kc,what u say is low free float or public float means that counter can easily become one man show counter?that also mean one can easily jack up the price
Kc u write so long for what? some ppl have to pay tuition fee to the mkt to learn. I appreaciate ur writing but a shorter 1 wil do la, best to use the time for other writing, haha
"Focus Lumber only has a total number of 103.2m shares outstanding with a total market capitalization of RM258m at that price of say RM2.50. The free float is even less. With just a capital of RM18m, you can buy and own 7% of its total market capitalization. If one uses 50% margin finance, he just needs RM9m in capital outlay. There are some players in the market who have that amount of money, and much more. Hence it is very easy to jack up the price, isn’t it?"
then we should avoid investing in low free float counter eventhough the fundemental is intact?
as i know double tax deduction is a promotion or benefit from government to some industry so that they pay less tax within that period of promotion. when it say double tax deduction removed the tax amount will back to what they suppose to pay previously
Another objective, unemotional post here. This is the best one on Focus Lumber that I've read so far. The mechanics and variables that affect "Share price" may be another matter but KC has addressed a lot of that too here. The number of shares and free float, for instance. But this can also be a good thing, provided the major shareholders don't sell.
My basic strategy with this kind of counter: I would trade it; buying at the support level. But with a stop-loss point decided upon. If it doesn't hold, then I'd take the loss there and then. No procastinating as with "Let's see how it goes tomorrow. Might rebound..."
Posted by iamsoonoob > May 24, 2016 10:25 PM | Report Abuse "Focus Lumber only has a total number of 103.2m shares outstanding with a total market capitalization of RM258m at that price of say RM2.50. The free float is even less. With just a capital of RM18m, you can buy and own 7% of its total market capitalization. If one uses 50% margin finance, he just needs RM9m in capital outlay. There are some players in the market who have that amount of money, and much more. Hence it is very easy to jack up the price, isn’t it?" then we should avoid investing in low free float counter eventhough the fundemental is intact?
Yes, if you are a short-term trader.
If you are an investor, then you must be able to answer all the questions posed in the article and make an informed judgment.
Often, more opportunity for higher gain investing in a smaller company then a big one, which most probably is fully valued.
Posted by iamsoonoob > May 24, 2016 08:37 PM | Report Abuse kc,what u say is low free float or public float means that counter can easily become one man show counter?that also mean one can easily jack up the price
Yes, he just need to use say RM10 own money and another RM10m borrowed money to jack up the share price from RM2.00 to RM3.00.
But beware when share price falls heavily, margin calls will come and RM3.00 can fall to less than RM2.00 in a short time.
Posted by shareinvestor88 > May 24, 2016 11:00 PM | Report Abuse Dear KC since USD has strengthen today 4.11-4 12 what is the impact on FLB ?
If USD continue to strengthen until end of the next reporting period, I think its foreign exchange translation gain may be more than its loss in this quarter.
But seriously, focus on things you can control, and forget about what you can't control. Be conservative.
FLBHD 16Q1 net profit was flat yoy which caused many people to misunderstand that the company's profits are not growing, especially if one only considers its EPS blindly. However, if one would just examine the results closely, one would realize that this flat net profit was caused primarily by two factors: forex losses and higher tax rate since 1 Jan 2016 due to revocation of previous tax benefits. Let's examine each one in detail.
16Q1 accounts was reported on 31 March 2016, where the RM/USD was at approximately 3.92, which was near its multi-month low. This was unfortunate for its Q1 results, because 15Q4 was reported on 31 December 2015 where the exchange rate was at 4.30, near a multi-year high. This meant that when the company's USD-denominated receivables/payables/cash/loans were translated to RM, the company suffered a loss of 3.6m due to forex, offset by a small gain on derivatives of 123k (used precisely to hedge against these forex movements).
If you strip out this forex loss, then the company would actually have made a PBT of approx. 7.7m, instead of the reported 4.4m. This would compare to the PBT of 3.4m in the preceding year's corresponding quarter (adjusted down for 0.4m of forex/derivative gains). This means that the PBT actually jumped by ~120% yoy.
