Posted by kcchongnz > 2013-05-09 11:22 | Report Abuse

Don't just choose the period. This amount to what we call data mining. Use all short term and long term data. See what happen to MKLand, short and long term.

MKLand 0.335 9/05/2013
Period 2-week 6-month 1 year 2-year 3 year 4 year 5 year
Price 0.31 0.36 0.290 0.385 0.320 0.320 0.495
Return of stock 8.1% -6.9% 15.5% -13.0% 4.7% 4.7% -32.3%
CAR 651% -13.4% 15.5% -6.7% 1.5% 1.2% -7.5%

This type of return, cry also no tears man.

"in the land of the blind, the one-eyed man is king", what a romantic one-eyed buta king"

Posted by kcchongnz > 2013-05-09 11:30 | Report Abuse

Lets see how Kfima has been doing for the last 5 years.

Kfima 1.95 9/05/2013
Period 2-week 6-month 1 year 2-year 3 year 4 year 5 year
Price 1.90 1.87 1.85 1.58 1.00 0.62 0.50
Return of stock 2.6% 4.3% 5.4% 23.4% 95.0% 214.5% 290.0%
CAR 96% 8.7% 5.4% 11.1% 24.9% 33.2% 31.3%

Compare that to MKLand. I think not only 100 times better, maybe 1000 time better man! Anybody disagree?

Posted by aunloke > 2013-05-09 11:31 | Report Abuse

Say what you like,since Jan. all my stocks moved up handsomely except Kfima and yet I think I'll add more Kfima for this is the only one that has to move up.

Posted by cfkhoo > 2013-05-09 11:38 | Report Abuse

fundamental stock not necessary will go up but for long term hold right. Patient as not for trade.
kcchongnz can you take a look at GUH and give your comment. would appreciate.

Posted by kcchongnz > 2013-05-09 11:52 | Report Abuse

What is the comment on the short and long term return of the following two stocks? I am still waiting for comments, especially from the one who laughed at me so heartily and saying what I said was long.

MKLand 0.335 9/05/2013
Period 2-week 6-month 1 year 2-year 3 year 4 year 5 year
Price 0.31 0.36 0.290 0.385 0.320 0.320 0.495
Return of stock 8.1% -6.9% 15.5% -13.0% 4.7% 4.7% -32.3%
CAR 651% -13.4% 15.5% -6.7% 1.5% 1.2% -7.5%

Kfima 1.95 9/05/2013
Period 2-week 6-month 1 year 2-year 3 year 4 year 5 year
Price 1.90 1.87 1.85 1.58 1.00 0.62 0.50
Return of stock 2.6% 4.3% 5.4% 23.4% 95.0% 214.5% 290.0%
CAR 96% 8.7% 5.4% 11.1% 24.9% 33.2% 31.3%

Posted by iafx > May 9, 2013 11:12 AM | Report Abuse

pre-GE till date, KFIMA +3.5%, MKLAND +10%

"in the land of the blind, the one-eyed man is king", what a romantic one-eyed buta king

hahahahhaaaaa....

Posted by iafx > 2013-05-09 12:03 | Report Abuse

simple, u can continue "mining" for another 5 years, while ppl who smart enough to understand; earn REAL $$$ (rather than dreaming on the 250m on the PAPER) for good food, new car, new house & bring the family for great trips

la..la...laaa... :D

Posted by kcchongnz > 2013-05-09 12:09 | Report Abuse

?????

Posted by kcchongnz > 2013-05-09 12:34 | Report Abuse

Well, if you can't understand the table I have constructed and discussed about return on investment over the last 5 years which is history, we can debate here on why in the near and far future, which company is more likely to reward shareholders.

I start here with my favorite Kumpulan Fima.

For me what matters most for a company which has steady and diversified businesses with a long enough record of performance is the free cash flow (FCF) it produces. FCF is what the company receives as hard cash each year less whatever capital expenses required for maintaining its competitive advantage and future growth. Hence it is clear that it is this FCF available that the company can pay dividend, pay down debts, increase its cash holdings, do some other investments, buy back shares. Table 1 below shows its cash flows from the last 5 years in thousands:

Table 1: Cash flows for Kumpulan Fima
Year 2012 2011 2010 2009 2008
CFFO 132346 139552 116823 59792 67049
Capex -26434 -24022 -19500 -23826 -32009
FCF 105912 115530 97323 35966 35040
Net income 116543 107502 86433 70627 43274
FCF/Revenue 22% 27% 24% 10% 11%

