Posted by chang0509 > 2014-06-06 16:06 | Report Abuse

Mr KC Chong, Parkson has dropped to such level. Currently rm2.42 .Can we buy more to average down the price at current level? The business model is it still competitive and resilient for long term investment? Tq

Posted by kcchongnz > 2014-06-06 16:30 | Report Abuse

Parkson's share price dropped unabated due to its worsening quarterly reports. This is probably due to the bad economic situation in China where it has the most presence. What is it future like, like its foray to Indonesia and other Southeast Asian countries, I have no idea and I don't follow the company.

Earnings down is one thing. You have to look at its cash flows. It may have a lot of cash flows and free cash flows as it own a lot of properties which may have a lot of depreciation which is non cash. Another thing at its present price which has been beaten down a lot, is it worth buying? Then you must have a feel of its value.

Value investing is not know all. It is also staying within its circle of competence.

Posted by stockoperator > 2014-06-06 18:04 | Report Abuse

Pintaras is quite a Classic example.

Buying Securities and managing the fund is a Highly regard profession.

Posted by stockoperator > 2014-06-06 20:07 | Report Abuse

Best article so far.

You cant invest without confidence and understanding.

1) Challenges remain for professional eye to appreciate One.
2) after researching high and low, eventually we create a portfolio. Again the challenge is portfolio and money management and risk management.

A highly conscious mind knows what happens.

Posted by calvintaneng > 2014-06-06 20:52 | Report Abuse

Value Investing is easier than DEEP VALUE INVESTING. I bought Insas when it was 50 cts & Ptaras long ago at RM1.40.

And venture fund which invested in Public Bank's Pre IPO shares has earned a Million RM for every single ringgit invested.

But in its earliest infancy a new start up may or may not succeed. There is some form of calculated risk or speculation. That's why we have to diversify even in value investing.

Peter Lynch said that if we diversify into 10 different value shares - 2 or 3 might go bankrupt But if one turned out to be a 10 bagger someday - we will be fully protected & rewarded

Posted by Pak Lah > 2014-06-07 09:30 | Report Abuse

Calvintangeng, mpcorp a 20-bagger?

Posted by sunztzhe > 2014-06-07 09:47 | Report Abuse

What is the rationale for owning stocks which has "intrinsic value" but it hardly moves and one has to hold it for years expecting it to move up and in the process test one's patience to the limit? What is the opportunity cost of invested capital then?

Wouldn't it be better to focus on stocks that has "reasonable intrinsic value" but it has strategic minded management and a business model that drives UP value of its share price??

Moreover an investor must be able to realize value, free up capital and look for another investment opportunity. As such the prospect of increasing profit growth over several years is the most important criteria for me.

It is pointless to own an intrinsic value stocks that has no profit growth, no prospect of increasing profit growth or for that matter decreasing profit prospects or uncertain profit prospects.

The invested capital has to give reasonable expected returns for any investor within a certain time frame but certainly not years of waiting. If not I will cut out and seek another investment opportunity.

Posted by calvintaneng > 2014-06-07 10:18 | Report Abuse

Pak Lah,

MP Corp a 20 bagger? I really do not know exactly. If I can see the future I would have bought Focal Aims at 11 cts. Now a 40 baggers (EcoWorld).

Years back I bought NamFatt at 45 Cts but forgot to buy Muhibbah at 70 cts. To my surprise Muhibbah rose from 70 cts to touch RM10.00 (13 baggers) but NamFatt only doubled to 90 cts. Then BN lost its 2/3 Majority in Election & KLSE dropped until it was suspended trading for 1 hour. I sold off NamFatt at 50 Cts.

NamFatt crashed further till it was delisted. NamFatt has NTA of RM2.00 when it went bankrupt. Why?

NamFatt has 1,000 acres very prime land in Phang Nga Bay, Thailand & Some in Negeri Sembilan. When the Tsunami hit Thailand in Year 2004 many people died in Phang Nga Bay. So 1,000 acres prime tourism land became haunted rubbish.

So it is not Just Any Asset (NTA) but the Quality of The Assets At Current Value or Future Value That Counts.

For MP Corp - the Share Price is in distressed level due to its many problems. The Real Value Is In Its Prime Lands. Will future be favourable for MP Corp? Will it rise up like its neighbour Scientex & EcoWorld?

