"Moreover the historical risk premium of the equity market has been around 4%".

kcchongnz, how do you know that the market risk premium is only 4% when the risk free rate is assumed to be 4% also?

Question here. I thought the 0.9sen/share dividend is just proposed and requires shareholder's approval in the coming AGM? How come it is already announced now?

I know Gan KH is the major shareholder here, but if that is the case, why seek shareholder's approval in the AGM for the dividend? I'm a bit puzzled here.

No worries. The forum is about sharing.
Nevertheless, the growth potential of PWROOT is the reason why the stock is valued at this price. Should be a good long-term stock to hold in my opinion, although I have not own any share yet. :)

An important metric to measure Old Town's F&B Outlet business is the Same Store Revenue Growth Rate. This way, investor can determine if more people are visiting their existing stores.

danlelttoob, the Egypt risk is mentioned here: http://klse.i3investor.com/blogs/kenangaresearch/33662.jsp

Something must be going on with this company. I hope it's for exploding earnings or new deals. Not purely due to speculators frying up the price, which will then be unsustainable.

Don't just look at EPS. Compare the profit margin of TOPGLOV and HARTA. One at around 6% while the other at 23% in the last quarter. One has almost stagnant revenue over the past few quarters while the other has been growing in both revenue and profit, maintaining its profit margin. That's why HARTA deserves a higher PE than TOPGLOV.

That's how I see it.

Hi CityTrader, kcchongnz,

I'm not an accountant, but ROE should be calculated based on "Net Income Attributed to Common Stock Holders" and NOT "Net income".

Posted by TeckChuan Lee > Jul 21, 2013 03:09 PM | Report Abuse

YTL E-Solution BHD. RM0.70

3. FY2012 & FY2011, no Fixed Deposit, but Cash and Bank Balance shot up to 180M. Question. Do we need include 'Cash and Bank Balance' into Invested Capital? Cause we usually dont right?

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No. I don't think we should include Cash and Bank Balances or even Cash & Cash Equivalents as invested capitals. Please correct me if i'm wrong. :)

Posted by CityTrader > Jul 21, 2013 09:57 PM | Report Abuse

Hi Teck Chuan

May i know where did u get this figure 1345328 which is the number of shares? I cant find so need to consult u. TQ in advance for yr kind advice.

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To find the total number of common stocks issued, one can always refer to the Notes section in an annual report whereby they show clearly how EPS is being calculated. Try looking for the Notes reference number when reading the Income Statement. :)

Posted by aunloke > Jul 14, 2013 07:36 PM | Report Abuse
I think most of the hidden gems have been uncovered and the market is in the late stage of a mania though it may move up further.I would prefer asset protection to taking a big risk for may be a small gain.With all the bad news stacked against US ,EU,japan and of course our country I don't think we can have a superbull so the risk reward ratio may not be favourable in taking big commitment. Care to discuss ?

Posted by kcchongnz > Jul 16, 2013 05:29 AM | Report Abuse
Is there a a mania? If you go to the wet market, do you hear uncles and aunties giving stock tips? When you go to a coffee shop, are there a lot of people talking about which stock to buy? When you have a gathering with your relatives, is stock a hot topic? In the media (non-business), are there a lot of talk on the stock market?

Bad news? Can't recall which year no bad news. 4 years ago after the sublime crisis, people said we were heading to the great depression. One year after that, the Dubai problem, the PIGS problems, the QE problems, the China problems, the fear of General election etc etc.

So how ah?

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I think when you look at most stock analysts call for BUY BUY BUY and almost no SELL SELL SELL, that's an indicator that the market is over optimistic about the future cash flow that businesses can generate?

The thing that TDM scares me is that the stock price can go up very quickly with huge volume all of a sudden without any public announcement or news. Then some corporate announcement will be made a few days later. This signals that insider trading is at large with this counter.

If insider trading can push the stock price up so quickly, it can do the same thing in the opposite direction.

So, i think i'll skip TDM.

Hope the above explanation helps. :)

An example of stock with extremely high ROE due to low equity is DiGi.
Go download it's latest Balance Sheet and see how the high ROE is generated to help you understand this.

It is also important to not blindly look at the ROE number. One is advised to read the balance sheet and determine the debt to equity ratio. Sometimes, ROE can be very high but that is because the company is over-leveraged (borrowed heavily or has high liability compared to it's equity). For more info, one can google DuPont analysis where it breaks down the ROE into component to help one to analyse how the ROE number is made of.

