Posted by anticonman > 2015-05-17 10:06 |

Post removed.Why?

Posted by bluefun > 2015-05-17 12:41 | Report Abuse

Hi Mr. KC, thanks for your good article. May i know how to calculate the net capex? Please share with us your formula.

Thank you very much in advance. :)

Posted by kcchongnz > 2015-05-17 13:01 | Report Abuse

Posted by bluefun > May 17, 2015 12:41 PM | Report Abuse

Hi Mr. KC, thanks for your good article. May i know how to calculate the net capex? Please share with us your formula.

Net capex = purchase of PPE - disposal of PPE

Posted by kcchongnz > 2015-05-17 14:03 | Report Abuse

Posted by anticonman > May 17, 2015 10:06 AM | Report Abuse
kcchong please read below article. Do you have the qualification for people to follow you? This forum does not belong to you only.
http://klse.i3investor.com/blogs/kianweiaritcles/76689.jsp

Are you from Bank Negara or SC wanting to check my FAR or CMSRL licenses? Or from the education department who wants to check my CFP, postgraduate degree in business administration, and Master in Finance Certificate?

Well I can tell you the above are not much use in real life investing.

Or do you want to find out the above so that you can consult me? Well I don't think you can afford it.

Do I ask people to follow me? Or I ask people to give me tips instead as in the post so that I can follow them?

This forum doesn't belong to me? Of course not! When did I say it belongs to me? Or does it belong to you?

Well do you have anything wrong to point out from my posts? I would love that as I learn a lot in that way along the years.

Posted by apini > 2015-05-17 14:47 | Report Abuse

anticonman,

you got nothing to contribute but why are you feeling so uneasy to see other people sharing their idea of valuation of stock.

what's wrong with mr kccchong sharing his view using CY to invest, I myself feel it is very viable and good metric , a wonderful idea.

honestly speaking , I do not join Mr KCChong online course, I DO NOT pay Mr KCChong a sen, not a single sen, but these 2 years , I made a few lorries of cash using his recommended valuation techniques.

please know his techniques well before you open your dirty mouth

please do not use any qualification to judge a people work, there are so many so called professional expert, they talk so much that we doubt whether they themselves know what they are talking about or not.

share market works in different way, NOT with the qualification you sure win big

Posted by apini > 2015-05-17 14:51 | Report Abuse

Mr KCChong,

I will add CY> 4% into my selection criteria.

thank a lot

Posted by kcchongnz > 2015-05-17 15:59 | Report Abuse

Posted by apini > May 17, 2015 02:51 PM | Report Abuse
Mr KCChong,

I will add CY> 4% into my selection criteria.

thank a lot



Apini, Good judgment

Posted by NOBY > 2015-05-17 16:07 | Report Abuse

KC, would fcf/ev be a better metric ? Since free cashflow is derived from cashflow from operations, we should deduct the excess cash as it doesnt earn anything.

Posted by goreng_goreng > 2015-05-17 16:09 | Report Abuse

lol share good thing also kena attack ka?

thx a lot kcchong. excellent info

Posted by kcchongnz > 2015-05-17 16:18 | Report Abuse

Posted by NOBY > May 17, 2015 04:07 PM | Report Abuse
KC, would fcf/ev be a better metric ? Since free cashflow is derived from cashflow from operations, we should deduct the excess cash as it doesnt earn anything.


If you look at most cash flow statements to obtain net CFFO, interest earned has been taken off from it (a few may not), and hence the net CFFO and hence FCF belongs to common shareholder only. So the denominator in the cash yield formula must be consistent, i.e. it should be market cap, rather than EV.

You can of course convert that net CFFO belonged to common shareholders to the CFFO for the firm, then you use EV as the denominator to be consistent. But conversion of net CFFO to CFFO for the firm involves some tricks as you know, it would be a little complex for normal investor. Do not forget that EV calculation can also confuse them.

So keep it simple, CY as computed in the article, in my opinion, is good enough, and it is easy to compute. That is more important.

