Let me try to revive this thread too.

"The thing is the market somehow recovered every time and if you investing some good stocks at good price, you will still get some decent long-term return. But if you are investing with leverage, you may never have a chance to recover."

Is my statement correct? What I can say it is correct all the time.

The recent dip in the market was just a bleep. But what if you were so overconfident that you speculate on say a stock like Insas a month ago when it was about 1.35? So many analysts wrote about this stock and say how good it is. I also wrote about and mentioning how undervalued it was.

What happened? Just a small bleep can caused it to plunge from 1.35 to a low of about 85 sen, or a loss of 37%, in a few days!

What if you were to pawn your underway and take up a margin account of say 50% and bang on this stock? Sure win one mah.

You would have almost lost everything there with the margin calls,the forced selling and the sleepless nights!

But if you are not on margin finance and keep the share, you would have recovered quite a bit. In fact if you have bought some better fundamental stocks, you would have recovered almost all.

We haven't even talked about a real big correction yet.

Posted by valueguru > Sep 15, 2014 01:39 PM | Report Abuse
KC, I always enjoy your write ups as they are supported by facts & not sentiments.


Glad that you enjoy this write up. But the interest in this thread seems to dwindle. I am trying to reignite it again. Why?

In Bursa, there are so many traps for small and naive investors. Call me kepoh, or doing social justice, or whatever you like. Without knowing what is a stock lemon, and how to avoid it, the small time retail investor is doomed to lose money, like what happened to me before too.

You know what. Of all the 9 lemons I mentioned here since a year ago, all except one made losses, most of them lost heavily. Average loss is >40%, while the KLCI has gone up albeit not that much.

The only one standing is KNM, and that is provided the market does not make a big correction, and as long as the right issues is not completed yet.

Posted by stockoperator > Oct 24, 2014 05:35 PM | Report Abuse
KC stock preference is quite personal much more than food music and clothing selection. You can write about it But discussion is not easy one.

I seriously don't see a stock can be akin to food, music and clothing.

Investing in a stock is investing in a part business of a company. It is a financial asset with certain expected cash flow, and hence determines its value.

"There are many areas in valuation where there is room for disagreement, including how to estimate true value and how long it will take for prices to adjust to true value. But there is one point on which there can be no disagreement. Asset prices cannot be justified merely by using the argument that there will be other investors around willing to pay a higher price in the future."

Aswath Damodaran, Investment Valuation

Posted by Tan KW > Oct 23, 2014 01:39 PM | Report Abuse

@kcchongnz, i have email the request to yttan@hlib.hongleong.com.my

It is fantastic if he can provide his view to us.


Yeah, we all can learn from him.

For a start, let me ask

1. “Strong earnings growth prospect? CAGR of earnings growth of 55% from FY14-FY16”
Based on what?
2. “We maintained our BUY call with unchanged target price of RM1.35 based on 16x FY15 P/E.” How come such a fantastic PE, why not 5?
3. “KNM is one of the alpha stocks”
What do you mean by alpha stock? Alpha to me is a positive return over the index.

While waiting for his reply, why not we discuss it here among ourselves? There seem to be a lot of people here know a lot of KNM.

Sunztzhe,
You have sound investment philosophy, just lie two super investors I know; they are Warren and Buffet and Phillip Fisher. Buffet actually transform himself from a farmer to a hunter in investing, guided by his deputy, Charles Munger. Berkshire Hathaway owns relatively very few stocks, actually he owns companies in a strict sense because it is a very substantial shareholder of companies it owns. Hence he can control the operations of the companies he chooses to, but he rarely does. He does made “thorough work on qualitative and financial evaluation criteria tools checklist prior to stock selection”, the same as what Philip Fisher did with his scuttle butting. It is not that they never make mistakes, they did often do. Their overall results are still very good.

I fully aware my own limitations that I can never be like Buffet (I mean his ability in finding companies and concentrate and control the investments in them), nor Fisher. Hence I took the other approach, ie diversifications. Well I have written an article here about it and I don’t expect you to agree with me.

http://klse.i3investor.com/blogs/kcchongnz/48946.jsp

I do more detail analysis for companies I want to invest in, but never thorough to the extent of what you described, especially the qualitative aspects. I can never certain that I am absolute right. If I am right 70% of the time, I would be very happy. Well, I am just a small time retail investor.

Once I have invested in 10-20 stocks, I don’t spend hell of time to monitor them as you know, I am not a trader. I do look at their quarterly reports, but that is only 4 times in a year. Sometimes I don’t even care much about the quarterly reports.

“Wouldn't it be better to further fine tune on one's stock selection criteria on qualitative and financial performance checklist requirement before investing in any stock thus reducing the no of stocks selected to more manageable situation?”

Sure, that is the essence of value investing, seriously. Go ahead and do it as much as you like and as much as you can.

