Posted by Probability > 2015-05-20 14:59 | Report Abuse

"A NBI is something you don’t need to calculate so much, think so much. It just jumps out at you."

please spent some time to understand this..dont get carried away with emotions...its that simple ;)

....and we are trying to identify which is a NBI...
and which is requiring:

"enormous brain processing power + intelligence + foresight + insider information + etc"....+ help from god coz only we deserve it...
he he he..

Posted by kcchongnz > 2015-05-20 15:00 | Report Abuse

Posted by shinebright > May 20, 2015 02:43 PM | Report Abuse
kcchongz>>>> Good that you talk about value. But did I value the company? Or was it RHB which value it?
“our TP is lifted to MYR4.50 (from MYR2.95), based on an unchanged recurring FY16 P/E of 10x”
Why based on 10X PE, why not 5, 15, 20, or 30? Is PE a good metric when V.S has so much debts?
At RM4.22, the present PE ratio is 14 and enterprise value is 21 times operating income. Is that cheap?

If those ratios are not valuation ratios, I do not know what to say really that you DID NOT TRY TO VALUE THE COMPANY?

So the question now is, how do you value the company. Please show us your valuation in details as you said others are wrong.

I have no time to spend on amateur like you seriously.All along, I am a silent reader of the forum, coming in occasionally to check on the market rumours. But stumbling across your misleading info, I cannot help but to comment on your methods.


Ok ok I did put some simple valuation there. Sorry forgot about it. So I can't value an enterprise like that, how do you professional value it?

Oh sorry professional, you have no time to waste on amateur! Professional checking on daily and hourly and minutely rumours? But no time to do valuation?

What is the job of professionals like you? Checking rumours?

Posted by Probability > 2015-05-20 15:02 | Report Abuse

If one can take the challenge and make V.S look like an 'NBI' ...that would be nice...anyone?

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

Nothing wrong with the simple valuation ratios done by KC, nothing misleading... its just a pre-screening to see if a stock warrants further analysis. Others who make a big deal out of this are just not getting the message of this article which is asking the question is VS a NBI ? Judging by the amount of qualitative and quantitative follow up analysis that is required, it really isnt a no brainer investment for me... haha

Posted by NOBY > 2015-05-20 15:11 | Report Abuse

Posted by Probability > May 20, 2015 03:02 PM | Report Abuse

If one can take the challenge and make V.S look like an 'NBI' ...that would be nice...anyone?

Why not ? Lets assume that FCF will grow by 50% to perpetuity based on rosy outlook by management ? Or lets make comparison with other highly overvalued companies, which trading at PE of 50x... Surely VS at 14x PE is a no brainer ?

:)

Posted by NOBY > 2015-05-20 15:13 | Report Abuse

After all investment is about future ma... forget about mean reversion... dont drive with the rear view mirror ! only amateurs do that...

Posted by Icon8888 > 2015-05-20 15:21 | Report Abuse

Cool down everybody

Have a cup of tea : )

Posted by Icon8888 > 2015-05-20 15:23 | Report Abuse

Have a kit kat

Posted by oregami > 2015-05-20 15:37 | Report Abuse

The latest CFFO is 63.423mil compared to CFFO of 46.368 for the entire year 2014. TTM CFFO is 111.431mil. TTM net capex is 53.746mil. This translates into TTM FCF of 57.667mil. A very significant improvement.

Retail investors and substantial shareholders have different concerns. What retail investors looking for is earning growth that propel share price. They don't really care about cash generated by the company. How could company's cash benefit retail investor besides awarding them peanut dividend? Most retail investors are not holding stock more than a year since market will experience correction sometime as frequent as twice a year.

Substantial shareholders are long term investors. Some of them even have a say in the company's board. They treat share as ownership of the business. Company's cash is definitely their concern.

Legendary value investors buy business. Retailers buy share but not business.