For us, of course we can do it both ways.

Posted by NOBY > 2015-05-17 17:02 | Report Abuse

Thanks KC. Yes you are right. I just write it down here to remind myself

FCFF = CFFO + [Int expense x (1-tax rate)] - Capex

Posted by Sunkist118 > 2015-05-17 18:11 | Report Abuse

I3 always produce so many SIFU .....now a Star is born.

Posted by bintang21 > 2015-05-17 18:12 | Report Abuse

but you have aroused my curiosity

what is FCFF?

Posted by NOBY > 2015-05-17 18:16 | Report Abuse

go google yourself...

Posted by bintang21 > 2015-05-17 18:57 | Report Abuse

ya, good answer, google is the best sifu

Posted by Sunkist118 > 2015-05-17 19:38 | Report Abuse

Bintang bro ...can you google TA for a particular share with remarks?

Posted by bintang21 > 2015-05-18 11:31 | Report Abuse

why not?

you got idea, they got technology

but they will ask kcchong to evaluate your idea before they decide to do

but most likely kcchong is not interested so no hope

conclusion: you do it yourself and share it here

Posted by kcchongnz > 2015-05-18 18:59 | Report Abuse

Nobody wishes to share any NBI here?

Let me start with one, Homeritz.

Below shows the FCf for the last 5 years

Year ended 31/3/11 2014 2013 2012 2011 2010
CFFO 29637 18647 20071 4395 16785
Capex -1766 -982 -1146 -8090 -1953
FCF 27871 17665 18925 -3695 14832
FCF/Revenue 21.9% 15.6% 18.3% -4% 13%
CFFO/NI 122% 104% 120% 40% 84%

The average FCF for the last three years is 21.5m, with the last year FCF at 27.9m. We take the average of last three years' FCF.

At RM1.21 closed last week, and no. of shares 200m, CY = 21.5/200=8.9%. This CY is twice you can get from bank FD. Moreover, it has clean balance sheet with a lot of cash in the balance sheet and with zero debt. It also has high cash return on invested capital CROIC of 50% lat year. Looks like a NBI to me.


Price 1.21
No. of shares 200000
Market cap 242000
Av FCF 21487
CY 8.9%

Posted by lovestockryy > 2015-05-18 19:38 | Report Abuse

thanks for the good write up! keep it up!

Posted by coolio > 2015-05-18 23:50 | Report Abuse

How about Magni-Tech?

Below shows the FCF for the last 3 years

Year ended 31/3/11 2014 2013 2012 2011 2010
CFFO 43169 29235 36197
Capex -6408 -4322 -4273
FCF 36761 24913 31924
FCF/Revenue 5.6% 4.4% 6.0%
CFFO/NI 103% 82% 118%

The average FCF for the last three years is 31.2m with the last year FCF at 36.76m. We take the average of last three years' FCF.

At RM3.40 closed today, and no. of shares 108.5m, CY = 31.2/108.5*3.40=8.46%. This CY is twice you can get from bank FD. Moreover, it has clean balance sheet with a lot of cash in the balance sheet and with zero debt. Looks like a NBI to me.


Price 3.40
No. of shares 108488
Market cap 368859
Av FCF 31199
CY 8.46%

Posted by Probability > 2015-05-19 01:07 | Report Abuse

perfectly said coolio...

Posted by coolio > 2015-05-19 11:16 | Report Abuse

Let me try with MFCB

Below shows the FCF for the last 3 years

Year ended 2014 2013 2012
CFFO 157,447.00 122,604.00 114,556
Capex -78955 -68281 -23217
FCF 78492 54323 91339
FCF/Revenue 11.7% 8.6% 14.4%
CFFO/NI 225% 166% 198%

The average FCF for the last three years is 74.7m, with the last year FCF at 78.49m. We take the average of last three years' FCF.

