Posted by inwest88 > 2014-09-20 21:10 | Report Abuse

KC - once again superb analysis. Dissecting FA from a different perspective, not the conventional way. It's no surprise that more people are willing to be coached by you.

Posted by belkg > 2014-09-20 21:33 | Report Abuse

I hv hold this stk before ,no value ,market up it feeze there,market down it follows,

Posted by MG9231 > 2014-09-20 21:52 | Report Abuse

Hopeless management team, I once read its annual report a couple of years ago, notice young directors are Dato-Dato and Datin-Datin who want fume and famous only. But don't know how to manage own business. I wonder those Dato and Datin directors are still around.
Lately, I also notice its products are heavily advertised in Singapore Media corp. I also noticed its MD is appearing in sponsorship of a few Singapore TV series. I wonder what is its return and segment sales in Singapore market? Or MD take opportunity to flirt with Singapore Media Corp Artists

Posted by matakuda > 2014-09-21 13:41 | Report Abuse

KC's a rare species. Thank you so much for the above sharing.

Posted by khun88 > 2014-09-21 17:26 | Report Abuse

Great work, i3 needs more of these kind of writing.

Posted by chenwei > 2014-09-21 20:32 | Report Abuse

Nice and timely article. My dad seems interested in this counter. :) let me show him this article

Posted by nice1 > 2014-09-21 21:14 | Report Abuse

High debts, low margin - stock to avoid

Posted by icecool > 2014-09-22 02:22 | Report Abuse

investment bank are nothing more than sales department, their job is to sell sell sell and make money at the cost of the public domain

Posted by Frank Soweto > 2014-09-22 03:54 | Report Abuse

Without a doubt KC is the BEST to dig out these longkang shares thru his thorough CSI forensic analysis about the true state of the company financials. I see very much similarities of this London biscuits together with KNM. Turnaround stories written by research houses,getting new projects n now with Epf being a substantial shareholders,high NTA,borsig listing,r all add excitement to the stock. Look at how these 1/2 past 6 investment houses wrote about this KNM longkang as if it's the gem of the century
28/08/2014 KNM Group Berhad - Recovery On Track
28/08/2014 KNM Group - 1H on track; expect a stronger 2H
08/08/2014 KNM to get slice of Pengerang job, eyeing work worth RM1bil
08/08/2014 PublicInvest Research Headlines - 8 Aug 2014
08/08/2014 KNM Group Berhad - Seeing is Believing!!! More to Come…
08/08/2014 KNM Group - RAPID ready
04/08/2014 Maybank Research Highlights - 4 Aug 2014
04/08/2014 PublicInvest Research Headlines - 4 Aug 2014
03/07/2014 Highlights / Stock Picks of the Day - KNM Group Berhad (KNM) - Not Rated
02/07/2014 KNM Group Berhad - Phoenix Reborn!!! - HLBank Research Highlights | I3investor

if you look at the real balance shits of KNM as highlighted by KC from time to time u will see how General 'Wolf' Lee being the most creative CEO constantly playing the news n working the balance shits with his latest creative accounting to raise $$$ like the one eg here
http://www.theedgemalaysia.com/business-news/272902-knm-proposes-to-cut-share-par-value-by-50.html
juz like that will be 745 mills in the coffer :)

Though KC has written many short snippets about how 'good' the balance shits of General 'Wolf' Lee's KNM not sure whether he has in details highlighted the stock performance of KNM compared to Bursa index ( chart wise )as like L.Bis n am telling u it ain't pretty at all - it' is so bad that even if you've bought in the middle of 2011 like I did at the price of 2+ u would have lost more than 100% n let's not even 'try' to look at those who bought Jan 2008 which was @ over 10 bucks - take a look for yourself ( u might want to do it in the toilet incase u feeling like puking afterwards :) )-
http://finance.yahoo.com/echarts?s=7164.KL+Interactive#symbol=7164.KL;range=my

now u tell me is this stinking longkang or stinking longkang :) yeah it surged 8% last Friday n got all the brave hearts excited n 'likely' to go up more today since it's on the 'uptrend' but will it sustain? - dun forget that it also dropped about 20% in 7 trading days from a high of over 1 bucks juz this month - why? - epf selling? why the &^%$ EPF buying in the first place? - have they not learned from their past mistakes? - well apparently NOT :(. More importantly will it ever even go back to a quarter of it's high of 2008 which is only 2 bucks since so many research houses are so bullish on it despite the fact that it's contracts won are always with very low or no margins,the foreign exchange losses, high debt that needs to be serviced, etc. I never doubt General or Bolihland ability to goreng but do u seriously want to 'invest' in KNM for the excitement?

