Posted by kcchongnz > 2012-12-25 19:22 | Report Abuse

Shrekk, I have already given my opinion about YTL Power warrants, that high dividend and low volatility of the underlying share is not good for warrants. The value of warrants is made up of two parts; its intrinsic value and the time value. As YTL Power Wb still has a long time to expire, it time value is considerable. Privatization is bad for warrants, because it straightaway kills the time value.

Posted by kcchongnz > 2012-12-25 19:40 | Report Abuse

Mat,
With an exercise price of 1.70, conversion ratio of 2, YTLP CH at 2.5 sen is out-of-the-money with a premium of 16% when the underlying share is traded at 1.51. The premium is large considering 8 months to expiry of a low volatility underlying share, coupled with large dividend yield which is a disadvantage to the call warrant holder. To me this is a very low probability of winning bet.

Posted by ERICA > 2012-12-25 20:15 | Report Abuse

Nextnat..quarter report just release.....stable profit & cash flow...

Posted by tonylim > 2012-12-25 21:55 | Report Abuse

aunloke, point taken.
I am actually looking at Marco mother shares as a seasonal counter.
The fat lady sings once or twice a year.
How the warrants move when the song is sung, remains to be seen but we have until 2014 to see if the M.O. in fitters is repeated here.

Mind you, dividend payments has been consistent.

Thanks for the reminder and words of caution. kcchongnz likes to take gambles la. Lately Ooi Teik Bee seems to tell me if takes big gamble.

Posted by aunloke > Dec 25, 2012 06:23 PM | Report Abuse

Tony, Kcchongnz, Marco outstanding warrants is huge, about 352M shares, be careful it may suffer the same fate as Fitter as it is in-money.

Posted by rlch > 2012-12-25 22:09 | Report Abuse

Marco-already announced fully diluted EPS as 0.35 sen in Q3. Will likely announced better result in Q4 as 4th quarter is their seasonally best quarter of the year. Overall for the year PE should be less than 10.(Marco-selling calculator and timepiece Casio brand locally).

Posted by Ooi Teik Bee > 2012-12-25 23:36 |

Post removed.Why?

Posted by kcchongnz > 2012-12-26 05:41 | Report Abuse

littleshark, good recommendation on Inari. The numbers look good on the surface. Yeah this small companies can grow exponentially when things work well. However, I have a little problem with many Ace counters. Many had initial done well and had shown promising growth potential but their turnover was so small and client base so limited that things can change so fast and so easily that all those good numbers disappear just like that when the projects were not there any more, or when growth slow down and they try acquisition to fuel growth but things did not work well. Digister, EAH etc came to my mind.
Another thing is Inari under Insas? Insas was one of my favorite counters as that time I was trying to follow Benjamin Graham on that net-net thingy. But pooh, another disappointing company. No shareholder value creation. No sharing of wealth to minority shareholders etc. Is Insas, or Inari's management credible? Could someone shed some light?

Posted by sotsot1986 > 2012-12-26 07:21 | Report Abuse

Hi KC, how about CBSA? Is it good?

Posted by New Insight Sabah > 2012-12-26 08:37 | Report Abuse

Anyone care to comment on voir and prlexus?

Posted by kcchongnz > 2012-12-26 12:16 | Report Abuse

sotsot1986,
I looked at CBSA long ago and I liked it and have made some money from it. Good growth company in the forefront of technology. Good operating numbers and hence awarded the Forbes top 100 (?)small cap companies fame for a number of years. I was a bit wary about its price-to-sale ratio then. Why not you share with us why you think it is good?

Posted by Shrekk > 2012-12-26 13:37 | Report Abuse

Dear tktan45, I have no idea on sustainability and prospect of client base for Skpres except it is one of four major suppliers for Dyson while its subsidiaries are also suppliers for other electronic appliances giants such as Pioneer and Sharp which this is evident of its reputation among the reputable plastic manufacturers.

What really impressive about Skpres which classifies it as an investment grade stock are its increased net profits years after years, high yield and balance sheet.