One can see the consistent FCF produced by Kfima in the last 5 years in an increasing trend, with FCF about the same as its net income. This shows the good quality of its earnings. FCF has been above 20% (>>5%) of revenue. I think besides those “unethical” companies such as tobacco, liquor, companies, you probably won’t find this high percentage of FCF over revenue from any other companies. So what did they do with this FCF? Table 2 below shows how Kfima utilizes its FCF:

Table 2: Utilization of Kfima’s Free Cash Flow
Year 2012 2011 2010 2009 2008
Dividend -26800 -15400 -13158 -7895 -6579
Pay debt -51608 384 -19229 -5330 32467
Sum -78408 -15016 -32387 -13225 25888

Example for last year, from the 106m FCF, 26.8m dividend is paid out to common and minority shareholders, 51.6m was used to pay down debts, and still left with a lot of extra cash in the balance sheet. That is why you can see dividend payment increases every year and its debts getting lower and lower due to the steady increase of FCF each year. Having a lot of cash which will be handy when an investment opportunity comes around like buying more land for palm oil, making a positive net present value projects; buying an investment which can yield return of capital higher than the cost of capital etc; or just distribute some special dividends to shareholders.

Posted by houseofordos > 2013-05-09 12:39 | Report Abuse

KFIMA is definitely a great company. It is really hard to find companies with such high FCF/Revenue (>20%) numbers trading cheaply ...
Yet one of the issue in Malayisa stock market is that the market cap to GDP is not proportionate, hence a lot of companies stay undervalued for a long time unlike other countries... just my opinion...

Posted by jtpc2006 > 2013-05-10 12:33 | Report Abuse

I like the idea of special dividends to shareholders :)

Posted by tonylim > 2013-05-10 13:52 | Report Abuse

houseoflords,

Is there an index or table where we can compare gdp vs market cap?

Posted by Ti Bowen > 2013-05-10 14:46 | Report Abuse

Got special dividends?

Posted by shirley1 > 2013-05-10 15:55 | Report Abuse

aaahhhh...

Posted by JimYeoh > 2013-05-10 15:56 | Report Abuse

inching up

Posted by aunloke > 2013-05-10 17:06 | Report Abuse

Nice move, as I said yesterday it has to move up.

Posted by kcchongnz > 2013-05-11 18:10 | Report Abuse

Oh, Public Bank gives a fair value of Kfima at RM3.21, quite similar to my valuation of RM3.28 posted here earlier on.

http://klse.i3investor.com/servlets/ptres/14116.jsp

I believe in "Value is its own Catalyst". Yeah uunloke, I agree with you. I remember my science teacher said when I was in Form 1 (?) that Water will always find its own level.

Posted by pradeep > 2013-05-11 22:28 | Report Abuse

let us see the next quarter result, anyhow fundamental of the company is intact.

Posted by mogul88 > 2013-05-12 00:16 | Report Abuse

Digress a bit, the guys in property forums talking about surge in klse and missing boats...

Posted by Jian Bin Siew > 2013-05-12 13:50 | Report Abuse

Since most of the share up so much, now is the time to buy back Kfima. If you compare ZHULIAN, DKSH and Naim to Kfima, I strongly believe Kfima still have lot room to grow. Anyway, this share quite passive in term of the price, hardly to move, maybe not generous in dividend.

Posted by pradeep > 2013-05-12 22:55 | Report Abuse

Jain Bin Siew I do not agree with you. KFIMA pays good dividend and maintains the payment of dividend and the management is good.

Posted by wayne1982 > 2013-05-13 11:20 | Report Abuse

Agreed. At least better than bank.... Result is announcing soon. Let's monitor and see is there any increment on dividend declared.

Posted by jtpc2006 > 2013-05-13 11:48 | Report Abuse

TP is above 3.20, should reach there soon...

Posted by behindthescene > 2013-05-13 12:10 | Report Abuse

one of the most undervalued stock in klse. hopefully they'll announce special dividend to drive the price up.

Posted by Ti Bowen > 2013-05-13 14:38 | Report Abuse

when is the quarter report out?

Posted by behindthescene > 2013-05-13 17:13 | Report Abuse

had a good feeling that this counter might explode soon. might be wrong though :) good luck to all who holds. cheers.

Posted by pradeep > 2013-05-13 18:43 | Report Abuse

As usual the quarter result reporting is by this month.

