Posted by VenFx > 2019-06-22 02:32 | Report Abuse

Definitely come back stronger .

Posted by hollandking > 2019-06-22 06:19 | Report Abuse

think a trade war is imminent. US just banned another 5 companies from China. China will have to retaliate

Posted by 3iii > 2019-06-22 08:17 | Report Abuse

Not so fruitful following Davidslim's posts. Just my observation to date.

Posted by Icon8888 > 2019-06-22 09:08 | Report Abuse

Why don't you write ?

Posted by L2earn > 2019-06-23 00:37 | Report Abuse

keep it up!

Posted by Choivo Capital > 2019-06-23 11:45 | Report Abuse

Thats untrue 3iii.

If you buy it while he is front running it, and before the article, sure profitable.

After, well you need to understand its a gamble, so sensing when the story turns and getting out before everyone else is key.

This is a goreng article after all. The best kind, which are weaved selectively with threads of the truth.

Posted by Icon8888 > 2019-06-23 13:20 | Report Abuse

I don't see what is wrong with this article

So your articles are factual and truthful and all his are goreng ?

Posted by kcchongnz > 2019-06-23 14:04 | Report Abuse

David Lim's articles are always factual and come with detail analysis and certainly beneficial here. They are without doubt much better than many articles which often appear as "Top articles" in this i3investor forum, which are mostly, if not all, without any substance and purely for "goreng" purposes.

Readers here should appreciate good sharing from writer such as David Lim. But of course each has to do his own finding and analysis.

Posted by probability > 2019-06-23 14:08 | Report Abuse

Jon still did not give a precise definition differentiating investing and speculation

Posted by davidtslim > 2019-06-23 14:19 | Report Abuse

Tq KC and Icon for your comments.

Posted by Connie555 > 2019-06-23 17:26 | Report Abuse

Talk talk talk so much, 5k article lar, investment lar, ended up with another article telling investor that he already quit his RCECAP, his so called biggest position (I assumed he is highly confident with the stocks).....Crazy kid. Why quit after holding for so long and not earning any bucks? RCECAP been hovering around that price range for so long.

Posted by 3iii > 2019-06-23 18:42 |

Post removed.Why?

Posted by probability > 2019-06-23 18:43 | Report Abuse

3ii makes return above bond level by 0.1% and he claims he is the ultimate 'investor'..lol!

Posted by Huat5828 > 2019-06-23 20:47 | Report Abuse

This article is equipped with facts...many thanks to the writter who has put up much effort.

Posted by (US/CHN trade war doesn't matter) Philip > 2019-06-23 22:01 | Report Abuse

The brands that are submitted by Pantech. These are the big ones, the seamless steel pipes used for o&g processes.
Nautic Steels (UK)
Kobe, NSSMC, Sanyo (Japan)
Posco (Korea)
Schoeller Bleckmann (Austria)
SMST (Germany)
Tubacex (Spain)

In my humble opinion, I find the sentence below and highlighted in black to have a misleading connotation that seems to imply that Pantech will have a monopoly with Petronas. This is far from the truth.

Make no mistake, pantech is just another trading house which added a manufacturing arm and a loss make hot dip galvanizing process which is at 50% capacity.

The trading of the above brands last this year did around 387 million will the manufacturing arm dropped a lot to 222 million. In a nutshell they did 607 million which is slightly lower than last year of 614, but with better margins which is pbt 61 million Vs 58 million last year.

Really profits are around 48 million with 15 million in dividends.

Here is the issue, 2 years ago they did 479 million with 29.7 million in net profit.

Basically the main reason for growth was due to turnaround process and PIC which will be completed soon.

Will there be further growth in the future for Pantech?

If you think carefully, trading houses carry other peoples products, meaning they are only able to complete supply in localised areas, aka export future is very limited. There will be appointed agents in other countries with licenses and heavy competition.

Aka major growth for trading is only in Malaysia market. After pic is complete any other major projects coming up? For replacement schedule how long do you think all these heavy duty seamless pipes last? Do you think it is a disposable product which need constant repair like aircon and chemicals? Or is it a structural process with long replacement cycles?

And if we go into manufacturing, Pantech is a butt weld fittings and long bend manufacturer which had a drop from 266 million to 222 million in revenues.

In the end local or no local Petronas is going in a different direction.

There is a perfectly concrete reason why investors are only willing to pay 8.74 PE for Pantech.