Posted by calvintaneng > 2014-06-07 10:55 | Report Abuse

Sunztzhe,

I think you have spoken up for all logical and rational investors. These thought processes I have come across many times from Value Investors, Successful Stock Brokers, Bankers and people from all callings and walks of life. And almost all of them are Successes in their own field of expertise. So it is right and proper for so doing.

But to get a better yield involve a higher level of understanding and some calculated risk.

I got some experience from The Car Business in the 1990s

If you want to sleep well every night in those days you better sell Protons & Kancils. They are bread and butter cars. No selling skill is involved. And so is the commission - RM300 to RM500 per car.

BUT If you want good commission better sell Peugeot or Renault - you get 10 to 20 times more per car. So selling One Renault is better than selling 20 Kancils.

One Very Successful Car Dealer Sold A Lorry One Day. He discovered that the lorry's margin of profit is far better than selling cars. He immediately switched to selling lorries. For lorries & commercial vehicles you need permits & JPJ & Later Puspakom inspections and all kinds of extra troubles.

After 20 Years My Friend, Mr Chia, The Lorry Seller in Klang Has Out Distanced all my other car dealer friends in KL. Selling a Kancil is easy but selling a Lorry is hard. You must find the market. And he is wise to move his operation from Sungai Way To Klang. And Port Klang needs lots of lorries. And he speaks good hokkien too.

That's why there is a book called,"Common Stocks; Uncommon Profits" by Phil Fisher.

Not every one is satisfied with average performance. That's why Sir Edmund Hilary conquered Mt Everest & Apollo landed on the moon.

For the rest of us just play safe.

Posted by kcchongnz > 2014-06-07 11:57 | Report Abuse

Posted by sunztzhe > Jun 7, 2014 09:47 AM | Report Abuse
What is the rationale for owning stocks which has "intrinsic value" but it hardly moves and one has to hold it for years expecting it to move up and in the process test one's patience to the limit? What is the opportunity cost of invested capital then?

ME: THAT IS WHY VALUE INVESTING IS DIFFICULT AS EXPLAINED CLEARLY IN THE ARTICLE.
• You need to have patience, and a lot of it
• You must be disciplined
• You must mind your behaviour
• You must know when to go against the crowd
• You must read a lot (annual reports, investing books etc.)
SO DO YOU THINK YOU HAVE ALL THOSE ABOVE?

Wouldn't it be better to focus on stocks that has "reasonable intrinsic value" but it has strategic minded management and a business model that drives UP value of its share price??

Moreover an investor must be able to realize value, free up capital and look for another investment opportunity. As such the prospect of increasing profit growth over several years is the most important criteria for me.

ME: JUST TALK NO POINT. LET US GET SOME DATA. I AM SURE YOU WOULD RANK GAMUGDA’ MANAGEMENT AS “STRATEGIC MINDED”, AND WITH “A BUSINESS MODEL THAT DRIVES UP VALUE OF ITS SHARE PRICE” COMPARED TO PINTARAS 5 YEARS AGO. YOU CAN ALSO “ABLE TO REALIZE VALUE, FREE UP CAPITAL AND LOOK FOR ANOTHER INVESTMENT OPPORTUNITY”

EXACTLY 5 YEARS AGO THE ADJUSTED SHARE PRICE OF GAMUDA AND PINTARAS WAS RM2.80 AND 63 SEN RESPECTIVELY. TODAY, THEIR ADJUSTED PRICES ARE RM4.56 AND RM4.11 RESPECTIVELY.

THAT WAS BECAUSE PINTARAS WAS DEEPLY UNDERVALUED WITH INTRINSIC VALUE WAY ABOVE ITS STOCK PRICE THEN, ITS INTRINSIC VALUE KEEPS ON INCREASING EVERY YEAR. AND GAMUDA, EVERY FUND OWNS GAMUDA AND ITS PRICE WAS NO DIFFERENT FROM ITS INTRINSIC VALUE 5 YEARS AGO, AND ALSO NOW.

SO WHAT IS YOUR “LOSS IN OPPORTUNITY COST” OF YOUR INVESTED CAPITAL IF YOU INVEST IN SUCH A “USELESS DEEP INTRINSIC VALUE” STOCK OF PINTARAS COMPARED TO YOUR “REASONABLE INTRINSIC VALUE BUT STRATEGIC MINDED MANAGEMENT” COMPANY OF GAMUDA?

