Posted by datuk > 2013-01-08 18:48 | Report Abuse

HI KC.....the research is confined to the paper research....lacking of industry experience....or worse still.....conned by the bad management who know how to cook the account.....remember the story of megan media and transmile????

all of us are making mistake. there is no exception to the institutional player. In fact.....sometimes due to the conflict of interest.....the recommendation is bias.....

Posted by tonylim > 2013-01-08 18:51 | Report Abuse

Kekeke datuk. . Was about to ask u specifics but nvm la.
Keep coming datuk. Nobody here kikijang .. Except for some chickens baboons and those known with five alpabets ending with "...bo"

Posted by Ooi Teik Bee > 2013-01-08 20:32 |

Post removed.Why?

Posted by tansrihew > 2013-01-08 20:44 | Report Abuse

OTB & Kcchongnz, both of you have done a good job with the analysis given. End of the day, the decision making are made by us. Losers always blame ppl in giving them wrong advices.

Kcchongnz, free for drink in newmarket?

Posted by kcchongnz > 2013-01-09 11:55 | Report Abuse

tansrihew, sure, I am quite free over here. i live in North Shore. My email address is kcchong@xtra.co.nz. Shall we communicate by email.

Posted by datuk > 2013-01-09 12:34 | Report Abuse

As i said it......the are two components in the equation of the hidden gem :

Hidden gem = f( business value > equity price)

Both of the components are variable; moving up and down according to the earning cycle, competitive landscape, abnormal cost incurred, the equity market sentiment etc.

Hence, the key to discover the hidden gem is ultimately lying in:

1) your ability to spot the movement if these variables both the value and price of equity in advance. This require industry experience or the so-called core competency.

ii) Be a contrarian. you need both the gut and bullet (capital) as pre-requisite to be a contrarian.

iii) Trigger actual the actual action and hold it like a fanatic....


I would be upset if you can't make yr ten bagger....

Posted by datuk > 2013-01-09 12:38 | Report Abuse

If would be more difficult to discover the hidden gems during the bull cylce especially after few years of up cycle.....

Posted by aunloke > 2013-01-09 12:46 | Report Abuse

Well said datuk, this shows the true colour of you compare with the post when you were joking in the Sozo tread. Please post more as we can benefit from your experience , thanks.

Posted by Fat Cat Tim Buddy > 2013-01-09 12:48 | Report Abuse

kikikiki

Posted by aunloke > 2013-01-09 12:55 | Report Abuse

kikikiki is from thin cat, from fat cat it should be kekekeke ! just joking, anyway found any gem? care to share.

Posted by shirley1 > 2013-01-09 13:02 | Report Abuse

Datuk, u related to datin? haha.. do you mean reading the market or the operating environment as well ?

Posted by buybackma > 2013-01-09 13:13 | Report Abuse

Hidden gem????? Hemmm... Pantech guys!! Pls go to Pantech forum and you will find it...smiles...

Posted by kcchongnz > 2013-01-09 13:15 | Report Abuse

datuk, well said, all good. Could you share with us your hidden gems with f(business value)> equity price as stated by you. Thanks

Posted by kcchongnz > 2013-01-09 13:28 | Report Abuse

I hope this thread will continue with recommendations continuously coming. Heaps of academic research have shown that hidden gems, are companies with tremendous potential for investors to earn excess returns. Appended below is a link to explain what are they (the writer uses sleeping beauties instead)and why they present great opportunities for retail investors. The thing is that you won't be able to find from any analysts reports. However, if you are speculators expecting buy and made huge profits instantly or in short time, they may not be for you, as explained by the writer.

http://blisswise.blogspot.co.nz/2013/01/sleeping-beauties-love-them-hold-them.html?spref=tw

Posted by datuk > 2013-01-09 17:41 | Report Abuse

sit leh (hokkian).....perhaps in this new year...i comes with new serious style that back up by the new resolution .....to discover the hidden gems.....kikikiki

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

Essentially, one of the best way in discover the hidden gems is to find the euphoria that could trigger the motion both in the intrinsic business value and the price simultanuosly.

