Posted by KC Loh > 2012-07-28 15:29 | Report Abuse

Pshiny, I am not into technical analysis. I think the best persons to consult in this forum would be Teh or Ooi I guess. I can try find out about my fair value of this counter if have time to research later. Currently am outside now.

Posted by Ram Cheong > 2012-07-28 16:23 | Report Abuse

right attitude . .......... God bless

Posted by Donpazac > 2012-07-28 16:30 | Report Abuse

KC Loh, I like to read your post. Good to have you here :)

By the way, which method do you use to derive fair value? Is it manually derived or using software? Net assets? Present value of future cash flows? I always have problem in getting the cash flows growth rate (from Reuters).. Don't know which is the fair rate to use. I know there is no best or accurate method... Just like to know more varieties of approaches used in practice.

All Sifu, brothers and sisters here are most welcome to comment :) Appreciate it. Thank you.

Posted by KC Loh > 2012-07-28 16:52 | Report Abuse

It depends. Mostly SOP valuation. Each counter will be valued separately. Construction counters reliable ones would be P/BV and banks will be growth rate and DCF. (To clue you in, research how the analysts are doing and you can basically apply the same valuation factors. ) Then its always measured to the ones closest to its industry peers. SP Setia to IJM for example and not smaller ones.

You are right about no one particular best valuation method hence in may case it is majority sums of parts. What your aim is, trying to derive value range. From what the prices are indicating. P/bV, DCF, P/E , etc all are trying to arrive at a price, and then to discount it appropriately to your risk discount to get your margin of safety. It gets easier as you do more number crunching. Fisher was quoted to say, don't worry about the fractions. It means getting your numbers approximately for a start is good enough and then work more factors going in.

Most important is read and look out for signs relating to valuation changes. What if tomorrow Affinity said they are Tier 1 bank? Can they get to Indonesia via Bank Ina? What will the returns be? What is cimb and maybank's returns via-a-his their indon forays? All these must be factored in.

I am getting long winded again. Better stop before I lose you to the enterprise as I did Scotty last night! :) beam me up!

Posted by KC Loh > 2012-07-28 17:02 | Report Abuse

Corrections from my auto-correct:

1. Approximates
2. Affin

Addition, Fisher said don't worry about fractions, because if your are sure of your numbers, it will grow beyond your fractions. Good returns are 25% returns annually for total portfolio. Four or five years to get back all your capital!!

Benchmark rate to compare? Buffett uses 25 year US treasury rate, you can for a start use BNM's BLR or 1-year senior FD rate if u want. Works for me :)

Posted by Donpazac > 2012-07-28 17:03 | Report Abuse

KC Loh, as always, your comment is very helpful. At least I don't feel it's long winded. But it doesn't sound easy at all. Too judgemental. Normally when research analyst derive SOP valuation, do they factored in potential future revenue from projects or markets which have not been confirmed but in the news?

Posted by KC Loh > 2012-07-28 17:18 | Report Abuse

Yes, usually they do. Hence you see a lot of TPs. One danger that I think newbies always fall into, for example, is when an analysts said they derived their FV at FY14 PER or something like that.they are saying in the financial year end 2014 only this will happen,but you see speculators go rush headlong into it already. Know what it means before investing. Sad isn't it? What if next year gift change and the business is rescinded? What if the company goes into liquidation as in the case of Enron or Baring? Do you know enough about the business and management to make a call? You won't lend me 10k cash I am sure, because u dunno me. But why are people throwing their money into share they don't even know anything about? The lure of instant riches and spectacular returns will always be there. That why Buffett said don't invest in business if you don't understand the fundamentals.

Posted by KC Loh > 2012-07-28 17:20 | Report Abuse

Suppose to mean "government change and business is rescinded". Sorry, my Android bad!

Posted by Donpazac > 2012-07-28 17:34 | Report Abuse

Haha.. KC Loh. You are right. In fact I already have some bad experiences.. Jumping on the bandwagon without much research on the fundamentals.. Cost me quite some hard earn money. Serve me right actually.. Haha.. Hope I will not repeat that..

Honestly it is very hard to resist the temptations of speculating.. How you do it? .. Like you speculate that a particular news will drive up the price for a while.. Without much change in the company's fundamentals. Market react to news.. Traders can make big money just by buying on rumours or news. So it's really tempting..

