Posted by (S = Qr) Philip > 2019-03-09 20:22 | Report Abuse

Thanks for the pertinent information SSLEE.

Do you know what the information is trying to tell you?

Posted by qqq3 > 2019-03-09 20:48 | Report Abuse

sted by (S = Qr) Philip > Mar 9, 2019 02:51 PM | Report Abuse

Which is why I kind of respect kyy, he puts large sums to back his investments, with margin to boot.
========================

S = Qr

Last year, I don't know how to write it properly.....I write about sailang margin and everybody censures me, deletes my posts.........

Posted by Sslee > 2019-03-09 22:18 | Report Abuse

Dear Philip,
I quote your explanation on 50PE, “Imagine if you have a condo in klcc that you bought for 1 million. Currently you are renting it out for 3,000 a month. Your earnings per year is 36,000 a year. If you were to offer 50pe, you would saying that you want to buy that condo for rm1.8 million. Would you sell your condo in klcc for 1.8 million knowing that a few years down the road you would be renting it out for rm 5,000 a month? If you think about it very carefully, 10-20 years down the road do you think condos in klcc will ever be sold at 1.8 million?”

I totally disagree with your above explanation hence I just want to highlight if QL EPS is 12.71 cents financial year end 31/3/2018. Apply the growth rate of 10% and discount rate 3.5% then how many years you need to get a DCF of RM 6.79 (Closing market price on 8/3/2019)

Note: Unlike the condos in KL many of QL assets “Farm building, Boat, Plant, Machinery, Vehicle, Fitting, Work in progress, Biological assets, leases hold land, Plantation development expenditure and etc” will have zero value at end of life. Moreover QL still need to repay their increasing borrowing.

Thank you

Posted by (S = Qr) Philip > 2019-03-09 23:16 | Report Abuse

So you are trying to tell me pt murni plantation lands will have zero value when you evaluate its business value(lease hold lands cannot be renewed?). Or the 2 refineries that it has once you fully amortise it's cost after 7 years it suddenly is worth nothing( fully depreciated in financial report suddenly cannot still be productive)? Or the specialist workers and management that is working to make PT murni a success is not an intangible asset when you buy the business. The wonderful organisation you helped set up, the highly trained workers and bylaws and business practise you have brought down are amortized to zero with no further value in making of murni a well run company?

Simple question for you, sslee. Malaysia depreciation for plant and equipment can be expenses out by 14% each year for tax purposes. But in reality, do you scrap and replace new palm oil refineries every 7 years? Do you just scrap your 10 ton lorries after 7 years? It do you replaced parts, upgrade machinery and keep it chugging along far beyond its assumed end of life cycle?

I think you would need to convince me further on your concept of useful life of an intangible asset (like sslee PT muni organization costs)and tangible assets (like your refinery)

In the end you need to explain to me the concept of fair value, willing buyer and willing seller. If you tell me that when I buy PT murni I need throw away refineries after 7 years ( fully depreciated) and scrap lorries after 5 years for me it doesn't really make sense.

Most refineries and plantations I know have equipment running and maintained far beyond that.

Or am I making the wrong assumptions all this while? Appreciate if you can elucidate on real life valuations versus tax accounting.

Posted by (S = Qr) Philip > 2019-03-09 23:28 | Report Abuse

Zero accounting value at end of life does not mean I cannot have a gain on disposal of asset, especially if it is a well run, well maintained asset in a difficult location and is still productive, no?

Posted by (S = Qr) Philip > 2019-03-09 23:52 | Report Abuse

And without knowing the future SSLee and using your current assumptions,
If you applied DCF for ql in 2009 you would have been wrong. If you applied it to TOPGLOV in 2010 based on your past data you would still be wrong. Heck, you can try to calculate your INSAS DCF in 2014, and you would have been horribly wrong. the problem with DCF is that your projections are all based on past historical data as your assumptions for the future. Investing is about making a risky bet on the future. DCF tells you nothing about risk or growth triggers.

I wonder what your DCF calculation told you about xingquan?

Don't forget when you apply DCF calculation you need to put in a terminal growth factor ( when growth stagnates), otherwise you will hit infinity and your DCF model falls apart. Not a very smart way to invest in a stock. Ql has grown for the last 20 years, how many more years of 10% growth do you foresee in your crystal ball?