And also value investors don't just buy one or two stocks, knowing very well that they could be wrong or overconfident in just one or two companies. They also know that they are not Warren Buffet. So they own a portfolio of generally ten to twenty stocks to capitalize on the free lunch offered by diversification. They also aware that the market is unknowable and unpredictable. So they don't like to use margin financing in investing or other form of leverage.

And then they wait patiently, and happy to obtain a compounded annual return of 10%-20% for a long period of time, hopefully.

Posted by sunztzhe > Oct 23, 2014 01:14 PM | Report Abuse

kcchong, ganasai, frank soweto, stockoperator
I am rather intrigued by your discussion. It appears that everyone has their favorite stocks to make money. To cut a long story short and to test your future capability of stock selection and be accountable for your stock buy decision, would all of you please select two stocks each which all of you think will outperform up to 31 Dec 2015. You can select and buy any two stocks from Oct 1st 2014 till 31/10/2014 and you can sell anytime or hold till 31st December 2015 as long as you are satisfied with the profits or lack of profits. Lets fix the investment capital to RM 10,000 for each participant.

So please advise the following:
kcchong- what is your stock selected? Uchitec, Tongher?
ganasai- what is your stock selected n buy in price? I assume its KNM, BJCORP unless u advise me otherwise
frank Soweto- what is your stock selected and your buy in price? stock 1, stock 2??
stockoperator- what is your stock selected and buy in price? Is it Padini, other??


Sunztzhe,

When I teach people about investing, I am talking about value investing for the long-term. Value investors have no ability to predict share price in 1 month, 6 months, 1 year, 3 years. They only look at the business of the company, whether it is good, durable etc. If it is they won't buy yet until look at its price; is it expensive relative to its earnings, cash flow, with other similar companies, what is its price relative to its value, how risky is the company, and a whole lot of question.

Even after that, the price may take a long time to reach its potential, if they are right about the business. But they can be wrong too, but generally not as often as they would be right.

So you see a value investor won't win in your kind of competition. But in the first place, they invest for long-term to build wealth,not aiming to compete with anybody.

Posted by sosfinance > Oct 23, 2014 03:37 PM | Report Abuse
Good Write Up kcchongnz. There are tonnes of Lemons in Malaysia to avoid. Stick with the High ROE, High Growth, High Margin, Good Management, Sustainable Biz, Reasonable PE. As long as we get 7 out of 10, I believe, it is not bad.

Well said sosfinance

Posted by ganasai > Oct 23, 2014 12:55 PM | Report Abuse
kcchong always promote this ptaras. I do not deny this is a good stock. Quite correct he promotes. But how about another 10 years? Dont forget knm also a bluechip in long long time ago. So dont foresee too far. kakaka....

I never promote any stock in i3. I do analysis of company and share my views here.

Firstly good companies no need huha huha in this kind of forums. Their value lies in their business, not promotion by anyone.

Secondly I seriously doubt there is any clout here to jack up the price of stocks. All of us combined is just kuching kurat compared to the insiders, syndicate players, manipulators,institutional investors etc.

Posted by ganasai > Oct 23, 2014 12:26 PM | Report Abuse
Please change this title to "unavoidable lemon", seems everybody eating now.

ganasai, since you are active in this investment forum and hence must be active in investing, it is good to learn some economic term such as "lemon". Goggle it if you don't understand. Knowledge is power, and it is easy to learn things nowadays.

Posted by Tan KW > Oct 22, 2014 08:17 PM | Report Abuse
@kcchongnz, why not direct your question to HLG analysts?


Tan KW,I would be very happy to discuss in an open forum with him here. It would be more appropriate if a third party, someone like you, invites him to come over here so that we all can benefit.

Posted by ganasai > Oct 22, 2014 06:04 PM | Report Abuse

Salt fish can wake up? I think its got chance. kcchong too calc and take history to give judgement. In your mind, you just think the history will repeat.

"History doesn’t repeat but it does rhyme" Mark Twain

But What I think history will give the management a lesson. They will improve.

"You can’t make a good deal with a bad person": Warren Buffet

When price from 3xc to 1 already prove that this salt fish will alive one day.

"When you realize that you are riding a dead horse, the best strategy is to dismount" Sioux Indian proverb

I will give them 2 more years: 2016 and check your this article again. May General Lee can prove what you said is wrong? Let see!

"I can use data to disprove a proposition, never to prove one. I can use history to refute conjuncture, never to affirm it." Fooled by Randomness Nassim Taleb

Beside for hib, it is still too young. So yours should not expect any good financial result will be in recent. Kid also need time to become adult mah.