There is no economic or business advantage to a company that is only a trading house and a Manufacturing that does 6% PBT on specialized goods.

If there was something unique about Pantech, it would have grown much further, captured much bigger market share. As it is, evaluate the risks of the company, with another hidden bomb that can occur at any time.

https://www.theedgemarkets.com/article/us-trade-war-claims-first-malaysian-victim-%E2%80%94-pantech

>>>>>>>>>>>>>>>>>>

12. Pantech is the <ONLY locally owned pipe supplying company> under the “Petronas Framework Agreement” - PANTECH provides pipes, valves and fittings not only used for the transportation of oil and gas, but also for the engineering and construction (E&C) phases of the fields (e.g. used as topside structures and jackets, subsea platform pillars, etc). “Petronas Framework Agreement” is to promote more local content, should there be any such ruling.

Posted by (US/CHN trade war doesn't matter) Philip > 2019-06-23 22:06 | Report Abuse

Obviously, that is not to show that the anti dumping plan was permanent, buy it serves to show why the revenue dropped so suddenly, and what the uncertain future will be for Pantech.

A simple thing. If China cannot export to USA anymore, where will it flood the markets next?

>>>>>>>>>>>
https://www.thestar.com.my/business/business-news/2019/06/18/pantech-resumes-exports-to-us/

Posted by Icon8888 > 2019-06-23 22:06 | Report Abuse

What you can't see in the future doesn't mean they are not going to be there

Don't be so sure and jump into conclusions too easily

In business, anything can happen

Entrepreneurs are always looking for ways to improve and grow

Posted by Icon8888 > 2019-06-23 22:09 | Report Abuse

The question now is whether pantech has a range of reasonable products and competent management

The answer is yes

So I leave it to them to sort things out

Posted by Icon8888 > 2019-06-23 22:14 | Report Abuse

The key is to hold Long term and not aim for quick profit

Why do you buy pchem ? The pertrochrm industry is facing overcapacity due to US dumping on east Asia and new plants completed

It is the same logic

Posted by Icon8888 > 2019-06-23 22:21 | Report Abuse

Lafarge seemed to face a hopeless situation not too Long ago

Suddenly YTL came along and take it over

Life is not as predictable as you believe it is

Buy stocks with reasonable quality and valuation in a reasonable industry, hold on to them for Long term and one day, magic will happen

Posted by Icon8888 > 2019-06-23 22:21 | Report Abuse

But Don't buy into sunset industry lah, it is a totally different story

Posted by Icon8888 > 2019-06-23 22:24 | Report Abuse

Few months ago you said success transformer is hopeless because Alibaba is channeling cheap china products into Malaysia

Suddenly h government said they want to replace 800,000 street lamps with LEDs

And they have a Buy Malaysia First preference

Who would have guessed that it would happen that way ?

Posted by Icon8888 > 2019-06-23 22:26 | Report Abuse

I still remember KC few years ago bought homeitz (he wrote about it)

Little we'll run company， buy not really superstar

But suddenly one day RM depreciates from 3.50 to RM4.1

And KC laughed all the way to the bank

That is how people made money in stocks

Posted by Icon8888 > 2019-06-23 22:27 | Report Abuse

What you can't see in the future doesn't mean they are definitely not going to be there

Keep an open mind

Posted by probability > 2019-06-23 22:30 | Report Abuse

closed minds are those who fear their long hard held believes will be challenged/shattered...

Posted by VenFx > 2019-06-23 22:30 | Report Abuse

Yaa ! I like this type of attitude.
No wonder icon8888's bank
Piggy !

Posted by probability > 2019-06-23 22:31 | Report Abuse

sifu Philip is open...3ii i super closed

Posted by (US/CHN trade war doesn't matter) Philip > 2019-06-23 22:33 | Report Abuse

Every investment decision is based on a set of assumptions. The less assumptions you need to make about an investment the clearer the possibility of it coming true.

How possible that Pantech will lose money? Obviously very low, as the management is competent and in an industry that has a niche requirement where price and quality and dependability converge.

How possible will Pantech increase its long term margin to +15% pat? Again very low. It is the nature of trading industry to have lower margins. Worse, once Petronas has tasted and used more lower cost discounts for products in their projects, it will be very difficult to charge then higher prices next time.

How possible is it for Pantech to increase its revenue by 10% or more next year? It is quite possible due to manufacturing picking up the slack from trading arm next year.

