Superb!

25 % gross margin??? May yield 120 mil net profit per year..Harrty 30, 承你贵言。

SG leadership give lot of assurance to investors.

cheers! :-)

Hi Ezra, you know i always like to read how investment bank (IB) research on companies. All kinds of methods and angle to see a company. It will be silly for me to reply on IB 100%, but 70% is seriously NOT a bad idea. Some reports are real good. Some analyst are real superior. Cross reference is always the way to sharpen own skill ,self confidence and also serve as self-check.

IB is about reasonable return. They have boundary. Not too much risk, but reasonable return. If one has to follow IB, most likely they get that reasonable return too.

Second, I'm not good with numbers, so i go as simple as possible. Keep It Simple and Sensible. PE is the most simple, if no logic, go for PEG..if still no logic..go for DCF or others.. they are plenty of them. I have whole sheet of preset formula.

True enough. PE is very subjective. It is equal to "risk". Market give different PE for each stock for their own reason. That is basic. Some stock has PE of 2 but no people want it, there are stock at PE 100 (TMClife), people chase like hell. Market give different expectation, and there for give different PE. People pay different price for earning with one very common objective: If i pay this much, you better make sure you can earn even more, so that the price i pay is cheap.

But same industry, you tends to have good and bad. Industry PE is only applicable by compare good vs good. So, using one industry PE across whole industry can be dangerous.

Third, Value investing can be a value trap i.e. value can continue to deteriorate further. Eventually eat into your capital. Growth investing can be a pitfall i.e. when grow not materialize. Risk are totally different. So, is 10% ROI is bad, good or superior? That is why investor are subjective. Some are contented with 10%, some hope 8%, if you ask Icon, 50% is a failure to him. I say one. ha ha

Forth, Buying a growth at value, it is even harder to do than say. Because it really has not many such companies in bursa.

I'm very simple minded. Again, it is a matter of choice, It is like trying to save more vs trying to earn more.

It is not difficult to find 10% 20% or 50% ROI seriously. So it depends on at which level of entry price we go in.

When the fruit at lower level of a tree has been harvest by you and me (value investors), those late comer have to take a ladder to climb higher (growth investors), there is a risk to fall.

If the tree kena poison, than both value and growth also die. :-)

Dear Mr Ooi,

Is Gkent responsible for the PQ (started their role as PDP)?

Very interesting research by HLIB on Gkent:

http://klse.i3investor.com/blogs/hleresearch/101233.jsp

(1)Gkent financial year ended 31 Jan every year, which mean that we are now at FY 17)

(2) Based on the HLIB research, i extract the important forecast by HLIB:

"We forecast FY17 core earnings to scale a new high of RM52m (+29% YoY)

=> RM 52,000,000 / 300,400,000 = EPS 17 sen

For FY18, growth moderation is expected at +6% to RM55m as the LRT3 would have just commenced.

=> RM 55,000,000 / 300,400,000 = EPS 18.31 sen

Earnings growth will regain traction in FY19 (+17% YoY) to RM64m once the LRT3 moves into full swing.

=> RM 64,000,000/ 300,400,000 = EPS 21.3 sen

(3) above all EPS forecast has not included upcoming dilution from bonus issue.

(4) based on my personal estimated EPS is RM 0.22 sen per share. So, it did not run far from HLIB.

(5) I give PE 10 for construction stock, so RM 2.2 is my target price.

(6) HLIB give PE 14 for "FY 18 earning" (Jan 2019), so, RM 0.1831 x 14 = RM 2.56

(7) Add in 70 sen cash/ share = RM 2.56 + RM 0.70 = RM 3.26 (roughly)

(8) Let work backward using PE 14 for FY 17 HLIB forecast = 0.17 x 14 = RM 2.38

(9) Add back 70 sen cash/ share = RM 3.08 by FY 17 ( Jan 2017)

Point of consideration:

(1) PE 10 is cold eye standard for growth stock. For high growth stock, PE 12 to 15 maybe. Is Gkent a high growth stock?

(2) RM 0.70 per share cash. Can the RM 0.70 per share cash will become even more, or even less 3 years down the road?

(3) Should we include current cash into valuation? (HLIB regular practice)

Share investment is 25% art, 25% science, 50% bank push :-)

For value investor, PE 14 really can ar?

Speculator don't curse me, because this opinion is for value investors.

Congratulation if you have made money. You deserve it, because you take higher risk than me. I super timid now.

Very interesting research by HLIB on Gkent:

http://klse.i3investor.com/blogs/hleresearch/101233.jsp

(1)Gkent financial year ended 31 Jan every year, which mean that we are now at FY 17)

(2) Based on the HLIB research, i extract the important forecast by HLIB:

"We forecast FY17 core earnings to scale a new high of RM52m (+29% YoY)

=> RM 52,000,000 / 300,400,000 = EPS 17 sen

For FY18, growth moderation is expected at +6% to RM55m as the LRT3 would have just commenced.

=> RM 55,000,000 / 300,400,000 = EPS 18.31 sen

Earnings growth will regain traction in FY19 (+17% YoY) to RM64m once the LRT3 moves into full swing.

