Posted by kcchongnz > 2013-08-22 10:21 | Report Abuse

Posted by Steve Jub > Aug 22, 2013 10:06 AM | Report Abuse
kcchong, any tot on LIIHEN? i have its fundamental looks ok.

Please read this, courtesy of Tan KW

http://klse.i3investor.com/blogs/5_rules_cold_eye_kcchongnz/34608.jsp

Posted by Steve Jub > 2013-08-22 10:39 | Report Abuse

thanks kcchong.

Posted by ten one ten > 2013-08-22 11:10 | Report Abuse

kcchong,
What is CFFO? Usually analysts would depend on FCF on tracking the company's use on credit / cash to determine the health of the company operations.Which is a better guide?
In the case of Inari Berhad was wondering where you got the balance sheet as I doubt any brokers cover it.
Inari shows good growth in revenue and profits as per your analyst as it intends to hit the RM3 billion mark in revenue as it acquires an offshore asset.
The problem is the nature of the industry which one has to acquire equipment continuously to keep pace with the demands of the technological changes in the consumer electronic market.
You are right on corporate governance as I do not know where the stakeholders came from and they have to be one of the existing players in the industry.
The only drawback I notice with global Malaysian players , most of the profits are parked offshore and the dividends are paltry.Most of these stocks are capital growth stories with no form of insurance like good dividend payout eg. like banks like Maybank and Public Bank.
Your views? Thanks.

Posted by kcchongnz > 2013-08-22 13:40 | Report Abuse

Posted by ten one ten > Aug 22, 2013 11:10 AM | Report Abuse

kcchong,
What is CFFO? Usually analysts would depend on FCF on tracking the company's use on credit / cash to determine the health of the company operations.Which is a better guide?

CFFO IS CASH FLOW FROM OPERATIONS, THE FIRST STATEMENT FROM THE CASH FLOW STATEMENT. IF YOU DON'T KNOW WHAT IS CFFO, I DOUBT YOU KNOW WHAT IS FCF. YES, YOU DON'T KNOW WHAT IS FCF. YOU NEED TO READ UP ABOUT IT.
BOTH ARE IMPORTANT. A COMPANY AT LEAST MUST HAVE GOOD CFFO, AVERAGING ABOUT 100% OF THE NET INCOME. A FAST GROWING COMPANY MAY NOT HAVE FCF NOW BUT EVENTUALLY IT SHOULD HAVE. IF NOT WHERE TO FIND CASH TO PAY DIVIDEND ETC?

In the case of Inari Berhad was wondering where you got the balance sheet as I doubt any brokers cover it.

BALANCE SHEET AND OTHER FINANCIAL STATEMENT ALL I BURSA WEBSITE.

Inari shows good growth in revenue and profits as per your analyst as it intends to hit the RM3 billion mark in revenue as it acquires an offshore asset.

TALK IS EASY. WHAT MAKES THEM THINK THAT GOOD ASSETS ARE WAITING FOR THEM TO ACQUIRE? OR WILL THEY BE ACQUIRING ASSET AT EXPENSIVE PRICE AND DESTROYING SHAREHOLDER VALUE?

The problem is the nature of the industry which one has to acquire equipment continuously to keep pace with the demands of the technological changes in the consumer electronic market.

IT IS ALRIGHT IN DOING SO, INARI HAS NO FCF. BUT AT LEAST INARI SHOULD HAVE CFFO AT LEAST THE SAME AMOUNT AS NET INCOME. THERE IS WHERE THEY CAN HAVE MONEY TO GROW THEIR BUSINESS AS THEY CLAIMED TO DO. BUT EVENTUALLY THEY MUST HAVE FCF.

You are right on corporate governance as I do not know where the stakeholders came from and they have to be one of the existing players in the industry.

I THINK INSAS CONTROLS INARI. AS I HAVE SAID, THE MAJOR SHAREHOLDERS/MANAGEMENT OF INSAS IS NOT PROVEN TO TAKE CARE OF MINORITY SHAREHOLDER'S INTEREST.

The only drawback I notice with global Malaysian players , most of the profits are parked offshore and the dividends are paltry.Most of these stocks are capital growth stories with no form of insurance like good dividend payout eg. like banks like Maybank and Public Bank.

