Posted by Tey Tian Foo > 2014-01-24 16:37 | Report Abuse

Good Report.

Posted by kcchongnz > 2014-01-25 11:37 | Report Abuse

Hope, a psychological pitfall

Hope, begging, blind faith, wishful thinking etc. Whatever you want to call it, it deserves no place in your portfolio. It is a dangerous pitfall one should avoid.

In Investing, Hope = Hopeless.

Let us look at KNM, a “shining star” in this portfolio of lemons.
There are people who have bought KNM at an adjusted price of more than RM4.00 less than 5 years ago with the wonderful promises given by the management, exaggerated by the bullish reports of many analysts. At that time KLSE was just recovering from the US Sublime crisis with the index at 1072. Since then KLSE has risen about 80%, whereas KNM kept on falling in price to the lowest of less than 40 sen half a year ago. Since then it has risen a little and closed at 56.5 sen on 24 January 2014. The loss is more than 80%.

How can investors accept the fact that a high flier KNM loss 80% and the broad market rose by 80% in the same period? It can’t be. It would sure to recover, if not to RM4.00, must be at least RM1.50. So they hope for the following:

1. KNM will get big contracts soon. But did they read the comment by one forumer here who said he worked in tendering jobs for KNM before and the prospective gross (note gross, not net) margin is 5%, or even zero %. So how could big projects securing, if any cure the problem of KNM?
2. KNM is getting 300 m Euros in loan. So all KNM’s financial problems (big one) would be all solved? I don’t know if this is true or not because if I am a banker, I won’t want to lend to them knowing their prospect and balance sheet.
3. Ringgit is weaken so good for KNM. Really? Is KNM earnings and getting big cash flows from USD or Euro, or is it likely it is going to pay higher interest, or to fund the losses in overseas operations from money remitted from Malaysia because of the lower exchange rate?
4. Borsig is going to list in Singapore soon. So all financial problems would be solved. Really? But how does it improve KNM’s business? The proposed listing has been talking for ages, why is it still not listed? Any problems?
5. KNM management is going to reward the shareholders soon with bonus issues, free warrants (of course also have to buy the right issues also lah). Are they really “free”? Or just free for the insiders who can benefit from the exercise?
6. This is the best. General Lee is going to privatize KNM (with his backside). All shareholders can redeemed their shares for RM1.37, its net asset backing per share.

Yeah, these are all the hopes. But think and analyze, what is the probability of any of this hopes to be realized?

It is also hard to sell losers as it would confirm your loss. But is it better to sell out and put your money to work in a better investment opportunity?

Whatever the outcome, you should heed a prime rule of investing: You don’t have to make it back the way that you lost it. – Buffett

Posted by Frank Soweto > 2014-01-25 12:54 | Report Abuse

Oh No not the privatization again :( I think if this comes out from General Lee directly better run as fast to the EXIT as you can and better still RUN now and never look back LOL
Sir how about another one? - If we don't learn from history we are bound to repeat it :(

Posted by kcchongnz > 2014-01-25 16:35 | Report Abuse

Frank, yes, history may not repeat itself, but it rhymes. Mark twain

Incidentally, you are one of the characters mentioned in my post above, a smart one who left the dead horse and ride on a young and energetic one and hunt for a bountiful load of harvest.

Posted by Horsefield > 2014-01-26 14:20 | Report Abuse

i think its good time to "realize" the loss and ride the young energetic horse (ie ptaras, kfiama, presbhd etc) now..

Posted by Frank Soweto > 2014-01-28 04:11 | Report Abuse

KCchongnz looks like our General is getting 'creative' again based on the latest news article from The Edge :)

http://www.theedgemalaysia.com/business-news/272902-knm-proposes-to-cut-share-par-value-by-50.html

I thought it was the 'good' news regarding Borsig listing since KNm has gone up lately but upon reading further I found that

"The Proposed Par Value Reduction will give rise to a credit of RM745,006,626 which will be credited to the share premium reserve account of the Company and may be utilised in such manner as the Board deems fit"
wah MAYBE they will give the shareholders some special dividends/bonuses since have so much money now YAY :)

hehe now getting really excited leh hoping for more good news as I read on :)

"The current market price of KNM shares is therefore not conducive for KNM to embark on any fund raising exercise and/or corporate exercises involving issuance of new shares. Accordingly, the Proposed Par Value Reduction will provide the Company with greater flexibility to raise funds and to implement future corporate proposals which entail the issuance of new shares"

Huh WTF? want to embark on fund raising? why need funds when the company juz got Euro 220 Mils? not enough cash meh? issue new shares? for what? Did they NOT do it less than 2 years ago? give out free shares izzit? and I dun even want to go to the ESOS thingy :(

Posted by almufathal > Jan 28, 2014 12:35 AM | Report Abuse
suka suka mau turun naik par value....dulu slash par value 3 times...then convert to rm1....now slash again...takdak kerja lain

haha this person got it right - memang Jeneral Lee takde kerja lain besides Gorenging KNM but but u have to give him credit lah He always manage to be 'CREATIVE' LOL

Anyway Last call for Flight 7164 to Butner,NC where Bernie M is waiting for loyalist of General:)

Posted by kcchongnz > 2014-01-28 06:14 | Report Abuse

Wow, a profit of 745m just to do this par value reduction exercise. Frank, that was why KNM's share price has been running up recently. That is how "investors" think. OMG!

Oh, the par reduction thingy is for making it easy for fund raising, or right issues. And ESOS. Great! Should be another round of share price appreciation. to 1.50? 3.00?