=> RM 64,000,000/ 300,400,000 = EPS 21.3 sen

(3) above all EPS forecast has not included upcoming dilution from bonus issue.

(4) based on my personal estimated EPS is RM 0.22 sen per share. So, it did not run far from HLIB.

(5) I give PE 10 for construction stock, so RM 2.2 is my target price.

(6) HLIB give PE 14 for "FY 18 earning" (Jan 2019), so, RM 0.1831 x 14 = RM 2.56

(7) Add in 70 sen cash/ share = RM 2.56 + RM 0.70 = RM 3.26 (roughly)

(8) Let work backward using PE 14 for FY 17 HLIB forecast = 0.17 x 14 = RM 2.38

(9) Add back 70 sen cash/ share = RM 3.08 by FY 17 ( Jan 2017)

Point of consideration:

(1) PE 10 is cold eye standard for growth stock. For high growth stock, PE 12 to 15 maybe. Is Gkent a high growth stock?

(2) RM 0.70 per share cash. Can the RM 0.70 per share cash will become even more, or even less 3 years down the road?

(3) Should we include current cash into valuation? (HLIB regular practice)

Share investment is 25% art, 25% science, 50% bank push :-)

For value investor, PE 14 really can ar?

Speculator don't curse me, because this opinion is for value investors.

Congratulation if you have made money. You deserve it, because you take higher risk than me. I super timid now.

Duit, thinking back, your above article maybe more relevant to your below scenario.

"taking advantage of retailer fearful mindset..人丢我丢。。自己吓死自己"

Initially i thought short sell = buy "short"


duitKWSPkita: YiStock...

Cannot mention 2 counters I meet up their Major shareholder (owner) frequently......... both also billion Revenue company with perfect CAGR for last 10 years.

Let give U clear historical example.
One stock use 1.5 year to climb from RM3.5 to RM4.5
on news they sell on news and owner press down to RM3.98 with small money but retailers panicking dispose and make it landslide to RM3.60.

Owner bought back big sum and the share price rise back to RM4.50 after 5 months.

Key points here: Last time use 1.5 yr to earn RM1... Now use 5 months gain bigger money (because shares unit become BIGGER). This is not the example of short selling but to share why "owner" wan to burn his own pocket money. In fact, what we see is because we never factor in timeline concept.

hmm... duit, understand. they are people like that. OK. Cheers

Duit, if point 2 is the key, if lender believe the counter will eventually show good figures, the share price will likely surplus RM 4 right? the paper value will be greater if not forcing (by short sell) the share price to dive. It is burn own pocket.

Hi Duit, based on your explanation above,

He has 368,500 shares which when share price at RM 3.85, the total value of the shares is RM 1,418,725

After whole short sell process, the same 368,500 shares now at RM 3.58, the total total value is RM 1,319,230

RM 1,319,230 - RM 1,418,725 = - RM 99,495 + RM 15,000 (profit sharing) = loss RM 84,495

Looks like the lender become "elder son".

Icon,you are the very daring one. :-)
Duit,doing very good ya..:-)

Way too challenging for me to understand the overall impact. Icon8888 will be able to understand the whole situation well.

ya.. is a matter of whole chicken, half chicken or quarter chicken

Any price increase passing to consumer will end up changing the purchasing behaviour and impact will then revert back to MFlour, i think that remained as a question mark.

kakashit, if 贵来贵卖, the same will apply to the farmer itself as cost may have increased (feed, etc)? It offset each other.

RicheHo, i'm NOT very familiar how the subsidy mechanism works. I'm just sharing my thinking.

(1) Is current flour revenue registered by MFlour is INCLUSIVE of subsidy, let say X? So by removing the subsidy X, consumers now has to pay for the X subsidized sum. To Mflour, is there any different?

or, is the revenue registered is NOT INCLUSIVE the subsidy? the story will be very different.

The key message i try to differentiate is: removing of subsidy vs removing of selling price ceiling.

(2) Mflour has RM 422 mil worth of USD short term loan, i think not easy to hedge. Or they may not be able to hedge properly. See the ratio of forex losses vs profit. Another big swing of forex may eat away all profit.


Very appreciate if you can help to verify this. thank you

Kakashit, the association has came out in newspaper to clarify that the price up is not at farmer level but on retail seller.

Hi Icon8888, i have been tracking this stock for several quarters, but still unable to open any position due to below reason:

1) I noticed this company USD debt in indonesia give significant impact (positive & negative) to the earning. Latest 2 quarter result has 22 million forex gain (Q1) & 5 million forex gain (Q2), coincidentally when rupiah appreciated about 6% and 4 % respectively. For Q3 (April to Jun), Rupiah did not change much. So, we can more or rest rule out the forex gain/loss. By taking out the forex impact, the core net profit for 2 quarters total at approximately 45 mil per quarter or 10.7 sen per quarter. If annualised it, will be 40 sen per year. But, there may be other factors as below.

2) i noticed the operating margin for property fluctuate a lot..in the region of 15% to 35%. This could be a significant factor.

