Posted by tonylim > 2012-12-02 15:11 | Report Abuse

I am also waiting, we already have aunloke, TNS, pradeep s., NZ, the 2 KCs and the likes.

Address also why, of everybody is buying and LT investors, where on the earth the volume for the last month or so, came from. Isnt a big chunk from ESOS as what some formers had pointed out.

Also, why from 2.40 came tumbling down 1.78, shed 62 sens before last weeks rebound back due to the results announcement.

Somebody mentioned no catalyst and management couldnt care less attitude. I though these are already good reasons for shedding 62 sen. Got more stories?

Posted by KC Loh > 2012-12-02 15:14 | Report Abuse

nah, promise no comment! shoot is reserved for kids! like you said, no right or wrong, coz really depends on average EPS, average PE, dividend payout, etc of each individual (5 years? 10 years?)! just getting a realistic FV to achieve a sell would be good enough for me! sell in case opportunity comes along! :)

Posted by tonylim > 2012-12-02 15:17 | Report Abuse

i sold the small quantities bought during the downtrend on bargain hunting

Posted by tonylim > 2012-12-02 15:18 | Report Abuse

*bought on bargain hunting

Posted by KC Loh > 2012-12-02 15:18 | Report Abuse

tonylim, GE fears, eurozone fears, fiscal cliff fears, growth target/consensus by analysts, short-termism factor, act of God (mayan) etc. get out of your barn and smell the coffee more, sunshine! stop always harassing kcchongnz's sheeps!

just joking! hehehehe

Posted by tonylim > 2012-12-02 15:19 | Report Abuse

kcchongnz still looking for his sheep that wondered away.

Posted by aunloke > 2012-12-03 09:15 | Report Abuse

The best part of this stock now is the reward to risk ratio, even the market makes strong correction it won't drop much for its intrinsic value remains the same. On the other hand I believe it'll touch 2.20 in the near future, the longest may be within a year.

Posted by kcchongnz > 2012-12-03 18:30 | Report Abuse

Let me start with the simplest and most common valuation method for Kfima, a earnings based method of PE ratio, P/E. Flip the ratio we will have E/P, or earnings yield. How much is your required return for your investment in the business of Kfima? For me, with the steady business of Kfima, its consistent growth in earnings and cash flows, I am contented with a earnings yield of 10%, which is 6% (risk premium) over the long-term MGS rate of 4%. Hence I would be happy to invest Kfima if its PE ratio is 10 or less. With a trailing twelve month earnings of 30.5 sen, Kfima hence has an intrinsic value of 30.5 sen*10=RM3.05. But don't forget that Kfima has an excess cash, cash which is not required in the ordinary operations, which can be distributed to shareholders without affecting the earnings of its ordinary business, in the amount of RM1.00 per share. So the intrinsic value of Kfima is RM4.05 per share. What is the margin of safety (a safety net if we are wrong) investing in Kfima then? It works out to be 55%. Of course if investing is so simple, I would have been a billionaire long ago already. Some more we have not talk about growth yet. We will talk valuation of Kfima by incorporating a growth assumption.

Posted by pradeep > 2012-12-03 20:30 | Report Abuse

Guys I read all your comments, I kept quite for a long time, simple reason market trend is not good and eventhough Kfima is a fundamental stock we have to look at the market trend, I believe we keep our cash tight, let the correction be over, now we have to see the recent low, whether it breaks or not, some smart money is collecting this stock, and the smart money have lot of cash, we just be alert and wait and see for the next quarter result it may not be very good, simple reason look at CPO price.I do not want you guys to loose money, nowdays it is v.difficult to earn and easy to suffer losses.

Posted by tonylim > 2012-12-03 21:31 | Report Abuse

pradeep, can i therefore assume that you took profits at 2.40s
and now you side line for better bargains.

Posted by sh2383jbt > 2012-12-03 23:03 | Report Abuse

Tonylim, we can enter bit by bit if u hv confidence with this stock, invest in long term will sure bring u handsome return , I agreed with kcchongnz statement.