Posted by Frank Soweto > 2014-01-29 02:39 | Report Abuse

hehe KC charging up today almost 5% and with DJ now green looks to surpass .60 today and soon to 'your' target price of 1.50 and beyond :) but do you remember this forumer edsm that u had it back and forth sometime back? - very interesting comment coming from him since he was a loyalist and looks like he knows NOW -finally the 'horse' is dead LOL - the best is his last sentence in CAPS - HISTORY REPEATING ITSELF :) One of the very few who is getting wiser by the day if they really care to study the General :)



Posted by eSdM > Jan 28, 2014 05:22 PM | Report Abuse

3. RATIONALE FOR THE PROPOSALS

3.1. Proposed Par Value Reduction

As at 24 January 2014, being the market day prior to this announcement, the closing price of
KNM Share was RM0.565, which is at a discount of 43.5% to the existing par value of RM1.00
each in KNM share. The current market price of KNM shares is therefore not conducive for
KNM to embark on any fund raising exercise and/or corporate exercises involving issuance of
new shares. Accordingly, the Proposed Par Value Reduction will provide the Company with
greater flexibility to raise funds and to implement future corporate proposals which entail the
issuance of new shares.


This latest exercise by KNM is a big negative.


From the rationale above, it can be clearly seen that the intention of doing it is for KNM to have "....greater flexibility to raise funds and to implement future corporate proposals which entail the
issuance of new shares", which plainly put means KNM, at the moment, with its par value at RM 1 cannot do a rights issue as the price of rights issue cannot be lower than its par value of RM 1, as nobody will subscribe to its rights issue at RM 1 when the price now is just RM 0.545, even with some sweeteners such as bonus shares or free warrant thrown in, as such, it must reduce its par value.


But more importantly,

1. from the ".... to raise funds..... " it is shown, despite the recent loans it obtained, KNM is still short of fund and looks like it needed the fund urgently.

Everyone knows KNM has got this Borsig subsidiary which it has claimed is ready for listing, now, if KNM is in need of funds, wouldn't the best way to do it is to list Borsig??

BUT, KNM IS NOT DOING IT! WHY? IS THIS BECAUSE BORSIG IS IN FACT NO YET READY FOR LISTING?? THIS EXERCISE HAS SHOWN THAT BORSIG WILL NOT BE LISTED ANYTIME SOON!


2. Instead of working hard to generate profits to boast its share price to beyond RM 1 to meet its par value of RM 1, KNM has now proposed to reduce its par value to meet its pathetic profits.

IT SEEMS KNM IS NOT CONFIDENT THAT IT WILL BE ABLE TO IMPROVE ON ITS PROFITS IN THE FUTURE.


3. KNM's share capital is already huge, if there is further issuance of new shares under a rights issue and bonus issue, KNMs capital will be really huge.

COUPLE THIS HUGE CAPITAL BASE WITH THE PATHETIC PROFITS AS NOTED IN 2 ABOVE, THE RESULT WILL BE A HUGE DILUTION OF ITS EPS. YOU WILL BE SEEING EPS OF 0.0000001 SEN OR SMALLER. HOW IS THIS EPS GOING TO SUPPORT KNMs SHARE PRICE??


Based on 1, 2, 3, I have now turned negative on KNM as Borsig will not be listed anytime soon, its profits will not improve, and yes even most likely there will be some sweeteners such as bonus shares or free warrant thrown in if KNM were to have a rights issue, its profits will not be able to support its share price, which is precisely what is happening now.

HISTORY REPEATING ITSELF!

Posted by kcchongnz > 2014-01-29 21:25 | Report Abuse

Frank,
Looks like you (rather we) are wrong about KNM. Its share price rose another 5.5 sen today to day's high at 62.5 sen now. For me I am often wrong about the share price. So this is nothing new.

I really MCC (Mong Cha Cha) and can't imagine why its share price has been going up, especially after the announcement of the par value reduction and now the reasoning of eSdM as it is very clear that KNM needs money again from the shareholders. But actually I know very well why the share price going up like that, and I believe you are very clear too.

The stock market is really amazing. There are so many suckers around, amazingly so many, so naive. When old suckers gone, new ones appear.

Posted by FreeThink > 2014-01-29 22:11 | Report Abuse

kc, share market is a place full of hope and dream...and a place full of corpse and dead body...hehe
it wont surprise if knm surge above rm1 and create few millionaires, after that plunge back to 30sen and create few dead body in the ground...hehe

Posted by speakup > 2014-01-29 23:22 | Report Abuse

FreeThink then u must buy KNM now before it surge to rm1 :)

Posted by Frank Soweto > 2014-01-30 06:34 | Report Abuse

LOL KC you 'might' be wrong about the share price which by the way you have no control over unless you're an insider or a big shark but you're NEVER wrong about the analysis. This is bolihland and anything can BOLIH here especially with General.It's worth repeating here IF I have read your analysis earlier or zemoolah I would not have lost or even invested in this fantastic share in the first place But but it was a really good lesson for me.
You know initially I actually made $$$ in KNM when I bought in 2008 when the price was 40+ cents and sold all in 2009 when it hit.76 - made about 21K. Ah easy money then bought double,triple and kept buying and price kept dropping when General kept opening his mouth - big projects la,the par play la,privatize la and kept averaging down with many sleepless night even though I was actually sleeping on a Tempur Pedic and after learning about opportunity lost from teacher I sold every 7164 shares at a massive loss and start all over again - this time putting my hard earn money on fundamentally sound stocks and with plenty of MOS and thanks to last year bull market I've recovered all my losses and actually made some too and now my wife is complaining that I'm snoring nightly because I'm sleeping too damn deep :)

