Posted by BN_better > 2018-11-27 16:10 | Report Abuse

Chia sold bec missed BN ruling?

Posted by Avangelice > 2018-11-27 18:13 | Report Abuse

why is everyone harping on the PE. if you think it's over priced then don't buy lor. why keep complaining about it.

Posted by Avangelice > 2018-11-27 18:15 | Report Abuse

I personally think its a blessing and a curse that its high PE and high price now so that those IBs and speculative traders will avoid this counter.

Posted by qqq3 > 2018-11-27 18:17 | Report Abuse

Posted by Avangelice > Nov 27, 2018 06:15 PM | Report Abuse

I personally think its a blessing and a curse that its high PE and high price now so that those IBs and speculative traders will avoid this counter.
================

absolutely agree...the high PE is now a blessing......

Posted by Avangelice > 2018-11-27 18:26 | Report Abuse

if you look at who's invested in QL, the pie chart will show majority of investors are local retailers. not IB and not foreign investors. so please

Posted by Avangelice > 2018-11-27 18:29 | Report Abuse

that's why when shit happens in this country. Harapan lah, oil drop lah, S

Posted by qqq3 > 2018-11-27 18:29 | Report Abuse

y Avangelice > Nov 27, 2018 06:26 PM | Report Abuse

if you look at who's invested in QL, the pie chart will show majority of investors are local retailers. not IB and not foreign investors. so please
===============

a company with satisfied and happy shareholders can have high PE for a very long time......

some times all these value investors, IBs and foreign funds buy and sell on PE is very disturbing only.

Posted by 10154899906070843 > 2018-11-27 18:29 | Report Abuse

Shpg22, in all time you were saying fcf is negative, the business kept growing revenue and earnings. And I'm all that time I kept and reinvested my shares, I had share splits, dividend increases, share price up, I basically made 10x my original investment. For all your book smarts and outlying factors, how do you explain why people still invested in ql throughout the entire time, and were rewarded?

In terms of fcf, you really need to check out what the capex is and what they are doing with the capex.if you ever come down to Sabah id be glad to bring you visit the megafactories they are building now to get so that seafood processed and exported out.

If you remember when Warren buffet drove to visit Geico to see what the business is about, my advise is to come visit QL to see what the business is about. Then you'd probably stop reading too much into technical charts and start understanding businesses...

Posted by Ricky Yeo > 2018-11-30 10:43 | Report Abuse

@10154899906070843 You are on point that understanding a business should go beyond PE, FCF, or at least, those numbers need to tie back to the business itself. And you mention moat being a good point too, a company that has a huge moat, or at least a growing moat, deserve a higher PE compare to a business that has declining or no moat because it can earn alot more economic profit down the line.

So going back to QL, you have to identify if there is a source of competitive advantage, and if there is, what is it? and is it growing, stable or declining?

From 2006 to 2018, QL invested just over $2 bil into the business, while net income grow from $48 mil to $206 mil during this time, that imply a return on business of 7.4%. Decent but not spectacular. And of course, keep in mind the investment over the past 1-3 years might not have bear fruit yet due to lagging effect. Such as investment in family mart for example.

If we assume QL has a moat, where will that come from? First one I can think of will be scale economies. Their growing gross margin since 2006 can be an evidence that the efficient in production through scale allow them to lower their cost (Spreading fixed cost over more units). But operating margin and ROIC has declined at the same time because asset turnover has dropped significantly. The biggest assets is of course investment in PPE - growing 6.8x in 12 years. In comparison, net income only grow by 4.6x, that's why the decline in ROIC. Operating margin is up, compare to 12 years ago, but not as big of a magnitude as gross margin because SG&A are growing fast too, grown 5x.

So it seems that the investment in assets to allow QL to achieve scale economies which translate into a higher gross margin is being offset by higher administrative cost (meaning admin cost doesn't get the benefit of scale economies). The incremental investment of those assets is producing lesser and lesser return as well. But this is just hypothesis. More of a half truth. Asset turnover has been on the decline since 2006, while at the same time, some assets investments are partly due to Familymart, especially for capex since 2016 ($100 mil in all).

So when you look at from the current valuation point of view of $12 bil enterprise value, there needs to have some form of moat and runway to justify that valuation given a net income of $200 mil. The traditional business (marine & livestock) are doing well, but is there a long runway? Malaysia market is fairly saturated (based on layman assumption). Perhaps neighbour countries have higher growth opportunity but grow fish and chicken are not the same as installing an app, it is highly anchored to country economy and population wealth etc.