How long do you normally hold on to a good stock? You long all the stocks? Do you sell when you feel it's overvalued?

Posted by KC Loh > 2012-07-28 18:31 | Report Abuse

yeah, i play long on stocks. 20% returns is always my benchmark.

if overvalued, i may sell stocks. but then again, i need to ask if i can ever get back into the price again. And if dividends are good, i just might hold on. why sell, if its a good company, logically?! Buffett said, the best time to sell, is NEVER! in fact, Philip Fisher mentioned that first.

how do i resist? er... ask wife to cubit telinga and bring me back to reality with her nagging if the bet fails lor! thats what the better half is for mar! well, next time you think about speculating, i give you my bank account. you bank in 10k for me first. It should work with appropriate admin fees deducted for holding period! just a suggestion! :) Seriously, think about the 10k analogy, it should give you a wake-up call i guess!

Posted by KC Loh > 2012-07-28 18:57 | Report Abuse

alternatively, i like what one of my friends did before. He puts a travel brochure on his table and always tell himself that he will be paying for someone's trip to Europe if he gets it wrong!

But i recommend the bank-in-to-my-account methodology! LOL

Posted by Donpazac > 2012-07-28 19:34 | Report Abuse

Hahaha.. Good ones brother. I guess I need some time to find a method which I feel comfortable (definitely not bank-in-to-your-account methodology :) lol

Thanks a lot for all the advice and suggestions.

Posted by 03pm > 2012-07-29 02:37 | Report Abuse

pshiny, r u the earlier pshiny that claimed alex lu the donkey benefited u a lot? so ur case of buying on a fake breakout and donno what to do now should be re-directed to the same donkey that been promoting this type of buying. why ask KC? when there is a trusted Stock Guru ??
ppls like u is exactly the type of target viewer Alex the donkey targeting, know a bit of chart, a bit of fundamental. and think they r so expert. and has the blessing of their mentor (donkey in this case)

pshiny i hope it doesnt mean a shiny-pussy...

Posted by KC Loh > 2012-07-29 23:50 | Report Abuse

pshiny, i got my FV for presbhd at 1.22. This is discounted at 10% owing to this company doesn't really have any gearing issues and as reuter's beta confirms it. If you can find out what is the current recurring income and sustainability, then you can even remove my discount for margin.

with the govt approved university status, it looks like a recurring income for the tax-free MSC status company. The growth prospect looks good, but i think the recent spike in price factored in, its already fully valued. I will go in around 1.05 and below. One should think a lot are queuing August 6th ex-date. A lot will probably sell after ex-date too.

The growth potential is definitely there as a long term stock. I am just using a conservative approach, even discounting it. Possible risks: i) not sure if its a e-university, but standard university build-up, if required will take about 800mn on average depending on area, land price and infrastructure, then recurring cost like personnel etc, so that's 4x its current market cap. It will hit gearing. So look out for that; ii) i presume most of its revenues are from govt related training and licensed software distribution. But govt coffers won't always be rosy and with next election, how will this play out if new govt in place and tenders are called?; iii) you need to check when the tax-free status is up.

as you see, more research needed. but overall, i say if you can buy below my discounted price, you should have yourself a winner!

Posted by Ooi Teik Bee > 2012-07-30 00:09 | Report Abuse

Dear Pshiny and KC Loh,

I am still in Jakarta conducting US stock option course for my SharesXPert students here, hence I did not read all the forum in I3investor.com.

Dear Pshiny,
According to my SharesXPert system, there is still no sell sign for Presbhd. My sell sign is "if the price falls below 1.18". Hence hold on to it unless the price falls below 1.18.

Thank you.

Ooi

Posted by pshiny > 2012-07-30 00:53 | Report Abuse

Thank you KC Loh and OTB for your grace in replying. I am grateful.

Posted by KC Loh > 2012-07-30 01:08 | Report Abuse

suddenly i feel royalty! :)

Posted by franksoweto > 2012-07-30 01:18 | Report Abuse

Royalty I dunno la but the best I can give you at the moment is you think,talk and act like the omaha guy and I like that!

Posted by KC Loh > 2012-07-30 01:22 | Report Abuse

marlon brando? hehe

http://en.wikipedia.org/wiki/List_of_people_from_Omaha,_Nebraska

Posted by franksoweto > 2012-07-30 01:30 | Report Abuse

Ha!Ha! you 're funny - you know who I'm talking about! Not that cowboy Marlon la ! incase you're not being funny it's WB and not warner brothers la!