Posted by kcchongnz > 2015-05-20 15:55 | Report Abuse

Posted by NOBY > May 20, 2015 03:05 PM | Report Abuse

Nothing wrong with the simple valuation ratios done by KC, nothing misleading... its just a pre-screening to see if a stock warrants further analysis. Others who make a big deal out of this are just not getting the message of this article which is asking the question is VS a NBI ? Judging by the amount of qualitative and quantitative follow up analysis that is required, it really isnt a no brainer investment for me... haha


Thanks Noby for all your comments. That is exactly what the post is about; is V.S a NBI? I don't see the problem of valuing an enterprise like that. The comment is more apt.


Posted by Probability > May 20, 2015 02:59 PM | Report Abuse
"A NBI is something you don’t need to calculate so much, think so much. It just jumps out at you."
please spent some time to understand this..dont get carried away with emotions...its that simple ;)
....and we are trying to identify which is a NBI...
and which is requiring:
"enormous brain processing power + intelligence + foresight + insider information + etc"....+ help from god coz only we deserve it...
he he he..


That is what sharing in a public forum like i3investor is about; hoping to get constructive criticisms which we will learn more. A post without comments is no fun.

Sometimes I do use some strong words which some people may not like, but it is normally is because a strong comment requires a strong reply and corresponding strong words. This may make some people unhappy. Sorry about that but there is nothing personal.

Posted by sunztzhe > 2015-05-20 16:49 | Report Abuse

I buy VS biz model, its management competence, its biz strategy, the execution of its strategy...VS has performed to date...Partnering Global Players is the right strategy...

Posted by JT Yeo > 2015-05-20 19:10 | Report Abuse

Sorry typo should be 'you dont need to be precise to know 6-7% ROE in long term will grow your way to bankruptcy'. VS revenue has grow by 300% since 2006, but you have to ask why share price only increase by 32% over past 10 years, if you really love growth.

2006-2014 Operation cash flow on average is around 50mil, capex is very similar, resulting in average FCF for past 8 years is only 4 mil. Look at ROE, besides 2007 & 2008 super high ROE, whatever reason, 2009-2014 ROE are all below 10%. So you have a company with patchy dividend record, reinvesting 80-90% of earnings back into business that generate a return of below 10%. From cost of capital point of view, bad move. From an opportunity cost point of view, you can find way many better business with good value (relative to price) to invest in.

Not sure how you define management competence, considered the share price has only increase 32% for past 10 years, you need to ask why, and that is on top of increase in outstanding shares. 10 years is a long enough judgement for management competence because it would have reflected in the share price.

Everyone talks about strategy this and that, just like IFC wants to conquer China, people pull out how many developers there are in China and look at those numbers. People just think like IFC owns everything, like no one in China or anywhere in Asia or software companies around the world will bother to compete with IFC. What makes IFC different, what makes VS different, is VS the only company that can make Keurig in this world?

Posted by JT Yeo > 2015-05-20 19:13 | Report Abuse

I know what you will say, this time it is different...

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

Posted by shinebright > May 20, 2015 02:43 PM | Report Abuse

I have no time to spend on amateur like you seriously.All along, I am a silent reader of the forum, coming in occasionally to check on the market rumours. But stumbling across your misleading info, I cannot help but to comment on your methods.


Hi professional, below is how I, as an amateur, value V.S as an enterprise. I hope you can show your professional way, not just talk.

Price 21/5/15 4.30
No of shares 186355
Market cap 801327
Total book value of debts 409791
Market value of Minority Interest 174881
Cash -123464
Other non-operating assets -11787
2014Enterprise value 1437103

EBIT2014 57963

EV/EBIT 24.8

By right I should use the trailing twelve months results which is much better. But as I am an amateur, I leave it to you, a professional, to show us.

Posted by Kevin Wong > 2015-05-20 20:25 | Report Abuse

Happy and prosperous investing everybody!

