Bursa Malaysia (KLSE) Stock Investment Portal

2015-11-27 13:38 | Report Abuse

Padini's current quarter gross profit margin stands at 46% which gives them some room to maneuver in terms of controlling admin/staff expenses. I think that is why they can absorb the GST cost.

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Blog: Discount Cash Flow Analysis for V.S Industries kcchongnz

2015-11-26 20:58 | Report Abuse

I am actually surprised and delighted by the result as I do not expect profit to increase this much. Good job!

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2015-11-26 14:07 | Report Abuse

pisanggoreng, I would love to but I have yet to learn about DCF.

I do not know if using FCF or owner's earnings is more accurate to calculate IV using DCF method. But I do know in general FCF is used in calculating DCF.

I am merely seeking kcchongnz's view on substituting FCF with OE since VS's FCF is virtually non-existent as we can see from his examples above.

Cheers.

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Stock: [PWROOT]: POWER ROOT BERHAD

2015-11-25 17:43 | Report Abuse

Good result again! http://www.bursamalaysia.com/market/listed-companies/company-announcements/4930225

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Blog: Discount Cash Flow Analysis for V.S Industries kcchongnz

2015-11-25 10:09 | Report Abuse

From my understanding of FCF, it calculates the amount of 'free cash' generated from a company's own cash from operation after deducting CAPEX.

Whereas for owner's earnings, it has to include depreciation, amortization into calculation while deducting changes to working capital & CAPEX.

I think for a company that needs a lot of working capital, FCF will be low or non-existent.

There is actually an interesting discussion on whether to use FCF or Owner's earnings in DCF: http://www.oldschoolvalue.com/forum/discussion/970/when-to-use-fcf-vs-owner-earnings-in-dcf-analysis/p1

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Blog: Discount Cash Flow Analysis for V.S Industries kcchongnz

2015-11-24 22:23 | Report Abuse

kcchongnz, great article. Here's an idea (don't shoot me if it's stupid): How about replacing non existent FCF with owner's earnings? Although I have yet to try it, let me know what you think about it. Thanks.

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Blog: Nihsin growing itself into bankruptcy in the long term

2015-11-22 22:17 | Report Abuse

Nice article keep it up. I would suggest using the Altman-Z score to determine if a company will go bankrupt within 2 years time. Its accuracy since the 80s is roughly 90% so it should provide a better insight on this subject.

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2015-11-18 11:47 | Report Abuse

Like I said, if you think it's bad, you sell and move on. If you continuous promote SELL here, people will suspect you may have a motive to bring the price down and accumulate cheaply for your own benefit.

Posted by muscle > Nov 18, 2015 10:58 AM | Report Abuse

amresearch said result BELOW expectation

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2015-11-18 10:11 | Report Abuse

If you think it's so bad, then please sell and move on to next counter. If you still believe the fundamentals are strong with this one, I suggest you wait for the price to drop further before buying in more.

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2015-11-17 10:58 | Report Abuse

muscle, you mean the lottery or casino right? That should provide you ALOT of excitement!

Otherwise, why do you even buy into stock market?

Posted by muscle > Nov 16, 2015 08:47 PM | Report Abuse

Ppl are lookin at triple quadaple improved profit.. Not just 11% increase... No shiok at all

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2015-11-16 18:06 | Report Abuse

I think another factor is the EPS. Some people might just look at the EPS and think that it's a bad result. When actually if you adjust it to the bonus issue, the EPS should be 4.14 sen vs 3.73 sen for Q3, and 12.73 sen vs 10.68 sen for FY 2015-2014.

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2015-11-16 18:01 | Report Abuse

But then again, I'm slightly disappointed with the lower dividend payout. Which I think partly contribute to the drop in share price today as well.

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2015-11-16 17:59 | Report Abuse

Well I have already mentioned before that currency will play a part in the increase of cost for feed and it certainly did. But I must say the management did well enough to lower the impact.

Looking at the EPS, at first I thought we didn't do well enough. But then I remembered again that we have bonus issue of 1 for each existing 2 shares held. So we cannot look at the EPS only since it has not been adjusted for the bonus share.

When we look at Q3, Earnings Before Interest & Taxes (EBIT) stands at RM 13,409,000 compared to last year Q3 RM 18,255,000. Which is not good. But net profit is higher RM 11,972,000 compared to RM10,818,000 which is not too bad.

When we look at the bigger picture for 9-months FY 2015, both EBIT and net profit actually increased compared to 9-months FY 2014 by 1.8% and 10.8% respectively. Not too bad.

Gain from Forex this year amounts to a total of RM 4,858,000 and therefore I believe the management did well to minimize the impact from our currency situation. I think for the full year 2015 we should expect roughly the same result or slightly better from year 2014. But I would still again caution on the weakening ringgit.

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2015-11-15 10:55 | Report Abuse

Thank you all for sharing, very informative. I will have a look at the I3 'Portfolio' later.

