KW, may I know where to have a look at your portfolio. Also I agree with your proposal to invite the three "sifus" to set up a new portfolio effective 1st Aug till 31st Dec. It's not so much of a competition as to who is better but just as a comparison of which method is better as each of them has their own criteria in stock selection. At the end of the day there are so many other factors in determining the direction of the market. The selection would also benefit the other is users Of course they have to near in mind that the stock picks are not a recommmendation to buy.
Yeah i agree, they have different styles and it would be good to have a look at their current selection based on current market conditions. Although whether or not they age would be a totally different matter. But to all 3 sifus, market at all time high, would it correct in a near future? Or shoot up higher?
Agreed with this suggestion. Pl get more ppl to support this idea. All investors wll benefit from their generous n wiilingness unselfish contributions. We name u three the best of the best investors in this forum. Can invite other sifu like imf etc to participate too.
I have to reiterate that the 6-9 months of the good performance posted is too short a record to boast about. It could very well be due to luck. Really the measurement of successful investing does not just based on a short-term of seven months performance. Investing to me is a long term endeavor. So we have to look at the more important long-term return. So how to measure the long term performance of your portfolio?
Table 1 below shows the performance measurement of my portfolio for one to five years. Again this is just for discussion purpose. I hope others do not construe this as a self bragging exercise. Some of the stocks only have prices of 2-3 years as they are either only listed 2-3 years ago, or data is not available from the Yahoo website.
And Table 3 below shows the computation of CAR of the portfolio as compared to that of KLSE.
Table 3: CAR comparison of portfolio with KLSE Year 1 2 3 4 5 Average Portfolio CAR 43.8% 19.7% 24.6% 27.8% 24.6% KLSE CAR 10.8% 8.0% 9.9% 11.4% 9.3% Excess return 33.0% 11.7% 14.7% 16.5% 15.3%
It can be that on average, the CAR of the portfolio out-performed the broad market by a wide margin. For example for a five year holding period, the portfolio returns a CAR of 24.6% as compared to KLSE’s 9.3%, a whopping 15.3% of excess return each year. For a shorter holding period of three years, the excess return a year is 14.7%.
I am willing to accept this challenge to give my watchlist. Please allow me until end of August to screen for good stocks. I will only select 10 stocks.
As I have posted that the total six-month return of my portfolio was 38% as compared to 10% of the KLSE, or an excess return of 28%. The 5-year compounded annual return of that portfolio just posted above was 24.6% as compared to 9.3% of the KLSE, or an excess return of 15.3%. This 5-year CAR is more representative because we have gone through a boom and bust from July 2008 to now. Sorry ah for boasting about them again.
Can I get another 38% of a new portfolio in another 6 months time? Highly unlikely. Can I post the same stellar return of the 5-year return. Dream on.
First of all, the great performance as I have said could have a big portion of the element of luck. Secondly, I believe this mean reverting principle in the equity market; any market for that matter, such as the property market.
But I also believe the economy of the country and the world at large will continue to grow and stock prices of good companies will continue to rise, albeit at a slower pace. So stocks selected basing on fundamentals such as their growth prospects, durability and quality of the business, management efficiencies and asset allocations, and most of all the concept of margin of safety, will continue to provide a higher return than the market.
I can share stocks which I think meet my requirements above and give my analysis and reasons for the choices. No point for me just to tell you which companies are good as investment without giving reasons why. However I think many here will find the stuff boring. Not sure if it is a good idea.
For those who are interested, it may provide you with some fundamental knowledge in investing which may be useful whether you make big money or not. This I personally believe so. I very much welcome constructive criticisms, not just baseless accusations and allegations, names calling etc without any substantiations.
I reiterate here again that I seriously don't think they will give you quick short-term return. Forget it. I am here just to share my thoughts.
KC agreed that luck is part of the computation. Even analysts revise their TP when new information emerges. Therefore, considering that at an all time high, one may select defensive counters as opposed to high growth ones.
This would give some of us who are interested in the boring stuff an idea of what and how you all derive and base your analysis on.
I'm glad that OTB is up for the challenge to give us a new list post KLCI All-time High :)
interesting views on stocks but i do believed that selection criteria may differ but the bottom line is we all of us, here is to make profit out of the market.
the number of stock selected is important. one may have a short list (eg. 5-6 stocks on the watch list)if we can hit the target on all the 5-6 stocks ( that means we are 100% accurate)
the bottom line is the holding period of the stocks. At 1,800 index most funds are targeting between 1830-1840 year end. that does not leave much room.
if we can identify growth stocks for 2014 that would be really of interest to people reading this blog.