INARI HAS NO FCF. IN FACT IF I AM NOT WRONG, THEIR FCF IS IN THE NEGATIVE TERRITORY OF MORE THAN 15M. SO WHERE GOT MONEY TO PAY DIVIDEND? KEEP ON DIGGING INTO ITS COFFER? BORROW MORE MONEY? RIGHT ISSUE?

Your views? Thanks.

Posted by kcchongnz > 2013-08-22 15:02 | Report Abuse

Posted by Fat Cat Tim Buddy > Aug 22, 2013 02:20 PM | Report Abuse

chong, u too obsessed with all the fcf thingy la, every since inari listed, every year, every quarter they also got pay dividend. fact*

IT IS ONLY WITH FCF A COMPANY GOT MONEY TO DISTRIBUTE DIVIDEND WITHOUT RESORT TO ISSUE MORE SHARES AND HENCE DILUTING EARNINGS, BORROW MORE MONEY AND HENCE INCREASE DEBT. YES, INARI PAY DIVIDENDS BUT HAVE YOU LOOKED AT WHERE THIS DIVIDEND MONEY COME FROM? NUMBER OF SHARES OUTSTANDING HAS INCREASED FROM 248.6M TO 336.6M NOW. BORROWING INCREASED FROM 6.6M TO 18.8M NOW. THAT IS WHERE THE MONEY COME FROM. NOT FROM THE CASH FROM THE OPERATIONS.

and their dividend is getting generous each year, if you buy inari at 40 cents ( before the right issue) combine with the dividends received ah... your total return easily get 200-300%.

I NEVER QUESTIONED THAT YOU HAVE MADE HUGE MONEY FROM INARI, HAVE I? BY THE WAY, CAN YOU SHOW ME EXACTLY HOW MANY PERCENT PROFIT YOU HAVE MADE IN TERM OF TOTAL RETURN?

see the kfima u so heavily recommended... having a mountain of fcf , but they rather put it on bank and get 3.88% interests than paying it out to enrich their shareholders.

I NEVER RECOMMEND ANYBODY TO BUY ANY SHARE. CAN YOU FIND ANYTHING I HAVE WRITTEN ASKING PEOPLE TO BUY THIS OR THAT SHARE? I POSTED ALL MY POSTINGS FOR SHARING OF KNOWLEDGE PURPOSE.

BTW, I AM ONE WHO DO NOT CARE MUCH ABOUT HOW MUCH DIVIDEND A COMPANY DISTRIBUTES BECAUSE TO ME IT IS THE TOTAL RETURN WHICH IS MY CONCERN, NOT JUST RETURN FROM DIVIDEND. I PREFER THE MONEY TO BE REINVESTED INTO THE BUSINESS FOR GROWTH AND EARN MORE RETURN IN THE FUTURE. THINK ABOUT IT, WHY DO YOU INVEST IN A COMPANY IN THE FIRST PLACE? ISN'T IT BECAUSE IT CAN EARN YOU RETURN MORE THAN OTHER INVESTMENT? SO WHY WANT TO TAKE OUT MONEY AS DIVIDEND RATHER THAN REINVEST IN THE BUSINESS?

what make it worse is their ESOS priced at 1.48 and still have 60somethings% havent issue out, they keep cash on the investor yet dont want pay better dividend.

ESOS IS A WAY TO ALIGN THE INTEREST OF BOTH SHAREHOLDERS AND MANAGEMENT. IT COULD BE A GOOD THING BECAUSE WHEN EMPLOYEES HAVE A STAKE IN THE COMPANY, THEY NORMALLY WORK HARD FOR THE COMPANY AND HENCE BENEFITS THE SHAREHOLDERS.

if let u choose now, u still choose kfima over inari?

YOU KNOW MY ANSWER, WHY KEEP ON ASKING?

Posted by jcck79 > 2013-08-22 15:05 | Report Abuse

kcchongz can you analyze for me the stock for Lien Hoe? this stock make a turn around last year after poor performance last few year's is it a good buy at current situation?

Posted by TeckChuan Lee > 2013-08-23 02:22 | Report Abuse

FORMOSA PROSONIC INDUSTRIES BERHAD
FPI, 9172, RM0.68

DEC2012 REPORT, RM0.71
1. ROIC 30
2. ROA 7
3. ROE 11
4. FREE CASH FLOW, CFFO/NI 189%
5. DIVIDEND YIELD 0.06
6. NTA RM0.97, P/NTA 0.74
7. EV/EBIT 3.45
8. EARNING YIELD 29%
9. PRICE/BOOK VALUE 0.74

ANY SECOND THOUGHTS?