Here's an interesting quote from one in the thread -Posted by smallboy > Jan 30, 2014 12:12 AM | Report Abuse
Aiyaya Dj drop 100+ points .. Congrats! Only got 2 reason u all get angao... First is knm kena goreng (please pity to those who will suffer huge amount of loss later) second is knm worth that value!( what a joke!)

and another by
Posted by FreeThink > Jan 29, 2014 10:11 PM | Report Abuse

kc, share market is a place full of hope and dream...and a place full of corpse and dead body...hehe
it wont surprise if knm surge above rm1 and create few millionaires, after that plunge back to 30sen and create few dead body in the ground...hehe

yep Our bolihland market is special where we have many goreng sessions with these fabulous junks but we all know how eventually it will end up( or down haha ). of course there's a few companies who managed to come back from the brink of disaster and I'm not saying this one won't (though it's really hard to bet on it since like Esdm said history repeating itself ( by the way did you see how sarcastically flabbergasted he is in the KNM thread :) ) but I rather be putting my again hard earn $$$ somewhere else :)
My late dad gave me an advice when I was younger and one that I still apply now days - There's always a goat around - u just have to wait for it :) which is pretty similar to yours - There are so many suckers around, amazingly so many, so naive. When old suckers gone, new ones appear.
Meanwhile since I'm snowed in I'll be making mo mo cha cha for my dessert and also want to take this opportunity to Wish you a very Happy Gong Xi fa Cai to you and your family as well and as always appreciative of the many hours you spend giving us valuable advice and analysis :)

Posted by AyamTua > 2014-02-02 02:16 | Report Abuse

thank you for mentioning list of stocks to avoid ...

Posted by AyamTua > 2014-02-02 02:18 | Report Abuse

this list if possible update it from time to time .. this way people knows what to avoid save money too! thanks

Posted by choe > 2014-02-25 10:41 | Report Abuse

hi kcchongz, could you pls give your comment on GOB bhd's recent multiple proposal.
http://www.thestar.com.my/Business/Business-News/2014/02/25/Global-Oriental-hopes-to-raise-RM1137mil-via-rights-issue/

this co has accumulated profit of 25mil and just announced that they would like to reduce it's par value and issue right. i m kind of confuse by all these corporate exercise. thank you

Posted by kcchongnz > 2014-02-26 08:14 | Report Abuse

Posted by choe > Feb 25, 2014 10:41 AM | Report Abuse

hi kcchongz, could you pls give your comment on GOB bhd's recent multiple proposal.
http://www.thestar.com.my/Business/Business-News/2014/02/25/Global-Oriental-hopes-to-raise-RM1137mil-via-rights-issue/

this co has accumulated profit of 25mil and just announced that they would like to reduce it's par value and issue right. i m kind of confuse by all these corporate exercise. thank you

I don't know much about this corporate exercise either. The way i see it is the company needs your money if you are a shareholder. You have to subscribe the right issues. You have to give them money because if you don't, you lose out on the dilution, and free (???) warrants. You could sell off your shares without going through the corporate exercise though. I personally would not like to put into such a position when I invest.

There are scores of property companies having plenty of cash, undervalued properties, paying good dividends, potential bonus issues etc. Why would I want to waste time and bother about a company doing the opposite; having heaps of debts, par reduction (less shares later), asking money from me to pay down the company's debts etc? This is just me.

Of course the market loves corporate exercises, any kind of corporate exercise. So there may be (I said may be) plays of its stocks. Don't miss it because of my comments here.

Posted by choe > 2014-02-26 09:19 | Report Abuse

hi kcchongz, thanks for you fair comments. no worries, whatever decision made is soley my own.

Posted by kcchongnz > 2014-03-02 19:33 | Report Abuse

This was what I wrote about Guan Chong Berhad, a high growth stock, last Christmas in this thread.

Guan Chong Berhad
Guan Chong Berhad is recommended by a famous investor a few months ago (I have great respect for this famous investor, I really do, but everybody can make mistakes). It appears to be making profit year in year out. It paid good dividends too. However, few people looked a little deeper; why is it the total debts have been increasing at such a fast pace, and that there is hardly any cash flows from operations, not to mention about free cash flows. Something is definitely not right. Why can’t GCB show us the cash? Are they speculating (not hedging) on Coco future? Finally the straw broke the camel’s back. Its last quarterly financial results finally showed a loss of 12m. Not much but is it the end of the story? I doubt so. I think there are still a lot of skeletons behind the closet. Its share price dropped by 22% from RM1.80 to RM1.40 since then. Interesting stories to read at the same link below about GCB.
http://whereiszemoola.blogspot.co.nz/search?q=gcb
Yeah, it is good to practise value investing; buy companies at a good price using PE ratio, dividend yield. We must understand what this “E” means for that particular company, where did the company get the money from paying that good dividend.


Guan Chong’s revenue grew from about 500m 5 years ago to 1.44b in 2012. What a fantastic growth stock. its profit also grew in tandem from 1.4 sen per share to 8.2 sen, or a compounded annual rate of 56%. Can you show me another company which grew at such a fantastic rate? Is it a good company to invest in?

What happened then? Since then another quarter of loss of 8.3m for the quarter ended 31st December 2014 was realized. The total net profit for the year is 4.6m, for a revenue of whopping 1.36 billion, or net profit margin of 0.3%. EPS amounts to only 0.73 sen for the whole year.