Posted by Johnnys > 2015-05-20 21:55 | Report Abuse

I no drink Coffee, so I don't like coffee machine, so I no buy.

Posted by paperplane2 > 2015-05-20 22:12 | Report Abuse

Somebody has lots of vs. Panicking

Posted by vinext > 2015-05-21 03:18 | Report Abuse

KKY koon yew yin bought so much that i didnt know he overlooked this, tq to KCC.
BTW, 1 real no brainer is Telco tower or VISA or mastercard but they aint cheap

Posted by Frank Soweto > 2015-05-21 05:13 | Report Abuse

Posted by fortunebullz > May 20, 2015 11:17 AM | Report Abuse
Frank! I am surprise you still read The Star! It's full of s**t!

Fortune I juz go to the biz section - all others I skip :) - tats how I spotted MMSV. Star interviewed MMSV,Elsoft n penta Bosses n all said their factory running full cap n millions orders clinched so did a lil homework - no others papers or analyst covering these Co but can see my local home improvement stores carrying crazy amount of LED lightings phasing out all the fluoro n Incandescent so definitely the new thing has arrived :) so I punted a bit but was wary becoz past results was poor but since they changed model of their biz can see dramatic improvement n every qtr keeps getting better so I became braver n like they said the rest is history LOL.

yeah they're full of S**t especially their one sided censored local news but if not becoz of them I might have missed out on definitely the biggest STAR of my life LOL

Posted by vinext > 2015-05-21 08:02 | Report Abuse

such a long comment, all in, KC Chong is correct, too many rookies/ amateurs here, dont think anyone point out that buffett once said "remember this 3 words that wil make u rich, FREE C F ", hahaha KCchong,u r the man, so far, not many can match ur brain, dont worry abt 2 3yrs performance, seth karlman underperform for 5yrs during tech bubble

Posted by sunztzhe > 2015-05-21 09:56 | Report Abuse

Buffet never invested in Microsoft during its early days...what was the opportunity cost? Would Buffet performance be vastly improved if Buffet had invested in Microsoft during its early days??? Investing in Coca Cola was a no brainer as Coca Cola was riding on the rise of US world economic domination after WW2.

A biz that grows need all the cash flow it can generate to invest into its biz to improve further on its biz model to empower it to deliver higher EPS that results in higher capital appreciation. If you are looking for high dividend payout, VS may not be the stock of your choice... however if you are looking for higher capital appreciation, VS maybe a good candidate.

Is Partnering Global Players and riding on the growth of the Global Players a No Brainer biz for VS???

Posted by FMHSTOCK > 2015-05-21 09:57 | Report Abuse

It was once a tech company with the name of Megan Media Holding Berhad, a favour to many value investor for its consistent profit reported, but unrealized the other side of the account when profit was reported; also the non cash assets was slowly building up, and the rest is just history......so it is important not only tracking the profit growth of the company but also to identify what drives the company profit up, if it is in cash where the amount is be able to be verified by auditor in much straight forward manner, the risk of written off will be kept minimum; otherwise the rest of the assets items are difficult to determine their real value, this is because valuation of asset will associate with subjectivity and arbitrary judgement, so do take note

the above comment is not advocating for buy or sells of any share, but just my sharing of some observation of some once bullish company but finally went burst

Posted by shinebright > 2015-05-21 10:17 | Report Abuse

>>>kcchongz

Hi professional, below is how I, as an amateur, value V.S as an enterprise. I hope you can show your professional way, not just talk.

Price 21/5/15 4.30
No of shares 186355
Market cap 801327
Total book value of debts 409791
Market value of Minority Interest 174881
Cash -123464
Other non-operating assets -11787
2014Enterprise value 1437103

EBIT2014 57963

EV/EBIT 24.8

By right I should use the trailing twelve months results which is much better. But as I am an amateur, I leave it to you, a professional, to show us.


