Earning growing is the holy grail right. Everyone knows that before even coming into stock market. Then I must ask how the hell does Aaron know Magni will keep growing?

I went through Magni's every annual report since theyre listed. The chairman's statement is always 2 sentences long. I have no idea how the company is doing. The only way one can know is looking at track record. Unless you personally visited their factories and management, isnt it safe to say you are just buying based on past trend? Extrapolate that Magni will continue to grow just like the past?

Im not sure what so special the golden rule is. It is like saying the key to be rich is to earn a lot money.

im a surprise someone would say ratios doesnt help. Thats how people says it before dotcom bubble, that valuation dont matter anymore

everything on the rear mirror always look obvious

Sorry my correction, in case you didnt get my story, the company of course wont bankrupt since there are silly investors that invest in them. The company wont, the investor will.

Of course the price will move back up, it's been to 50 cents before. The history of the share price is a fact that it goes from 0.335 to 0.30 in 10 years.

Yea of course they have money to buyback. But please ask what's the point? Profit margin goes from 31% in 2005 to less than 2% in 2015. Profit goes from 18 mil to few hundred k.

I find it irony rather than find a way to reverse their business, they decide to buyback!

Well hmm since you are thinking with your head, so you can tell me why the share price hasnt moved in 10 focking years?

Im using my ass to think and explain, but you cant understand with your head. If I use my head to think and explain, that will be too much for you.

I previously mentioned that Nihsin will grow itself to bankruptcy, people says im bullshitting. So let me tell you a story to BS you more. Enjoy

10 years ago in 2005, you bought 1 share of Nihsin which is selling for RM0.34. You went coma, wake up today. You asked 'Does Nishin still exist?" Yes. "No bankrupt?" Altman Z score is healthy. "How does my 1 share perform?"

As you remember you bought RM0.34 a share in 2005. Since then they make money most of the year, lose money a few years. They made RM0.13 per share in total, they give you dividend of RM0.064, 18.8% of your cost. Niceee.

But unfortunately Nihsin is selling at RM0.305 now. Although the dividend reduce your cost to RM0.276, well you say at least I still make money if I sell now. Oh wow not bad I make 10.5% return for the past 10 years. Or about 1.05% a year.

Maybe not so great compare to fixed deposits. If you take into the account of CPI and decreasing of purchasing power due to inflation by average of 3.25% a year, hm well at least I am not bankrupt!

10 years ago in 2005, you bought 1 share of Nihsin which is selling for RM0.34. You went coma, wake up today. You asked 'Does Nishin still exist?" Yes. "No bankrupt?" Alive & well. "How does my 1 share perform?"

As you remember you bought RM0.34 a share in 2005. Since then they make money most of the year, lose money a few years. They made RM0.13 per share in total, they give you dividend of RM0.064, 18.8% of your cost. Niceee.

But unfortunately Nihsin is selling at RM0.305 now. Although the dividend reduce your cost to RM0.276, well you say at least I still make money if I sell now. Oh wow not bad I make 10.5% return for the past 10 years. Or about 1.05% a year.

Maybe not so great compare to fixed deposits. If you take into the account of CPI and decreasing of purchasing power due to inflation by average of 3.25% a year, hm well at least I am not bankrupt!

There's no sector that needs to be avoided. When something is selling below it's value, then just buy it. There are good apples in bad sectors, and bad apples in good sectors, vice versa.

Altho there have been theme play every year such as oil & gas in 2013, plantation 2014, export/furniture 2015, what is 2016? I dont want to guess.

The sectors that you are asking everyone to avoid is pretty mainstream. You see it everywhere in news and analyst writeup to avoid property, banking and auto. But that is what everyone trying to do, extrapolate. You extrapolate good things will continue to be good, bad things will continue to be bad.

But did anyone see oil price collapse coming? No. Anyone see MYR depreciation coming? No.

I am surprised that using the 'don't lose money' rule you advise people to stay away from banks and other industry sector that are currently ignored by investors. You do know Buffett is a contrarian.

I think any intelligent investing is good investing. Doesnt matter what name you call it. Intelligent investing comes down to knowing what you are doing.

And ultimately for me, it is always buying something that worth a dollar for 50 cents. Simple as that.