Posted by kcchongnz > 2013-08-23 07:36 | Report Abuse

Another property and construction company?

Posted by jcck79 > Aug 22, 2013 03:05 PM | Report Abuse
kcchongz can you analyze for me the stock for Lien Hoe? this stock make a turn around last year after poor performance last few year's is it a good buy at current situation?

Are you sure Lien Hoe turnaround last year, or it was sale of an asset. A company cannot have a profit of 95m with a sale of 34m (4th quarter last year).

I won't bother on a company making losses every year.

Posted by charan das > 2013-08-23 07:52 | Report Abuse

kcchongnz --- your recommendations are all scattered arround on the above discussion,, can you summarize on your strong picks please?

Posted by charan das > 2013-08-23 07:54 | Report Abuse

kcchongnz -- where do you put your STRONG RECOMMENDATIONS on stock picks on this blog?? which are the strong picks based on valuations

Posted by kcchongnz > 2013-08-23 08:24 | Report Abuse

Posted by charan das > Aug 23, 2013 07:52 AM | Report Abuse
kcchongnz --- your recommendations are all scattered arround on the above discussion,, can you summarize on your strong picks please?

did i recommend anything here? i thought i was just giving my views on the companies' business when asked?

aiyoh, i got so much time meh to summarise?

Posted by kcchongnz > 2013-08-23 08:57 | Report Abuse

Posted by TeckChuan Lee > Aug 23, 2013 02:22 AM | Report Abuse

FORMOSA PROSONIC INDUSTRIES BERHAD
FPI, 9172, RM0.68

DEC2012 REPORT, RM0.71
1. ROIC 30
2. ROA 7
3. ROE 11
4. FREE CASH FLOW, CFFO/NI 189%
5. DIVIDEND YIELD 0.06
6. NTA RM0.97, P/NTA 0.74
7. EV/EBIT 3.45
8. EARNING YIELD 29%
9. PRICE/BOOK VALUE 0.74

ANY SECOND THOUGHTS?


Not bad a company. but you have to look at average for the last few years, which I believe is still good.

Posted by Steve Jub > 2013-08-24 12:25 | Report Abuse

kcchong, looks like GTRONIC also not bad but could be quite fully valued already

Posted by KC Loh > 2013-08-24 12:35 | Report Abuse

Gtronic got a shot in the arm when they are granted Govt grant (which may lead to minimum 5- or 10-year tax exemptions if they can prove the are blue ocean material). That has pushed the price further upwards before the two days fall. Otherwise the price is already high even by their own executives' expectation.

Their giving out of special dividend & interim only shows they are rewarding back shareholders with the extra cash they dont need. Good solid company bbut no longer hidden gem

Posted by Steve Jub > 2013-08-24 12:46 | Report Abuse

thanks kc loh, yeah look like the price kinda no longer hidden gem liao

Posted by bsngpg > 2013-08-24 14:38 | Report Abuse

My assessment on GTronic :
Layman’s method with calendar year instead of FY. Total div in 2013 is 17sen(5+1+2+5+4) =17sen/RM2.68=6.3%=2x FD rate. I assume the best eps is 20sen and accord it with PE 12X, the Fair Value until Feb14 is RM2.40. With that, if the current market drops further, I will accumulate GTronic by batch every 10% drops from the current 2.68. In my opinion even the very worst BEAR hits such as 2008, the lowest of GTronic is about RM1.80 as by then the yield is almost 10%. Condition is that the fundamental of the business, earning and DPO are still similar as current. If the eps stops growing, the story will fall into opposite side.
On the flip side, I forecast eps is to grow to 24sen and 29sen with FV RM2.90 and RM3.50 in 2014 and 2015 respectively with 20% grow rate each year. This is my sweet dream which keeps my enthusiasm in Bursa warm.
Thank you.