However, this is just a small woe (小巫). The big woe (大巫) is again the cash flow which few people are able to see or bother about. The cash flow from operations is a negative (again) of a whopping 204m! Negative CFFO (mind you not free cash flow but CFFO) of 204m! Why?

The main culprit is the inventories of another whopping 850m as shown in its balance sheet, up by 325m from last year of 525m. Forced delivery of coco due to its speculation in coco future which gone sour?

It is not hard to understand why its total debts increased again from 922m from an already ultra high debt of 625m of last year, and cash depletion of 25m from 52m to 27m as shown in its balance sheet.

Is it the end of its predicament? I highly doubt so. Really a big head devil (大頭鬼).

This is the problem of not knowing what this “growth” means, whether it is a value enhancing growth or a value destroying growth. This is the problem of only looking at revenue growth and not focusing on operating costs and earnings growth. In actual fact, earnings growth focusing is not good enough. One has to understand what this “earnings” or “profit growth” is?

Furthermore, knowing what the profit growth is still not good enough. One has to relate its share price or enterprise value in relation to earnings and its growth. Without a price-value relationship, how to justify what price is appropriate, even for good things?

Posted by Seek > 2014-03-02 20:02 | Report Abuse

Hi Kc, I am not sure whether Tebrau Teguh is of the same category. Their related co IWH sold and went into joint venture valuing their land at hundreds of millions and yet they are issuing rights issue with free warrants. A bit worried about giving them my money for the rights issue. Bought at 1.59 and now only 1.26. Can please comment? Thanks.

Posted by kcchongnz > 2014-03-03 12:41 | Report Abuse

KNM another high growth stock

KNM’s share price rose from about 43 sen three months ago to a high of 83.5 sen a couple of weeks ago. Many punters would have made some decent profit if they have bought near the lowest price and also sold near the highest price during this period. What is the probability of this occurrence?

Its share price retreated to 63 sen now. Those who have bought near the highest price and sold at about today’s price would have lost a bundle too. For small time retail punters, any idea which group of people they are; the earlier ones or the later ones? Why was the rise of the share price of KNM in the first place, capital reduction and right issues? Is that a good news? I really don’t understand.

Let us forget about the share price movement and see if KNM has done well with its just released financial report ended 31st December 2013.
According to its income statement, which is quite obscure, “contract value” is at about 2 billion. Operating profit is 101m, but after deducting net financing cost of 211.5m and “share of loss of equity accounted investees” of 3.5m, profit before tax is 45.8m as shown. What? How do they do the calculation? I thought it would be a loss of about 114m?

Never mind, let us take it as a printing mistake somewhere and assume the PBT of 45.7 is correct instead of the loss of 114m. After paying tax of 25.4m, the net profit is 20.3m, or a profit margin of just 2%. Is that good? Earning 20.3m with an equity of 2061m, or a ROE of 1%. Is that good?

But wait, did KNM really earned 20.3m or any money at all in 2013? A look at its cash flow statement shows that this “profit” of 20.3m includes “Gain in foreign exchange-unrealized” of 79.1m, and “Gain on disposal of subsidiaries” of 11.8m? What? Are these earnings from ordinary operating activities?

Below was what I wrote about KNM in this thread last Christmas.

[KNM has been losing money almost every year in his operations. Cash ran out and many cash calls were made. Even when it said it made money I have doubt about it because it often did not reflect in its cash flows and balance sheet. Some may say. “don’t worry, it has a lot of assets”, but its assets are of very low quality; Property Plant and Equipment (PPE) of which not sure what is the realizable value, if there is much, doubtful receivables and work in progress if they are real and collectible, inventories, huge goodwill and intangibles because of paying big premiums in acquisitions. Its debts and liabilities are huge. It may end up the only value KNM has is just a corporation option value, minimum of zero (no intrinsic value) and something questionable.]

Posted by AyamTua > 2014-03-03 12:43 | Report Abuse

kcchongnz most what you said and predict all come true ... :-) AyamTua notice the pattern ....... but sometime cannot blame also itchy hands to punt punt mah .. coba nasib saja mah ... kikikiki hahaha

Posted by kcchongnz > 2014-03-03 13:37 | Report Abuse

Posted by Seek > Mar 2, 2014 08:02 PM | Report Abuse

Hi Kc, I am not sure whether Tebrau Teguh is of the same category. Their related co IWH sold and went into joint venture valuing their land at hundreds of millions and yet they are issuing rights issue with free warrants. A bit worried about giving them my money for the rights issue. Bought at 1.59 and now only 1.26. Can please comment? Thanks.

I talked about lemons in this thread. Tebrau Teguh does not belong here. Don't know much about this stock. The last time I knew something about it was a some years ago when it was way below RM1. It had a lot of undervalued land in the precious Iskandar Corridor.

A peep at its financial statements shows it has "real" earnings and reasonable quality assets. Cash flow not too good because of high receivables.

Right issue may not necessary to be bad as they may need money to develop their land, which may earn them good return in the future.

Yes you should try to estimate the value of this company based on its future earnings in order to determine if the price now is good for you to keep. Without an estimation of its value, i don't know how one can determine if to buy or sell at present price.

Posted by kcchongnz > 2014-03-17 15:43 | Report Abuse

17/3/14
What are the returns of some “lemons” after another 2 and a half months?

