I ain't crowd follower (again). When everybody is making money and I don't, it is ok. It doesn't bother me.

inwest88, to be fair to JCool, my initial response to him also a bit sarcastic. But I didn't actually mean to be. I remember my first response to you in our first encounter also a bit sarcastic, a little only lah, just for fun. but you are more mature and understand my intention that i didn't mean it.

JCool is ok, provided you don't provoke him.

My reading on JCool is he is a ok. Just a bit green. Don't be too hard on him.

faberlicious, good one. Always enjoy your contributions. With the discount at 2.8%, and gearing at 3.4, it is good to take the opportunity for a near risk-free arbitrage like what I have described.

But for long-term investing (yeah buy company warrants is not necessary tikam, it can be investing at lower cost compared to the underlying share), I am not sure. This is because there is not much volatility for this type of stock. Warrant's time value depend on volatility of the underlying, the higher the better.

The next thing is its high dividend payment which warrant holders don't enjoy. High dividend lower the value of the company asset, hence adversely affect the value of warrants.

Company buy back shares is a good thing. For one the management thinks that the market value of the share is undervalued. It also increases the EPS, provided the bought back shares are cancelled off. But this is not the case as the buyback is used to reward employees. Hence I think it has no effect on the value of the warrants.

But YTL Power warrant is certainly a safe bet, and may be a good bet when there is a spike of volatility for the underlying.

Hope you can contribute more.

Posted by xyzsim > Sep 21, 2013 06:52 PM | Report Abuse
any similar counter like pintaras ?

What do you mean similar counter? Do you mean construction companies with the same operating efficiencies as Pintaras, or same compounded annual return like Pintaras as below?

As for the former, I doubt so as Pintaras operating metrics, cash flows, balance sheet, hard to find one construction company to match. Even at its enterprise value now it is also hard to find one so cheap. So it may not mean Pintaras won't be able to continue to provide excess return in the future.

As for the later, I think it is also very difficult to find many matching the kind of return. For example the one year return of 103%, and 5 year compounded annual return of 37.5%, >3 times the return of the market. Of course there are because there are so many companies in the Bursa. But it is really difficult to find many with consistent CAR of about 50% each period for up to five years.

Year 1 2 3 4 5
CAR Pintaras 103.0% 59.3% 51.0% 44.2% 37.5%
CAR KLSE 10.9% 14.8% 7.1% 10.2% 11.9%

Anymore of this type of return? Sure there should be. But one has to scout among the small capitalized stocks with good business, great operating metrics and cash flows.

In my portfolio, I am hoping Kumpulan Fima can follow the footsteps of Pintaras.

One thing you must know, for fundamental stocks, it takes time for investors to discover, months, years, unlike technical, which traders can make 50% or 100% within days basing on trading on momentum. But definitely not for FA.

Hi inwest88, my good friend in i3 who has been defending me when others attacked me personally. OTB is also my good friend in i3.

When you take probability, upside at 98 sen and cut loss at 40 sen, if the probability is 50% each, your expected gain is 36.6%. It is an expected gain and at a high value of 36.6%. How can I say OTB is wrong.

But don't you agree with me that when we talk and share about investing, we shouldn't act like a cult, each must echo and agree with the other? That is not good for anybody's investing experience.

Everybody has his opinion and view. At least for me I would be very happy if others tell me that what I think and write about may have some questions to be pondered about. I am also happy if others criticize what I have written, I mean constructively. I would avoid a lot of mistakes or misconceptions in the process and help me to avoid losing money.

Buy MPCorp at 50.5 sen, cut loss at 40 sen, maximum loss 11 sen or 20.8%, cannot afford this small loss meh?

For me it is not a matter of can afford or not, but are you wiling or not. Not for me. I am a follower of Warren Buffet in investing. His famous rules are no. 1, "Don't lose money". No2, "don't forget rule no. 1".

For a fundamental investors, he is hoping for a long-term return better than the broad market, and the long-term return of Bursa is about 10% CAR. So he will be very happy with 12%, return a year. I was lucky that my CAR return for the last 5 years have been much better than that. This of course is no way near to your minimum return of 50% in a short time. No way. Yeah, fundamental investor like me also think too much, consider this ah that ah. Also can't read chart. But that is me. That is why can't get rich. Sigh.