Posted by KC Loh > 2012-07-30 01:39 | Report Abuse

Benny Hills - Never assume because...

http://www.youtube.com/watch?v=6hrLj8QEAgI&noredirect=1

Posted by Donpazac > 2012-07-30 12:33 | Report Abuse

Kc Loh. Good analysis. Keep it up :)

Posted by KC Loh > 2012-07-30 16:53 | Report Abuse

This is again for newbies. If you are dealing in such a manner as mentioned, you are a PUNTER!

with stocks, though, it's often more important to know what to avoid. Here are key mistakes to avoid:

• Overpriced goods: Be cautious about highflying stocks. They may be closer to the end of their run than the beginning, no matter how good the company is.

Source : http://www.marketwatch.com/getting-started/stocks

• Hunches and headlines: Leave impulse buying for the supermarket. Have patience about selling. Time gives individuals a rare edge because longer horizons make losses less likely.

• Pump-and-dump scams. Internet chat rooms, bulletin boards, unsolicited emails, newsletters -- even radio and TV ads -- can all be sources of stock touting. Don't take the bait.

• Love-struck stocks. You may love a stock, but it won't love you back. If losses start to mount, you have to know when to break it off and sell. Best defense: Stay disciplined and diversified.

• Climbing on bandwagons: You'll almost always be too late. Instead buy into companies with a history of superior earnings, barriers to entry in their field and a track record of wise investment.

Posted by passerby > 2012-07-30 20:25 | Report Abuse

Another quality post by KC Loh. I'm actually interested to know your greatest mistakes in the share market, mind to share some so that the rest can avoid the same mistakes ?

Posted by alexlulu > 2012-07-30 20:27 | Report Abuse

passerby, my biggest mistake in share market is not to know KCLoh 10 yrs earlier.

Posted by KC Loh > 2012-07-30 20:37 | Report Abuse

greatest mistakes? i did all the five above when i was young and stupid! and of course the value investor's main weakness: buy in late, sell too early!

FYI, the post is not by me. Its a copy and paste which i think is apt to the trendy market currently!

Posted by Ram Cheong > 2012-07-30 20:38 | Report Abuse

the biggest mistake is always repeating the same mistakes . ........... lol

Posted by KC Loh > 2012-07-30 20:41 | Report Abuse

hahaha Ram Cheong. i am guilty of that too! LOL

Posted by passerby > 2012-07-30 20:41 | Report Abuse

alexlulu = 03pm, hiding behind your new nick. :), everyone know it is you la. The way you put your post is still the same, go use ur existing nick.

Posted by alexlulu > 2012-07-30 20:43 | Report Abuse

hahaha. this place is fun. i m alex the lulu. why is the point of hiding wor.

Posted by alntm > 2012-07-30 20:46 | Report Abuse

ram ur comment summarises it all haha..nice one..

Posted by passerby > 2012-07-30 20:53 | Report Abuse

TQ for you for the replies both KC & Ram Cheong. Sometime newbie just will never understand the meaning until they hit the wall hard one day. I have hit my head hard before but knowing the meaning of is a bit too late that time. An expensive lesson to be learned for myself 2 years back.

Posted by KC Loh > 2012-07-30 20:58 | Report Abuse

i recall the cartoonist Lat drew a traffic signboard which in it states

"pakai tali pinggang"
"pakai helmet"....
and lastly "pakai otak"

guess, that was missing too in my younger days of investing! hehehe

Posted by kl foong > 2012-07-30 21:08 | Report Abuse

early losses = tuition fees

Posted by gray > 2012-07-30 21:26 | Report Abuse

kcloh ! wrong sequence ! After pakai helmet, how to pakai otak????

Posted by KC Loh > 2012-07-30 21:37 | Report Abuse

it was not a sequencing act, but rather a blunt reminder in no particular order for drivers. if i can find that pix, i will definitely post it here and you will understand. :)

Posted by gray > 2012-07-30 21:40 | Report Abuse

how can it not be a sequencing act when you said lastly..... you seriously need to spend some QUALITY time with your wifey ! C ya mate... in a minute??