It can briefly be summarized as below and as shown in the table below:

1. The average return of the portfolio improves marginally to minus 6.8% compared to minus 8.7% previously, versus the return of the benchmark FTSE Midcap70 of 12.1%. This means the portfolio underperformed the bench mark and alpha is negative at minus 18.9%, still is a huge under-performance.
2. I would expect a couple of high return stocks because basically these are all the “hot” stocks chased by many people. All of the 15 stocks under-performed the market except for one, KNM, with a whopping 67% 2 and a half months ago.
3. Instead there are 5 of them in double digit losses, all more than 23%. CSL has its negative return widened to 73%, and AsiaMedia stll high at minus 33%. Smartag’s loss widened to 47.2% from 25% 2 and a half months ago.
What has changed for the star performer KNM recently for its share price to spike up?
1. KNM will get big contracts and will make big money soon?
2. Will all KNM’s financial woes be all solved?
3. Is Borsig going to list in Singapore and KNM receives huge amount of money soon?
4. Is KNM management going to reward the shareholders soon with bonus issues, “free” warrants and with what?

Or is it more likely that that generous General Lee is frying up the share price of KNM so that all small shareholders of KNM will get rich?

No. Company Ref Price 17/03/2014 Gain/loss
1 Pmetal 2.520 2.270 -9.9%
2 GCB 1.800 1.380 -23.3%
3 Ivory 0.550 0.600 9.1%
4 PW 0.720 0.760 5.6%
5 Rsawit 0.850 0.845 -0.6%
6 LonBisc 0.680 0.705 3.7%
7 KNM 0.455 0.780 71.4%
8 MPCorp 0.550 0.410 -25.5%
9 Careplus 0.315 0.350 11.1%
10 CSL 0.750 0.205 -72.7%
11 AnComLB 0.185 0.190 2.7%
12 Smartag 0.180 0.095 -47.2%
13 Amedia 0.135 0.090 -33.3%
14 NovaMSC 0.065 0.065 0.0%
15 Hibiscus 1.900 2.020 6.3%

xx Average xxxx xxxx -6.8%
xx FTSE Mid70 12294 13785 12.1%

Posted by kcchongnz > 2014-03-19 09:49 | Report Abuse

Hibiscus "found" oil recently.

Hibiscus warrant. With 4 more months to expire and the precious time value, why is Hibiscus warrant trading at a 3 sen discount?

This type of dangerous scenario happens all the time.

Posted by kcchongnz > 2014-03-22 10:25 | Report Abuse

Warren Buffet: Why Speculation is Like Pornography

To put it clearer, here’s how Buffett differentiates investing and speculation.

You know, it’s like pornography… the famous quote and all that. I look at it in terms of the intent of the person engaging in the transaction.

…An investment operation in my view is one where you look at the asset itself to determine your decision to lay our some money now to get some more money back later on. So you look to the apartment, house, you look to the stock, you look to the fame in terms of what that will produce. And you don’t really care whether there’s a quote under it at all. You are basically committing some funds now to get more funds later on therough the operation of the asset.

Speculation, I would define, as much more focused on the price action of the stock, particularly that you buy or the indexed future or something of the sort. Because you are not really, you are counting on, for whatever factors, could be quarterly earnings, could be up or it’s going to split or whatever it may be or increase the dividend, but you are not looking to the asset itself.

And I say the real test of how you, what you’re doing is whether you care whether the markets are open. When I buy a stock, I don’t care whether they close the stock market tomorrow or for a couple of years… Now if I care whether the stock market is open tomorrow then I say to some extent I’m speculating because I’m thinking about whether the price is going to go up tomorrow or now.


Read more: http://www.oldschoolvalue.com/blog/investing-perspective/bitcoin-speculation/#ixzz2wed8QNCq

Posted by kcchongnz > 2014-03-27 06:02 | Report Abuse

Masterskill put and call option. Another peril or pitfall in investing.

http://nexttrade.blogspot.co.nz/

Posted by Frank Soweto > 2014-03-27 07:19 | Report Abuse

ah good morning Mr Chong. I dunno much about put or call option but I do know again based on my experience this is another stock where the previous owner Kolonel Santhara Kumar was juz slightly below General in his goreng skills. General was playing with his 'guidance' and privatization while this Colonel was with his undervalue call at 2 bucks a piece then and 'crying' that EPF should seriously consider buying since the IPO was about 3 bucks with all his growth and expansion cerita dongeng :(
Bought based on CIMB reports lofty TP and Unfortunately Again found out the hard way when the numbers keep falling off the cliff and Kolonel was no where to be found :( Certainly there was the 'Master' of goreng Skills in Kolonel and now looking at recent event that was highlighted by Alex Lu it seems Kolonel goreng skills has been passed to his students in Major Sivakumar and the new recruit Captain Gary How :(

Posted by kcchongnz > 2014-03-27 07:32 | Report Abuse

Haha, Frank, a seasoned investor in Bursa.

An excellent comment from you.

Posted by kcchongnz > 2014-04-03 17:56 | Report Abuse

Hibiscus share price stays the same as RM1.90 when I wrote about it in this blog. Many second liners' share prices have gone up substantially. But at least there is no loss, unless you have bought it at the high of RM2.80 just before this blog was written last Christmas.

At today's close, Hibiscus and its Wa is trading at RM1.90 and RM1.35 respectively. With an exercise price of 50 sen, Wa is trading at a discount of 5 sen. There appears to be an arbitrage opportunity here as below:

Sell 10,000 shares of Hibiscus at 1.90 and get RM19000
Buy 10000 shares of Wa and pay RM13500
Sent for conversion at 50 sen and pay %M5000
Arbitrage profit is RM500

But why aren't there anybody doing this and cause the price of Wa to go up and Hibiscus price to go down as in normal circumstances?

