Thanks for the questions. I don't mind answering this one because it is not as wonderful an opportunity as my other buys, and I'm not topping up.

Phillip,

Yes. Because they have end to end fibre network. It's not a compeititon, everyone else either piggybacks TM network one way or another, or they buy wholesale from Time.

Better offerings? Well 5G maybe. But I wrote on that earlier. And even if people actually go crazy and put a 5g antenna at every building in kl to give that speed. You still need an underlying fibre network for those antennas and I think time can provide it. They just won a certification, MEF3.0. Which certifies that their packet loss and latency is low enough to support 5g. Only telco in msia to get that so far.

I don't think time will ever be the biggest broadband provider. But they can expand as much as they want. Net cash, no 99% dividend payout policy.

Pricewar? Time will eat the compeitition. Everyone but time piggybacks off tm. That's their cost base. And TM have so many legacy cost that cannot be easily removed.


Godhand,

I wrote this article sometime in early 2017. Didnt post it till end of 2017. The table is outdated, but I believe if you are to update it, time is still ahead. The rest of the article, I believe the essence is still relevant.

I think the fact tbey are pure fibre that is directly linked to global undersea cables. That is a moat. No other in msia is. And if you want to build this network, its extremely expensive, it takes time, and you have timecom there already, completely changing your economics.

Either way, my average cost is still from more than 1 year ago. 9.4. Business have far improved and price is far lower. The only reason I'm. Not topping up is, there is a business, not as wonderful, but far far cheaper.

Hmm, i think the main reason for the undervaluation is the lack of dividends, coupled with the high director remuneration. I think you're aware of this as well, from your previous postings.

One would naturally not be so eager to invest, if investors perceive the directors as not treating them as partners.

I too bought a little a few weeks back, when i felt it was a bit too cheap.

Good luck with your plan to engage management. I hope you obtain a favorable outcome.

You dont pump. Because upi have no money.

You write article, ask people and your follower pump for you. Then you sell to them loh!

lah pump and dumper article lai liao

Hmm, not that much i guess.

Mother or son?

Should ban stock market then.

====
Posted by enning22 > Feb 7, 2019 12:33 PM | Report Abuse

ban all forms of gambling .

I think the main question here is this.

How much have KYY bought and how much cash or credit he got left to support and for how long?

And when will the results be coming out?

You would want to sell before the results come out, and before KYY got no money to buy more.

Hmm phillip, im not sure if you've read any of yeong sheng tey's articles on PPHB. They are quite good.

He met and interviewed the bosses before, and they were very very open to explaining the business etc. Very friendly people.

If you meet them, you may not want to be so aggressive, and talk so much about soaring stock price, but to slowly nudge them to align their interest as directors better with the shareholders. They are the biggest shareholders after all.

He spoke to them in dept on warren buffets philosophy, the importance of Return on Incremental capital etc. And they were quite open and participated, so they are probably not foolish either.

all this ang moh theory dont work in KLSE!

Haha, happy cny calvin.

No worries phillip, im not looking for anyone to invest in timecom.

Im look for people to poke holes in my thesis, as this is one of the bigger ones for me.

The only way to prove all swans are white is to find a blackswan after all.

I have some stoneco. Not a major position yet. Mainly because im not that sure or understand as well as i would like, but it looks pretty good.

Phillip, i look deeper, but PE is a convenient way to make comparisons. The reason why compare against QL, is that a new investment must be compared against one's current best investment, and QL is yours. Its also easier to describe things in that context when speaking to you.

On the note 20, the difference is mainly due to deferred tax assets due to capital allowance. Refer to note 8.

https://www.investopedia.com/terms/d/deferredtaxasset.asp

You may read this to understand that better.

The main one in TIMECOM is from un-adsorbed capital allowance, which makes me think they probably depreciated their asset faster than the initial and annual allowance, giving rise to that amount, which will be recognized in time, when the accounting base meets the tax base at some point.