“Prediction is very difficult, especially about the future.”
― Niels Bohr

Posted by sy1226 > Oct 20, 2014 02:07 PM | Report Abuse
The investment banker that told you that......not licensed to advice retail/priority/private banking clients

You are right. But you know what? Even licensed advisers with Bank Negara who are Financial Adviser Representative (FAR), or with Security Commission who have Capital Markets Services Representative’s Licence (CMSRL), most of them will give you the same advice, ie borrow and invest.

First they probably get more commission if you borrow and invest more as they charge by asset under management (AUM). Understand the agency problem. Or they just can't fathom the peril of leverage in investing. They are not trained academically,neither are they trained in their company about this stuff which is detrimental to the well being of the company they work for.

Scary but it is true. How I know? No need to ask this question. Ignore what I say at your own peril.

"will I be far off if a couple of years down the road that you will again ask for rights n then reduce your the Par value from .50 cents to .10 cents n in between throw in a loan or 2 to 'raised' more $$$$$ for your latest Space shuttle? :( :( :("

Frank, I don't think you have to wait for a couple years for the above to happen. I will say in months after this one.

Posted by hng33 > Oct 18, 2014 08:39 PM | Report Abuse
Another question is, how high the dividend yield is consider high ?
Is the benchmark return a year should against 12 month FD, Bond yield, EPF dividend or unit trust?

When we talk about high dividend yield investing strategy, of course the higher the dividend, the better because that is the essence of the strategy. I would think the rate must be equivalent to FD rate. You can’t put money in EPF as you wish to earn that higher return. Bond is not easily purchased by retail investor in Malaysia. Bond fund? Be aware that it is a risky assets which is correlated with interest rate and interest rate is likely to rise in the future which is detrimental to bond funds. Unit trust? I don’t have trust that it will give you a fixed income.

But bear in mind that high dividend payment has a cost to shareholders. A high pay-out ratio will results in low retention ratio, which in turn stifle growth. For a company at a stable growth stage, all companies will eventually reach that stage, the growth rate is related to the following:

Expected growth rate in Equity income, g = Retention ratio x Return on Equity (ROE)

The higher the pay-out ratio, the lower the retention ratio and hence the lower the expected growth

You can see the other factor is the return on equity, ROE. So theoretically the most crucial factor is how the return on reinvested capital, not growth in earnings.

A company can borrow an additional 1 billion and makes 2% from this borrowing and still grow its earnings by 20 million each year. But is this good for shareholders?

A higher retention ratio actually doesn’t guarantee success too if the return on reinvested capital is below its cost of capital. Instead it is a value destroyer.

Posted by truthseeker1 > Oct 18, 2014 08:53 PM | Report Abuse
Maybank C6. Recommendation time 10.5sen. Now 4.5sen Loss 6sen. If follow KCChong advise to invest 960,000shares at 10.5sen, Maybank C6 value will drop to RM43,200 a loss of RM57,600 in less than 2 months. Stock market is not a place for fun(last paragraph), genting casino or gambling is. KC why so quiet on this blog?


Truthseeker? Another new name? I think Troll suits you the most as mentioned by someone before. Take this identity.

How to seek truth when you have been lying and throwing wild accusations instead of contributing something useful in i3investor?

How to seek truth when you have anger and hatred in your head?

How to seek truth when you can't even understand simple English as written in the post?

How to seek truth when you can't grasp the right message in the article which anybody who reads English would be able to? Although of course I don't expect you to understand what a derivative is, and how it works.

How to seek truth when you can't differentiate "Recommendation" and "Discussion of issues"?

How to seek truth when you can't differentiate "Recommendations" and sharing and discussions?

By the way where did you find the word "Recommendation" to buy that call warrant?

Where did you find the phrase "KCChong advise to invest 960,000shares at 10.5sen"?


Finally you did cite something from my article as below:

"Stock market is not a place for fun(last paragraph), genting casino or gambling is"

But why didn't you cite the complete paragraph of mine as below?

"Punters are reminded that this is not an even playground for most people, including you and me. However there may be some fun here as long as you take the financial risk management approach as described above."

What are the true messages behind the complete paragraph? Punters, "not an even playground", "fun". "risk management approach".

Why you so stupid, couldn't understand a thing what i wrote and "invest 960,000shares at 10.5sen on Maybank C6" and lost RM43200, and rant here for some stupid actions of yourself?

Hey, is that the best you can do to try to put me down again? I have written 77 posts in i3investor and posted 4030 comments. Still can't find something, instead of showing your stupidity here?

hng33,

Good points.

I would agree with you for Magnum, but for BJtoto, it is a disaster. Look at the total return chart for BJtoto from Yahoo Finance you will understand what I mean.

http://finance.yahoo.com/q/bc?t=5y&s=%5EKLSE&l=on&z=l&q=l&c=1562.kl&ql=1

For simplicity I did take a short cut to assume a holding period of 5 years, for the dividend yield 5 years ago based on the dividend and share price then. Investors don't invest based on dividend yield in the past like 6 years, 7 years or 10 years ago from 2009. They would base on the present dividend yield then.