Again, I have pointed out, VS only owns 44% stake in VSIG and the high level of debt, and the depressed items in CF all comes from VSIG. VSIG is listed in HK and its financials are publicly available.

So the question is: Does it makes any difference if they own 44% and not wholly own VSIG? OF COURSE! The analysis thereafter is misleading because they are all consolidated. Well, if the VS Ind management wants everything to look pretty, they can as well dispose their stake in VSIG and not conso, making all your analysis and arguments void. And also, their VSIG China operation does not involve in Keurig production.

I am sure their Msia operations generate postive FCF. It is VSIG that drags the items in CF and BS down. Again you must bear in mind that VS only owns 44% in VSIG. If there is case of disposal, any items in balance sheet or whatsoever is split according to the stake owned. There are always reasoning and origins behind every figures.

Well, I will only do full-fledged valuations if paid.

Posted by tsc823 > 2015-05-21 10:42 | Report Abuse

Very good . Please don,t get angry if you disagree.

Posted by JT Yeo > 2015-05-21 10:51 | Report Abuse

sunztzhe "however if you are looking for higher capital appreciation, VS maybe a good candidate. "

So how do you justify 32% capital appreciation over the past 10 years?

Posted by sunztzhe > 2015-05-21 11:07 | Report Abuse

Managing to grow the Biz is forward looking...Partnering Global Players and riding on Global players that results in increasing EPS will result in higher share price.....VS has delivered so far...the justification for me is the share price appreciation....that is enough....

Posted by sunztzhe > 2015-05-21 11:23 | Report Abuse

JT Yeo, Are you purely focused on seeking answers on justification of 32 % capital appreciation over past 10 years rather than focus on making money with VS ?? I have already made money riding on VS...have you???

Posted by kcchongnz > 2015-05-21 11:52 | Report Abuse

{Posted by shinebright > May 21, 2015 10:17 AM | Report Abuse

Again, I have pointed out, VS only owns 44% stake in VSIG and the high level of debt, and the depressed items in CF all comes from VSIG. VSIG is listed in HK and its financials are publicly available.

So the question is: Does it makes any difference if they own 44% and not wholly own VSIG? OF COURSE! The analysis thereafter is misleading because they are all consolidated. Well, if the VS Ind management wants everything to look pretty, they can as well dispose their stake in VSIG and not conso, making all your analysis and arguments void. And also, their VSIG China operation does not involve in Keurig production.

I am sure their Msia operations generate postive FCF. It is VSIG that drags the items in CF and BS down. Again you must bear in mind that VS only owns 44% in VSIG. If there is case of disposal, any items in balance sheet or whatsoever is split according to the stake owned. There are always reasoning and origins behind every figures.

Well, I will only do full-fledged valuations if paid.]



We are valuing V.S here, not VSIG. When a company like V.S which has equity, debts, minority interests, non-operating income, Enterprise value is a very common valuation method; what is the price to buy over the whole business.

TEV = Market Capitalization +Total Debts + Minority Interest - Cash and other non-operating assets. And that is how I did it as appended below.

Again, we are valuing V.S, and not VSIG.

If you have better way to value it, just show us. We all learn here. There is no limit to knowledge. We don't solicit payment for sharing of knowledge here.

"I Will only do full-fledged valuation if paid?"

Anyone willing to pay him to do that?

Please lah, you haven't even shared anything useful here and showed that you are that good yet except shouting here and there so far.




[Price 21/5/15 4.30
No of shares 186355
Market cap 801327
Total book value of debts 409791
Market value of Minority Interest 174881
Cash -123464
Other non-operating assets -11787
2014Enterprise value 1437103

EBIT2014 57963

EV/EBIT 24.8

By right I should use the trailing twelve months results which is much better. But as I am an amateur, I leave it to you, a professional, to show us.]

Posted by shinebright > 2015-05-21 12:04 |

Post removed.Why?