Not some special incentive here. You will see this alot more in timecom, because they do very significant capex works compared to the other telcos.

Verizon, fixed option offer coverage in the range of around 2,000 feet. In a city environment, such as New York, that could mean installing 5G small cells every city block to provide good coverage!

And the signals can be blocked by the human hand.

Maybe it will be overcome, but in the meantime, i think fibre is still needed. And given the price and growth rates of TIME, well its 18 times earnings, not 50.

A significantly easier buy for me.

Internet usage and demand will grow to fill the capacity available.

Do you know the capacity limit for fibre lines?

Its essentially infinite. The problem lies in being able to project a strong enough light signal, without affecting other light signals and corrupting the data.

Researchers recently were able to increase light transmission power by 20 fold without significant deterioration, or the need of a signal regenerators. And fibre lines from way back till now, show little sign of degeneration.

What would be easier, increase light projection through existing fibre lines by 20 times, or building essentially 5-10x more tower for 5G? Probably a lot more than that if we are to try and IOT and full scale streaming etc.

All recent test showing the wonderful speed of 5G, is done indoors, with direct face to face connections of like 10 feet. The moment you take it outdoors, with all the noise and put obstacles between the stations.

You have problems.

5G and satellites etc, is the best cost wise, when you are trying to connect to the very last mile, or some god forsaken rural area.

But in city centre, im not sure if it will go beyond our phones. I do think its unlikely.

by the way, malaysia and much of the world is still on 4G LTE. 4g LTE speeds is below 4G.

What this means is that most telco providers still cannot provide 4G speeds.

Good luck with 5G.

My only worry on Timecome, is on the 5G.

The question i always wonder, will there come a time, when people no longer have a land/fibre line, and instead rely on just wireless data from their phone?

I doubt it.

The first step is that 5G, if you read up on it a little. The main difficulty is in transmitting over large distances or through objects. Which mean you will require alot, and i mean orders of magnitude more stations, which will all need to connected by fibre lines, which i think timecom can provide by selling wholesale.

And with full hd streaming (4k in the future) going on, i genuinely doubt, a wireless data network, can support it. Even in the US, fibre capacity is hitting capacity limits, and fibre runs way more data than wireless. Currently, 4G already have problems whenever a telco come out with unlimited plans, umobile etc. And these people are not streaming alot either.

I don't think people are ever going to stream netflix, korean drama and andriod topboxes over your phone data (tether to laptop/tv), it would not be fast enough, and if it were, there wouldn't be enough capacity to allow that.

Correct. However, you should note that the limits such as cost of fibre laying etc, is normal across all the competitors.

Its like saying surimi business not that good, because fish is expensive. Everyone want to eat fish, and all the businesses in surimi business need to buy fish. The question comes down to the quality of the management and the structural edge.

At the end of the day, fibre cable needs to be across the world. And time was a small partner in the AEES cable.

Timecome have the edge of being pure fibre from front to back. They are not bogged down by any bottlenecks. They have their own fibre backbone, this is the key. Which they can also vertically integrate with their data centre services.

Imagine you are a business customer of timecom, you want to move to cloud. Do you want to use Azure or AWS or KRONO, who has a server somewhere in south east asia or further.

Or just use time's, where you have a DIRECT line to their data centres? Its a no brainer. The data centre is growing faster than retail if im not mistaken, but its not that big right.

I more on elucidated this in that piece i wrote.

Now, personally if i was TIMECOM, i would not be in such a rush to connect to sarawak etc.

Why do that, why you have so many city centres and condo's you can connect to. And the suburbs as well, when the condo's are done.

As i wrote, timecom provides the best service for the lowest price, due to their inherent structural edge.

The moment they connect, they will take away all of TM's fibre customers.

And from my count, they have a long way to go before connecting the entire city center in peninsula malaysia.

Thats a long runway for growth.

