Posted by chrisyap > 2014-06-11 15:47 | Report Abuse

tq raider PPG !

Posted by chrisyap > 2014-06-11 15:48 | Report Abuse

cenbond !?

Posted by sunztzhe > 2014-06-11 17:28 | Report Abuse

Raider very good comments loh!!
Raider ultra gold hawk loh!
sunztzhe accept Raider views with open mind mah
means sunztzhe mind still open to raider ideas mah
Don't believe sunztzhe meh?

Hiyah gold/diamond can be present to wife/partner mah
Gold/diamond not make wife/partner happy meh?
Raider make so much money from hurdle rate investment loh
Sure Raider can buy gold/diamond as birthday present to wife or partner mah
or raider buy undervalue shares and give share certificate to raider wife/partner loh!
Which present has higher perceived utility value loh?

of course lah..raider very competent in margin of safety technique loh
just like money religion to raider mah, No meh?
imagine raider live through hyperinflation, can still do hurdle rate investment technique mah, No meh?

Best time to do hurdle rate investment technique and act on it is near/at peak of inflation, near/at peak of interest rate mah
No point doing and acting on hurdle rate investment technique at beginning and mid way of hyperinflation period mah
Raider no agree meh?

Posted by stockraider > 2014-06-11 17:34 | Report Abuse

Raider...don know whether.... sunz agree or understand....what raider say loh...!!

The key point raider conveyed
"Margin of safety investment can be used for all season...whether inflation or no inflation mah....!!"

Posted by stockoperator > 2014-06-11 17:44 | Report Abuse

It won't be easy for everyone here to accept gold, cash, mutual fund, real business, property as alternate portfolio.

Posted by stockoperator > 2014-06-11 17:54 | Report Abuse

End of day making friend is more important.

Posted by kcchongnz > 2014-06-11 18:00 | Report Abuse

Howard Marks on Macro

So anyway, it was very refreshing to hear Marks talk about the macro. He was asked about how macro is getting to be more important in investing in these volatile times. He said that most people think macro will determine investment results (so they pay a lot of attention to it). But he points out that in investing, there is always another side to it.

Of course, it's desirable to be able to forecast the macro to improve your investment results, but the big question is can you do it? Can it be done? Marks said that he personally doesn't believe that you can be consistently superior in macro judgements. The two key words are consistently superior.

He also noted that the smartest investors from Buffett on down don't make macro judgements; they find great values to invest in.

He was asked what he thought will happen in Europe (just after telling them that forecasting macro can't be done consistently). He said that it is a complex situation but he is sure of three things:

1. He doesn't know what will happen in Europe
2. Nobody knows what will happen in Europe
3. If you ask an expert what they think and take their advice, you're making a mistake.

He quoted Mark Twain: "It's not what you don't know that gets you into trouble, it's what you know for certain that just ain't true".

Can you know more than others? That's the real question.

Posted by stockraider > 2014-06-11 18:08 | Report Abuse

Correctloh....pay less attention....to macro....put more effort to the underlying investment fundamental selection loh.....!!

If your investment selection is rock solid.....u can survive...when there are some unexpected macro headwind.

Stock market...is a voting machine short term and a weighing machine long term mah....!!

Posted by sunztzhe > 2014-06-11 18:25 | Report Abuse

Raider,
How to detect whether the management of any coy r pofessional mgrs or professional money pocketers? What info u go for immediately ?

Posted by stockraider > 2014-06-11 18:30 | Report Abuse

Hard to say...raider rely on my tukang tilik sifu and some little bit of gut feeling to detect loh.....!!

Posted by sunztzhe > 2014-06-12 01:05 | Report Abuse

Hiyah depend on tukang tilik sifu also also loh
Everyone got own kung fu mah
tukang tilik sifu wayang kulit also mah
What u no see, u wont know leh

No substitute for hard work loh
Must know what info to look for leh
Focus on Annual Report, Qtr report good mah
Use brain power to do work good mah
This sit down ,shake leg, telephone call, surf internet for info, i3 foruming, drink kopi can do mah

look for Chairman message, New business development, P&L, BS, Cashflow, Basic financial ratios, Notes to account, Top 30 Shareholders very good mah
Cash per share, NTA per share, operational cashflow per share, Total debt Equity ratio, EPS, DPS, Compute ROCE,Gross Margin increase or decrease, Debt/Expenses increase or decrease very important mah
No substitute for hard work loh

Work hard to create the opportunity loh!!!