Of course it would be better if we adjust the portfolio at the end of each year and readjust the portfolio to select those high dividend yield stocks every year. That is definitely the right way to do, but I prefer to leave it to you to do it. I am not doing an academic research.

"(a few years to 2009) n subsequent comparison (a few years from 2014)"

Good point. I like simplicity. But I would be happy to see how your analysis is.

We are talking about 5 years ago you invested in high dividend yield stocks basing on the dividend and share price then, hoping that you would get a good total return 5 years later. 5 years ago the dividend yield should be based on the price then and the amount of dividend. If not what other price can you base on? Stock price in 2013 which we had no idea in 2009?

But that didn't happen 5 years later as shown in some high dividend yield stocks 5 years ago, because their share prices have gone down substantially now, compared to 5 years ago.

Then it concludes that looking for high dividend yield stocks to invest now, you may be disappointed too as history has shown that there is no evidence to suggest that high dividend yield stocks provided high total return.

Frank Soweto,

Being a former investor of KNM in the 2000s, how do you like about the statement below?

[posted by friendship > Oct 18, 2014 07:57 AM | Report Abuse
I think the right issue call is fair
The price is very attractive and somemore for bonus warrant!
Most importantly, owners r committed to put in their own monies too!!!
I think KNM should rally next week, supported by much improved sentiment, higher oil price and broad market rally! Huat ah!!!]

"on a more 'serious' note how come u know that they will issue ANOTHER Right not long AFTER the recent one :) u have crystal ball ah LOLL"

How do I know the above?

You know when people asked me which share will go up, especially in the short-term,I always say I got no crystal ball in front of me because the market is unknowable. But answering your question above is like eating kachang putih; the writing is all over the wall.

Many of those who have learned in my course will be able to spot it, easily, close one eye. You know what? This is the more important thing one should learn if he wants to survive in the stock market, rather than always thinking about finding a multi-bagger in the stock market.

Sorry ah Frank, have to use your post above to do some marketing. You know when intend to do something good is ok to advertise, right?

Anybody interested in learning fundamentals of investing, email me at

ckc13invest@gmail.com

Posted by digiuser016 > Oct 16, 2014 10:04 PM | Report Abuse

Hi, Kcchong, May I know your philosophy? How do you react over the current situation? Using bottom up? Ignore market noise? Or?


I am not a qualified person to answer this as there are many much more experience market players here. But since you ask, just share what I think.

The market, especially that of US has gone up a fair bit since the last crisis in 2008. Well, I believe nothing can defy Newton's law of gravity. It is just that nobody knows when that would happen in foresight. The market is unknowable. It is unpredictable. That is why you can see I advocate this principle in investing; invest you do (in good stocks with good price), but never speculate with borrowed money. History has shown that market always recovers, and in the long run, you can reasonable return from the market (provided you invest in good stocks). But if you speculate on margin (even for seemingly good stocks), you can't recover like what a prudent investor will as explained in this article.

I know of people who have made tons of money "investing" with borrowed money or margin. So they become overconfident. I have done that before and I am sure i can do again and I am damn good, that is what they think. However, investing is not a matter of self confidence as you can't control the market, you can't even control the companies you invested in. overconfidence kills. As a matter of fact, all investors should respect the role of luck as this article below.

http://klse.i3investor.com/blogs/kcchongnz/45226.jsp

There are investors who are happy about this market , such as TTB of icap, (it is just that the shareholders were very unhappy for the last 5 years). For them there are cheap stocks now or soon to be picked. But for those who are over-leveraged, they should be prudent and not get themselves fall into the deep hole.

I really don't know how the market will continue from here. Just read these two top articles in i3investors,and another one from a favourite site of mine below. They are good articles.

http://klse.i3investor.com/blogs/kianweiaritcles/61675.jsp

http://klse.i3investor.com/blogs/kianweiaritcles/61678.jsp

http://www.intellecpoint.com/

Posted by chongkeatL1 > Oct 9, 2014 01:15 AM | Report Abuse

Hi kcchongnz, I'm probably terribly mistaken, but I'm just wondering why the inclusion of "Property development projects", "Land held for development", and "Investment Properties" in the NCAV calculations? I thought those are considered non-current assets? At least, from the reports they're listed as non-current i mean. I apologise for any mistakes, I still have a lot to learn, and thanks!

In the olden days when Ben Graham talked about NCAV, he only took the current assets because at that time, most companies are manufacturing companies. So the non-current asset mostly made up of plant and machinery which on liquidation, would not worth much at all.

In property companies, don't you think those land and investment properties worth a lot? For some property companies, their land could have been bought long ago but still carried the historical book value, they may even worth a lot more than its book value.