As for two quarters of financial year 2013, skpres already achieved net profit of ard 24m which is 2/3 of its net profit of 36m for 2012. If the earnings are sustainable for the next two quarters, net profit of >42m is achievable for 2013 which translates to eps growth rate of ard 20%. The higher the net profit the higher dividends will be rewarded handsomely in accordance to 50% div policy. It is also rare to see a secondliner stock such as Skpres to have more than 60m balance in bank. Hence, no wonder it was the only penny stock that was rated 7 star in Dynaquest due to its consistent and solid qualitative and quantitative valuations.

I foresee that current share price of ard 0.35 cts as an opportunity for those with zero holdings to acquire it with acceptable margin of safety after the stock hits its 52weeks high at 0.395 in Nov. But, patience is always the virtue. Investors must be ready to avrg down in case its share price continuously on downside mode in future. This is truly a boring stock and suit those with holding powers and will definitely not suit those punters with quick rich mentality.

Posted by rlch > 2012-12-26 13:54 | Report Abuse

Shrekk, rating in Dynaquest SPG cannot be taken simply without further analysis. Example is PPB rated 8.5 in SPG but down badly this year. What kind of personal interest you mention for Mr Gan recent disposal. Isn't he as major shareholder entitled to most dividend amount the company declare and also huge salary he received from the company? For your information SKP has risen 100% for this year alone.

Posted by reyes430 > 2012-12-26 15:05 | Report Abuse

Hi shrekk, can u provide me with other competitors of skpress so i could do a comparison. much appreciated.

Posted by kcchongnz > 2012-12-26 15:39 | Report Abuse

Posted by aunloke > Dec 25, 2012 06:23 PM | Report Abuse
Tony, Kcchongnz, Marco outstanding warrants is huge, about 352M shares, be careful it may suffer the same fate as Fitter as it is in-money.

Aunloke, Marco warrant is still a long way to expiry in 2017 (tonylim, 2104 or 2017? You give me two different years) and I don’t think it is a worry that it would be like Fitters a month or two ago. Fitters problem I think was because insiders held a lot of warrants and they are traded at quite big discount to the underlying shares. So insiders sold the underlying shares in huge amount to get cash, may be buy more of warrants at discount and convert to the underlying shares.
I agree with tonylim, the real “loa chieo” that Marco is a good investment as posted by me earlier. Rich, the wealthy man also likes Marco very much. I have actually ignored its value in “land held for property develop” which is considerable at 44 m, or 6 sen per share. I may buy some soon. As for the warrants, I think it is appropriately priced now at 4.5 sen when the underlying share price is 14.5 sen (see my earlier posting). The high dividend yield of Marco has been taken into account. The interested part of this warrant is its gearing of 3.2 times, or an effective leverage of about 2 times now which will exaggerate the return if the fat lady sings for Marco. So I think the warrant may be more interesting. Ah, again my punting instinct at work. The warrants are deep-in-the-money now and with 352 m outstanding, the value is considerable at about 15m. But that won’t dilute much of the value of the underlying shares, less than 10% in my estimate.

Posted by aunloke > 2012-12-26 20:27 | Report Abuse

Kcchongnz, the expiry date of the warrant is 2014-05-26, of course is still a long way to go. As for the fat lady sings once or twice a year, it may be due to one prominent trader . There is one interesting write-up you may like to read in intellecpoint.com/search/lable/Marco, .

Posted by Shrekk > 2012-12-26 20:36 | Report Abuse

Dear rlch, Dato Gan's personal direct stake in skpres of 11.8% remain unchanged since last Aug. The disposal was thru his holdings in Renown Million Sdn Bhd from 32.87% in Aug to 28.74% as at 20 Dec. Hence, major shareholders' stake is still substantial at 68%. There were no disposals from two other major shareholders Beyond Imagination and Gracefull Assesment which obviously also Dato' Gan's vehicles. I foresee this as a mere profit taking by the owner.

As for rating from Dynaquest, I treat it as a guideline as it is really beneficial. If not I search it thru its rating from SPG in 2009 when its price was 10 cts and its rating was 6.5 (really high for a 10cts stock) for sure I wouldn't be able to discover it. As at now, I'm still searching for potential tenbagger thru this method by scanning and identifying penny stock less than 50 cts which have rating in Dynaquest 6 star and above.

reyes 430, there's other exciting counters in plastic industry such as daibochi, slp and tomypak but they are primarily in different segment i.e plastic packaging. In bursa, I see skpres as solely listed counter which involved in supplying high end plastic components products for electrical manufacturers.