Some people like to hold great companies with big moat and keep it for decades; while others prefer Benjamin Graham cigar butt style. Some prefer to have concentrated 8-10 stocks; while others prefer 15-30 diversified stocks. Investors that hold great companies has less buy/sell in their portfolio; while Ben Graham style has more trades every year. But that is fine. Think a company with high profit margin/low asset turnover (Big moat/low portfolio activity), another company low profit margin/high asset turnover (Cigar butt/High portfolio activities). In the end both companies have the same ROE return on equity.

But at the end of the day, they are all intelligent investing. Buying something for a lot less than what they are worth.

To win in stock market, you need an edge. I think there are 3 edge you can have:
1. Information - You know something others don't. Insider information, you work in that industry etc.
2. Analytical - Your ability to analyse is higher than average investor. Strong qualitative and quantitative skills.
3. Psychological - Your ability to control emotion and other psychological bias such as overconfident, anchoring etc.

1, I think it is very hard. You might have but unsustainable in long term. 2. You can build this if you work really really hard, but not easy too. However I think if you do start reading, you are already at the top 5% of investors. 3. I think this is the main one where most people can have an edge. Why? Because even the most intelligent investors can fck up on this. And easy said than done

If you can sit there and do nothing, better prepared than anyone when crisis comes, avoid overconfident, be skeptical, think independently, avoid many psychological bias etc, you will be sitting in the top tier of intelligent investors group already.

lol Icon. People can make up their mind if what i said make sense. A stock at one price is 'buy', at another price it is 'hold', and on the another price point it is 'sell'.

Public Bank grows every year as long as I can remember, but buying PBB at RM1 is very different to buying it at RM50.

OTB you are correct it is the future earnings that determined the stock price. But you do notice you didnt explain if future earnings expectation has been priced into the share price. It isn't how much the future growth will be, it is about how much surprise there is.

People that buy in VS at the price now by assuming future earnings will continue to grow, their fate is very different from your entry price or KYY. Your entry price can survive a 5% earning growth, but for ppl entering at current price, 5% growth is dead zone for them. Why? Because at current price, the market is pricing VS to grow 20% or more.

Yea alright Johotin and SIGN continue to grow their earnings too, but what happen to ppl that bought at the peak?

To be frank, look at the whole investment thesis. The whole thesis is build on one thing - MYR vs USD to stay at current level. What is the probability of that? I doubt you can give any subjective probability where the forex rate is going to be in 2016. This is not risk, this is uncertainty.

Do you want to speculate based on that one single event? If you have many catalyst going at the company for example like business growing, ROE improving, winning new contract etc. Then if one fail to materialise, there are few others catalyst that protect your downside. Invest in something by assuming where forex rate will be is like predicting the weather for 2016 christmas.

If bad news makes your conviction stronger then uve a problem. Because you just want to be contrarian for the sake of different.

Tns indeed doesnt make sense. But saying VS is for long term (i.e. 10 years) is equally doesnt make sense as well. Hello remember IFC, I think there are few million ppl say they will hold for long term when it is sitting at RM1.80. Now not sure why are those ppl have gone. Most will tell you they have moved to the next best thing. For those holding maybe after 10 years they will make a lot money. Whether it is more than FD, i dont know.

If you enter at the price of OTB or KYY good on you, you bought it cheap, you should have good return for holding long term. If you enter at this price? Good luck. Go have a study what happened to SIGN or Johotin. Especially Johotin, when people start thinking they found another 'Dutch Lady'.

2 years ago you dont see a flies wants to discuss about VS, now after going up few hundred %, people treat VS like agong. Did the machines sitting inside VS factories start turning resin into gold? No. Resin still make plastics. What changed? Investors sentiment.

And consider another strange thing, a rational investor should say it is cheap before the price rocket upward. But strange thing is they call it cheap now after the price increase by several fold?

By the way, dividend sounds fancy. But it is just part of an equation of valuation. Capital gain/loss is still the king. Remember VS isnt magnum or casino.

when someone has 'god' on his name normally it is the opposite

this is interesting, some ppl call 1.5 as expensive, and call 1.40 cheap. 10 sens difference can make such a huge difference? if 1.5 is expensive, cheap is when it is 70sen

Eliza, people here will only give you a TP that is higher than current price.