So do you think we should ignore these assets in our valuation of assets?

Posted by choon_fei2001 > Sep 27, 2014 11:21 AM | Report Abuse
Hi kcchongnz,
do you still conduct any FA courses? I am interested as well. If you did see this msg, can you also send me an email on the course detail, email: Choon_fei2001@yahoo.com


Many people here asked me before wanting to join my online course, but when I sent them the particulars, especially they know that they have to pay a fees, although it is a small sum, they gave up joining. Little do they know that many are penny-wise pound foolish.

Yes, I have one course starting now. Please email me if you are truly interested. Remember, there is a fee.

ckc14training@gamil.com

I just received this email an hour ago from one of my students.

Lam Kun Onn

6:05 PM (1 hour ago)

to me
Dear KC,
I just read of yr comment in KNM:
"Do you really follow investment bankers recommendations to buy shares? What were the outcomes from those investments? @#%&*"

my answer is yes and it costs me RM35k in just less than 5month on TAS recently. The "tuition fees" is truly expensive and I will not hesitate to pay you as little as RM100 each month to minimize similar mistake in future.
no wonder yr comment ended with 4 letter words..&%#@ hahaha...
wish you a nice week end.
regards,
Lam


The below two posts were from my students in i3investor a week ago:

Posted by coolio > Sep 17, 2014 02:02 PM | Report Abuse

I'm a KC student, glad to be his student & great to be his first batch student! what I can say is I really benefited from his course. He inspire you, entertain you (with winning stocks), and you end up learning tons of knowledge even in short period of time and you will be able to pick your own winning stocks! Cheers


Posted by SS661M > Sep 18, 2014 08:12 AM | Report Abuse

Some of u might think, what is so great about KC? My remisier's promises much higher returns. Well, I'm sure that KC's returns is in fact higher than what he published. He does some short term investments that he never mention or publish them. His intention is to teach u fundamental investment so that u can get some decent returns while keeping your job. He is not intended to teach you to punt, like what your remisier is doing. I guess the course is almost done but i'll still subscribe to KC. $100 monthly is nothing compare to the amount i invested. I think i pay much more brokerage fees than that. I do that because i have unlimited Q&A session with KC through email. I can learn all his FA skills but can never learn all his experience. I m learning from other oldbirds in I3 forum. When learning with KC, u just say u don't know and he'll be more than happy to teach u. If u want to learn from those oldbirds, u got to show them your kungfu and they will defend their superior position. That is how u learn from them. It isn't easy. Sometime i have to make a fool of myself and in the end of the day i learn nothing. Reason is the oldbird also dun know much but just hearing news from here and there. If you are going to make one right decision in your share investment life, let it be this one. Join KC!

Posted by Steven Yong > Sep 26, 2014 01:44 PM | Report Abuse
HI KC Chong bro,
This company seems to utilise its cash no so efficiently. I calculated and studied, it is churning ard 3% of cash return from operation only.
Mind to share your views?

Steven, you must know there are different investment strategies around. If you invest in Kuchai, you are betting on its quality assets, not earnings from ordinary business as Kuchai's ordinary business is only the rental of its apartment in Singapore.

The investment thesis in Kuchai is its negative enterprise value; pay me RM1.60 and you get RM2.50 worth of cash, investment in shares, a property in Singapore etc.

Please read here if you are interested in my view.

http://klse.i3investor.com/blogs/kcchongnz/45296.jsp

Of course there are risks in all kinds of investment, but the good thing about Kuchai is there is all the upside potential, but little downside.

Posted by kakijudi > Sep 25, 2014 10:28 AM | Report Abuse
Hi kcchongz,
didnt mean to take a jab at you. after all, ive been invested in kuchai since below RM1. it looks like its going to breakout. RM1.55 now

kakijudi, yeah I know. We are all matured people. It is ok make constructive criticisms with each other. There is no harm. We have crossed path before and I could see you can take things easy too.

My comments are actually for the purpose of discussing with those adversaries of Kuchai to bring forward their arguments why investing in a stock like Kuchai which has all the upside potential and little downside, is such a bad idea. They talked about share price, I also can talk about it with facts and figures that investing in Kuchai is not really that bad an idea. So where are their arguments?

It is just for discussions. Everyone has his opinion. Bring forward yours, rather than just baseless statement.

今年折价陷阱特别多

Posted by kakijudi > Sep 24, 2014 03:42 PM | Report Abuse
since kcchongz has already been 'waiting' for a decade like you said. shouldnt you be buying now? because afterall, he showed his confidence in the stock although all the lost opportunity costs

If I get a compounded annual return of 11.9% return as mentioned in my last post above, close to 40% above the 8.7% for the KLCI for the last five years, I don't see any "lost opportunity costs". Do you?

