Posted by soojinhou > 2017-11-28 12:40 | Report Abuse

Their ability to pay down their debt, at the same time paying generous dividend, is impressive.

Posted by bursainvest12 > 2017-11-28 13:23 | Report Abuse

Good analysis

Posted by csl1991 > 2017-11-28 13:25 | Report Abuse

Thanks for sharing David.

Posted by KLCI King > 2017-11-28 15:09 | Report Abuse

Annjoo's result was far lower than what I expected

Posted by Op3rs > 2017-11-28 15:27 | Report Abuse

Kyy say property slowdown, all steel counter tarak harap. go sialang jaks and sendai as they do not depend on property market and have earnings visibility for the next few years. you cannot doubt him as he is the founder of IJM, Gamuda and Mudajaya. if u still want to doubt him, u have to look back on your track record and see if you have bought VS, Latitude few years back. if not, do not even try to contradict his view.

Posted by leoting > 2017-11-28 15:33 | Report Abuse

@Op3rs Sorry to say properties slowdown since 3 years ago, and it is very "old" issue that yet to solve. Current steel sector's performance mostly base on infrastructure and manufacturing, and driven by low inflow of China's steel.

If properties sector is good, current steel counters' price should be double or even triple. But, i don't think properties sector will recover in coming 2 years.

Posted by Op3rs > 2017-11-28 16:33 | Report Abuse

haha leo bro.. it was meant to be sarcastic. dont take it too serious.. respected your work btw.

Posted by Rukawa > 2017-11-29 00:45 | Report Abuse

Good analysis especially on the financial side. Just to add one point on the opportunity, raw materials cost is dropping around 12-15% since Sep, ASP is higher than Q3, that will ensure better profit margin for Annjoo in coming quarter.

Posted by Ricky Yeo > 2017-11-29 06:49 | Report Abuse

Hi David, just a few questions:

1. Why is the calculation of operating cash flow / net profit called Quality of Earnings? My understanding is I have never encounter this ratio and the difference between the two simply comes down to the timing of cash, which when monitor over a length of say 10 years, will come to be more or less the same. And this has nothing to do with the quality of earning, which suppose to mean the sustainability of the earning in the long term.

2. How do you justify that Annjoo deserve a higher PE just because they have best financial metrics compare to other steel companies when in fact their ROIC is at a level that is destroying shareholders value? And looking at the track record where their 10 years incremental return is no better than 10%, won't PE of 10 seems to justify the right valuation?

Thanks.

Posted by NOBY > 2017-11-29 10:42 | Report Abuse

@Ricky Yeo

Your answer for item 1
https://www.divestopedia.com/definition/881/quality-of-earnings

Posted by Ricky Yeo > 2017-11-29 10:54 | Report Abuse

Thanks Noby

Posted by occa888 > 2017-11-29 21:44 | Report Abuse

Thanks for the quality analysis