It is pointless to own an intrinsic value stocks that has no profit growth, no prospect of increasing profit growth or for that matter decreasing profit prospects or uncertain profit prospects.

ME: HAVE YOU MISSED SOMETHING ABOUT WHAT INTRINSIC VALUE IS AND HOW IS IT DERIVED?

The invested capital has to give reasonable expected returns for any investor within a certain time frame but certainly not years of waiting. If not I will cut out and seek another investment opportunity.

ME:ARE WE TALKING ABOUT VALUE INVESTING OR TRADING IN THE STOCK MARKET HERE? I THOUGHT MY ARTICLE IS ABOUT INVESTING.

Posted by youlee > 2014-06-07 12:17 | Report Abuse

Kcchongnz, did you invest in nz shares during the 1988 period when prices of many stocks were like cents? Tks.

Posted by stockoperator > 2014-06-07 12:20 | Report Abuse

Aiyo, KC, Sunztzhe is making comment to Calvin ideas of Net net asset investing lah. You know how to read business but not reading people mind ke?

Posted by kcchongnz > 2014-06-07 12:31 | Report Abuse

Posted by stockoperator > Jun 7, 2014 12:20 PM | Report Abuse
Aiyo, KC, Sunztzhe is making comment to Calvin ideas of Net net asset investing lah. You know how to read business but not reading people mind ke?

yeah lah, I don't know how to read people's mind for sure.

I thought of deleting my comments. but I think an apology to Sunztzhe is more appropriate.

Sorry my fault.

Posted by kcchongnz > 2014-06-07 12:38 | Report Abuse

Posted by youlee > Jun 7, 2014 12:17 PM | Report Abuse

Kcchongnz, did you invest in nz shares during the 1988 period when prices of many stocks were like cents? Tks.

In 1988, I was still a young engineer in DID. With housing loan, car loan, co-op loan etc, my take home pay was negative. Where got money to invest?

Even now I don't invest in NZ shares. I looked at them once and they were fully valued. Bursa got a lot more opportunities.

The grass on the other side is not necessary to be greener.

Posted by calvintaneng > 2014-06-07 13:08 | Report Abuse

KCChongNz,

No need to delete your comments. You words are far more valuable than many out there. See the majority are going round and round in circles. Ever learning but never arrive at the truth of the matter.

I have been looking at a neglected stock call PPG (Pelangi Publishing Group). It has its Office in Taman Pelangi, Johor. The 3 shophouses were bought for about RM1 Millions or slightly more for all 3 units.

Recently along the same row One Unit of 3 Storey Shop was offered for Sale. My friend Andrew quoted RM1.6 Million for it. But it was sold to a Singaporean for RM1.8 Millions - only few doors away from PPG HQ.

So if PPG 3 Shop Lots if Revalued Should be RM5.4 Millions (Current Value)

To me PPG has Very Undervalued Assets. And since they sell Educational Books I think the Business is Recession Proof.

I am not sure about its other financial figures. May be you can do a study on it.

Posted by stockraider > 2014-06-07 13:26 | Report Abuse

Hi Calvin,

PPG looks undervalue....its nta before revaluation of its properties already Rm 0.94 per share, compare share price rm 0.54.
This counters pays dividend about rm 0.02 per year giving a yield of 4% pa,
EPS rm 0.06-0.07 per share or Pe 8x.

The balance sheet is strong....net cash...meaning dividend can sustained loh.....!!

Good for long term investor mah....!!
Short term.....not doing well....bcos one....of director Lee is disposing....but I think after the stock clearance.

This share can reflect a fair value...I think say Rm 0.70...!!

Posted by kcchongnz > 2014-06-07 13:37 | Report Abuse

I agree with stockraider that PPG is a deep value stock compared to its share price. Steady earnings and cash flows too. However it won't appeal to growth investor.

For me its current value Vs price attracts me and it is in my value portfolio. If the dividend yields is 4%, I don't see why not.

Posted by stockraider > 2014-06-07 13:41 | Report Abuse

Kcchong....I think u should look into AUSSIE share....instead...it do offer some good opportunity based on valuation and dividend yield

Posted by calvintaneng > 2014-06-07 13:50 | Report Abuse

Stockraider,

Very good to see you here. I was busy lately doing renovation work in Iskandar. And yes, the 3 Shoplots of PPG HQ has been renovated whereas the one recently sold for RM1.8 Million nearby is in original condition.