My insights on skpres may seem bias as I am holding substantial percentage of this stock in my portfolio and I potentially have my own personal interest. Hence, inputs from other forumers are valuable for check and balance.

Posted by rlch > 2012-12-26 21:28 | Report Abuse

Kcchong, nice to meet you. Are you from New Zealand? I am not a wealthy man as you mention although I aspire to become one. How is your life there? Can make a lot of money working there? I also want to go oversea to work but don't know how and where to go.

Aunloke, as to your concern about Robert Tan counters I only like Keladi and Marco which give dividend every year. But Keladi now not cheap(although regret did not keep longer)anymore so only Marco left.

Shrekk, thank for your information about how you select SKPRes(I also bought this counter before but sold too fast). Any counters you have in idea now using SPG Dynaquest which is 6 star and above and potential 10 beggars like SKP and still below 50 cents and most importantly not yet move. Please share here.

Posted by fankim > 2012-12-27 00:02 | Report Abuse

dear kcchongnz,

just want check if i am calculating correct.

bought 10,000 CHEETAH shares at RM 0.70 with RM 7,000 on 2008
today CHEETAH at rm 0.50, so 10,000 CHEETAH shares worth RM 5,000.

Over the five years, this stock gain the dividend as sen 2.6, 3.4, 3.0, 3.0, and 2.8.

rm 260 + rm 340 + rm 300 + rm 300 + rm 280 = rm 1480

on hand 10,000 shares worth rm 5000 + total dividend rm 1480 = rm 6480.

Over the five years, still losing rm 7,000 - rm 6480 = -RM 520.

Should we buy more at a cheap price or continue to hold?

Posted by kcchongnz > 2012-12-27 06:49 | Report Abuse

Aunloke, thanks for the clarification of the expiry date of the warrants and the link on the fat lady, very good one. I am a follower of the link and I would say it is one of the best on Bursa stocks. Traders thinking of trading and punting Marco really have to be careful of this fat lady. Never chase the price of Marco or its warrants if they are fried sky high. It could be a warning for those people who follow the chart looking for “breakthrough”, as clearly insiders can paint the chart and lie to you. However, I was looking purely at the fundamentals of Marco and they do look good. I guess there are capable people in the company running the company. So I think at the present price of Marco and its warrants at 14.5 sen and 4.5 sen, they present value as a long-term investment, don’t they? They even give good dividends every year, not like some china apek keeping all the cash for themselves to manipulate. Maybe it is not too bad with the fat lady also because when he sings half way, we applause and not wait until he finishes. Then we may strike pay dirt. What say you Aunloke and others?

Posted by aunloke > 2012-12-27 09:09 | Report Abuse

Yes you are right and also the lao chieo who recommend this, I think he must have enjoyed many songs before.

Posted by kcchongnz > 2012-12-27 09:46 | Report Abuse

fankim, you calculation is correct. You lose RM520, or 7.4%. That is a simplistic calculation, good enough for simple estimation. If I were to do in the financial principle way using the time value of money, assuming that when you invested in Cheetah 5 years ago, you expected a return of 10% per year. The value of all the dividends plus the shares you have now is RM4200 at the 2008 price. This means your loss is 40% [(7000-4200)/7000]. You are unfortunate to have bought Cheetah at the high end of its price in 2008. And unfortunately it has not fully recovered.
As to your question on whether you should buy or continue to hold, sorry I can’t tell you and I believe nobody can confidently tell you so. This is because the very essence of investment is its unpredictability. It is your call. However, the financials I have described at the top may serve as a guide to you. Happy investing.

Posted by kcchongnz > 2012-12-27 10:43 | Report Abuse

Shrekk has given a detail analysis of Skpres and everything points to it being a sound investment. What else can I say except agreeing with him fully. Just to add some of my analysis on Skpres. I like SKPRes for its high growth in the last 5 years of 20% per year, accelerating in the last two years. It has a high ROE of 20.5%, achieved through net profit margin of 9%, a high asset turnover of 157% and just a small leverage of 1.46, without any debts. My discount cash flows analysis on its owners’ earnings with conservative assumptions of growth of 8% for the next 5 years and 3% subsequently, and a discount rate of 10% shows that the intrinsic value of at least 75 sen, a margin of safety of more than 50% over its present price of 45.5 sen. I just bought some yesterday for investment.