Posted by Steven Yong > 2014-06-12 19:11 | Report Abuse

A company well being not really related to overall economy. More to own country policy. EVen in 98 times also got stocks go up, because they have expanded capacity. So profit doubled, so will stock price. Even not, after crisis sure double.

Posted by screwdriver > 2014-06-14 22:27 | Report Abuse

kc, I would like to ask, under what circumstances that a company may have negative cash from operations in cashflow statement but at the same time shows a net profit in a financial year? My question may sounds silly, sorry for that, but thank you in advance for willing to help me =D

Posted by Steven Yong > 2014-06-14 23:30 | Report Abuse

Just use imagination. Accounting simple only. As long as cash can reconcile, everything can do mah.

Posted by kcchongnz > 2014-06-15 04:22 | Report Abuse

Posted by screwdriver > Jun 14, 2014 10:27 PM | Report Abuse

kc, I would like to ask, under what circumstances that a company may have negative cash from operations in cashflow statement but at the same time shows a net profit in a financial year? My question may sounds silly, sorry for that, but thank you in advance for willing to help me =D

A contractor has claimed he has done 100m of work last year. Part of it he claimed that 10m is additional work or what he called variation order.

However he received only 50m cash for the year. 20m is still under certification from consultants, the 10m he claimed is disputed by the client. On top of that, the consultant slaps a 20m fine for liquidated and ascertained damages for delay.

Sounds familiar? This is very common for construction work and contract disputes.

Posted by digiuser016 > 2014-06-15 20:58 | Report Abuse

Hi Kcchong,

How do you evaluate an IT comapny with high depreciation?

When I evaluate Opensys this company, I realize its ROIC/ROE are very low(about 10%) due to high depreciation. Its FCF/Invested capital is quite high(most of the time the ratio is >20%) because its fcf does not take into consideration depreciation.

when I try to get the intrinsic value of the company using DCF, i realize its value should be very high with conservative growth(1%-5%, I evaluate this comapny when it was 0.2x).

Posted by NOBY > 2014-06-16 08:17 | Report Abuse

i think high depreciation means that there will be considerable capex to maintain operations.... One should look at average fcf over a longer period to be more conservative... but i think its quite ttrue that ROIC would not be great for capital intensive business...

Posted by bracoli > 2014-06-24 21:38 | Report Abuse

Again, raider tenkiu for ur PPG!

Posted by digiuser016 > 2014-07-15 00:16 | Report Abuse

Hi Kcchong,

What is your opinion for the folliwing statements?

1:High returns on existing capital—the capital already
employed in a business—are almost meaningless without an ability
to invest new capital at above-average returns. Returns on existing
capital, whether high or low, are already refl ected in a company ’s
operating income. In a static scenario, the driver of return to equity
investors is the earnings yield—or free cash fl ow yield, to be more
precise. If we pay less for a given level of earnings, we will earn
a higher return. Whether the earnings number was achieved by
employing X amount of capital or half of X is irrelevant. In a scenario
without reinvestment, the only other driver of return will be
whether management returns cash to shareholders or whether it
insists on putting cash back into the business despite an absence of
high-return projects

2:This commonsense use of EBITDA appears to have evolved into an
overly broad application of the measure. If we analyze a telecom
services company as a going concern, and the fi rm ’s maintenance
capital expenditures approximate depreciation and amortization,
EBITDA may obscure rather than illuminate owner earnings.

The manual of idea is a great book! Thank you for your recommendation. ANYMORE good books?Hahaha.