Posted by shinebright > 2015-05-21 12:06 | Report Abuse

Why not look at VSIG when VS owns 44% in VSIG? Doesnt make sense Uncle

Posted by shinebright > 2015-05-21 12:07 | Report Abuse

And just so you know whn disposing based on EV, it also takes into consideration the stake you own in each subsidiary.

Posted by kcchongnz > 2015-05-21 12:52 | Report Abuse

Posted by shinebright > May 21, 2015 12:07 PM | Report Abuse

And just so you know whn disposing based on EV, it also takes into consideration the stake you own in each subsidiary.


The market value of minority interest in the enterprise has taken into considerations of all subsidiary companies V.S may have. It is collectively taken care off, though it is an estimate.

Are you telling me you must value each and everyone of the subsidiary company? What if some of them are not public listed and have no public information?

Ok, you may have your way of doing. Then show us. We learn from you.

Posted by Icon8888 > 2015-05-21 13:16 | Report Abuse

have a kit kat

Posted by sunztzhe > 2015-05-21 13:43 | Report Abuse

Lets not argue waiting for the cows to come home when those who argue are not leading the cows home....hahahahaha!!

So I have just taken some time to do a bit of desktop research..taking on the shepherd's role to lead the cows home...hahahahaha....kinda easy though...its a bit of no brainer as all info are available online..just need to dig it out...So here goes...

http://www.bloomberg.com/research/stocks/financials/financials.asp?ticker=1002:HK&dataset=balanceSheet&period=A&currency=nativ

TEV = Market Capitalization +Total Debts + Minority Interest - Cash

Market capitalization at yesterdays close price = HKD 965.4 Million
Cash= Cash + equivalents= HKD 81.3 million
Short term borrowings= HKD 223.9 million
Current portion of long term debts/capital lease obligation= HKD 31 million
Long term debt= HKD 195 million

Total Debts=Total Interest bearing debt= 223.9+ 31+ 195-= HKD 449.9 million


So TEV= 965.4+ 449.9-81.3= HKD 1,334 million

VS owns 44% of VSIG= HKD 586.96 million

Total issued shares of VS= 207,021,506 units

So the TEV of VSIG /share for VS= HKD 2.835 X0.465= RM 1.318/share

Just for the sake of discussion..If VS sells off its 44% stake in VSIG now, VS will receive about MYR 1.318 cash/share. So at current VS price of RM 4.27, the conservative value of VS should be RM 4.27 + RM 1.318= say RM 5.50/share.

So is VS current share price undervalued, fair price or overvalued???

IS CURRENT PRICE OF RM 4.27 ALREADY REFLECTING 100% OF VS TRUE VALUE???

Does anyone want to comment on the above???? hahahahaha

Posted by kcchongnz > 2015-05-21 14:45 | Report Abuse

sunztzhe,

Good effort. at least you have done something here. Here are a few of my comments.

1)You were working out the enterprise value of VSIG, not EV of V.S. VSIG is just one of the subsidiary company of V.S.

2) The HK 1334m you get is the EV of VSIG. That is made up by equity shareholders and debt-holders, not sure if there are other stakeholders. The whole lot doesn't belong to the shareholders of VSIG, and hence not 44% of the EV belong to V.S. What belongs to the shareholder of V.S is just the market capitalization, the first term of your EV formula.

3) You don't just add the part market cap to V.S and get a value of RM5.5 for V.S shareholders. The value of VSIG is already reflected in the RM4.27 of V.S share price. VSIG's account has been consolidated in V.S account. V.S may have other subsidiary companies. But adding each individual price to V.S share price, Huat loh!

4) You add one price to another price and determine if the sum of price is over-valued is like putting the cart in front of the horse. You should determine what is the value of the company, and judge if the price is overvalued. You know the price of V.S. You need to estimate the value of the equity shareholders of V.S.

Posted by sunztzhe > 2015-05-21 15:22 | Report Abuse

kcchongnz,
OK , thanks for your feedback.
The negative effects of VSIG is already reflected in VS current share price. VSIG has a negative impact on VS till now...not positive.