At RM2.40 closed today, and no. of shares 242.5m, CY = 74.7/242.5*2.40=12.84%. This CY is thrice you can get from bank FD. Moreover, it has clean balance sheet with a lot of cash in the balance sheet and with little debt. Looks like a NBI to me.


Price 2.40
No. of shares 242455
Market cap 581892
Av FCF 74718
CY 12.84%

Posted by kcchongnz > 2015-05-19 11:54 | Report Abuse

Posted by coolio > May 18, 2015 11:50 PM | Report Abuse
How about Magni-Tech?
Below shows the FCF for the last 3 years
Year ended 31/3/11 2014 2013 2012 2011 2010
CFFO 43169 29235 36197
Capex -6408 -4322 -4273
FCF 36761 24913 31924
FCF/Revenue 5.6% 4.4% 6.0%
CFFO/NI 103% 82% 118%
The average FCF for the last three years is 31.2m with the last year FCF at 36.76m. We take the average of last three years' FCF.
At RM3.40 closed today, and no. of shares 108.5m, CY = 31.2/108.5*3.40=8.46%. This CY is twice you can get from bank FD. Moreover, it has clean balance sheet with a lot of cash in the balance sheet and with zero debt. Looks like a NBI to me.
Price 3.40
No. of shares 108488
Market cap 368859
Av FCF 31199
CY 8.46%


coolio,

Remember we talked about Magni-tech here a year ago:

http://klse.i3investor.com/blogs/kcchongnz/51356.jsp

Magni's share price was just RM2.69. Its FCF in 2013 was 23m. With the no. of shares at 108m, its CY was 12.3%! At that time, it was a NBI. One year later now, it is RM3.41, or a gain of 27% against almost a flat KLCI.

Now although its share price has risen its FCF also has improved a lot to RM36.8m. At the present price and the average 3-years FCF, your computation of CY of 8.5% is still very high.

Yes, I think it is still a NBI.

Posted by coolio > 2015-05-19 16:47 | Report Abuse

coolio,

Remember we talked about Magni-tech here a year ago:

http://klse.i3investor.com/blogs/kcchongnz/51356.jsp

Magni's share price was just RM2.69. Its FCF in 2013 was 23m. With the no. of shares at 108m, its CY was 12.3%! At that time, it was a NBI. One year later now, it is RM3.41, or a gain of 27% against almost a flat KLCI.

Now although its share price has risen its FCF also has improved a lot to RM36.8m. At the present price and the average 3-years FCF, your computation of CY of 8.5% is still very high.

Yes, I think it is still a NBI.


KC,

Yes, still fresh in my mind. Glad that Im still holding Magni. I believe good to have Magni in my long term portfolio

Posted by kcchongnz > 2015-05-19 21:39 | Report Abuse

coolio,

MFCB was one of the stocks in my portfolio set up on 1st August 2013, less than 2 years ago.
http://klse.i3investor.com/servlets/pfs/19386.jsp
At RM1.71, or market cap of RM414.5m then, and FCF of 2012 at 103m, the CY was 25%. With that CY, how could it go wrong? How can it not be a NBI?

MFCB's share price has risen to RM2.42, or a gain of 42% in less than 2 years, against the rise of KLCI of about 10% during the same period.

Now although its share price has risen, its FCF has dropped to RM55m. At the present price CY is 12.8% as computed by you is still very high.

Yes, I think it is still a NBI.

Posted by bintang21 > 2015-05-20 03:10 | Report Abuse

Mr Kcchong,
Can you please kindly do one on GADANG.it might be a super nbi.
Thank you

Posted by kcchongnz > 2015-05-20 06:15 | Report Abuse

Posted by bintang21 > May 20, 2015 03:10 AM | Report Abuse

Mr Kcchong,
Can you please kindly do one on GADANG.it might be a super nbi.
Thank you

If you read the article, a NBI should be a company with consistent FCF and CY of double, triple or more than bank fixed deposit rate.

Gadang has negative FCF the most recent year, so it may appear that it is not a NBI.

