Posted by reyes430 > 2012-12-28 12:32 | Report Abuse

Hi Kc,can you have a look on Kulim-wc? Is it a worth bet? Sorry i know i am posting in a wrong thread...

Posted by kcchongnz > 2012-12-28 12:51 | Report Abuse

Ooi, I don't know if you have mistaken my last statement that how much money "they" have been making. The "they" here are not the punters. They are the investment bankers. Another thing is the "perfect" word I used in the first sentence is wrong. It should be "theoretical". I suddenly recall this WCT Wb is actually trading at a big discount now, even though it still has 4 months to expire and there shouldn't be any dividend to be declared during this time which would adversely affect its value too. Another one is Fitters warrant not long ago which was at deep discount just before expiry. So theoretical can be different from reality too.
One more thing regarding this SKPRes warrant. People punt with only the upside expectation but not what if it happens the other way, the underlying share stays the same, go up only a little bit or even goes down. If within this 4,5 years the underlying share goes up by less than 12 sen to less than 47 sen per share which is the exercise price of the warrant, warrant holder lose everything, kosong left.

Posted by tonylim > 2012-12-28 13:08 | Report Abuse

Ooi, Kc,

Yep the gap for skpres-w is a bit too big.
If it has corrected 50%, change mindset, buy for trading?

Posted by kcchongnz > 2012-12-28 13:10 | Report Abuse

reyes430. Without looking at details and just off hand, I see the danger of punting the Kulim warrant now. Assuming Wc is appropriately priced before the announcement. When Kulim declared a big dividend of 91 sen per share, everybody will chase this share, say from 4.82 to 5.50, or 68 sen at ex-date. And Wc also goes up in tandem, say from 1.01 to 1.20 ex-date. What happen to Kulim share ex-dated? It will drop back to an adjusted price, won't it? Just say it drops to 5.00 instead of the original 4.82, what will happen to Wc price? Won't it drop in tandem with Kulim share price as the value of warrant depends on the price of the underlying share? Let say now it drops to 1.04. So what happen to those people who buy Wc at 1.20? Kulim shareholders will gain but not the warrant holders for the dividend. Do you get what I say about high dividend is bad for warrant holders?

Posted by kcchongnz > 2012-12-28 13:26 | Report Abuse

One thing would there any adjustment of the warrant exercise price due to this "special dividend"? I have the notion that it won't. If there is then my last comment is not valid. Can somebody clarify?

Posted by Ooi Teik Bee > 2012-12-28 13:41 | Report Abuse

Dear Kcchongnz,

Thank you for your concern. I am a remisier and I am also a kiasu investor, I know how to handle it.

KLSE is bearish, hence most warrants are traded at a huge discount. When KLSE is bullish, the gap of discount will be narrowed accordingly.

I will buy warrant when KLSE is bullish. Presently, I am out of KLSE and I will concentrate on HKSE until KLSE is bullish again.

Thank you.

Ooi

Posted by tonylim > 2012-12-28 13:43 | Report Abuse

kcchong, off hand, there would not be any adjustments in most of the deed poll as was the good ole days.

Posted by Ooi Teik Bee > 2012-12-28 13:46 | Report Abuse

If I am not mistaken, exercise price of warrant will be adjusted if it is a special dividend and the amount is a big amount like Kulim.

Thank you.

Ooi

Posted by tonylim > 2012-12-28 13:52 | Report Abuse

Ooi, my bad, yes exercise price with the adjusted or conversion ratios will be adjusted for loan instruments

Posted by reyes430 > 2012-12-28 13:54 | Report Abuse

Yea i have been thinking on whether theres adjustment on warrant exercise price, however,something cross into my mind after i enter my position. Its not logical to purchase the warrants for speculate purpose now is what i think.
1. Special Div of 91 cents certainly surge Kulim price and cause the warrant to be in negative premium, however, its a bad bet to buy WC as it hardly bring return in short term,the ex-date for special div is on 11/1/2013(which i didnt check before i enter), one do not have enough time to exercise the warrant, so people wouldn't take this chances to do the riskless arbitrage.
2. Even if the exercise price for the warrants will be adjusted,but the payout of special div will cause the share price to drop 91cents. Can the adjusted strike price be more than 91 cents and WC in the money after that?



