Posted by newbiestock > 2013-07-08 11:09 | Report Abuse

datuk buy a smart phone and do it on the move.. better i think .. use precious time to contribute more to society

Posted by KC Loh > 2013-07-08 11:21 | Report Abuse

LOL.... zoo feeding time. quiet liao! hahahahaha

Posted by datuk > 2013-07-08 12:48 | Report Abuse

The secrete of making great money from bursa is be able to differ from the herd mentality, be a value investor and a contrarian; buy the value stock when no darling indulge with

and then sitting there do nothing! do nothing at all until the herd comes to fall in love with the value stock you have pocketted much earlier.....

and ......let them buy from you at very higher price preferbly at least double from your accumulated cost.....that's sure win formula proven in Bursa.

sitting and do nothing is part and parcel of the winning games....

of course ......firing the bullet can be done through samsung or apple smart phone..........kikikikiki

Posted by kcchongnz > 2013-07-08 13:27 | Report Abuse

Isn’t ECS a hidden gem?

Posted by inwest88 > Jul 7, 2013 09:08 PM | Report Abuse
Hi kschong, if you don't mind, what about ECS ICT Berhad.
ECS ICT is involved in the distribution of information and communication technology (ICT) products, the provision of ICT systems and services, as well as the provision of management, financial, accounting, warehousing and logistic services.

Since public listed less than 3 years ago, its annual revenue and net profit has been at the average of 1266m and 30m respectively. This translate to an average earnings per share of 22 sen. It has a net tangible asset backing per share of RM1.04, debt free and cash of 41 sen per share in its balance sheet. The interesting things about ECS is relatively it doesn’t need much asset to carry out its business. Its fixed asset turnover is 190 times a year. Its inventories turnover in 23 days.

Its reasonably good average ROE of 18% (>12%) which is achieved with a high total asset turnover of 4 times. More significantly, it has a very high ROIC of 25% (>12%).

Actually ECS impresses me most is its ability to generate cash. ECS generated an average of 36 m of cash flows from operations. ECS doesn’t require much capital expenses. The average free cash flow for the last three years was 34m.

Free cash on average is 30% of invested capital. Imagine that you put in money for a business and you get 50% return in hard cash a year. Isn’t that a good investment?

But what is the market valuation of ECS? With a closing price of RM1.16 on 5th March 2013, ECS is trading at a PE ratio of only 7.0, and a total enterprise value of 3.4 times EBITDA, very low indeed.

Posted by eftee > 2013-07-08 14:15 | Report Abuse

Bull run bull run ... in Pamplona lah. But mark my work every year when they have the bull run thru the streets of Pamplona in Spain the market is also up. Watch the Dow and world markets

Posted by Jaack1 > 2013-07-08 14:48 | Report Abuse

Dear Mr KCChongnz,

CIMB issued a report on Jaya Tiasa - suggesting shortage
of Logs in the months ahead.

What is your take on WTK?

Tks/Rgsd
Jaack1

Posted by newbiestock > 2013-07-08 17:28 | Report Abuse

datuk how come you not tan sri or tun ah?? not good enough ah???

Posted by newbiestock > 2013-07-08 17:29 | Report Abuse

old chinese saying. no matter how big you are there is someone bigger.. or my saying no matter how big your pancut ah someone will pancut bigger than you ler.. LOLZ> ok datuk

Posted by j harcharanjit a/l jalaur singh dhillon > 2013-07-08 18:27 | Report Abuse

GOB,,,BENALEC,,,LBS...MALTON,,,MYEG,,PERISAI

Posted by newbiestock > 2013-07-08 18:51 | Report Abuse

aree paa ji. you got some cheap stock. dont ler buy those buy good stock to become rich.,

Posted by kcchongnz > 2013-07-08 19:02 | Report Abuse

is WTK a hidden gem? Nah

Posted by Jaack1 > Jul 8, 2013 02:48 PM | Report Abuse
Dear Mr KCChongnz,
CIMB issued a report on Jaya Tiasa - suggesting shortage
of Logs in the months ahead.
What is your take on WTK?
Tks/Rgsd
Jaack1

Actually I am not informed about this timber industry. This needs a lot of hard work in meeting with the management of the company to find out information and discuss about their future plan, both in their timber and palm oil plantation. How much land they have, how much crops have been planted, how long and the production of the crops at various periods of time; forecasting of future prices of timber and palm oil and their revenue and profit etc etc. Hack, I am just a small retail investor! This is a full time analyst specialized in this industry to do all the fact finding and analysis!