Posted by KC Loh > 2012-07-30 21:47 | Report Abuse

oh great, a lawyer at this time! :)

Posted by franksoweto > 2012-07-30 23:12 | Report Abuse

Hehe! KC I see you're making full use of the new website:)I've been there for years but did not bother to search much and that was a very good article that you posted. You just so remind me of someone in Omaha!

Posted by KC Loh > 2012-07-30 23:18 | Report Abuse

Yeah, thanks to your lead. Good site, but generally American based

Posted by franksoweto > 2012-08-01 04:19 | Report Abuse

Hey KC! here's a good article about facebook and I think it actually implies to some companies in KLSE that keep issueing those ESOS - no wonder the shares goes no where:)

http://www.marketwatch.com/story/why-wall-streets-facebook-estimates-are-phony-2012-07-30?link=mw_home_kiosk

Posted by KC Loh > 2012-08-01 15:26 | Report Abuse

now you know why Warren avoids them like a plague!

anyway, ESOS has many benefits. Chiefly, it retains the loyalty of the staff and encourage productivity since they are stakeholders.

how do they come to their valuation is the one that irks me. but it has been standard practise to issue ESOS when market is trending upwards, because nothing beat the it like seeing your friends untung and you didn't! :)

Posted by KC Loh > 2012-08-05 13:45 | Report Abuse

recent additions to my stock portfolio. Maybe the rest wants to evaluate for yourself the position of these counters

CBIP - 18%
Digi - 12%
Gamuda - 3%
GenM - 10%
Harta - 5%
MFlour - 26%
Scomi - 5%
Scomien - 5%
Wellcal - 13%
Gtronic - 2%
Prtasco - <1%
LiiHen - <1%
Benalec - <1%

Posted by suhnaj > 2012-08-05 15:41 | Report Abuse

I love Digi...
Still waiting on Benalec. la la la

Why not look also at Pantech. recently it had a good news and im thinking of putting it into my portfolio (a fund manager advice me)

Posted by KC Loh > 2012-08-05 15:58 | Report Abuse

Why don't you get the fund manager to advise you on the fundamentals first, or did he?

I dunno your fund manager, but is he only interested in your business? That is the question that must be asked!

Posted by KC Loh > 2012-08-05 18:13 | Report Abuse

Sorry one more forgot (how could I? ?) Hehe

Mudajaya < 1%. Sold a lot of them at 2.76. Now need to pick it up again to make it about 5‰ of portfolio because of it potential. Well have til end of the yeah to play with dips to increase my returns for the year :)

Posted by Peter Lee > 2012-08-05 18:38 | Report Abuse

where got 2.76,r u ok?

Posted by KC Loh > 2012-08-05 19:39 | Report Abuse

Peter, i assumed you jumped in and took Friday's price as my selling point when you asked this question. the naughty stab of the state of my mental faculty only reinforces that!

it was 12th June when a major position on Mudajaya is sold. Please check with me in in future before jumping to conclusion next time!

Posted by franksoweto > 2012-08-06 00:26 | Report Abuse

Since the title of this topic already been specifically addressed to,there should be no doubt whom I'm referring this to, Mr market mover/shark - lol. when are you going to move the first S stock in your portfolio? O.k Jokes aside, always you got my greatest respect not only to your pickings of stocks and your fundamentals to go with it but also your advice to lots of readers here in this forum especially on KNM of which we all benefit considerably. You said it so much better than me and you convert the smart non believer and some 'lost' soul to see the clear fundamental working picture of a certain counter. I hope one day we can meet and meanwhile will continue to learn from your wisdom.

Posted by KC Loh > 2012-08-06 00:39 | Report Abuse

How many brownie points you want? :)

Smart non believer and some lost souls? Er.. who ar? Really blur since no ice cream from baskin Robbins. I am serious. Lost in your sometimes encrypted messages.

Scomi ... hmm.. the logic of last puff is that its trampled, unloved, basement price, and really out of analysts coverage. Downside potential is almost nil and in case that is that tiny hope of one last puff in them, sometimes the reward can be spectacular. The problem is, waiting time and also what the management gonna do with the earning (last puff) that comes with it.

To me there is not much to lose anymore, at lost I will probably lose another 1-2 more sens and brokerage fees, so I can live with that. Insulated by gain of almost all my other stocks already except MFLOUR and Benalec at the moment. Don't play play. This is last puff is not for the faintest of heart! Calculated craziness has its rewards, or so I hope.