Posted by wayne1982 > 2013-01-22 14:39 | Report Abuse

I still prefer KFIMA due to its low gearing, cash rich... Pantech has the potential to grow big in future. Prestariang, I am still watching it

Posted by JASON80 > 2013-01-22 14:40 | Report Abuse

yes pantech is a good stock . redtone too

Posted by kcchongnz > 2013-01-25 22:08 | Report Abuse

Fundemental analysis and my portfolio. The stocks in my porfolio are really nothing to shout about. Non of them yields anyone quick profit. In fact most of them are illiquid and lethargic in the performance of their share price. However I would like to share with you why those stocks are chosen. Another purpose is that I hope to get critical feedback on my process of investing so that I coud improve it. There are a few criteria for the selection of the stocks; growth, profitability, financial health, cash flows etc. We wil start with the one most people are familiar with; profitability in term of return of equity (ROE). I believe anyone who wish to do a business would like to know how much profit can be generated from the buisness in relative to the amount of money he puts in. Stock investment is the same; what is the net profit from the equity invested in the business? ROE is made up of three components, we will carry out an analysis call Dupont analysis on the ROE:
ROE=Net income/Equity
=net income/sales*sales/total assets*total assets/equity
=net margin*assets turnover*financial leverage

Hence the higher the net margin, the higher the assets turnover(more sales related to assets), and the higher the financial leverage, the higher the ROE. Of course company would prefer to achieve higher ROE with relatively higher net profit margin and asset turnover. Increasing financial leverage can improve ROE by a great deal but it can cut both ways; when times are good, leverage amplifies ROE, but in bad times, it can hurt ROE badly, besides too much leverage (like having too much debts) can make a company risky in bad times.

Take for Kumpulan Fima, ROE=net margin*assets turnover*leverage
ROE= 24.8%*0.52*1.2=15.5%
ROE of 15.5% is good as the equity in the company earns 15.5% (>15%). ROE is achieved with relatively high net profit margin (>>10%), and low financial leverage (<2). However its assets turnover seems to be unsatisactory at <<1.5. However if one looks closely at its balance sheet, it has a huge amount of excess cash of 270m which skews its total assets. We will discuss further on another metric, return of invested capital which whould be a more appropriate metric to measure efficiency later.

In conclusion, Kfima has a good business with a good ROE achieved with excellent high profit margin with low financial leverage. Kfima has the potential to improve its ROE with higher asset turnover, such as more investment in capex in its various business, improves sales, and maybe alter its capital structure to increase leverage which it can easily afford.

Any comments? Anybody interested in this analysis for other stocks?

Posted by necro > 2013-01-25 22:17 | Report Abuse

Kk mind share intrisic value of stock in klci..
Digi n maxis..

Posted by kcchongnz > 2013-01-25 22:30 | Report Abuse

necro, sorry I have not study these two stocks before. Lets consult those who know better. One person I know who can answer you is KC Loh for Digi. For Maxis, I would like you to refer to this blog.
http://www.intellecpoint.com/search?q=maxis
But the discussions on this blog is more of valuation rather than operation eficinecies. Valuation is very important too but we will discuss it separately, if anyone interested.

Posted by necro > 2013-01-25 22:48 | Report Abuse

I just want to reconfirm my analysis to buy those 2stocks,which DIGI@below 4.25 and MAXIS@below 5.93...because at that price is the fair Value of those stocks using 25%discounted IF & 33% 52WEEKS HILO DIFFERENCE..

Posted by kcchongnz > 2013-01-25 22:53 | Report Abuse

necro, that sounds like Fibonacci (hehe just try to sound as if an expert, but is it Fibonacci?). This got to consult people like OTB already.

Posted by necro > 2013-01-25 23:01 | Report Abuse

I dunno wat d name just read books HOW TO MAKE MONEY FROM YOUR STOCK INVESTMENT EVEN IN FALLING MARKET...
It just wrote how to VALUING STOCKS USING THOSE METHODS..