So if I lose 20.7% now, I need at least two years with the market return just to break even. Hence I try not lose money like that. Luckily few of my stocks for long-term investment lose money.

Of course you could be very well make 50 sen or double your play in MPCorp, or even 600% if the share price of MPCorp rises up to its "paper value" of RM3.49. Yeah, big risk reward. Possibly. I am not going to argue about that.

"In investing, what is comfortable is rarely profitable." -- Robert Arnott

Someone flagged Lim AS's comment just because his comment is different from yours? Who the hell did that? Outrageous!

Jaackl, yeah lah why you want to spoil the party? Don't you know that MPCorp has shot up by more than 50%. Everybody is making money.

Posted by Jaack1 > Sep 21, 2013 07:11 PM | Report Abuse
Dear Mr Ooi,
It is good if your will explore MPCorp’s 2012 accounts - Page 101 – points 35 & 36 regarding significant events.
It seems that Amanah Raya Bhd has served a writ of summons on claims pertaining to the exercise of put option granted under the joint venture agreement signed on 20 Aug 2008. Claims amount rather significant.
I always appreciate your continued contributions and I don’t mean to spoil your party.
Tks/Rgds
Jaack1

Jaack1, seriously I hope I can have this kind of critical comments on what I have written in my other threads. Your comments are actually very constructive and extremely useful as an alternative view. No need to be apologetic doing a good job.

The put options and the summons on claims by ARB is very relevant here. I have a few questions for those who knows well about MPCorp and this case and very bullish about MPCorp(I personally don't know much). I am sure you guys have your reasons for being so.

1) If that land in Iskandar is so valuable, why did ARB wanted to exercise its put option to sell its shares in APTEC back to MPCorp?
2) How come it has developed into this situation which ARB has to serve the writ of summons for its payment of 110m which was supposed to be paid off more than a year ago?
3) It is a present problem, not a past problem. How is MPCorp going to settle this?
4) How come the APTEC project has still not started after talking for so long?
5) How is MPCorp going to fund this project of 4.9b?
6) When is the first profit ever going to come in?
7) It appears to me MPCorp can only continue to survive if they can sell off some of its properties, the Wisma MPL, some land in Johore, having a corporate exercise, partner with somebody etc.
8) Of course it also depends on how successful the APTEC project is. But meanwhile, what is their plan?
9) Many other queries a fundamental investors would ask.

As far as trading and making money, I have no doubt of the recent past, but not for those who have bought the shares 3 years ago, even worst for those who bought the shares 13 yeas ago at >$2.00.

As for the near future, I have absolutely no idea.

No, I ain't a crowd follower.

Anbz, not nabs. This iPad simply changed what I write

Nabs, remember you said I were bingo? You are wrong here again, impartiality knows quite some stuff though he talks rough.

Anbz, definitely wrong deduction.

Faberlicious, good on you. In my opinion, they are all good companies. Why good companies?

When a company has high margins, high roe, ROIC and great cash flows consistently, how not to be good companies?

Best still if they are selling at reasonable or even cheap price.

How do we know their business model is good? Isn't it all shown in those consistent metrics? What other proof do you need?

In your environment 1, crowd bullish only enter call warrants (note I talk about call warrant here, not company warrant, they are of different game), fair enough as that is how you want to play. It is just like ordinary share, you follow the technical, buy high and hope to sell higher. Noting wrong with your strategy, provided that crowd bullishness continue after you have bought. This is opposed to the other camp, the value investors who buy good companies at a big margin of safety.

I follow the other strategy, buy cheap based on premium, expiry date and volatility. Most options players in the developed market also follow the efficient market hypothesis. Due to the action of many players in the market, they believe the present share price of the underlying is reflected by all information available at that point of time. They don't know which direction the underlying share price will move in the near future. If you can buy the call warrant at close to its intrinsic value without having to pay a high premium on the time value which is still far away, it is a safe strategy as even if the underlying share price doesn't go up, you still won't lose much when the CW expires because you still get the intrinsic value of the CW back at settlement. But in case if there is a spike of volatility, you have every chance to make big.

I have explained the detrimental effects on the call warrants (and also company warrants) if a company is taken over at a small premium to its market price when there is still a lot of time value which will be lost. Hope you understand what I am talking about. It is not a matter of monitoring or not.

Now only know about the uneven playing field? Did I say now only I know?

Since i have written a few posts on Marco warrant before, i think I should be responsible to write another post here.

