Hi Sardin, happy to contribute as I appreciate fellow forummers' sharing over the years. Hume Cemboard made revenue of RM127 mil, RM163 mil and RM180 mil in the 3 years to 2022, with losses of RM21 mil, profit of RM5 mil and losses of RM8 mil over the same period.

The disposal of Hume Cemboard is a healthy development as it has been loss-making over the past few years (one can purchase the P&L from SSM). I for one do not expect a special dividend haha.

@yerng94 Why did you resign from Penta?

It's a small point to note but we should not forget this : Not all of the FCF belongs to HLI, as most of the profits come from HLYamaha Motors, which HLI only owns 69.41%.

You consolidate 100% of cash in the accounts but only 69.41% belongs to you.

In reality, the market value is worth 50 to 100 times more.

Mr Woo, surely this is a typo...haha

Thank you, Mr Woo for the good sharing. There are lots of noises and nonsense in this forum, but occasionally one hears from seasoned and sincere investors such as yourself!

Long live the long number guy. Thank you, uncle, for your quality posts.

May I say something, I think Jon is a very good writer and a clear thinker. He regurgitates Buffet a bit too much but it's normal in the journey to becoming an expert fund manager. You start by imitating the best, then slowly you learn from experience and you apply your own independent thoughts shaped by the realities of investing in Malaysia.

Anyway, good luck to everyone for 2019!

Agreed, his PE calc seems to ignore recent bonus issue...but still a good call. Rarely do we see directors/major shareholders paying themselves only 100k per year.

Just ask Lim Kok Thay

See, my analysis is right. The deal with the PE firm is a bad one, and the market agrees. Hehehe

@Alexrod

1. Penta has RM43 mil in cash & investments...they don't need additional funds for the HK listing exercise.

2. If Penta is a good company, which I believe it is, why do they need GEM to help them list on the HK stock exchange, especially since they have appointed their own Corporate Finance specialist based in HK?

IMHO, I don't think it is a win-win, I think it's a lopsided deal with the PE firm.

I'm actually annoyed at the valuation they are disposing to GEMS. The PE ratio chosen is 10.4x, which is significantly lower than current valuation of PE of 17.4x.

In other words, the directors are selling 7.4% of the 3 material subsidiaries at a MATERIAL DISCOUNT to current valuation. Whatever the justification is, I cannot see it from the Bursa announcement - they merely mentioned GEMS' extensive investment experience & network.

Absent further information, this deal is a thumb's down for me. The winning side from this deal is GEMS, not us shareholders.

@MATB, last year, out of circa RM300k in PAT, 1/3 was contributed from this 24% associate. Fantastic business....

Revenue growth is lacklustre though over the past few years...

MATB, I have both Aji & Cocoaland...not sure about the future growth of HLind though. Do you think motorcycles have a bright future in Vietnam?

Wow...is this the famous investor Dr Neoh?

Very strong interest from Institutionals...

Does anyone know how many % sales is sold to Qatar?

Who is the Ang Mo - is it James Hay?

Aji results out today, so far no special dividend yet -.-"

Mc Wei,

Hope it is not too late to participate -

http://klse.i3investor.com/servlets/pfs/71411.jsp

http://klse.i3investor.com/servlets/pfs/71411.jsp

Dear Mr. Tan,

Seek your kind acceptance of my entry for 2017 -

1. Perstima (10%)
2. OKa Corp Bhd (10%)
3. IQ Group Bhd (10%)
4. Uchi Tech Bhd (10%)
5. Dufu Technology (10%)
6. Awc Bhd (10%)
7. Lii Hen Ind Bhd (10%)
8. Superlon Holdings (10%)
9. Elsoft Research (10%)
10. Cocoaland Holdings (10%)

The above is based on a -

1) Proprietary stock selection based on combination of value, quality and momemtum
2) Diversify across different sectors
3) Small caps
4) With a bias towards magic formula companies.

Thanks

sumato88,

Thank you for your clear & insightful analysis of DKSH.

Just to clarify your statement that DKSH's net working capital is a good and liquid as cash, are you saying this on the basis that DKSH's contracts with its suppliers allow it to 'resell' its inventories back to them if unsold after a certain period and they don't take inventory risk?

I am not sure if this is the case.

Furthermore, the recent impairment of receivables also highlights the risk of non-collection, despite the strong credit controls of DKSH.

When you mentioned that the PE of other Distributers are between teens to 20s, presumably you have not made similar adjustments to the net working capital, right? If we were to compare like-for-like, DKSH's current PE of 15 is within the range you quoted.

Ricky, Shaun,

The RAM report states that gearing level of APM is expected to rise to 0.3x.

Per their Q2, 2016 quarterly report, the equity of APM stands at RM1.2bn. At 0.3x gearing, their expected drawdown will be circa RM360 mil, out of total CP/MTM facility of RM1.5 bn. It is worth noting that most companies do not plan to fully draw down their MTN facility.

The RAM report then goes on to say that the FFO debt coverage is expected to range between 0.3 to 0.5 times. As the report mentions 'debt coverage' instead of 'interest coverage', I suspect RAM is referring to FFO as compared to the total debt (instead of interest payment).

Assuming total debt is RM360 mil, FFO is expected to range from RM108 mil (at 0.3x) to RM180 mil (at 0.5x).The range seems reasonable as compared to its 2015 FFO of RM95 mil or 10 years average of RM125 mil.

