While I agree intrinsic value is a vague word, and sometimes carry different meanings to different investors due to misconception, but nonetheless it is a measurement - to know what a business should worth for a willing buyer and willing seller. And how that is measured is by estimating the future cash flow that can be generated by the business.

Whether you are talking about intrinsic value or trading, everything is obviously in the eye of the beholder. But a good investor doesn't determine IV from his own point of view, he synthesize by incorporating all supportive and contradictory information to derive a valuation that he hope is closest to the objective truth. In other words, seeing things from multiple lenses. Share price of course gyrate more than IV, but that doesn't invalidate the use of IV. It is precisely the gyration of the market that a long-term investor should know the value of a business without being swept away by nonsense.

Using NTA/NAV, first, is just an anchor to where IV could possibly be, it is a start not the end, second, it is a heuristic some investors may rely too much upon and create misconception (think PE), it has nothing to do with the reliability of IV itself. Correlation doesn't mean causation.

IV has relevance to all caps and all kind of cash flow generating assets outside the realm of stock market. Property, there is IV; Mona Lisa painting, there isn't. P&L that has no stability doesn't mean there isn't any IV, it just means the IV range will be huge since there are many possible outcomes.

And I don't disagree with you, that IV itself requires a time frame to judge the accuracy of one's forecast as well. But instead of using market price which is unreliable, one should make forecast based on business key drivers.

No one should 100% trust their IV, it is not something that you set in stone, but rather constantly require adjustment as more information comes in. Think in term of degree of confidence.

Holding power is a measurement of risk. Everyone exact definition might differ, some refer it to the psychological aspect of holding it under stress. But to me, it means not being forced to sell under adverse condition. Investor can be forced to sell under condition such as margin lending, lifestyle obligation etc. Those are risks. Risk begins way before you buy a stock.

That's why a company that doesn't require much in capex over the long-term is better than one that require high capex. Capex light business can either reinvest or distribute earnings to shareholders while continue to earn a high ROC. Nestle share price continue to go up not because they can pay alot dividend, but because they earn a high ROC. It is high ROC that makes them valuable, not the dividend itself. But high ROC does enable long-term dividend growth.

HY can pay you a fat dividend but if the business is so competitive that ROC eventually come down, no amount of dividend can support the share price. Don't take my word for it. Look at Hengyuan from 2008-2012 when they are still Shell. The payout ratio is 50-100%, sometimes even more. Given such a generous dividend payout, share price should go up according to your assumption. But it didn't, the price stays flat all those year. When Shell decided to stop the dividend, given the poor/negative ROC, thus inability to sustain of such dividend payout, the share price moved downwards. That's why my opinion is understand the business earning power, that matters more than the dividend policy.

@Sslee I don't disagree with what you are doing. I just think there other better things you can do in this scenario, but that's just me. And to clarify:

1. Depends on your definition of growth, like what constitute growth? Anything above o%, 10%, or 20%? To put something in context, I assume growth is defined as anything as above 10%, and a dividend stock as something that has a return yield of above 7%. That essentially mean you need a return on capital of 17% to do both. How many stocks in the universe consistently achieve more than that? not many. If Insas and HY can go more than that, they can be growth and dividend at the same time.

2. On Nestle. Why should I sue Nestle? They got a high payout ratio because they lack reinvestment opportunities. I would sue them if they invest in those businesses you just mentioned, because those biz would lower their return in the long-term. Nestle don't maintain their high ROC by investing in those 'commodity', but because they stick to what they know best. In contrary, investing in those biz will result in lower share price than what it is right now.

This goes to the core of your argument. Your argument is that fat dividend means higher share price, but that's only half true. Companies can have zero dividend yet with high share price, think Berkshire Hathaway. You probably prefer dividend because you are near retirement age, that's a valid point. But everything goes back to the future ROC of HY. Dividend is only a byproduct of quality business. It would be better to question the strength of HY than questioning when they'll be paying div.

How can one determine if something is cheap or expensive based on the historical movement of the price and his average entry price unless he is trading? Otherwise, that's like you drop your wallet out in the sea, so you mark an 'X' on the side of your boat so you can find it later.

Great effort but in my opinion, unnecessary, unless you really have to become an activist because a big chunk of your wealth sits inside HY.