My experience in investing in the Marco warrant is not a good one. Not easy trying to make some money from this laduk. I am glad I didn't lose much. I will avoid investing in any of his companies.

Why is the playing field not level?

Let us look at the call warrant Sime CW. Sime was trading at 9.52. Its warrant CW has an exercise price and ratio of 9.40 and 4 respectively. It is expiring on 30/5/2013, a long eight more months to go. The bid and asked prices were 9 sen and 10.5 sen respectively. That means if you want to sell, the investment bank is willing to pay only 9 sen but if you want to buy, you can only get at 10.5 sen , a cool 17% difference. How come such a wide gap?

Actually Sime at 9.52 when CW is at 10.5 sen is not expensive in my opinion because at those price, the premium is only 3.2%, for a relatively long expiry time to come. But can one sell at a reasonable price when he intends to in view of IB's market making behaviour?

Sense maker, your comments make a lot of sense.

Frankly after reading all those negative comments and attacks I began to doubt LiiHen although I find LiiHen has been doing very well in its business. The company also take care of shareholders by paying good dividends all this while. This is because to me the management credibility is very important for me if I want to invest in a company.

Your positive comments about LiiHen gives me another thought about reinvesting in its stock.

Hey the Cool guy, you are right again. Sorry sorry sorry. I shouldn't write about negative things and talk nonsense about Malton without visit the site, talk to management, look at their ledgers and accounts etc. Sorry sorry sorry again.

Hey the Cool guy, you are really cool, and very cute too. Salute you!

"N THEN WHITOUT SITE VISIT.. WHITOUT CLARIFICATION FROM MANAGEMENT.. WITOUT FACTS FINDING.... PROMPTLY USED A SIMPLICITIC VALUATION FORMULA.. KEYED IN SOME BALANCES.... N CAME UP WIT A VALUATION OF "AAA"....... THE REST IS HISTORY AS WE KNOW IT... "

Okokok, sub-prime crisis like that one. Thank you thank you thank you.

So all must refrain refrain refrain because:

N THEN WHITOUT SITE VISIT.. WHITOUT CLARIFICATION FROM MANAGEMENT.. WITOUT FACTS FINDING.... PROMPTLY USED A SIMPLICITIC VALUATION FORMULA.. KEYED IN SOME BALANCES.... N CAME UP WIT A VALUATION OF "AAA"....... THE REST IS HISTORY AS WE KNOW IT...

Got it. Thank you thank you thank you.

My sifu the Cool guy posted my comments 5 days ago on this stock Malton when somebody asked my opinion. AT the time when I was asked, Malton was about 95 sen and now it is 84.5 sen

So my sifu the Cool guy, are you trying to say i must refrain refrain and refrain from giving my opinion because I have not visit the site yet, have not talked to the management, have not looked at their ledgers and accounts etc yet.

Or must I put up a disclaimer first before offering my opinion when asked?

Posted by JCool > Sep 16, 2013 10:27 AM | Report Abuse

Posted by kcchongnz > Aug 21, 2013 06:08 AM |Report Abuse

Posted by Steve Jub > Aug 20, 2013 08:15 PM | Report Abuse kcchong, for malton, i saw the net asset per share pretty high (1.37) and PE ratio pretty low (5.84). what do you think of these 2 area?

steve, you are talking about the financial results ended 30/6/2012 which is more than a year ago. Malton's 2013 results will be announced soon. So the PE ratio you are referring to is history. But even for the 2012 results, you notice that revenue and profit has declined. Malton reported that they made 64.4m, or 15.4 sen per share in 2012. But show me the cash. Why is that that year they have to pay out a net cash of 52.6m? What is this 118.2m as "short-term fund" appearing in the "Cash Flow From Operating Activities" statement? Strange. Now let us come back to its 2013 ending 30/6/2013 which will be announced soon. I won't think it will be pretty. The three quarters results showed that it only make 19.2m or just 4.6 sen per share. What do you think the EPS will be for this last quarter? How much higher can it be when compared to its third quarter of just 0.36 sen? So what is its latest PE ratio then? Don't forget that it has loan stock and warrant holders who are also will be sharing any profit made in the future. Earnings is one thing which I never trust it standing alone. Look at its cash flow. Just three quarters, its CFFO is a negative of 192m! this is a result of increase in inventories and receivables of 83m and 215m respectively. As I have mentioned, the total inventories and receivables amount to 437m as at 32/3/2013. They are already more than its NTA of RM1.43 in its balance sheet. These assets are what I consider as "bad" assets" My feeling is that Malton will soon try to borrow more money from the bank. I don't know the bank will lent them any more and if not, a right issue or private placement is on the card.

