Please check out this link

http://www.thestar.com.my/Business/Business-News/2014/06/16/Penang-LED-tester-device-makers-charged-up-Their-order-books-already-filled-for-the-first-nine-month/

http://www.thestar.com.my/Business/Business-News/2014/01/25/MMS-Ventures-looks-to-bounce-back/

Yes I agree that if during a downturn, my strategy would be to pick up high div yield, defensive beaten down blue chips first since these would be the most resilient and the first to recover. Part of the reason for blue chips being unlikely to crash like small caps would be the institutional support (foreign or local) that would support share price. Normally small caps will only move with retail participation which typically will be poor during a bear market.

The problem is no one really knows when we are going into bear market until we are in one. Haha... so my strategy is to always maintain an acceptable amount of cash and to diversify well.

Dont agree with this one

3. Avoid company with small cap; look for big cap with long listing history.

I would say small cap or big cap shouldn't matter but must look at historical consistency of earnings and management ways.

today's upmove could be precedent to a good set of upcoming quarterly results

II, I am not saying it will be 2 weeks to go. I m telling KC that it cant be 2 weeks to go judging from significant discount to offer price.

Posted by NOBY > Jun 18, 2014 06:35 PM | Report Abuse X

Raider, can you comment on ECM Libra which is trading below NAV and most of its assets are in liquid cash or investments.

Raider, can you comment on ECM Libra which is trading below NAV and most of its assets are in liquid cash or investments.

fortunebullz you have a keen eye for gems... yes mmsv is a shity company till last year... they have a healthy balance sheet with net cash of 5 sen per share... and with the growth expected this year with 9 months orders already exceeding 20 mil, buying at this price is almost like getting the growth for free !

KC SCR is not on the agenda of the AGM . Based on original circular on 15 Jan, they would call an EGM for this. Also if there is still a 7 pct discount with only 2 weeks to go I would be worried.

KC. how do u know when they will call the AGM ? Whether it s 2 months or 3 months away ?

i think high depreciation means that there will be considerable capex to maintain operations.... One should look at average fcf over a longer period to be more conservative... but i think its quite ttrue that ROIC would not be great for capital intensive business...

THere is an easier way. If you have a fundamental screener like the one from CIMB traders, just use the screener (Capital IQ) to search his name and the list of stocks he own will appear.

stockraider, must thank you for this tips.. haha

wow 60 sen now

Foreign funds bought in on 29/5/14.. seems like director selling has subsided ?

Risk Arbitrage of Perak Corporation Berhad kcchongnz
http://klse.i3investor.com/blogs/kcchongnz/48584.jsp

Same question is would you buy company B if interest rates skyrocketed ? The question is whether company A or B, not about macro or interest rates... and my choice is clear.. my view is that bird in hand is better than 2 in the bush...

Company A costs RM1 and earns 10 sen, pays out all earnings as dividends that is already 10% yield. Value trap or not, returns already better than FD hahaha..

Most investors always looking for growth, how often do you see some lousy counters share start rocketing up when news of turn around or high % increase in EPS from a very low base....

Sasbadi IPO.may cause rerating of PPG fair value....

No doubt Insas is undervalued. But one thing to look out is how soon this deep value can be unlocked ? It requires some material event or activist shareholder to pressure management to change their ways but is it possible without high institutional ownership of the shares ?

Johnny klse screener v2 can scan for ROE. Just google it

II, I really doubt that the top 3 companies in your list P/E are that low. You need to check back on the corporate exercises done for these companies. Bonus issue or share splits will increase the outstanding number of shares and you need to calculate the P/E based on the adjusted price before bonus if you want to use previous year EPS as guideline. Personally I have done a thorough analysis on Willow before and the P/E is not that low.

II, pick up the book by Pat Dorsey on Little Book that Builds Wealth. There is some detail explanation there on how to identify the sources of economic moats.

GWPLAST can rule out. Its ROE is very high cause it sold off its stretch film business to SCIENTX. It is now a shell company.
CAP is a China stock. Can be ruled out as well.
PRESBHD just underwent a bonus issue, you calculations took into account the increased share base ?

Sure. Once I finish it.

I like the title.. almost fell of my chair when I saw the author name :)

II, no problem. Its hard to find FA investors in this forum and I m happy to share my views. FYI, I am creating my own watchlist of magic formula stocks in Bursa. It takes a lot of time and analysis since a lot of the ratios involved needs to be calculated manually. However, I have always wanted to track how Greenblatt's method would work in KLSE for the long term.

This is a nice discussion. I have always been thinking about % cash in my portfolio and if I will have enough cash to invest when opportunity presents itself. If market crash and stocks become unbelievably cheap, there are a few ways I have considered to get additional cash in order of preference :-

1. Credit card cash advance. Nowadays its so cheap, interest rate is slightly higher than 1. but safe a lot of hassle. Recently, I was able to get one at 3% fix rate (or 5.9% reducing term) and use this as starting capital if cash is short. The interest rate here is fixed typically and you can pay back in installments for up to 4 years as long as your cashflow allows it. Amount here is small maybe about 50k at the most.
2. Refinance home loan. As long as interest rates are low this is viable option to free up a large sum of money.
3. Withdraw from EPF to invest directly into stocks. This one is tricky cause you get charged 3% upfront plus you forgo 4-5% risk free EPF dividend. The required return must be great to take this option. However, you cant lose more than you own since it is your own money,
4. Share margin financing. This is the riskiest in terms of all the options since we are borrowing up to 1.5x to 2x the collateral pledged. There is risk of margin call and effect of double edged sword in terms of leverage. I would consider this as last resort and only put a small percentage.