I term it as "thematic play". For example....in the water sector .....the pahang-selangor water project...what will happen to the water-linked stocks when the BN regaining the power in selangor???? using the formula outlined above.........you choose your hidden gems....ok...

Posted by shirley1 > 2013-01-10 06:54 | Report Abuse

Will maybank and cimb become lagi gems one day cuz they're expanding regional ? Great vision. asean for you.

Posted by tptan45 > 2013-01-10 08:34 | Report Abuse

Maybank and CIMB are not hidden gems. They are 24 carat diamonds.

Posted by kcchongnz > 2013-01-10 15:46 | Report Abuse

Is Scientex, posted in this thread before, a hidden gem? Judge yourself from the writeup of one of my favorite bloggers below.

http://www.intellecpoint.com/

Posted by shirley1 > 2013-01-10 15:48 | Report Abuse

too many ppl know already, it is a gem but not hidden.. jus kidding

Posted by tonylim > 2013-01-10 16:19 | Report Abuse

Kcchong, in my lay man terms, plantation land has appreciated in value when it was sub-urban. The land after conversion to housing is kuci miao and cheap houses.

Shirley1, their take over of GWPI was the best kept secrets last night. Scientex was doing at RM2.60 prior to announcements

Posted by shirley1 > 2013-01-10 16:28 | Report Abuse

thank you tony :)

Posted by tonylim > 2013-01-10 16:33 | Report Abuse

*last year

Posted by keanpoh > 2013-01-10 16:38 | Report Abuse

Is TDM considered a hidden gem then?

Posted by Raymond Tiruchelvam > 2013-01-10 16:50 | Report Abuse

i think IJM is a hidden gem.... with its book orders, and overweight on the construction industry... but it does have a thorn among its roses, stake in scomi.

Posted by Ooi Teik Bee > 2013-01-10 16:54 |

Post removed.Why?

Posted by kcchongnz > 2013-01-10 16:59 | Report Abuse

keanpoh, my personal opinion, yes, TDM is definitely a hidden gem. Its ttm EPS is 50 sen, which means at 3.37, its PE is just 6.8. For me a more relevant metric is enterprise value over its ebit which is just at 4.3. I doubt any plantation company is that cheap. It has 146m excess cash in its balance sheet, unlike some other company like TSH, Jayatiasa, RSawit etc which have huge debts but all highly recommended by analysts and many others in i3 forums. Same as the cash flows. Many plantation companies mentioned here are with no or little free cash flows. TDM has heaps of FCF every year. Its FCF has been consistent at 12% its enterprise value. It is abundant.

Posted by kcchongnz > 2013-01-10 17:05 | Report Abuse

Ooi, almost all property companies are undervalued if you look at their land value. But can they sell all their land at what they perceive as its market value? Even they can, will they close shop and distribute all the money to shareholders? If develop the land, of course a lot of profit. But what next after all land has been developed? No I can't value company like basing on land value as I don't have the information. As you are aware I can only value a company based on available information from Bursa only, and not from insider information or other sources which would be too tedious and difficult for me as a small time investor residing far away from home. That is why my analysis may have limited use if you consider the market is efficient.

Posted by keanpoh > 2013-01-10 17:20 | Report Abuse

kcchongnz, thank you for sharing your opinion about TDM (as well as on SCIENTX and KFIMA).

Like you said, I like TDM for it's FCF and healthy balance sheet. It is no doubt the cheapest plantation stock today.

For plantation stocks, I also think that SOP will be a good buy judging from it's mature and immature tree ratio. SOP still has a lot of room to grow it's revenue and profit.