So there's a high probability the justification of $12 bil EV comes from family mart investment. Let's assume Affin's estimate of $6k daily turnover per store as ballpark, upon all opening of 90 stores, running full 365 days/year, will get you $197 mil revenue. How much will the net income be? 7-Eleven's profit margin is around 2.5%. Family Mart in Japan profit margin is 2.8%. Let's say we use 3% margin, net income will be $5.91 mil, make it $6 mil. 90 Family Mart stores, $6 mil annual profit. Of course the positive thing with familymart is there is a long runway compare to the traditional fish and livestock business. There is a potential to grow few hundred FM stores all over Malaysia and not to mention perhaps scale economies again. But you are looking at a ROC of roughly 6% here. (ROE = Profit margin 3% x Asset turnover of 2). Family Mart Japan has ROE of 4.5-6%. That should perhaps grow over time because of scale.

So you have to ask is is this investment enough to justify me buying the business for $12 bil?

Posted by monkeyinvestor > 2018-11-30 19:04 | Report Abuse

game over QL run for ur life!!!!!!!!!!!!!!!!!!!!!!!!!!

Posted by supersaiyan3 > 2018-12-01 10:12 | Report Abuse

Ricky Yeo, well said.

Within the same industry, you wonder why QL is doing so well while others keep losing money. I think, as they said, hand on management, integration, plus the ability to make use of standard, international practices. Nowadays there are SOP, management guide on everything, just not a lot of people want to follow.

Why are they selling? They are two groups of Chia, and they are both selling. They must have reached agreement to sell together. i. they must have thought the price was too high. ii. maybe they want to buy something, without using QL's company resources.

Posted by James Ng > 2018-12-02 12:07 | Report Abuse

https://klse.i3investor.com/blogs/general/184765.jsp
[转贴] [Facebook live:浅谈QL Resources bhd (QL)] - James的股票投资James Share Investing

Posted by Jon Choivo > 2018-12-03 11:53 | Report Abuse

Ricky Yeo,

Man you really am an analysis and writing god.

Posted by Luoo Phoon > 2018-12-04 15:22 | Report Abuse

Buy buy buy sell at 7.08

Posted by striker888 > 2018-12-04 23:59 | Report Abuse

No need for such lengthy analysis. Just think if QL spins off Family Marts, it will be worth more than 7/11, that's RM2+

Posted by Ricky Yeo > 2018-12-05 11:55 | Report Abuse

Worth more than 7/11 you say, so that's valuing standalone Family Mart at $2 bil market cap with $6 mil profit. That's cute.

Posted by striker888 > 2018-12-05 16:49 | Report Abuse

I don't know where you got the 6mil figure from, but a blind man can see FM is killing 711 with multiple times the turnover. I don't know what are people buying, but there's always a line of customers at FM lol

Posted by trulyinvest > 2018-12-05 17:08 | Report Abuse

miss the boat. I thought want to enter when 6.66!!!!

Posted by Ricky Yeo > 2018-12-05 18:51 | Report Abuse

Im impressed you can 'know' FM has multiple times turnover by looking at the line. How many times? I'm not interested whether FM is killing 711, can do somersault, or beat MyFM. All I'm interest is tell me the justification of $2 bil market cap.

Posted by JW Leong > 2018-12-05 19:31 | Report Abuse

Trulyinvest enjine starts

Posted by supersaiyan3 > 2018-12-05 22:36 | Report Abuse

Hello guys.

I got a lot to say but i can't say it here. It seems that the news hasn't been blown yet. I think the market get to know the news few days ago when QL was top volume counter.

What i can say here is there are many Chias' running this company. Basically they are two groups of them. And both groups of Chias are disposing AT THE SAME TIME.

It has been going on for two months now!

Please be cautious.

(YES, YES, YES, its happening again.) <-- for the smart fellows.

Posted by striker888 > 2018-12-05 22:40 | Report Abuse

If FM sells expensive things, you can expect they get better margins, so 1. 2, Always people lining to pay as opposed to 711 clerks looking at their phones, what more do you need? Obviously the majority of share holders like what they see, bless them for having common sense, hahaha.