Damn scary.

I would like to discuss with you constructively on warrants here as it is hard to find one in i3 like you to discuss about it to share knowledge and experience.

Ok I agree with you that the word “gambling” is not appropriate. I would amend my term from “gambling” to “speculating”. That is the way I look at structured warrants as I take risks when it appears to me that the odds are in my favour, i.e. speculating.

Regarding the environments you are talking about. Here are my views:

1) the crowd / public are bullish on the underlying, not when warrant trader are bullish on the underlying or analysts are bullish on underlying.
THIS IS TRUE . IT IS ALSO TRUE FOR INVESTING IN STOCKS. HOWEVER IF THE CROWD/PUBLIC ARE BULLISH ON THE UNDERLYING STOCK, I DOUBT YOU CAN GET CHEAP WARRANTS TO BUY. ULTIMATELY IT IS WHETHER YOU HAVE BOUGHT THE WARRANTS ON THE CHEAP THEN ONLY CAN MAKE MONEY. SO ONE CAN ONLY MAKE BIG MONEY IF HE IS DIFFERENT FROM THE CROWD AND OF COURSE HE MUST BE RIGHT IN HIS VIEW.

2) speculation elements are present - hostile takeover, corporate exercise, some speculated reason might cause the underlying to move higher or theme play, etc

OF COURSE SPECULATIVE ELEMENTS MUST BE PRSENT BECAUSE BUYING CALL WARRANTS IS ITSELF A SPECULATIVE ENDEAVOUR AS I HAVE MENTIONED ABOVE.
HOWEVER, DO REMEMBER THAT CALL WARRANTS VALUE IS DERIVED FROM TWO PARTS; INTRINSIC VALUE AND TIME VALUE. IF SOMEBODY HOSTILE TAKEOVER, OR THE UNDERLYING COMPANY TAKES IT PRIVATE, UNLESS THE TAKER PRICE IS MUCH HIGHER THAN THE MARKET VALUE, THE WARRANT LOSES ITS TIME VALUE. FOR MANY CALL WARRANTS, THE MAJOR PART OF THERE ARE IN THE TIME VALUE. SO WHEN YOU LOSE THE TIME VALUE, YOU LOSE MONRY IN THE CALL WARRANT WHEN THE COMPANIES ARE TAKEN OVER AT NOT A HIGH PRICE.

3) hedging are require (hardly in use locally, usually for put warrant), so we just leave this aside.

WHO IN BURSA THINKS OF HEDGING USING OPTIONS HERE? HOW MANY PEOPLE KNOWS WHAT HEDGING IS AND HOW TO CARRY OUT HEDGING? INVESTMENT BANKS WHO WRITE THE OPTIONS ONLY DO, WHETHER IT IS CALL OR PUT WARRANTS. RETAIL INVESTORS THINK ABOUT SPECULATING ONLY. IN FACT MOST RETAIL INVESTORS ONLY THINK OF GAMBLING, BECAUSE MANY HAVE NO CLUE ABOUT WHAT ARE THE FACTORS AND HOW ARE THEY INFLUCING THE VALUE OF OPTIONS.

At the time when we discussed about the TM-CU, non of the above environments exist for TM underlying, hence I'm in my opinion, the battle should not take place at the first place.

WHEN I SPECULATE IN TM-CU THEN, MY CRITERIA ARE NOT RELATED TO THE ENVIRONMENTS YOU ARE TALKING ABOUT FOR THE REASONS I HAVE DESCRIBED. I AM HOPING MAY BE THE PUBLIC MAY REVALUE TM UPWARDS MAY BE BECAUSE OF UNEXPECTED HIGHER EARNINGS, BULLISH MARKET LIFTS ITS PRICE, ETC. IN FACT MARKET IS BULLISH AS IT IS ABOVE 1800 POINTS NOW, ALTHOUGH IT DOES NOT AFFECT TM.