Posted by kcchongnz > 2013-01-26 13:07 | Report Abuse

How is the operating efficiency of Kimlun?

ROE=Net income/Equity
=net income/sales*sales/total assets*total assets/equity
=net margin*assets turnover*financial leverage

ROE=6.5%*1.27*2.38=19.7%

ROE is high at 19.5% (>15%) achieved with reasonable asset turnover of 1.27 and a relatively high leverage of 2.4. However net profit margin, like most construction firm, is low at 6.5%. The most recent debt-to-equity ratio has increased to 0.6, which is still manageable as it is still below 1. EBIT is 20 times interest payment and hence still ok. The main problem with Kimlun is its cash flows. Due to its recent expansion and award of many jobs, much cash is tied up to its property development, receivables and other current assets, coupled with heay capital expenses. Kimlun must exercise great effort to improve its cash flows.

Posted by Ooi Teik Bee > 2013-01-26 14:51 | Report Abuse

Dear necro,

I cannot understand your question. Please be specific.

Thank you.

Ooi

Posted by KC Loh > 2013-01-26 19:32 | Report Abuse

you got to ascertain what is your discount rate first, necro

Posted by KAHFIEHLAI > 2013-01-26 20:31 | Report Abuse

Kcchongnz
u 2 holding marco warrants. I have long holding both mother & warrants.I like them.
Mother laying div. egg to me yearly and warrants is cheap and may be able convert to underlying at premium soon. Good

Posted by kcchongnz > 2013-01-26 21:47 | Report Abuse

KAHFIEHLAI,
Yeah I got interested in Marco when tonylim posted it as a value stock less than 50 sen. It has some good operating numbers. I bought the warrant instead as at 4 sen when the mother share is 14.5 sen now, it is trading at a discount of 3.5%. With 16 more month to expiry, it is strange that the warrant is traded at discount. Even if one buys it at 4.5 sen, there is still no premium. Moreover there is a nice gearing of 3.2 times. I hope to ride on the rise of Marco share with these warrants.

Posted by KAHFIEHLAI > 2013-01-26 23:07 | Report Abuse

I have holding mother stock over log time. It regulary paid valued worth dividend. Don't u think is good/better to go for mother share?

Posted by skyland > 2013-01-26 23:22 | Report Abuse

marco is a good dividen counter but too slow on return...better keep your eyes on ivory, amprop & l&g

Posted by hawk > 2013-01-26 23:23 | Report Abuse

Better news in EU

http://www.malaysia-chronicle.com/index.php?option=com_k2&view=item&id=48361:euro-tensions-fade-as-banks-repay-ecb&Itemid=3

Posted by kcchongnz > 2013-01-27 11:21 | Report Abuse

KAHFIEHLAI, depending on individual. If you want dividend, it may be better to hold Marco shares as the dividend yield is high. For me I prefer the warrant simply because there is no premium at 4.5 sen. This means I get free time value of about 6 sen for the warrant which has another 16 months before expiry using option pricing model. If I were you say holding 100000 shares of Marco I would sell then at 14.5 sen and buy 100000 shares of the warrant at 4.5 sen. I will have a net RM10000 in my pocket to do other things, such as investing n another value stock. I stil enjoy exactly the same upside potential of the holders of the mother share. If one day Marco declares a good dividend and there is still no attractive premium, I can still convert the warrant to mother share and enjoy the dividend. If there is good premium of the warrant then, I sell off the warrants and buy the mother shares and enjoy the dividend. If say something seriously gone wrong with Marco, the most I lose is the RM4500, not RM14500 you have in the mother share now. The interesting thing is that the option is in my hands. I can choose whatver way to enjoy the best benefits. And mind you, option has value.