Posted by tonylim > 2012-12-27 11:13 | Report Abuse

Boss welcome to the club

Posted by New Insight Sabah > 2012-12-27 11:21 | Report Abuse

SKPRes is a good buy now as it is lower than 0.36 sen. Nevertheless I've a small paper loss as my average cost is 0.365. Will certainly buy more if price should fall further.

Posted by monreyes > 2012-12-27 13:40 | Report Abuse

movement very slow...

Posted by Shrekk > 2012-12-27 15:08 | Report Abuse

Dear kcchongnz, nice summary on skpres fundamentals and glad you are giving comments at skpres thread which was dominated by ta guys all this while. Hope the thread will be much more academic and beneficial for the investors community.

To rlch, I did identify potential penny stocks below 50cts with ratings 6 and above each time SPG is published every 6 months. As at now, there are only four counters which fit this criteria i.e skpres (7 star), ntpm (6 star), scicom (6.5 star) and xdl (6 star). I have my only position in skpres. Ntpm used to be my darling stock back in 2009 which I bot at ard 38cts. I sold it when it was at 56cts in 2011 when the valuation I thought was way overvalue and the net profit dropped for the first time in 2011 while its net profit was consistently increased since 2006. At current share price of 0.44 cents, I think it is impressive to reenter.

As for scicom and xdl, both seem fundamentally solid. However, Xdl in my instinct is seem not impressive at all due to the known reason that it is a china company with its core business in manufacturing shoes. However, scicom may worth for us to take a look at it as valuation wise it seem undervalue at 0.39 cts and its core business is really interesting.

Posted by tptan45 > 2012-12-27 15:39 | Report Abuse

Gosh, was away for a few days and rlch called me a liar.
Let me clarify:
1. I like Skpres but I do not have a single share of this company. Not yet anyway.
2. I am sure cheetah has business somewhere else but certainly not at the retail counter here. Maybe they have bulk contracts. It must be making money, but I don't buy shares which bothers me somehow.

The analysis and input that I have read here is awesome. Will really need time to comb through them. Thank you everybody.

Posted by tonylim > 2012-12-27 15:55 | Report Abuse

shrekk, scicom's biz is indeed interesting.
I did monitor this one in 2010-11.
Are u able to share here in brief?

Posted by tonylim > 2012-12-27 16:03 | Report Abuse

shrekk, Is ali kadir still the boss there?

Posted by Ooi Teik Bee > 2012-12-27 18:24 | Report Abuse

Dear Kcchongnz or Shrekk,

Thank you for your good selection on SKPres.

I found that SKPRES-WA at 0.07 or 0.075 is a better buy if compared against mother share SKPres. It is a new warrant, maturing in 2017.

Please advise.

Thank you.

Ooi

Posted by kcchongnz > 2012-12-27 18:54 | Report Abuse

Posted by tptan45 > Dec 27, 2012 03:39 PM
"but I don't buy shares which bothers me somehow."

Yeah man. I fully agree. There are so many stocks in Bursa. See there are so many in this thread here. Why bother to invest in one which you are not comfortable with?

I posted Cheetah as a value stock with a low PE strategy as at 46.5 sen, PE is just 5.5 (<10). Just low PE is not good enough for me. I have to look at some other things below:
Debt ratio 0.1<0.5 ok
Earnings quality, good as earnings is translated to cash flows.
Growth expectation. However this fails my criterion as even for low PE strategy, I still require a minimum 5% growth expectation. For Cheetah, it has not shown that it can meet this criterion looking at its past growth.
However since my posting of Cheetah, it has gone up by 3.5 sen, or 7.5% in just a couple of days from 46.5 sen to 50 sen. Not bad eh? I have to declare it happened just by chance, not because I am good at forecasting, which I have to admit that I am usually very poor at. Hehe.