Posted by KC Loh > 2013-08-24 14:44 | Report Abuse

Fair assessment

Posted by ipomember > 2013-08-24 14:48 | Report Abuse

nice one bsn

Posted by kcchongnz > 2013-08-24 20:15 | Report Abuse

Posted by bsngpg > Aug 24, 2013 02:38 PM | Report Abuse
My assessment on GTronic :
Layman’s method with calendar year instead of FY. Total div in 2013 is 17sen(5+1+2+5+4) =17sen/RM2.68=6.3%=2x FD rate. I assume the best eps is 20sen and accord it with PE 12X, the Fair Value until Feb14 is RM2.40. With that, if the current market drops further, I will accumulate GTronic by batch every 10% drops from the current 2.68. In my opinion even the very worst BEAR hits such as 2008, the lowest of GTronic is about RM1.80 as by then the yield is almost 10%. Condition is that the fundamental of the business, earning and DPO are still similar as current. If the eps stops growing, the story will fall into opposite side.
On the flip side, I forecast eps is to grow to 24sen and 29sen with FV RM2.90 and RM3.50 in 2014 and 2015 respectively with 20% grow rate each year. This is my sweet dream which keeps my enthusiasm in Bursa warm.
Thank you.

Investors who have bought GTronics 5 years ago would have made very handsome return, beating the broad market by a very wide margin. Congrats. GTronics has evolved from high volume contract manufacturing of electronic products to value-added engineering company. Thanks to its smart capital allocation in spending money in R&D and has been very successful in doing so.

Looking at its operating numbers, I would classify GTronic as a great company. Its ROE and ROIC are great at 16% and 25% respectively. The quality of earnings is good too with Cash flow from operations averaging 2 times its net income. Free cash flow is abundant at about 15% of revenue and invested capital despite heavy capital expenses. GTronic also has a clean balance sheet with zero debt and 106m excess cash.

However whether it is a good investment or not it depends on individuals. At RM2.68, it is trading at a PE ratio of 17.6. It market enterprise value is 13 times ebit. Sure Globetronics's revenue and earnings will continue to grow at a high rate for the next few years. In fact it is already shown in the recent two quarters. However, the market valuation is still way too stiff for me. I am afraid a lot of future growth expectation has built on its price already.

Posted by bsngpg > 2013-08-24 21:29 | Report Abuse

Hi KC Chong : How do you derive PE 17.6 ? Below listed are my calculations, hope you can kindly point out my error. I learnt EPS from internet by myself, no teacher, I may unawarely making mistake all the while.
1) EPS of the 1st half=8.86, if annualize this number, full yr eps=17.7, thus PE=15.12 @RM2.68.
2) EPS of the 2nd half of last yr=9.44, if eps is flat as of last yr, full yr eps =8.86+9.44=18.3sen, thus PE=14.6 @RM2.68.
Thank you

Posted by kcchongnz > 2013-08-25 08:13 | Report Abuse

bsngpg, you were right in your calculations. It is just that we did it in different way. I based on last financial year earnings of 15.2 sen which I got it from its financial statements for last year. I like to look from the primary source of information, ie from Bursa and then work out the numbers myself. In that way I can see where the numbers come from. One never know if the earnings are from the core business, or one time off item like sale of assets, gain from financial instruments etc.

You are basing on the trailing twelve months which is more appropriate I must say. I didn't do that because i was lazy as more work is necessary to compute those numbers from the financial statements. However i did mention that

"Sure Globetronics's revenue and earnings will continue to grow at a high rate for the next few years. In fact it is already shown in the recent two quarters."

I do use trailing twelve month results often especially when I went into detail analysis of the future income of a company.

Posted by bsngpg > 2013-08-25 08:48 | Report Abuse

Hi KC Chong : a very good morning to you. Thank you very much for confirming my right way of calculating PE. Now I am relief. You know, I were a science student during school time, no basic financial knowledge. I learnt investing technique from newspapers and internet, no guidance and therefore I am very prudent like walking on surface of a frozen lake in investment, more so after I lost my first few barrels of gold to Bursa. Thank you very much.

Posted by kcchongnz > 2013-08-25 09:14 | Report Abuse

bsngpg,
Prudence in investing is the best approach. Be in your own circle of competence. good luck.

Posted by tonylim > 2013-08-25 12:13 | Report Abuse

..

Posted by hongchai > 2013-08-26 14:41 | Report Abuse

Dear kcchongnz,

http://klse.i3investor.com/blogs/in_search_of_excl_kcchongnz/34630.jsp

In view of your recent analysis, just wondering would you able to re-analyse Redtone counter using the actual F13 result?

The analysis that you have done were using the trailing full year result as the result not announced yet.

Thanks and very much appreciate it.

Posted by kcchongnz > 2013-08-26 17:28 | Report Abuse

hongchai, the last time I analyzed Redtone, it was based on the ttm results and I found that it was too expensive. It is a good company though looking at the numbers.