KC, it will be great if you can share a summarized compilation of shares on your watchlist by ranking them according to your FA metrics such as ROE, ROIC, FCF, EV/EBIT etc...
kcchong, how to do calculate mr ooi performance is 55% for 6-8 months ago? because he is more towards technical analysis, which means his trade should be short term (1-3 months), right?
hey steve, you asked a very relevant question. You were right. Traders relying on technical analysis base entry and exit mostly from price volume and other technical indicators. They generally don't hold those stocks longer than a few months, some not even days, because the price changes all the time. They would have exit long ago and may re-enter, exit and reenter again and again.
A big THX to the sifus for sharing with us all in this thread, Buy or not , is our choice. So no blame thrown ....keep this in mind . Remember it is thru their graciousness that they share.
Posted by kcchongnz > Jul 31, 2013 05:00 PM | Report Abuse X
Kumpulan Fima
“Value portfolio managers buy and sell judiciously, choosing today’s ugly duckling that shows the promise of becoming tomorrow’s beautiful swan.”
Kumpulan Fima has been in my original portfolio for about 4 years now. At 2.06 now, it provides me with a total return of 220%, or a compounded annual rate of return of 34%, three times above the return of KLSE a year of 10% for the last 4 years. However, for the past one year, return has been unsatisfactory with a negative return of about 8%. Should I discard this stock now? No way!
The business Kumpulan Fima Berhad is engaged in manufacturing and trading of security and confidential documents; bulk handling and storage of liquid products and cargoes, warehousing and transportation and customs forwarding services; Oil palm Plantation and manufacturing and packaging of food products.
It has a well diversified group of businesses. I won’t say these businesses are very great but each has reasonable growth in revenue and earnings for the last 10 years. All these businesses are durable and are expected to be around for many years to come.
Quality of the business Kfima’s revenue and net profit has been growing at 8.2% and 23% to 487m and 104m respectively for the last 10 years. In recent years, Kumpulan Fima has been buying up plantation land for its next phase of growth. The growth in revenue is unabated but just last year, earnings has slipped by 10%, due to the low price of palm oil which makes up 30% of its revenue. All divisions remain profitable.
The good quality business of Kfima is evidenced from its high gross margin of average of 43% for the last 5 years (Table 1). Net profit margin is also high at an average of 21%. This results in good 5-year average ROE of 15% and high ROIC of 22%. Retained earnings have been growing at a CAGR of 15% a year.
Kfima’s quality of earnings is excellent as shown in Table 2 below. Its CFFOs are generally about the same as net income. There is good average free cash flow, 16% and 19% (both> >5%) of revenue and invested capital respectively for the last 5 years. It is noted that last year cash flow has deteriorated. It may be still too early to tell if they will further deteriorate.
Capital allocations Kfima has spent quite a substantial amount of money buying plantation land, new plants and equipment for its business. 143m in total was spent for the last 5 years. The capital expenses were well spent as they yield higher earnings and better cash flows the following years. Due to the better earnings and cash flows, the company has been increasing its dividend payment from 3 sen per share five years ago to 8 sen for 2013. This gives a reasonable good dividend yield of 4%, higher than the bank fixed deposit rate.
Market Valuation With such good business and operation performance, one would expect it would not be cheap to invest in this stock. But is it so?
AT RM 2.06, Kfima is trading at 7.2 times its earnings per share of 28.6 sen for the financial year ended 31 march 2013. Note that Kfima has an excess 272m cash or cash equivalent sitting in its balance sheet, or an excess cash of RM1.00 per share. Besides it has about 100m in investment properties and interest in associates.
Its enterprise value is less than 4 times its earnings before interest and tax, far below the industry average of more than 10 times. This translate to an earnings yield of 26%, much higher than my 10% requirement. Hence at RM2.07 a piece, kfima will remain as a second stock in my new portfolio.
Table1: Quality of Kfima’s business Year 2013 2012 2011 2010 2009 Average Gross margin 44% 46% 47% 40% 39% 43% Net margin 21% 25% 25% 14% 13% 20% ROE 12.5% 15.5% 16.6% 16.0% 15.6% 15% ROIC 19.2% 25.3% 25.4% 21.1% 18.6% 22%
1. ".... element of luck. Secondly, I believe this mean reverting principle in the equity market; any market for that matter, such as the property market" ^ I have not heard of reverting principle. Is it a market phenomenon?
2. Your 5 years bursa indices, is it 31st dec figures or 12 months comparison adjusted to July 28th?
Posted by tonylim > Jul 31, 2013 07:29 PM | Report Abuse Kcchong, 1. ".... element of luck. Secondly, I believe this mean reverting principle in the equity market; any market for that matter, such as the property market" ^ I have not heard of reverting principle. Is it a market phenomenon?