Posted by tansrihew > 2012-12-27 19:27 | Report Abuse

kcchongnz: which part of Aotearoa are you from?

Posted by kcchongnz > 2012-12-27 19:36 | Report Abuse

Tan Sri, olan. oop, Auckland

Posted by kcchongnz > 2012-12-27 19:43 | Report Abuse

Posted by Ooi Teik Bee > Dec 27, 2012 06:24 PM
“I found that SKPRES-WA at 0.07 or 0.075 is a better buy if compared against mother share SKPres. It is a new warrant, maturing in 2017.”

Ooi, why do you say so? Just because it is a new warrant and at a lower price? I hope you don’t mind me saying that this is a gross misconception. With an exercise price of 45 sen, the warrant is out-of-money at 7.5 sen while the underlying share price is only 35.5 sen. It has no intrinsic value and all its value is derived from the time it has before expiry in about 4.5 years time. However this time value is very small at about 2.1 sen only compared to its price of 7.5 sen. This is estimated using Black-Schole Option Pricing, using an estimated historical volatility of SKPRes of 25% (You can actually get its actual historical volatility from its past prices). The killer being the high dividend yield of SKPRes at 7.2%. As you know high dividend yield of underlying share hurts warrant holders as they don’t enjoy it. Of course the option pricing, though it is a Nobel prize winner can be wrong, and the assumption of volatility can also be wrong. I personally think it is just theoretical and can be far from reality. But if you look at the premium of the warrant traded at 48% [(7.5+45)/35.5-1], I don’t need option pricing to determine that this warrant is indeed way overpriced, also taking into consideration of its high dividend yield. The high gearing of 4.7 times may be good for punting, but the odds are against you. I don’t punt if I do not have positive expected outcome. Agree, Ooi?

Posted by fankim > 2012-12-27 19:53 | Report Abuse

kcchongnz, thanks for your comments.

Shrekk, yes. do agreed SKPRES is one of the best stock below 50 cents. thank you. plan to accumulate these few days.

Posted by tansrihew > 2012-12-27 20:24 | Report Abuse

kcchongnz: can come out drinks when free. me living in central

Posted by reyes430 > 2012-12-28 01:09 | Report Abuse

Hi, as i notice, the receivable of skpres is increasing dramatically, from 54,350 at 2011 to 100,886 at 2012 and current year to date at 115,234. Its always not a good sign as high receivable might cause collection problem. I understand as overall its still a fundamentally sound counter but can someone please shed some light on this matter? much appreciated, thanks!

Posted by kcchongnz > 2012-12-28 07:07 | 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%.

Posted by reyes430 > 2012-12-28 08:30 | Report Abuse

Thanks KC for your clarification. Well explain!

Posted by Ooi Teik Bee > 2012-12-28 11:39 |

Post removed.Why?

Posted by kcchongnz > 2012-12-28 12:18 | Report Abuse

Ooi, your explanation of both the scenarios are perfectly correct. You will make a lot more money if you buy the warrant instead of the underlying share, if and only if SKPRes can go up to close to 75 sen, or 48%, being the premium of the warrant, above its present price of 35 sen, any time before the expiry date of the warrant. Why 75 sen, why not 1.00, 2.00 even? Then the warrants will give you return of even 1000% or more. Yes, it all boils down to what is the probability that the underlying share can go up by 48%, 70%, 100%, or even 200% before the expiry of the warrant. The longer is the expiry date, and the lower the expectation of the underlying share, the higher the probability. That is the essence of the option pricing model. Nothing is impossible, and also the probability will not be high if you put too high an expectation. I just want to reiterate that the other factor which affect adversely the value of warrant is the high dividend of the underlying share SKPres. When a dividend is ex-dated, the price of the underlying share goes down the same amount, and hence the value of warrant deteriorates. The shareholders of SKPRes enjoy the dividend but not the warrant holder.
If buying and making huge money is so simple in warrant like what you described, everybody will try to buy warrant at high gearing which will give you exaggerated returns. why buy the underlying share then? You know I always say, leverage cuts both ways. Don't you realize how many call warrants are written by investment banks? You know how much money they have been making. Heaps!!!

Posted by Ooi Teik Bee > 2012-12-28 12:30 |

Post removed.Why?

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