Those parameters/Greek should only come in as secondary screening after the above conditions are satisfy. Coz those parameters / Greeks will determine which battle ground where all the warriors will gather to fight. You want liquidity, you get your liquidity there. Even if you don't get your liquidity, your chances against market maker is higher as chances for underlying to move is higher if conditions (1) & (2) are present( exception for AM Bank IB - SW, this "chow ka" market maker are notorious to reduce the premium base from over 30% to below 10% even when underlying move significantly )

AS MENTIONED, I DIDN’T CARE ABOUT THE ENVIRONMENTS YOU ARE TALKING ABOUT. THEY ARE IRRELEVANT TO ME. IN ALL CIRCUMSTANCES, THE MORE IMPORTANT THINGS TO ME ARE THE PREMIUM, TIME TO EXPIRY, GEARING, AND THE LAST BUT NOT LEAST VOLATILITY OF THE UNDERLYING SHARE, OR THE IMPLIED VOLATILITY.

If the parameters / Greeks are good without the above conditions - it is a meaningless battle to me - that is purely gambling / depending on luck

TO ME WITHOUT PAYING ATTENTION TO THE PREMIUM, IMPLIED VOLATILITY, TIME TO EXPIRY WHEN PLAYING CALL WARRANTS IS A GAMBLING. THIS IS BECAUSE YOU HAVE NO CLUE IF YOU HAVE A CHNACE TO WIN.

If there is one & only battleground, when condition (1) & (2) are created....does the parameters still important ? I'm not sure if you ever observe this playing field behavior...it is something worth to observe.

If you checked back all the fallen battles , they share something in common. Knowing the existing failed attempts = preventing similar outcome in the future. We should share more fallen attempts here.

I LOST MONEY IN TM-CU NO DOUBT. BUT LIKE I HAVE SAID, YOU WIN SOME, YOU LOSE SOME.

Are you talking about structured call warrant? I can't put myself to say call warrant traders are investing. I have never used the phrase "investing in call warrant".

What can i conclude? Well you win some you lose some. Important you must know the risk. And very important one must know how the value of call warrants is derived from. Take the game as a chance to win big but if things do turn out the way you hope to, don't lose a fortune.

By the way, I have never said highly geared CW is a winning pick. Yes, there are other factors involved which I have described at length.

One other important thing is the market participation. Most call warrants have little participation from the retail punters. So if we have to depend on the market makers to provide the liquidity, it becomes a very uneven playing field. The way the market makers are behaving, I think I would leave the playing field too.

Posted by JCool > Sep 20, 2013 09:02 PM | Report Abuse

I WAS FLAGGED17 TIMES...U CAN CHECK URSELF.... WELL DONE TO U N UR CAHOOTS ...

Yeah ah, why people flagged you ah? Despite me asking them not to.

NOW U R TALKING.... FINALLY U GOT IT.. AFTER MY 4TH ATTEMPT TO GET IT INTO UR HEAD...

HOW COME SUDDENLY U KNOW??? JZ READ UP FURTHER OR ASKED SOMEONE WHO REALLY KNOW VALUATION?

Yeah I got it from you. Thank you thank you, thank you.

IN D IMPORTANT MATTER OF STOCK VALUATION WHERE $$$$ IS INVOLVED... U CANT GO FOR CONVIENENCE AT D EXPENSE OF ACCURACY!!!
IF U DONT HV D EXPERTISE N RESOURCES TO DO IT.... U SHOULD REFRAIN.. REFRAIN... FROM DOING IT..... NOT B RECKLESS N COME OUT WIT A HALF BAKED ONE... UNDERSTAND??

Okokok, sorry sorry sorry. Sorry i didn't know my valuation could make you so upset. Sorry again. Understand understand understand.

I HV TOLD U I REFRAINED COS I KNOW WAT IS INVOLVED TO DO A PROPER VALUATION... I REFRAINED U DONT...

Okokok, I refrained from doing any valuation for you to read. Sorry sorry sorry.

PROFESSIONALS R OF COS DOING IT IN D WAY I HV TOLD U IN MY EARLIER POSTS... THEY MAY NOT SHOW U THEIR CALCULATIONS UPFRONT... BUT IF THEY ARE SUED BY THEIR CLIENTS FOR WRONG VALUATION THEY WILL HV THEIR CALCULATIONS TO BACK UP THEIR VALUATIONS!

Yeah yeah yeah, professionals do it the way you show them.


DID U KNOW HOW TIS SUBPRIME FINANCIAL CRISIS WHICH IS IN ITS 5TH ANNVERSARY STARTED???