KCChongNz,

My son is studying in Australia. He wanted to learn investing in Aussie Market. I can't help him as I don't have any idea. It would be interesting if you could list some for case study.

Posted by stockoperator > 2014-06-07 14:12 | Report Abuse

Dear Calvin, we will never shun Net Net asset investing as when we are investing in good business we are also looking at its asset for downside protection.

It is MORE IMPORTANT to know that when you are Wrong than when you are Right in your pursuit. LET me do a simple Reverse analysis here as You must know when you are Wrong:

1) If you are investing on Deep Net asset value, you must recognize time postponement, negative cash flow, sluggish Business, Power of Execution before realizing Future value of your deep value of Asset;

To mitigate the Risk, you might need Accurate insider Information and ONLY Invest based on HARD FACTS;

BE conscious enough to recognize and accept WHEN YOU ARE WRONG than when you are Right. Don't be speculative BUT only only invest based on FACTS and FIGURES. It is alright if we miss the first initial Insider Move;

2) If you are investing on Good Business Prospect, you must also KNOW WHEN YOU ARE WRONG even though you may dwelt on its earning power to be around for sometimes.

IS company being able to re-invest its retained earning? Is there better opportunity? IS company profit margin declining or improving? IS company doing outside non core and non operating investment to enrich themselves? Has company being able to grow its Business?

YOU MUST BE MORE CONSCIOUS AND COURAGEOUS TO KNOW WHEN YOU ARE WRONG THAN INSISTENCE YOU ARE ALWAYS RIGHT.

And Being confidence enough also to stick around knowing that you are Right.

Posted by stockraider > 2014-06-07 14:28 | Report Abuse

My view of right and wrong....is based mathematically formula.
A stock....no matter how undervalue....u could be wrong in your selection mah....!!

Therefore...u must select at least a few different stocks....so that u can avoid...the freak risk of wrong selection.

Posted by stockoperator > 2014-06-07 14:39 | Report Abuse

Dear Raider, yes diversification a bit is the Way.

My concern is more towards BE conscious and to know if you are Right or Wrong. Knowing And acceptance of the facts and Moving on. Being confidence and courageous when you are Right.

Posted by calvintaneng > 2014-06-07 14:51 | Report Abuse

Thank you Stockraider,

That is an excellent piece of advise. I heard you attended a Meeting in Penang which Dr. Neoh Soon Kean also attended. Any sharing about Dr. Neoh?

Years back I drove to Penang to look for him but was told he already in "semi retirement" or already retired. I owe a lot to his writings.

Posted by NOBY > 2014-06-07 15:32 | Report Abuse

Sasbadi IPO.may cause rerating of PPG fair value....

Posted by sunztzhe > 2014-06-07 16:57 | Report Abuse

Wow, there is so much passion here which is really a good thing though and please by all means do express your views with passion as well. It makes the discussion even more interesting!!

Stockoperator, Yes, you are indeed very good in reading in between the lines, a rare skill indeed.

Kcchong, I would consider Gamuda as a stock with a high degree of political affinity but I have never invested in it though and moreover I would not really invest in big caps as there is not much margin of safety or rather it is "fairly valued". My focus will be on mid and small caps which has the prospect of increasing EPS over the next few years.

Posted by digiuser016 > 2014-06-07 20:31 | Report Abuse

Hi Kcchong,

I have never recommended anyone to buy them, knowing that it is extremely difficult to gauge the short-term movement of share prices. Many of them I do not own any more now, even though they are still way below my intrinsic values computations

What factors that affect you to sell the stocks?
If They are still way below your Intrinsic value, the quality of the business does not deteriorate( i assume), why did you sell the stocks?

Posted by stockoperator > 2014-06-07 20:37 | Report Abuse

My Dear Sunztzhe: It just happens that you are my type that is all. I know it from beginning and you are not going to change Overnight.

But somebody does not know after so Long, writes such a Long comment some more until i tell him. Pity him writing so much. You should apologize for bad writing instead of him apologizing.

Posted by sunztzhe > 2014-06-07 23:08 | Report Abuse

Hi Stockoperator,
This is an excellent forum for exchange of ideas and ones investment philosophy or rather one's investment strategy. Every one is free to exchange their investment views whether with passion or in a subdued manner but nevertheless this does not detract us from the ultimate objective of a better understanding and a learning process for each person's investment strategy.

