6 people like this.

68 comment(s). Last comment by Fabien "The Efficient Capital Allocater" 2019-12-02 16:12


577 posts

Posted by popo92 > 2019-11-23 23:08 | Report Abuse

earning visibility is there, don't be afraid. Is raw material price sustainable - Don't forget RAPID PIC capacity is coming this year end if not Q1 20. Is revenue sustainable? It seems previous few years they have done well, but struggling through expansion of capacity. On right track i would say. They are a good packaging company.

Ricky Yeo

1,636 posts

Posted by Ricky Yeo > 2019-11-25 11:56 | Report Abuse

Oh hey Connie, how are you? Yes I did write about Tguan, and why it doesn't deserve Scientex P/E (based on what we can see), and I don't have to repeat it here.

Tguan share price could go up 30% or 300%, but that is irrelevant to my writing. Hypothetically, had Tguan share price goes down, should I come out and shout 'hey I am right?', no right? And again Connie, focus on process, not outcome. Now since you guys crave analysis, here comes my analysis:

"High gross margin may likely to sustain or improve for the rest of FY19, due to low raw material cost as a result of lower Linear Low-density polyethylene (LLDPE) prices." - How sustainable is low material cost? What happens if it normalise? And apply 2nd level thinking, if all plastic packaging manufacturers i.e Scientex, Daibochi enjoys lower material cost, what is going to stop others from passing the cost savings (from the low material cost) over to their customers? And once that happens, what competitive advantage does Tguan has over others to maintain their profitability? Is the customers going to say I like to pay more for Tguan's plastic over Scientex's plastic? At this front, Tguan is a price taker, same as every other manufacturers like Scientex.

So when the ability to control selling price is out of question, the focus comes back to controlling the cost. And that comes to the central argument: the whole flexible plastic packaging industry is consolidating; worldwide. Scientex has to keep acquiring other plastic companies to grow because they knew you either go big and scale to maintain cost advantage or lose the war. Too many plastic players and inefficiency in the industry shows why most players hardly make any money. When an industry consolidate, you either acquire others or get acquired. What is Tguan strategy? Tguan currently rely on organic growth, production capacity is half of Scientex and if Scientex managed to hit $10 bil in revenue by 2028 which they target to, their capacity is likely to be 3x bigger from now. I'm not saying this to mean Scientex is superior, but you have to ask where does Tguan find its cost advantage with their current size given that all players are price taker? Tguan either has to do what others does, scaling up massively, or specialised into some niche market, which would mean limited growth opportunity.

If you plan to buy Tguan for a year then sell it, sure, Tslim already gave you a good analysis, but if you plan to hold Tguan for many years to come, why on earth are you interest in analysing LLDPE price and exchange rate? Those are not even within the company's control so why obsess over it? The only thing they can control is cost but why there is zero analysis on the cost structure of Tguan? And it also make sense that if one is so good at analysing LLDPE and forex, the natural path is to become a LLDPE or forex trader. Not playing in the stock market.

Lastly, valuation is intimately tied to the business's return. What effect business return? Of course, it is profit margin and asset turnover. How do you improve both margin and turnover? Scale!!!

Are you happy with my analysis? As for the SWOT thing, let's dissect:

1. Improving profit margin and growing revenue in recent 3 qtr. - What then for the next 100 qtrs?
2. Capacity keep expanding in stretch firm, courier bags and PVC food wrap productions lines may further improve its market share especially in Europe and Japan. - Growth is great. But the question is what is the long term ROC?
3. Growing to be one of the largest PVC food wrap producers in Malaysia. - One of the largest? This is like all the restaurants advertising they are the award winning restaurant. Pretty much meaningless statement.