The assets Kuchai has are not "dead" assets. They are properties, shares of listed company, cash etc which goes up in long term and provides real return too.

Posted by fusing79 > Sep 23, 2014 05:17 PM | Report Abuse
may I know is MFCB still good? Base on FA the pass record is good, but the contracts on hand is going to expire.....so future is good? how to predict future

"how to predict future"?

How I wish I could do that! By the way, nobody can predict the future in the of the company. If he says he can, go far far away.

Investment bankers, professional analysts can sort of make some guesses by studying the macro, the industry, the company, interview the company management, its consumer etc, but that is still just a guess. Anyway, not sure the majority of them even do those things or not, which they should.

Unfortunately research has shown that the "guesses", even by the professionals, are normally out by a fair bit most of the time.

My personal experience shows although investing must be forward looking, sometimes the rear mirrors can help a lot.

"History does not repeat itself, but it rhymes" Mark Twain.

So do learn how to read annual reports, and have a feel of value.

Posted by Flintstones > Sep 22, 2014 06:39 AM | Report Abuse

Well, if you think holding Kuchai for 5 years at a CAR of 11.9% is attractive, then it is attractive. Anybody who is literate could see Kuchai is an undervalued company. The question is whether the investor is patient enough to wait till the cow comes home.

So, chongnz, do you want to own Kuchai??


Sure. Kuchai is one of the stocks in my portfolio of net current asset value investment strategy.

http://klse.i3investor.com/blogs/kcchongnz/56472.jsp

if you are investing, I can't imagine you don't have patience, unless of course if you are speculating.

Long history of profits? What is the theme of this article? Investors should focus on return on capital, not earnings. Earnings below cost of capital is a big destroyer of shareholder value. Long history of profit below cost of capital is long history of misery for shareholders. That is why they have to keep on putting money for right issues, and company keeps on borrowing and its debt level is precarious now.

Sure there is somebody interested in Khee San and London Biscuits. But that depends of what price to pay.

In Sept 2007, London Biscuits acquired 18.420 million shares, or a 30.7% stake in Khee San Bhd for RM27.630 million, or RM1.50 per share. It was purchased at a huge premium. And many other acquisition also at high premium. Hence it has this "goodwill" of 12.7m which has been in its balance sheet for many years already. today Khesan is trading at only 61 sen, a loss of 60% after 7 years. @#$%*.

“An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory return. Operation not meeting these requirements are speculative” Benjamin Graham

Let me look at the 5-year return of Kuchai and see if it is good. No point making statements without any facts and figures.

Kuchai's share price was 81.5 sen exactly 5 years ago. At today's price of RM1.44, the total return is 75%, or a compounded annual return (CAR) of 11.9%. Not bad what. How much if you were to put in the bank? To me Kuchai is safer to invest because you pay RM1 but own >RM2.50 of quality asset in cash and shares, property.

KLCI was at 1217 5 years ago. It is now 1849, or a total return of 52%, or CAR of 8.7%. Also not bad what. But Kuchai is 36.4% better.

I would have no complain if I have owned Kuchai since 5 years ago. Do you?

Posted by godbless88 > Sep 18, 2014 12:24 PM | Report Abuse

@kcchongnz - yes, I agreed. Hype and rumours are there for a reason, to cheat people to chase high when higher or to trap you.

No offense, I just wanted to listen to ur expert opinion on this counter tho, to see if it has any future since you usually do a lot of analysis on numerous counters. :)


godbless88, I am no expert. I don't know all. In fact, I don't know a lot. Furthermore, I am just a small time retail investor, an investor following fundamental approach in investing.

A fundamental investor stays within his own circle of competence. He invests based on understanding of the business, the durability of its business, read its financial statement and annual reports and its performance in the past as the past rhymes, how is its management etc. Future is more important, no doubt about it, but few people including myself knows much about the future. Also have a feel of how much the company worth before paying.

So let me ask you back, why are you interested in Sumatec? For me I know nothing positive about it.

Posted by godbless88 > Sep 18, 2014 12:18 PM | Report Abuse
kc, pls comment on what you think of Sumatec, thanks :)


One of the most important thing when you want to build long-term wealth is to avoid rubbish, hypes, rumours, fads, hope etc, just like what I am talking about in this post here.

JUst from your this question, It is utmost important for you to learn the fundamentals of investing before further dabbling in the market.

Posted by fortunebullllz > Sep 18, 2014 10:06 AM | Report Abuse

Hah ! KCChong, this is good one. But you have forgotten. almost all here are contra player or short term player. longterm investment, build strong investing foundation etc is not in their dictionary !! Only after they have got burnt, then maybe, maybe only, they will start to talk about longterm investment, build strong investing foundation bla bla bla....

"Hah ! KCChong, this is good one"?
I think I know what you mean by your this statement above. But let me tell you you are wrong again. I don't do things like this. I don't need to.