How possible is it for Pantech to double it's revenue by 100% or more next year? Impossible. It doesn't have another IPIC in the horizon, the competitors and market is becoming more competitive and streamline, and they don't have the factory space.

Businesses usually follow a consistent trajectory in the long term. Especially brick and mortar businesses. By comparing the trajectory of similar businesses you can have a more POSSIBLE idea of what will happen in the future.

Still miracles happen.

For me, I fully agree with Pantech valuation right now, and in fact believe that Pantech should be selling at a lower price than currently.
Especially when management has said that business next year will continue to be "challenging".

Posted by VenFx > 2019-06-23 22:33 | Report Abuse

May be 3iii is a fair lady.
Must stay closed.

Posted by probability > 2019-06-23 22:36 | Report Abuse

Philip undoubtedly have good business knowledge...another great asset in i3...keep up the factual arguments Philip...

Posted by Icon8888 > 2019-06-23 22:45 | Report Abuse

I acknowledge Philip is actually very unique

Ha has better feel of industries than almost everybody here in i3, and probably in the entire investment community

But his method of pursuing certainty not the only way to make money

Our methods work too

As a matter of fact, I wrote about these different methods in my article as below

https://klse.i3investor.com/blogs/icon8888/87192.jsp

Posted by probability > 2019-06-23 22:47 | Report Abuse

key factor that made Pantech who they are now is because they were able to source quality Pipes, valves and fittings at extremely competitive price from China and market in south east asia...local presence...

if they could venture similarly to vietnam...or indonesia with similar strategy...then the expansion will be phenomenal...not sure they can do that...else current valuation appears fair i guess..

they need not depend on PIC...as they have other huge process industry (veg oil & chemicals) with recurring need for their products...

Posted by Icon8888 > 2019-06-23 22:48 | Report Abuse

Philips method is based on certainties (actually only perceived certainties, if you ask me)

In that article, I called it Angler

And I also talked about Drift Wood (what you can't see doesn't mean it won't happen in the future)

So all methods can work, nobody can claim to have monopoly of wisdom

That is all I want to say

Posted by (US/CHN trade war doesn't matter) Philip > 2019-06-23 22:49 | Report Abuse

I prefer to think with facts. PCHEM has stated their revenue drop will recover next quarter and is due to schedule turnaround, thus is temporary not permanent. US dumping on East Asia is also a temporary and not a systemic issue. Plus when the PIC get completed the revenue will increase.

The led upgrade of streetlight is definitely true, as my subcon package of pan Borneo is using led 12m highway led bay( maincon have not awarded it to Success but instead to IQ group) Success has not won any major contracts and so far has no major announcements of any. But what is apparent is this qoq drop 88% and yoy 32% for success.

But of course, what you say can happen and success may win all 800,000 streetlight upgrade tender in Malaysia. Hopeful, but unlikely.

I try to keep an open mind all the time.

But I don't need to buy 6/55 toto to know that chances are I won't win lottery in this lifetime.
>>>>>>>>>>>

Why do you buy pchem ? The pertrochrm industry is facing overcapacity due to US dumping on east Asia and new plants completed

It is the same logic

Posted by probability > 2019-06-23 22:51 | Report Abuse

sifu Icon...i always love to be angler..

what a brilliant summary:

.....

Angler tries to look into the future. Driftwood is of the view that it can thrive without knowing too much about the future (take care of the downside and the upside will take care of itself).

Surf Rider does not predict the future. For them, THE FUTURE IS ALREADY HERE.

Posted by soojinhou > 2019-06-23 22:56 | Report Abuse

I'm with Icon8888. Long term hold strategy can make money, weaving in and out of stocks can make even more. And that's not based on TA, but purely FA. And the reason is simple, great stocks don't come cheap, and strong growth are often priced in. However, cheap stocks tend to see massive rerating when business climate changes in their favor. The point is to lose small, but win big. Whereas long term hold on good quality companies requires the company to rerate to ridiculous valuation, like QL at PE 50, to generate big return. I don't have the talent to pin point which company will be the next QL, I'll stay with being a cheapskate. And Choivo, being the real dick that you are, when you post, you are the most sincere person in the whole universe, when other posts, they are all front running. Shit head like you deserves the hate you get.

Posted by (US/CHN trade war doesn't matter) Philip > 2019-06-23 23:03 | Report Abuse

I have never said other methods can work, as I am certainly the first one to say I have tried everything in more than 25 years of investing tragedy.