VS is a growth company and deserves a higher PE factor. With VSIG,I will impute a lower conservative PE of 12. Based on prospective rolling 4Q forecast of 45.1 cents/share, the fair value of VS= RM 5.41.

Based on this basic valuation, VS is currently undervalued.

Posted by NOBY > 2015-05-21 15:27 | Report Abuse

Let me try using trailing 12 months valuations....

VS (in RM thousands as of 31/1/15)
Market Cap = RM 864,800
Cash = RM 201,751
LT borrowings = RM 136,042
ST borrowings = RM 223,566
Minority interest (HKD 0.53* 56%*shares outstanding*0.47) = RM 246,506
EBIT (TTM) = RM 111,325
Enterprise value (EV) = RM 1,269,184
EV/EBIT = 11.4x


VS International Group (in RM thousands as of 31/1/15)
Cash = RM 73,248 (56% = RM41,109)
LT borrowings = RM 79,664 (56% = RM44,612)
ST borrowings = RM 84,327 (56% = RM 47,223)
EBIT (TTM) = RM 3,996 (56% = RM 2,238)


Adjusted VS Enterprise valuations (After De-consolidating 56% stake of cash, debts and EBIT that belongs to minority shareholders of VSIG from VS balance sheet)

Market Cap = RM 864,820
Cash = RM 160,732
LT Debts = RM 91,430
ST Debts = RM 176,343
EBIT (TTM) = RM 109,087
Minority interest = RM 0

EV (de-consolidated VSIG) = RM 971,861
EV/EBIT = 8.9x

My calculations are lower than KC but perhaps its because I m using TTM valuations. Would VS share price be higher or lower assuming it did not own a 44% stake in VSIG ? My take is that it would be higher as the valuations would look more attractive since VSIG from a sum of parts valuation only contributes about RM 19 mil to VS market cap.

Posted by sunztzhe > 2015-05-21 16:58 | Report Abuse

NOBY,
Please advise what is your fair value estimate of VS in RM/share? TQ.

Posted by NOBY > 2015-05-21 17:26 | Report Abuse

sunztzhe, I did not go further to value VS. To do so, will require a lot more work, understanding the industry cycles, looking at competitor valuations, estimating cashflows etc. The valuations today are not compelling enough for me to do that...

Posted by JT Yeo > 2015-05-21 17:47 | Report Abuse

sunztzhe, of course i know you have make alot money, IFC, MYEG people told me that too, but that has nothing to do that your valuation is correct right? Process triumph Results

besides the 32% is real, i didnt not made it up, if I forward looking in 2004, 32% is what im getting now, maybe slightly more if you include dividend.

Posted by sunztzhe > 2015-05-21 18:04 | Report Abuse

JT Yeo, OK accept and respect your views...however I have a different mindset and a different viewpoint...I use basic simple valuations and take decision on case to case basis...If there is an opportunity to make money based on my simple FA valuation which is confirmed by TA, I shall take it...Today the index had broken 1800...I have sold off major portion of my investment...still make money...hahahaha

Posted by kcchongnz > 2015-05-22 08:56 | Report Abuse

This is the 100th comment in this thread. The question is; Is V.S a No-Brained Investment, or NBI as described in the thread here:

http://klse.i3investor.com/blogs/kcchongnz/76694.jsp

"A NBI is one which provides you with a cash yield of double, triple, or more the cash you can get from a bank fixed deposit interest, in a consistent manner."

The key phase is "in a consistent manner". If past three years of negative free cash flow, and hence negative cash yield, it doesn't fit into the definition above, does it?

Its FCF seems to be positive for the coming year, but few here care about this FCF anyway. But that is what the article of NBI is about; "cash yield in a consistent manner".

Even positive FCF the coming year, which I believe it will. Does it fit into the above definition of NBI which requires "consistent manner"?