Nevertheless, since you ask, I still try to put forward my little-informed opinion here, basing on their performance for the past years. I have no interest in investing in this industry, company like Jaya Tiasa, or WTK. For example, huge amount of invested capital is involved for WTK in its business, 1.2b Ringgit. However return of capital is meager at 50m for the last two years, or just 4.6%, a very low figure. ROE is averaging at 4.7%, very poor indeed.

What about its price?

At the close of RM1.18 today, the PE ratio is 11, and earnings yield (Ebit/EV) is 11%, not too cheap too.

No, WTK, nor JayaTiasa is not for me.

Posted by Jaack1 > 2013-07-08 19:12 | Report Abuse

08.07.13

Dear Mr KCChongnz,

Thank you for your post - I appreciate your generosity in sharing.

Tks/Rgds
Jaack1

Posted by andyhard > 2013-07-08 19:22 | Report Abuse

Hi KC,

Not sure you have kept some historic financial data for ECS? If yes, do you mind to share to me? Thanks

Posted by keanpoh > 2013-07-08 21:13 | Report Abuse

Hi kcchongnz,

Thanks for your comment below:

=============================================
Posted by kcchongnz > Jul 5, 2013 04:36 PM | Report Abuse

Posted by kcchongnz > May 27, 2013 11:43 AM | Report Abuse X

Posted by Tan KW > May 26, 2013 07:05 PM | Report Abuse
@kcchongnz how you get the WACC? need to calculate by yourself?

If a company has 200m equity and 100m debts and the cost of equity you use say 12%, and after-tax cost of borrowings at 7%,

WACC=200/300*12%+100/300*7%=10.3%.

I use 12% as my required return for investing in a company with ok but not so good balance sheet and cash flow. If they have healthy balance sheet and excellent cash flow, I may use 10%.


Invested capital you have to compute yourself:

It is IC=fixed assets+receivables+inventories-payables

Return in ROIC is Ebit*(1-tax rate)/IC
=======================================

For discussion purposes, here are my further questions:
1. When calculating WACC, we should use the company's cost of capital right? However, I understand it is not possible to know the cost of equity of the company unless we're the CFO of the company. Is my understanding correct? Or am I missing something here? If I am correct, then according to your method, you're making an assumption of 12% for cost of equity and this number can be different for each individual.

2. How do you know the cost of debt is 7%? It is another assumption or am I missing something again?

3. Since we're discussing about cost of capital, is there any website that we can get the beta value for each individual stocks listed in KLSE? The beta value is required to calculate an investor's required rate of return using Capital Asset Pricing Model (CAPM). I know i might be asking too much for a simple number, but just in case i'm missing something. :)

4. I've looked though a lot of your previous postings and I've found that you've used ROIC and sometimes ROTC. Is it just a typo or they are different things?

Again, thanks for sharing with us.

Posted by houseofordos > 2013-07-08 22:38 | Report Abuse

what about gadang ? Strong balance sheet and really good free cashflows recently

Posted by kcchongnz > 2013-07-09 07:15 | Report Abuse

Posted by keanpoh > Jul 8, 2013 09:13 PM | Report Abuse

For discussion purposes, here are my further questions:
1. When calculating WACC, we should use the company's cost of capital right? However, I understand it is not possible to know the cost of equity of the company unless we're the CFO of the company. Is my understanding correct? Or am I missing something here? If I am correct, then according to your method, you're making an assumption of 12% for cost of equity and this number can be different for each individual.