Posted by kcchongnz > 2012-12-04 07:57 | Report Abuse

What is the intrinsic value of Kfima? I tried to stimulate some discussions on value investing here, instead of all the trading, speculating, this price and that price, broad market and trend talks. Sigh, I think I have failed here. Never mind, let me carry on.
Let look at another simplistic valuation method; what Benjamin Graham talked about his earnings-based valuation method. He came up with a formula of the intrinsic value V in relation to its earnings per share (EPS) as below:
V=EPS*(8.5+2*g)*4.4/Y where g is growth rate, Y the long-term bond rate
The intuition of the formula is that 8.5 represents a PE ratio Graham was willing to pay for, 4.4 was the long-term bond rate at that time, Y is the bond yield now, and g is the expected earnings growth rate. For Kfima, EPS=30.5 sen, Long-term MGS rate about 4 (%), but what is g? For the last 6 years, CAGR of Kfima has been 15% per year. Let's just take half of that as g, of 7.5% for the next 5 years. The intrinsic value of Kfima is
V=0.305*(8.5+2*7.5%)*4.4/4=RM2.90.
Again I have not included the RM1.00 per share of excess cash held by Kfima which is not needed for its ordinary business.
Sigh again, if investment is so simple, I would have been a multimillionaire long ago.
Let see if there is any critical comments about this method before we move on to other more contemporary valuation methods.

Posted by shirley1 > 2012-12-04 08:34 | Report Abuse

Kcchongnz, im learning, hope im not asking something stupid, something sometime i don't quite understand bout the intrinsic value, reason notice some using the cashflow to project, and some using the growth rate & PE to project. in your view which way is more reliable ? company with low PE may not necessary be good, cuz some may say this type of company not growing or maybe some other reasons.

Posted by gark > 2012-12-04 09:33 | Report Abuse

The main thing that everyone forgets or based too much on calculation is that earnings and profits are not static and have great change. A company ca do well for the past 20-30 years, but one misstep can bring it down. I would rather think investment is an art of guessing the future. :)

Posted by kcchongnz > 2012-12-04 09:40 | Report Abuse

gark, good one! And best of luck.

Posted by shirley1 > 2012-12-04 09:58 | Report Abuse

Gark, i like your answer and believe you are someone dont just base on mathematics. haha. one can be expert in mathematics or math teacher. guess what make some of the business owner successful is they see things differently, can predict the future, maybe with some luck and something that cannot be quantified. Unfortunately, I can’t do that yet :(

Posted by kcchongnz > 2012-12-04 10:03 | Report Abuse

Shirley1, here is the answer to your question.
The intrinsic value is the actual value of an asset such as the share of a company, based on an underlying perception of its true value, including all aspects of the business, in terms of both tangible and intangible factors. This value may differ from the current share price. Value investors use a variety of analytical techniques to estimate the intrinsic value of a share with hopes of finding investments in which the true value of the investment exceeds its current market value, and profit from the market.

Posted by KC Loh > 2012-12-04 10:08 | Report Abuse

Kcchongnz, if you can spare the time, I really hope you can help me find the intrinsic value of MFLOUR!

Last two quarters back in the black already after the first Q contraction of earnings due to their expansion!

Posted by KC Loh > 2012-12-04 10:09 | Report Abuse

If you can't, its OK. Maybe not under your radar!

Posted by gark > 2012-12-04 10:31 | Report Abuse

Even Graham & Buffett admits that estimating the future earnings is the greatest and most difficult part of a company valuation. So instead of trying to guess the right number, they try to increase their odds by having a safety margin and also looking at moats, cash, net asset, average 10 years EPS and other clues that put a floor on the stock price. They also prefer easy to understand business with stable earnings & dividend paying. Basically there is no sure way of calculating the intrinsic value but merely to guess it.

For me Kfima meets several criteria such as moat (security printer & bulking)and net cash of RM 1/share. Cash flow has been spotty but is generally positive yoy. Also Kfima has consistently increased dividend payout for the last 7 years.