I notice you used to write a lot and you have a lot of followers. Surprised you have a total of only 38 posts? It is more like 38000 posts I thought. the following is one of your recent posts in Hovid thread.

[Posted by fortunebullllz > Aug 8, 2014 10:08 AM | Report Abuse
I collected when it is 15cen. How's that! sound like bull story?]

Yes, you are the one forumers who want to get rich here must follow. Hovid is trading at 40.5 sen now! I just want to let others know, this is not the only fantastic call with the incredible result, you have made tons of them. Bravo.

No, I haven't forgotten "almost all here are contra player or short term player" as you mentioned in your post. There are many who really want to build up long-term wealth. They know there is no other way which gives them better probability of achieving that. For your information, the response of the course is immense. That is why I do not have to do what you think I am doing.

Posted by CCCL > Sep 17, 2014 10:40 PM | Report Abuse
Hi KC, can Fiamma becomes winning stock. Thank you in advance.


Fimma I think is good. but that is a very superficial statement. Value investors don't know everything. They have to do a lot of work such as read the annual report, understand its business, study its past performance, gauge its future, try value it etc. Mind you, there are hundreds of companies in Bursa.

But you would be able to do it once you have learned the fundamentals, do on almost any company you are interested in, but that also will be limited to your circle of competence too.

I don't know Fimma detail enough to give an opinion.

Posted by nsyee28282828 > Sep 16, 2014 10:55 PM | Report Abuse
Hi KC I am new in the world of shares investing.
What is your advise to me if i am to invest in hohup, knm and unisem now..thanks

I tell you nsyee28282828, few people know KNM better than Frank Soweto. I guess it is best to listen to him on this. He is the best on KNM.

Regarding Hohup and Unisem, I also don't know as I don't follow them. But actually you would be able to judge by yourself, and is best to judge by yourself, once you have learned some fundamentals of investing.

Seriously if you want to be successful in investing, you must know how to read financial statements, and do some valuations. This is the language of business, as you invest in stock, you invest in part of a business.

Posted by Aba Saw > Sep 16, 2014 10:24 PM | Report Abuse
Many thanks for those useful info you've posted. I somehow found out you haven't include INSAS in your portfolio just posted. Please comment. Pardon me if i'm wrong. Thanks again.

Yeah, I talk about Insas in a net current asset value somewhere but I haven't found it. May be you could let us know which post of mine was that.

Insas at RM1.23 is damn cheap, also looking from its quality asset wise. Don't know why it can't move. Probably investors don't like the preference share proposal. But it comes with "free" warrants. How come this doesn't appeal to investors like it normally do. May be investors don't like this preference share thingy as it has so much cash, why does it need this preference share issue?

But the point is, it is damn cheap.

Posted by tsy88 > Sep 17, 2014 04:27 AM | Report Abuse
Good morning kcchongnz- am very interested in your said course on investing for long term. May I know how much is fee charged? Thank you.

Send me a email.

I can tell you guys, few people knows KNM better than Frank Soweto, including me.

Posted by emperor > Sep 16, 2014 09:36 PM | Report Abuse
Hi KCChong, no doubt that Kuchai is a fundamental sound company with a financial ratio and intrisic value of Rm 5.5 based on book value and EPS. I am just wondering whether the consistency of earning per share every quarterly as well important? From what i have observed this company, the EPS is not always positively consistent and how will it impact the quality of price of this stock? Other issue is what will the impact when GST implement next year as this company income resource from leasing of properties?

emperor, good comments. Just to make a couple of comments to your post:
1)Kuchai definitely doesn't worth RM5.50, no matter which way you look at it.
2)The value of Kuchai doesn't come from its earnings power, but on its quality assets value. So earnings stability is not what we should look at, but assets value. You are encouraged to read my post here:

http://klse.i3investor.com/blogs/kcchongnz/45296.jsp

I was talking about two investment thesis on Kuchai
a) Negative enterprise value
b) Net current asset value

These are proven investment strategy. You can also learn about them if you join my course.

3) Its property is in Singapore. So I don't think apa ini GST implemented next year is irrelevant. Anyway, its income from this only business is peanut for them.

Posted by AyamKFC > Sep 16, 2014 10:55 PM | Report Abuse
http://klse.i3investor.com/blogs/kcchongnz/58905.jsp
Why not included above?
Maybank-C6. 10.5sen date recommended now 8sen. Furthermore we are asked to bet RM100,600 not small amount.

Excellent comment. But let me ask you some questions about my post.

1) Is the post an educational or a recommendation to punt?
2) Where is the specific "recommend" you are talking about?
3) Where is the phrase I used to ask you to bet RM100,600?
4) Did I say you "invest" in C6, or "punt"?
5) Do you know why I specifically use the term mentioned?
6) Did I emphasize on financial risk management or speculation?
7) do you understand what I wrote< anyhthing at all?