At first, i was thinking to take a ride on the price escalate of Kulim through WC, but after i think hard i personally think its not a good chance to speculate on its warrant. I think i have made a wrong decision... Any ideas?

Sorry i know it is a bit messy. @@

Posted by kcchongnz > 2012-12-28 16:45 | Report Abuse

If the exercise price of Wc is fairly adjusted after ex-date for special dividend, then at the present price of Kulim and Wc at 5.00 and 1.02, and the present exercise price of 3.85, Wc appears to be a good bet.

Posted by kcchongnz > 2012-12-29 12:25 | Report Abuse

Posted by Ooi Teik Bee > Dec 28, 2012 12:30 PM | Report Abuse
“I take 0.75 from your posting. I believe 0.75 is achievable within 4.5 years. I am very convinced that SKPRES can perform, hence it is better to buy warrant assuming the risk is very small in this case.”

Ooi, after thinking over your statements above, I think what you said makes a lot of sense.
The Black-Schole option pricing only look at the following factors to price a financial option:
1) The present share price of the underlying share
2) The time to expiry
3) Exercise price
4) Volatility of underlying share price
5) Dividend yield, risk free rate
Notice that the movement of underlying share price is dictated by the volatility of its share price. It does not consider the fundamentals and growth prospect of a company. Hence the upward movement of SKPRes is capped by its historical volatility. Using this Nobel prize winner option pricing model, the warrant at a premium of 48% now, is way over-priced as discussed.
You went a step forward by considering the fundamentals and growth of the company. You trusted my analysis on the intrinsic value of SKPRes which I mentioned that it is at least worth 75 sen (Hope I am right). Hence buying the warrant provide you with much higher return than the underlying share as explained by you in your two scenarios. This is because of the gearing of 4 times. Your strategy of buying the warrant rather than the underlying share may be a better one, abeit with higher risk. Your points enlighten me beyond the option pricing.
Do I believe in my analysis of the intrinsic value of SKPRes of at least 75 sen? Of course. By the way intrinsic value is a present value, not a future value. So with another 4.5 years to expiry of the warrant, the more I agree with Ooi that this target price is not difficult to achieve, even in the near future. Those who are sceptical about this, I hope you could look at my assumptions and analysis shown in this thread and provide me with a constructive criticism. I would really appreciate that.
Before we become too overconfident, I like to quote the following:
“Financial model s are exceedingly useful, if not essential as a guide. But they are not infallible, no matter how well crafted they were. Models are only as good as the data that is fed into them and the assumptions that underpinned their mathematics.”

Posted by Ooi Teik Bee > 2012-12-29 12:55 | Report Abuse

Dear Kcchongnz,

Please note that I am also a trainer conducts US Stock Option course for SharesXPert system. I teach my students to trade US Stock Option.

Nowadays, I change my way to teach students to buy Stock Option out-of-money instead of in-the-money. The main reason is very simple, we apply the least money to win big. If the stock can go up, we do not care about premium paid because we do not want to convert the option to mother share. We buy at premium, we also sell at premium, no change in our position. Of course the expiration date should be long enough for us to hit our target price.

In this case of SKPRES-WA, the maximum we can lose is 0.07 if our decision is wrong and this mother share cannot perform. IF FA is good and TA is also good, I am willing to bet because the probability to win is very high.

Please note below quotations :-

"The most successful executive is not necessary the one who is most original but the one who knows how to add on to the original knowledge by using the successful ideas of others."

"You don't have to be right all the time in the market; in fact you could make a fortune only being right 50% of the time as long as you have the sense to always cut short your losses."

Thank you.

Ooi

Posted by New Insight Sabah > 2012-12-29 13:23 | Report Abuse

Thanks Ooi. I'm certainly not right most of the time. But I've not been able to make any money even when I'm right some of the time. The fact is I've been losing money every time I've "the sense of cutting short my losses." Whatever that means. I just don't know how long I can go on losing money this way.