Posted by gark > 2012-12-04 10:37 | Report Abuse

Here is an interesting article done by vanguard research company.. they have a chart of the accuracy of many stock earnings forecasting methods and the highest achievement (0.43 correlation) is using the Schiller PE10 CAPE method which is originally concerted by Graham. other popular methods such as earnigns growth fails at 0.01 correlation.

Interesting article for those value investors.

http://www.investmentmoats.com/stock-market-commentary/technical-analysis/the-folly-of-forecasting-modelsjust-how-accurate-are-they/

Posted by kcchongnz > 2012-12-04 10:45 | Report Abuse

gark, are you following what Graham and Buffet do like what you said in your later post which obviously one needs to do some simple maths (and yes with some intelligent guesses of assumptions too), or are you just guess about the future as you said earlier which you no need to estimate any value but just hantam only? I hope you know the difference. If your point is the later, can we have a number, and preferably with your basis and assumptions?

Posted by kl foong > 2012-12-04 10:49 | Report Abuse

Gark, tq for the sharing.

Posted by kcchongnz > 2012-12-04 11:00 | Report Abuse

K C Loh, you gave me a tough one. Yes MFlour is not on my radar screen, but most of all, I don't know anything about the company and its business. First of all, I don't know why they did so badly this year as compared to its previous years before their corporate exercise when they have been earning consistent profit and good growth. It would be easier to value a business with consistent growth and profit, like that of Kfima when the assumptions would not run too much. For example, Mflour's annual profits have been in the region of 70-80 m for the last 5 years, why the last 3 quarters dropped so much to only 15 m, and earnings per share of just 3.4 sen? I think a lot of scuttlebutt works need to be done to find out why and what would be its future earnings prospect. This would be beyond what I can do as an individual investor. Ok I will still give a shot of a simple valuation method using Graham's method. V=EPS*(8.5+2*g)*4.4/Y. Using annualized EPS of 6 sen and a liberal assumption of g of 15% for the next 5 years, V= 58 sen. See you may say that I am nuts to say Mflour's intrinsic value is 58 sen when its share price is RM1.28.

Posted by kcchongnz > 2012-12-04 11:15 | Report Abuse

gark, great you know about the peril of forecasting of future earnings. Few are as knowledgeable as you do here. Most people will follow the analysts' forecasts and buy into their stories, and at the end disappointed. One thing about this article by Vanguard is it is a marketing material, to try to emphasize that the market is efficient, and don't try to pick shares yourself or relying on the fund managers to provide a better return for you. Just buy their low cost index funds. You know what, i fully agree with him. The problem with analysts forecast is they are over optimistic in projecting growth when they try to sell their recommendations. Yes, they always way over estimate growth and 90% of the projections went badly wrong and investors lost a lot of money chasing unrealistic growth. But if you want to pick shares yourself, you have the choice of what expected growth rate you want to use isn't it? Can you even be more conservative by using a low growth rate, of even a non-growth rate, and if it turns out that even with that the intrinsic value of a stock is still way below its price? So what is your number for Kfima? Yes, no right or wrong, but just a calculated opinion.

Posted by tuniamasingh > 2012-12-04 11:18 | Report Abuse

I was told that one famous website has come out with a "magic scan" for one to uncover the gem

http://traderstruthrevealed.com/launch/magic

and guess what are their criterias:-

Market Cap > RM250 Million
Revenues growth 15–30%
Debt ratio < 30%
Profit Margin > 15%
Dividend Yields > 4%
Buy Below Intrinsic Value
….. and Many More…..


Actually one do not have to use the magic scan, the stock that has fulfilled all the consitions is just right in front of us.

In fact Kfima are performing much better than above. Revenue growth easily more than 30% for the past 5 years,sitting at RM250 million cash, profit margin is more than 20%, dividend yield is in the uptrend and can easily hit 5.5%(RM100/RM1800) based on current share price and certainly below intrinsic value which is RM3.00.

It seems that most people concerned with the performance of their plantation sector. However, If one really do their howework, the current quarter results of Kfima has told all. While most plantation companies have recorded 50% drop in profit q vs q , Kfima is one and only one of the company that has recorded increase in profit for their plantation sector. The resaon is very simple, the young plant has started contributing. The increase in production has managed to cover the drop in CPO price. Kudos must be given to the management who are controling the cost very well.