The actual 2013 results was much better than the ttm result. Hence ROE and ROIC are all better than before,which were already good.

At the closing price now at 65.5 sen,Pe and EV/Ebitda at 12.5 and 7.9 respectively is acceptable to me to invest in this stock.

Posted by tsejuie > 2013-08-26 21:48 | Report Abuse

Hi kcchongnz, based on the Q2 results released for MBL today, revenue has dropped by 29.7% compared against Q2 2012 and profit dropped by 64.9%. EPS to date is only 4.11 compared with 10.4 for Q2 2012. Looks like MBL has had 2 pretty bad quarters. Still making a profit and generating cash but registering negative growth. If we annualise the 1H2013 EPS, the amount we get of 8.22 only gives an ROE of less than 10%. Hence, based on the recent results, will you change your view on MBL?

I noticed from their announcement that they are buying a plantation and a logging company. While it is good that they are trying to create recurring income, doesn't it show that they have lost focus on their core competency? Or have they really lost out that badly to CBIP in terms of tenders for their palm oil machinery?

Would greatly appreciate your views on this. Thanking you in advance.

Posted by kcchongnz > 2013-08-27 07:09 | Report Abuse

Posted by tsejuie > Aug 26, 2013 09:48 PM | Report Abuse

Hi kcchongnz, based on the Q2 results released for MBL today, revenue has dropped by 29.7% compared against Q2 2012 and profit dropped by 64.9%. EPS to date is only 4.11 compared with 10.4 for Q2 2012. Looks like MBL has had 2 pretty bad quarters. Still making a profit and generating cash but registering negative growth. If we annualise the 1H2013 EPS, the amount we get of 8.22 only gives an ROE of less than 10%. Hence, based on the recent results, will you change your view on MBL?

YES, INDEED THERE IS A BIG DROP IN ITS PROFIT FOR THE LAST TWO QUARTERS. BUT IS IT REALLY CONSIDERED THAT BAD? LIKE YOU SAID, IT STILL MAKE PROFIT AND GENERATE CASH, FREE CASH FLOW. ANNUALIZED EARNINGS 8.2 SEN. IF YOU PAY 1.01 TO BUY OR KEEP MBL FOR 8% EARNINGS YIELD. OR IF THEY MAINTAIN 50% (?) PAYOUT RATIO YOU GET DIVIDEND OF 4.2 SEN. IS IT THAT BAD? ROE IS 11%, STILL .10%. IS IT THAT BAD?

MY PHILOSOPHY OF INVESTING (I SELDOM DO TRADING, ONCE A WHILE I DO) IS A LONG TERM PROCESS. A COUPLE OF BAD QUARTERLY RESULTS DO NOT CONSTITUTE A LONG TERM DETERIORATION OF A BUSINESS FOR ME, NOT EVEN A YEAR OR TWO, ESPECIALLY IF YOU LOOK AT ITS PERFORMANCE AS A WHOLE, EG GROSS MARGIN 43%, HEALTHY CASH FLOW AND FCF, CASH INCREASES IN BALANCE SHEET. MBL HAS NOT A SINGLE YEAR OF LOSSES SINCE LISTING ETC.

ALSO BEAR IN MIND THAT MBL IS RELATED TO THE PALM OIL INDUSTRY, A COMMODITY, IS IN A CYCLICAL INDUSTRY. IS PALM OIL A DOOMED INDUSTRY? IS IT RECOVERING OR CONTINUES TO DETERIORATE?

SO WHEN LOOKING AT THE VIABILITY OF INVESTING IN THIS TYPE OF INDUSTRY, ONE SHOULD LOOK AT THE PERFORMANCE FOR AT LEAST 5 YEARS TO SEE IF IT IS A GOOD INDUSTRY TO INVEST IN, AND WHAT APPROPRIATE PRICE ONE PAYS FOR IT.

I noticed from their announcement that they are buying a plantation and a logging company. While it is good that they are trying to create recurring income, doesn't it show that they have lost focus on their core competency? Or have they really lost out that badly to CBIP in terms of tenders for their palm oil machinery?

IT IS GOOD THAT A COMPANY SHOULD DIVERSIFY ITS BUSINESS A BIT. DIVERSIFYING INTO OIL PALM PLANTATION IS ACTUALLY A RELATED DIVERSIFY INTO UPSTREAM BUSINESS. I DON'T LOOK AT IT AS A BAD CAPITAL ALLOCATION IN THIS CASE.