1.Potential beneficiary from Japan 2020 Olympic games where the demand of packaging products may increase. - Again, one off gain. Does Tguan survive based on once every 4 years Olympic? How many % will the extra profit gained from Olympic contribute to their next 10 years valuation? 1%?
2. Strong USD/MYR in last 6 months rate further improve its profit margin or it may have forex gain (USDMYR rate hovering at 4.17 for past 3 months) - Enough said.
3. Expected to have small growth in profit in coming 1-2 years based on 1 billion revenue target and growing profit margin and revenue - okay. sounds legit.

Are you happy with my analysis?

Posted by Fabien "The Efficient Capital Allocater" > 2019-11-25 14:25 | Report Abuse

i will continue to hold TGUAN

Nov 21, 2019 11:34 AM | Report Abuse

average PE multiple is around 12x

CIMB ascribed a PE of 13x for packaging sector

i believe 40sen earnings is achievable in 2020

estimated valuation = 12 x 0.40 = RM4.80
plus net cash 0.31sen
TP = RM5.11


180 posts

Posted by Connie555 > 2019-11-25 17:05 | Report Abuse

Halo Abang Kembar Choivo...If everyone do business with your kind of thinking...this economic is not gonna work or roll anymore...

To be honest i respect pasar pagi aunty who is selling nasi lemak bungkus for RM1 per pack more than your whole analysis...i dont even bother to read at all....at least they go out there and try and dont even calculate ROC at all...KL area is flooded with nasi lemak bungkus also yet they woke up early go out to the tepi jalan and sell instead of kira this kira that kira the whole day and wasted a day and never earn a living....

let me teach you something, in chinese they always say 船头怕鬼 船尾怕贼....at the end u are destine to serve the labour force for the entire of your life.

If Jack Ma at the beginning also think like u...there is no alibaba no more....kira this kira that.....

being so calculative that at the end what also never buy and here u tot got mines thr u tot gt enemy ambush u...

u better stay in ur mancave and continue ur phobia of buying a share ok....

Not to say that calculative is not right, ofcourse no one wants to pay more for their share, but to an extend which is jz right and not too EXCESSIVE...


180 posts

Posted by Connie555 > 2019-11-25 17:09 | Report Abuse

Fire me with theories...look where Jon's Petron heading...are u gonna cover his ass?

Commonsense dont even bother to reply Jon's comment "i can name you how many how many share which is cheaper than MBMR bla bla bla"

At the end of the day, you have to be REALISTIC...u must face the reality...and REALITY IS ALWAYS CRUEL...people are convinced by how success you are and also how much money you have...

You so suka Warren Buffet....Lets imagine this...if Warren buffet is a homeless and telling u value investing shit...are u gonna listen to him??? This is where reality hits....dont always use all the theory u learnt and shoot....its not gonna hit anyone...

Go back and make some money until u no need to work.

free come kota bahru...

no offence...u can always find me there, shelter are provided


180 posts

Posted by Connie555 > 2019-11-25 17:10 | Report Abuse

Forgive me England...uncle education level is Form 3...then 1 Year of 独中

Ricky Yeo

1,636 posts

Posted by Ricky Yeo > 2019-11-25 17:16 | Report Abuse

Connie, as always, haven't offered anything substantial. Really theory? I haven't even started throwing formulas. Uncle, england not good no problem. But at least write something useful, not blow water everyday. If you want cafeteria talk, free come Kuching. But if you want to talk Tguan, I'll wait for you any day.


180 posts

Posted by Connie555 > 2019-11-25 17:19 | Report Abuse

Jack Ma start up time bottomline is in Red...bleeding...ROC i bet is negative.....................................

Masayoshi Son invested....so he is dumb fuck or what? Never calculate ROC or what.....yet Alibaba is Masayoshi Son most successful investment afterall....

Masayoshi Son so rich...he dont have accountant like u helping him to calculate ROC????

Bleeding wor....still invest...with ur theory then he mar quite dumb fuck to invest in to a bleeding company?

Track record already telling that Jack Ma has been rejected by few investor before Masayoshi Son....