Posted by popo92 > 2019-03-10 00:23 | Report Abuse

i do feel pity for those who insisted insas rather than yinson or pchem. cigarbutt investing doesn't win in long term, period.

Posted by Sslee > 2019-03-10 07:45 | Report Abuse

Dear Philip,
Let examine:
1. Palm oil mill: How many equipment after a certain useful years of operation you need to replace with the new one because the old one keep breaking down (production interruption) and high maintenance cost. (Boiler, Steam turbine, fruit cage, sterilizer, stripper, digester, screw press, separator, cyclone, nut cracker, vacuum dryer and etc?
2. Plantation: How many years your biological assets of palm tree remain productive before you do replanting? How long your vehicles use in plantation can last? After lease hold plantation land expired how much you need to pay to renew the lease?
3. Fishing: Fishing net/gear/motor how often you replace them? Fishing boat how many years can it last before it is no more sea worthy? Refrigerator units what is the life span before it break down too often?
4. Layer poultry farming: What you do with the biological assets of egg producing chickens when they are old and unable to lay egg anymore?
5. General transportation vehicle, how many years before it become no more road worthy or incur high breakdown and maintenance cost?
6. How often the supplier of control system will tell you they no more produce/keep obsolete spare parts or maintain their old system and you have no choice but to upgrade the whole system?
7. How often your high wear and tear moving part/equipment or vessel subjected to high corrosion, erosion and pressure swing needed to be replaced during MTA?

So instead of getting mad at me and keep harping on INSAS or Xingquan, why not you tell us what is your projection of EPS growth rate and from where to justify Present Value or DCF of RM 6.79 in 10 year time.

By the way your article is top class no argument about that. (Million time better than quack quack quack’s article)I do learn something new from your article.

Thank you
P/S: This is what we do when we present project flexibility study to our boss with discount rate of 7% (interest rate is high in Indonesia) the capital payback period should not be more than 10 year otherwise it is not worth investing. (And of cause you do not stop production after 10 year and the plant shall still be productive for another 20 years)

Posted by (S = Qr) Philip > 2019-03-10 10:18 | Report Abuse

If I were to pick up figures from the sky ( which is what DCF is all about), and use past historical figures only, my DCF calculated value for ql currently ( if no further growth triggers apply), I would be giving ql a dcf intrinsic value of rm18.65. if ql gets over the bump into the second growth challenge ( which I am confident they will do), I have an intrinsic value of rm26.47. if they perform beyond my wildest expectations and become the next Nestlé, my DCF is rm53.6. your guess is as good as mine.

I would need to earn at least 6% above( more than EPF rate), otherwise it would be unwise to invest in the future.

But SSLee you are buying a business. Not an asset. If you buy a lousy business with 1 refineries, it would not grow beyond that. But if you are buying pt murni which is one of the biggest privately owned plantations, your business will definitely grow beyond your original calculations 10 or 15 years ago.

Imagine rabbits breeding. When you first only paid for 2 pairs of rabbits, in 10 years you would have many many many pairs of rabbits, far beyond your wildest projections.

The challenge is to buy a male and female pair. After that you wait.

Posted by (S = Qr) Philip > 2019-03-10 10:29 | Report Abuse

In either case, DCF also does not take into account many things.

>>>>>
Limitations of DCF Model

A DCF model is powerful but there are limitations when applied too broadly or with bad assumptions. For example, the risk-free rate changes over time and may change over the course of a project. Changing cost of capital or expected salvage values at the end of a project can also invalidate the analysis once a project or investment has already started.

Applying DCF models to complicated projects or investments that the investor cannot control is also difficult or nearly impossible. For example, imagine an investor who wants to purchase shares in Apple Inc. (AAPL) in late 2018 and decides to use DCF to decide whether the current share price is a fair value.

This investor must make several assumptions to complete this analysis. If she uses Free Cash Flow (FCF) for the model, should she add an expected growth rate? What is the right discount rate? Are there alternatives available or should she just rely on the estimated market risk premium? How long will she hold AAPL’s stock and what will its value be at the end of that period? Unfortunately, there's a lack of consistent answers to these questions, and since she cannot access AAPL’s cash flow as a minority shareholder, the model is not helpful.