THE COST OF EQUITY OF 12% IS NOT ENGRAVED IN STONE. EVERY INDIVIDUAL HAS HIS COE. THE ACADEMIC WAY IS USING THE CAPM, OR THE CAPITAL ASSET PRICING MODEL WHICH I AM NOT FANCY OF, ACADEMIC YOU KNOW. SOME USE A RISK PREMIUM OVER THE RISK-FREE RATE AND THIS IS ALSO ARGUABLE LIKE WHAT IS THE RIGHT RISK-PREMIUM, RISK FREE RATE ETC ETC. FOR ME USUALLY I JUST USE MY OWN COE. I NEED A RETURN OF A MINIMUM OF 10% FOR MY RISK CAPITAL IN THE EQUITY MARKET, IE 5% OVER THE LONG-TERM MGS RATE OF 5%. BUT THAT ALSO DEPEND ON THE EARNINGS STABILITY, FINANCIAL SOUNDNESS AND CASH FLOWS OF THE COMPANY. SO THIS COE IS REALLY VERY ARGUABLE, BUT I THINK WHAT IS MORE APPROPRIATE IS WHAT IS YOUR PREFERENCE, WITH A GOOD REASON OF COURSE.

2. How do you know the cost of debt is 7%? It is another assumption or am I missing something again?

YOU GOT ME, I DON'T REALLY SURE OF. I AM NOT AN INVESTMENT PROFESSIONAL YOU KNOW. BUT I MAKE AN EDUCATED GUESS. MANY COMPANIES ISSUED DEBT OR HYBRID DEBT INSTRUMENT WITH THAT KIND OF INTEREST RATE, FOR EXAMPLE, PANTECH ICUL. SO I ROUGHLY HANTAM LAH. MAY BE SOMEONE CAN PROVIDE BETTER FIGURE.

BUT I NORMALLY DON'T GO INTO TROUBLE OF ESTIMATE WACC BUT JUST TAKE IT AS 10% WHICH IS IN MY OPINION A GOOD ESTIMATE ALREADY. SO THIS SAVE THE TROUBLE OF ESTIMATING THE COE AND COST OF DEBT WHICH IS GIBBERISH AND TO ME UNNECESSARY.

3. Since we're discussing about cost of capital, is there any website that we can get the beta value for each individual stocks listed in KLSE? The beta value is required to calculate an investor's required rate of return using Capital Asset Pricing Model (CAPM). I know i might be asking too much for a simple number, but just in case i'm missing something. :)

I WAS TRYING TO FIND A WEBSITE TO GET THE VALUE OF BETA TOO SOME TIME AGO, BUT IN VAIN. AFTER THAT AS EXPLAINED ABOVE, I DO AWAY WITH THIS CAPM NONSENSE. YOU CAN DO THAT IF YOU WANT BY REGRESSING THE MONTHLY RETURNS OF THE STOCK AGAINST KLSE.

4. I've looked though a lot of your previous postings and I've found that you've used ROIC and sometimes ROTC. Is it just a typo or they are different things?

WAH NOW I CANNOT SIMPLY BLUFF ALREADY. ROTC WAS A SHORT CUT AS I CAN'T POSSIBLY WORK OUT ALL THE INVESTED CAPITALS OF SO MANY COMPANIES PEOPLE ASKED ME. SO I ADD UP THE TOTAL EQUITY AND DEBTS TO COME UP WITH 'TOTAL CAPITAL' AND HENCE ROTC. I THINK ROIC IS A MORE APPROPRIATE METRIC TO USE.

Again, thanks for sharing with us.

YOU ARE WELCOMED. PLEASE FEEL FREE TO CORRECT ME IF THERE IS MISTAKE, WHICH I BELIEVE THERE WOULD BE PLENTY

Posted by keanpoh > 2013-07-09 08:30 | Report Abuse

It's much clearer to me now. Thanks for the explanations.

I found that cost of debt is reported in REITs annual reports but i'm not sure if I can find any in a stock's annual report. Since most Malaysian firms do not issue bonds, i believe the cost of debt would be the interest rate they got from their borrowing from the banks, which really depends on their relationship with the bank. If bonds are issued, the cost of debt would be the yield to maturity of the bond they issue.