I hope 4 of them can tell me how to find out which stocks can make more money than last year. And more importantly, how do they relate this to the price and value of a stock.

As the old saying, "one bird in the hand is worth 2 in the bush". Good quality companies are the one that's normally make more money every year, i.e. PBB. And quality companies are always forward looking, future value is borrowed into current stock price, i.e. Ecoworld, MYEG, Hartalega.

That means people are expecting 10 birds in the bush. If last year there's 8 birds and this year it grows to 9 birds, it is still a disappointing results, 1 bird less. Stock price will still falls even if profit is growing

I told ya, u dont get intelligent answer here

"This will reach till what point o " - I dont think you will get an intelligent answer from here.

oh wow, where's the respect here. Buy VS become smart, didnt buy VS become dumb

Stop loss depends on buyers to provide liquidity. When there are no buyers, every effective stop loss strategy turns crap

"Even though it is selling so cheaply in terms of P/E ratio, many investors and fund managers I spoke to, would not buy it because they are afraid that they cannot sell at some point due to poor liquidity. "

What a pile of BS nonsense. Well Dutch Lady has the same outstanding shares as Latitude. What is their PE? 20. and how many fund managers has Dlady in their portfolio? Too many

I find the discussion about people trying to manipulate the price by spreading fear is hilarious. How many people come to i3? How many people read the person's comment? How many people decide to buy/sell because of the comment? 1? 3? How many shares do they have?

i3 is not WSJ.

https://www.facebook.com/1481770695411158/photos/a.1648738438714382.1073741827.1481770695411158/1648707925384100/?type=3&notif_t=like

Kenneth,以你所见，vs rm1.80 几时会达到？就得看大家是否能一起配合。

Sounds like some big boss plotting..

WSJ "Closely held JAB agreed to pay a 78% premium for Keurig’s shares, which have fallen sharply over the past year amid troubled product launches and other challenges...Euromonitor beverage analyst Virginia Lee said taking Keurig private also will let it “make adjustments to its marketing and product development strategy away from the scrutiny of the investment community.”

Other aspects of JAB’s strategy are less clear, such as how it plans to leverage its added scale to gain better purchasing price or any other synergies...Mark Astrachan, an analyst at Stifel, said the deal could pose a risk to connections Keurig has within the industry such as its deal with Starbucks to make K-Cup pods. Starbucks is a direct competitor with companies that JAB owns.

KYY when ure my age, ure also poor, so ill hand you my life report card when im your age ok

Investing is similar to gambling, it is called intelligent gambling

Allan Yeoh, no offense, surely in 4 years you have learn more about KYY then most people and probably mastered the golden rule, just curious why you are still working as a remisier? Altho im sure you will be getting plenty of commission but wont it be better off just be full time investor since uve probably master the golden rule already

I respect his golden rule alright. But the hard fact is that this will only work with stocks with very low expectation. Example a stock like Hartalega or Ecoworld, with so much expectation built into the price, yoy profit growth does not necessary translate into share price increase. Johotin is a great example that expectation outpace profit growth.

Therefore, the contrarian rule comes in. How many contrarian in Malaysia? 1% perhaps. But that is not the key point. The key is the fact that it is never easy to find low expectation stocks that can surprise the market, where a profit growth will cause the share price to go up many times. Put it another way, given everyone has access to annual reports and public news, it is never easy to uncover something most people dont know, unless you have superior insight, or you have to turn over many stones.

To take the unconventional path, the contrarian, the lonely road, the action that looks so wrong in the first place, to zig when ppl zag, there lies where most money is. You need to be right too. This, I believe, is the principle behind the golden rule.

pandai nya - magic ball

if my memory is correct u sold it a while ago before hitting TP

I never fall in love, although i must say Scientex isnt cheap anymore.

The practice of investing is to listen to different opinions, after that, if you still want to stick to what you do, you have your conviction, simple as that.