Posted by kcchongnz > 2013-01-10 17:36 | Report Abuse

keanpoh, how come we have exactly the same opinion about plantation stocks ah? Yes, if I think of growth, I like SOP much much better than TSH which has been peddled by many analysts. Few recommend SOP. SOP has much better operating numbers, healthy balance sheet and cash flows, plus value. I used to chart their monthly production. There is heaps of truth in the growth of SOP, not in TSH which claimed by many analysts, One claimed that TSH will grow by 25% for the next 10 years? Of course if you plug in this over optimistic figures into valuation, TSH is worth a lot. But do you believe such exponential growth can continue for so long? Not me.

Posted by keanpoh > 2013-01-10 18:27 | Report Abuse

Not me either. Somehow TSH never make it into my radar. Probably due to the balance sheet, cash flow and gearing ratio.

SOP on the other hand looks more like a well managed, on the right track kind of company. I would definitely prefer SOP as a growth stock. Even over TDM in terms of growth potential. However, TDM is cheaper and pays good dividend.

:)

Posted by kcchongnz > 2013-01-11 07:27 | Report Abuse

Another hidden gem, ECS ICT
ECS ICT Berhad (“ECSB”), an MSC-status company is a leading distribution hub for Information & Communications Technology (“ICT”) products in Malaysia listed on the Main Market of Bursa Malaysia Securities Berhad on 15 April 2010. ECSB distributes a comprehensive range of ICT products comprising notebooks, desktop computers, printers, software, network and communication infrastructure, servers, and enterprise software from more than 30 leading principals like Hewlett Packard, IBM, Cisco, Microsoft, Apple, Oracle, Dell, Epson, Samsung, Buffalo, Adobe, Juniper, Blue Coat, VMWare and Google. With a nationwide channel network of more than 2,500 resellers comprising retailers, system integrators and corporate dealers, ECSB also provides value-added product support and technical services.

The followings are the performance of ECS
Price on 11/1/2013 RM1.06
Average 3-year EPS 17 sen
NAB per share RM1.02
Excess cash per share 25 sen
ROE 17%
Dividend per share 8.0 sen

The interesting thing about ECS is it doesn’t need much asset to carry out its business. Its fixed asset turnover is 200 times. Its inventories turnover fast in less than a month. Its ROE of 17% is achieved with a high asset turnover of 4X. Actually ECS impresses me most with its ability to generate cash. Last year ECS generated 56 m of cash flows from operations. ECS doesn’t require much capital expenses. Cash return averages at a whopping 37% of invested capital. Imagine that you put in money for a business and you get 37% return in hard cash, not dicey earnings, a year. Free cash flows per share is at 30 sen. Isn’t that a good investment?

But what is the market valuation of ECS? PE ratio is only at 6.2. The enterprise is only valued at 3.6 times its EBIT. The dividend yield is 7.5%, twice the fixed interest rate from banks. Is this low valuation justified?

Posted by passerby > 2013-01-11 09:34 | Report Abuse

datuk: on the stock on recovery - can MISC & Maybulk fit into the category ??

