8 people like this.

35 comment(s). Last comment by stockraider 2022-05-04 11:14

calvintaneng

52,864 posts

Posted by calvintaneng > 2022-04-30 17:27 | Report Abuse

Welcome welcome back !!

s3phiroth

301 posts

Posted by s3phiroth > 2022-04-30 18:03 | Report Abuse

great mind think alike. That is y i am holding sop and cepat because their r real cheap!

s3phiroth

301 posts

Posted by s3phiroth > 2022-04-30 18:06 | Report Abuse

the current ratio of subur is 0.27 and debt to cash ratio is 135! This is a ticking time bomb waiting to explode anytime!

Posted by investor2021trading > 2022-04-30 18:34 | Report Abuse

do choose d right company as not all plantation stocks r safe even when CPO price is trading above RM7000 per ton! years prior to d current CPO bull-run, a lot of plantation companies r not doing well with high debts, shortages of harvesters n poor ffb production due to low CPO price around RM2,800 to RM3,400 per ton giving rise to management decisions of abandoning fields upkeep/management, low ffb harvesting round per month/year n foregoing manuring! don't b surprised these affected companies r just recovering financially as u can study from their quarterly financial report!

Abrahmi

58 posts

Posted by Abrahmi > 2022-04-30 19:00 | Report Abuse

Insiteful

Posted by investor2021trading > 2022-04-30 19:07 | Report Abuse

@Abrahmi, thx...insightful!

okdoke

279 posts

Posted by okdoke > 2022-04-30 23:39 | Report Abuse

welcome back Sir. Since your absence, BIMB-wa has been redeemed via BIMB re-structuring ( vs original schedule 2023). also, it was Icon8888 atm machine as he claimed many rounds of profitable investment.

gohkimhock

2,873 posts

Posted by gohkimhock > 2022-04-30 23:47 | Report Abuse

sometimes can't blame KYY. He has been fed with dumb analysis by his dumb remisiers. Using last EPS x 4 and then divide by something then came his fairy tale cheap PE ratio. This is the worst laughing joke I ever heard in my 27 years in KLSE.

kcchongnz

6,682 posts

Posted by kcchongnz > 2022-05-01 04:08 | Report Abuse

calvintaneng
Welcome welcome back !!

Hi my good friend, hope you are well.

kcchongnz

6,682 posts

Posted by kcchongnz > 2022-05-01 10:46 | Report Abuse

Posted by s3phiroth > 16 hours ago
great mind think alike. That is y i am holding sop and cepat because their r real cheap!

I agree with you.

stockraider

31,527 posts

Posted by stockraider > 2022-05-01 12:44 | Report Abuse

Dear Kc,

Nice to hear u r back.
Your analysis on Palmoil stock are positive & bullish loh!

But Raider, like to highlight instead of using the latest qtr eps x 4.....raider like to suggest u look at the anomaly of exceptional one time earnings in the latest q4 result....net out and then multiply by 4....instead of adopting of heartedly figures reported in the Qtrly accounts.

Do not fall in the trap of ill advice KYY Mah!

stockraider

31,527 posts

Posted by stockraider > 2022-05-01 12:51 | Report Abuse

Rubbish loh....!
If u want to analyse & invest long term, U invest based on sustainable CPO prices of around Rm 4200 based on Pe 11x....irregardless the Plantation big or small loh!

If Co....pay good dividend yield say above 3.5% pa.....then increase its value rating to Pe 13.5x loh!

This way u ensure do not overpay & do not simply chase base on not sustainable earnings bcos of CPO price run up sky high mah

stockraider

31,527 posts

Posted by stockraider > 2022-05-01 14:21 | Report Abuse

Common sense mah!

10 yrs ago min pay Rm 700....now min pay Rm 1500 mah!

10 years ago chicken rice Rm 5.00....now Rm 7.50 loh!

Surely inflation mah!

Thus palmoil above Rm 4000, very reasonable mah!

Common sense mah!

Lu tau boh ?

stockraider

31,527 posts

Posted by stockraider > 2022-05-01 14:36 | Report Abuse

Pakai common sense otak lah!

5 yrs time u think min salary will drop from Rm 1500 to Rm 700 meh ?

Cjicken rice will drop from rm 7.50 to Rm 5.00 meh ??

Unlikely mah!

The chances it will also up higher mah!

