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CS Tan
4.9 / 5.0
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
kcchongnz
6,684 posts
Posted by kcchongnz > 2015-08-20 06:01 | Report Abuse
Great article. Maybe it is better to have more of this type of article for investor to learn to avoid the pitfalls in investing rather than stock peddling.
Just some comments:
1) It pays to know a little more about financial statement analysis to see that ROE may not be a good measurement of goodness, especially when a company has a lot of debt. ROIC is a better measure. With the inclusion of non-operating income, ROE can straightaway be thrown to the dustbin.
2)P/E ratio may be a little too simplistic to measure price vs value. In this case, the non-recurring income and the heavy debts are not reflected. Clearly enterprise value will show that the stock is not cheap. Low NTA here also doesn't mean it is cheap, as I think the quality of the assets are very poor. Yeah, all packed in inventories and receivables.
3) It appears that the free cash flow mentioned here is not FCF, but cash in the balance sheet. They are different. I doubt, on average, the company has any FCF over the years. Yeah, not even cash flow from operations, forget about FCF.
4) without FCF, the dividend is also paid from borrowed money.
5) Investors will be "rewarded" with rights issues soon judging from the financials.
6) Is that important for the big boss even if the company is not performing? It doesn't seem so with such a fat remuneration.
Instead of just looking at growth in profit and P/E ratio, look for the above first.