Posted by kcchongnz > 2012-12-29 13:37 | Report Abuse

Ooi, sorry that "I have eyes but didn't see the big mountain Tai San". I am just a student of option pricing, unlike you a trainer or master of option pricing. I guess I got a lot to learn from you then. I hope you could provide constructive criticism on my analysis and comments on options which I do often. You know what, I am disappointed that no one has told me I was wrong in my evaluation of options yet, nobody. This to me is very dangerous to my investing and punting outcome because I could be wrong in many occasions.
Yes, I agree with you that if FA and TA is good, betting on company warrants can provide much better return, or with much lower risk because of lower investment outlay. Most people think that buying warrants is highly speculative, punting but few believe it could be a risk management measure. Just curious, call warrants are also an option, abeit with a shorter expiry date and cash settlement. Many of them are highly undervalued (using OPM) with high gearing. Why are you so objectionable to call warrants?

Posted by kcchongnz > 2012-12-29 13:44 | Report Abuse

Oh yeah Ooi, just read New Insight Sabah's post, and refer back to your latest post, if one invest using both FA and TA and does cut loss, isn't this cut loss action totally opposite to the principle of value investing? I mean in value investing, you look at the fundamentals and buy at reasonable price. Just because of some macroeconomic, political factors and some other noises and the share price drops after you invest, and you cut loss, when fundamental haven't changed a bit?

Posted by petepereira > 2012-12-29 13:45 | Report Abuse

Dear kcchongnz, teik bee, NIS, tony lim, reyes, et al,
I am a complete newbie to investing and have been following this forum (which I found completely by chance, btw) for the past few weeks.
My interest is mainly in mid to long-term investments and I did not realize that there's so much to learn!
I am bowled over by the generosity of spirit that you guys show in your sharing. Sure, I think you have a great deal of interest and passion in investing, but it takes a fundamentally generous spirit to share with the effort and depth that someone like kcchongnz does.
This may not have occurred to you guys before, but it is your generosity of spirit that makes you guys a success. I do not have quantitative data to support this assertion but I do have years of experience in seeing how this comes to fruition in people around me.

I'm afraid that I cannot reciprocate with analysis and contribution of a similar kind to you guys. However, I do have a fair degree of competence in understanding and interpreting human behaviour, individually and in groups. I'll be very pleased to extend any insights and sharing with the same degree of generosity that you guys continue to show. You can reach me at petepereira19@gmail.com.
May you be blessed abundantly this 2013.

Best Regards
Pete

Posted by Ooi Teik Bee > 2012-12-29 14:13 |

Post removed.Why?

Posted by New Insight Sabah > 2012-12-29 14:14 | Report Abuse

Good point KC. It seems that this discussion is going off at a tangent. I thought we're here to discuss the fundamentals of stocks. But now we're saddled with language such as "betting","bet", "win", "punting", etc. All these are a bit disconcerting to me. I find that I always lose money when buying stocks based on their TA.

Posted by reyes430 > 2012-12-29 14:49 | Report Abuse

Hi Mr.Ooi, sorry i do not understand this

"KLSE was a bear market for last 9 months"

As we know the index is reaching all time high, how do you justified it as a bear market. Thanks for clarification.

Posted by reyes430 > 2012-12-29 14:56 | Report Abuse

Hi Peter, I am a newbie too with less experience in stock market, i am too learning from those experiences and most of all the helpful seniors like KC,Ooi,Tony and many more as u can see. If you really wish to learn, a book namely "the five rules for successful stock investing" by Pat Dorsey is a good reading book for starter,which i have been reading over and over again. Hopefully it can help you as for what i have been reaping from others knowledges, i wish to contribute some too. Cheers

Posted by Ooi Teik Bee > 2012-12-29 15:09 |

Post removed.Why?

Posted by Ooi Teik Bee > 2012-12-29 15:17 | Report Abuse

Dear Reyes430,

FBMKLCI is not accurate, it measured the performance of 30 stocks. There are about 1,000 stocks listed in KLSE, there are more down than up in the last 9 months. Hence I said it is a bear market for the last 9 months. In a bull market, there are more up than down.

Thank you.