Posted by (S = Qr) Philip > 2019-03-10 10:30 | Report Abuse

Don't get me started on dividends, if you do a dcf analysis based on dividends, almost all the stocks you look at are a bad investment.

Posted by Heavenly PUNTER > 2019-03-10 10:31 | Report Abuse

Uncle S=QR, I got some extra pocket money, and I read every single annual report of QL Resources, Chairman is Chia Song Kun, can buy already lah. CEO is Mr Chia also, very confident. I will punt in QL only from now onwards, God Bless My Soul and my pocket money. Amen!

Posted by Heavenly PUNTER > 2019-03-10 10:31 | Report Abuse

Maybe I can meet you in the AGM one day, you are my idol

Posted by Heavenly PUNTER > 2019-03-10 10:33 | Report Abuse

I will buy Family Mart ice cream every week at least once, and eat QL eggs from today onwards, hopefully can contribute a bit more to my investment / punting (whatever you call it).

Posted by (S = Qr) Philip > 2019-03-10 10:57 | Report Abuse

Personally, I think PCHEM would be a better buy for retirees and elders, if they are looking for a safe long term investment. It has the lowest risk Vs reward ratio in my stock portfolio.

Posted by probability > 2019-03-10 11:00 | Report Abuse

now epf started buying back pchem..cant figure out why they sell n buy back

Posted by Ayoyo > 2019-03-10 11:05 | Report Abuse

Knowledge and information will not bring riches, for if that's true, professors or PhD holders would be the richest people on the planet..

So, what determines success and to a larger extent, riches? It is the IMAGINATION - in being able to combine knowledge, information and experience into something of value

Everyone has access to the same information, annual reports, books by authors, economic reports... You can see the by-the-book forummers expounding list after list of theoretical jargons, more to confuse than convince, while the successful outlier sees an imaginative perspective not immediately apparent to the norm

And that is the hallmark of a great entrepreneur - skill, guts, instincts and creativity in making use of chaotic mess of information into structure of substance

Seeing beyond his cockiness, Phillip has this pedigree and he's earned it... Thanks for the wonderful read of your thought processes

Posted by AhHuat50 > 2019-03-10 11:26 | Report Abuse

[转贴] 尝试以不同角度看HARTA - 蛤蜊先生


2019年3月7日星期四


今年1月的时候，我曾对HARTA写过一篇文章《长期投资HARTA》？

当时候HARTA股价从高峰跌至5令吉左右，之后便反弹回5.74，之后慢慢越做越低，最近又跌回了5令吉，甚至更低至4.96。

延续先前的文章，蛤蜊认为HARTA不管是创新、效率、行业优势都具备长期投资的条件。

那今天，尝试以老板角度去计算，如果投资HARTA，会得到什么。

假设，今天我买入1000股，每股5令吉，成本价5000令吉。（5令吉容易计算）

HARTA 2019财年的每股盈利预计是15仙，也就是说，我以5000令吉收购价，买入了一个每年能够创造150令吉净利的资产，回酬每年约3%。（5000x0.15=150）作为老板，我不一定要把赚到的都拿出来，我可以把盈利存起来或投资扩充工厂。

这资产每年也会派发股息，以每年股息0.088计算，我拥有1000股，那么就可以回收88令吉。换算回酬是1.76%。这是实际回收的现金收入（88/5000×100=1.76%）

HARTA每股资产为66仙，我有1000股，也就是拥有660令吉的每股资产。这资产包括公司里的地皮、工厂、器材、存货、现金、应收账款等等。

总计，5000令吉的成本，我可以买到值660令吉的资产，这个资产每年能够创造150令吉的回酬，并且每年分红88令吉，加起来可以赚到238令吉，算起来需要21年才能回本（5000/238=21年）