Kevin,

to tell you the truth. When I fist started investing, even after investing for more than 10 years, I loss money most of the time. That was because I did not have the necessary knowledge and experience.

I am glad to say that that is the past. My return in the last 5 years plus is very closed to what I have shared with you so far in this website on my first portfolio put up in January 2013, though some of the stock holdings have generally changed.

But bear in mind that this 5 years have been very kind to most investors anyway.

Posted by kk123 > Sep 15, 2014 10:04 PM | Report Abuse

Lousy compare to fimacorp
Kfima is like the ugly step sister hahaha
Plus CPO PRICE DROPPING Oh !!


You are quite right, or rather partially quite right here.

But like what your other opinions and comments, whether using this same id or not, lack the depth in thought process.

In term of share price performance, Fima Corp definitely out-performed Kfima. That was because of its corporate exercise which seems to have "unlocked" the value of its business. You are right here.

But Fima Corp is a subsidiary company of Kfima (>60%). So don't you think if Fima's business is good, that of Kfima is good too? And that is precisely the reason why I think there should be more upside potential and catching up for Kfima, share price wise.

Investing should be a long term endeavor, not a day-to-day, month-to-month, or even year-to-year basis. CPO is a cyclic commodity. The value of a palm oil plantation does not fluctuate week-to-week because the change of palm oil prices.

Btw, do you know what make up the business of Kfima? How much palm oil contribute to its top and bottom line? How has the fluctuation of palm oil prices the last few years affecting its top and bottom line?

Posted by chenwei > Sep 15, 2014 10:12 PM | Report Abuse

KC, admire your skills in stock analysis. Mind to share some idea on Allianz or AMMB?


Alliance and AMMB are definitely good companies with durable businesses which will last for a long time.

However knowing that it is a good company is not good enough for investing as good companies may not present a good investment. It all depends on the price you pay. A simplistic PE ratio, in my experience, to gauge if a company is a good buy or not may not be enough.

I can't just tell you if they are good price to buy now as I don't follow them; and I need to spend a lot of time studying all those things before I can give you a factual comment.

That is why you need to learn about the art of financial statement analysis and interpretation, and valuation.

Even that is not good enough yet. You must also be aware the behavioral finance which I also deal with in the course.

Posted by Ivan Lim > Sep 15, 2014 08:48 PM | Report Abuse

knm share 1.2b receivable?y i can see only 681m?1.3b intangible asset?y i can see only556m?


As an investor, a user of financial statement, one must know what the terms such as "Intangible" means; what contribute as "intangible assets". Similarly for a construction firm, what "Receivables" are and what are the things contributing to "Receivables".

That is why I think you need to learn about the art of financial statement analysis and interpretation.

soojinhou,

Hevea certainly has it plus points. Yes its good qualitative aspect is as important. And price-to-book and price-to-sale which Hevea is the lowest are also important valuation metrics. Its future prospect is also important if you are certain and best if you can quantify them.

However, earnings wise, though Hevea is the lowest, I more care about EV/Ebit, ie the valuation of the whole firm. this is because Hevea with a lot of borrowings whereas others don't, it is more appropriate to value the whole firm which both capital providers should be taken into considerations. Like what sense maker said, it distorts the efficiency and valuation metrics.

Sense maker, thanks for the comments. appreciate that.

1)Yes, debt can distort ROE. Lii Hen does have net cash (cash -total debt), so do most of those companies except Hevea. However the leverage in DuPont Analysis of ROE is not whether if the company is net cash or not, but that "leverage" is Total asset/Total equity, of which debts contribute most of the numerator of that ratio. In fact the financial leverage of Lii Hen is the highest at 1.6. Homeritz's financial leverage is only 1.2, and Latitude 1.5 as show in Table 3.

2) Yes again, excess cash distorts ROE, but it will be fully reflected from ROIC, ie the return on invested capital, where excess cash is less off from invested capital, IC. In this respect, Lii Hen is better than other companies, but not as good as Homeritz and Latitude. In fact Homeritz is way ahead as shown in Table 3 with ROIC at 45.7%, against the 18.9% of Lii Hen.

3) Partly agree with you on this point. I think Homeritz dividend yield is as good as Lii Hen.

Posted by GG3261 > Sep 2, 2014 10:20 AM | Report Abuse
Mr kcchong, in the calculation of nnwc, can we include the biological assets ,concession asset and tax recoverable in the calculation ( GADANG balance sheet). please kindly enlighten me. TQ

Posted by GG3261 > Sep 2, 2014 10:13 AM | Report Abuse
Mr chong, isn't it earning yield = 1/PE ? please kindly enlighten me


There are a lot of things to know about a business. Can't explain so much here. You are encouraged to learn through a online course.