But cash flow is volatile every year for most companies, you may like to see the average FCF for a few years.

Just looking at the last two years, Gadang may be good in terms of cash flow with CY of 10%, and you shouldn't rule it out as a good investment if other metrics are good.

xxxx 2015 2014 Average
CFFO -39140 116361 xxxxx
Capex -8380 -5472 xxxxx
FCF -47520 110889 31685


Price 1.63
shares 196691
MC 320606

CY 10%

Posted by paperplane2 > 2015-05-20 06:49 | Report Abuse

Kc, I found it hard to determine fcf year by year. Simply capexhard to calculate. Can share how to calculate free cash flow, how capes calculated

Posted by kcchongnz > 2015-05-20 07:59 | Report Abuse

Posted by paperplane2 > May 20, 2015 06:49 AM | Report Abuse
Kc, I found it hard to determine fcf year by year. Simply capexhard to calculate. Can share how to calculate free cash flow, how capes calculated

FCF = Net CFFO - net capital expenses

Net CFFO is obtained as the last line in the "Cash flow from operating activities"

For capex, look at "purchase of property plant and equipment", and less off the disposal of PPE, that is the net capex. This can be obtained from the "Cash flow from investing activities"

For some companies, other stuff like biological assets for plantation companies are also capex, development costs for property companies are also their capex.

Posted by paperplane2 > 2015-05-20 09:13 | Report Abuse

but capex vary year by year, don't you think hard to determine a stable amount?

Posted by bintang21 > 2015-05-20 09:40 | Report Abuse

Mr Kcchong,

I appreciate you effort in making thing clear and simple for us to learn. thank you very much

regard the calculation free cash flow isn't it sufficient to reflect the company cash position by just subtracting the net cash from investment from the net cash from operation?

I also have the feeling Quick ratio is also a good metric to measure a company cash flow

thank a lot your willingness to share your knowledge

Posted by kcchongnz > 2015-05-20 10:24 | Report Abuse

Posted by bintang21 > May 20, 2015 09:40 AM | Report Abuse

Mr Kcchong,

I appreciate you effort in making thing clear and simple for us to learn. thank you very much

regard the calculation free cash flow isn't it sufficient to reflect the company cash position by just subtracting the net cash from investment from the net cash from operation?

I also have the feeling Quick ratio is also a good metric to measure a company cash flow



Some people do that by subtracting CFFO from CFFI. It is not wrong. However, cash flow is about the ordinary or core business of the company, whereas CFFI often contains investment not in the core business. So may not be appropriate.

quick ratio measures the ability of the company to pay short-term debt, after ignoring inventories. It has nothing to do with the cash flow of the company.

Posted by kcchongnz > 2015-05-20 11:06 | Report Abuse

Posted by paperplane2 > May 20, 2015 09:13 AM | Report Abuse
but capex vary year by year, don't you think hard to determine a stable amount?


So look at the FCF for a number of years, for example 5 years. Take for example, if the average FCF for the last 5 years is 100m, and there is a clear trend of increasing FCF, and if the market cap is RM1b now. Then av FCF/MC = 10%

This sound like a NBI for me.

Posted by nakata > 2016-03-17 22:54 | Report Abuse

Hi KC,
could you pls share what is means by NBI? what are the favorable % for high, mid, low?

Posted by kcchongnz > 2016-03-17 22:58 | Report Abuse

Look at the FCF over a few years, and if they are consistent, better still increasing, use the average and divide by present market cap.

If it is 5% or above, good, because higher than fixed deposit rate. if >10%, fantastic.

If >15%, buy by lorry loads.

Posted by jeremiah1983 > 2016-03-17 23:03 | Report Abuse

Hi kc, thanks for your guidance on NBI....

can u help and guide me about Karex and FLBhd?> thanks a million

Posted by kcchongnz > 2016-03-17 23:27 | Report Abuse

Posted by jeremiah1983 > Mar 17, 2016 11:03 PM | Report Abuse
Hi kc, thanks for your guidance on NBI....
can u help and guide me about Karex and FLBhd?> thanks a million


I used to do this last time in i3investor a lot. However, it is very time consuming. If you want, you can learn this thing from my online investment course for a small fee and then you can actually do this on any stock all by your own.