LOSE OUT TO CBIP IN JOB TENDER? I AM NOT SURE IF THEY ARE CHASING THE SAME KIND OF JOBS. I THOUGHT A FORUMER GARK SAID MBL IS MORE IN THE NUT CRUSHER.

Would greatly appreciate your views on this. Thanking you in advance.

THERE ARE A LOT OF THINGS I DON'T KNOW TOO. I AM JUST A SMALL RETAIL INVESTOR, NOT A PROFESSIONAL ANALYST WHO CAN STUDY IN DETAIL ABOUT THE INDUSTRY, COLLECTING DATA AND ANALYZE THE INDUSTRY, INTERVIEW THE MANAGEMENT ETC, AND FAR FROM PROFICIENT IN THE PALM OIL INDUSTRY (OR ANY OTHER INDUSTRY). THESE ARE JUST MY NOVICE OPINION.

Posted by tsejuie > 2013-08-27 10:09 | Report Abuse

Thanks very much for your reply kcchongnz.

I also hold my shares for several years and don't normally trade. True, MBL has a very good track record and we should always look at things in totality. I guess I lost track a bit there. No doubt, they are still doing much better than many other companies in bursa. They also have a good track record in rewarding shareholders, something I tend to put more emphasis on nowadays.

I guess there is insufficient data at the moment to see whether their move upstream will boost their earnings so we'll just have to wait and see. Palm oil is definitely a long term business which I believe, can only get better.

Looks like I have to do more research to understand the differences between MBL and CBIP products. I always thought they make similar machines.

Though you may call it your novice opinion, it does give some.good pointers and throws up different angles that I have not considered or thought in detail. Thanks very much for your sharing. :)

Posted by TeckChuan Lee > 2013-09-09 13:56 | Report Abuse

Can I suggest another one?

LUXCHEM 5143 RM1.24

1. GOOD GROWTH
2. FCF FOR RECENT FIVE YEARS
3. ROIC20 LAST FINANCIAL YEAR
4. EV/EBIT4.6
5. EY21

Posted by kcchongnz > 2013-09-09 18:27 | Report Abuse

Luxchem Corporation Berhad acts as importers, exporters and distributors of petrochemical and other related products, and manufacturing and trading of unsaturated polyester resin and related products.

Good work TeckChuan. Wow you are good at valuing using enterprise value. Agree with your analysis. Just some points below:

Margins a bit low but I presume that is normal for distributor's business. Just a little concern about the quality of its earning; CFFO is low at average of about 60% of earnings for the last three years. But again it may not be a concern for Luxchem's business in particular.

Posted by TeckChuan Lee > 2013-09-11 11:59 | Report Abuse

Thank you KC

Can you give me a quick review on Media Prima?

Posted by kkanagasg > 2013-09-11 12:09 | Report Abuse

cheung kong

Posted by tonylim > 2013-09-11 12:25 | Report Abuse

kcchong,

Any notes on this mysterious counter, Ajiya.

It never fail to amaze me. Cant buy cant sell.

Posted by datuk > 2013-09-11 12:30 | Report Abuse

Kc chongz.....can take me as yr student ?

Posted by kakijudi > 2013-09-11 13:35 | Report Abuse

give you all one. KUCHAI, their holding of 3,000,000 shares of Great Eastern Singapore, does not do justice to the current share price of RM1.25

Posted by datuk > 2013-09-11 14:16 | Report Abuse

we are here not to becomes kakijudi.......we are here to be a great investor tomorrow ...heheehe

Posted by kcchongnz > 2013-09-15 09:56 | Report Abuse

Posted by TeckChuan Lee > Sep 11, 2013 11:59 AM | Report Abuse
Can you give me a quick review on Media Prima?

Teck Chuan, Media Prima is Warren Buffet kind of company; A cash cow!

With the political clout it has, huge amount of business at good profit margin (12.4%) and hence boast its ROIC at good rate of 17%. Huge amount of CFFO, 348m, or 165% of net income. FCF 250m, or 15% and 27% respectively of revenue and invested capital. Certainly I would classify this as a great company (in term of a business concern).

At a PE of 14, P/B of 1.9, and an earnings yield of 10%, I don't think it is expensive.

The only thing is whether you have any political belief. For me, I can't bring myself to invest in a company which is a political mouthpiece of some elite group of people who constantly spew venom against those not of the same thinking and belief as them.

