As you have mentioned somewhere that market is part art part science, sometimes % is just a general calculation for chance, it does not guarantee anything.
See the one who died on the dental clinic, no one expected that but it just happened this way.
When it is too relying on % to make investment, it will divert the attention from looking at the bigger picture.
I believe most successful businessmen are taking risks on their daily business decisions, after calculating all risks & rewards.
That's the job of accountants to advise. That's the reasons most accountants are working for businessmen.
Yea you're right, one needs to have a good grasp of the magnitude and frequency of both upside & downside. All business looks at the bigger picture, the story or narrative ie. let's move into adjacent market, expand etc, but ultimate they have to simplify it to a yes or no answer to go ahead. How do they do that, most use net present value NPV, by calculating capital outflow on year 0 (present) and cash inflow from the investment return every year after for say, 10 years. NPV applies the same principle as DCF.
Ricky, thank you for reply, we as investors are always handicapped when come to investment in stock markets.
Most people don't realise that many of us have to rely on all information made available via newspapers, announcements & reports from the management and we have to rely on the credibility of the those so called directors, even though we know that many of them are having low morale.
All calculation/methods are merely tools used to reduce the risks of making mistakes but these are not decisive when come to share investment. People is still the key factor.
KLCE King, Yes, you are right, beside looking at the figure, you have to look at chair person and the management team. For CSCsteel so far very reliable
Tools are not be all end all. You're right the person using the tool is the key. Anyone can manipulate a tool to work the way he wants, PE 10 would win the most abused tool in financial industry hands down.
If a person choose to be ignorant, no tools save that man, not even Thor's hammer. And look at this page, how many people is expressing constraint and thread carefully? None.
From the spread alone, 13jun RMB457 12sep RMB752 difference is RMB295 equivalent to RM183/ton which is the figure CSCstel capable of making profit for coming quarter. Taking 70% capacity utilization, coming quarter CSCsteel will able to produce 108500 ton. The equivalent additional profit should be 19.8 millions or EPS 5.2 sen If average of EPS is assumed with additional profit, the next quarter EPS should be 9.35
aiya Ricky...if i am sure about the near term earnings...whats the harm in giving PE 10? Its kinda useful when you estimate your rewards giving a dividend payout of say 50%....
and in no way anyone can predict correctly long terms returns.... if one is to really use the correct-realistic figure...i dont see why they should use a figure more than the GDP growth rate of say 4% only...as the ROC itself....unless they have the ability to make an in-depth analysis of the business...and its long term competitive advantage. Who can do that?
I think 99% investors cant...and they are not interested also...furthermore what certainty we have on the long term returns?
...the uncertainty builds up exponentially the longer - your 'time frame' of estimates.
no doubts, company share price will be reflected by the company management. all business will be subject to up and down but a good management will do their best to protect the company interest which will flow to shareholders finally;
one good indicator for a company, is the amount of dividend paid to shareholders. this reflect the company commitment to all shareholders.
csc steel dividend record; 2006 - 5 sen less 28% tax 2007 - 10 sen less 27% tax 2008 - 18.5 sen less 27% tax 2009 - 2 sen less 27% tax 2010 - 20 sen less 26% tax 2011 - 13 sen 2012 - 7 sen 2013 - 7 sen 2014 - 7 sen 2015 - 3 sen 2016 - 8 sen
csc should be treated as a blue chip as 1) market leader in cold roll coil in malaysia 2) never fail to pay dividend even during bad/difficult times 3) the management remunarations are extremely reasonable. pls check yourself. even some lousy losing money ACE companies COO salary is higher.
there is only ONE risk investing in CSC. (UNFAVOURABLE LOCAL BUSINESS CONDITION LIKE THE PAST WITH MASSIVE DUMPING FROM CHINA) WITH THE ANTI DUMPING EFFECTIVE FOR 5 YEARS DOWN THE ROAD FROM 2016, THE ROAD IN FRONT IS CLEAR OF UNNNECESARY HURDLES
The idea of assigning a PE multiple is because you think the market will agree with your view and push the share price to that multiple right?
If market disagree with you what's the point of this whole exercise.
I don't make the market, no one wants or can predict long term but that is how a market is. Market says it is extremely hard to make money following the 95%, yet no one wants to be a contrarian.
does contrarian believe all the margins will eventually revert to mean..4%?
Say now the margin is only 2%....we estimate based on long term returns of 4%... and found it to be dirt cheap - say its selling one third of its Intrinsic Value...does that ensure we will get a good return in the future? Is that contrarian thinking?
Is it not possible for the company to turn out to be like Megasteel & close-shop?
Megasteel was build 20 years ago....didnt the businessman have ability to forecast its long term competitiveness? If he cant....how can investors like us do?
Not only the Spread helps.... if they report on re-valuation gain on their Inventories..due to the rising HRC / CRC / Steel rice generally....it will be phenomenal!
but...all these information are very easily available to the majority....we have to be 'contrarian' and find information that is not easily accessible to everyone & only then buy if its a positive information.
So...dont buy...how on earth did you get a sky high PE of 10?
Chelsea....y2y basis it'll be good...this q results will be slightly lower compare to previous...that what I can say. Just wait for the results and see...it'll be good to start buying into it again after this q results...
so the results is out...it didn't beat last quarter right?...where do we go from here? For those who are holding I say sell and wait for cheaper entry.
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....
zefftan
173 posts
Posted by zefftan > 2016-10-18 23:09 | Report Abuse
beware of q3, might not up to expectation