作为投资者，不仅要知道买入后可以赚多少，投入的成本几时能够回本，分红多少，资产值多少，当然还有未来的增长潜力。

因为，只有进行扩充，生意越做越大，我们的回本期才会缩短，不然这盘生意就太昂贵了，不值得买。

HARTA目前有4个厂，第5间厂刚在去年投入营运。直到Q3的时候，这第5间厂只有6条生产线投入工作，还有其余6条下半年会开通。

除了这5间，还有工厂6和工厂7，大概在2020年至2021年之间，会全部投入营运，到时候一年可以生产440亿只手套。

根据2018年的年报，当时候工厂5还没投产，而工厂1至4，共32条生产线，总共可以生产320亿只手套。

320亿至440亿，两三年时间内将增长37.5%。但这是以递增的方式增长，就好像工厂是逐步投产，而不是一次过开完所有生产线。

所以预计一年的产量会增加15%左右，也就是说盈利也会增长15%。

所以就会像这样慢慢增加， 2019年 每股盈利 15仙，2020年17.25仙，2021年19.83仙，以此类推。

也意味着，以5000令吉成本换算，2020年我将可以赚172.50令吉，2021年赚198令吉。每年的分红也同步增加，2020年101.2令吉，2021年116.38。以此类推。

单看2021年，198令吉的盈利回酬，加分红116.38令吉，总收入是314.38令吉，回本期缩短至16年。（5000/314.38=15.9）

因此，只要工厂一间接一间的开，盈利跟上，那么这5000令吉的回本期将会快速缩短，甚至在未来某年，产量超过千亿只手套，每年就可以赚1000令吉或更多，到时候不仅回本，而且净赚更多。

未来，如果HARTA的买入成本越便宜，也表示我可以以更便宜的成本买入具备增长潜能的公司，回本期也会相应缩短，甚至分红可以更多。

Posted by VenFx > 2019-03-10 11:31 | Report Abuse

谢谢 Ahuat50
如此简单明白
的 梯增值 文章。

Posted by (S = Qr) Philip > 2019-03-10 11:58 | Report Abuse

Which is why I pointed out the fact that topglove is adding more production lines, more expansion, more r&d, more cost reduction activities, more improvement.

Hartalega is giving up 240 million every year from 400 million in earnings and giving it out as dividends.

TOPGLOV is giving out 190 million out of 400 million earnings, and using the retained earnings to grow bigger and extend its moat and improve its business.

TOPGLOV is cheaper to buy, and has better mix than HARTA.

I'm content to bet on this horse for the long term.

Posted by stockraider > 2019-03-10 12:08 | Report Abuse

Please understand this things loh....!!


Posted by (S = Qr) Philip > Mar 10, 2019 11:58 AM | Report Abuse

Which is why I pointed out the fact that topglove is adding more production lines, more expansion, more r&d, more cost reduction activities, more improvement.
1. ADDING MORE CAPACITY MEANS CREATING MORE PROBLEM TO THE ALREADY GLUT OF RUBBER GLOVES AND ITS SELLING PRICE AND THIS WILL IMPACT ITS PROFIT & MARGIN MAH...!!

Hartalega is giving up 240 million every year from 400 million in earnings and giving it out as dividends.
TOPGLOV is giving out 190 million out of 400 million earnings, and using the retained earnings to grow bigger and extend its moat and improve its business.
NO BIG DEAL MAH..counter like hartalega and topglove pays div about rm 400m a yr bcos their mkt cap already exceeded rm 11 billion mah, this translate to a modest div yield of 3.7% pa loh...!!

TOPGLOV is cheaper to buy, and has better mix than HARTA. Not true their valuation of Harta almost the same as topglove but 1 thing is for sure harta is more efficient as its ROE is much higher loh..!!

I'm content to bet on this horse for the long term.
IF U HOLD LONG TERM U GET NORMAL RETURN & NOT OUTSTANDING LOH..!!

BETTER TO EXPLORE SOME OTHER INVESTMENT AVENUE LIKE INSAS LOH...!!

Posted by VenFx > 2019-03-10 12:09 | Report Abuse

哈哈， Harta being innovative with their new products has a additional mark.
Both are good.

Posted by Abismail > 2019-03-10 12:12 | Report Abuse

Next 5 or 10 year harta will produce 100% amg glove..topglove.supermax and kossan will take market share for nitrile glove that left by harta...i think next move for top glove to buy UG healtcare to compete with harta in amg glove ..harta already in new level for amg glove that not many competitor....