ROE = Profit Margin (Profit/Sales) * Total Asset Turnover (Sales/Assets) * Equity Multiplier (Assets/Equity)

Source: Investopedia (http://www.investopedia.com/terms/d/dupontanalysis.asp)

As the general formula says:
Asset = Liabilities + Equity
A company has 2 ways to fund its assets, either by liabilities or equity.
Liability = Other people's money (from bankers, bond holders, suppliers, etc)
Equity = Owner's money (shareholder's fund, or in other words, your invested money)

So, it is very important to learn how to read and understand the 3 financial statements, namely the Income Statement, Balance Sheet & Cash Flow Statements.

It's much clearer to me now. Thanks for the explanations.

I found that cost of debt is reported in REITs annual reports but i'm not sure if I can find any in a stock's annual report. Since most Malaysian firms do not issue bonds, i believe the cost of debt would be the interest rate they got from their borrowing from the banks, which really depends on their relationship with the bank. If bonds are issued, the cost of debt would be the yield to maturity of the bond they issue.

Your stock analysis in various thread on i3 have been very beneficial to me and i am developing my own excel sheet too, that is why all those questions above. Not as a critique here but i think if we can include cross sectional analysis, then the analysis would give us a better picture. For example, PE ratio of < 25 is not necessary cheap for stocks from certain industry, or ROE of > 12% might not be high enough for certain industry. If we can compare the ratios with the firm's main competitors, I believe we can get a better/clearer view of the performance of a company.

Again, thanks!!

Hi kcchongnz,

Thanks for your comment below:

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Posted by kcchongnz > Jul 5, 2013 04:36 PM | Report Abuse

Posted by kcchongnz > May 27, 2013 11:43 AM | Report Abuse X

Posted by Tan KW > May 26, 2013 07:05 PM | Report Abuse
@kcchongnz how you get the WACC? need to calculate by yourself?

If a company has 200m equity and 100m debts and the cost of equity you use say 12%, and after-tax cost of borrowings at 7%,

WACC=200/300*12%+100/300*7%=10.3%.

I use 12% as my required return for investing in a company with ok but not so good balance sheet and cash flow. If they have healthy balance sheet and excellent cash flow, I may use 10%.


Invested capital you have to compute yourself:

It is IC=fixed assets+receivables+inventories-payables

Return in ROIC is Ebit*(1-tax rate)/IC
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For discussion purposes, here are my further questions:
1. When calculating WACC, we should use the company's cost of capital right? However, I understand it is not possible to know the cost of equity of the company unless we're the CFO of the company. Is my understanding correct? Or am I missing something here? If I am correct, then according to your method, you're making an assumption of 12% for cost of equity and this number can be different for each individual.

2. How do you know the cost of debt is 7%? It is another assumption or am I missing something again?

3. Since we're discussing about cost of capital, is there any website that we can get the beta value for each individual stocks listed in KLSE? The beta value is required to calculate an investor's required rate of return using Capital Asset Pricing Model (CAPM). I know i might be asking too much for a simple number, but just in case i'm missing something. :)

4. I've looked though a lot of your previous postings and I've found that you've used ROIC and sometimes ROTC. Is it just a typo or they are different things?

Again, thanks for sharing with us.

Hi kcchongnz,

Can I know how do you calculate WACC (Weighted Average Cost of Capital)?

Also, on ROIC (Return on Invested Capital), can I know where do you get the numbers for Invested Capital?

Thanks for your enlightenment.

You're right tonylim. Time to move on. :D

Unloading my toxic assets today after keeping this stock for more than 5 years. Have to stop the bleed. Anyone who is still bullish with this company can come and take them away.

WHAT??!! is the only word I have for KNM when I looked at the quarterly report just now. What a joke.

Check this out. http://www.stocks-unleashed.com/2013/05/scientex-current-price-rm426-target.html

Frying today. Hot, hot, hot...

Thanks for the info soosuan.

Does anyone knows the exact date of AGM?

No wonder share price suddenly went up so quickly in the past 2 weeks. Over efficient market?

Hi kcchongnz,

Have you look at Hartalega before? This is also one good company with good management and healthy growth prospect.

Thanks for sharing your knowledge in this forum. I believe many have benefited from your write-ups, including myself.

Cheers!!

Not me either. Somehow TSH never make it into my radar. Probably due to the balance sheet, cash flow and gearing ratio.

SOP on the other hand looks more like a well managed, on the right track kind of company. I would definitely prefer SOP as a growth stock. Even over TDM in terms of growth potential. However, TDM is cheaper and pays good dividend.