Your stock analysis in various thread on i3 have been very beneficial to me and i am developing my own excel sheet too, that is why all those questions above. Not as a critique here but i think if we can include cross sectional analysis, then the analysis would give us a better picture. For example, PE ratio of < 25 is not necessary cheap for stocks from certain industry, or ROE of > 12% might not be high enough for certain industry. If we can compare the ratios with the firm's main competitors, I believe we can get a better/clearer view of the performance of a company.

Again, thanks!!

Posted by datuk > 2013-07-09 08:50 | Report Abuse

hi newbiestock,


i m yet to be tan sri or tun becos of unable to discover enough hidden gem in 2013 to qualify to that league! hehehe!

Posted by newbiestock > 2013-07-09 08:55 | Report Abuse

datuk like i said NOT GOOD enough ler.. kikikiki

Posted by newbiestock > 2013-07-09 08:59 | Report Abuse

there is an old saying u know. no matter how big you pancut ah there is always someone who pancut bigger ler..

Posted by newbiestock > 2013-07-09 09:00 | Report Abuse

kcchongnz ah. jus be honest tel people u don know anything ler. so people wont curse u when u are wrong. u talk like u know it all.but all wrong ler.

Posted by newbiestock > 2013-07-09 09:01 | Report Abuse

stewpead foool kcchongnz

Posted by datuk > 2013-07-09 09:06 | Report Abuse

One of the inner quality requires success in life is never indulge in
comparison simulation.

Instead, we should be grateful with what we oledi have. We are the master of our ownself!

Newbiestock......you are too raw to understand what;s life! I encourage you to think positive; what you oledi have and not crave and cries about what you dun have !

Posted by kcchongnz > 2013-07-09 09:46 | Report Abuse

Gadang a hidden gem? I am not sure.

Posted by houseofordos > Jul 8, 2013 10:38 PM | Report Abuse
what about gadang ? Strong balance sheet and really good free cashflows recently


house, how come you are interested in a construction company now? I thought you are not interested in investing in construction company? So am I.

I do agree with you about its strong balance sheet (After the 2/3 rights in 2010) and its strong cash flow recently (yes, just recently, but also due to delaying payment to sub-contractors?). Its trailing twelve month revenue and net income has jumped by 36% and 75% to 336m and 26m respectively. Thanks to its MRT project and new launches of its property development.

One thing I know very well which many people don’t know, or rather don’t bother, is that high revenue in construction projects doesn’t necessary translate to sound bottom line. It may translate to more problems, headaches such as poor management of works and leading to losses, labour and material problems, construction disputes and bad debts etc. Look at the segmental result of Gadang. A total turnover of 208m in construction only yield 3.8m in net profit, or less than 2%!
As far as operational efficiencies, I think Gadang did ok lah, but that was the best during last year when return of equity and invested capital is about 10% and 16% respectively.

Value wise I do agree that it is quite cheap with ttm PE ratio of about 7 and price-to-book just 0.7.

Whether Gadang can do well or not in its business depends on its 1.6b in its construction order book. However, as mentioned before it is not a totally rosy picture for this segment. So Gadang has to depend more of its future property projects, especially the Tampoi commercial and residential project.

So for me, as I don’t know about its future, but just looking at its present, I think I have better construction company share to hold than Gadang.

Posted by datuk > 2013-07-09 14:34 | Report Abuse

Gadang is no longer a hidden gem....instead it's oledi a shining diamond ! Not more exciting lioa! Anyway, it's my pure opinion...

Posted by datuk > 2013-07-09 14:56 | Report Abuse

Another way of assessing the hidden gem......:


i) The potential earning is there but yet to realize. Waiting for the catalyst and it's around the corner.

ii) The full turnaorund in earning has taken place (particularly after the prolong periods of earning loss and the emerging of new landscape that favor its existing business )but the story is untold, unawared in the industry and yet to manisfest in the financial statistic.

iii) The opportunity of converting of exsiting asset into significant cash........

Posted by datuk > 2013-07-09 14:58 | Report Abuse

Few stocks fall under these cate...very clear!!!!

Posted by aziz12 > 2013-07-09 14:58 |

Post removed.Why?