It is good to learn how to fish rather than grabbing any fish thrown at you. I am sure many people like you would have bad experience recently with all the peddling of stocks, especially those export stocks which had gone up in price hugely before retreating by 30% recently.

Posted by jeremiah1983 > 2016-03-17 23:29 | Report Abuse

I had tried though but certain numbers seems difficult to obtain/ dunno how to get it.

Posted by latjiu > 2016-03-18 00:46 | Report Abuse

Thank you kcchongnz! Your articles are always a pleasure.

Posted by jeremiah1983 > 2016-03-18 07:41 | Report Abuse

kcchongnz : Nobody wishes to share any NBI here?

Let me start with one, Homeritz.

Below shows the FCf for the last 5 years

Year ended 31/3/11 2014 2013 2012 2011 2010
CFFO 29637 18647 20071 4395 16785
Capex -1766 -982 -1146 -8090 -1953
FCF 27871 17665 18925 -3695 14832
FCF/Revenue 21.9% 15.6% 18.3% -4% 13%
CFFO/NI 122% 104% 120% 40% 84%

The average FCF for the last three years is 21.5m, with the last year FCF at 27.9m. We take the average of last three years' FCF.

At RM1.21 closed last week, and no. of shares 200m, CY = 21.5/200=8.9%. This CY is twice you can get from bank FD. Moreover, it has clean balance sheet with a lot of cash in the balance sheet and with zero debt. It also has high cash return on invested capital CROIC of 50% lat year. Looks like a NBI to me.


KC : What does NI mean here? is it Net income? pls help. thanks

Posted by kcchongnz > 2016-03-18 07:50 | Report Abuse

Yes, NI is net income


Posted by jeremiah1983 > Mar 18, 2016 07:41 AM | Report Abuse

kcchongnz : Nobody wishes to share any NBI here?

Let me start with one, Homeritz.

Below shows the FCf for the last 5 years

Year ended 31/3/11 2014 2013 2012 2011 2010
CFFO 29637 18647 20071 4395 16785
Capex -1766 -982 -1146 -8090 -1953
FCF 27871 17665 18925 -3695 14832
FCF/Revenue 21.9% 15.6% 18.3% -4% 13%
CFFO/NI 122% 104% 120% 40% 84%

The average FCF for the last three years is 21.5m, with the last year FCF at 27.9m. We take the average of last three years' FCF.

At RM1.21 closed last week, and no. of shares 200m, CY = 21.5/200=8.9%. This CY is twice you can get from bank FD. Moreover, it has clean balance sheet with a lot of cash in the balance sheet and with zero debt. It also has high cash return on invested capital CROIC of 50% lat year. Looks like a NBI to me.


KC : What does NI mean here? is it Net income? pls help. thanks

Posted by jeremiah1983 > 2016-03-18 07:52 | Report Abuse

From where do u extract the data of CFFO from? is it from the quarterly results or from annual reports?

Posted by jeremiah1983 > 2016-03-18 08:06 | Report Abuse

Also, i observed that the examples of Homeritz and Magni given above, the CFFO is very different from the ones i obtained from the annula report.... May i know how do u derive the CFFO? can i take the real CFFO from the annual report to calculate CY? pls advice. thanks

Posted by kcchongnz > 2016-03-18 08:41 | Report Abuse

Posted by jeremiah1983 > Mar 18, 2016 08:06 AM | Report Abuse

Also, i observed that the examples of Homeritz and Magni given above, the CFFO is very different from the ones i obtained from the annula report.... May i know how do u derive the CFFO? can i take the real CFFO from the annual report to calculate CY? pls advice. thanks


FCF = CFFO – Net Capex


CY = Free cash flow (FCF) / Price,