This is what I understand from reading the RAM report, not sure if the others agree with me.

Can we invest with KC Chong? :-)

Riche, you have omitted to value the net cash position of the company. Based on that and the normalised EPS, I think the company is currently undervalued.

Ivan89, how do you know got 5 cen dividend? No speculation pls!

Who is fong sai lang?

Don't worry, Aeric taiko will buy 30k shares :-)

The market is quite irrational on this one. I have tried to search for reasons for such pessimism but could not find one. Even if profits half (say RM corrected back to 3.3 level), the company still looks cheap to me, stripping out its net cash.

Plywood price to the US is going up slowly. Brexit has nothing to do with FL Bhd. Am I missing anything?

Posted by Icon8888 > Feb 20, 2016 11:46 PM | Report Abuse
It is aggressive to assume 7% yield from fixed income
The credit must be crap

Howard Marks specialises in high yields and have make outsized returns over the years, where people will not normally touch. :-)

2nd level thinking maaa

Thanks for sharing the book, will read it.

And yes, perhaps the fixed income manager carefully chose his 10 year period to make his point. It just that I have never thought of fixed income as being able to beat equities due to its consistency.

Food for thought...

Chong, I agree with you on your stance on margin calls, it should never be used by newbies.

Even experienced investors can loss everthing in a major recession if they don't close their leverage in time or they are caught in small and illiquid stocks.

Mr Chong,

Since you asked, here is an example of why the law of compounding return is dimished for equities, vs fixed income:

Say you have 2 investment class - equity and fixed income, and you invested RM10,000 in both class for 10 years.

Fixed income:
Average return:7%
Investment at the end of year 10: RM19,672
Calculation:
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Fixed income 7% 7% 7% 7% 7% 7% 7% 7% 7% 7%
10000 10700 11449 12250.43 13107.9601 14025.51731 15007.30352 16057.81476 17181.8618 18384.59212 19671.51357


Equity:
Average return:8%
Investment at the end of year 10: RM19,594
Calculation:
Equities -15% -12% 15% 14% 8% 25% -10% 10% 15% 30%
10000 8500 7480 8602 9806.28 10590.7824 13238.478 11914.6302 13106.09322 15072.0072 19593.60936

Summary:
Despite the higher average return of 8% (compared to 7%), equities actually underperformed fixed income over the above 10 year period.

You quoted CAGR earlier, my point would be that it is inappropriate to assume equities can be projected using CAGR, due to the inherent volatility.

I know the above example is fictive, but the fixed income fund manager who presented this used real example (historical bursa return vs fixed income fund).

In times of uncertainty, thank God for the good people over at EPF.

Touche, Icon8888

Watching 2 respected uncles argue electronically is...*face palm*

Desa has a point, the power of compounding interest diminishes for the equities market, due to its higher volatility, as opposed to fixed income, which one can hold till maturity.

This does not mean Chong's advice of starting to invest young do not apply.

Ceasefire?

Desa,
A very good point. I remember a presentation given by a fixed income fund manager last year (charity event in which KYY/Salvatore Dali spoke) - he basically says that an average return of 7% in fixed income can beat an average return of 10% in equity, due to the fact that return on bonds are consistency compounded, whereas equity will have its ups and downs.

For the record, I have always invested in 100% equity. Time to change sell some shares for a fixed income fund? Any good one to recommend?

A fellow chartered accountant


Desa20201956 let me give you an example. Lets say 30 years compounding.
The end result after 30 years is heavily dependent upon the performance of the first few years. The first few years you go negative, you can forget about the other 30 years.

Icon8888,
Actually, I am also small fry. That's why can only buy once every few months.
Hence ask you not to promote. Haha

I suspect institutions are buying now - and since volume is very thin, the price gets push up quite significantly.

Icon8888, any similar share to Aji?

Between you and me, no need to promote a good company like this la. The less people know about it, the more we can accumulate at reasonable price.

Really hope there is not a part 3 or part 4 coming out. Thanks.

Icon8888, can you please refrain from promoting this counter? A few of us here want to accumulate for the long term.

Agreed that valuation is very attractive, but what do you gain by promoting it?

I'm still not sure how AEGB has the funds to divi up the 5 cents - need to look at their Q3 figures.
I suppose that's what you get for co-investing with PE firms - cash back fast and early!

Turbo, from where did you get the info that Asia Met has already 2,000 students? If yes, I think it is a strong buy.

Have you guys received the dividends yet? Still have not got mine. I'm using MBB.

The ex-div date is 10 Jul 2015 - which shows how serious PE firms are. If you don't need excess cash, you divvy it up. Now. Happy holder here.

Flintstones, surely the best way to gauge the performance of MEGB is number of paying students and average fees achieved.

Are you hinting PTPTN publishes number of loans to the different education providers? Google searches of 'Asia Metropolitan' trend etc?

You guys are forgetting the diluting effects of the ICUTS - take this into account, I think SAM is trading at circa 16x PE 2015.

Is this reasonable? Perhaps, with the good balance sheet and healthy growth but it's definitely not as cheap as you make it out to be. :-)

This is a long term stock actually. None of us should be satisfied with a mere 10-30% gain on it.

Who is Black Cobra btw?