Posted by Jian Bin Siew > 2013-05-13 21:57 | Report Abuse

Last year gave 8 sen, consider good dividend? If this company give dividend like ZHULIAN, at least RM3 now. Pradeep, maybe 4% is ok for you, but I prefer stock that can grow and give at least 40% of profit. That is the reason why Tambun, ZHULIAN, Hua Yang and UOA Dev, Axis can increase year by year. This is the nature of human, especially asian want to earn money and put into pocket instead of let the money inside the company. Anyway, this is a undervalue stock for sure.

Posted by behindthescene > 2013-05-14 09:24 | Report Abuse

fly kfima, fly!

Posted by buybuybuy > 2013-05-14 13:36 | Report Abuse

Good dividend is expected to announce soon so time to collect the share now when the price is still very low. Target price 3.20.

Posted by kllady_fidah > 2013-05-14 14:53 | Report Abuse

thin volume ler...

Posted by Ti Bowen > 2013-05-14 16:27 | Report Abuse

Today market performe slower....

Posted by hsong > 2013-05-14 19:54 | Report Abuse

If foreign funds were to be come in a big way then those undervalued stocks will move as they are backed by fundamentals.

Therefore, no worries as downside is limited with plenty of upside as Public Investment Bank values it above RM3.00

Looking forward to obtain contributions from investors on undervalued stocks with high upside.

Posted by buybuybuy > 2013-05-15 13:58 | Report Abuse

More to come for this counter. Keep an eye on this share.

Posted by joseph hii > 2013-05-16 14:21 | Report Abuse

start to buy in lohh

Posted by Ti Bowen > 2013-05-16 14:29 | Report Abuse

no strength today...

Posted by joseph hii > 2013-05-16 14:44 | Report Abuse

standard volume for the stock that can slowly growing up

Posted by nhkch > 2013-05-16 21:43 | Report Abuse

Posted by kcchongnz > Jan 1, 2013 08:01 AM | Report Abuse

Using EPV, the details of computation for the intrinsic value of Kfima is summarized below.
Average 3-year Ebit 120655
less income tax -30164
NOPAT 90492
Add average D&A 20154
Less average capex -22546
Adjusted ttm Ebit 88100
Cost of capital, R 9.8%
Capitalized earnings=Ad Ebit/R 898190
Add cash 265593
Less debts -20977
EPV 1142806
Less minority interest -295611
EPV to common shareholders 847194
Number of shares 267684
EPV/share 3.16


hi kccchongz, i try to calculate the EPV as you did. However i can't get the same value like yours.

I looking at the annual report of 2010 2011 and 2012. How to get the EBIT? I sum up all the profit before tax and divide by 3 but the number are not the same. Do you mind to point out how to get those number? Thanks in advance.

Posted by kcchongnz > 2013-05-17 09:56 | Report Abuse

EBIT means earnings before interest and tax, or operating profit. You used EBT or earnings before tax. Don't take the interest payment out yet as I used EBIT to calculate the value of the firm, which includes value of debt holders. See EBIT of the 3 years below:

year 2012 2011 2010 Av
EBIT 135145 130237 96584 120655.3333

Posted by joseph hii > 2013-05-17 10:04 | Report Abuse

Price still keep in maintain

Posted by Ti Bowen > 2013-05-17 10:33 | Report Abuse

move very slowly, i just sold mine, profit taken.... LoL..

Posted by faberlicious > 2013-05-17 10:56 | Report Abuse

Aiyah,no need to monitor share price all the time.This one's a buy n hold gem.Like what kcchongnz said about investing should be like watching paint dry or grass grow. Patience and ye shall be rewarded handsomely.

Posted by pradeep > 2013-05-18 09:25 | Report Abuse

wait for the next quarter result guys

Posted by nhkch > 2013-05-18 09:56 | Report Abuse

hi kcchong,
Thanks i got the number.However there are still some problem for me to compute the EPV.

1.less income tax: is this value get "income tax expenses" in incomestatement. These are the value i got:
year 2012 2011 2010 av
tax 37269 33428 29293 33330 (which is a huge different from yours)

2. Average D&A: I get this number from "note to financial statement"

year 2012 2011 2010
Depreciation: 21743 20872 19449
Amortisation: 6081 5310 5744

avarage of D&A=20688( which is near to the number you got)

3. average capex" I get this number from " note to financial Statement"

year 2012 2011 2010
capex 41038 19918 30806

average= 30587 (which is a huge different from yours)

4. Cash: Is this "Cash and cash equivalents at end of year" in Cash flow statement?

year 2012 2011 2010
Cash 270410 214758 212270

average=232479 (which is a huge different from yours)

6.Dept: as for dept, i got no idea where to get this. Is is from "long term borrowing" and "short term borrowing" in balance sheet?