Ricky Yeo

1,636 posts

Posted by Ricky Yeo > 2019-11-25 17:26 | Report Abuse

Everytime someone can't win argument, they call it 'theory'. When someone can't win argument, they go ad hominem. Oh wait too theory, let me explain ad hominem "refers to a fallacious argumentative strategy whereby genuine discussion of the topic at hand is avoided by instead attacking the character, motive, or other attribute of the person making the argument"

Let's dissect Connie's writing:
Personal attack #1 - at the end u are destine to serve the labour force for the entire of your life
Personal attack #2 - u better stay in ur mancave and continue ur phobia of buying a share ok
Personal attack #3 - Go back and make some money until u no need to work.

When someone can't discuss the matter, that is, Tguan, he inevitably start attacking the writer to divert attention to make it look as if he wins the argument.

Sorry Connie. You need to do better than this.

Ricky Yeo

1,636 posts

Posted by Ricky Yeo > 2019-11-25 17:29 | Report Abuse

Connie, you're getting better, but I'm waiting for your discussion on Tguan, not Son, not Baba, not Softbank, not Wework, but Tguan. Oh wait, what happened to Wework? Should be very successful right?


14,252 posts

Posted by probability > 2019-11-25 17:33 | Report Abuse

what makes difference between a 'pasar malam talk' and 'theory'...nothing except RESULTS on prediction.

Both are 'stories' only...till you have empirical data to support.

Note that 'theory' which has empirical data to support in U.S market...can be a 'pasar malam talk' in Bursa...

we must accept that

I think that is the essence connie555 is trying to convey Ricky.

as a logical man you should be able to grasp the point he is putting across with his limited vocab


18,658 posts

Posted by Icon8888 > 2019-11-25 17:50 | Report Abuse

the following is Thong Guan comment of its prospects as set out in quarterly report :

For the current quarter ended 30 September 2019, the Group recorded a very encouraging double digit growth in revenue and profitability. The world economic condition is expected continue to be challenging and has impacted the growth of the plastic packaging sector. This has jeopardised the sales growth of the Group to its existing customers and its pace of market expansion. Despite this, the Group has been working hard and has concrete plans to look for new customers and markets for its products.

The Group has completed commissioning its fourth premium stretch film production line, a new blown film extrusion line and its 11th PVC food wrap line during the quarter. With the additional capacity coming on stream and the continued expansion of the courier bags and other product divisions, the Group is optimistic to continue its upward trend in sales volume and profitability.
Barring any unforeseen circumstances, the Group expects to continue its growth plans for all its business units.


18,658 posts

Posted by Icon8888 > 2019-11-25 17:52 | Report Abuse

Please note the following :

"With the additional capacity coming on stream and the continued expansion of the courier bags and other product divisions, the Group is optimistic to continue its upward trend in sales volume and profitability. Barring any unforeseen circumstances, the Group expects to continue its growth plans for all its business units. "

The boss sounds happy and positive, a big contrast to the bleak assessment of Ricky Yeo

who should I believe ?


18,658 posts

Posted by Icon8888 > 2019-11-25 18:05 | Report Abuse

For at least three to four years already, Thong Guan's boss has been consistently talking about Capex and growth for the coming years (and he kept on delivering). You don't make this kind of statement and planning unless you believe the industry is healthy and the prospects is good. Thong Guan boss is very savvy. The fact that he has always been happy and positive is indication that he is confident of the growth prospect.

as an expert in the industry, he must have known something we don't know and Ricky doesn't know


18,658 posts

Posted by Icon8888 > 2019-11-25 18:18 | Report Abuse

one of the biggest pleasant surprise of this quarter is their revenue posted huge gain

so it is not only benefiting from margin expansion due to low raw material cost

something positive is happening on the ground

in this article dated 1 July 2019, Thong Guan mentioned growth potential in Latin America

"The group is also working on penetrating into new markets in Latin America, and the US. “There are countries in Latin America who prefer to source stretch film and garbage bags from Asian countries."

what should I believe ? ROC ? or the business details as given to us by Thong Guan, backed by sterling set of results ?