3) For Q2 plantation segment, the "unusually" high revenue & operating profit could be due to the "stocking" up of the FFB/ CPO or the like in Q1 as indicated by the management. They may have take advantage of Q2 high CPO price and sold them, which lead to high income.

4) the recent purchase of agriculture land has further "assumed" more USD denominated debt.

5) the tree age are indeed in the high production age, but i suppose the high earning from plantation may be "normalized"

Just sharing some of my tracking data

Hi Mr tan, Please help update:

1) Gkent dividend 3.5 sen per share ex 8 July 16
2) please dispose 3850 TienWah-OR at RM 0.565 (last trading day closing price) and keep the cash.

Thank you

PETALING JAYA: George Kent (M) Bhd is eyeing opportunities from the UK and Europe to participate in rail road projects.

Chairman Tan Sri Tan Kay Hock (pic) said that it was still in the early stages but hoped to secure some projects there.

“It’s the rail road and construction sector we are looking at. We are already supplying meters to the UK as an original equipment manufacturer,” Tan told a press conference here after its AGM yesterday.

The engineering and construction company said that its order book stood at [RM5.5bil of which 20% is from the metering segment while 80% from the engineering business segment.]

-------------------------------------------------------------------------
Order book: RM 5.5 billion x 80% = RM 4.4 billion

LRT 3: RM 4.5 billion.

Most likely guesstimate:
(1) The Ampang LRT contribution should have ended and the billing is likely "in-advance" mode.
(2) Latest EPS may have already include a small portion of LRT3 project

170,000 MT is target. Another 30% capacity up from now.

Probability, women are more complicated :-)

It is the many many parts to put together to have a giant elephant. When one touch on one part of them, please continue to explore other parts too . A missed of any part will not make the elephant a complete and powerful one.

i also waiting.

I personally have confidence over the renewal of BAT contract. Let patiently wait for it.

Ezra bro, if there is balance sum to be recognized, that will be the "balance". Watch out ya. Cheers!

又过了几座山

very good info. thank you

and is unrealized RM 3.33 million.

ya..hope so..cheers!

Kimlun spending about RM 10 mil per year for 2015 as finance cost. It is time for them to start "aggressively" cutting the debt to add 10 more million into the EPS.

In Q1 2016, they repay RM 23 million of debt. I believe is among the biggest single sum of repayment in one quarter through out the history.

On item 5 of cash level drop. Not to worry too much as big chunck of it was used to lower down debt.

Include in the 3.2 mil forex loss, the result is great. Margin continue to sustain. Earning visibililty is intact.

Hi Ezra, when wb was above 2.4, it is already overvalued.

Multibagger, your calculation make every sense. Thank you for correcting me.

Multibagger, sorry, not sure with what you meant by same as the result is different. And 17,999 is already converted, therefore no need to reconvert to do calculation. I believe is double work.

Harryt30,

1) i think there is a typo mistake at last part, it should be 17,999 x 0.0909, not 0.909
2) i feel that your calculation method got some error. Of course, i'm not 100 % sure my method is correct.

When i estimate foreign currency risk, i will NOT use % of currency change to multiply direct with the net exposure. Instead, i use dollar and cents change

Please see below potential forex loss of Hevea due to positive dollar exposure.

RM 17,999 (carrying amount) x RM 0.39 change = RM 7,019 (my answer)

VS

RM 17,999 (carrying amount) x 9.09% change = RM 1,636 ( your answer)

See below:

RM 0.409 / 4.5 = 9.09%
RM 0.818 / 9.0 = 9.09%

both give same 9.09%. but different by 0.818 - 0.409 = 0.409 different x 17,999 = RM 7,361 forex gain or loss shortage/ different.

Therefore, i think is more accurate to use dollar and cents rather than using %.

Q4 2015 result was solid. Still, expect the unexpected.

chan, 6% is the % or margin. If the revenue registered is lower, i expect the quantum of impact to net profit will be greater. % margin and dollar value always not moving in tandem. That is the key risk. Also i'm refering to Q1 2015.

I only pray for 10 mil profit. Always expect the unexpected.

Anyway, just my guesstimate figure

if you use RM 160 mil as based case, that is additional RM 9.6 mil additional profit. Added up RM 4.6 mil of Q1 2015, that should work out at least RM 14.2 million profit.

the operating margin of Q1 2016 should be at least 6% better than Q1 2015

Q1 2016 is expected better than Q1 2015

further more, management already give very positive note to the result expectation

3. Tguan share price correction is not justifiable to me. But i suppose market always move in same direction generally.

2. I don't feel surprise with the SLP and BPPLAS price moving up simply because the PE has already corrected for past few months which i treat it as correction to the forex gain. Latest Slp and bplas core profit are actually good if not better. The share price should continue to move up as their expansion are not end yet.

Zeff, allow me to share my opinion:

1. all above companies i believe do have either both/negative foreign currency exposures along the way depending on the receivable/deposit/payable/loan. However, these company has demonstrated their ability to mitigate their net forex risk. We should feel safe to put our money with them.

Kakashit, can you keep track and share with us the monthly production of wtk so that can can see the trend. Thank you very much and appreciate that.