If you have attended the AGM, the MD has mentioned that cost per tonne is RM1,400 -RM1,500. Assume that CPO price drops to RM1,700, which is very unlikely, the company still making handsome profit not to mention that Kfima has other well performed business segment.

Ask yourself, in this tough operating environment, which company that you are investing can give you a guaranteed profit like Kfima?

Posted by Fat Cat Tim Buddy > 2012-12-04 11:19 | Report Abuse

everyone please stop talking, please go jack up the price, i wanna sell at 2.3 :D

Posted by tuniamasingh > 2012-12-04 11:21 | Report Abuse

Fat cat you are a rich guy, what is the difference between RM1.80 and RM2.30 to you?

Posted by reyes430 > 2012-12-04 11:27 | Report Abuse

Well, i started to love this forum. This kind of discussion is so beneficial. Thanks all the sifus. Appreciated a lot

Posted by kcchongnz > 2012-12-04 11:27 | Report Abuse

tuniamasigh, good points. How do you get the intrinsic value of Kfima of RM3.00? Please share.
Fei Mau ah, I know I know, the share price is important. How nice if it is RM5.00 now. But without knowing the value, how to know if the present price is high or not? May be its present price is already way above its value, then how to jack up the price?

Posted by KC Loh > 2012-12-04 11:30 | Report Abuse

No problem kcchongnz. They went on expansion as their plants and mills has reached 90% capacity. They paid out a handsome special dividend before commencing the business of expansion indicating, to me at least, that tough times ahead without dividend payout and good earning reports! But positives, like mentioned earlier, already two good quarters despite tough climate environment leading to margin squeeze on wheat price. That's the same guess I have if you reported one "bad" quarter of earning which I think short termism investors and analyst picked up! PE and EPS goes up the smoke! I am continually picking up MFLOUR shares due to this market frown of MFLOUR currently.

And thank you again. You know I value your opinion and time to help!

Posted by benjamin > 2012-12-04 12:37 | Report Abuse

Spot on gark! I also like the simple and commonsense of looking at a company,eg moat,cash and near cash,net asset and the such. But the items in the P&L and Balance Sheet give you hints about the company's performance also eg. the items in the current asset [inventory, receiveable , ]. Current liabilities[ payables,short term borrowings]and LOng term debts.I am talking about boring micro stuffhere. No ratio here.About K Fima ,There is moat in some of their businesses, that does not involve in the capital expenditure type.
Graham got the last puffs out of the companies. Buffet do more than that.Eg See Candy, he and his side kick ,Munger bought the company in 1972 after seeing the potential of See, a well run money making company and a mini ATM machine, left it exactly where he had found it.What he did was nationalise it as it is a local Califonia com. Now there are more than 200 store nationwide with 200 more ATM machine.
Value is very subjective and I don't have a TP and I don't know what a TP is. I leave it to the professional. Part of their job is churning out TPs. But I do know that if Mr Market offer Rm4 to buy KFima Now, I would willingly sell it to Mr Market and kept 1 lot for old time sake.This is the long term stable.
So kkchong , I do not subscribe to the standard way of investing.Back to Fima, Cash = rm 1 , Fima C. = rm 1+/share.If we liquidate the com. Just that is worth 2+ RM . Go figure at 1.80RM now!!!The only thing that I notice is that there is an increment of inventories and receivable, but nothing the com. cannot coup with.Now if you do a bit of flutter , like most of us do then you view it differently.

Posted by shirley1 > 2012-12-04 13:51 | Report Abuse

Kcchongnz, thank you.