:)

kcchongnz, thank you for sharing your opinion about TDM (as well as on SCIENTX and KFIMA).

Like you said, I like TDM for it's FCF and healthy balance sheet. It is no doubt the cheapest plantation stock today.

For plantation stocks, I also think that SOP will be a good buy judging from it's mature and immature tree ratio. SOP still has a lot of room to grow it's revenue and profit.

Is TDM considered a hidden gem then?

I agree with diablo88. GPACKET has been turned into a bright stock to hold now.

'kin' in cantonese should mean REAL in english.

But I am a bit choosy. I hope not TM but DIGI to buy over GPACKET or it's P1 business. Haha.

Invested in the company for more than 3 years and this is the first time i visited their website to know more about the company. Not very wise huh...

Found this piece of information which i think would be useful to boost investor's confidence in the company.

"Our Story


The beginning of Green Packet is tied to one visionary man, Founder, Group Managing Director cum CEO, CC Puan. A graduate in Finance and Management Information System, a young CC Puan in year 1999, invested to set up a technology company with some partners in the Silicon Valley. That was during the dot.com prime where funding was aplenty and venture capitalists literally lined the streets. A year into business came the dot.com bust which greatly affected the Green Packet team. The then CEO decided to call it quits with funding dried up.

Green Packet was at the verge of resigning to oblivion if not for a very determined CC Puan. CC believed in the technology that the company was developing to meet a future need of anytime, anywhere connectivity'. He was also determined to sustain the employment of his hopeful and talented research and development team, some of whom were living in the United States on working visas.

Once he verified the business potential, he wrestled circumstances to keep the Company afloat. CC maintained the small R&D team in the US and moved the operation to Malaysia, at the heart of Southeast Asia. Not only was the costs of operation reduced substantially, CC refocused Green Packet's business on new emerging markets, namely China and Southeast Asian countries.

Within five years, Green Packet was listed on the MESDAQ market of the Malaysian bourse where the Company's market capitalisation peaked to RM 2.7 billion. Two years later in 2007, Green Packet transitioned to the Main Market.

To ensure Green Packet weathers economic changes and market volatility of the highly competitive 'solutioning' business, its Board of Directors and Management Team devised a 5-year business plan and strategy spanning from 2007 to 2011. The business plan and strategy comprise of product diversification, geographical diversification and the creation of a recurring revenue network operator business.

Four years into executing the Group's biggest transformation, Green Packet has emerged a fully integrated mobile broadband player anchored firmly on the two synergistic pillars of 'Solutions' and 4G Network Operator'. It has grown its business by a few respectable folds with operations in nine countries; the USA, Malaysia, Singapore, Taiwan, China, Australia, Bahrain, Thailand and Hong Kong. Green Packet currently employs over 1,000 'Packeteers'.


Greenpacket Solutions
Serves over 70 Operators in 40 countries.
World's third largest vendor of WiMAX devices.
Asia’s No.1 connection management software solution.

P1 4G, Network Operator & Service Provider
Greenfield Operator, commercial service launch in August 2008.
First in the Asia Pacific to deploy 802.16e 2.3GHz WiMAX, and amongst pioneers in the world. Serves 388,000 subscribers as at December 2011.
50% population coverage, to achieve 65% by end 2012.
Only WiMAX licensee in Malaysia authorized to deploy nationwide.
Further entrusted with additional 2.6GHz TDD/FDD spectrum by the Government.
Successfully acquired Singapore WiMAX spectrum license.
Technology and Strategic Partners: Intel and SK Telecom.

The Green Packet Group aims to build leadership in 4G mobile broadband, and by diligently executing on our business plan and strategy of our two core businesses of 'Solutions' and '4G Network Operator', will ensure high sustained revenue and healthy growth for the Company."

There is still the original Green Packet business if they really sell away the P1 business.

Let's see if volume sustainable tomorrow.

For a moment i thought they have finished minyak goreng at RM0.540 and now it's RM0.56. Looks like more to come...

Ok. Thanks for the info afifi.

Yes, this might be a good turn-around stock if they start making money in 2013.

Bill Gates have a share? Can you please elaborate further afifi?

I have held this share for more than 3 years. So, still making losses. Avg around RM0.80. So, waiting for it to recover. Yes, I am very careful on this RED report counter. :)

Still rallying. RM0.525 now. Gained +19% today. Any insider news?

GPACKET rallied from RM0.41 to RM0.50 in 2 days...As long as they can post positive profit and show investor the growth potential, this stock is going to shoot.