2. Your 5 years bursa indices, is it 31st dec figures or 12 months comparison adjusted to July 28th?
Definition of 'Mean Reversion' "A theory suggesting that prices and returns eventually move back towards the mean or average. This mean or average can be the historical average of the price or return or another relevant average such as the growth in the economy or the average return of an industry."
The bursa data or stock price are meant to be 5 years from now, ie 28th July. It needs some time to get those prices and compute the total returns and CAR. So sometimes I curi ayam a little bit using data I computed say a week or two ago. But when you talk about 5 years total return or CAR, I don't think there is much difference.
Please invite another sifu here because he is 100% accurate one. Let us learn from him to make more money. I want to be a billionaire by following his stock pick. Please help me !! Please !!
Mega First Corporation Berhad (MFCB) is principally engaged in Power, Property, Limestone, Engineering and Investment Holding. The Power segment builds, owns and operates power plants.
The main earner is the power division which owns two power plants, one in China and the other in Sabah. The plants provide steady income for MFCB of 76% of the total revenue and profit of the company. It’s resource division operates one of the largest limestone hill reserves of more than 100 acres in Perak. It is also one of the country’s largest producers of lime products. This division contributes 13% and 15% of the total revenue and profit respectively. The management intends to increase capital expenses in this division in anticipation of greater demand for the limestone products in the country. Going forward, the Resource division will be contributing more to the revenue and profit of the company. The other core division in property development contributes about 5% of the total revenue and profit. These businesses of MFCB will continue to provide steady income and stable cash flows for many more years.
Quality of MFCB’s business Years ago, MFCB has been depending on its power generation business to provide a steady and stable revenue and profit for the company. However there is not much growth in this business. Revenue and operating profit have been hovering less than 500m and 100m respectively (See Table 1). It is only about two years ago revenue and operating profit spike up to 635m and 120m respectively from the three core businesses last year. The compounded annual growth rate for the last two years is very good at 10% and 27% respectively for its revenue and operating profit.
The margins of the business of MFCB are reasonably good for its kind of industry. Last year, gross and operating margins have recovered steadily back to 26% and 19% respectively (See Table 2). Net margin deteriorated to 15% due to its losses in its investment activities and as a result affecting its return of equity. ROE of MFCB was 10% last year which is nothing to shout about but meets the minimum quality requirement. ROIC is however, much better at 18.6%, much higher the costs of its capitals.
MFCB’s quality of earnings is excellent as shown in Table 3 below. Its CFFOs are generally about the same as net income. About 30% of its cash flows from operations is spend on capital expenses. There is good average free cash flow after that, 13% and 16% (both> >5%) of revenue and invested capital respectively for the last 7 years. Last year cash flows are particularly good at 15% and 20% of revenue and invested capital respectively.
Market Valuation There may not be high growth in MFCB’s business, but it has stable earnings and good cash flows, beside having a squeaky clean balance sheet. Hence it should be accorded with a reasonable good market valuation. But is it so?
At RM1.70, MFCB is trading at 7.1 times its earnings per share of 24 sen last year. Note that MFCB has an excess 126m cash or cash equivalent sitting in its balance sheet. Besides it has about 117m in quoted and unquoted investments and interest in associates. Despite of these quality assets, its price-to-book value is at only 0.7.
The cheapness of MFCB is more glaring from the perspective of its market enterprise value. At RM1.70, Its market enterprise value is 1.6 times its earnings before interest, tax, depreciation and amortization, far below the industry average. Earnings yield (Ebit/EV) is great at 50%, much higher than my 10% requirement.
Hence at RM1.70 a piece, I have added MFCB as a third stock in my portfolio.
3 same trading giants, kcchongnz, otb, fat cat n they are applying 3 different trading methods to reach the same goal. What colors the cats are, so long they are able to catch mouses, are good cats. I hope all counters as per their recommendations will move upside but to what level?
Otb has set tp but kcchongnz n fat cat have not done yet.
New IPO: The onshore and offshore support services provider for the O&G industry, Steel Hawk Bhd aims to list on the Ace Market!
MQ Trader 3147 views | 3 d ago
0:17
New IPO: The largest mini-market player and a leading groceries retailer in Malaysia, 99 Speed Mart Retail Holdings Bhd aims to list on the Main Market!
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
inwest88
5,628 posts
Posted by inwest88 > 2013-07-28 20:15 | Report Abuse
KW, may I know where to have a look at your portfolio. Also I agree with your proposal to invite the three "sifus" to set up a new portfolio effective 1st Aug till 31st Dec. It's not so much of a competition as to who is better but just as a comparison of which method is better as each of them has their own criteria in stock selection. At the end of the day there are so many other factors in determining the direction of the market. The selection would also benefit the other is users Of course they have to near in mind that the stock picks are not a recommmendation to buy.