IT STARED LIKE THIS... TIS IS D TRUTH TAT I READ SOMEWHERE... NOT MADE UP BY ME OK....

STANDARD & POOR... MOODY... UPON SEEING D BUNDLES OF LOANS FROM D INVESTMENT BANKS SAID SOMETHING LIKE THIS:

Oh, what subprime (or sublime)ah? Sorry sorry sorry, I didn't know anything about it.

N THEN WHITOUT SITE VISIT.. WHITOUT CLARIFICATION FROM MANAGEMENT.. WITOUT FACTS FINDING.... PROMPTLY USED A SIMPLICITIC VALUATION FORMULA.. KEYED IN SOME BALANCES.... N CAME UP WIT A VALUATION OF "AAA"....... THE REST IS HISTORY AS WE KNOW IT...

Oh S&P, Moody didn't visit site, didn't talk to management, no fact finding, simply use a formula (what formula ah?), keyed in some balances (?) and came up with a valuation amount to "AAA"? Okokok, understand now. Thank you thank you thank you.

D point is mr vain IF U DONT HV D EXPERTISE N RESOURCES.. U DONT GO N DO A VALUATION ANYWAY... U REFRAIN... REFRAIN.. REFRAIN!!!! UNDERSTAND OR NOT??? u mr feel so good abt urself... yes u r so at d top of "i m so vain league of ur own"!

Okokok, next time I refrain, refrain refrain!!!!!!! Understand already. Thank you thank you thank you.

Hey OTB, I want to let you know I made good money riding on your LBS W and Hapseng w this few days.

No doubt it is K.O. But in gambling, one must know things can go K.O, then it is O.K.

This few days tumpang Ooi Teik Bee's LBS warrants and Hap Seng warrants. "Damn song".

LBS Warrant, Wa and arbitrage opportunity(200913)

LBS Warrant A is trading at 82 sen while the underlying share is at RM1.84 now on 20 September 2013. It has an exercise price of RM1.00 and the expiry date is on 11th June 2018, or in about four years nine months time. The warrant is hence in-the-money with an intrinsic value of 84cents (1.84-1.00).

That is right. Even though there is still long time to expiry, Wa’s intrinsic value at 84.0 sen is higher than its share price of 82.0 sen. Buyers of Wa not only getting a free time value, they even got a discount. Here is a risk free arbitrage opportunity. Transaction costs are ignored.

Short sell 100,000 shares of LBS at RM1.84, proceeds of RM184,000
Buy 100,000 shares of Wa at 82 sen for RM82,000
Convert to LBS at exercise price of RM1.00 for RM100,000
Return the 100,000 converted share to lender
Pay rental of LBS share cost RM1000

Profit=184,000-82,000-100,000-1000=RM1000

If short sell is not allowed for LBS, borrow money to buy Wa and convert to LBS share. Then sell the converted share in the market. Pay interest. The payoff is the same. In this case there is an execution risk, risk that LBS may trading below RM1.84 when the converted shares come back in a couple of weeks time. But then the share could also be higher too.

However, it is better to keep Wa until it moves higher. Why waste the free time value of 4 years and 9 monhts?

bsngpg, how come you also buy Haio? I think Zhulian is a better stock in this business. Yeah I know you already been holding Zhulian for long time. I would think it is still good to hold.

But on the other hand, good to diversify a little bit. I do believe in diversification, theoretically as well as practically.

Posted by xingxian > Sep 18, 2013 01:23 PM | Report Abuse
Take a look at MMODE. Similar to FIBON IMO

Posted by kcchongnz > Sep 19, 2013 07:35 PM | Report Abuse X

Is M-Mode good for a long term investment? (19092013)

M-Mode Berhad is engaged in the provision of mobile contents and data application services with platform connected to mobile network operators in Malaysia and China.

M-Mode has a fantastic growth story. From 2006 to 2012, its revenue and net income grows by a CAGR of 37% and 75 to 62.1m and 13.2m respectively as shown in the appended Table 1.

Table: Revenue and net profit for M-Mode
Year 2012 2011 2010 2009 2008 2007 2006
Revenue 62070 75395 29207 22335 16129 13540 9432
Net Income 13232 12867 3425 3026 2096 1189 465
EPS, sen 8.1 8.0 2.2 1.9 1.4 0.9 0.4

M-Mode is one of the rare companies having a gross margin of over 40% and net profit margin above 20%. ROE and ROIC are high at 25% and 51% respectively, much higher than the costs of capitals and my requirement of 15% for a small capitalized company.