We must all rise above personal trivialities and look forward towards the greater benefit arising from a healthy exchange of investment ideas that will eventually lead to better returns on invested capital for everyone.

Posted by stockoperator > 2014-06-07 23:31 | Report Abuse

Ha Ha Dear Sunztzhe, look at your writing. I had read it three times to understand. no wonder...anyway You can help KC to compile a Book.

Posted by sunztzhe > 2014-06-07 23:42 | Report Abuse

Ha Ha Stockoperator, I m not in biz to compile a book. I m in to make good returns on my invested capital and not having to wait years to achieve that!!

Posted by stockoperator > 2014-06-07 23:49 | Report Abuse

Dear Digiuser:

Don't be too meticulous or academic about arriving the intrinsic value which you might think it is the grandest idea to do so as the assumption and conditions might deviate sometimes. It can be conservative or aggressive depends on the models and assumption and projection which ties to investment climate and risk on/off again. Certain conditions might not be ripe Now and investors is opting for longer horizon.

There might also be financial risk, market risk and earning visibility or other alternate opportunity or balancing of portfolio and risk appetite that the investors are weighing into it.

Surely when timing and condition is right again, investors will come back again and again and reinvest.

Posted by stockoperator > 2014-06-07 23:53 | Report Abuse

Dear Sunztzhe, look at my writing above. Same as yours. Learning from you fast.

Posted by sunztzhe > 2014-06-08 00:10 | Report Abuse

Stockoperator,
Ha ha ha, I try to summarize
- Be flexible on your Intrinsic value as you are not God
- Be prepared to realize profit when there is exuberance which gives you opportunity to cash out.
- Cash out, Look for better opportunity, Go to sideline and reenter when macro conditions turn bullish again

Posted by stockoperator > 2014-06-08 00:22 | Report Abuse

Well something likes that. Minor adjustment of portfolio once a year to balance your cash holding/investment holding, risk appetite, growth projection and things like that.

Posted by kcchongnz > 2014-06-08 06:11 | Report Abuse

Posted by digiuser016 > Jun 7, 2014 08:31 PM | Report Abuse
Hi Kcchong,

I have never recommended anyone to buy them, knowing that it is extremely difficult to gauge the short-term movement of share prices. Many of them I do not own any more now, even though they are still way below my intrinsic values computations

What factors that affect you to sell the stocks?
If They are still way below your Intrinsic value, the quality of the business does not deteriorate( i assume), why did you sell the stocks?


I don't know about you, my financial resources is limited. I can't own hundreds of shares, and I won't just own a couple. I am also limited in my knowledge about so many shares in Bursa. So what I did was buy a share when it is way below its intrinsic value, sell it when it rises close to the intrinsic value. But often it was more of I thought i have found another better value stock to buy and as I have said, my capital is limited.

If you are interested in my thought of "when to sell", you can refer to the link here and here:

http://klse.i3investor.com/blogs/kianweiaritcles/43016.jsp
http://klse.i3investor.com/blogs/kcchongnz/53034.jsp

Posted by Steven Yong > 2014-06-08 19:41 | Report Abuse

Pelangi definitely recession proof

Posted by stockraider > 2014-06-08 22:13 | Report Abuse

Hi Calvin....one thing.........i notice...in your stock selection is always............there is some undervaluation of properties somewhere.

Clearly this is calvin's forte.....!!

Can u explain. to us the recent.........Johor Sultan...involvement in land matters..............how would impact the Johor's properties valuation n confidence ??

Posted by sense maker > 2014-06-08 23:09 | Report Abuse

Some minuses of Pelangi which dissuaded me.

1) Students are going online for purchase of reading materials and this trend is set to continue inexorably.

2) Government has opined that the publishers in Malaysia work like a cartel on pricing their books making them out of reach of students from poor families, and may implement measures to promote or induce greater competition in the market.

Pelangi has great BS but its long term earnings prospect is clouded.

Posted by chrisyap > 2014-06-08 23:17 | Report Abuse

just to satiate my curiosity, notice ppl see it probably a bit undervalue now rather than its long term!

Posted by sense maker > 2014-06-08 23:35 | Report Abuse

A company's intrinsic value is calculated using its DCF over long-term.