The only thing I can say is my method give me the least amount of stress, and the highest margin of safety in putting large capital to work.

Many roads lead to Rome. I just go there via the most comfortable method.

Some choose to fly Concorde high risk high reward.
Some choose to go by bus low risk low reward.
My method of there is such, is to evaluate risk, opportunity cost, cost of capital and then weigh it versus possibility of profit.

In other words, I look at how much money I can lose first, then decide how likely am I to make a profit.

For Pantech, it is more a case of opportunity costs for me. I don't think I will lose money with Pantech. But future returns compared with my other investments define my imperfect knowledge of the future.

Simple mental model, if I had 2 stocks to choose from Pantech versus PCHEM, if I had to hold longer term with borrowed money from ahlong( where being wrong results in death), which would I rather hold? PCHEM or Pantech. Fate of the universe on the line.

I think we both know the answer. Especially when I have no way of knowing how three market will fluctuate for Pantech short term.

>>>>>>>>>>>>>

So all methods can work, nobody can claim to have monopoly of wisdom

That is all I want to say

Posted by Sslee > 2019-06-23 23:55 | Report Abuse

Dear all,
It is a great pleasure to be able to read the different open minded view and investment philosophy presented by many sifu in this Davidtslim blog post. This should be the way forward without name-calling or being the real dick like choivo or closed mined like 3iii.
Thank all for the sharing

Posted by Ricky Yeo > 2019-06-24 08:21 | Report Abuse

I think there should be a definition what does 'good' sharing, analysis means? What defines good from bad? Is it the length (the effort) of the writing, the factual/non-factual ratio of the writing, the lucidity of the writing, or something else?

My definition of good writing is accuracy of judgment, because it leaves no room for argument. In this case, the writing cannot be good or bad because author predicts 68 cents a year from now. So only then can the writing be judged on whether it is good or bad. But one can infer on previous predictions to find out the accuracy.

Posted by (US/CHN trade war doesn't matter) Philip > 2019-06-24 08:23 | Report Abuse

Rather than saying long term hold, I prefer the word long term monitor and ignore noise. Weaving in and out of stocks is a great strategy, but it works best when deploying small capital. With Pantech at 400m market cap, using 1% or 4 million to weave in an out could be far more difficult than one would think. Even with gkent I'm only using 1m of margin for my more speculative investment which I plan to see the results within a few years or so.

For small sums, I do agree. I used to do it quite often in the 90's where I could get 50-100% profit in a few stocks over the course of a few months/weeks/days. It was very exciting. The stress and depression from not understanding the underlying risk of my stocks and watching the rise and sudden crash of major stocks with wonderful accounting and seemingly good business fundamentals made me revaluate my understanding of margin of safety deeply.

As munger puts it, if we identify wonderful businesses, we just need to concentrate on those with growing addressable market and how much higher it will go up in the future, and identify if the price and is fair.

If we buy a fair business, not only do we need to know if we are buying it at a wonderful price, we also need to contend with cut loss, business deterioration, middle of the pack mentality, new competition.

I can appreciate that thinking. Why go jump over 7 foot poles when in the long run 1 foot poles work just as well. That is what I have learned. If I can find something with 90% chance of making 20% money, it is far easier and more comfortable than buying something with 50% chance of making 100% money, especially when you factor in compounding and access to deploy large capital.

Either that or I am lazy.

>>>>>>>>>>

Posted by soojinhou > Jun 23, 2019 10:56 PM | Report Abuse

I'm with Icon8888. Long term hold strategy can make money, weaving in and out of stocks can make even more.

Posted by soojinhou > 2019-06-24 08:42 | Report Abuse

"Rather than saying long term hold, I prefer the word long term monitor and ignore noise. Weaving in and out of stocks is a great strategy, but it works best when deploying small capital."

I can't argue with that. While I have agility now, it will be eroded over time IF capital continues to grow. If I have what you have, I probably will not be as agile. Having said that, I've expanded to 3 geographical markets to maintain agility even with a much enlarged capital, ie, I am forced to spread out my capital wider to maintain the same investment strategy. For the capital size that you have, your strategy should serve you better.

Posted by Ricky Yeo > 2019-06-24 08:44 | Report Abuse

The kind of measurement an investor use determines his strategy. Long-term return is the measurement that most investors use, but it is a bit like P/E ratio, there are many area when long-term return can't measure.