Quality of earnings is good with cash flows from operations higher than its net income. Free cash flow is positive every year with FCF above 50% of invested capital and 19% of revenue. MMode has a healthy balance sheet with an excess cash of 33.6m. Hence MMode is great company in every aspect. But is it a good company to invest in?

M-Mode’s share price rose by 4 sen today. At 57 sen a piece now, MMode is trading at a PE ratio of just 7.0. Enterprise value is also low at 4.5 times ebit (<<8 times). The price-to-book ratio is not excessive at 1.8.

Hence in my opinion, M-Mode is a great company good for long-term investment.

As to the statement below. Let me just say I don't have to cover up anything and no need to be defensive also. Not until if he starts to attack personally.

Posted by ryanc > Sep 20, 2013 10:21 AM | Report Abuse
Good way to cover up a lousy stock pick. :)

I am more interested to know why this iafx fellow can change something in the Kfima thread, and then kept on accusing me altering it, and then kept on and on to attack me personally.

But how ah? Every time he appears to make a jab at me, then when I ask him something about the credibility of him as a person, he just disappears?

iafx, remember also that Pintaras you criticizing like mad on my analysis. You even asked people to sell at 2.70, just less than a year ago? It is RM6.08 now, not including 19 sen dividends received.

What say you?

But actually the worst part of you is to change that word "revenue" to "profit" and then came back and accuse me of changing. That is the worst from of cheating and accusing.

How do you aspect people to respect you?

Hey iafx, long time no see. Try making fun of me? Good, I am always ready for you.

Have you sworn that you did not change the "revenue" to profit in the Kfima thread? So long still haven't seen the response from you yet.

Haio reported a poorer results for the first quarter 2014. Investors reacted strongly to this poorer performance, the price has already dropped by about 5% this morning.

That is why I always say valuation is an art. It depends a lot on your forecast in the future, and nobody can predict the future. He can only use the economic outlook and its recent past to try to have a good guess of its future. Hence in valuation I like to use conservative assumptions to get the intrinsic value, and buy the share when there is good margin of safety.

But does Haio warrants for a sell off just a poorer one quarter result? Is the poorer result due to seasonality?

To me, it depends on whether you are a trader or an investor.

Is M-Mode good for a long term investment? (19092013)

M-Mode Berhad is engaged in the provision of mobile contents and data application services with platform connected to mobile network operators in Malaysia and China.

M-Mode has a fantastic growth story. From 2006 to 2012, its revenue and net income grows by a CAGR of 37% and 75 to 62.1m and 13.2m respectively as shown in the appended Table 1.

Table: Revenue and net profit for M-Mode
Year 2012 2011 2010 2009 2008 2007 2006
Revenue 62070 75395 29207 22335 16129 13540 9432
Net Income 13232 12867 3425 3026 2096 1189 465
EPS, sen 8.1 8.0 2.2 1.9 1.4 0.9 0.4

M-Mode is one of the rare companies having a gross margin of over 40% and net profit margin above 20%. ROE and ROIC are high at 25% and 51% respectively, much higher than the costs of capitals and my requirement of 15% for a small capitalized company.

Quality of earnings is good with cash flows from operations higher than its net income. Free cash flow is positive every year with FCF above 50% of invested capital and 19% of revenue. MMode has a healthy balance sheet with an excess cash of 33.6m. Hence MMode is great company in every aspect. But is it a good company to invest in?

M-Mode’s share price rose by 4 sen today. At 57 sen a piece now, MMode is trading at a PE ratio of just 7.0. Enterprise value is also low at 4.5 times ebit (<<8 times). The price-to-book ratio is not excessive at 1.8.

Hence in my opinion, M-Mode is a great company good for long-term investment.

Efficient market=predictable market?

Wow, you beat Professor Eugene Fama who developed this theory which is one of the main topic in finance and investment.

It is alright to be angry with yourself, not Rambotan or grandma

A review of the company warrants just introduced yesterday.

Hap Seng Wa rises from 55.5 sen to 63 sen
LBS Wa rises from 73 sen to 79.5 sen
Freight Wa No change because no trading at all

The price of company warrant moves with the underlying share. It is assume that the market is efficient.