Posted by calvintaneng > 2014-06-08 23:36 | Report Abuse

Dear Stockraider,

Yes! I am very concerned for the Quality of NTA because of 3 lessons

1) NAMFATT. I bought NamFatt at 45 cts because it has NTA of RM2.00. But part of NamFatt's NTA consists of 1,000 acre Prime Lands in Phang Nga Bay, Thailand.
In Year 2004 the Tsunami killed many people in Phang Nga Bay & the lands became valueless overnight.

2) MEGAN MEDIA

Megan Media I bought at 78 Cts when it has NTA of over RM2.00. Its P/E was 3 and also pay a dividend.

Later the Assets were found to be fake. And Profits were all receivables.

3) Fountain View
I Bought Fountain View at about 40 cts after Price Has Crashed From Over RM5.00. It also has High NTA of over RM2.00 Its NTA consists of Cheap lands in lousy locations.

All 3 went bankrupt. I escaped NamFatt at 50 Cts. As for Megan Media I Sold All at 76 Cts For A Small Loss BECAUSE I SAW DIRECTORS SOLD ALL AND PARACHUTED. I had 20 Lots of Fountain View. When It rebounded to 35 cts I sold 10 lots. But I got caught for 10 lots (RM4,000) When Fountain View Closed Shop.

So From Then On I Need To Know Not Just Any Assets BUT THE QUALITY OF THE ASSETS. More so now as I am managing over 25 properties for 4 Investors.

They are located in all parts of Iskandar. I know by now where is booming and where I should not have invested in the first place. If given another chance I would buy all in Bukit Indah, Horizon Hill & JB City Area.

Regarding the Johor Sultan His Majesty Is A Really Good Businessman. He partnered Remisier King Peter Lim of Spore in Building Vantage Bay & Motorsports City. He is also a philanthropist who care for his people. So I think Iskandar Should Do Well.

Posted by calvintaneng > 2014-06-09 00:42 | Report Abuse

Sense Maker,

What you say do make sense. Some times experience do play a part.

I was a Book Seller for 5 years (1982 - 1987) The Bookstore was called "BEREAN BOOK CENTRE" in KL. Owned by A Church Group selling Bibles & Christian Books. It is Recession Proof.

Pelangi Publishing Group Publishes Educational Books In Printed Form And Also Follow The Trend In Going Digital.

Whether student buy direct or buy online is immaterial as Pelangi is the Publisher. This is the Cost Structure For Books

For A Book Priced at RM10.00.

Cost of production = 25%
Royalty to author = 5 - 10%
Discount For Book Wholesaler (Bulk Purchase By Cash Preferred} = 25%
WholeSaler Discount For Retailer (Credit of 30 days to 60 days) 10% -15%
Publisher might entertain retailers who buy in bulk.

As you can see the Gross Profit - Cost of Publication (25%) Royalty (10%) Discount To Book Sellers (25%) is 40%.

Recently there was a 30% Price Hike for Paper & Paper Related Products. Prices of Muda, Ornapaper, Cenbond, Master Pack & Asia File Surged.

Two Paper Related Counters Have Not Moved Yet - KPSCB & PPG.

As to Govt Controlling Cartels they have been controlling prices of Cooking Oil & Chicken. Even so YEE LEE (Oil palm) & and Chicken counters like LTKM, Lay Hong & Huat Lai have surged in price.

So Paper Products should survive & also prosper.

Daniel 12:4 Says, "In The End Times Many Shall Travel To And From & KNOWLEDGE SHALL BE INCREASED."

Knowledge is not an option BUT A NECCESSITY

Posted by stockoperator > 2014-06-09 02:24 | Report Abuse

Lets do a Reverse analysis in value investing:

1) High dividend yield is a criteria But not the only criteria. IF we are in the market just for High DY we might as well put money in FD, fair?

2) Net asset of a company is a criteria BUT not the only criteria. An old Bungalow house does not necessarily fetch the same market value as New gated Bungalow developed by SP Setia just in front, fair?

A plantation land in Kelantan with low yield does not necessarily equates to Utd Plant land for sure, right?

As not a single Business is the same, same applies to same category of asset. They are NOT of THE SAME VALUE, fair?

3) Growth is part of value and criteria BUT not the only criteria. Any companies in Bursa also can post certain growth in certain years, fair? Is there any difficulty in achieving growth anyway? Not at all, just use some debt to Buy some mediocre performance asset, fair?