Thus Palmoil is likely to sustained above Rm 4000 loh!

Common sense mah!

Plantation can or good hedge agst inflation loh!

Lu tau boh ?

kcchongnz

6,682 posts

Posted by kcchongnz > 2022-05-01 18:19 | Report Abuse

s3phiroth
the current ratio of subur is 0.27 and debt to cash ratio is 135! This is a ticking time bomb waiting to explode anytime!

You are absolutely right.
A total of RM425m of short term debt, which has to be paid within a year (not to mention another RM205m of long term borrowings), where to find the cash flows to pay within a year period? The last twelve months only had RM82 m of free cash flows. You have to depend on the mercy of banks whether to let you roll over the short-term borrowings.

gohkimhock

2,873 posts

Posted by gohkimhock > 2022-05-01 21:04 | Report Abuse

not many people understand the importance of cash flow to a company. It is like the blood stream. Only those with some accounting knowledge will able to grasp it. High receivables can also kill a company if it unable to turn it into payments.

stockraider

31,527 posts

Posted by stockraider > 2022-05-02 00:31 | Report Abuse

Boloh loh!

Yes subur has current liabilities exceeding current assets....this do not mean subur is bankrupt mah!

It is just that subur have too much of its assets in plantation lands loh!

It is good too have alot of assets....in plantations....bcos this is the area that generate alot of cashflow loh!

Thus negative current assets...sup sup sui for subur...can easily pay off from the strong cashflow mah!

Lu tau boh ??

kcchongnz

6,682 posts

Posted by kcchongnz > 2022-05-02 13:39 | Report Abuse

gohkimhock
not many people understand the importance of cash flow to a company. It is like the blood stream. Only those with some accounting knowledge will able to grasp it. High receivables can also kill a company if it unable to turn it into payments.

Subur did have serious cash flows problems in and before year 2019 when it has an outflow of cash (negative free cash flows) of about RM350m from 2016 to 2019. However, cash flows have improved the last two years with positive free cash flows of a total of RM120m. If palm oil price stays around the present level, it will continue to have free cash flows.
However, the problem with Subur is it not that it won't have cash inflow, but what it owes the banks, especially in the short term of about RM400m. Short-term debts are supposed to be paid within a year. So can Subur earn RM400m in free cash flows for the next twelve months, considering the cash inflows in 2021 of RM115m was the peak in many years, and probably the highest so far?

If Subur can't make that kind of free cash flows in the next 12 months, will the banks kind enough to let Subur roll over the debts? Possibly yes if palm oil price continues to be good. Possibly no as its liquidity and solvency risks are too high.

What if the palm oil price reverse to the mean, say go down to less than RM4000/ton?

Subur requires capital injection, now, right now, whether a private placement, or rights issues. Both these exercise won't be good for existing shareholders.

Posted by Mr NoNeedToStudy > 2022-05-02 13:43 | Report Abuse

stockraider your common sense why terbalik one LOL . lose too much money hvnt learn your lesson yet ah

i3gambler

654 posts

Posted by i3gambler > 2022-05-02 14:32 | Report Abuse

COMPANY SIZE and TRADING VOLUME VERY MUCH MATTER.

When you own 1 BKAWAN, indirectly you get 1*B = 1.3*KLK + X,
where X is BKAWAN's other small business.

Look at their last financial year EPS,
BKAWAN's EPS=RM2.8961, KLK's EPS=RM2.0930,

Fit into the above 1*B = 1.3* KLK + X,
X = 2.8961 - 1.3 * 2.0930 = 0.1752,
Meaning BKAWAN other small business also contribute small profit.

Now, base on last Friday Closing, B = RM29.12 and K = RM29.46.

Look at FY2021 PE Ratio,
BKAWAN's PE = 29.12 / 2.8961 = 10.01 times,
KLK's PE = 29.46 / 2.0930 = 14.08 times,

Look at FY2021 Dividend Yield,
BKAWAN's DY = 1.10 / 29.12 = 3.78%,
KLK's DY = 1.00 / 29.46 = 3.39%,

Why fund managers (EPF, ASB etc) invest in KLK but not BKAWAN?
The answer is COMPANY SIZE and TRADING VOLUME VERY MUCH MATTER.

stockraider

31,527 posts

Posted by stockraider > 2022-05-02 19:35 | Report Abuse

Do not get confuse mah!