1. How can someone exactly know the dividend is the crux of the problem that cause the share price to nose dive? No doubt, there will be those that sell because they expect higher dividend but what is the % of those shareholders that contribute to the fall? 0.1%, 2%, 50%? No one knows. There can just as many other reasons that cause the fall. Or no reason at all. If HY declares the same dividend and the share price stays at RM15, would this letter be written? Most likely not. Because it is the share price movement, the almost 50% fall since the dividend date, that trigger this action, not because of the dividend itself. As a thought experiment, if HY declare 2 cents div, and the share price shoot up above RM20, many would come out and praise how 'generous' HY is. This requisition won't be written. I write this to emphasize the dividend is not the real issue, the real issue is people look at the share price everyday that creates panic in themselves. Share price is the cause, not the dividend

2. This is more on creating value and dividend itself. No doubt, dividend has been a main source that contribute to a big chunk of stock market return over past 100 years, not just the increase in share price. But given that if what all the predictions and countless articles written on HY is true, that HY is going to generate upward 40% return on capital. My stand will be opposite from you, I would 'sue' them for paying that 2 cents. Because they should reinvest everything back into the business. I can't and no one can find a 40% roc business out there, paying out dividend essentially lower my long-term return. Because all I can is take those dividend and invest in a 15% ROC business, worse, lower than 10%. So why should all these people that is confident of a business generating 40% ROC get so concern that HY is paying a pittance of dividend?

If someone invest his hard earned money in a stock without doing any proper due diligence and subsequently get influenced by people in forum or neighbour next door to make yet another bad decision that result in heavy losses (the first bad decision is buying), he has no one to blame but his own greed and poor decision making.

I can't speak for 3iii but seems like the word 'game' has a bad connotation. To me, the meaning of game is to invoke rationality, to treat it as a probabilistic game, a bet, or what you like to call it, so you can judge your degree of confidence. Game has nothing to do with morale or being heartless when someone's life is on the line. The very fact that many people tend to treat their beliefs as treasure to be guarded instead of hypothesis to be tested get themselves into trouble. Having a heart means associating your self-worth of being right and someone as wrong. Confusing self-worth with net worth, a dangerous thing.

When someone is free read this famous article - Boys will be boys - https://faculty.haas.berkeley.edu/odean/papers/gender/boyswillbeboys.p...

Why given the overwhelming knowledge, insight of men in investing and advantage, with overwhelming odds, continue to underperform women? Why women, despite their risk adverse personality (less women participate in stock market compare to men), less access to information, continue to outperform men? And when you consider the time men spend digesting daily market news, that puts the return on time at negative value!

Dont get me wrong. The odds of winning for someone with no insight is lower than someone who has insight. You are right. But to an extent. When the person that has insight become overconfident with his own insight, when the gap between his subjective confidence and the objective truth widens, the one with no insight will have the winning odds. It isn't childish at all. You only thought one way but not the other. You keep thinking insight is a one way ticket, the fact that more insight = more accurate prediction. Until it doesn't. Thats why you emphasise on knowledge (how much you know), and I emphasise anti-knowledge (how much I don't know).

You are right, the future indeed decides the price movement, not the past. But it doesn't mean past is irrelevant, unless HY has decided to jump into producing and selling milk, then yes, we shouldn't rely on the past, because it will be totally wrong. But HY is still doing what they did 3, 5 years ago - refining. Albeit there is changes in term of activities, macro, the past to an extent, is still relevant.

And if we look at the past of all the refining businesses around the world, that past is still very relevant to how HY might unfold in the future.

As example if a person says "the sun has risen in the past, so I know the sun will continue to rise in the future'. Is he right? Not 100%. No one can guarantee sun will rise forever (the sun will die one day). So will HY always be like the past? it might or it might not, depends on your degree of confidence and beliefs. But as an investor, you want to protect your downside, you want to know if 'HY indeed is like the past', what valuation would that become? And did my buy price guarantee there is a margin of safety?

No one is exactly right or wrong here. Future involve many possible outcomes, but only one outcome will happen. At times, not even the outcome with the highest probability will happen but those that no one see it coming (Black Swan). The job of an investor is to take into account all these possible outcomes, each with their own value should that scenario occur, and come out with an expected value and compare that value to the current price.

The person that tells you HY should worth RM24-90 is putting a bet a certain outcome/s will happen, what is the probability? Make your judgement. Others that tell you HY is worth RM3-8 is putting a bet on an alternate outcome, both have a certain degree probability of happening. And there is somewhere in the middle. All possible outcomes will add up to 100%.

Just as if someone looks like in his 40s, my confidence interval that his age is between 40-50 years old can be as high as 90%, but if you ask me what about between 45-47 years old, then my confidence is 30%, because the age can be higher or lower than that.

Same thing applies to HY or any stock. What is my confidence interval for HY at RM90 within next 3 years? I give it a 1%. Will it happen? Sure, 1% odds. It will be silly for me to bet on that outcome with that kind of odds. And considering the nature of the business, I need to have a very wide range to achieve a 90% confidence interval, it could be a range between RM3 to RM40. That is, if HY manage to repeat the history millions of time, im confident 90% of the time it will fall within that range. But that's just me. If you know more and presume your subjective confidence is accurate, you can have 90% confidence in a more tighter range and place your bet.