Posted by petepereira > 2013-01-27 11:49 | Report Abuse

kcchongnz, you must be a mind reader! I was going to ask your help with understanding ROE ratios before deciding to invest in a couple of counters but your 10.08pm post of 25/1 answered before I could ask.
Thank you for that

Posted by kcchongnz > 2013-01-27 12:14 | Report Abuse

petepereira, Despite you being a newbie in investment as claimed by you, you got interested in ROE, the most fundamental metric one must know very well before embarking himself in equity investment. Good on you. I must say this is a very rare case as very few people are interested. By the way, have you bought the book by Pat Dorsey as recommended by reyes430 some time ago. You must read that book, for a few times, practice and do it before you can be good at investment. I am not talking about trading here. The following saying is for you.
“How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.”
- Robert G. Allen

Posted by tonylim > 2013-01-27 12:50 | Report Abuse

Pete, I must remind you our Bro kcchong is the great sifu in i3.
A man with great learning capability, engineer by profession with post graduate degree in accounting and financials.
Humble, simple and with great humility.

Kudos Sir. May you have a great year 2013 with abundant returns and dividends.

Posted by petepereira > 2013-01-27 12:58 | Report Abuse

kcchongnz, I did buy the Dorsey book but my interest was 'hijacked' at the same time by another book titled 'Your Money and Your Brain' by Jason Zweig. This really appealed to my interest in investing from the perspective of neuroscience and human behaviour. So, I'm reading that now. There's an on-line course that I'm following as well currently called 'Think Again:How to Reason and Argue'. I'm mentioning this because much of it deals with the type of language that typical con-men and spin doctors use. It is very interesting especially when I see it in the context of some posts on the i3 forum. Let's just say that not everyone is driven by altruistic intentions!

Posted by petepereira > 2013-01-27 13:00 | Report Abuse

tonylim, I wish you a 2013 of abundance that far exceeds your expectations!

Posted by tonylim > 2013-01-27 13:05 | Report Abuse

Pete, go for a workshop in NLP.
Thanks for the wishes.

Is "think again" avail. in hard copy?

Posted by petepereira > 2013-01-27 13:11 | Report Abuse

tony, it's a free on-line course that's delivered through video lectures and assignments. Go to this site: www.coursera.org and you'll find a whole lot of free courses that are really fascinating. Sigh....so many exciting new things to learn, so little time...

Posted by KAHFIEHLAI > 2013-01-27 16:49 | Report Abuse

Dear kcchongnz
Thanks alot. I got the picture clearly..Is great and decision power is on our hand..Once again thanks to learn so much from u.

Posted by KAHFIEHLAI > 2013-01-27 20:39 | Report Abuse

Dear kcchongnz

Refer to your post

ROE=Net income/Equity
=net income/sales*sales/total assets*total assets/equity
=net margin*assets turnover*financial leverage

ROE=6.5%*1.27*2.38=19.7%

Where can I get the figures of net margin/assets/financial leverage?

Thanks
lai

Posted by kcchongnz > 2013-01-27 21:10 | Report Abuse

ROE=net margin*assets turnover*financial leverage
=net income/sales*sales/total assets*total assets/equity

By some simple maths, you can see ROE also equals to net income/Equity

The individual items can be obtained or from some simple computation from the income statement and the balance sheet.

Does the above help, lai?

Posted by necro > 2013-01-27 22:20 | Report Abuse

Dear PROs...
Where can i found website that show INTRISIC VALUE of STOCK in KLCI...
Or you can show me INTRISIC VALUE for;

MAXIS
DIGI
GASMALAYSIA
PUBLICBANK
MAYBANK
CIMB
IGBREIT
KULIM
TDM
DAYA
AJINOMOTO
APOLLO

Tq pro..

Posted by necro > 2013-01-27 22:22 | Report Abuse

And POS...
Not to forget POWEROOT,OLDTOWN and BJFOOD..

Posted by necro > 2013-01-27 22:29 | Report Abuse

And Cuscapi...

Tqvm..