Posted by inwest88 > 2013-07-09 16:00 | Report Abuse

newbiestock, MBSB is below RM3 now !

Posted by inwest88 > 2013-07-09 16:00 | Report Abuse

newbiestock, MBSB is below RM3 now !

Posted by newbiestock > 2013-07-09 17:40 | Report Abuse

datuk i suggest u become a tan sri before u give me advice OK.. LOLZ.. i am not interested in your advice ler.

Posted by newbiestock > 2013-07-09 17:41 | Report Abuse

mbsb dam good ler. nice price now.

Posted by newbiestock > 2013-07-09 17:42 | Report Abuse

our datuk of i3 kuat cerita tapi dia datuk ONLY..

Posted by newbiestock > 2013-07-09 17:43 | Report Abuse

datuk u claim that never compare right.. how come u use the title datuk here ah?? but any other nick?? have u asked yourself that ah??LOLZ

Posted by inwest88 > 2013-07-09 17:47 | Report Abuse

newbiestock, have you sold MBSB. You say you are only interested in stocks above RM3 ?

Posted by newbiestock > 2013-07-09 17:54 | Report Abuse

inwest88 lik my bals OK u misunderstand ler soohai LOLZ

Posted by newbiestock > 2013-07-09 17:55 | Report Abuse

inwest88 u so interested in getting my attention ah.. LOLZ.. i got a message for u. lik my bals OK.

Posted by inwest88 > 2013-07-09 17:56 | Report Abuse

Next time don't talk big ! Eating your own words. LOL !!!!!!!!!!

Posted by newbiestock > 2013-07-09 17:57 | Report Abuse

some cheap stocks like puncak and mbsb also ok ler. but expensive stock better. y u dont like me talking big. u takut ur wife come to me ah

Posted by newbiestock > 2013-07-09 17:58 | Report Abuse

i guess u poor people will never understand rich man talk ler.

Posted by inwest88 > 2013-07-09 17:59 | Report Abuse

The fact that you are holding MBSB (below RM3) means you also also part of the group !

Posted by newbiestock > 2013-07-09 18:00 | Report Abuse

not really i dont like cheap stock below rm3 but a few are good mbsb is one of them. but u poor people dont get it. u people take all literally. that is why u are poor ler

Posted by newbiestock > 2013-07-09 18:01 | Report Abuse

TRUST ME inwest88 i am not in your group and neva want to me. make urself happy ok buy cheap stock. this world is made up of poor and rich after all

Posted by newbiestock > 2013-07-10 11:54 | Report Abuse

datuk.how come u never answer me ler. why u must use your title here to gain respect ah cant do it jus with any nick ah since you preach never indulge in comparison simulations ?? datuk mana la u

Posted by datuk > 2013-07-10 12:31 | Report Abuse

sole......busy cashing out the profit generated from the water stocks. Afterall, making money is far more serious making joke here and there right?

Posted by newbiestock > 2013-07-10 12:37 | Report Abuse

datuk u neva answer me ler.. why u use the title datuk. here for ler.. u shy no on will bother about u without a title here is it????

Posted by newbiestock > 2013-07-10 12:38 | Report Abuse

datuk bete u change ur nick ler so u dont malu yourself OK..

Posted by datuk > 2013-07-10 12:42 | Report Abuse

In the investment community within my circle, all of us being bestowed with datukship long long times ago.

Serious....but if you think i'm not a datuk yet........tak salah juga.....afterall, my son is yet to be a father....how i cannot be a datuk ! wahaha !

Posted by datuk > 2013-07-10 12:47 | Report Abuse

More often than not, the title and the entitlement of "datuk" usually being respected in the society.

That's the norm but with the exception in one area.........dun like the performance like "datuk". Dun like at all! Instead, i prefer to be like you ......a newbie.....wahaha ! wahaha!

Posted by newbiestock > 2013-07-10 12:48 | Report Abuse

datuk. u are more like atuk ler. the way you talk. only u can understand. i dont care what ur title. it seems u care. anyhow keep ur stories to yourself OK. i am not interested in talking to a wannabe..