I know this is about thread is about London bis n not KNM but when they're longkangs they're all stinking longkangs no matter how you clean them :) whether it's Lon Bis or KNM or even MEGB - They're still longkangs :) STINKING LONGKANGS LOL

Posted by OptimusM > 2014-09-22 04:23 | Report Abuse

Amazing warren buffet wannabe. Trying to find value in a biscuit co. I m speechless.

Posted by OptimusM > 2014-09-22 04:26 | Report Abuse

Frank. As always. I m a big fan of u. Cant agreed more with wat u wrote.

Posted by cheongcy > 2014-09-22 10:12 | Report Abuse

HI KC, allow me to add one more point towards LondonBisc.

“Historically, LONBISC earnings decline from FY10 to FY12 is caused by its high investment to upgrade its capacity and expansion to modernise its equipment and machinery. However, the period of high capex should be coming to an end”
Look at the PPE spending at 2013 at the cash flow statement, it was just a modest amount of RM22Million which represents a total of 7.6% of total revenue.

Hell yeah the period of high capex should be coming to an end!!!

But wait a minute, part of the PPE spending was actually being funded by bank borrowings which we could find the little notes at the end of cash flow statement as below:

“Property, plant and equipment at aggregate cost of RM55,226,040 (2012 - RM115,409,572) was acquired during the financial year of which RM33,213,902 (2012 - RM23,730,715) was acquired by means of hire-purchase and term loan.”

Taking into account of the full PPE spending, it represents a total of 19% of total revenue!! What about for the latest financial year 2014?

“Property, plant and equipment at aggregate cost of RM58,768,000 (2013-RM55,226,000) was acquired during the financial period of which RM18,172,000 (2013-RM33,214,000 ) was acquired by means of hire purchase and term loan.”

In 2014, its total revenue was an impressive figure of RM360million but 16% of it is going back to PPE while its operating margin before Depreciation was just 15%. What a coincidence figures that whatever they earned (after COGS, after SG&A expenses) in the first place is going back to the machine. Well working capital, bank interest charges, taxes are yet to come to the picture.

Whatsoever, London Bisc is still making a not so bad on paper EPS of 9.68sens for the financial year 2014 and the company is priced at a ‘cheap’ valuation with PE less than 10 for its impressive sales growth.

Posted by Lollipot Anison > 2014-09-22 11:20 | Report Abuse

your article is always the best to read in i3. keep up the good works.

Posted by SS3U > 2014-09-22 12:21 | Report Abuse

Good to read BUT I don't agree. The debt and those private placement shares of both LONBISC and Kheesan are too fishy. I am worried on the accounting

Posted by cutie > 2014-09-22 12:40 | Report Abuse

Dont worry, Khee san and Lonbis have long history of profits. If anything bad goes wrong, sure there is somebody who is interested in them .

Posted by cutie > 2014-09-22 15:34 | Report Abuse

Here comes these 2 babes

Posted by kcchongnz > 2014-09-22 15:35 | Report Abuse

Long history of profits? What is the theme of this article? Investors should focus on return on capital, not earnings. Earnings below cost of capital is a big destroyer of shareholder value. Long history of profit below cost of capital is long history of misery for shareholders. That is why they have to keep on putting money for right issues, and company keeps on borrowing and its debt level is precarious now.

Sure there is somebody interested in Khee San and London Biscuits. But that depends of what price to pay.

In Sept 2007, London Biscuits acquired 18.420 million shares, or a 30.7% stake in Khee San Bhd for RM27.630 million, or RM1.50 per share. It was purchased at a huge premium. And many other acquisition also at high premium. Hence it has this "goodwill" of 12.7m which has been in its balance sheet for many years already. today Khesan is trading at only 61 sen, a loss of 60% after 7 years. @#$%*.