Posted by kcchongnz > 2012-12-04 15:59 | Report Abuse

benjamin, you appears to be a follower of Graham, Buffet and Munger. Good on you. I am sure you will be successful in investing in the equity market if you follow their principles. I am an admirer of them too. But when Buffet and Munger bought See Candy, I am quite sure they would have make an estimate of the value of the company, then pay a reasonable price for it. Yeah value is subjective. Buffet and Munger would have come up with very different figure on the intrinsic value of See Candy. I would assume Munger would have a much higher value than Buffet, knowing that Munger values growth very much compared to the old Buffet. But surely they must have come to a consensus what the value was and pay a price accordingly, depending on the margin of safety they wanted.
You rightly mentioned that Kfima has a net asset backing, (equity attributed to common shareholders/no. of shares) of RM2.00. The return of equity has been an average of 16% for the last 4 years. As I have mentioned before, my required return for investing in Kfima is 10% per year. Here is another simple valuation method. The intrinsic value of Kfima is 16%/10%*RM2.00, that is RM3.20.
See there is no standard way of valuation, benjamin. There are many other ways of doing so. But I still feel that one must a feel of the value of a company before talking about its share price. The horse must come before the cart.

Posted by benjamin > 2012-12-04 16:48 | Report Abuse

Yes you are right kkchong. The value of the com. is different from the price of its share in the market.Value of the com. varies according to its performance . The price of it share fluctuate according to the whim of the market.When I first look at KFima it was around 80sen.The business was doing ok and their P&L and balance sheet were healthy. No debts. I thought there was some hidden downfall to the share. But as the a/cs improve further I threw caution to the wind and went in.That was about 2 yrs ago.See what I mean when I mention I hate to lose money.There is a down side to the caution nature and that is others would have taken the oppurtunities and you have to buy at a higher price. Better safe than sorry.
I try to follow his way but it is very difficult as we don't know he does it. He has not divulge on how he does it. He has to protect his padi fields . And we have to protect our rice bowls. Ha.Don't have is IQ. Don't have his discipline .Even if the value of Fima is 320 sen. I would not sell it. Mentioned the price I am willing to sell. But if the if the financial to Fima deteriorate , then I have to re assess it. Another counter similar to Fima , is Oriental. But nobody wants it because it is too slow . One could imagine your I rm doing better elsewhere. That is value. But not so to most of the people. Now the Japanese is mopping the share up.

Posted by tonylim > 2012-12-04 18:37 | Report Abuse

@sh3858
based on experience I will sell on strength and buy on weakness.
Fits me well.

Posted by kcchongnz > 2012-12-05 03:41 | Report Abuse

tonylim, good on you. You must have made heaps of money buying on weakness and selling on strength. You are really a legendary "Lao Cheow". Use your profits and grab some properties in Queenstown in NZ here.
Value investors like Peter Lynch, Warren Buffet, Charles Munger, Philip Fisher etc buy low and sell high, rather than buy on weakness and sell on strength. (No, I won't say you are wrong and they are right, nothing is right or wrong in investment strategies). They study the business of the company and the moat, growth potential, operating efficiencies, management etc and then try to value what is the worth of the company. Their valuations of course are based on some assumptions which they will prefer to be roughly right rather than precisely wrong (gark said that here before), and then come out with an estimate of what is the intrinsic value of the company. They then compare with the share price with this intrinsic value, and see how much the share price is traded below this intrinsic value. They may then buy the shares at a margin of safety [IV-P)/IV], 20%, 30% or whatever because they know that their assumptions may be wrong. It is better to be prudent. Do the value investors sell their shares? of course. They will do that when the share price rise close to or above the intrinsic value, or the business has lost its competitive advantage.
So tonylim, you are are a gambler to get in and come out from the market frequently. Me too, excitement and itchy fingers mah and life would not be interesting without this excitement. But there is nothing wrong to be a gambler as long as we make more money, isn't it? But if one seriously sit down and analyze and compare the strategy of the value investors and your strategy of buy on weakness and sell on strength, one would find that the earlier one is usually the more profitable one. But at least the buy on weakness and sell in strength is better than the greatest fool theory, in my opinion.

Posted by aunloke > 2012-12-05 11:33 | Report Abuse

Wah Tony! made heaps of money, what's your latest pick ? would like to tunpang.