Posted by kcchongnz > 2013-01-27 23:09 | Report Abuse

Return of equity: Pintaras Jaya Vs Kimlun
There are a few criteria for the selection of stocks; growth, profitability, financial health, cash flows etc. We will start with the one most people are familiar with; profitability in term of return of equity (ROE). I believe anyone who wishes to do a business would like to know how much profit can be generated from the business in relative to the amount of money he puts in. Stock investment is the same; what is the net profit from the equity invested in the business? We will analyze the ROE of two construction companies, Pintaras Jaya and Kimlun.
By definition, ROE=Net income/Equity, Net income is obtained from the bottom line in the income statement, and equity is given from the balance sheet. For net income, we have to do some normalization such as discarding one off item such as extra-ordinary gain/loss, gain/loss from foreign exchange, change in fair value of unit trusts (especially relevant for Pintaras Jaya) etc which is not recurring in nature.
Below is the table showing the net income (NI) and equity of Pintaras for 2009-2012 in thousands, and the computation of ROE. For this purpose, the return and equity are both the end-of-year values. Note some people may use the equity as the beginning-of-year or some the average of both years.
Table 1: ROE of Pintaras Jaya
Year 2012 2011 2010 2009
NI 42,149 25,682 20,737 16,053
Equity 237446 219835 190230 175498
ROE=NI/Equity 17.8% 11.7% 10.9% 9.1%

The ROE of Pintaras has been consistently above my minimum requirement of 10% for construction companies. There is in fact a rising trend of ROE for the last 4 years, increasing from 9.1% to 17.8% in the most recent year, which is a very good sign. Let’s look at the ROE of Kimlun as shown in Table 2 below:
Table 2: ROE of Kimlun
Year 2012ttm 2011 2010 2009
NI 48669 42676 36559 31527
Equity 262909 216143 184403 104954
ROE=NI/Equity 18.5% 19.7% 19.8% 30.0%

ROE of Kimlun has been close to 20% for the last 4 years, appearing to be better than Pintaras Jaya, or is it? We can’t really pass a good judgment yet until we analyze how their ROE comes about. To do this, we shall dissect the ROE and see what drives this ROE by the DuPont Analysis.
ROE is made up of three components as shown below:
ROE=Net income/Equity
=net income/sales*sales/total assets*total assets/equity
=net margin*assets turnover*financial leverage


Hence the higher the net margin, the higher the assets turnover (more sales related to assets), and the higher the financial leverage, the higher the ROE. Company would prefer to achieve higher ROE with relatively higher net profit margin and asset turnover. Increasing financial leverage can improve ROE by a great deal but it can cut both ways; when times are good, leverage amplifies ROE, but in bad times, it can hurt ROE badly, besides too much leverage (like having too much debts) can make a company risky in bad times. Table 4 and 5 below shows the DuPont Analysis of Pintaras Jaya and Kimlun respectively.
Table 4: DuPont Analysis of Pintaras Jaya
Year 2012 2011 2010 2009
1 NPM 22.8% 20.4% 19.6% 12.3%
2 AT 0.61 0.48 0.49 0.61
3 F. Leverage 1.27 1.19 1.13 1.22
ROE=1*2*3 17.8% 11.7% 10.9% 9.1%

Table 5: DuPont Analysis of Kimlun
Year 2012ttm 2011 2010 2009
NPM 5.7% 6.5% 6.9% 7.2%
AT 1.25 1.67 1.78 1.47
F. Leverage 2.59 2.38 2.12 2.83
ROE 18.5% 25.9% 26.1% 30.0%

It can be seen that Kimlun’s higher ROE is achieved with much higher asset turnover (AT) and financial leverage. But does it matter if it is a black cat or a white cat, as long as the cat catches mice? Sometimes it doesn’t but most often it does. I have mentioned before this Dr Chiu of Pintaras chooses and picks his jobs. He only does easier foundation jobs with less risk, and of course with higher margin as you can see. Also Pintaras has no debts at all. That should explain its lower asset turnover and much lower financial leverage. Kimlun has been announcing multi-million jobs secured recently. It also has quite some debts, 151m, or a debt-to-equity of 0.6, still manageable though, in the most recent balance sheet. That should explain its higher asset turnover and higher financial leverage. Which company would you prefer; one with good margin jobs and able to focus on delivery, no worry of debts, and in fact can distribute all its excess cash of RM1.70 per share without affecting its ordinary business; or one with a lot of jobs and worry of timely delivery and profitability, and construction jobs always come with heaps of problems, and with some debts which you have to worry of paying interest and principal? You tell me.
Mind you we just discuss about operational efficiencies. We have not considered growth, financial health, cash flows and most important of all, valuation yet.