First of all, Wa is expiring about 3 months time. There is not much time value for Wa to talk about.

Secondly the gearing is just 1.4 times, not much incentive to punt on it as there won't be much exaggeration of price of Wa.

Thirdly, the market does not believe there is much upside spike of Hibiscus's share price in the near future.

Fourthly manipulators may be trying to entice punters to buy Wa while they are unloading them. Insiders have heaps of this warrants.

Just some guesses.

Posted by kcchongnz > 2014-05-31 06:08 | Report Abuse

Long time didn't visit here already. Let look at the latest financial result of one of the lemons here.

Ivory Property just announced its latest quarterly report. Its revenue increased by 12% to 59.4m. But the more notable one is its net profit which increased by a whopping 75% to 3.5m. Net profit margin increases as a result to 5.9% from last year’s 3.8%.

A closer look at its financial statement appears to be alright, unlike in the previous year when there were some doggy massaging of the figures, where “fair value gain of property” was booked as “profit” at the top lines, yes as a gain in the ordinary operations. So far the results appears to be, shall we say wonderful? So the turnaround is coming?

The Achilles heel of Ivory is its cash flow from operations, as usual, is still a negative number, at minus 17.5 m for just three months. So how to pay just interest of more than 10m a year because of its relatively high borrowings? So when is the next right issue?

A look at the comparison of some metrics of Ivory with the industry average also makes me worry:

Metric Ivory Industry
Profit margin 5.9% 32%
ROE % 3.9% 15.9%
ROIC % 2.3% 11.8%

How long more for Ivory to catch up with the industry? Or will it ever catch up?

Wait, we have to look at its share price. May be it is still a good investment, even though it is not performing well in its business.

At the close of 62 sen on 30 May, 2014, its trailing PE ratio is 19. Is it cheap? Can you get other companies, better companies with even lower, or much lower PE ratio? I sure can.

Oh, I forgot its next quarterly result would be much better. It is turning around. It is coming.

Posted by kcchongnz > 2014-05-31 09:00 | Report Abuse

London Biscuits, another lemon mentioned in this thread, just announced it 3rd quarter 2014 results. With a turnover of 96m, the net profit is 2.3m, or a net profit margin of just 2.4%. This is not even half of the last year net profit margin of 5.2%. ROE based on last year's data is already very miserable at 4.15%, way below the required return of any rational investor. So look like the expected ROE this year is 2.5% (?). How?

Where is the widely talked-about turnaround?

Already stopped heavy investing in PPE like the last 10 years? I can see its PPE increased some more from 517m to 528m now. How?

Yeah, I forgot that it is going to turnaround.

Posted by kcchongnz > 2014-05-31 12:45 | Report Abuse

KNM also reported its first quarter 2014 results recently. We already talked about how bad KNM has been doing as described in the main article here. But more important is its future, isn’t it? And how much we have been hearing that it is turning around.

The latest quarterly report ended 31 March 2014 still shows a fantastic sales of 493m! That would put many public listed companies to great shame. The net profit also improved by 700% to 13.6m! Yeah, turning around already! Really?

But that is a net profit margin of just 2.8%. And we haven’t take into consideration that it has 7.3m in foreign exchange losses and 2.4m losses in new investment in subsidiaries etc which the final net profit is just 3.3m, or 0.7%. Not even a basis point?

Why would I consider this investment and foreign exchange loss as they appear to be non-operational? Because this “non-operating” losses are yearly affair now and so much so they are no more extra-ordinary.

Actually the worst thing is its cash flow from operations (CFFO), not FCF. It is a whopping negative 104m, in just a quarter. Doing 493m business in three months, make 3.3m, but got to find 101m to fill the cash shortage. Where to find money to fund capital expenses? Where to find money to buy some more investments like they always do overseas? Where to find money to pay the extremely high interest payment for a total of 1b loan?

Wow, you really call that a turning around? When is the right issue again and again?

Posted by kcchongnz > 2014-06-01 10:04 | Report Abuse

What about our high flier Hibiscus?

Hibiscus share price was chased up by 80% from RM1.50 to RM2.70 in just four months from August to December 2013 just because of rumours that when or when the drilling machine would reach the destination, and when start drilling. The first drilling didn’t yield any positive results and its share price plummeted to RM1.72 end of the last year.

The euphoria started again when the second drilling appeared to yield very encouraging result, note the word “encouraging”. Its share price jumped up again to RM2.19, or about 28% from its low in three months. What happened then? Its share price slide and close at RM1.58 on 30th May 2014, or a plunge of about 28% from the recent high, in just 2 months.

This is extremely exciting, of course not for those who bought it at RM2.70 and sold it at RM1.72, or bought it at RM2.19 and sold it at RM1.58 just two days ago.

Hibiscus released its latest first quarter 2014 result a few days ago. It just lost a nominal 156,000. It is peanut and as expected. After all there is no oil extracting yet after just a few years only of listing. But this compared to its previous quarter results ending 31 December 2013 is horrific because the last quarter they made 9.4m!

But they had no extraction of oil from anywhere yet and how come there was such profit. This is very important for any aspiring potential accountants, you have to learn from the accounting prowess of Hibiscus. The accountants of Hibiscus can book the following items as “profit” and “pooh”, made the share price galloping:

1. Gain in dilution of interest in a joint venture of 13.5m. That was selling shares in a J/V at a premium over its par value can generate “profit”.