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2015-11-14 10:54 | Report Abuse

leno, thanks for the advice! I will definitely start tracking from now.

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2015-11-14 10:26 | Report Abuse

sayakamiyuki you may find me in Telegram. ID: Shinado
Thanks.

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2015-11-14 10:21 | Report Abuse

BearbearDrop Some dividend return appears high as I am calculating based on dividend yield adjusted to the cost price. It may not be so high if we calculate based on trailing 12 month DY.

leno, that would require some work to do. I did not keep track on when I inject new cash into the fund or how much percentage of cash I hold for that certain year. I only keep track of my current cash holding %, the date I bought/sold a stock and the amount of units. But I would prefer not to disclose it. Cheers.

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2015-11-13 22:36 | Report Abuse

NOBY, thanks for sharing. Will look into it.

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Blog: Performance of fundamental investing in a down market kcchongnz

2015-11-13 14:06 | Report Abuse

azhakha, I really like GDEX & MYEG. They are in my watchlist. However, their valuations are not attractive at this moment. Looking at EV/EBIT or PE, it seems to be expensive at this moment. I will continue to monitor both closely.

Mikro MSC was only added recently and I do not see the need to remove it from my portfolio. As for Padini & Teo Seng, they are up for debate as I have been holding for a while (I still find they have good fundamentals). Thank you.

Posted by azhakha > Nov 13, 2015 12:11 PM | Report Abuse

my 2 cents:
add GDEX & MYEG
remove padini, teo seng & mikro msc

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2015-11-12 20:54 | Report Abuse

kcchongnz, well done! That is like a Berkshire performance! I am curious though, how do you calculate dividend for KLSE as 55?

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2015-11-12 14:57 | Report Abuse

ksng0307 I will look into it and maybe Google translate it? Haha. Anyway thanks alot.

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2015-11-12 14:36 | Report Abuse

kcchongnz, thank you for comment. I realize this method is considered outdated and therefore also use EV/EBIT to cross check with this formula!

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2015-11-12 14:33 | Report Abuse

For an example of using this formula, let's pick Panasonic. With this formula, I calculate the Intrinsic Value for the next 5 years at RM 19.11. Panasonic is trading at RM 22.10 now. So this means Panasonic is fully valued/over valued. But if I apply Margin of Safety 40%, this becomes RM 11.47. It is telling me that Panasonic is overvalued by a lot!

Another example, I calculated Scientex's intrinsic value for the next 5 years at RM 18.40, and price after Margin of Safety is RM 11.04. It is currently trading at Rm 7.70. It is telling me that Scientex is still undervalued at this moment.

But when I use this formula for a company with negative EPS growth over the 5 years, I get ridiculous value. Example, Fibon. It will tell me that it's valued at only 1 cent. Logically speaking, that's not going to happen.

So there are limitations to this formula. It can only be used for companies that have steady growth.

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2015-11-12 14:32 | Report Abuse

Hi ksng0307, I'm not sure if anyone is using it over an extensive period in Malaysia market. I do know that this was back-tested in US market using a paper portfolio by Old School Value:
http://www.oldschoolvalue.com/stock-screener.php

Testing period of 1999-2014 gives a total return of 576.45% or annualized return of 12.7%.

I have just been using it for over 2 years. It's not a long time frame, so who am I to say that it's effective? Anyway, I believe that valuation is useless without good fundamentals anyway. So pick a good fundamental company and go with whatever valuation method you like.

Posted by ksng0307 > Nov 12, 2015 02:07 PM | Report Abuse

Is Benjamin's method (which was written many years ago) still workable nowadays? Also, is the method suitable in Malaysia market, Shinado, can you please share from your experience using this valuation method, anyway, thanks for your valuable write-ups

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2015-11-12 13:33 | Report Abuse

Hi Ezra_Investor, thank you for your feedback.

I am amazed at how Cold Eye's 5 yardsticks method is simple and effective. As for my method, I know it's complicated but at least I am comfortable with it.

As your suggestion, I might consider it for future use. But first, must learn about DCF.

Posted by Ezra_Investor > Nov 12, 2015 01:27 PM | Report Abuse

Just my 2 cent opinion, actually, no need to be so complicated.
Why? Because complicated does not mean effective. Especially in investing, you'd want to be as simple as possible, otherwise you'll have hard time keeping track of the companies you buy.

I suggest just use Cold Eye's 5 yardsticks, it's a simple but effective method.

If you want, you can add an additional few stuff like DCF and EV/EBIT, and a few, but that's all.

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2015-11-11 22:18 | Report Abuse

HJey, I have a few Uniqlo shirts too and quite frankly I like them as well.

I agree when you mentioned business cannot be measured on any investment jargon alone. After all, how do you valuate a brand name like Coke? It is a very valuable intangible asset that you can never put numbers in a financial sheet.

But investing methods come in many different ways and approach. I take the approach that best suits my risk of appetite and style of investing. I want to invest knowing that I will not lose sleep even if the market crash tomorrow.