Politically, the previous problem they had consisted of trying to get permits to connect fibres to certain places from the govt, because they couldnt connect above ground, due to government policy, or use the connection poles of TM underground, because TM refused to sell.

Now with the policy of the new govt to boost speed and coverage, i think they will find it a lot easier.


====
Why is a wonderful company like timecom nonexistent outside of Klang valley? I can't find them in Sabah, Sarawak, Labuan. What does this tell you? The capex of laying fibre is very restrictive, because at each point you need to install a MDF, you need to install routers and switches, and you need to install a big support team. Your customer acquisition cost is lowest in big population centers and gets incrementally higher the further out you go.
That hardly sounds like a wonderful business to me.

Guys, the expected value is probably negative now.

Still, good outcomes can come from bad decisions. I have not skin in game, so i wish you good luck.

Feel free to sell down other holdings to buy more currymee.

Sounds easily replicated to me tbh.

Probably undervalued, can consider 1-1.5% of portfolio i guess. But with market this good, they are so many wonderful companies at similar valuations.

Making it harder to swallow.


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Posted by soojinhou > Feb 2, 2019 09:25 AM | Report Abuse

soojinhou,

How does their lighting business compare versus the competitors. Any particular moat, or just another supplier in the industry?

Their lighting is supposed to be smart, and therefore energy saving. For example, the light brightens when a car approaches and then communicate the information to the next light. It is IOT based and smart, and so it's controllable via computer. IQGROUP's Lumiqs is also based on similar concept but they are targeting industrial customers, such as those used in warehouses, rather than infrastructure like Success. As for a moat? Well, given enough money and motivation, most engineering can come out with similar solutions. But given Success is the incumbent and has established a portfolio of projects, they are harder to unseat by competitors. In the end, it's ultimately cost vs benefit. Are councils or property owners willing to pay more for smarter lighting, or just go for cheap dumb lights?

Well, nice to know you weren't lying about the size of your QL stake.

Having said that, i think you would be wise to consider that soujinhou said.

I don't think a company being local or foreign deserves a 3-4X premium in valuation, 14PE in say CP food vs 50PE in QL.

I have no doubt the management is far minded and highly competent.

However do note, when buying a wonderful company at a high price, there is a two factor premium.

1) The strong management results in historically high earnings, which is multiplied to obtain the much more expensive market value.

2) The strong earnings result in a higher multiple, resulting in a second overvaluation. And in this case, its not like you're paying 5% yield (20PE), you are paying 2% yield (50PE). The only way this make sense and gives you 10% earning yield, is earnings increase at 50% per annum for 10 years. I doubt they can hit more than 10%.

If you're going to look for a wonderful company and a fair price, i suggest you consider TIMECOM

https://klse.i3investor.com/blogs/PilosopoCapital/142735.jsp

Take a read, i think this one is right up your alley.



+=====
Show me another vertically integrated company in Indonesia and Vietnam doing the same thing as QL resources. Go ahead I dare you."

Japfa Cornfeed listed in Jakarta and Japfa listed in SGX. A lot cheaper than QL.

>>>
Very good. I think I missed out the word local. Because all those companies investing are foreign.

can send the article?

tks.

Mr Koon, your senseless critics told you to sell JAKS at RM1.84. You told people to buy.

The same senseless critics are now saying at RM0.4-RM0.5 JAKS not horrible, maybe can buy. You on the other hand asking to sell.

Now we have the same story with CARIMIN.

Uncle, RM64 million (More than RM70 million if i add in all your other holdings) is a lot of tuition money to pay. And im not sure you learnt enough for RM64 million.

You like to help others and poor students. I hope you don't pay this kind of tuition money again.


======
As you know, I have posted my buy recommendation. My senseless critics always said to sell when I call to buy. Now they are leaking their wounds. Those who believed me are laughing to the bank.
Koon Yew Yin

sorry they increased card prices. They increase card prices every 5 or si years.

