It depends on how you assess Wang Zheng in its totality.
The borrowings are secured by 2 Classes of Assets:
1) The building of 4 modern factories in Sungai Buloh. As such those borrowings are secured by Net Tangible Assets. And if you dig deeper you will notice that they are all at old book value. Did you notice that Wang Zheng also has 2 blocks of 3 Storey Shophouses in Rawang? The book value is around Rm160K per unit.
2) By Inventories & Receivables. Totalling Rm110 Millions.
So assuming that The Net Assets Have Taken Care of all borrowings Wang Zheng DO HAVE a surplus Cash position of Rm100 Millions.
The Sum total of Assets minus the Sum Total of all liabilities equal Net Net Value.
As for YTL Power there is a vast difference. The Sum total of YTL Power Net Net minus Total liabilities is a completely different story.
Insiders & Top 30 Substantial Share Holders Have Discovered The Deep Deep Value of Wang Zheng. They have quietly accumulated up to 88% of the total paid up capital of Wang Zheng. Only a mere 12% shares are still in free float.
This is a testament of the faith of Insiders & substantial share holders.
One more thing. Wang Zheng is a Far Far More Solid Company than XOX, Hibiscus & Xinquan. Why don't you go there and warn all the newbies there?
Receivables can be fictitious and or becomes doubtful.in the past we can see this company like transmile , megan media, patimas faking it till the hole become too big.. There are not many true net cash company Those true net cash co in most cases are able to pay good dividends consistantly But their share price wont be cheap also.. So can forget about earning quick bucks from wang zheng, wang fei hong or whatever and go watch the action which is in china
1) Selling at 75 cents With NTA of Rm1.06, THere is a Margin of Safety Comment: There are many stocks trading below NTA, hence I disagree that it should be viewed as margin of safety
2) Ever increasing profit. P/E less than 10 Comment: Many companies are trading below 10x PE. What about the earnings growth prospect of the Company? If the Company can grow its earnings more than 10% in FY16, then maybe we should really look at the stock
To me, I dun like to put receivable as the way to pare down trust reciept. NNWC only consider 50% of receivable value.
Neverless, expect some big price movement from this posting. The nature of Wang Zheng is super low liquidity counter. After this post, it might trigger the interest from the "invisible hand" .
Quote CalvinTaneng, One more thing. Wang Zheng is a Far Far More Solid Company than XOX, Hibiscus & Xinquan. Why don't you go there and warn all the newbies there?
********************************************
Calvin, I just come here and comment on the calculation. It just that 1+1 = 2 , but my mind tell me it's 10 (base 2).
I have no grudge against you or your stock.
*************************************
And I'm tired and have no obligation to warn people not to buy those kind of stock. You wanna play the game, you had to risk your underwear to play it.
Since Wang Zheng is selling health care products like Baby Nappies & Adult diapers credit is extended to pharmacies, hospitals & established supermarkets. As such there is little bad debts
In THE INTELLIGENT INVESTOR by Ben Graham the concept for "Margin of safety" was first highlighted.
Ben will only invest in a Company with at least 30% discount to NTA.
Why so?
Like building a bridge for lorries to pass through. If you build a bridge to withstand the weight of a 5 ton lorry you should not just build to 5 ton specification.
What if an 8 ton lorry ignorantly pass through. Then the bridge will collapse!
So try to build a bridge that can withstand even a lorry up to 10 tons even if the specification is only for 5 tons lorry. The extra 5 tons is a precaution just in case a person foolishly drives a n 8 ton lorry over it.
So this is an example of "Margin of safety" concept.
Others are having life boats and life jackets on ferry, parachutes in airplane, ABS Brake for fast cars and fire extinguisher in factories or petrol stations.
So the better the "Margin of Safety" or NTA the better the state of the Company. At the very worst of times Assets can be sold off to pay borrowings & fend off bankruptcy.
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Posted by calvintaneng > 2016-01-08 01:57 | Report Abuse
Note:
Last time Calvin bought Cenbond at 50 cents with NTA over Rm1.00
Calvin also bought Muda at 35 cents with NTA over Rm1.00
Both have gone up 300% to 600%
WANG ZHENG Is Better than Cenbond and Muda anytime