I am not a business man and certainly might not have a great eye on knowing which business is good or bad. But at least I can partly rely on financial reports to aid me in making a decision on what company to invest in.

Posted by HJey > Nov 11, 2015 07:35 PM | Report Abuse

Uniqlo is better for a good very good reason. If you think from retail business perspective, you will know the answer.

There are many strategies to grow sales & Padini is using the least favourable option. You don't measure a business from no. of outstanding shares,PE or any investment jargon

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Stock: [MAGNI]: MAGNI-TECH INDUSTRIES BHD

2015-11-11 12:59 | Report Abuse

valuelurker, for your comment on 5 year past analysis, kcchongnz already have analysis for Padini's last 10 financial years. I have already link his post on my post above.

As for your comment on point no. 2, perhaps you might be interested to find out the average profit margins in the apparel sector. L.C.Chong did a apparel industry peer comparison: http://www.slideshare.net/lcchong76/apparels-peer-comparison

Obviously that comparison did not include H&M or Uniqlo because his comparison is more in depth and we are lacking in depth financial reports for H&M & Uniqlo.

To conclude that 11% profit margin as "appalling" seems to be unfair to the apparel industry as a whole. I would suggest that you reserve such conclusion until Uniqlo has actually been around for a few more years and we can truly judge its profit margins with the rest of the group.

I do realize that we are looking at the same coin but on different sides of it. Perhaps it's best I just leave it as it is. Thank you.

Posted by valuelurker > Nov 11, 2015 12:32 PM | Report Abuse

2.) In current state Padini has the very slight advantage in profit margins.

As I said, new players will always incur huge costs. 11% for a business that has had so many years of advantage is appalling.

3.) There is heavy competition in the retail industry. Apart from Padini & Uniqlo, there's also H&M, Zara, Giordano, Cotton On, Mango, G2000, Voir, Kitschen and many many more. Each caters to their own customer needs and wants.

Exactly, you said it yourself. They will only suffer.

Stick to the facts and look at the trend, since 5 years ago not do a comparison since last year. Also for Uniqlo using Wing Tai's numbers. Then you shall see. 3 years is not a long time, and then it is all the way down hill. The only recourse is that you get 6% dividends - the next question would be how much erosion in share price and MOS are you willing to take on, to still get your required IRR. Not much I reckon

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2015-11-11 12:19 | Report Abuse

RosmahMansur any idea why suddenly Magni shoot up by 5% at noon? This morning still trading at less than RM3.80. lol.

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2015-11-11 10:32 | Report Abuse

valuelurker, I admit that as someone holding Padini, my comments and views might tend to be bias. But the figures and numbers that I present in this post is just facts.

You may choose to disagree on my views, but I do hope you agree with me the facts below:

1.) Uniqlo indeed does need a few good years playing catching with Padini in terms of Revenue.
2.) In current state Padini has the very slight advantage in profit margins.
3.) There is heavy competition in the retail industry. Apart from Padini & Uniqlo, there's also H&M, Zara, Giordano, Cotton On, Mango, G2000, Voir, Kitschen and many many more. Each caters to their own customer needs and wants.
4.) And in such competitive market, one have got to do what it takes to survive. Even including opening stores in small towns.

Let's agree to disagree on the rest. Thank you.

Posted by valuelurker > Nov 11, 2015 09:39 AM | Report Abuse

You own the stock, that's a bias, and you see what you want to see.

Padini only survives because it is in the smallest towns. And they have been in MY for how long? Uniqlo is an infant, and already its revenues are almost 50% of Padini. And its Margins? IT has expanded so aggressively, its amazing it is making money - of course, like I mentioned earlier, its margins are superior, bar none.

VAlue investing is for the long term and in 3-5 years, Padini is already in decline, and in 5 years it will be far worse.

Good luck holding

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2015-11-10 16:01 | Report Abuse

Wing Tai owns 45% of Uniqlo. Frankly speaking, I do not know how to tag a stock to this post. I'm not even sure who put the labels for Yong Tai.

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2015-11-10 11:56 | Report Abuse

mason, I cannot disagree with your view on Uniqlo. After all, Uniqlo is japanese brand and the japanese tend to be a trend setter. I have Uniqlo clothing too, but mostly wear it for parties or fancier events.

As of now, I still wear Padini. For work, hanging out, run errands, or just at home. Affordable and comfortable enough is how I would describe their shirts.

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2015-11-10 09:09 | Report Abuse

JT Yeo, thank you for sharing an interesting article.

I quote from the article:

"How do Uniqlo, Zara and H&M do this? An all-important shared pursuit of the three companies is a deep understanding of their customers’ wants and needs. "

and:

"The bottom line is this: In today’s highly competitive retail environment, regardless of approach, it’s critical to know how consumers will react to products well before they’re launched."

I fully agree that knowing what your customer wants and needs is important. Each company have their own target audience in the market, and successful in their own ways.

Padini, being the local player, have the earlier head start and most likely the biggest share of the pie. I think it will remain the same for some time to come.

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