As an example, an investor making 13% return over 10 years vs another making 15% over the same period of time. Now everyone would want to be the latter than former. But what if the 15% is achieved with a cumulative of high stress 500 hours (over 10 years), whereas 13% is achieve at less than half of those hours with little to no stress? Which would you prefer? Now that is interesting. Is it worth it to get all the extra stress to achieve 2% outperformance? There is no right or wrong, but something to think about.

Hence, on top of having a long-term return as a measurement, one should also measure their return on invested time (ROIT). Just like ROIC and its CAP (competitive advantage period) differentiate quality from mediocre companies, ROIT gives you an idea how much dollar are you generating for every hour you have invested in. And as a benchmark, it should be people who invest in index fund and spend 0 hours studying investing. If index fund investors can get 10% return long-term with 0 hours invested, an active investor that can achieve 13% spending 250-300 hours are wasting their time just to get that 3% outperformance.

Posted by (US/CHN trade war doesn't matter) Philip > 2019-06-24 08:46 | Report Abuse

My definition of good writing is something that make you think and allows you access to new mental models in attacking a problem.

In investment there is no such thing as no room for argument because essentially we are always predicting the future. It can always go in any direction.

As Howard marks puts it, doing investment analysis is to prepare all the likely possibilities for the future performance of a company and we base the analysis on what we think is the most likely one. Most times the analysis with the least assumptions will come true. But other times other possibilities may turn out instead, which makes investing so interesting.

I like David's article because his presentation of facts and analysis is very concise aka numbers= view of analysis. He doesn't extrapolate so much or make huge jumps in assumptions like choivo or Calvin tan.

He presents it in a less biased way ( which I fault myself especially on stocks which I have a position as I feel the need to defend myself from uneducated "attackers". But these days I find it is easy to differentiate investors who have done their research versus those who are just trolls like stockraider who are not in it to learn something new but to just push the point across.

In fact I think he is very accurate in the depiction of Pantech. It is a fair company. With conservative growth expectations.

>>>>>>>>

Posted by Ricky Yeo > Jun 24, 2019 8:21 AM | Report Abuse

My definition of good writing is accuracy of judgment, because it leaves no room for argument.

Posted by soojinhou > 2019-06-24 08:49 | Report Abuse

2-3% outperformance is too pathetic haha. If one can get 10% outperformance with stress and work, ie 20% cagr, vs 10% fire-and-forget with zero effort, it can mean the difference between being comfortable and being filthy rich in the long run.

Posted by Ricky Yeo > 2019-06-24 08:53 | Report Abuse

Yea 10% outperformance can justify the right amount of stress lol

Posted by Lukey_Greek > 2019-06-24 19:53 | Report Abuse

It's a natural progress to move to Philip's way of investment when you have big capital. If you have 100m, 10% gain a year is equivalent to 500% return for someone with only 2m capital. Why waste so much time to filter,understand & chase the new good stocks? Warren Buffet cant apply the same approach like junior warrent when he was young.

Posted by Lukey_Greek > 2019-06-24 19:55 | Report Abuse

High growth normally only happend to small company, cos their base is small. & it comes with high risk due to their small base.

Posted by 3iii > 2019-06-25 19:21 | Report Abuse

>>>

SSLee posted:

Jun 23, 2019 11:55 PM | Report Abuse

Dear all,
It is a great pleasure to be able to read the different open minded view and investment philosophy presented by many sifu in this Davidtslim blog post. This should be the way forward without name-calling or being the real dick like choivo or closed mined like 3iii.
Thank all for the sharing

>>>>



SSLee

The risk of buying poorly performing companies is the permanent loss of capital, though the price may look cheap. I observed that you have a lot of examples of these.


3iii

Posted by Sslee > 2019-06-25 19:39 | Report Abuse

Dear 3iii,
Thank you for reminding me that I used to have some poor performing stocks in my portfolio. I am learning, keep an open mind and eager to learn from all you included. But at least I read the annual report, find out from the board what went wrong and I also use reasons and ready to present the fact and figure to put forward my point.
No matter how good you are, please keep an open mind and do not simple dismiss anything because of your prejudice.
Thank you

Posted by ruby20 > 2019-06-26 04:57 | Report Abuse

Always been a fan of davidlimts, his cresbld writeup was my fav. However, his writing on aturmaju / ARBB, where he got trapped by the tricks of shady businessmen doing shady deals, put a slight dent to his otherwise good record with me. In KLSE, being gullible to all publicly available information can be your biggest downfall.