Posted by kcchongnz > 2013-09-15 10:49 | Report Abuse

Posted by Jimmy Young > Sep 14, 2013 11:41 PM | Report Abuse
Hi KCChongnz,
Want to ask your opinions on the following about their intrinsic values, returns on investments etc etc - i don't know how to do analysis but if you can help to shed some thoughts on these stocks .. say in 5 years in the future .. whether it's OK or not OK to invest in these counters .. would appreciated it, Sir ..

1. SKPRES
2. NTPM
3. TH Heavy Engineering
Thanks

Jimmy, I don't have a crystal ball about SKP Res future. Neither do I have the luxury to go scuttle-butting about SKP Res business prospect in the future. The only thing I can do is to look through its recent past and see if the management has done a good job or not. In my experience, if they have, it is probable that they can do a good job in the future too. For example a good golfer who has been playing very well in the game and with a handicap of 5 now, isn't it likely that he would most probably hit a round of golf for a score of under 80 today? Well even if he can't score below 80, a score of 85 is still a good round for most golfers. The past doesn't repeat itself, but it rhymes.

I did read about some articles about Dyson (its big client in vacuum cleaner) is doing quite well in China and they are expanding. hence this will benefit SKP Res too. SKPR's last year's growth in earnings lowed down considerably, but it was still at a respectable rate of 10%.

Below was what I posted about 5 months ago. Though the growth has slowed down, it doesn't mean it won't pick up again. Of course it may slow down further, i really don't know. But then you still can look at SKPR as a value stock.


Posted by kcchongnz > Apr 7, 2013 12:13 PM | Report Abuse X

SKP Resources, A growth stock

SKPR’s revenue and earnings has been growing at a compounded annual growth rate of 20% and 18% respectively for the last 5 years as shown in the table below.

Year 2012 2011 2010 2009 2008 2007 CAGR
Revenue 414834 256996 195735 174729 178341 170066 20%
EBIT 48200 30981 17552 5307 22323 19811 19%
NI 36844 26245 13404 2931 18294 15997 18%
EPS 0.061 0.044 0.022 0.005 0.030 0.027 18%
Equity 179936 158059 140797 130386 129561 113792 10%

TA and OSK forecasted that its revenue and earnings will continue to grow at an average of 16.7% and 19.4% a year respectively for the next three years. SKPR is hence considered as a growth stock with growth rate more than 15% a year. However at a closing share price of 31.5 sen on 5th April 2013, SKPR is trading at a very low PE ratio of 5.1 (<<10), PEG of 0.3 (<<1), a P/B of 1.2 (<1.5), and a dividend yield of 9.8% (>>3.5%). Hence SKPR is not only a growth stock, it is also a value stock in every aspect.

A high growth stock has a major concern; that is if the growth adds value to the firm. Growth is considered shareholder value enhancing if the growth in earnings exceeds the weighted average cost of capital of the firm. With a return of total capital of 20.5% last year, it has clearly demonstrated that the growth is shareholder value enhancing.

So is SKPR a free lunch for investors; one with high growth and yet selling at a very cheap price?

Posted by kcchongnz > 2013-09-15 11:16 | Report Abuse

NTPM, Jimmy? Yes. But it is better to read what this blogger say about it. He is one of the best for Bursa stocks. He knows NTPM very well.

http://www.intellecpoint.com/search?q=ntpm

Posted by htyeap125 > 2013-09-15 11:26 | Report Abuse

KC chongnz, this link is marvelous, thanx

Posted by kcchongnz > 2013-09-15 15:03 | Report Abuse

Posted by Jimmy Young > Sep 14, 2013 11:41 PM | Report Abuse

Hi KCChongnz,

Want to ask your opinions on the following about their intrinsic values, returns on investments etc etc - i don't know how to do analysis but if you can help to shed some thoughts on these stocks .. say in 5 years in the future .. whether it's OK or not OK to invest in these counters .. would appreciated it, Sir ..

1. SKPRES
2. NTPM
3. TH Heavy Engineering

Thanks

Jimmy, for the first two stocks i have already given my opinion above. For the third one THHE? Ramunia? Ah sori lah, no good impression on it. Don't wish to waste time on it.

Btw, why you asked about THHE ah?

Posted by kcchongnz > 2013-09-28 17:51 | Report Abuse

We started this thread about 9 months ago. At that time many investors were wary about the impending general elections and held a lot of cash, including many local funds and the oracle of Bursa TTB.