Posted by supersaiyan3 > 2018-12-05 22:52 | Report Abuse

James Ng, 選股票好像做偵探一樣，不要背書一樣講回出來。

兩群董事都在拼命賣股，已經兩個月了。前幾天高Volume時應該就是消息爆出來了。現在吹全利，自己死就算了，別拖累人。

其實，不可能發生的偏偏發生了，大家亂成一團，也是很自然的。但冷靜下來背後自然有其規律。

今天很高興，原因我也想到了，解方我也想到了。只是，馬來西亞還是相對落後的國家，要接受新知識也是很難的。今天，就算全利全體董事認同我的講法，要改變也需要幾個億吧！所以等於是無解了。

自求多福吧！

Posted by Ricky Yeo > 2018-12-06 04:04 | Report Abuse

Thanks for your answer. Come back when you have your numbers, not feel good stories. So what that FM got better margins? How does that justify 2 bil market cap, why not 1 bil, or 100 bil? How does selling expensive things can have a higher turnover at the same time? Well, if everyone can see FM has longer lines than 711, that would have baked into the current valuation right? Hence going back to the original question, give me a number to justify 2 bil market cap. Cut to the chest.

Posted by rajachulan > 2018-12-06 09:46 | Report Abuse

基本面，政策面，前景，预测全部放一边吧！ 十一月三十号出现了爆量收红了散户们还不先走一趟？

董事们为了什么原因抛售我们不知道， 就是不知道才要留意趋势，势头不对就先跑一趟在旁边观望。

春江水暖量先知，股价会骗人，成交量是不会说谎的！

十一月十四号出现大量，又留下长长的上影线是我就全部卖出了。。。

大家留意保重

Posted by striker888 > 2018-12-06 10:08 | Report Abuse

The same fool still complains about QL having high valuation. I don't know, I jusy feel really good looking at my handsome returns on QL investment, while you can suck your sour grapes till the cows come home, hehehe

Posted by Ricky Yeo > 2018-12-06 10:18 | Report Abuse

Well, lets not personalised the market. How you want to feel about your QL investment has nothing to do with our discussion. Until you can come out with some numbers, we shall end our discussion here. At this point, we will wait until you have something to back up $2bil market cap valuation, aside from the queue you see at your local FM store base on a sample size of 1.

Posted by Kawkaw > 2018-12-06 12:47 | Report Abuse

Ql nice mountain shape..
It will find it base..
Let see

Posted by klangkopitiam > 2018-12-06 13:07 | Report Abuse

https://mymetastockjournal.blogspot.com/2018/12/ql-resources-bhd-klse-ql-7084.html

Posted by Dvorah > 2018-12-06 15:21 | Report Abuse

Will the price drop again?

Posted by striker888 > 2018-12-06 15:47 | Report Abuse

The sorry fool probably said the same when QL was RM3 before the multiple splits of shares. Oh it's too highhhh. Sohai indeed.

Posted by Ricky Yeo > 2018-12-06 16:13 | Report Abuse

It's okay to say 'i don't know' if you don't know the answer instead of going in circles. It is irrelevant to mention the movement of the historical share price because that doesn't answer the original question as to why "it will be worth more than 7/11". Since you come up with that hypothesis, yet unable to quantify it, I'll just ignore it.

It is surprisingly easy to find out if someone know what he is talking about by asking him to quantify his words. Like a hot knife through butter.

Posted by JW Leong > 2018-12-07 10:58 | Report Abuse

Where is the sohai indeed?

Posted by striker888 > 2018-12-07 14:33 | Report Abuse

All your self styled smartasses trying to quantify some theoretical numbers while the real high stock price staring at you?. If I sold my stock today, I'd have real money in my bank, and you'd have your pseudo numbers.

You know how Newton was burned in the stock market because he thought he had "quantified" the prices. Yeah of course you're smarter than Isaac Newton, not!! Haha.

Posted by Ricky Yeo > 2018-12-07 14:55 | Report Abuse

No one is trying to be a smartass here, but definitely try not to carry the historical price around your mouth whenever you want to make an argument. It is like someone can't answer a question and go around telling people how much is in his bank account, it doesn't serve any purpose.

I don't know what is more pseudo, is it more pseudo trying to get an explanation behind why FM is worth 2 bil? Or is it more charlatan that one says FM is worth 2 bil because the queue at a FM store nearby is longer than 7-11 store and yet unable to offer a shred of evidence to justify that logic? We can go on this forever and you still unable to offer a figure. That tells a lot how much you know about QL. Do me a favour, if you going to tell everyone how much you have make at QL before you want to make a discussion, you can save that.