Posted by kcchongnz > 2014-07-15 10:26 | Report Abuse

Digiuser

1) High return of existing capital meaningless?
a. If a firm’s ROC is very low, where does it get the cash from to distribute better dividends for the purpose of returning cash to shareholders, to make maintenance capital expenses, or to invest in something else new which provides good return of this new capital etc, assuming the marginal return of this new capital cannot earn above average return reinvesting into the business? Issue more shares? Borrow more money?
b. ROC is about operational efficiency, earnings yield, cash flow yield are about how much return to investor for the price he pays. They are two different things.
c. Yes, the return to equity investors are earnings yield, cash flow yield etc. Of course the lower the price you pay, the higher the yields you get. However, the numerators of those metrics are still dependent on what is the return of capital, aren’t they?
d. Don’t you think a higher efficient company deserves a higher market valuation?

2) Agree with your second point. I treat EBITDA as the firm’s earnings after all the bad stuff. Bad stuff is a real cost to the business, and how can we ignore this stuff?

I like this book. It is more of a fiction, an interesting story book. It is very interesting to read about corporation’s behavior and what you should avoid in investing.

Conspiracy of Fools: A true story of Enron, Kurt Eichenwald

Posted by kcchongnz > 2014-07-24 10:29 | Report Abuse

Posted by NOBY > Feb 19, 2014 11:41 PM | Report Abuse
KC, what is your view on MMODE recently announced Q4 results as you mention you are holding some ?
A few things :-
1. One off very high deferred tax charge caused net profit to plunge to only RM490k.
2. Operating margins also plunged to only 10% due to higher operational costs.
3. The only bright spot is its high net cash holding of RM0.25 per share due to its healthy cashflows.

Mmode share price dropped from about 70 sen to less than 50 sen after the release of this quarterly report.


Posted by kcchongnz > Feb 20, 2014 04:53 PM | Report Abuse X
Noby,
You know I am not one who will get all worked out when there is a drop of profit just for a quarter, especially due to higher tax allowable, write-off of non-cash items etc.

The top-line is still growing. PE is single digit, and good cash flow and healthy balance sheet.

To be a value investor,you need to have the following attributes as written in the article here:

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.)

Posted by kcchongnz > Sep 20, 2013 12:40 PM | Report Abuse X
Posted by xingxian > Sep 18, 2013 01:23 PM | Report Abuse
Take a look at MMODE. Similar to FIBON IMO

Posted by kcchongnz > Sep 19, 2013 07:35 PM | Report Abuse X

Is M-Mode good for a long term investment? (19092013)

M-Mode Berhad is engaged in the provision of mobile contents and data application services with platform connected to mobile network operators in Malaysia and China.

M-Mode has a fantastic growth story. From 2006 to 2012, its revenue and net income grows by a CAGR of 37% and 75 to 62.1m and 13.2m respectively as shown in the appended Table 1.

Table: Revenue and net profit for M-Mode
Year 2012 2011 2010 2009 2008 2007 2006
Revenue 62070 75395 29207 22335 16129 13540 9432
Net Income 13232 12867 3425 3026 2096 1189 465
EPS, sen 8.1 8.0 2.2 1.9 1.4 0.9 0.4

M-Mode is one of the rare companies having a gross margin of over 40% and net profit margin above 20%. ROE and ROIC are high at 25% and 51% respectively, much higher than the costs of capitals and my requirement of 15% for a small capitalized company.

Quality of earnings is good with cash flows from operations higher than its net income. Free cash flow is positive every year with FCF above 50% of invested capital and 19% of revenue. MMode has a healthy balance sheet with an excess cash of 33.6m. Hence MMode is great company in every aspect. But is it a good company to invest in?

M-Mode’s share price rose by 4 sen today. At 57 sen a piece now, MMode is trading at a PE ratio of just 7.0. Enterprise value is also low at 4.5 times ebit (<<8 times). The price-to-book ratio is not excessive at 1.8.

Hence in my opinion, M-Mode is a great company good for long-term investment.

Posted by coolio > 2014-07-24 15:51 | Report Abuse

hehhe..i bought mmode at 0.48 with 65% paper gain now. TQ KC, you are no 1.