Well from my calculation, both are fairly valued, not a good price to enter thats all. Kakashit, everyone has their own calculation, just like your letter, i can disagree every single point of it, but that doesnt reduce the people that want bonus issue to make themselves happy.

ok we will use DCF
Average 3 years DCF = 67mil.
Assume Capex = depreciation = 20mil
FCF = 47mil.
Growth rate next 10 years = 5%
Terminal growth rate = 3%
Total present value of cash flows = 810 mil
Outstanding shares = 97,208
Value per share = $8.34

Comments: 10 years growth at 5% isn't low at all. Not many companies can grow more than 10% in the long term, unless they got moat. When KC Chong did a valuation on Latitude in March 2014, using 5% growth in FCF, he comes up with a value of $6.13. That is $2 per share difference from my valuation in just over 20 months. That gives you a good gauge that Latitude value is sitting somewhere around $7-8. Very rough but we can never be precise.

http://klse.i3investor.com/blogs/kcchongnz/48173.jsp

For Homeritz
Average 3 years DCF = 23mil.
Assume Capex = depreciation = 3mil
FCF = 20mil.
Growth rate next 10 years = 5%
Terminal growth rate = 3%
Total present value of cash flows = 341 mil
Outstanding shares = 300,000
Value per share = $1.14

Never said high ROE can buy at any price, but high ROE does common a higher valuation, all other else being equal. case in point Harta, PBB, Amway etc

RicheHo,

1. If you look at a normal year or for past 3 years 2012-2014 ROE 4%, 11% & 20%, Homeritz has a more consistent ROE, which always stayed above 18%, I think the market is right to give Homeritz a higher PE.

2. I think the possibility it will go up is 99%, the possibility it will add real value is 1%.

3. If you use comparative valuation, it is 'undervalued' to the industry average. If you look at historical ROE I think it is fair price. Or from FCF, Latitude generate avg FCF of 34mil, Homeritz FCF is half of that. Homeritz EV is half of Latitude.

4. I heard they are going up/down stream of the supply chain like acquiring kiln operations. Again if those activities has higher ROE they should pursuit but if ROE is lower they will just dilute their ROE and bloat the company. Case in point being CBIP, they have a wonderful business selling palm oil mill to plantations company. Patented design, high margin/ROE, cost is the biggest pain of plantations co everyone wants to upgrade their mill to compete, great business. And they go and invest all their money into buying lands and grow palm oil, a commodity industry, a price taker, a capital intensive, a low margin/ROE business.

1. 相比其他家私股略为逊色 - PE is determined by ROE, if you compare it to Homeriz, Latitude ROE looks pretty bad

2. 分红股 - Bonus issue doesnt make anyone richer. You as a long term investor should know that. Bonus issue or free warrant or split whatever is just a 'trick' to shiok yourself.

3. 一旦股票的流通量增加，能够吸引基金的入驻, 不会那么容易遭到低估 - Dutch Lady got 64 million shares, Latitude has 97 million shares. And how many institutions own Dutch Lady? Plenty. Is DL undervalued? Nope.

4. 要如何使纬树的股价表现更加的出色呢？ Increase all the below: ROE, ROIC, ROE, ROIC, ROE, ROIC, ROE, ROIC, ROE, ROIC. Stop wasting time and money issue bonus. They can go ahead and split the shares until 5 billion, it would NOT add any value to shareholders.

if you ask then your money will be in the wrong place.

How low can it go, RM0.00

In a day that dropped over 30%, i wonder if anyone stop loss actually worked at all.

yaya no time for you to wait, i heard that when IFC is sitting at 1.50, they say dream on to buy at 1.20. Same for DKSH, when it is heading for RM10

yea make sense, i expect VS to revert to the mean

Im not attacking you, just saying you have to be careful making such association, it will lead to overconfidence, which is dangerous. I bought FLBHD in Feb this year, but I would say im just being lucky rather than skillful. I bought it just like you because it is considered undervalued to me but I have no ability to tell when it will go up, and the fact it has gone up so much in less than 6 months surprises me .

Danny, to be honest, a run up for Datasonic & FLBHD cannot be associate with your 'track record'.

Yea i agree, just correction, from TA lines, the LK trend is looking solid, when it converge with average 20 days CO line and breakout from CK, you will have (TA + LK + CO + CK = 讲鸡）

The value of a company is not the EPS growth but the cash flow generated. VS gain quite a lot from forex gain, EPS can grow because of that, but forex gain has totally nothing to do with IV either