2. Reversal of discovery bonus payable, 15.8m as profit.

Oh, those were the reasons “investors” chased its share price up from RM1.72 to RM2.19 previously, and of course the seemingly discovery of huge oil in the second exploration.

But what happen now? How are the test results? When is the extraction of oil? How come so quiet now? When is the next good news coming so that I can buy at the right time and become billionaire?

Posted by kcchongnz > 2014-06-01 13:29 | Report Abuse

Somebody posted this great news about KNM in that thread.

Posted by gymkhana > Jun 1, 2014 11:54 AM | Report Abuse
Notice of Shares Buy Back - Immediate Announcement
http://www.bursamalaysia.com/market/listed-companies/company-announcements/1642565

You know my limited understanding about company is share buyback will only carried out if:

1) The share price of KNM is grossly undervalued in relation to its value?
2) When company has excess cash, I mean hard cash, plenty of free cash flow from operations.
3) Company has limited debt, or even no debts at all

Anyone can tell me in affirmative "yes" for the three questions above, or just don't know, or a resounding "no"?

Why am I so kepoh about KNM? I simply find it ultra amusing and KNM management is alien from another planet. Gosh!!!

Posted by speakup > 2014-06-01 17:00 | Report Abuse

Sumatec : from lemon become abalone :-)

Posted by kcchongnz > 2014-06-02 15:15 | Report Abuse

Recalled GCB was making profit every year and paid good dividends. However there was hardly any cash flows from operations. Finally the straw broke the camel’s back. Its quarterly results ending 30/9/13 finally showed a first loss of 12m followed by 8.3m the next quarter.
GCB announced its latest quarterly result ending 31/3/14 with 5.44m net profit at a revenue of 480m. Another turnaround story?

A 1.1% net profit margin of 480m turnover? Profit of 1.1 sen a share with an exposure of 480m? ROE of 6% with a huge financial leverage of 4.5 times? Sure, a big achievement.

However, this is again just a small woe (小巫). The big woe (大巫) is again the cash flow. The cash flow from operations is a negative (again) of a whopping 62m! Very consistent. No wonder the story goes on, the total borrowings have increased again from 942m to 1.03b Ringgit now!

Yes, again a big achievement, a billion ringgit borrowings round table club! A turnaround. Another lemon becomes abalone!

Posted by bracoli > 2014-06-06 06:33 | Report Abuse

Maybank also gave good report on knm. Hahaha

Posted by kcchongnz > 2014-06-08 18:25 | Report Abuse

Amedia, another lemon in my list here, just announced its first quarter 2014 results ended 31 May 2013. The EPS is 0.03 sen. So if we annualized the EPS, it would be 0.12 sen per year. So what do you think Amedia’s PE ratio should be? 10? Then it is worth 1.2 sen per share.

But it can’t be, it net asset per share is already worth 13.7 sen per share. However, few care about the bulk of this NTA of 77% is made up of “Properties, plant and equipment” in the amount of 110m, which we won’t know what is the actual realizable value. The other 13% is made up of receivables. It has a net cash position of 17.5m. This is because of money from new issues and additional bank borrowings for the last few year.

Now Amedia’s share price has plummeted further to just at a price of 8 sen, the lowest since listing.

The cash flow from operations (CFFO) last two years was negative 2.2m and 4.6m respectively. Last year, further 5.6m receivables were tied up. Just wonder what these receivables are, and are they collectible.

No cash from CFFO? Yes, but got cash to invest 46.5m in additional PPE last year with the result of producing 0.03 sen a share?

So where did the money come from. Yeah, the shareholders of Amedia have plenty of money to subscribe to right issues again soon.

What about the hype of that custom projects of tracking all the containers in the country we hear it from 4-5 years ago? When is this $$$ coming in?

Posted by bsngpg > 2014-06-08 19:40 | Report Abuse

Ha! Reading story of lemon a lot of times is more interesting than reading story on hidden gem.

Posted by kcchongnz > 2014-06-09 04:32 | Report Abuse

In my opinion, if a retail investor can identify and avoid lemons, he will be ahead of others 80% of the time in his investment experience. But how many care to learn how to do that?

Posted by kcchongnz > 2014-06-09 19:02 | Report Abuse

What about China Stationery Limited? I can't even find its financial results ended 31/3/14? What happen? This is the announcement:

"Reference is made to our announcement made on 30 April 2014 in relation to the approval granted by Bursa Malaysia Securities Berhad (“Bursa Securities”) via its approval letter dated 30 April 2014, an extension of time for the Company to announce its Audited Financial Statements for the financial year ended 31 December 2013 ("AFS") and the unaudited first quarterly report for the financial period ended 31 March 2014 ("1st Quarterly Report").

The Board of Directors of CSL wishes to announce the monthly updates on the progress of the police investigation report and the steps taken or proposed to be taken to issue the AFS and 1st 1st Quarterly Report."

Its share price slipped further from 19.5 sen last Christmas to close at 12 sen today, another 40% drop. I thought it has 75 sen cash and no debt in its balance sheet just a few months ago?

Really no eyes see.

Posted by sunztzhe > 2014-06-09 19:56 | Report Abuse

If one really want to understand the basics in "Untrustworthy Accounts ala fraudulent Accounts", CSL is an excellent case study material for the anyone who is interested.