Posted by KAHFIEHLAI > 2013-01-27 23:12 | Report Abuse

Dear kcchongnz
I got it. Thanks once again.

Posted by necro > 2013-01-27 23:27 | Report Abuse

Kcchong pls explain bout valuation...

Posted by pathew > 2013-01-27 23:49 | Report Abuse

Excellent sharing... Time to read other financial reports and calculate the ROE too:)

Posted by necro > 2013-01-28 00:05 | Report Abuse

Zzzzzzzz......

Posted by kcchongnz > 2013-01-28 21:50 | Report Abuse

Posted by necro > Jan 27, 2013 11:27 PM | Report Abuse
Kcchong pls explain bout valuation...

necro, valuation is an art. There is no absolute value. This is because different people use different data and assumptions and various methods to obtain the fair value of a stock. I will show you one method which is simple but to me is a very powerful valuation method. The method is based on the net asset backing (NAB) per share and the return of equity (ROE).
In my last post, Pintaras has a ROE of 17.8%. Its NAB is RM3.00. Lets say my required return investing in Pintaras is 10%, ie 6% risk premium over the MGS rate of 4%. How much am I willing to pay for Pintaras? For me I am willing to pay 17.8%/10%*RM3.00 or RM5.34. Can you see the ogic I used? Any comment?

Posted by yfchong > 2013-01-28 22:00 | Report Abuse

Some thing supportive,

Posted by KAHFIEHLAI > 2013-01-28 22:21 | Report Abuse

wow..Zzzzzz also can read & calculate..great Necro salute u

Posted by kcchongnz > 2013-01-28 22:29 | Report Abuse

Prestariang, a high return of equity
Prestariang is a highly synergistic ICT service provider
which specializes in wholesale training and certification
of softwares. It has a very high ROE of 50.4% achieved with high profit margin of 30.1%, asset turnover of 1.3 and financial leverage of 1.3. Its NAB per share is just 30 sen. It has huge intangible asset in human resources, business connections, branding etc which is not reflected in its balance sheet. How would you value Prestariang using ROE?
Again using a required return of 10%, the fair value of Prestariang would be RM1.50 (50.5%/10%*RM0.30).

Posted by skyland > 2013-01-28 23:11 | Report Abuse

kcchong...prestariang a bit risky now if change gomen after GE sure drop coz the contract in hand majority from gomen...if open tender implement by new gomen...will not monopoly the game...careful

Posted by ferrarimaker > 2013-01-29 00:16 | Report Abuse

Hi KC Chongz,
Please allow me to give you many thumbs up for your analysis and clear explanation on ROE. I am wondering whether is there a way to tweak the ROE to looks good? For example, distributing dividend driving down the asset denominator but of course, a company can't really do that without solid cash flows. Companies such as Dlady and Nestle is able to maintain high ROE for many years.

Another question is, I still couldn't get how you come up with the fair value? Would you mind to explain more on the formula and the rationale behind it?

Million thanks on your unselfish sharing. Salute!!

Posted by kcchongnz > 2013-01-29 12:29 | Report Abuse

ferrarimaker, you are right. ROE can be tweak, for example paying huge amount of dividend, share buyback in huge amount and hence lower the equity boost ROE artificially. Some companies suddenly write off of assets value also artificially boost up ROE. Company can also realize one time non-recurring big gain to boost the numerator and hence ROE. That is why understanding the financial statements is very important.

