Posted by kcchongnz > 2014-04-07 18:50 | Report Abuse

Don't you see the same story?

Good cash flow from operations with CFFO/IC>12%
Good free cash flows
High return of invested capital > 10%

Like Buffet says, "I always know that I will be rich"

Posted by AyamTua > 2014-04-07 22:52 | Report Abuse

follow this tips to live longer in the dark woods!

Posted by kcchongnz > 2014-04-08 05:56 | Report Abuse

"“You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right.”"
— Ben Graham

Posted by Pak Lah > 2014-04-08 16:13 | Report Abuse

Good write up. Thanks Tan KW.

Posted by kcchongnz > 2014-04-14 06:22 | Report Abuse

[Check These Three Rules of Thumb Next Time

1)Check to see Operating cash flow is at least 12% of the total capital invested. Rising consistently year over year.
2)Look for ROCE (Return on Capital Employed) above 10% as a benchmark. Anything above 15% consistently is spectacular. Also, smaller companies and companies from emerging markets should also exceed 15%.
3) FCF positive at least 5 out of the last 10 years]


A case for Kumpulan Fima

Why use Kfima?

1) This is the only few stocks I have been monitoring very closely and have all the financials.
2) Many of my other stocks do not have a history of more than 10 years public listing.
3) Please note that as Kfima has a cyclical major business in palm oil plantation, there won't be continued improving results year after year. What we can see is the trend; does the trend tell us the performance is rising, and hence a strong business?

Let us see how Kfima fits in this article.

Metric/Year 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 Average
CFFO/TC 6.2% 17.1% 19.3% 18.8% 10.5% 12.4% 3.0% 9.3% 8.3% 14.7% 12.0%
FCF + + + + + + + + + + +
ROCE 12% 15% 15% 14% 13% 9% 10% 12% 8% 5% 11.4%

Item 1, it meets the requirement with an average CFFO 12% of total capital employed for the last 10 years. There is evidence of rising number. Average CFFO/TC was about 15% for the last 5 years.

Item 2, average return of total capital is 11.4%, above the 10% requirement. The ROCE has been rising and the average for the last 5 years is about 14%.

Item 3, FCF has been positive, not only 5 of the last 10 years, but all the past 10 years.

So can we conclude that Kumpulan Fima has a strong business according to the rules in this article?

What other company do you have which meets the requirement of this article? Please share.

Posted by AyamTua > 2014-04-14 06:29 | Report Abuse

kcchongnz : hopefully the shared general rules of thumbs can be applied to all preferred stocks. thank you.

Posted by rlch > 2014-04-14 07:35 | Report Abuse

As a bias person, he bet he won't do that. Sorry I have to go to work now.

Posted by ssmart > 2014-04-21 06:53 | Report Abuse

hi, for the free cash flow calculation above, it is operating cash flow + investing activities (CAPEX + etc) + financial activities (loan repayment). Isn't that net cash instead of free cash flow? Hope you can shed me some light

Posted by ssmart > 2014-04-21 07:01 | Report Abuse

another question :) for the total capital, only long term debt and equity included. how about short term debt?

Posted by talkking > 2014-04-21 11:46 | Report Abuse

1 rule only

invest in good superb hebat ppl.management r ppl.ppl run business.

goreng stock apa pun bolih