Got 2 tier, USD60 for standard. USD120 for companies. Renewal rates is higher than 90% per annum.

Brother probability,

Moat does not mean you wont die during a disruption, but harder to die, and may even thrive.

Lets say now, very simple. Retail apocalypse. Because of Amazon and online retailing, all the shopping malls and retail companies in the US dying.

SEARS from 40 dollar a share to 20 cents, now almost bankrupt.

Parkson from RM8.81 to RM0.22.

UK, Nordstrom etc all dying.

Whatever moat these companies had, was great no doubt, but it wasn't a true moat. In the end, get murder by a structural change initiated by the emergence of Amazon.

But then, not all retail companies die.

COSTCO, a wholesale grocery business, this year, profit and revenue up 4%. And it has growing like that for the last 20 years.

Share price for USD50 in 2008 to USD215 today.

Why?

Because COSTCO is a true wonderful business with a moat. Let me explain to you this co.

What is a wonderful business? How does a moat sustain for decades?

First, it needs to be the standard good business in great industries, that has a certain structural edge etc..

But the key thing for a moat is, it needs to be WONDERFUL for society. You need to tie your profitability to benefit towards society to such an extent that, the more money you make, the better off it is for society.

COSTCO is a wholesaler, can buy your nestle, coca cola, groceries there, just need to buy higher volume.

Last year, they made USD3 billion or so. Except, this consist wholly of their USD50 yearly membership card. They make ZERO, KOSONG, NOTHING from selling groceries.

Here is what they are telling their customers. Every year, we will only make USD50 dollars in profit from you, regardless of how much you buy. You spend 10 million with us? We only make 50 dollar. You spend USD20k? We make USD50 from you only.

And this company has one of the lowest cost base in the industry, and is completely focused on cutting cost.

They got no name tag. Just sticker with your name. Uniform? Bring yourself, black shirt, slacks and shoes.

When coca cola try to increase selling price by 5 cents per bottle, they completely refuse to stock coca cola, telling their customers, they feel coca cola does not provide enough value for them to sell it to their customers.

Coca cola buckled and didnt increase the price.

If this company next year makes US10 billion instead of USD3 billion. One can argue that they have tripled the benefit they contributed to american society.

That is a moat.

Look through that lens when finding companies to buy in malaysia. Got one or two such companies in bursa. :)


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Posted by probability > Feb 1, 2019 03:09 PM | Report Abuse

have a feeling..after all the warren buffet bull shit theories...people are going to realize there is no such thing as moat in the current business world...

every technology, IP and skills (including heavy manufacturing industry)...are going to be easily replicable....and the world has to adopt free & open cross border competition...

this is the struggle between U.S & China currently...

soojinhou,

How does their lighting business compare versus the competitors. Any particular moat, or just another supplier in the industry?

If the earnings come back should be ok gua. Business looks moatless, but it looks cheap enough, but im not sure its that great of an investment versus others cos now.

2.5% or less ok lah.

aunty where is my seaweed keropok!

Go back kitchen make, dont come market and lose your retirement money!

I'll pay RM20 for one tin!

Longer than you can keep the money you got from front running KYY.

Hmm the directors needed to pay 64sen to exercise the right kan?

Raider bro,

let me just say, market got alot more than just insas.

That is a NTA buy, not a sailang stock imho.

Uncle,

Size as at that point in time.

Just in the interest of disclosure. No ego here, not stating absolute amounts.

We here all think got few mil like elephant in market, then grandpa warren buffet show you USD100bil investment in apple when quarter come out in feb.

Suddenly even kyy like germ only.

Money when got enough, just a high score only.

Haha uncle,

Just kidding around.

Still, i think it would be very kind of you, if you are to state in your articles, the size of the positions.

So people have a better idea of what you mean.

Mine a bit different. Timecom, one article, 50% at that time, now 17% due to significantly expanded base and capital gains.

RCECAP, 30% at the time, now 24% due to capital gain and expanded capital base.