Some argue about its profit growth, its qualitative aspects, its PE valuation etc. But what is my post about? What is my context of a NBI? It is again consistent FCF with a good cash yield. Well your context of a NBI is obviously different from mine. That is not an issue for me.

It is just that I do not agree with you. Sure, investing is about the future, but I do not agree with you extreme high growth should be extrapolated into the future. I do not agree that you have the ability to project such rosy future. I do not agree with your comparison with Amazon.

I also do not not agree with your valuation basing on PE that it is cheap, as I don't agree that is the right valuation metric.

So even based on your context of growth, valuation, exceptional management, global player etc, it is still not a NBI for me.

Many accuse me of misleading information, that I am jealous that they made so much money for buying V.S, but I don't. Congratulation. No, "when everyone makes money in V.S, and I don't, it is ok.". I have qualified that in the post. Meanwhile, enjoy your gain.

And there is no reason that I should talk down on V.S. I can't short sell it. And no, I have no intention to buy it cheap by talking down on the stock.

Posted by kakashit > 2015-05-22 16:46 | Report Abuse

i though KC should be able to pull down the price of VS, or Koonkoon supporting it? lol

Posted by sunztzhe > 2015-05-22 23:08 | Report Abuse

A NBI investment is akin to investing in Coca Cola, a company with very strong leverage on its brand equity riding on the economic domination of the whole world by the USA just after WW2. It is a no brainer investment..Coca Cola is quite addictive..hmm..what are the real product constituents in Coca Cola.,,does anyone really knows what goes into its product constituents??? .. Sometimes I do wonder whether it is the brand equity that sustains its growth or the addictive nature of the drink itself...of course a company that owns and sells a strong brand equity in an addictive product will add cash to its bank in voluminous amount..I too would like to invest in Coca Cola just after WW2 but sadly I was not even born then...

Posted by Ooi Teik Bee > 2015-05-24 14:38 | Report Abuse

After reading KC Chongnz’s recent 2 articles on VS Industry as posted on i3investor.com which are not encouraging readers to buy VS, I am wondering why Mr Koon Yew Yin bought so much within the last few months to become a substantial shareholder. Is he really so stupid?

The VS price chart shows that it has gone up from Rm 2.50 to Rm 4.30 within the last 6 months.
Is he not aware that the company has increased borrowing, increased interest payment, increased receivable, poorer cash flow etc as shown in its financial report?

So, I asked him to explain to me his reason for being so bullish.
He said that although he is not an accountant, he looks at VS business operation as a business man. As long as it is selling cheaper than MPI or Globtronics in terms of P/E ratio, he is not afraid to buy it. As an experienced business man, he can imagine that if the company has tremendous increase in sale revenue, the company surely requires more borrowing to do more business. VS needs more money to pay for more raw materials.

Regarding the increase of receivables and poorer cash flow, he said that the company requires longer time to make and deliver its products to customers spread over 30 countries.
The most important consideration is how sustainable is VS’s new business in manufacturing coffee machines for Kuerig, the famous US coffee brand?

He said that during his recent site visit of VS’s 5 factories in Johore, the American Engineers from Keurig were working with their own Engineers to develop a new type of coffee machines and a new machine for cold drinks. Cold drink business is about 5 times larger than hot drinks.
Moreover, VS is only supplying about 25% of the total machines required by Keurig and the rest of Keurig’s requirement is from manufacturers from China. As labour and other cost are rising in China, VS has a better competitive advantage to gain more orders.