Posted by kcchongnz > 2013-01-13 16:57 | Report Abuse

Kimlun Corporation (RM1.43 on 13th January 2013)
Kimlun Corporation BHD is a one-stop engineering and construction services provider. It has also established itself as an integrated industrial building system (IBS) builder. The Company operates in three segments: construction, manufacturing of concrete products and trading of building materials, and investment.
Management
• Pang Tin, aged 64 is Executive Chairman and the major shareholder, he has more than 30 years in construction sector. Sim Tian Liang, aged 57 is a professional civil engineer. Currently he is the Immediate Past Chairman of IEM Southern Branch and the Deputy President of Johore Master Builder Association.
• Independent directors appear to be made up of credible and professional people who are well known and active in the industry.
• Strong insider ownership of 65% as at 31/12/2010.
• Total executive compensation in 2010 made up of only 2.5m, or less than 0.5% (<<3%) of revenue in 2010. None of the five executive directors was paid more than RM550,000 a year.
Growth
• Kimlun grows at about 14% compounded annually from 2007 to 2011. The main driver is its construction arm which made up to 93% of group’s revenue. It has a very strong presence in the state of Johore. With the ETP and its rollout of various projects, example the Klang Valley MRT, speeding up of the development of Iskandar Malaysia, there is high positive growth potential in the next 5 years.
• Kimlun has grown from a regional construction player in the southern region (Iskandar Malaysia Development) and Singapore (MRT extension) to a national player with the rollout of ETP.
• The high use of Integrated Building System (IBS) for many civil engineering projects for government as well as private sectors which Kimlun has a niche in. This is a government policy to mitigate the problems of foreign labourers.
• There is already more than RM1 billion projects in Kimlun’s order book.
Strategic Advantage/Moat
• Its use of the IBS construction method, with its own casting yards gives it an advantage over traditional construction and its players, especially for the concrete linings for tunnels in the Singapore MRT and Klang Valley MRT projects, and the policy of utilizing more of precast construction in both government and private sectors.
• Its strategic geography location in Johore with the extensive development of the Southern Corridor (Iskandar Malaysia), and the Singapore MRT extension.
Competitors
• Highly fragmented and competitive construction industry.
• But fewer players in IBS construction method.
• Able to compete with bigger players.
Risks
• Customer concentration in Johore but has expanded its base throughout Malaysia.
• Intense competition in the construction industry
• High receivables and bad debts are the norm in this construction industry.
• Needs high capital expenses to build new plants and regularly upgrade equipment to meet demand and maintain edge over competitors.
• The earnings per share dilution on recent 10% private placement.
• Small capitalized stock and illiquid. Only a market cap of 364 m and tightly held.
• A blow up in Europe debt crisis or a political change in Malaysia may cause a slowdown in the construction industry.
Valuation
• A very healthy balance sheet.
• Revenue grows by a CAGR of about 14% from 2007 to 20112. Expected to grow faster with the speedup of ETP.
• Margins have been stable with operating profit margin of about 10%.
• ROE is good at 20% (>15%) with slightly high but manageable leverage of 2.1.
• ROA over last two years is good at 9.3% (>7%)
• 2011 Ttm free cash flows negative, need more cash for capital expenses.
• Dividend yield ok at 3.6%, about the same as FD rate.
• PE ratio of 7.7. Low for a high growth company.
• Graham’s valuation gives a value of RM2.04, a margin of safety (MOS) of 30%.
• Discount cash flows valuation gives an intrinsic value of RM2.52, a MOS of 43%.
Catalysts
• More contract awards, a high possibility with ETP especially the MRT projects.
• Institutions’ interest in Kimlun when it becomes apparent to them of its value.
• Government assertion in the policy of the more use of IBS in construction industry.
Conclusion
I became interested in Kimlun after hearing that the share is going to go up to above RM2.50 from the technical point of view. The valuation of Kimlun is undemanding. However with the good prospect in the construction industry with the ETP and Singapore MRT projects, and Kimlun’s niche in the geographic and its IBS, there seems to be a plausible story for this company and hence its share price. The major shareholders have been buying up shares in the market.
Verdict
• Management: B+
• Growth: A
• Moat: A-
• Risk: B
• Valuation: B+
• Overall: A-
Disclosure
Own some shares

Posted by aunloke > 2013-01-13 17:15 | Report Abuse

Agree, kimlun has the potential to shine, in fact just bought some last week ; the award of Sing MRT contract may be out this month, hope it's in favour of kimlun.

Posted by bryan_su > 2013-01-13 18:04 | Report Abuse

yes, kimlun....

Posted by yfchong > 2013-01-13 19:34 | Report Abuse

Thks for the analysis KC, will keep for some time, .......

Posted by machai123 > 2013-01-13 19:41 | Report Abuse

Dear kcchongnz. I am a silent observer since November 2012 and I thank you for your postings. It has help me to make calculations and know my risk more clearly.

Can I ask what is your observe in JTiasa?

