from PETRONAS.

I'm not sure if the second holds water.

Firstly, there's something called a "transfer pricing documentation", which every large conglomerates with huge interco transactions need to have. This dictates the price these items can be sold, or how the price can be set.

The figure at which it sells the feedstock, needs to be at arms length basis, or as if to a third party.

If you say PETRONAS sell cheap to Petchem, you are saying the government of malaysia is willingly making lower money, since PETCHEM is public listed and not 100% owned.

That PETRONAS staff willingly murder their KPI by selling cheap and lower profit there.

Maybe, what they have is lower transport and storage cost, since you have a stable and fast supply, but cheap feedstock, is a stretch.

Here's an additional hint.

There are two kinds of government price controlled industries in Malaysia.

One, is like chicken, egg, sugar, mutton, beef, pork, small red onions, flour etc

Second is like retail petrol price, power plants (especially solar), water concession, highway concession etc

What is the difference in economic reality between these industries?

I really said too much d. This is more than enough if you're very curious.

========
I can't answer your question properly, as i like this company at this price very much for myself and my investors.

Its not in my interest to potentially increase my purchase cost by explaining to others on a public forum. Its already up 5% this year, and it had just cost me an additional few thousand this year when i buy more.

However, i wrote something on the economics of refinery business.

https://choivocapital.com/2018/11/28/an-estimate-on-the-real-refinery-...
https://choivocapital.com/2018/11/28/lessons-from-hengyuan-petronm-and...

I believe the above two articles, as well as a brief study on husky energy and other petrol retailing or refinery companies around the world, will provide you an answer.

Email me once you've finished your research. We can talk further then.

=====
johnbrooks Choivo, why do you say the refinery margin is not important? Shouldn't it be the most important thing for the company's profit? I mean the refinery margin is what determine the gross profit margin right?

The way u say it, u think that the profit won't be affected even if the refinery margins go down. I'm not saying the retail business is not important but the biggest weight to the company profit should still be the refinery profit.
13/01/2019 15:11
14/01/2019 11:19

=======

RainT so what is the main money maker for PETRONM?

can share ? hehe
13/02/2019 16:36

No.

That one is outdated. Im privy to new information, which i did not have when i wrote it then. This new information has led me to understand my previous assumptions are too optimistic. I cannot disclose this information as its P&C.

Having said that, im fine with keeping my 2% position. There is enough tail end benefit that should be interesting.

Haha chosen to not be in top 20 in competition this year. Hahahah.

Calvin this year quite happy think, stock market wise.

Oil price does not really matter for PetronM. Its not the main money maker.

O. Nice. Small position only though.

You know funny thing is,

They went and amended my profile on their own.

"Young fella. Abit Lohsoh. Too conservative, not adventurous enough. Probably not stupid. Considers himself rational."

This the profile i asked them to put. Might not feel like going now. Haha


====
A young fellow who passionate about investment knowledge, active in blogging and share his thought as one of the ways to contribute back to investment society. He thinks that investing skill should be rational and based on common sense, following a herd without knowing what you are doing will lead to self destruction.

This is a useless piece of research.

Change in comparative valuation.

It was in my original 59%, than as i buy more of other things and put in more money, it fell to the current 17%.

Of course, i don't expect you to be able to understand it.

Go look at your charts for 8 hours a day pls. Tks.

I know what its worth. Haha

.... Wanted to buy my last batch, but was still thinking, at 6.5. Aih . A little bit irritated.

Phillip,

If you paid 50 dollars for a company that make 1 dollar every year, you would have. 50 dollars in 50 years, or 3.8 dollars when 50 years worth of future cashflows is discounted back to present value. 92.4% destruction in value, unless there is growth. The only way you get 10% earning yield, is if earnings grow 50% per annum.

Buffet bought sees candy at roughly 6PE. Not 50

The only time he paid more than 25 times earnings (coke he bought at 20 times or so, held at 50 times and he admitted its a mistake. Precision castparts 20 times), was in turnaround or startup scenarios, GEICO and netjets.

Not 50 times earnings at all time high earnings.

===
(S = Qr) Philip for that last part,
assuming if you were thinking pure long term:
if a stock was asking for PE50, and you had earnings of 1 dollar, yes you would have 50 dollars of earnings in 28 years. But imagine in 100 years you would have 1.2 million earnings. Yearly. the power of compounding.

Do you think you will be able to buy a quality stock at a cheap price?

Warren originally was only willing to pay 20 million for Sees candy. (Charlie thought 30 million was a fair price in 1972). Imagine if Warren followed ben graham concept of margin of safety, he would have wasted 10 million opportunity cost to get 1.6 billion in cash flow return ( on a business that had 85 million earnings yearly)
06/02/2019 16:23

I wonder if, "adaptable, open minded and flexible" is synonym for "No real philosophy" beyond whatever potentially spurious correlations at that point in time.


====
Icon8888 surprisingly, the most adaptable, open minded and flexible old timers in i3 are two old men

one is qqq3, the other is icon8888

most of the others don't dare to walk out of the room without their warren buffalo book in hand
28/01/2019 10:00

You everyday recommend stock, how come only pick 7 to put in your "stock pick" post? These are the only one that gain is it.

Probability,

Phillip did not have insider. He had public information given to him in an easier way.

He could see the business, talk to fellow suppliers and see ql customers. He could see the bosses, how they act, how they think about business, how they run the business.

And from this, he decided, given the level of comfort he has towards the business, he is willing to pay premium.

He gets to know the bosses well, and they tell him how the business is going, the industry dynamics, theirs plans. He ask his questions, they answer it well.

He feels more comfortable and continues buying the stocks. Sometimes at higher, other times at lower valaution.

He becomes so close with the bosses, that it becomes abit of a family business now. Strong sentiment attached to it.

And to an extent, he gets lucky as the Malaysian market dynamics works with him, local funds need to buy msia stocks, cant buy small cap, and have herd mentality. One buy ql, all buy ql.

Remember, Bill ackman had the same experience with Micheal Pearson, the former ceo of valeant. That experience almost killed his entire fund.

Raider bro,

When you talk about investing in general, you sound logical.

But the moment you talk about stocks, hy, evergreen, insas etc. You start to sound a little to very illogical.

Do note by both metrics, quantitative (pb discount, and ev/ebit) or qualitative. They are far better options than insas in klse now. It's worth a holding a little, but not alot imho.

I think it's the same post from 25iq. But I'm hoping it's from a nice thick book I can dig into haha.

I think for Phillip, QL is almost like a family business d. He is close to the QL family, the bosses etc. This is more personal than just pure numbers. It made him 10x or so d and save him from his debts, and gave his family a good life. There is some sentiment there.



Icon8888, all these angmoh theory too academic. Not practical. Only work in foreign markets and not Malaysia. Hahaha.

Thanks. This was really useful. Would appreciate the title of the book or blog you got it from.

I have my doubts about 5G ever being able to replace fibre.

Having said that, I am aware of my limitations when it comes to technical knowledge, and that I am likely biased towards information that do not speak well of 5G.

Still,at this price, I like it. Those buying now, in lieu of the 15% drop from my cost as well as the 25% inprov d earnings from when I bought it.

Will likely be getting something like a 25-35% discount. When I bought it from was close to 27pe. Now its 18. Some are forex do note. Not that much, but still go study on your own.

Take what you may.