Mr Koon told me to look at the summary of his investment talk on 9th May 2015 when I assisted him. The talk was organized by Dali of Malaysia Finance blogspot in KL. The following is part of his speech:

My largest holding is VS Industry:
I selected this electronics manufacturing company because it is so cheap in terms of P/E ratio, ROE and other criteria in comparison with the 2 famous leading electronics manufacturers in Malaysia as shown below:
Name Half Year EPS Half Year Revenue Share price P/E ratio
Globtronics 13 sen Rm 180 million Rm 6.10 23
MPI 23 sen Rm 670 million Rm 7.00 15
VS Industry 27 sen Rm 1,010 million Rm 3.96 8

VS has a total of 9 factories in Johore, China, Vietnam and Indonesia. VS employs 15,000 workers which is more than the total number employed by MPI and Globtronics.
Their largest customers are Keurig. Dyson, Sony, Sumsung, Panasonic etc. They have been in this business for 30 years.

Mr Koon said that his VS and Latitude investment reminds him of his past performance in buying Supermax and make a kill about 5 years ago when Supermax price shot up from Rm 1.00 to above Rm 6.00 within a period of 15 months. It is similar to Latitude which shot up from Rm 1.00 to above Rm 6.00 in the last 24 months.

I will study his past performance in buying Supermax and post another article which should be useful knowledge to all investors.

Note :
It is not a recommendation to buy ... I repeat ... not a recommendation to buy, I just post Mr Koon's view why he is so bullish about VS. There are some information is useful to VS investors since he visited VS Industry during AGM.
FYI, I hold VS stocks which I bought at very low price at the beginning of 2015, you can check my posting in the below link :
http://klse.i3investor.com/servlets/pfs/41947.jsp

Final decision is yours.
Thank you.

Posted by bsngpg > 2015-05-24 14:51 | Report Abuse

Thks Mr Ooi TB for relating in detail the lengthy decision making process of Mr Koon. It showed us another way of share selection which looks a biz thru an eyes of biz which basically bases common sense.

Posted by kcchongnz > 2015-05-24 17:25 | Report Abuse

OTB,
Thanks for the information you have posted here. It is very useful to give a different view about what I have written. That is what a constructive, informative and supported with relevant information.

It certainly also gives a view point by different businessman. Yeah even businessmen think differently. My business point of view is cash, cash and cash. Your business point of view is future, insights, prospect. Nothing wrong with your view. In fact big money is made that way; have a good insight and foresight, insider information, scuttle butting etc.

Your post gives readers an excellent alternative view here to decide if they were to buy, buy more of V.S shares.

Your excellent post is unlike what are the normal unproductive, opposing view like below:

Posted by bigheadsheng > May 20, 2015 12:39 PM | Report Abuse
very obvious, KC Chong is jealous that he missed the boat, dun have any VS shares on hand. those info are misleading :)

Me: Me jealous, so obvious? Jealousy is one of the most dreadful sicknesses in investing. Don't be. Misleading? What is misleading? Show me what is misleading.


Posted by kakashit > May 22, 2015 04:46 PM | Report Abuse
i though KC should be able to pull down the price of VS, or Koonkoon supporting it? lol

Me: Pull down the price? For what? To short sell it? To pull down so that I can buy cheap? Or you want to pit me against Mr. Koon, a great social contributor which I respect of?


And also try understand what this post is about. A No-Brainer Investment, and how do I define a NBI? Is V.S a NBI in the context of my definition, in my context of a businessman point of view.


Posted by Probability > May 20, 2015 02:59 PM | Report Abuse
"A NBI is something you don’t need to calculate so much, think so much. It just jumps out at you."
please spent some time to understand this..dont get carried away with emotions...its that simple ;)

Posted by kl foong > 2015-05-24 17:46 | Report Abuse

Mr OTB,
TQ so much for sharing with us - Mr Koon's rationale for buying VS.

Posted by murali > 2015-05-24 20:02 | Report Abuse

What is Koon Koon's rational for promoting VS N Latitude at current prices again n again??

Posted by murali > 2015-05-24 20:04 | Report Abuse

No easy job to be fund manager of long Buddha ear old man, besides making money for him also has to do PR for him too,it's certainly a very challenging job in view of Koon Koon's "reputation in I3"...OTB is one of the best fund manager in the world....