The 5 Rules of Investing by Cold Eye

Posted by kcchongnz > 2013-03-17 18:37 | Report Abuse

Cold Eye冷眼’s 5 yardsticks for investment Cold Eye, during his talk on 16/3/2013, listed 5 important criteria for investing in a stock as below: 1. Return on equity, ROE, 2. Cash flow from operations and free cash flow, 3. PE ratio, 4. Dividend yield and 5. Net tangible asset backing per share, NTA If you invest RM100,000 in a business, you would want to have a reasonable return from the capital, or equity you put in. A business is risky and probably you may want a minimum return of say 25%. For investing in the share market, you may want a minimum return say 10%, 6% above the return you get from bank deposit? If the business only returns you 4%, why would you want to invest in it when you can get that rate from FD without having any worries at all? In your business, you would expect that all your debtors pay you promptly and that you don’t have to stock up a lot of inventories which will tied up your capital. Otherwise you would have to put in more capital each year even though you make money. I would expect the hard cash I can received must be about the earnings I make each year. My business would also require capital expenses each year to keep it going, better growing bigger so that I would earn more in the future. This I would need to buy more and replenish the equipment , buy or open more shops etc. It would be ideal if these expenses can be met with the cash I receive each year and not having to come up with more of my own money or borrow from bank. After that, I would be happy if there is still money left for me to draw out (as dividend), or the company can have extra money to invest in other lucrative business. This money available after all the capital expenses is termed as free cash flow, or FCF. If the above business make a lot of money, say 30000 a year, or 30%, would you buy it if the asking price is 1 million, or a PE of 33? This will give you a earnings yield of only 3%. Hence a good business does not mean it is a good investment if the price is too high. How nice it would be if the business earns enough for me to draw down 10,000 a year consistently. For my dividend yield would be 10%, 2.5 times that of FD rate. Besides my business is still growing. Well if at the end if I want to exit from the business, if the net tangible asset of my assets worth more than what I put in, or more, I can recoup my initial investment. These assets must of course the more valuable the better, for example hard cash, property and land etc, rather than some money which I have been arguing with the debtors whether they are going to pay me or not, or some inventories which are outdated. Hence NTA is important too although in some businesses, example the service industry where the important assets are its people, its technology or brand name rather than hard assets. Do you have any good stocks meeting the majority of the above criteria as given by Cold Eye to share? Or any lemon you may know which you want to tell others to be careful about? This discussions here is for sharing of knowledge and information and should not be construed as a forum for hard selling or condemning others of their stocks without giving justifications. Kcchongnz 17/3/2013

22 people like this.

260 comment(s). Last comment by bsngpg 2013-09-25 22:39

kcchongnz

6,684 posts

Posted by kcchongnz > 2013-04-03 03:48 | Report Abuse

Posted by houseofordos > Apr 2, 2013 07:32 PM | Report Abuse
wah kc, so fast u pick up MBL ar.. i still din manage to catch it :P

house, you must be trying to catch it at lower price. Good, you are following the philosophy of one of my sifu.

• The secret to successful investing is to figure out the value of something and then-pay a lot less Joel Greenblatt

For me sometimes I don't count on one two sen difference because I may never get it that way. If you refer back to our discussions, including that of gark, and my last evaluation of mbl based on Cold Eye's five yardstick, plus another additional yardstick of "growth", do you see some compelling reasons to invest in this stock? Yeah, I know, election fear. But again this type of thing very hard to say one. Who knows since most players, including institutional investors have left the market long time already, they may be getting impatient now and may jump in when election date is announced?

kcchongnz

6,684 posts

Posted by kcchongnz > 2013-04-03 04:24 | Report Abuse

nhkch, I like to answer your question but most of them have been explained in the previous posts. First, read my explanations on top of this thread on the explanations of all these metrics. Secondly also read our posts on some of the stocks which i considered failing the yardsticks such as Ivory, Guan Chong etc which were posted here before. Try understand them, Google some terms which you may not understand. Then com back again if you still have any query.

For the explanation on CAR, compounded annual rate of growth, try Google also. Or if you are interested in my explanation, go to the thread below:

http://klse.i3investor.com/servlets/forum/600027440.jsp?fp=2

The prices you can go to Yahoo Finance, I think, or some other sites. For me, I go here:

http://www.shareinvestor.com.my/charts.pl?id=6556WB&action=charts_history

But I have to put into a spreadsheet of mine to find out the CAR. I don't know anybody can get the CAR of all the stocks anywhere or not. I doubt so. Some other data like dividends, you can get from their annual reports.