This would make sense if you take into consideration the fact that their gross profit increased from 7.8m to 14.9m, an increase of approximately 90%. Coupled with the higher profit margins due to higher average USD exchange rate, then the 120% increase in PBT makes sense.
However, PBT is still one step away from the bottom line, which is what interests us investors the most, along with FCF of course. Since there is no more tax break for the company effective 1 January, the tax rate is now approximately 23%. This means that moving forward, the net profit margin will be lower than prior years, and hence the net profit and FCF as well.
In short, Q1 results were actually good, since revenue, gross profit, and PBT all increased yoy, if you ignore the forex losses. However, due to increased tax rate, the company's fundamentals has deteriorated slightly compared to before.
i think many panic who blindly follow EPS miss out this forex losses were "unrealised" losses.... these were only for accounting method since flbhd calculated on the end of quarter report day. yes, the fundamental of the company has deteriorated slightly than before but unfortunately it happens to every export company as well. there isn't much thing we can do about it.
@ks55 This is why I'm now forcing myself to think through the possible downside before buying anything. Especially with the counters that I think "are good, with potential". But time and again, the market has shown it doesn't care whether about these. That's where the stop loss comes in. Normally I'd set it at minus 5%, or just a bit below a supposed support level. Sometimes a counter would rebound after I had cut loss (and making me feel like a wimpy idiot). But more often, it did help prevent bigger losses.
Have to take risks in order to try make profits. But must always have an exit plan early on should things not go our way. Preservation of capital is the number one priority. Can't be stubborn and risk seeing it decimated.
I believe preservation of capital comes from knowing what you are buying and the price you are buy, not cut loss, unless your investment thesis has changed.
Posted by popo92 > May 25, 2016 10:24 AM | Report Abuse Kc is always a fundamental investor who don't have a trade mindset strategy. Buy to sleep well tomorrow is what he always seek for at the first place.
Posted by vinext > May 24, 2016 09:54 PM | Report Abuse Kc u write so long for what? some ppl have to pay tuition fee to the mkt to learn. I appreaciate ur writing but a shorter 1 wil do la, best to use the time for other writing, haha
The tuition fee they paid to learn through following rumours, hot tips, hypes and fads in the stock market is very costly. Why not learn with a small fraction of what they pay through a well structured course and well equipped themselves such that they can consistently build long-term wealth slowly but surely?
Kc, so far my fundamental philosophy on flbhd has not changed yet. Current price 2.04-2.07 already provide me enough margin of safety to sleep well. Mind sharing your price tag for peace of mind too? :)
Ronnie, i believe u got kc wrong. He nvr mention about how the share price will go. He always emphasize on fundamental of the company/business like those questions in this article. Exclude forex gain in 2015, this company is still in a very good position. I will still rate it 5 star especially its cash flow and cash lvl.
Dear KC, a lot of commentators in this forum just shoot from the hip and commenting without doing proper analysis, even though their are plenty of info which are presented in the quarterly results.
Posted by shareinvestor88 > May 24, 2016 11:00 PM | Report Abuse Dear KC since USD has strengthen today 4.11-4 12 what is the impact on FLB ?
If USD stays at this 4.12 level, or strengthen further, Focus would likely to have a lot of foreign exchange translation gain at the end of this period.
But if it weakens to say 3.50, there will be substantial foreign exchange translation loss.
But why worry it so much in your investing decision as foreign exchange rate can go up and down and no one has any control over it?
Posted by raitospk > May 25, 2016 11:10 AM | Report Abuse so your opinion is woth for long term?
Have you ever wonder most, 90% of retail investor under-performed, or lost money in the stock market?
That is because of the get-rich-quick mentality trying to make big money in the shortest time possible. They become the victims of syndicates, big time speculators and manipulators.
There is only one way which can consistently provide you with better return from the stock market; play at your own field, invest rather than speculate, and know yourself how to invest smartly to build long term wealth.
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Posted by cpng > 2016-05-24 19:55 | Report Abuse
这种就是大师级水平,不是那些Pasar Malam kakies可以匹配的。