Ooi

Posted by suhnaj > 2012-12-29 15:24 | Report Abuse

I love this forum. Kudos to all the ppl who contribute. As a newbie and with limited financial resources, I find this forum to be encouraging and educating. My target is to achieve a sustainable investment portfolio for long term investment
As of now, I'm very keen to learn further / invest in
Marco, DKSH, NTPM and SKPRes

Should I hv 50k of Capital, and I want to start invest on Monday. I'll allocate this way
Counter Invest amt
Marco 5,000
DKSH 2,500
NTPM 5,000
SKPRes-Wa 5,000
SKPRes 2,500
Others 20,000 (AirAsia / DRBHicom / Digi / MFlour)
Cash 10,000

I feel tht it is a good starting point but I do need to learn more on how to react on market bull/bear.
Well, Discussion on SKPRes is really fruitfull. Salute to KC, Ooi n Shrekk, etc...

I plan to invest for 20 years. Pls comment on my portfolio. I'm humble to learn from everybody.
Investment Experience : KNM (huhuhu)

P/S: As for Warrant discussion, sometimes it is good to put certain exception especially on SKPRes case since there's merit in comparing it with mother share. Just make sure it still confine to mother share at below 50 sen.

I do apologize upfront if my posting is running out of topic.
Thnx

Posted by reyes430 > 2012-12-29 15:35 | Report Abuse

Dear Mr.Ooi, Thanks for your explanation! To be true, i am a practical of "Think like a fundamentalist and trade like a technician" I am totally agree with you on trade by following the trend and TA can help on securing your profit/cut losses. Sometimes, when it reaches to my cut loss point, i cut it so i wont be having a big paper loss as the price keeps falling down even if the fundamental remains intact. However, in some cases, the price just fall below my cut loss point/support line, but it then hovering around there.It could be closed higher than the support or even lower in the end of day? What to do in this scenario. Sorry if i seem to be too demanding. Thanks!

Posted by Ooi Teik Bee > 2012-12-29 15:50 | Report Abuse

Dear Reyes430,

Please use the closing price as your reference. Do not use intra-day price to make your decision.

I suggest you use GMMA indicator to help you to differentiate up trending or down trending stock. If it is a down trending stock, please cut loss.

Hope it helps.

Thank you.

Ooi

Posted by reyes430 > 2012-12-29 15:54 | Report Abuse

Dear Mr Ooi

Noted with thanks! Appreciated with your help! Wish you all the best in trading as well! Happy weekend =)

Posted by kcchongnz > 2012-12-29 16:13 | Report Abuse

Grad to hear that there are already people making good use of this topic of discussions. I am one of them and suhnaj seems to be one. Anybody else? My comments on suhnaj portfolio is "I believe non of the stock in your portfolio will bring you to Holland (go to Holland means kaput in crude Cantonese)". As to whether you will make extra-ordinary return over the index, I believe it will. The fundamentals of those stocks have been analyzed and put forward and discussed earlier on. But again in investment, nothing is certain. The KLSE hs been making a compound annual return of about 10-12% over the long-term.

Posted by kcchongnz > 2012-12-29 16:16 | Report Abuse

"Making good use of this topic of discussion" I meant invested in stocks discussed in the forum. Anyone else has done that?

Posted by tptan45 > 2012-12-29 16:30 | Report Abuse

A compounded annual return of 10-12% will include those Holland stocks as well. There are numerous Holland stocks.
To keep it simple, just avoid the Holland stocks and we should do much better. A very simple and effective rule.

Posted by suhnaj > 2012-12-29 16:47 | Report Abuse

KC, Hope u can maintain this forum and filter out abusive forumner. I hate "lost focus" forum...I hv stop following KNM forum because of tht. Although I appreciate the comment by both kc n ooi in thr.
I'm no FA or TA. Just a regular Investor. Invest some in shares n unit trust. Just looking for avg return of 10% for next 20 years.

Posted by tonylim > 2012-12-29 17:51 | Report Abuse

New insight, it is my opinion that at this stage of bursa you also need to be greedy to follow the market momentum. Hence it is in order.
If those words are taboo, pls ignore.