Correction on your FCF, my benchmark is it must be >5% of revenue, not <5%. Think intuitively.

Margin of safety is (intrinsic value-stock price)/intrinsic value. Again think intuitively.

Debt/capital is the ratio of total debt over total capital. Capital includes equity and debts. Debt is cheap but too much debt makes a company risky in case of economic downturn.

Many benchmarks I mentioned here is individual preference, and many are just common sense.

kcchongnz

6,684 posts

Posted by kcchongnz > 2013-04-03 12:21 | Report Abuse

Cold Eye’s 5 yardsticks for Johore Tin (JT)

Yardstick 1: ROE
JT reported an earnings of 23.1m for the common shareholders, or EPS 24.7 sen for the year ended 31/12/2012. With its net asset backing per share of 1.67, ROE is 17.6% which is better than the benchmark of 15%. This is good as it was achieved with a low total debt of 0.16 to assets.

Yardstick 2: Cash flow and free cash flow
The cash flow from operations (CFFO) is 16.6m. This is 72% of its earnings of 23.1m. This shows the quality of the earnings is not that great. After spending 29m in capital expenses, there is a free cash flow (FCF) of 7.6m. 3.5m dividend was paid out from the FCF . This FCF is at 3% (<5%) of its revenue which is a little on the low side. As JT is growing very fast in revenue and earnings, these little low cash flows are considered tolerable.

Yardstick 3: PER
JT is trading at 1.73 now. With EPS of 24.7 sen, the PE ratio is only 7.0 (<10). This is a reasonably low PE and considering that it has a healthy balance sheet with excellent earnings and growth.

Yardstick 4: Dividend yield
JT paid a dividend of 3.8 sen for last financial year, or a dividend yield of 2.2%, a little low.

Yardstick 5: NTA
The net asset backing per share of JT is 1.67. Hence at a share price of 1.73, the price-to-book value is 1.1 0 (<1.5).

Yardstick 6 (Non Cold Eye yardstick): Growth
The CAGR of JT’s revenue and net profit for the last three years was 32% and 67% respectively. Last year’s growth was 84% and 113% respectively. This is a very high growth.

JT meets most of the criteria of Cold Eye as an investment grade stock except for cash flow and dividend yield. Yes the most attractive attribute of Johore Tin is its expected high growth for the next few years due to its acquisition of Abel Dairies, and yet it is selling at a reasonable valuation.

kcchongnz

6,684 posts

Posted by kcchongnz > 2013-04-09 18:18 | Report Abuse

Cold Eye’s 5 yardsticks for Prolexus

Yardstick 1: ROE
Prlexus reported an earnings of 9.7m for the common shareholders, or EPS 28 sen for the year ended 30/6/2012. With its net asset backing per share of 1.53, ROE is 18% which is better than the benchmark of 15%. This was achieved with no debts.

Yardstick 2: Cash flow and free cash flow
The cash flow from operations (CFFO) last year was 26.6m. This is 253% of its earnings of 9.7m. This shows the quality of the earnings is good. After spending 3.5m in capital expenses, there is a free cash flow (FCF), or owner’s earnings of 23.2m. 1.2m dividend was paid out from the FCF . 11.5m was used to pay down debts. This FCF is at 12% (>>5%) of its revenue or 54% (>>12%) of its invested capital. I can only use one word to describe this; Fantastic.

Yardstick 3: PER
Prlexus is trading at 1.33 at the close on 9th April 2013. With EPS of 28 sen, the PE ratio is only 4.8 (<<10). This is a reasonably low PE and considering that it has a healthy balance sheet with excellent earnings and cash flows.

Yardstick 4: Dividend yield
Prlexus paid a dividend of 3 sen for last financial year, or a dividend yield of 2.2%, not great but it is ok. Prlexus has not been paying any dividend for a long time already.

Yardstick 5: NTA
The net asset backing per share of Prlexus is 1.53. Hence at a share price of 1.33, the price-to-book value is only 0.9 (<1.5). It is inexpensive. 50% of its assets is hard cash.

Yardstick 6 (Non Cold Eye yardstick): Growth
The CAGR of Prlexus’s revenue and EBIT for the last three years was 8% and 45% respectively. Last year’s growth in EBIT and NI was 91% and 78% respectively. This is a very high growth.