Posted by benjamin > 2012-12-05 11:54 | Report Abuse

Morning kkchong and all, Dont you sleep? How many hours is Auckland ahead of us? Buying properties in Queenstown? Is that in Hobbit land?If it is then is nice for visit. To reside , air is too fresh and cold for me lah.
Seriously , can you enlighten me with this ' sell of strength and buy on weakness' I understand the buy low and sell higher stuff but not sell on strength and buy on weakness thing. Strength and weakness of what? Volume , pricing? Definately not Balance sheet. That would be disastrous . Pardon my ignorance.Thanks.

Posted by tonylim > 2012-12-05 12:11 | Report Abuse

Aunloke bought pantech and wait
For kfima, I mean when when you know price will retrace why not sell.

Posted by tonylim > 2012-12-05 12:53 | Report Abuse

benjamin, oriental and kfima tells the same story all over again. Yes, unless somebody tells me some cataylst is upcoming, it is buy on weakness sell on strength.
oriental latest rumours is privatisation, I thought revaluation of their assets and bonus issues has been more than a decade already.

Posted by tonylim > 2012-12-05 13:03 | Report Abuse

kcchong, my strategy for kfima, has been time tested. Nobody here (including the lao cheow) can explain why price retrace (quite rapidly) from 2.40s to what? 1.76 despite all the figures and facts.

I can tell you in all internet forums, Kfima attract hordes of FAs but no bottom line strategy on entry and exit.

Fundamentals has improved for better compared to, like what Benjamin pointed out, now we see bigger figures in their books.

Aunloke used common sense, their staff esos priced at 1.48. When these buggers exercise their options, many cina apek can buy at reasonable entry price. That is how I see the trend.

At closing now, a cursory check, its back to 1.80. i would at current market sentiments I would Buy at 1.70ish.

dont get paranoid for those holding this counter.

Posted by tonylim > 2012-12-05 13:09 | Report Abuse

kcchong, if I had the time I would have whack cw.
My time of so called gambling is over.
Properties, I wish I had gone big on prop in sydney, melb in late 90s. My AUD money was at rate of 1.80 to 2.00. If diverted into prop, it would have quadrapled.
NZ is too way out for me. Dont play play with unattended prop.

Posted by tonylim > 2012-12-05 13:10 | Report Abuse

kcchong, do you have an hour to look at apollo, can it be a kpj in the making

Posted by kcchongnz > 2012-12-05 14:39 | Report Abuse

tonylim,
When I pose the question on "what's the intrinsic value of Kfima", it is meant for the sole purpose of looking at Kfima's business and financials and determine a fair value of the business. It is not meant to guess what price Kfima should go up, or go down. "Value is what you get, and price is what you pay". Price is determined by the collective actions of the players in the market. People are not rational and hence price can fluctuate wildly. It is also not meant for discussion what is the entry or exit level. That is the work of the chartists. "Why price retrace (quite rapidly) from 2.40s to what? 1.76 despite all the figures and facts?"
Again it is the collective actions of all the participants. You can use all kind of explanations after the fact, but what is the point? It would be nice if one can tell that before the fact. But the fact is nobody can consistently do that. Yes, the share market is that tough.

"I can tell you in all internet forums, Kfima attract hordes of FAs "
Really, are there hordes of FA here?

Posted by tonylim > 2012-12-05 14:44 | Report Abuse

hhmnn, ok mike.apollo?

Posted by kcchongnz > 2012-12-05 14:52 | Report Abuse

tony,
I have not followed Apollo. Just a glance of its annual report and it does look interesting. Glad you bring it up. But let me jeak pui, bansai, and attend to my sheep first. Ok? Can give you your email address so we can exchange ideas?

Posted by tonylim > 2012-12-05 14:53 | Report Abuse

aunloke, scientex at RM2.80 might suit you.
today, heavyweight and 2nd liner

Posted by Fat Cat Tim Buddy > 2012-12-05 14:55 | Report Abuse

junjunforty, you want my opinion on apollo? :D

if you want, just say so, but you might get disappointed after reading...

Posted by tonylim > 2012-12-05 14:55 | Report Abuse

shoot, i wont