Posted by striker888 > 2018-12-07 15:04 | Report Abuse

OK I don't know what I'm talking about. I'll just keep quiet with my 4x returns on QL investment, you win win liao. So how much have you made? Must be a lot more because you have all the numbers, hahaha.

Posted by JW Leong > 2018-12-07 15:39 | Report Abuse

Come on sell the tickets to me! I like to eat fishballs and eggs everyday

Posted by Ricky Yeo > 2018-12-07 16:15 | Report Abuse

Your message really sounds like "hey don't ask me to explain, but just trust me because I have made a lot of money in the market, so trust whatever I have to say."

IF you say you don't know then we can stop here now. I'm not interested in discussing how much I have made nor am I interested in how much you made. If you want to boost your ego, you can talk to others so others can worship you. Because it seems like that is the only thing you have to offer.

Posted by striker888 > 2018-12-07 16:42 | Report Abuse

Because Ricky boy, the only thing matters in investment is the results to show for it. Come on show us how good you really are than talks

Posted by Ricky Yeo > 2018-12-07 17:23 | Report Abuse

Is it? Then you shouldn't talk about why FM is worth $2+ because you haven't got anything to back it up.

Posted by klangkopitiam > 2018-12-11 15:02 | Report Abuse

https://mymetastockjournal.blogspot.com/2018/12/ql-resources-bhd-klse-ql-7084-update.html

Posted by monkeyinvestor > 2018-12-12 00:09 | Report Abuse

ql 在做头!GG

Posted by 4444 > 2018-12-12 03:29 | Report Abuse

https://www.thestartv.com/v/are-cartels-colluding-to-fix-higher-prices-for-eggs-asks-saifuddin

Posted by shpg22 > 2018-12-13 00:13 | Report Abuse

No doubt the company will still grow, but at this ridiculous valuation (P/E 51.8x, P/B 5.7x) better keep your money in the FD. Current price is like paying upfront for 10 years of continuous growth at min 20% CAGR. Only fools are willing to part their money for the deal.

Posted by shpg22 > 2018-12-13 16:42 | Report Abuse

Remember in stock investing, Do not overpaid for something good, otherwise prepare to get whacked.

Posted by 10154899906070843 > 2018-12-14 11:15 | Report Abuse

Ricky how about these for hard facts, let's use comps.

There are 80 fm stores in Klang valley area, daily turnover around 6k with mostly fresh food and seafood kombi direct from ql, higher margins than seven eleven which doesn't carry their own products ( low margin). No differentiation between 7-11 and mynews etc. QL spent 100m in 2016 to in operating budget open up these stores, and they have a much deeper capital to reinvest. FYI the profit returns from fm is enough to generate new store openings, unlike 7-11.

There are 2240 7-11 stores in Malaysia, with low margin items and high debt ( from which you can do comparison), the returns from 7-11 are only enough to pay dividends and small growth. They are taking on more debt to grow the 7-11 stores, which are becoming more saturated and can't be grown organically.

Now, which do you think has the bigger future and growth opportunity, the vertically built company with production, manufacturing and now retail? Or the other company which frankly is built to only drive out and bully the mom and pop kedai runcit and doesn't even make a good profit. Do you think 7-11 can double the number of stores in the next 5 years? Is that even possible?

And if you do the math, right now fm is worth more than 2 billion to ql simply because 80 stores generate 150m in sales per year, ql has the opex cashlow to add even more stores if needed, and if you think 5 years or 10 years ahead (pe10), you are looking at 200-300 stores in Malaysia which would add 300-400m in sales, at 5% profit margin internally is around 20m. However when you look at ql bottom line which is linked to surumi, poultry, eggs and palm oil products then you will understand what is meant by vertical integration.

Now look even deeper into things. What happens when fm hits 800-1000 stores? QL would be able to start producing and selling even more specialized products under their brand umbrellas mushroom, suria, ika, ql Omega and Sakura at higher prices because right now people look at fm and think quality, same way people look at Nestle and think quality.

If you really want to do comps, don't just look at pe or profit, compare growth speed and market valuations.