Starters can begin to ask :
Why is Share price @ 12 cents but "CASH AT BANK" is 75 cents?
Where is evidence of CASH AT BANK?
Why borrow at higher interest rate when got huge CASH AT BANK?
Why Factory got burnt down after appointment of New External Auditor?

Posted by Frank Soweto > 2014-10-18 04:29 | Report Abuse

LOL Kc looks like we 'Missed' out on our annual presents from General 'Wolf' Lee AGAIN LOLLLL

http://www.bursamalaysia.com/market/listed-companies/company-announcements/1769965

this year really 'bad' luck, 'lost' in shares,now no more 'presents' from General 'Wolf' Lee n worst Epf lost my retirement savings too speculating in KNM LOLLL so cham lo LOL

on a more 'serious' note how come u know that they will issue ANOTHER Right not long AFTER the recent one :) u have crystal ball ah LOLL

Posted by kcchongnz > 2014-10-18 08:15 | Report Abuse

Frank Soweto,

Being a former investor of KNM in the 2000s, how do you like about the statement below?

[posted by friendship > Oct 18, 2014 07:57 AM | Report Abuse
I think the right issue call is fair
The price is very attractive and somemore for bonus warrant!
Most importantly, owners r committed to put in their own monies too!!!
I think KNM should rally next week, supported by much improved sentiment, higher oil price and broad market rally! Huat ah!!!]

"on a more 'serious' note how come u know that they will issue ANOTHER Right not long AFTER the recent one :) u have crystal ball ah LOLL"

How do I know the above?

You know when people asked me which share will go up, especially in the short-term,I always say I got no crystal ball in front of me because the market is unknowable. But answering your question above is like eating kachang putih; the writing is all over the wall.

Many of those who have learned in my course will be able to spot it, easily, close one eye. You know what? This is the more important thing one should learn if he wants to survive in the stock market, rather than always thinking about finding a multi-bagger in the stock market.

Sorry ah Frank, have to use your post above to do some marketing. You know when intend to do something good is ok to advertise, right?

Anybody interested in learning fundamentals of investing, email me at

ckc13invest@gmail.com

Posted by nokenzo > 2014-10-18 12:24 | Report Abuse

I strongly recommend any one who wants to make money in stock market to learn from Mr KC Chong, my most revered guru! I knew next to nothing about finance, let alone financial analysis, and I followed his financial course, so, on last Wednesday and Thursday, when there was blood bath, I dare to nibble certain stocks with confidence, and on Friday, I was one of the happy men in KLSE small time retailer. Of course anything can happen for the next few weeks but certainly, I am not SCARED. I am looking at 3 to 5 years' price! So, do you think you want this type of investment or just to listen to rumour or the so called certain analysts' recommendation?
Join me to attend Mr KC Chong's financial course, you won't regret.
Cheers!

Posted by Frank Soweto > 2014-10-19 04:56 | Report Abuse

Kc - Like? Honestly when I read this type statement I want to smack the hell out of them n very obvious u know they're ignorant n before long I can guarantee u they will not only lose their pants but will pening,pengsan n then likely jump off the building LOL
Sure You can be lucky sometimes punting in these longkangs but sooner or later your luck will run out n by that time u will be lucky if u still have a sane mind after many $$$$$ poorer. Unfortunately, am speaking from experience :(
For anyone who has been here for wat? say 3 years now already know that you're honest,very straight forward n extremely well versed with all these financial shenanigans of these crooks CEO/owner especially this General.
LOL Kc, I dun think u need my statement to help your promotion but if it helps by all means please use them ( I dun mind being an example coz it will ALWAYS remind me avoid these longkangs like a plaque :)). If they ( newbies ) are really SMART n who wants to be successful, getting to know you is already an advantage in this shark infested market n learning from u will not only improve their knowledge but will ensure their survival n their success from your guidance more so in volatile times like this. Your impressive record already speaks more for itself :)
Every time I see stupidity (sorry la a bit harsh but beh tahan )the first thing I suggest (if they ever listen) is to get some education at least the basic fundamentals before spending so much money investing opps speculating in these longkang shares n losing their pants off n the first person that comes to my mind is who else but you :) n if they're really smart they will know that your fees are really kachang putih compared to the much2 more $$$$$ that they will lose from punting in these longkangs. Unfortunately, sad but true there are just too many penny wise pound foolish lazy ignorant punters always looking for hot tips n the flavor of the day hoping to make an easy killing but getting killed instead :( How else u think General 'wolf' Lee can have so many loyal bravehearts despite keep coming out with all these 'gifts' that he is ASKING (like u mentioned before LOL ) from them :)
U need one good example out of the plenty there in KNM Thread? - if u have time check out this Ahmad postings with his earlier ave down 'strategy' before he finally come to his senses - well of course as always after losing his pants but then give him a little credit - not many people do n most continue to be ignorant :( . let me warn u first before reading that your stomach might churn LOL

Posted by jacklintan > 2014-11-21 14:55 | Report Abuse

kcchongz: I would like to hear you elaborate on KNM please. Thank you.

Posted by kcchongnz > 2014-11-21 16:02 | Report Abuse

Posted by jacklintan > Nov 21, 2014 02:55 PM | Report Abuse
kcchongz: I would like to hear you elaborate on KNM please. Thank you.


jacklintan,

I am happy that you help to revive this thread. You know I consider this as one of my best posts. Self praise ah?

Haven't I loso enough on KNM? Well actually when talking about rubbish I can never have enough. Good intention mah, trying to warn newbies.

I recommend you to read this article here:

http://klse.i3investor.com/blogs/kcchongnz/62293.jsp