Posted by AhHuat50 > 2019-03-10 12:21 | Report Abuse

Good.

Posted by (S = Qr) Philip > 2019-03-10 12:36 | Report Abuse

Please open annual report for all the producers and check trade journals. Rubber glove market is a disposable product which needs to be replaced every time you use it. The entire world market is growing by more than 10% yearly for the past 10 years. Mature markets( USA, Japan) are growing slower, but the other markets are growing by 30+%.
Please open page 27 of the annual report la SOHAI.

Stop posting your nonsensical remarks ( in ALL CAPS nonetheless) and stay away from my blog. I wrote it. You are not welcome. Go away stockraider. And stop asking me to buy shit like INSAS.

>>>>>
1. ADDING MORE CAPACITY MEANS CREATING MORE PROBLEM TO THE ALREADY GLUT OF RUBBER GLOVES AND ITS SELLING PRICE AND THIS WILL IMPACT ITS PROFIT & MARGIN MAH...!!

Posted by stockraider > 2019-03-10 12:42 |

Post removed.Why?

Posted by (S = Qr) Philip > 2019-03-10 13:18 | Report Abuse

Revenue is all time high la stupid SOHAI. Disposable product how to become cyclical bodoh? You think petronm with scheduled shutdown? Do you even know what is cyclical business? You stupid or something? Annually every year HARTA and TOPGLOV did better than the previous year for upteen years. Stick to your sapura and INSAS, you brainless office boy.

I repeat, don't pollute my blog. Or I will have to shut down replies again.

My blog is for people who seek knowledge, not those who shut their brain and repeat useless information.

GO AWAY.

Posted by stockraider > 2019-03-10 13:21 |

Post removed.Why?

Posted by lazycat > 2019-03-10 13:25 | Report Abuse

long num.. ur pchem recommendation look good , i think i'll buy it soon

Posted by (S = Qr) Philip > 2019-03-10 13:38 | Report Abuse

Really brainless SOHAI

Topglove net profit

2014 183million
2015 281 million
2016 362 million
2017 330 million
2018 437 million

What part of net profit is collapsing you sohai idiot.

STOP MISLEADING MY INVESTORS AND FAMILY WITH FALSE INFORMATION THAT IS PUBLICLY AVAILABLE.
STICK TO YOUR CAVE.

STAY AWAY. OR START YOUR OWN BLOG.
I won't be reading or replying further.

Posted by stockraider > 2019-03-10 13:45 |

Post removed.Why?

Posted by stockraider > 2019-03-10 13:47 | Report Abuse

U should consider switching to this no brainer counter loh...!!

Posted by stockraider > Mar 10, 2019 01:19 PM | Report Abuse X

LETS ANALYSE OPENSYS ;

OpenSys has four business revenue models, namely
(i) outright sales, NEUTRAL GROWTH PROSPECT
(ii) software services, GOOD PROSPECT STILL GROWING
(iii) outsourcing services CHEQUE PROCESSING FALLING VOLUME
(iv) maintenance services. GOOD PROSPECT DUE TO HUGE CRM MACHINE

THE CHALLENGES POSE;

1. CHEQUE PROCESSING OUTSOURCING BUSINESS FALLING INCOME DUE TO LESS VOLUME OF CHEQUE USE LOH....!!

2. OUTRIGHT SALES OF CRM MACHINE LOWER GROWTH RATE AS THE VOLUME GROWTH TAPER DOWN DUE TO MATURITY OF THE MARKET AND COMPETITOR LIKE NCR AND HITACHI START COMING OUT WITH THEIR OWN CRM MACHINE. THIS MEAN MKT INTENSIFY LOH....!!
BUT OKI UP THEIR ACT....THEIR MACHINE CAN EVEN PROCESS RM 1 NOTES LOH......!!

3. SOFTWARE AND MAINTENANCE SERVICES SHOULD BE THEIR CORE BASE BUSINESS BUT THERE MAKE UP FOR DECLINING SALES OF CHEQUE PROCESSING AND LOWER RATE OF CRM SALES ??
RAIDER SEE THE ANS IS YES.....BUT MKT SAY UNCERTAIN....THATS WHY PE LESS THAN 10X LOH....!