Be greedy when others are fearful

Posted by suhnaj > 2012-12-29 17:53 | Report Abuse

On KNM note, there is plenty of reason not to invest in the counter but for existing investor like me, I would like to make an exit or avg down strategy on this counter. My current position of KNM

Quantity Cost Market Value Loss (%)
20,000 12,043.51 9,200 2,843.51 23%

Still hoping on Borsig listing, Peterborough, dividend, bla, bla, bla. So, Im giving another year to this counter. I don't mind adding another 20 lot if losses goes to 40%.

KC / Ooi, from yr analysis of this counter wht is yr advice to me?
Shld I give it another year or cut loss n look for new counter?

Posted by kcchongnz > 2012-12-29 18:35 | Report Abuse

suhnaj,
sorry to say that you are in the wrong thread now. Check the topic at the top.

Posted by suhnaj > 2012-12-29 19:19 | Report Abuse

Opps, just trying my luck.

Posted by littleshark > 2012-12-29 23:07 | Report Abuse

Oh gosh so many comments here. No one will really knw what will happen nxt in knm. Will it continue to trade downwards/rebound bk to its high price. FA is really gd in evaluating a company position whether is in a healthy position. TA is useful in timing the entry&exit of your position. I myself did suffer lost due to fear of cutting my losses. I learn my mistake now & hv sold out all rubbish stock.
Anyway i admit that im quite a risk taker as I put a significant amt on a few selected stock normally 1/2 low price company which enable me to buy in big quantity& hv highest growing potential. While the rest of the stocks in ard 8 company i just allocate a small portion on them. Thk that my significant stock did jump up&hv surpass all my earlier losses so i can close my yr 2012 trade with 30% net gain.
Right now adopting a defensive strategy : not buying into any stocks at the moment, holding on my potential stock&will sell off oth so so stock once it hit my target price/cut loss if it hits 20%. I also shift some of my portfolio into foreign markets recently as election is coming soon.
Guess i comment a lot here. Sorry im also a new market player with 1yr+ experience&still hv a lot to learn frm all sifus here. Wish all of us a blessing new year ahead.&happy hunting everyone!

Posted by AL833D > 2012-12-30 00:13 | Report Abuse

Posted by kcchongnz > Dec 24, 2012 08:16 PM | Report Abuse

al833D, you like NTPM? Me too.
Great consumer stock too. Revenue has been growing nicely for the past years. Its profit dropped the last two years though due to rise in cost of material, paper and pulp, and other operating costs. Its recent quarterly results improved immensely. Trailing twelve month earnings per share of about 4 sen and PE about 10. Undemanding market valuation. Seems like potential of further operating improvement. A re-rating soon?
http://www.intellecpoint.com/search?q=ntpm
You also like Keladi, Skpres, InaRi and Cheetah pwroot. Could you tell us why you like them, preferable with some numbers? I also hope others input their opinions and analysis too. You know it is only that much I alone can do. Thanks first.

KCCHONGNZ, sry about this late respond. i am a selfish person that share not much opinion in this forum(i learn from here actually). i read more but contribute less. TQ and SRY.

Posted by AL833D > 2012-12-30 02:06 | Report Abuse

HOW to buy RM1.00 stock with just pay 50 sen or lower (Margin of Safety) :
Search a good company (good bisnes or have good product, eg:Digi, Nestle, PBBank, GenM, AeoN...a lot!). AVOID goreng counter!
List out few company that earn money but show price at near 2 years lower. Eg : Ytlpowr @1.59, Star @ 2.58, NtpM@ 0.43... maybe Bjcorp @ 0.565?
( how about MegB@0.585 or Mas@0.72? no i think it lose money in few quarter already? unless we really known it in personally)
let say we buy 10000 share of NtPM @0.43 with RM4300. we Keep it for medium to long term.
wait for one day NtpM price up to 50 sen (16% upside is possible for mid term?)
when it was 50 sen, sell out 8000 share and keep 2000 share FOReVeR!
What was the price we pay for our 2000 share NTPM after that? RM330 or 0.165 per share!
We buy NTPM at average 0.165 and get almost 18% in dividen yearly and still have RM4000 cash in acc for another 'INVESTMENT'!

You only have to do a very few things right in your life so long as you don't do too many things wrong--- Warren Buffet
Just for Sharing. TQ

Posted by skyland > 2012-12-30 08:51 | Report Abuse

AL833D...you are telling us all the mum in the world are female...good example but pls share something that we dont know ok?