Posted by bursarookie > 2014-09-22 18:42 | Report Abuse

news report by Focus Malaysia on London Biscuits in this Sept.
http://www.theantdaily.com/Business-Targeted/Is-3rd-share-placement-in-3-years-sufficient-for-London-Biscuits/

Posted by leslieroycarter > 2014-10-03 15:00 | Report Abuse

trickery reports, so better avoid this stock....

Posted by ncsncs > 2014-10-03 15:09 | Report Abuse

Private placement 1.00 now 79 sen ???????

Posted by Adrian FC Hiew > 2014-10-09 02:00 | Report Abuse

Don't worry when it comes down gradually it will goes up again hold on the iron rod ...... It will be cold again

Posted by skyz > 2015-01-31 11:13 | Report Abuse

thanks KC! loved your impartial comments! (unlike some other "famous" blogger started with the word "B" who gave the BUY call and many followed and get trapped) keep it up!

Posted by Tey Tian Foo > 2015-02-05 15:36 | Report Abuse

KC, Good report. Just one question. The Fix Asset at RM570 Million. Huge !! How many years is the depreciation base on? 5, 7, 8 or 10 years?

Posted by kcchongnz > 2015-02-06 00:17 | Report Abuse

Posted by Tey Tian Foo > Feb 5, 2015 03:36 PM | Report Abuse

KC, Good report. Just one question. The Fix Asset at RM570 Million. Huge !! How many years is the depreciation base on? 5, 7, 8 or 10 years?


I am no accountant. I think PPE life span probably 5-10 years? For London Biscuits, I doubt the life span or the depreciation method matter as they buy and sell huge amount of PPE every year. So there will be huge amount of capex and add back of depreciation to make cash flow from operations pretty, but persistent negative free cash flow, and hence persistent right issues and private placement, and of course continuous borrowing every year. A very interesting management action indeed.

Posted by kcchongnz > 2015-02-27 20:01 | Report Abuse

The just announced quarterly results was so poorly prepared that we can%27t see how its profit and especially cash flow comes about. %0A%09%0AAgain reduction in profit is one thing. How is its cash flow%3F Does cash flow from operations results from heavy depreciation write back%2C but again high capital expenses resulting negative free cash flow again. %0A%0AIt doesn%27t even tell you what the capital expenses is. Is this an acceptable quarterly report%3F

Posted by SpeedyBoy > 2015-02-27 22:26 | Report Abuse

Why so many postings 20%25...20%25...20%25...

Posted by fortunecheat > 2015-02-27 22:29 | Report Abuse

kcchongnz why are we talking about London Biscuit again %3F%0A%0AI sick of the left over rice...

Posted by kcchongnz > 2015-02-28 05:09 | Report Abuse

Posted by fortunecheat > Feb 27, 2015 10:29 PM | Report Abuse

kcchongnz why are we talking about London Biscuit again %3F%0A%0AI sick of the left over rice...

Reflection Is the Most Important Part of the Learning Process

"We do not learn from experience ... we learn from reflecting on experience." John Dewey


It is also important to keep on reminding oneself what has gone wrong in an investment; otherwise he will continue to make mistakes in the future, endlessly.

By the way, it is not my responsibility to tell you what you want to hear, is it?

Posted by kcchongnz > 2015-02-28 05:15 | Report Abuse

The just announced quarterly results of London Biscuits was so poorly prepared that we can't see how its profit and especially cash flow comes about.

Again reduction in profit is one thing. How is its cash flow? Does cash flow from operations results from heavy depreciation write back, but again high capital expenses resulting negative free cash flow?

It doesn't even tell you what the capital expenses is.

Is this an acceptable quarterly report?

What is hiding behind the closet?

London Biscuits is one of the poorest performance and corporate governance company. That is why it can be used as a text book case study in a MBA Finance course.

Posted by ajim102 > 2017-08-18 22:16 | Report Abuse

thank you for sharing your thoughts and knowledge.its good to be able to refer back to especially in current market condition.feels like reading one of howard mark's memo.