5,517 posts

Posted by yfchong > 2019-11-25 20:08 | Report Abuse

If pe 15 happy liao


180 posts

Posted by Connie555 > 2019-11-25 20:20 | Report Abuse

Based on Ricky analysis, my understanding is we should believe the analysis of the academian instead of Thong Guan Boss himself i suppose.

Correct me if im wrong Ricky...Uncle Vocab is very limited.

Btw I ask u to Go back and make some money until u no need to work is trying to advocate u to go and take some risk instead of attacking you. dont get me wrong, otherwise i wouldnt wasting my time telling u chinese philosophy 船头怕賊 船尾怕贼...


2,614 posts

Posted by Sslee > 2019-11-25 21:23 | Report Abuse

Dear Connie555,
Why so angry?
In life sometime fortune favor the brave. The brave one become boss and hire the calculative one to work for him.
Choivo still have a lot to learn. In i3 only KYY pump and pump and at the end others dump to him or he dump to others.
Incon8888 no pump and dump because he likes to recommend stock at its low and this year many of his stocks is flying.
3iii like to talk theory and I like to talk politic.
So everyone got what they want. What a wonderful world.

Thank you

Ricky Yeo

1,636 posts

Posted by Ricky Yeo > 2019-11-26 04:00 | Report Abuse

Probability, like that die loh, everything need empirical data to support. go ask TSLim to empirically support that PE 11-13 is fair then.

Let's start with you. Given pasar malam talk is the same as theory, but I don't trust you. Maybe you should provide you empirical data to support pasar malam talk = theory. Don't forget to add reference and citations.

Ricky Yeo

1,636 posts

Posted by Ricky Yeo > 2019-11-26 04:13 | Report Abuse

When did I say you should trust me instead of Tguan's boss? Never said that. All I'm writing here is to provide an alternative perspective. I never said whether Tguan is good or bad either. Any stock is good at some price, bad at other price. I'm telling you what's happening in the flexible plastic packaging industry, it is up to you to make the judgment how that is going to affect Tguan in the next 10 years. But if one is going to call others academian or theoretician everytime someone offer a conflicting view, life is going to be tough. That, I don't need empirical data.


1,981 posts

Posted by YiStock > 2019-11-26 09:25 | Report Abuse

"We have penetrated markets to supply premium plastic films.."

SLP and Scientex has higher PE partly due to product mixed.

Read more at https://www.thestar.com.my/business/business-news/2019/07/01/thong-guan-to-spend-up-to-rm40mil-on-expansion#KZOVwfLd8GYcFdjp.99

Posted by Choivo Capital > 2019-11-27 09:18 | Report Abuse

Can you tell me a scenario where the boss and majority owner of the company does not sound happy and positive? All course you're going to toot your own horn.

Shahril from sapura say going to turnaround dunno how many years d. Now after huge right issue.

Current asset less than current liability again.

No idea if thong guan is good or bad business since i've never studied it in depth before.

But for the newbies here, please note davidtslim spoke very highly of MASTEEL, HENGYUAN etc at their all time high prices, before they fell more than 60-70%.

Do not read this and think you now understand the business, and you are now "investing" in the company.

If you're trading it, you know better than me how to play this.

Posted by Icon8888 > Nov 25, 2019 5:52 PM | Report Abuse

The boss sounds happy and positive, a big contrast to the bleak assessment of Ricky Yeo

Posted by Choivo Capital > 2019-11-27 09:24 | Report Abuse

I mean, booking holdings, the company that holds Booking.com, Agoda.com, priceline.com.

With great economics and moat is around 16PE.

You sure you want to pay 13 times earnings for a commodity co?

I mean at this price, using a very cursory view, it does not look too expensive, but im not sure its that great as a long term investment. I do regret not buying some at 2-ish.

Still wonder why tbh, probably because i thought it was a commodity co, and they were better ones (prices did not similarly increase though, ahah).