Regarding the rationale of valuation using ROE:
Say you are invited to buy over half of a business with a capital of RM200000. You are happy to get a return of 10% a year. In this business, you are promised to get a return of 15% a year. This work out to be RM15000 a year for your half share. So you may be willing to pay 15%/10%*100000=RM150000 to buy over the half share of the business. This is because with a capital of RM150000 in, you earn RM15000 a year, that is the 10% return you wanted in the first place. Clear?

Posted by kcchongnz > 2013-01-29 13:08 | Report Abuse

ROE as a guide for sustainable growth of a company.
Often you can read analysts reports promoting certain stock with high PE ratio, saying that this is because of the expected exponential growth rate of this company, "25% growth for the next 10 years", which warrants this high valuation. How do we check if this growth projection is realistic and sustainable? One way is to look at its ROE and dividend payout ratio. A low ROE and a high dividend paying stock cannot grow above the rate below without taking more debts, issuing more shares etc:
Sustainable growth rate=ROE(1-payout ratio)
For example it is highly unlikely Kimlun can grow above say 15% as the sustainable growth rate =18.5%*(1-20%), or 13%, assuming payout ratio=20%.
To do that Kimlun must be more efficient, borrow more money but doing so may cause the stock becoming more risky as its debt-to-equity ratio is already not low at 0.6. Issuing more shares will dilute earnings. Another way is to do away with dividend payment but investors may not be agreeable with it. Can still do these but there is a limit to it.

Posted by necro > 2013-01-30 11:48 | Report Abuse

Posted by kcchongnz > Jan 28, 2013 09:50 PM | Report Abuse

Posted by necro > Jan 27, 2013 11:27 PM | Report Abuse
Kcchong pls explain bout valuation...

necro, valuation is an art. There is no absolute value. This is because different people use different data and assumptions and various methods to obtain the fair value of a stock. I will show you one method which is simple but to me is a very powerful valuation method. The method is based on the net asset backing (NAB) per share and the return of equity (ROE).
In my last post, Pintaras has a ROE of 17.8%. Its NAB is RM3.00. Lets say my required return investing in Pintaras is 10%, ie 6% risk premium over the MGS rate of 4%. How much am I willing to pay for Pintaras? For me I am willing to pay 17.8%/10%*RM3.00 or RM5.34. Can you see the ogic I used? Any comment?

Posted by kcchongnz > 2013-02-01 14:31 | Report Abuse

I hope you guys don't accuse me for talking about Kfima again below as my purpose is for discussion on something I thought is an important thing about investing in a company, not for peddling about the stock.

Free Cash Flows (FCF) as a guide of operating efficiency and moat of a business
Many investors focus too much on earnings while ignoring the "real" cash, the cash flows from operations (CFFO) that a firm generates. Earnings are not cash a firm receives as they could be in the form of receivables; amount customers owe or claimed to be owed to the firm; or the firm may have to increase its inventories because of the nature of its business. Do you want to invest in a business which your business partner keeps on telling you that the business is making profit, but you have to put in more money because the profit earned is not enough for the expansion of the business for another 5 years, 10 years or maybe perpetually? Or would you prefer to invest in a business and shortly you receive dividends and never have to put in more money? Earnings can also often be clouded by accounting gimmicks, but it's tougher to fake cash flows, the “real cash” a firm receives from customers and pays out to suppliers and creditors each year. Hence if one is interested to invest in a company with is money at risk, it pays to check if the earnings are “real”. Don’t you agree?

For the illustrations of cash flows, I would take the example of Kumpulan Fima. Table 1 below shows the CFFO and FCF of Kfima and compared to its net income (NI) and revenue for the last 5 years.