Posted by Fat Cat Tim Buddy > 2012-12-30 09:24 | Report Abuse

ytl corp is a b!tch.

why do they have to make ytl power pay the same dividend as the ytl corp?

it doesnt make any sense to me, anyone please enlighten?

Posted by Fat Cat Tim Buddy > 2012-12-30 09:34 | Report Abuse

if those big croc kakis really want to privatize their company, at least show some common sense and pay the premium just like what kfc, yhs did.

SEGi is a good example of insulation to the minorities shareholders, i have no idea why would those ppl would agree on the ytlcement in the past. anyone pls enlighten :D

Posted by shirley1 > 2012-12-30 11:25 | Report Abuse

Ytlpwb is one of them that below 50cents now, it may worth to punt with some element of gambling.

Guess no need to talk bout the fundamental or fundamental change or arithmetic or the share price la, guess for those follow know well how the group perform. Maybe now just playing the game, sometime we tot we're playing the game, but huh we're not sure if the game played us. so buy at ur own risk huh.

If notice huh, the ytlpwb start dropping from oct till lately, guess one of the reason is due to the supply of ytlpwb that ytl holders got, coincidentally the mother dropped together one, I tot it should be vice versa one.

guess the theme is “privatization”. Some IB already started give some TP like 1.80 and etc. assume it is around 1.65 to 1.70, probably we start make money liao if buy around 0.40 haha. but if less than that then die die .. by then need to make painful decision liao.

Like some of you said, we buy counters we comfortable with, at least I still have some fate in the management base on their past history.

By the way, look like the TA getting better (im not sure one huh), if it is true huh, stock watch should notice this if not they are not stock watch group liao.. haha

Posted by kcchongnz > 2012-12-30 12:22 | Report Abuse

Is Scicom (ACE) a good investment?
Thanks Shrekk for mentioning about this stock. This stock is trading at a PE of just below 10, reasonable for a growth company. I see the attractiveness of ACE counters are their growth potential. So when I look at small companies, I try to see what would their expected growth for the next few years. My main criteria for the growth strategy would be company having at least 15% expected growth. However, when I look at their revenue of the last five years, it didn't impress me. Revenue is basically flat between 120-140m for the last 5 years. Earnings wise the growth is much better at >20% CAGR. However, this has flatten for the past 12 months, and there is no sign of further improvement the last quarter. If I were to value this stock using ROE, it would be about 45 sen (21%*22sen). Not much margin of safety for investing in this share currently trading at about 40 sen.
Well I have to admit that I am just looking at the past. There may be something brewing in the future. Of course we are investing for the future. I hope Shrekk could enlighten us.

Posted by kcchongnz > 2012-12-30 14:20 | Report Abuse

Is YTLP at 43.5 sen now good to punt? Shirley1 suggested so. her reason is because of the likelihood of privatization of YTLP. I just reiterate that the value of YTLP Wb consists of two parts; its intrinsic value and the time value. Intrisic value is straightforward which is equal to Share price of YTLP less the exercise price of WB which is equal to 1.59-1.21 or 38 sen. Warrants having along time to expiry like YTLP Wb (5.5 years) has a big part of its value in time. What happen if YTLP is privatized? Wb will lose all its time value, leaving behind only the intrinsic value. The following table may serve as a guide whether it is worthwhile to punt on Wb based on this privatization theme.
YTLP 1.50 1.60 1.70 1.80 1.90 2.00
Intrinsic value 0.29 0.39 0.49 0.59 0.69 0.79
Gain -0.145 -0.045 0.055 0.155 0.255 0.355
Gain% -33% -10% 13% 36% 59% 82%

You can see that if YTLP is privatized at 1.80, the intrinsic value of Wb is 59 sen. One who punt on Wb now at 43.5 sen now would make a profit of 15.5 sen, or 36%. If the privatization price is 1.60, the IV of Wb is only 39 sen. He will lose 4.5 sen, or 10%.
so if there is a privatization, what would you think the price would be? This would show how much you would make as shown in the table.

Posted by petepereira > 2012-12-30 14:27 | Report Abuse

reyes, thanks for the book recommendation. I'll get it tomorrow.