But as a trade, got good story, lots of eyeballs on this co, potential good quarters coming up that can support the future frying, potential extra davidtslim article, and OTB KYY frying?

Should be fine for the next 3-6 months.

Nov 21, 2019 11:34 AM | Report Abuse

average PE multiple is around 12x

CIMB ascribed a PE of 13x for packaging sector

i believe 40sen earnings is achievable in 2020

estimated valuation = 12 x 0.40 = RM4.80
plus net cash 0.31sen
TP = RM5.11


180 posts

Posted by Connie555 > 2019-11-27 09:28 | Report Abuse

this 2 kembar......really a tin kosong...

When commonsense start recommending MBMR he at there i could recommend uhow many how many stock which is cheaper than MBMR...while he at there icould i could, MBMR already one fold and outperform the market...and his petron price couldnt sustain nvm but drop 99....

if it is a pump n dump case, shark would hv dumped MBMR already, but seems like not the case, given so many months already...MBMR still sustain while petron kena dump like fuck...so who is the one kena trap by pump and dump....

Another guy which is Jon abang kembar...Ricky Yeo...dont know why they always appear tgt...while ricky at there keep saying tguan doesnt worth that much blabla teaching how to calculate ROC...tguan price already risen 1/3...

They are more suitable to be a colleage lecturer than investor....while saying ppl pump and dump never thought of himself posting RCE capital shit on i3....that thing himself post doesnt consider pump and dump while other people post then is consider pump and dump....

i would say they are sour grapes...last time so lan confirm about RCR talk until he has 30% of his portfolio, now on the other hand he sold it all already....if you are so confirm about something why so fast change your opinion?

When ever i mention things like this this 2 kembar cant answer it dirextly and use all the theory they learnt to fire me...I am ok with that...free can come find uncle YC at kota bahru....


180 posts

Posted by Connie555 > 2019-11-27 09:36 | Report Abuse

dont talk about other people share first lar...talk abour your petron first....cant even manage own petron properly....ur own rce also....last time say invest 10yrs down the road la blablabla...

why sell rce then? why dont gv them time to rectify their mistake? since u say u are long term investor....

how is ur petron? let shark dump until cannot see front road jo? thats why come and sour grapes others???

pls la john....cant make money dont at thr cry fathee cry mother...

and say lar...since the day i raise this question u nvr explain also everytime say ppl pump n dump....

what about ur rce capital post? not pump and dump? when ppl recommend a share then is pump and dump....when u recommend a share is like jesus giving out holy water everyone cant judge about it and u wont answer it..... and mbsb post is it u buy short then u post the article to talk bad about it?

i still rmb the day how u attack icon and commonsense....
at the end of the day seems like commonsense mbmr is the one look cheap thats why market rerated it...instead of ur how many how many share which is cheaper bla bla....i only hear tin kosong sound at thr ting ting tong tong....at the end results speak for everything

Posted by Choivo Capital > 2019-11-27 09:37 | Report Abuse

Very long never see Connie posting d.

On the nasi lemak ladies.

I have nothing against people trying their luck and putting their neck out there. To try hard and make a living.

I'm just saying, work smart better than work hard.

You want to sell nasi lemak? Well ask yourself?

1) How good is your nasi lemak? How is your sambal? is it the best within a 10km radius?

2) What is your price? RM5 for one bungkus? or RM1 or RM3? Is it of good value? RM5 come with chicken?

3) What is your costing, you got big pot anot? or you still using small pot?

4) How many people selling nasi lemak around the vicinity? If there are 3 stalls selling nasi lemak next to you, you sure you want still want to sell nasi lemak, or maybe you sell milo ais better?

5) If egg and rice price drop 20%, you expect to make more profit. But if you are in the scenario where you got 4 people around you selling nasi lemak, and they drop the price from RM2 to RM1.8. You sure you want to keep at RM2?

6) What is the demand elasticity like? Does your still taste better?