Nestle Malaysia is a 30 billion company with 5 billion sales at 12% margins, pe 50

QL resources is a 10 billion company with 3.6 billion sales at 7% margins, pe 50

But now look deeper and look at how the much cashflow is being used to grow the business, affecting current profit now for future growth. Look at the factories, refineries and plants being built right now that can handle future orders.

Now ask yourself what a monopoly means, how growth works, and what people are investing in. There are hundreds of companies which have pe of 2 and 3 etc but never make you money because it doesn't grow, but only a few companies in Malaysia similar to Google or Facebook or Amazon which can consistently grow over a 20 year period.

In the end a business is only worth holding if it grows, and pe doesn't mean a thing if no one buys the shares.

FYI I also continuously bought my shares at 3.90 more than 7 years ago, then it split, and then it went up to 7, so whatever drop you are looking at now doesn't change how a great business works.

Posted by 10154899906070843 > 2018-12-14 11:32 | Report Abuse

Sorry a bit more of a rant Ricky, cos you don't seem to want to digest what other people are saying.
Last year annual report,

Nestle Malaysia spent a part of their 5 billion revenue 138 million in new equipment, plant and machinery.

Now look at QL resources, they spent 338 million of their 3.6 billion revenue on new factories, plants and machinery. That's how much cash they are churning out, that's how much growth they are expecting.

Now for those who didn't buy Amazon back in the day ( I learned this lesson far too late) because pe was like 300+ or something, digest this.

In fact, I won't give you the answer, find out and reply back here.

Did Amazon lose money every year for all those years? Or did they just make a minimal break even every year because they were pumping every single cent back into growing the business?

And now Amazon is a trillion dollar company.

PE is just a ratio. I can turn it into any figure I want. If you want to understand a business, read the financial notes. Then read the cash flow statements. Then read the assets and debts. Then look at the business and see who else above them. That's how you do comps.

Posted by 10154899906070843 > 2018-12-14 11:43 | Report Abuse

Shpg22 fyi, if you want to fudge numbers I can just as easily change the earnings part by omitting their opex growth to get a feel of how the business is doing.

If we take out their future expansion of 338 million, and use that plus the 65 million declared profit we'd get roughly P/E 3+ if they stopped investing in growing their business.

What do you say to that?

Also your book value is also not accurate, because a lot of their land assets for palm oil and factory grounds and lands have not been restated for a long time. So if you just want to invest based on wsj or morningstar estimate of book value you better spend a bit more time on reading financial reports. Otherwise you'd just be another Warren buffet wannabe.

Posted by shpg22 > 2018-12-14 16:51 | Report Abuse

We ll see who is wannabe.

Posted by Ricky Yeo > 2018-12-15 08:05 | Report Abuse

@10154899906070843 I think trying to lump QL with Amazon and Nestle is really stretching the definition of comparing.

Let's do a thought experiment,say QL can increase FM stores to 800 in the next 10 years, which is aggressive given that is around $800 mil in capex but we assume it's doable. Based on your 5% margin (because of vertical integration), that gives you a profit of $40 mil (800mil sales x 5%). Given that you think FM is easily worth $2 bil, in other words, you're saying you're happy to pay 50x in today's money for FM's earnings in year 2029 (2 bil / 40 mil). To put this in the quantum of things, you're happy to open a term deposit account with $2000 deposits that will pay you a $40 dollar interest in 2029.

Maybe you going to say PE has no meaning, given that Nestle, Amazon have high PE too. But why do those 2 companies have high PE, is it because of growth? No doubt growth partly explain why a stock deserve high PE, but that is not the key reason a stock has high PE because growth doesn't explain why Nestle and Amazon have the same PE when clearly Amazon is growing way faster than Nestle. High PE stocks can only be justified if the business can generate a high return on capital.

Let's ignore QL and focus solely on FM. Given the logic you're happy to pay PE 50 for 2029's earnings, FM as a standalone needs to have a really high ROC. In fact, 'really high' is an understatement. We already have the numbers.

ROC formula is EBIT / Average of (Net fixed Assets + Net Working Capital)

Instead of the complexity of 80 stores or 800 stores, we look at a single store economic. A single store capex is around 300K. Add in refurbishment of 100k say every 5 years to maintain earning power, therefore around 320K in investment. Based on 5% margin, a single store can earn around 100k a year. Translate into a return of around 30% which is really good. But I still find it hard paying $2 bil even with this kind of return.

Now I have digested what you're saying. Feel free to correct me.