Normally, you can use the free FA screeners available to screen for this (not sure if you use some other screener). I normally use this screener, www.klsescreener.com/v2/ scan for companies with PE between 5 to 15 and ROE between 15% - 30%. This can help filter out the outliers. The above screen can be used to do some pre-screening for magic formula stocks as well but need to dig deeper.

Good job but I think some of the ROE numbers are inflated due to corporate exercise (ie bonus issue etc( or one off extraordinary gains.

No idea why ppl are selling off... is it just because net profit drop compared to last year ? But that is because of higher tax cost which is not related to their operations. The PBT numbers shows improvement Q-on-Q in terms of numbers and margins,

PBT margin improved to 12.4% from 8.8% last quarter.
Revenue increased by 19% compared to same quarter last year.
The food and beverage division profit increased by 76% compared to same Q last year.The profit margins for this division has also increased to 11% compared to single digit margins from last year.

It is a value buy at this price as the stock is trading close to 52 wk low and with attractive forward earnings yield.

superb... the sell off for PTARAS has started... i m preparing my bullets..

Posted by stockoperator > May 20, 2014 03:28 PM | Report Abuse

Is margin of safety a specific located price for people to hide? Or market drops 20% and your portfolio managed to drop 10% that is margin of safety?

Or should we think that margin of safety is where 90% of broad market drops But i am holding the balance of 10% that will continue to perform well.


For me, even if my stock dropped 20%, or part of the 90% of the broad market to drop, as long as I have clear idea on its value, I would buy more if I have the cash as the margin of safety would have increased if the price drop is not related to fundamentals. Price volatility is to be expected when investing in the stock market and they are the result of the temperament of the market participants. Like KC mentioned, in the case of Graham net net, asset values change much slower than earnings, which would you prefer to hold in current market condition ?

One of the criteria of graham net net is that the company does not bleed cash or making huge losses as this would in the long run deplete its cashpile. DCF models eventually come up with the intrinsic value by adding the present value of future cashflows as well as the excess cash a company has today. That excess cash/liquid assets which is present in Graham net net type stocks provide you a huge additional margin of safety in the intrinsic value. I have valued many companies using DCF and those having a strong balance sheet always had a bigger margin of safety even with the most conservative growth assumptions.

KC how are you allocating your portfolio between asset plays and magic formula stocks today ? How many pct for each ?

hahaha... finally this sleeping stock awakes Proposed share split, bonus issue and free warrants....
http://www.bursamalaysia.com/market/listed-companies/company-announcements/1623125

Dato Gan accumulated at RM0.36
http://www.bursamalaysia.com/market/listed-companies/company-announcements/1618025

Glad that my write up has invited a lot of useful comments. Thanks everyone.

sephiroth, dont forget the excess cash is RM0.39 per share. The adjusted P/E after taking away excess cash is 9.8x, still undervalued in my view based on its return of capitals.

Also, reason I use EV/EBIT instead of P/E when comparing the different companies is because of different debt structure.

http://klse.i3investor.com/blogs/stockpick/51610.jsp

I believe all companies are suppose to transition to single tier tax system by 31/12/13. So the window to pay out any special dividend should have ended so I dont think there is any likelihood of any special dividend as a result of these tax credits.

what s on note 25 that s so interesting ?

Posted by KvThian > Apr 25, 2014 09:43 AM | Report Abuse

@houseofordos for example 2 sen , i bought 1000 units.. 1000 * 0.02 ? this is my dividend?

Correct.

20% dividend means 20% * par value (RM0.10) = 2 sen

seph how you come up with 7.3% div yield for PPG ? Dividend 4%, par value 0.5 is 2 sen per year only. That's 3.7% yield.

Thanks KC for your explanation.

KC, thank you for the many analysis and valuable knowledge you have imparted selflessly here. My thought is that a company like Pintars with supernormal ROIC and ROE will definitely invite more competition in the future. No business can maintain this kind of ROE/ROIC for long periods as high margin business will invite more competition. In your article here,

http://klse.i3investor.com/blogs/kcchongnz/46430.jsp

you have explained some of the moats of Pintaras that allowed it to sustain its margin. How long do you think Pintaras can maintain this edge ? Perhaps lets say in worst case
1. Key management leaves the company.
2. A competitor company recreating the "specialized plant and equipment" that Pintaras has and encroaching their market share. How long do you think this would take ?

Thanks for your views.

KC what does your updated valuation look like ? Ptaras already doubled their order book valuation wise should be much higher now

Oh yeah....

JKing, based on the response you have gotten so far from various parties, what is the likelihood of the SCR approved or revise offer ?