Posted by kcchongnz > 2014-05-29 18:10 | Report Abuse

Intelligent Investor, good work.
But I just wonder people care about all these numbers or red flags. Just for curiosity sake, let us try to fathom what those numbers mean.

You got your Return of assets (ROA) of 2.2% in this thread and return of equity of 4.15% here:

http://intelligentinvestor8.blogspot.co.nz/2014/05/dupont-analysis-apollo-vs-lonbisc_6394.html

Imagine you put in 1m and borrow another 1m to buy equipments and some working capital for a food business. So total asset is 2m. Your business makes a net profit of 44k (ROA=2.2%). Are you happy about it?

And from your equity of 1m, you make a net profit belong to you of 41,500 a year (ROE=4.15%). Are you happy with it? Hack, for me I rather go work as a clerk and I can easily earn that amount of money without any capital nor stress.

Or I just put that 1m in bank deposit I will earn that amount of money without any stress nor any risk. And the interest I earn is cash interest.

And what kind of return is that investing in LonBisc, a "return" in terms of more PPE, receivables and inventories!

Oh we haven't come to cash flow yet. How do you like when the business tells you that yeah, we earn some profit but the profit is not enough to pay for some more equipment, as the old ones need replacement. Give me more money.

The business is turning around? How much more it makes? Double, triple? Even with that, is that enough for the risks you are taking? Need to put in more money into the business again or not?

Posted by submarine > 2014-05-30 08:21 | Report Abuse

I am from JB and we can watch Singapore TV channels. In the past 2 years, LonBisc poured big money to sponsor their Mediacorp Star Awards. It got the most coverage for its London Chocolate Roll during the show so I guess it should be the biggest sponsor.

I always wonder why LonBisc needs to spend big on a small market like Singapore? Don't they feel that there is a mismatch between a Star Award where people look for glamarous things and a less than S$1 Chocolate Roll?

If they have money to spend they should change their packaging and food quality. The packaging looks cheap and food quality tastes cheap. The TV ads looks cheap too. It is definitely not appealing to the general Singaporeans.

Posted by submarine > 2014-05-30 10:26 | Report Abuse

To LonBisc shareholder, this is how your money is spent -- http://m.youtube.com/watch?v=SVbnyjwh1vg

Posted by tjhldog > 2014-05-30 11:02 | Report Abuse

Sigh, young man can never be spared for this type of glamour

Posted by Intelligent Investor > 2014-05-30 14:33 | Report Abuse

Look at Mr. Chong comment and Think about it. Why not put the money to bank FD to get a better return? And it is risk free and you can sleep well.

Posted by Intelligent Investor > 2014-05-30 17:40 | Report Abuse

"Growth creates value only when it takes place within the limits of a strong and sustainable company franchise, and these are rare. Second, not all growth - even growth that is worth something - can be appraised with enough precision to permit an accurate valuation." - Bruce Greenwald

Posted by kcchongnz > 2014-05-30 18:45 | Report Abuse

London Biscuits 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%. Your analysis of ROE based on last year's data is already very miserable at 4.15%, way below the required return of any sensible investor. So look like the expected ROE this year is 2.5% (?). How?

Where is the widely talked-about turnaround?

Already stopped investing in PPE? I can see its PPE increased some more from 517m to 528m now. How?

Posted by hwang112 > 2014-05-31 09:34 |

Post removed.Why?