The example u have quoted on KLK v Bkawan on price valuation discrepancy is actually Holding co discount not big co v small co issue mah!

This is bcos Bkawan is not a total plantation Co when compare to klk loh!

The holding discount use to be higher at range of 25% to 30% previously but due to Bkawan good management & effort of rewarding its shareholders the gap have been narrowed to a very low differential lately loh!

i3gambler

654 posts

Posted by i3gambler > 2022-05-03 08:51 | Report Abuse

When an unitholder asked TTB in AGM why the fund bought KLK instead of BKAWAN, his answer was "Exit Strategy", meaning can dispose faster lor.

I read from Investopidea, to me the reasons given to justify conglomerate discount are all rubbish.

Furthermore, conglomerate discount is not applicable to BKAWAN/KLK lor, because BKAWAN's other profit is only 0.1752, only 6% of its total profit mah.

BKAWAN is KLK, KLK is BKAWAN lor.

Don't like this BKAWAN/KLK example, then tell me why SIMEPLT/KLK/IOICORPs' PE is relatively much higher than those smaller size plantation companies.





Posted by Integrity. Intelligent. Industrious. 3iii (iiinvestsmart)$€£¥ > 2022-05-03 10:39 | Report Abuse

Welcome back KC. You have been busy putting your knowledge to share in your books. Very comprehensive, however, probably the lay person may need a much simplified version. Nevertheless, great effort and sacrifice on your part. Well done.


Posted by Integrity. Intelligent. Industrious. 3iii (iiinvestsmart)$€£¥ > 2022-05-03 10:41 | Report Abuse

Among the articles I like on valuation are those by intelligent authors doing comparative valuation of 2 or more companies. This article by KC shows how you can get a hold on the valuations of different companies in the same industry just by comparing them intelligently.

Posted by Integrity. Intelligent. Industrious. 3iii (iiinvestsmart)$€£¥ > 2022-05-03 10:45 | Report Abuse

For those who only use PE as their measure of valuation and there are many in this forum, it is very superficial way of looking at valuation and will often lead you into making the wrong decision. There is more to PE than meets the eyes.

If you can answer this question, you will probably have some good idea why PE may not be the sole guide to your investing.

"Why is a stock with a PE of 9 overpriced (expensive) and another stock with a PE of 129 underpriced (cheap)?"

Posted by Integrity. Intelligent. Industrious. 3iii (iiinvestsmart)$€£¥ > 2022-05-03 10:50 | Report Abuse

Annualising the last quarter EPS to project the forward next year annual EPS is applicable for a particular type of company only.

If you have a company that can grow its earnings y-o-y for many years (reflecting its durable competitive advantage in its business), you can safely employ this generalisation. In some of these companies, the earnings and growth can be so "predictable", you can project forward their future earnings and future intrinsic values with a high degree of probability. However, their stock prices are unlikely to be cheap except at certain market conditions.

stockraider

31,527 posts

Posted by stockraider > 2022-05-03 11:07 | Report Abuse

I3gambler,
The valuation difference between KLK v Bkawan is definitely holding co discount mah!

1. If u hold 1000 Bkawan share u r effectively holding equivalent 1286 of KLK shares mah!
Thus beside u r getting more share exposure on KLK u also own additional chemical business.
2.Thus effectively U also get more earnings & dividend if u hold bkawan instead of klk mah!
3. As i say earlier fund manager prefer to hold klk than bk bcos in their mind klk has bigger exposure to plantations & the stock is more liquid loh!

Conclusion
1. If u r shorter term investors or traders u will prefer klk for the same reasons loh!
2. If u r longer term fundamental value investor and willing to hold more than 10 yrs....definitely BK return will outperformed KLK loh!

As for bigger caps Sime/IOI/KLK trade at higher valuation......bcos some big funds has restriction of buying smaller size plantations mah! Thus they concentrate their funds on bigger cap stalwart co mah!

Smaller cap plantations will attract more enterprising & value investors that demand higher return & prepare to take bigger perception risk with stocks that is lesser liquid loh!


Posted by Integrity. Intelligent. Industrious. 3iii (iiinvestsmart)$€£¥ > 2022-05-03 11:11 | Report Abuse

Yesterday was a day well spent. Driving in Selangor coast, we were directed to the various small roads by waze to avoid the heavy traffic on the main roads. It was great fun educating the youngsters in my family on the oil palm plantation activities.