Table 1: CFFO and FCF of Kfima
Year ended 31/3/11 2012 2011 2010 2009 2008
CFFO 132346 139552 116823 59792 67049
Capex -26434 -24022 -19500 -23826 -32009
FCF 105912 115530 97323 35966 35040
FCF/Revenue 22% 27% 24% 10% 11%
CFFO/NI 114% 130% 135% 85% 155%

The table shows that Kfima is able to consistently generate CFFO for its operations, not just the illusive earnings. As CFFO is also consistently above the NI, it shows that every ringgit of earnings is real and translated to hard cash. After allowing for capital expenses necessary for maintaining its competitive edge and for future expansion of the ordinary business, FCF left behind is abundant at more than 100m a year for the last 3 years. FCF is important because it allows a company to pursue opportunities that enhance shareholder value; to develop new products, make acquisitions, pay dividends and reduce debt. For the last 5 years, FCF has been consistently above 10% of revenue, up to more than 20% for the last 3 years. This is also reflected in the continuous improvement of the balance sheet. This is a feat hard to find in a public-listed company in Bursa.
Wouldn’t you think it is safe to invest in a company like Kfima which has consistently shown its business moat and operating efficiency as reflected in its cash flows, and yet selling at an undemanding valuation?

Posted by reyes430 > 2013-02-01 14:53 | Report Abuse

thumbs up for Kcchong, i love how you explain about sustainable growth rate! thanks =)

Posted by investor77 > 2013-02-01 15:52 | Report Abuse

Kcchongnz, you have really done a wonderful job of explaining why ROE, and Free Cash Flow is impt in analysing Companies.

With that in mind, if you done mind, please share the listed companies that you think have lots of potential, besides K..Fima, Pintaras.

Is DRB, Air Asia,Ornapaper in your list ? What do you think of companies that have spent millions to upgrade their plants, but sadly do not give any dividends,e.g. Orna.

Thank You.

Posted by kcchongnz > 2013-02-01 17:05 | Report Abuse

investor77, there are too many companies in Bursa to analyze and it is beyond me as an individual investor to do. Those companies I have done are listed in this thread above. I have done some other companies too but you must understand the limitation I have. One way one can screen companies to analyze is through some of the threads here. If a company discussed appears to have potential to have extra-ordinary return, then only I go ahead to analyze it. Detail analysis takes time. Again you must understand a seemingly good fundamental stock may not make you rich by investing in it, especially for the short term.
For AirAsia I have looked at it before. I didn't like it initially because I simply did not like the industry and AirAsia like other airlines, have not produced any free cash flows for years until last year, when shareholders appear to see the fruits of their investment. Its operating efficiencies in terms of ROE, ROIC etc also appeared to be fairly good now (>15%). Is it a turn for the better for AirAsia? It does appear so. But will the impending entry of other low cost carrier such as Malindo (?) affects its business? I don't know.
DRB is a highly politically intertwined company which I don't like to invest in. It has extremely high debts with debt more than three times its equity, and high solvency risks. ROE has been low at 5.2% achieved with low profit margin (5.8%) and low asset turnover (0.17). It has huge amount of assets, that is what I have read, but I am not sure this whole assets belong to the minority shareholders eventually, you know what I mean? The share price may fly if BN wins again in the next GE. But the opposite may also be true.
Orna paper? I have not looked at it before, but why Orna Paper? If a company spends a lot of money temporary to improve its operations and then produce great benefits later, but don't pay dividend, I think it is ok. If pay so much dividend, where got money to improve future profitability? But of course the money is well spend and actually produce the benefits as expected. If it doesn't after a couple of year, I think one must reconsider the management decision.

Posted by necro > 2013-02-01 17:40 | Report Abuse

bro wat abot CUSCAPI

Posted by necro > 2013-02-01 19:00 | Report Abuse

Bro kcchongz u method seem like Warren Buffet but do you company distribute the profit as dividen or growth of stock price?
I wondering if those stock below is GROWTH STOCK or not,need your opinion...
OLDTOWN so many ppl supper even at 3am...
BJFOOD with Kenny Rogers and Starbucks stall will open more..
PANTECH
Cuscapi as KFC & PIZA HUT restaurant will be open more in this coming years i see each reastaurant have 4 petty cash which Cuscapi name appear...wondering more kfc n pizza restaurant open..