Posted by shirley1 > 2012-12-30 15:59 | Report Abuse

Kcchongz thank you, I worked out something similar to urs.. my worst scenario is 20% to 25% lost.

frankly, I hold position in this counter, I may sell if the price is rite and won't wait for the privatization if there is any. good luck guys.

Posted by reyes430 > 2012-12-30 17:18 | Report Abuse

WHY SKP resource?

Well, as we all know efficiency is what its all about in the industrial sector! Innovation in term of product in industrial might not be that crucial. Example: 1)If one company manages to produce a longer durability and better quality product, the replacement cycle for customer become longer, which deteriorate the company sales! 2) Since as one company comes out with a better innovated products, it easily get copied!(However in SKP case, skpres is the solely listed counter which involved in supplying high end plastic components products for electrical manufacturers according to Shrekk)

So, what is the most concern part in term of efficiency?!
1)Cost efficiency
Most industrial firm have high operating leverage, they incurred to fixed cost regardless of volume and sales level. As sales increased, economic of scale kicks in and average cost will be drag down, profit margin increase. But please take note that operating leverage cuts both way! So let take a glance of SKP cost efficiency.
2008 2009 2010 2011 2012
10.78% 14.25% 11.14% 9.07% 6.35% (operating expenses/sales in %)
12.02% 3.04% 9.27% 12.42% 11.97% (operating margin)

2)Efficiency in asset utilization.
2008 2009 2010 2011 2012
1.115753482 1.096517706 1.103814443 1.217586583 1.574890378 (Sales/Total Assets)
Meaning to say that, in year 2012, for every 1 dollar invested in assets, the company able to make 1 dollar in sales!
As industrial firm is more focus on tangible asset, which refer to property,plant and equipments,so now lets see about the sales/net fixed assets.
2008 2009 2010 2011 2012
2.324652886 2.358843859 2.84291939 3.445078957 6.091720755

3)Efficiency in working capital
2008 2009 2010 2011 2012
71 70 86 67 86 (trade receivable cycle,days)
37 30 28 32 24 (inventory cycle,days)

Yes, trade receivable cycle is increasing, but kcchong has a good explanation on it.

"Posted by kcchongnz > Dec 28, 2012 07:07 AM | Report Abuse

Yeah, sudden surge in receivables can be a great concern. One should pay attention to this. But one shouldn't just look at this figure alone and get panic. First of all, turnover also increased in tandem by 61% last year. The outstanding sales to be collected is still manageable at less than 3 months, about the same historically. Notice that the cash conversion cycle is just 30 days, although higher than last year but much lower than the historical periods. Good sign. Earnings is well supported by cash flows with CFFO/NI of 80%"

Lastly, its about dividend payment, SKP has 50% payout ratio which amounted to 7% of net dividend yield with current price! High div is important to compensate the investors as industry companies are cyclical. All of other good components of SKP have been stated by Shrek,Kcchong and etc, please look back on previous comments to know more!

Hopefully there are more people sharing their views on SKP resource so we can get better information before we make our call. Thanks!

P/S: Please be note that some of the information provided here are extracted from a book "the five rules for successful stock investing"

Posted by kcchongnz > 2012-12-30 17:38 | Report Abuse

Yeah, I would also recommend investors, not only newbies to read and master Pat Dorsey's book on "the five rules for successful stock investing" as recommended by reyes430. That was the very first FA investment book I bought about 10 years ago. It is very good, one of the best.

Posted by New Insight Sabah > 2012-12-30 19:07 | Report Abuse

"By themselves, share-price movements convey no useful information, especially because prices can move in all sorts of directions in the short term for completely unfathomable reasons. The long-run performance of stocks is largely based on the expected future cash flows of companies attached to them - it has very little to do with what the stock did over the past week or month.... Most of us should be better investors if we could just block out all those graphs of past stock performance because they convey no useful information about the future." -- extracts from "The Five Rules for Successful Stocks Investing" by Pat Dorsey.

Posted by AL833D > 2012-12-30 19:11 | Report Abuse

skyland, yes i agree with u that i should share something that in this topic. that theory ppl can read from book like "the five rules for successful stock investing". thanks for correct me.