Compare to Nestle, my 90% confidence interval, as if Nestle can repeat history for many many times, I know Nestle will do well in all the alternative universe. So in this case, I am more confident that the range of how much Nestle will be narrower than HY.

If you categories all the people in this forum that provide their opinion on HY into 3 groups:

1. The optimists - > RM24
2. The neutrals - RM10-20
3. The pessimists - < RM10

Then you want to consider the probability of each case of happening. If:

1. Optimists has 30% of being right, the value is $7.2
2. Neutrals has 40% of being right, the value is $6
3. The pessimists has 30% of being right, the value is $1.5

Then your expected value is the sum of all - $14.70

This is just an example. Don't anchor bias. Now how do you want to make sure the probability you assign is correct, that's what investing is about. Look at the outside view, optimists give you a ROIC of >40% long term, is that possible? How likely would that happen? Assign a probability.

The pessimists tells you assets has better predictive power than discussing future prospect? So how likely that is true? Assign a probability. And so on.

Do you have enough insight yet?

@Probability your argument can go both ways. I can tell you the opposite of what you tell me i.e not looking at the past, speculating the future (more applicable than speculating the past), pseudo insight, so let's not go there. If you think I've hidden agenda, again, it goes both way right? You own HY so you have the incentive as much as I do. So don't go there either. If you like to add the land value back into the cash flow itself, have it your way right. Does adding insight really makes your decision better?

It is hard isn't it, insight vs no insight, the one that has no insight always lose. Certain vs uncertain, the one that is uncertain always lose. Knowledge vs anti-knowledge, knowledge and insight will always convince and persuade more people than those that emphasis on limit of knowledge. If you think you can push the limit and predict earthquake, go do it. But don't come and tell me I don't contribute anything. Because that in itself really don't CONTRIBUTE anything.

Enforcement will be costly and do little to protect anyone. Just as things like pyramid scheme has survived hundred of years, losing money will continue be a norm in the stock market.

A better tool is between your ears - learn how to think for yourself, you will never fall for all these BS.

Nice one. Using Jesse Livermore's word to infer the definition of 'Investor'. That is only his own definition, not representative of others or the general definition of the word itself. Risk comes from the attitude ones bring into engaging in any form of betting on the uncertain future. Risk doesn't 'start' after a buy, it starts long before. And again, risk comes from attitude, down 8% on cost has little meaning to the understanding of risk.

Makcik 73, yes rubbish bag is used for sampah.

I didn't know 3 years is considered a 'history' of consistent sales, earnings, and cashflow. In that sense, history typically means covering multiple business cycle. 3 year is not even one full cycle. And just as every home needs rubbish bag, that doesn't turn rubbish bag manufacturer into a moat company. To push that further, just as population is going to continue to grow, that doesn't mean it is great to be a rubbish bag manufacturer, and doesn't necessary mean there is growth either.

There's no point talking to him. He is overconfident, doesn't understand complexity and nonlinearity and have no appreciation for the unknown. Those that normally gets killed in Black Swan.

Exactly, indirectly, the correlation can be so small that it has no predictive power.

Now let's not make a connection between bertanggungjawab and company that create long-term value, which dictate share price performance. There are many bertanggungjawab companies that disappear under the pressure of competition. Tanggung or tak tanggung has little causation on the return of an investor.

"those fortune teller that rely on past earth quakes and made extra supports on to make earth quake prove buildings....and bridges...have less return lor... "

Please what are you talking about? No one has ever consistently predicted an earthquake. So there's no 'less return' to begin with because high return (correctly predicting earthquake) never exist.

Predicting future correctly wins, yes. But don't confuse winning with making money. A person that gets the future correct still can lose money. It all comes down to expected value.

Past always have reference for future. Imagine someone saying all the past earthquakes have no relevance. True to a point, past cannot predict future earthquakes, but we do discover Gutenberg–Richter law.

The only way to bridge between past and current data is through constant updating our view using bayes rules. But no one ever apply that in investing. Not to mention the amount of noise one encounter to find the real signal.

When someone says don't dare to take risk go put money in FD, you know he doesn't know what is he talking about.

If the past tells you a relevant reference class of stocks have never achieve >35% ROIC long-term, while those stocks have no effect on the stock you are interested in, nonetheless it tells you the probability that you will come across an outlier is so small that you better think twice.