4,171 posts

Posted by Up_down > 2019-11-27 09:39 | Report Abuse

Wait for the price to cool down first ...Half way big gap up is not a good sign...example MBMR, Takaful, Redtone...


180 posts

Posted by Connie555 > 2019-11-27 09:44 | Report Abuse

btw, i knew professor chew of Tarc, can intro u for him...they are looking for finance lecturer. U and ur abang kember are suitable...

gv me ur email if u are looking for job especislly lecturer job

Posted by Choivo Capital > 2019-11-27 09:47 | Report Abuse


My rce capital post, people tell me, after they read, they get confused, dunno should buy anot. At least 30% of the article, detailing and the risk and the dangers. Good and bad inside, make people confuse only.

While david's one, after you read, he is clearly telling you, "SAILANG NOW", not a word on risk etc.

Now my RCE, why i sold? I think you can find the article explaining it. David when he sell, got tell you ah?

And my RCE, after i sell, it continue going up summore.

The sign of a good investor, is that he sells a good investment for a better one. This should mean over a long period, the price increase of the second should exceed the first. (this is clearly not the case for me the last 2-3 months lol, though my genting warrants and mother did ok)

David one leh?

MASTEEL, ANJOO, MUDA, HENGYUAN, LIONIND, LCTITAN etc. I dont need to explain more lah.

Which is, to be fair, the mark of a good trader or goreng artist. After you sell, it goes up abit more before crashing down to holland (the going up abit part is optional).


180 posts

Posted by Connie555 > 2019-11-27 09:49 | Report Abuse

instead of counting how many cars on the highway count until u sot 9 jor better come and work for professor chew....can express all ur theory...and also why ur theory doesnt work in petron... this and that....

student of tarc sure feel very thankful to hv u n ur abang kembar as their lecturer

Posted by Choivo Capital > 2019-11-27 09:51 | Report Abuse


Lets make a fun bet ok.

You prepare a portfolio of stocks, i just pick one petron. 3 year later, see which one higher.

Loser donate 10k to nasi lemak auntie to expand business.

Posted by Choivo Capital > 2019-11-27 10:04 | Report Abuse

My rce sold at one month after the 3rd year anniversary actually. :)

No idea why this is relevant though.


4,171 posts

Posted by Up_down > 2019-11-27 10:31 | Report Abuse

Everything happens for a reason. Many Bursa retailers have turned into short or mid term investors due to the structural issues of the local business. Many companies are involved in short cyclical business in nature with more than 90% of the listed companies.


4,171 posts

Posted by Up_down > 2019-11-27 10:31 | Report Abuse

Don’t blame the short sighted of Bursa retailers, it’s the environment causing them to protect their capital as a first priority in such situation. Is it pump and dump? Go for DJ companies with strong moats if you want to seen to be noble in investing for long term or follow 3i.


4,171 posts

Posted by Up_down > 2019-11-27 10:56 | Report Abuse

It’s unethical not to make money in a business for long term. The business would certainly go burst. So..it is unethical too for being not able to protect our capital investing or trading in share market. The risks of being extinction.

Posted by Fabien "The Efficient Capital Allocater" > 2019-11-27 11:25 | Report Abuse

if the company is growing 20% over the next few years, it's fair to pay PE 13x (though note that i didn't pay 13x, i believe its a fair valuation. my cost is at single digit PE)

whether it's a great long term investment, i'm not sure.

it's not my core holdings anyway.

Posted by Fabien "The Efficient Capital Allocater" > 2019-11-27 11:33 | Report Abuse

but i do have to take note of what Ricky pointed out.

the competitive landscape surrounding the industry.

and the ability to scale up.

Ricky Yeo

1,636 posts

Posted by Ricky Yeo > 2019-11-27 12:52 | Report Abuse

if a company can compound 20% over 3-5 years, then one should buy all they can at 13x.

But to achieve 20% growth, assume dividend payout of 0%, ROC has to be 20%.