Well, A really good Business will continually generate good cash flow, its asset is Highly valued and sought after, and being able to grow strength from strength in years to come.

A) Look for past ten years. Has the company been able to achieve above criteria and the achievement is within your expected rate of return?

B)IF YES then we have to question its future prospect for the next 5-10 years at least and its Earning Power.

C)IF YES AND YES, then what price do we pay? More importantly, how much do we invest? Most importantly, how much more allocation we will put into it for the next 5-10 years? We are in market to build wealth not for one-off profit, REMEMBER?

FAIR?

Posted by stockoperator > 2014-06-09 02:34 | Report Abuse

My Dear Calvin, the Light is within your our self Image and Hide within our Ego. The Knowledge is Know Thy self. ya.

Posted by stockoperator > 2014-06-09 02:40 | Report Abuse

Surely you know the house value is different after your masterly renovation right?

Posted by calvintaneng > 2014-06-09 08:56 | Report Abuse

Good Morning Stockoperator,

I have One Thing Uppermost in Mind When Investing. Actually very simple. IT IS THE MARGIN OF SAFETY.

I learnt this by studying how Banks give out loans. They are Very Afraid of NPL (Non Performance Loan) They want to know the Assets they finance and the quality of borrowers. At one time Public Bank will not finance Kota Masai houses by Focal Aims (Now EcoWorld) Why? They were all lemon houses with lemon borrowers there.
I think because EcoWorld has taken over Kota Masai all Banks will be willing to give out loans for Masai Properties by now.

2 Years Ago, one retiree booked a new Cluster house in NUSAJAYA. As he is already retired there is no proof of proper income. So all Malaysian Banks rejected his loan application. BUT UOB BANK (From Spore) is willing to give him 70% loan. Why?

The Loan Officer's Logic Is This. The VALUE OR MARGIN OF SAFETY HERE LIES IN THE INTRINSIC VALUE OF THE SEMI-DETACHED CLUSTER HOUSE OF NUSAJAYA. Should the borrower default the property ITSELF IS THE COLLATERAL. It will definitely be taken up if Sold In Foreclosure. Since UOB Bank only lent him 70% There IS A HUGE MARGIN OF SAFETY FOR UOB BANK. (Incidentally, UOB (Spore) Has Done Very Well.)

My son attended A VALUE INVESTOR's CONFERENCE In Spore. One of the Work Shops was to divide the people into many different groups and compete against each other to see how well they performed.

There were 3 Companies - 1) Company with High Growth or Low P/E) 2)Company that pays a Very Good Dividend & 3)Company with High NTA. The time period to actualize performance is instantanous.

The Result Came Out That The Group That Selected Company With High NTA came out First.

You see When You Bring Time Forward To The Immediate Present Moment & Liquidate Every Thing. The One With The High NTA Delivers The Highest Value or Reward.

Of course as investors we should not just look at one time gain. However, beyond our control undervalued companies are often taken private by Top Management. And if Privatization is generous with a Good Buy Out Price. Why not?

Posted by stockraider > 2014-06-09 09:12 | Report Abuse

Actually Margin of safety can be derived based on NTA, Earnings, Cashflows, dividends, breakout value and earnings growth.

Most important u must buy the asset way below the intrinsic value.
The diff between intrinsic value n purchase price = margin of safety.

So key criteria to margin of safety is valuation and purchase price loh..!

Posted by calvintaneng > 2014-06-09 09:49 | Report Abuse

Yes Stockraider,

Totally Correct! One Stock Broker Highlighted 2 counters' CASH VALUE As Above Share Prices. 1) ILB 2) Sungai Bagan. Could you please do a study on them?

Posted by cheongcy > 2014-06-09 10:42 | Report Abuse

Hi Calvin, I sort of agree with you that we should value a company the way a bank value a personal loan or whatsoever. Take personal housing loan for example, the bank will only approve a loan if there is significant residue left (after all other personal debt obligation & basic living expenses) for monthly instalment. In the case of common stock valuation, the residue left is either dividend or free cash flow that is readily distributable as dividend. If we able to project the residue left for common stock to the future and discount it with an appropriate rate, that’s the intrinsic value of a company.

Posted by cjzion > 2014-06-09 10:47 | Report Abuse

Good discussion between Calvin & Stockraider. I am also an exbanker and your financial views on companies is eye-opening.