Posted by skyland > 2013-01-13 19:54 | Report Abuse

menang & amprop...go go go

Posted by aunloke > 2013-01-13 22:13 | Report Abuse

Cheer to Amprop for being upgraded to this thread from below 50 sen thread.

Posted by skyland > 2013-01-13 22:32 | Report Abuse

aunloke...thanks & amprop is a good call from u

Posted by skyland > 2013-01-13 22:34 | Report Abuse

i bought 0.535 amprop & menang 0.305

Posted by kcchongnz > 2013-01-14 05:28 | Report Abuse

Posted by machai123 > Jan 13, 2013 07:41 PM | Report Abuse
Dear kcchongnz. I am a silent observer since November 2012 and I thank you for your postings. It has help me to make calculations and know my risk more clearly.
Can I ask what is your observe in JTiasa?

When somebody asked me about amprop and menang, I took a look and didn't provide positive feedback on them. Luckily people like aunloke, skyland didn't follow me. If not that would deprive them of making money on them. So machai123, are you sure you want to listen to me on Jaya Tiasa?

Anyway since you asked, I would be frank about it. I don't like Jaya Tiasa and don't even bother to waste time to value it. I think I have look at them before; poor operating results, very high debts, no cash flows, the very pantang things for me in investment. Worst of all, very expensive in relation to its performance. I know i know, many credible people like Dali, Cold eye, Koon YY etc liked them very much; so so much land ah, worth so much so much per hectare and hence per share ah, blah blah blah. I don't know how to evaluate like that because i have no information and don't bother to find out. But first of all why jaya Tiasa and not say TDM, SOP etc?

Posted by bbull > 2013-01-14 07:01 | Report Abuse

faber

Posted by hw0706 > 2013-01-14 07:03 | Report Abuse

any people have view on sam engineering

Posted by kcchongnz > 2013-01-14 13:42 | Report Abuse

SP Setia, a fallen angel?
Sp Setia is undoubtedly the number 1 property developer in Malaysia. However its share price dropped from a high of RM4.60 to RM3.14 at the close of today's market. What happen? Has anything changed that much besides a little correction in the property market? Appended below is a writeup of SP Setia from a favorite blogger of mine for your information.
http://www.intellecpoint.com/search?q=sp+setia
coincidentally the popular Dali also wrote a piece of it as below:
http://malaysiafinance.blogspot.co.nz/
I seldom follow recommendations from Dali but his post on SP Setia is quite impressive. So more because of the recommendation of the earlier website, I bought some SP Setia shares at RM3.14, without doing any work of myself. Hope I can make some money.

Posted by tonylim > 2013-01-14 15:58 | Report Abuse

@value_man, come here to talk about your magni

Posted by Drachen > 2013-06-22 17:52 | Report Abuse

What about SEB and Favco?

Posted by kcchongnz > 2013-06-22 18:16 | Report Abuse

Is Favco a hidden gem?

Posted by kcchongnz > May 28, 2013 08:03 PM | Report Abuse X

Is FAVCO a great company? Is it a good investment?

FAVCO, a crane fabricator has a good business spread all over the world. Its earnings has been growing at a fantastic CAGR of 36% over the last 6 years. ROIC is high at 17%. Yes, it is definitely a great company. But is it a good investment at the present price of RM2.64 after going up 30 sen today? I think so. Below is my assessment.

FAVCO Good company?

Good governance ?
Durable business Yes
Growth Yes 36% Net profit 6 yr CAGR
ROIC Yes 17% >WACC
Balance sheet Yes 0.23 <1.0 D/E ratio

Screens for investing RM2.64 28/05/2013
ROIC Yes
P/B Yes 1.6 <2.0
PE ratio Yes 9.1 <20

Posted by tonylim > 2013-06-22 18:25 | Report Abuse

Arrghh, it has since touched 3-00.
Retraced to 2.74 friday, settled at 2.86 same day.