7.minority interest: wonder is it the same as the non-controlling interest in income statement. However the value i got is far from the one you got.

8.Cost of capital: any guideline to come out with this percentage?


Hope this is not too much. Thanks :)

Posted by kcchongnz > 2013-05-18 16:46 | Report Abuse

nhkch, good effort. Hard to find one in i3 who is so keen to learn.

I have been saying valuation is an art, much more than a science. Everybody doing valuation of an asset uses different data and assumptions. So valuation is more for getting a feel of the approximate value of an asset. That is why I use margin of safety. For example why do you use three year average data, and not 5 year? I will respond to each your question here.

1) I may have underestimated the tax expense as yours is more accurate. The tax expenses is on average 25% of the EBIT for the past 5 years; the one I used is only 21% which was too low.

2) The D&A I used was the average of the past 7 years; the new one which is I am going to use is the average of 5 years. See this is arbitrary again.

3) Similarly for the capex, I use a new average for 5 years. The thing is that the EPV assumes there is no more growth for the company, and hence capex is more of maintenance capex and will be less than the past year which capex is spent for growth.

4) Yes, the cash and cash equivalent can be obtained from the cash flow statement. I took it from the balance sheet which is the same. I used the latest cash and cash equivalent which is the last quarter value. You shouldn't use average value for this.

6) Debts is all the long term and short term borrowings in the balance sheet. Again you should use the latest account as at 31/12/2012.

7) Minority interest I got is the total future cash flows of the company, not just a single year. So I estimate the percentage from the trailing twelve month earnings which belong to the minority interest and apply it to the total value of the company.

8) Cost of capital is actually the weighted cost of debt and equity. For example if 80% of the capital is equity and 20% of debt holder, and assuming the required return for equity holder is 10%, and cost of debt is 5%, the cost of capital would be 80%*10%+20%*5%=9%. But normally for simplicity, I just use a cost of capital of 10%, which normally is a slightly conservative value.

Below is my new valuation for the intrinsic value of Kfima with no growth:

Revenue ttm 000 470753
Ebit 111917
less income tax -27924
EBIT after tax 83992
Add average D&A 22423
Less average capex -25158
Normalized Ebit 81257
Cost of capital, R 10%
Capitalized earnings=Ad Ebit/R 827604
Add cash 246001
Other investments 111492
Less debts -14325
EPV 1170772
Less minority interest -269909
EPV to common shareholders 900863
Number of shares 267972
EPV/share 3.36

You notice I "normalized the EBIT with the average EBIT margin of the last 5 year. Also notice that there is no much change in the intrinsic value of Kfima from the last time I did it though I have made some changes in the assumptions. This is because there isn't this growth assumption here which is the main culprit of the big discrepancies in valuation.

Posted by pradeep > 2013-05-18 22:41 | Report Abuse

From your calculation I note KFIMA is undervalue and dirt cheap. KCchongnz and nhkch both of you had done a good job. We have to salute both of you. Any other fundamental stock you have in mind. I note TGUAN is under value too.

Posted by fishbone > 2013-05-18 22:42 | Report Abuse

A very good stock for long term investment

Posted by joseph hii > 2013-05-19 13:30 | Report Abuse

pradeep, thank for good introduce

Posted by nhkch > 2013-05-20 00:10 | Report Abuse

The EPV for Kfima is done kcchongz. I'm trying to learn EPV from him.

Hi kcchongz, i think i can understand most of the answer you have provided. It really clear my doubt. Thanks.
However regarding the minority interest, i got no ideal what you mean. Are you assuming future cash flow for the company? What is the relationship between this future cash flow and minority interest? Sorry, i don't have any finance background so simple explanation and example will be appreciate.

Posted by joseph hii > 2013-05-20 09:15 | Report Abuse

go go go. most of stock is start moving up

Posted by kcchongnz > 2013-05-20 12:37 | Report Abuse

nhkch,
Kfima owns 60% of fimacorp and hence the financial results of Fimacorp is "consolidated" into Kfima's account. Every item in the financial statement of Fimacorp is added up to Kfima's statements, that is the requirement. However as you know there are other minority shareholders in Fimacorp and so Kfima shareholders do not own all the revenue and profit of Fimacorp which has been consolidated into Kfima's account. So the "minority interest" of Kfima is this part which does not belong to Kfima shareholders. The way I estimated it is by looking at how much is the total net income in % belongs to the minority shareholders in the income statement. Then the intrinsic value of Kfima's value is net off with this percentage.

I am not an accountant and this is the way I look at it and I think it is correct. Hope someone can correct me if it is wrong.