But overall...Raider see it is a worthwhile investment in opensys the core software and maintenance should give a large core base income loh......!!

Posted by stockraider > 2019-03-10 13:48 |

Post removed.Why?

Posted by wiki123 > 2019-03-11 09:56 | Report Abuse

very informative... opens my eyes to many perspectives of long term company growth and investment...

Posted by wiki123 > 2019-03-11 09:57 | Report Abuse

once again thanks for the learning...

Posted by pputeh > 2019-03-13 21:59 | Report Abuse

Thanks Philip for yr info. However me being a 75 year old retiree find some parts a bit difficult to follow. However no worries. I have picked up a few lots of P.CHEM Yinson & Top Glove for my children and hope to see them grow and flower in the years to come. Will be adding on to them when finances permit at regular intervals. Again thanks and a good night

Posted by RainT > 2019-03-14 15:53 | Report Abuse

Thanks for sharing your knowledge and information !

Posted by sillypan > 2019-03-18 17:37 | Report Abuse

Philip, thanks for sharing. Hope you can share more in i3 to benefit more people.

Posted by Jester > 2019-03-22 15:21 | Report Abuse

What a great article! This is what I want to see more in i3. Thank you so much Philip for sharing. My newbie mind is learning a lot from your postings.

"My blog is for people who seek knowledge" - Philip
- Great words. Please continue as your postings has benefited many people including me.

Posted by stockraider > 2019-03-22 15:23 | Report Abuse

But this biker fellow...dia bike sudah hilang loh....!!

Posted by Jester > Mar 22, 2019 3:21 PM | Report Abuse

What a great article! This is what I want to see more in i3. Thank you so much Philip for sharing. My newbie mind is learning a lot from your postings.

"My blog is for people who seek knowledge" - Philip
- Great words. Please continue as your postings has benefited many people including me.

Posted by okdoke > 2019-03-24 18:13 | Report Abuse

philip...thanks for sharing.

Posted by Heavenly PUNTER > 2019-03-24 18:17 | Report Abuse

stupid raider

Posted by (Clark GKent) Philip > 2019-03-31 07:41 | Report Abuse

Picked up additional 29,500 shares of PCHEM @9.05 on march 26th t+3 based on dividends yield of 18 cents for my shares of 1,495,200 shares. The balance dividend seafood dinner in Penang!

Posted by qqq3 > 2019-03-31 08:56 | Report Abuse

Top Glove, QL, Yinson...they had explosive organic growth the last 10 years.

Gkent? Gkent is facing 2-3 quarters of disappointing results and a real test for its survival in new challenging environment , its probably feast or famine and whatever is currently in balance sheet is probably irrelevant in comparison.

Posted by qqq3 > 2019-03-31 09:10 | Report Abuse

Gkent has tremendous possibilities and execution risks...Its one of those critical junctions.

Posted by kcchongnz > 2019-03-31 11:10 | Report Abuse

A good article with plenty of good investment stuff will always attract many comments, whether good or bad comments. But obviously the sharing of the author has been attracting many good comments, which the author deserves it.

Well done Philip. Take it as a joy to share.

Posted by jackfruit > 2019-03-31 12:15 | Report Abuse

Philip U are very good stock analyst. Never come across an analyst like U in I3 so far. Thank for sharing and hope U continue write more in I3.

Posted by (Clark GKent) Philip > 2019-03-31 12:55 | Report Abuse

Hi jackfruit, I'm not a stock analyst, I'm merely a amateur stock picker who reads a lot, am rational in my investments in not being much affected by highs and lows of the market, and treat investing as being part of a business, instead of prices on a stock ticker tape that goes up and down every day.

Posted by tealeaf > 2019-06-21 11:28 | Report Abuse

thank you for the sharing, very insightful .... regret to sold off my yinson earlier now to switch to other...

Posted by (US/CHN trade war doesn't matter) Philip > 2019-06-25 07:26 | Report Abuse

The real money in stock investment is in the waiting. Not in the buying. I will be preparing my latest quarterly report, just as soon as gkent and yinson announce results, should be end of this month.