A lot of stocks were suggested and discussed. Many of the stocks were property companies. I hereby summarize the return of some property stocks discussed in the thread since then.

The KLSE returned 8.8% since then. Those property stocks as listed in the table below returned an average of 35%, beating the broad market by 4 times. This does not include any dividend which were declared. This is an exceptional performance.

4 out of 17 returned more than 50%. They are Tambun, Hua Yang, Crecendo and Daiman in that order of highest return. Only one counter, ie Mahsing has a single digit return of only 4.8%. Two of them have negative return, ie SP Setia and L&G.

SP Setia could be overvalued at that time because of the frenzy of its UK project then. L&G has a negative return of 10%, also may be the frenzy of its Forester project which is true. But I think the main reason of its under-performance could be its high price acquisition of a property from its major shareholders which pissed investors off.

Stock Price then Price now *+/-
Plenitude 1.79 2.26 26.3%
Glomac 0.855 1.15 34.5%
Hua Yang 1.59 2.97 86.8%
KSL 1.55 2.09 34.8%
Tambun Indah 0.74 1.48 100.0%
Daiman 1.80 2.75 52.8%
Ivory 0.49 0.595 21.4%
Tebrau 0.90 1.27 41.1%
UEM 2.20 2.57 16.8%
Sunway 2.40 3.2 33.3%
Mah sing 2.10 2.20 4.8%
E&O 1.53 2.08 35.9%
SP Setia 3.40 3.32 -2.4%
L&G 0.415 0.375 -9.6%
Dijaya 1.29 1.54 19.4%
Crescendo 1.75 3.25 85.7%
MK Land 0.300 0.375 25.0%
Average 35.7%
Median 33.3%
Stdev 31%

Posted by Alexwong > 2013-09-28 19:25 | Report Abuse

KCChongnz, I think you made a mistake. Mahsing, you forgot about bonus issue, warrant issue and dividend payout. So its more than 4.8%

Posted by Alexwong > 2013-09-28 19:27 | Report Abuse

Mahsing, Bonus issue 1:5 on 4/7/2013. Dividend payout on 5/9/2013 of 7.6 cents.

Posted by Alexwong > 2013-09-28 19:29 | Report Abuse

Oh, forgot. Mahsing also had warrant issue 1:3 on 7/2/2013.

Posted by kcchongnz > 2013-09-28 19:30 | Report Abuse

Alex, thanks for the correction. It is not I forgot, I didn't know at all as I didn't follow it. May be you can help to work out the total return.

Thanks again

Posted by Alexwong > 2013-09-28 19:35 | Report Abuse

Total return workout to be 38% for Mahsing for the 9 months period.

Posted by kcchongnz > 2013-09-29 11:39 | Report Abuse

Posted by Jimmy Young > Sep 28, 2013 07:42 PM | Report Abuse
Dear KCChongnz,
on FA, wanna ask your opinion/thoughts about Digistar

Jimmy, Digistar, like many ACE counters migrated to the main board. They have some new models seemingly good in making money, usually technology related with initially very high growth for a couple of years. But they don't have long enough proven records of consistent revenue and income. They have a small base too.

A few years ago, Digistar has very high growth in revenue of 23% with 200% of growth in income for a couple of years. I actually invested in it when they performed extremely well then.

After that nothing much happened and profit dropped sharply for the last two years. Coupled with a related party transaction of property if I remember correctly, its share price dropped sharply from a high of 60 sen to just 20 sen.

Recently there was some announcement of a long -term concession agreement with the government. I really don't have a crystal ball to tell if this will benefit Digistar in a big way.

Just basing on its last year's earnings of 2.3 sen per share, and likely no profit for the coming financial year ended September 2013, I myself would not invest in it at 29 sen. Bear in mind that it has two warrants in issue and calling for bond issues too.

It is just my personal opinion. I like to invest with companies with proven records, good operating numbers, stable earnings and cash flows and healthy balance sheet.

Posted by Jaack1 > 2013-10-03 19:32 | Report Abuse

03.10.13

Dear Mr Chong,

Please have a good look at MWE Holdings Bhd – they have always been profitable & I think MWE is getting more interesting.

MWE hived off their plantation and electronic businesses and recently bought a 27% stake in Kumpulan Europlus Bhd.

In your view, is this good for mid ~ long term investment?

Tks/Rgds
Jack