Posted by Fabien "The Efficient Capital Allocater" > 2019-11-27 13:48 | Report Abuse

it's getting closed to that i believe.

if i'm not wrong, latest ROIC is at 18%


18,658 posts

Posted by Icon8888 > 2019-11-27 13:50 | Report Abuse

All these ROIC thing nonsense

Look at Dufu, UWC, MI, etc

What is their ROIC ? How much are their PE ?

Get my point ?

Ricky Yeo

1,636 posts

Posted by Ricky Yeo > 2019-11-27 16:32 | Report Abuse

Let me try to translate your point so I can get your point

All these "smoking is bad" nonsense

Look at my uncle, my neighbour, my friend etc

What is their health (super healthy)? How much they smoke (a pack a day)?

Get my point?


577 posts

Posted by popo92 > 2019-11-27 23:30 | Report Abuse

scientex plastics packaging division have recorded lower margins than thong guan all these years(latest quarter slightly surpass tguan merely 1.59% ebit), so if you consider plastics packaging only scientex's roic would be worse than thongguan. Of coz you need to consider what industry are they into. You are comparing peers not Semiconductor companies like MI who currently have ROIC of 25% and its still growing fast.

Ricky Yeo

1,636 posts

Posted by Ricky Yeo > 2019-11-28 04:32 | Report Abuse

So what are you trying to say?

Ricky Yeo

1,636 posts

Posted by Ricky Yeo > 2019-11-28 06:31 | Report Abuse

Scientex spent >$500 mil making acquisitions over the past 5-6 years so ROIC will definitely get dragged down due to a massive increase in invested capital. And if Scientex continue to acquire other companies in the future, which they will, ROIC will continue to be less than TG. But then again, investing is about paying for future ROIC, not past ROIC; future cash flow; not historical cash flow.

Ricky Yeo

1,636 posts

Posted by Ricky Yeo > 2019-11-28 08:45 | Report Abuse

And this comes back to Icon's point, why some stocks have disconnection between their ROIC and PE i.e low ROIC but high PE.

Why did Scientex's share price went up 800%, P/E expanded from 7x to 17x, over the past 7 years, while TG's share price only went up 200% during the same period when TG's margin and ROIC is superior to Scientex (excluding property division)? Because the market has higher expectation that Scientex's aggressive expansion will increase future cash flow (once they slow down their expansion), thus generate a sustainable and gradually higher ROIC in the future (when utilisation rate catches up).

Not saying TG is bad or anything, 200% gain in 7 years is impressive, but ROIC cannot be interpreted based on the number itself. Investor has to connect that number to what the business is doing. ROIC is not a formula, or a meaningless number on a stock screener, but a starting point for investor to understand the business strategy.

ROIC is like the bananas (fruits) on a banana tree. IF you see beautiful bananas (ROIC), you want to pay more to own the tree. But if you see disease and pest eroding the tree roots, then you will pay less because future bananas will be less or even none. In contrast, a banana tree might have little to no fruits now, but if one is to look at its healthy roots, strong trunk, fertile soil, then one would pay more knowing the future banana will be abundance and delicious.

Hope you get the analogy. The point is: Don't always look at the fruits, the fruits right now is irrelevant, you're paying for future fruits (future cash flow), and the only way to be sure you'll get alot future fruits is to look at the tree, the roots, the trunk, the soil, the weather (industry).


1,219 posts

Posted by Ncm88 > 2019-11-28 08:53 | Report Abuse

Sell now retracement wait at 3.2

Posted by jiaen0509 > 2019-11-29 18:39 | Report Abuse

Buy at RM3.44 and now the price dropped to RM3.30 at 29-Nov. Shall I give it up or hold it for long term? Newbie here

Posted by Fabien "The Efficient Capital Allocater" > 2019-12-02 16:12 | Report Abuse

newbie, perhaps you should stay away from the market, learned your trade (read up and learn from the experienced investors) before investing your hard earned money.

the market is very unforgiving.

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