This estate is newly planted. This is an estate where the plant is about 3 years old. This plantation is at its peak production. This is a very old plantation, its trees are probably 20 years +. This is an extremely old plantation, the trees are just very old 25 years or more; will need to be replanted soon. This is a well kept and maintained estate. This estate is poorly maintained. These palm trees are thick and healthy. These look thin and not so healthy. The soils of this plantation is very suitable for oil palm. These estates were planted when I was in late primary school. It was recently replanted about a decade ago. Small plantation owners with 10 acres shared they are taking home net RM 15,000 per month recently. During the bad period, they took in very meagre income, hardly enough to support their family without supplementing their income from other sources. Labour is a big issue today. Getting people to work is a big problem for the big plantations particularly. Small estates face the same problems too. Human networking and relationship play a big part in getting people to work the estates today.

You can learn a lot in an afternoon. Just sharing with my youngsters.

stockraider

31,527 posts

Posted by stockraider > 2022-05-03 11:20 | Report Abuse

If u do not go back to fundamental hard basic valuation like PE....u run the risk of overvaluation which may result to underperformance mah!

A very good example....if u chase Nestle 3 yrs ago at Rm 140.0 to Rm 150.0 u will be underperformed compare to investing in bkawan at Rm 16.5 to Rm 18.0 loh!

Thus for value investors buying with good big margin of safety is central core of all his investment mah!

Posted by Integrity. Intelligent. Industrious. 3iii (iiinvestsmart)$€£¥ > 2022-05-03 11:38 | Report Abuse

You need to have a long term perspective and the ability to pick a very good company with a durable competitive advantage business that can continue to grow for many years. All you have to do is just sit still. Watch its intrinsic value grows.

As for price of the stock, you generally should not be too focused on this. Focus on the fundamentals of the company always.

If the price is "low", you can acquire more. If the price is "high", should you be selling? If price is 120% of its intrinsic value (based on your calculation), will you sell? NO
If price is 150% of its intrinsic value (based on your calculation), will you sell? NO

When will you sell such a stock, for a long term investor, then? When it is obvious to you that it is RIDICULOUSLY EXPENSIVE. :-)

:-)

stockraider

31,527 posts

Posted by stockraider > 2022-05-03 11:46 | Report Abuse

For small longterm investors it is better for them to sell some when it is obviously overvalue mah!

Ridiculous expensive is when it is PE is high more than 50% & paying low dividend yield less than fixed deposits and when the growth started to be tepid n flattish loh!

Always sell some to hedge our performance mah!

U can always buyback when there is opportunity loh!

markgold

297 posts

Posted by markgold > 2022-05-03 20:02 | Report Abuse

Thanks kcchongnz for sharing.

kcchongnz

6,682 posts

Posted by kcchongnz > 2022-05-04 08:30 | Report Abuse

Posted by Integrity. Intelligent. Industrious. 3iii (iiinvestsmart)$€£¥ > 21 hours ago | Report Abuse
Welcome back KC. You have been busy putting your knowledge to share in your books. Very comprehensive, however, probably the lay person may need a much simplified version. Nevertheless, great effort and sacrifice on your part. Well done.

Thanks 3iii for your support and encouraging words. Thanks for your comments on my book too.

Yes, investing should be made simple, but not simpler.

Posted by LAWRENCE1960 > 2022-05-04 10:17 | Report Abuse

WELCOME BACK KC GREAT TO LEARN FROM U

stockraider

31,527 posts

Posted by stockraider > 2022-05-04 11:14 | Report Abuse

U need to understand....we already had move ahead since the covid run in 2020 loh!

Now u need to be little bit more defensive & plantations with CPO price up and huge cheap landbank to manage inflation plus a good hedge against RM depreciation are good bets to manage this risk & capitalise on opportunities loh!

Posted by nhbeen > 44 minutes ago | Report Abuse

stockraider: Inflation is good for banking whereas recession is not loh!

So if u invest in banking when recession strike....be prepare for about 2 years share price consolidation mah!

Yup. You are right. In recession, all sectors affected and their share price as well. If you intend to invest for long haul, it is also the time to buy into some good companies. Normally, equity market will move ahead first when economy starts recovering.

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