But how come LBS Wa at 1.80 now, the warrant is trading at a discount when there is still 5 more years to expire and the exercise price is 1.00? That means even though there is still 5 years to expiry, this time value is given free?

so lunch or dinner treat, tonylim?

Posted by Ooi Teik Bee > Sep 19, 2013 10:13 AM | Report Abuse
Dear Kcchongnz,

Please review my position now, all turn green. 10/10. 11.28% gain within 19 days.

Okokok, as at 2.30pm today, OTB's portfolio has seven green as opposed to three red. The average return of his new portfolio is 8.4% as compared to 1.0% of the KLSE. The excess return is hence 7.4%. Please note the KLSE index is taken on 1st August 2013. OTB have three big winners, all are company warrants; ie LBS, Punchak and Hap Seng.

kcchongnz's portfolio has 6 green and 5 red. The average return is 7.2%, with an alpha of 6.2%, a.2% below that of OTB.

The result is after about one and a half month since starting the new portfolio.

So if one can shoots an average of 60% into the basket from the line, he probably is one of the best in Bursa.

Michael Jordan, basketball greatest player of all time, shot just a bit over 80% from the line over his career. Chances are, nobody in Bursa can be the Michael Jordan of the investing world.

Posted by xingxian > Sep 18, 2013 01:23 PM | Report Abuse
Take a look at MMODE. Similar to FIBON IMO

Have taken a peep at M-Mode. Appears to be a good company selling at big margin of safety.

Is the market inefficient?

Freight Warrant, Wa and risk free arbitrage opportunity(180913)

FREIGHT Warrant A is trading at 48.5 sen while the underlying share is at RM1.50 now on 18 September 2013. It has an exercise price of 97 sen and the expiry date is on 8th January 2017, or in about three and a half years time. The warrant is hence in-the-money with an intrinsic value of 53cents (1.50-0.97).

That is right. Even though there is still long time to expiry, Wa’s intrinsic value at 53.0 sen is higher than its share price of 48.5 sen. Buyers of Wa not only getting a free time value, they even got a discount. Here is a risk free arbitrage opportunity. Transaction costs are ignored.

Short sell 100,000 shares of Fright at RM1.50, proceeds of RM150,000
Buy 100,000 shares of Wa at 48.5 sen for RM48,500
Convert to Freight at exercise price of 97 sen for RM97,000
Return the 100,000 converted share to lender
Pay 1% interest cost RM1455

Profit=150,000-48,500-97,000-1455=RM3045

If short sell is not allowed for Freight, borrow money to buy Wa and convert to Freight share. Then sell the converted share in the market. Pay interest. The payoff is the same. In this case there is an execution risk, risk that Freight may trading below RM1.50 when the converted shares come back in a couple of weeks time.

Tan KW, I have said many times before. A value investor buys the share of a good company at an adequate margin of safety. After that he concentrates in his work, or play golf for some, and never look at the screen for months. Only when the share price rises to the intrinsic value (note intrinsic value changes as business improves), then he sell and look for other value stocks.

Talk is easy. Often my fingers don't listen to me.

But serious, you have posted many good articles from Warren Buffet, Philip Fisher etc and recently Peter Lynch. You can learn a lot from them. Most of the time they didn't just make 40-50% from many of their stock selections. They made a few hundred percent patiently waiting for the share price to rise up to its intrinsic value.

I am not saying I am right in the valuation of Fibon, even though I am confident looking at their performance and financials. But please bear in mind that valuation is really an art, far away as a science. And though you should use the past as a good guide, the future may not be the same. Nobody can predict the future.

Actually your question is best directed to a chartist like OTB.

sense maker, If I am in KL, I sure like to meet you. I think we have the same philosophy in investing. If we have technical people in the group, it will even better.

I have learned something from you in the revenue recognition thingy before.

Fibon was not first mentioned by me. It was from houseoordos. I concurred with him and used the information given by him and even some of his analysis and wrote up the report.

xingxian,
Congrats to you. I want a treat from you too.

But you are a good person. When Fibon was down, you kept quiet and never blame anybody. When it is up, you show up and presumably showing gratitude. Good on you.

OTB, I joke often, but not this one.

OTB, the next time I go back to Malaysia, I sure look for you for this dinner you are talking about. Husband and wife together? Make sure you honour what you wrote.