Icon8888,

7 articles, sailang stock. 2.5%.

MBM is 2 articles, so its 0.7% position.

LCTITAN, HY and Petronm. 1 article, so 0.35%?

More confidence a bit uncle.

Wah, only in I3, you can see retirees talk like this so publicly.

I forcing connie make me seaweed keropok with salted egg sauce to eat for cny, in exchange for mopping the floor.

No seaweed keropok, no mop floor!

If this year ends up very bullish, i dont think i can break top 20. Haha Oh well.

Haha talk about a comeback for mr Ooi.

Haha funny lah you guys.

Personally, when Icon use my picture, my portfolio went up about 10%, when he stop, starting dropping.

As i no cash now (only some credit left) and unlikely to buy stocks for the next 2 months or so.

I would be quite ok with Icon changing back to my picture and letting us Ong and feel nice abit for CNY hahaha.

Great read, Thanks Icon.

Uncle,

Dont forget your lesson for Jaks.

Good luck.

I suggest you don't so brave and make sure strong statements.

you believe refinery and petrol retailer can sell for 5 pe anot.


====
Posted by pBlue > Jan 30, 2019 05:55 PM | Report Abuse

If you want to buy at 4.00, suggest you wait until US goes into recession. 4.11 is lowest LCTITAN has gone since listing.

Id like below RM4 as well.

Not exactly cash rich, not sure i want to stretch for this at this price.

Might be time to buy soon.

Hmm, id rather buy petronm. Better absolute opportunities. That's about it.

This article is quite balanced. I dont think it has pump and dump nature.

Phillip,

Go and study motorcycle ownership trends in Malaysia.

Long number,

As always, your data is wrong. But given your age, I'll forgive you for that. Since I'm in a giving mood, I won't charge you for the advice I'm about to give you.

From the bottom of a crisis to normal or peak levels. The companies that gain the most, whether bonds or equities. Is not the highest quality ones, but the most rubbish quality ones.

Which makes sense, as people can't help but remember ONLY it's rubbish qualities at the throes of the crisis, and in the subsequent boom, place too low of an emphasis of those same rubbish qualities.

Like I said, don't go on margin. And you won't die, no matter how foolish your subsequent actions in investing prove to be.

I know, it does not feel good to have someone you consider to be a young ciku to give you advice. In fact, you probably feel a little insulted that the entire i3 did not kneel and thank you, the moment you opened your mouth on the glories of ql and its longkang of a moat.

Still, you should listen. I'm sure you will change your mind.

Because I'm right, and you're smart enough to know it.

I mean your philosophy went from "wonderful company at any price" to "wonderful company at the right price" in the last one month. Due to no small our effort, on mine, Ricky and others here.

I'd send you a bill, but my skin is not so thick yet. Nor do I have your address.

Yeah, i bought some stone as well. Its pretty cheap.

Thanks Unker, i appreciate it. Send me an email, lets meet up if you're in KL.
====

Posted by Icon8888 > Jan 22, 2019 10:57 AM | Report Abuse

learn a bit from you also, Ah Boy

Haha all that reading of investment books seem to have deepened your thinking by quite a bit.

Connie,

Good luck. Try not to go bankrupt. I don't know why, all the Connie's who start putting money in KLSE tend to burn out. IFCA etc

You old already, if you screw up, cannot come back d. At your age, go sleep can d, don't look at market so much.

You seem to be one of those who take pride in their ignorance.

Well.. the spectrum of human nature runs large

This year, my i3 goal is this.



"If you come across any special trait of meanness or stupidity, you must be careful not to let it annoy or distress you, but to look upon it merely as an addition to your knowledge - a new fact to be considered in studying the character of humanity. Your attitude towards it will be that of the mineralogist who stumbles upon a very characteristic specimen of a mineral."

Arthur Schopenhauer.



I do what i can, but if the cow don't want to move from the burning barn. It should get burned. I did my part.