Let's see. HY has an invested capital of $2 bil. With the assumption of gross profit around $1.2-1.3 bil annually, you are looking at a business that has a return on invested capital that's over 35% long term. If you don't jump out of the chair, you should.

Even under the fact that what you say is true, betting on the outcome of MBSB in 9 months time tells nothing about anything. The direction of share price by then is as good as being random outcome.

The most humble thing one can do is to admit he doesn't know anything, instead of trying to explain what's happening. Because if he himself don't see it coming, hindsight will not do much to help him foresee what is to come.

Sometime it is worth to examine this deeper. To ask - how does all these investors that are so called 'weak sellers' that are 'manipulated by sharks' got into HY in the first place? How does these investors that don't know what they are doing get into buying HY? Didn't they more or less get influenced, or 'manipulated' into buying because many promises quick rich rewards and high hopes?

I am not giving judgement whether HY is good or bad for investment. But it just goes to show manipulation is a silly word to use in investing, like you try to accuse Nike of manipulating your mind. If you want to buy, sell, hold, thats up to you, but don't go about telling people what's the best action for them, as if you know them that well.

@leslieroycarter is it fair to say that just as there are many that speculate on daily share price calling a drop, there are just as many or probably more speculate on the price to go up everyday?

This is not to justify whether it is right or wrong (that's for i3 to decide), but please don't call people cronies just because their incentive is different from yours. And besides how do you know it is this forum that contribute to the drop? i3 no doubt is the most visited stock website, but is it enough to explain people in here can move the market or change the sentiment? It is like the sand pile effect, which grain of sand contribute to the drastic collapse? You can't tell, every grain contribute to it. You create stories you want to hear. Besides, this is what makes the market.

Hardly notice any changes. Still shouting as the old days

Far from necessary to call others that disagree with you macai. You are not at war.

If that's what you like to assume.

Did I mentioned im invested in Petron? Not smart enough to invest in O&G. That's why I assign 50% probability on myself and others when someone predict macro crack spread. And worse, quarterly EPS.

Ultimately, there isn't such thing as HY should be more valuable than Petron or vice versa. It comes down a myriad of factors such as profitability, stability and how much the business can create value, which affect market expectation and the multiple ascribe by the market. Hypothesis says HY is complex refinery hence should have better margin, better profitability, therefore more valuable certain has valid point, but the opposite can just as true if margin fail to materialise.

Very impressive to see David Tan got the best projection by throwing a PE 4-10. Like I said, investing is a very tough job to get rid the illusion of validity.

@pingdan that's very good conviction. But be careful, you assign PE 10 on Latitude with TP>$10 not too long ago.

Welcome back Raider, I hope your TP$24-90 shows up when you are meditating in Tibet. If you do meditate

@Paperplane, isn't your TP is $30?

When very few stocks in Bursa can match HY in earning power and generating strong cashflows, one should question the validity of its earning power and cashflows, not confirming its superiority.

I hope sexy babe is still counting his profit

Paperplane, please load it up. Don't show mercy. I miss sexy babe, disappeared lately.

I miss those days "IB is pressing down price so they can accumulate, once it is done, it will gap up!'

History repeats - IFCAMSC, Latitude, HengYuan.

Someone with a strong conviction on a TP of $24-90 should seriously consider allocate a large portion of their fortune in HY at the current price.

Do people seriously believe in karma?

This isn't lecture. It is learning everyday. What market condition? Everyday is a learning opportunity, regardless of bear, bull, rain, sunshine. What stock did I pick this year? None. What I hold? You can read through previous posts. But I would be impressed if you can tell how good I am by looking at the stocks that I hold.

Even Tianhe-2, the fastest supercomputer can't anticipate the movement of a stock silly.

Anyone can disagree, but I've setup a filter long ago, when someone start predicting next quarter earnings, especially using PE x EPS, I stop reading what they have to say. Before I read a writeup, I always scroll to the bottom and see how the person do valuation.

How someone do valuation gives me more information about how good the person is than what he writes for 10 pages with charts and data. And it save my time. Nonsense valuation = save my time reading the full article (unless for entertainment). I am not being arrogant that I am smarter than others, but it is a known fact that not many can consistently predict EPS (for those that always request fact and figures).

@Alex, there is much more to learn when something is heading down than when going up. Anyone can go to a so called 'uptrend' stock, find supporting information, and look insightful and brilliant overnight. The movement of the share price that agrees with an analysis instantly make the analyst looks intelligent, but means little to access his actual skill.

If someone can make the effort to go back and read HY's forum thread starting from December 2017 until now, you will learn more things about investing than 90% of people out there.

They once said once ASB sold out, it will begin to fly; now once KYY sold out, it will begin to fly. What a great story teller. As if they know when it will go up and come down.