Prlexus with the exception of dividend yield, meets all criteria of Cold Eye as an investment grade stock by a wide margin. But again one would expect a low dividend yield for high growth stock.

houseofordos

936 posts

Posted by houseofordos > 2013-04-10 00:32 | Report Abuse

Here is another counter that might meet the 5 yardsticks and possibly undervalued:-

Willowglen MSC Berhad
Willowglen MSC Berhad is engaged in the research, development and supply of computer-based control systems. Its supervisory control and data acquisition (SCADA) system is used in security monitoring, building management and environmental control systems. During the year ended December 31, 2009, the Company delivered a hardware expansion board for the remote terminal unit (RTU) 6500 series, developed an internal hardware test system to further ensure manufacturing quality and released the SysLink version 3.8.2. SysLink 3.8.2 was developed to incorporate features, including openness, productivity and connectivity (OPC) client, support for more relational database servers and a new industrial standard protocol. Its operations are carried out in Malaysia, Singapore, Europe and other countries. As of December 31, 2009, the Company's subsidiaries were Willowglen (Malaysia) Sdn. Bhd., GB Tech Sdn. Bhd., Willowglen Services Pte. Ltd. and Willowglen (Hong Kong) Pte. Limited.


1) ROE (Consistently >15% except for 2011)
Year 2012 2011 2010 2009 2008 2007
ROE 21.06% 13.50% 15.26% 20.90% 16.10% 18.25%

2) Free cash flow - Healthy, low capex and consistently positive. The FCF is low for 2012 due to high amount of receivables from contract customers.

Cash Flow
Year 2012 2011 2010 2009 2008 2007 Average
CFFO 1623 5505 15065 8736 15309 5386 8604
Capex 1006 381 458 2541 1107 3721 1536
FCFF 617 5124 14607 6195 14202 1665 7068
Div paid7302.21 6085 7308 7427 4951 4956 6338
FCFF/Rev1% 10% 27% 10% 28% 3% 13.06%

3) PER
Based on EPS(TTM) FY2012 of 6.32 sen and closing price of 42sen, it is trading at P/E of 6.6 which is undemanding.

4) Dividend yield
Year 2012 2011 2010 2009 2008 2007
EPS (sen) 6.32 3.49 3.77 5.10 3.25 3.31
DPS (sen) 3.0 2.5 3.0 3.0 2.0 2.0
Payout ratio 47% 72% 78% 59% 61% 60%

Dividend yield for 2012 at closing price of 42 sen is at 7.1% which is great. It's strong cash position enables a high dividend but even then the earnings have been able to sustain the dividend payouts as there is minimum investment on capex. It is a net cash company with no debts. Cash/share = 12.6sen

5) NTA
The net assets per share is RM0.3. This implies a Price/NTA = 1.4 which is OK since this company is a service based company which is asset light.

6) Growth
Year 2012 2011 2010 2009 2008 2007
Rev 83427 52160 54470 62,001 51,157 51,937
Y-o-Y growth 59.94% -4.24% -12.15% 21.20% -1.50%
EBIT 18194 10180 11564 15164 9959 9677
Net Income 15231 8381 9312 12614 8061 8202
Y-o-Y growth 81.73% -10.00% -26.18% 56.48% -1.72%
Gross margins 21.81% 19.52% 21.23% 24.46% 19.47% 18.63%
Net margins 18.26% 16.07% 17.10% 20.34% 15.76% 15.79%

The growth has been not been consistent over the past 5 years possibly due to high percentage of profit derived from contract customes.

This counter may not fit in as a growth stock for now but it is a financially sound company and even as a no growth stock offers a decend dividend yield which is supported by strong cash flow. Comments ??

kcchongnz

6,684 posts

Posted by kcchongnz > 2013-04-10 07:46 | Report Abuse

house, well done. A few points here. A service based company's main asset is intangible, such as human resources, reputation etc. Hence book value is low as rightly pointed by you. Its ROE should also be high, which at I am surprised its ROE is just 21%. Maybe to much cash. A better metric may be is ROIC. CFFO for last two years are very low according to your tabulations. Occasional low CFFO and FCF is alright, more important is the trend and average. This is because sometimes due to lumpy payment of contract works and hence sometimes of high receivables. I would like to check further why such a low CFFO. Any inappropriate realization of future profits which costs have not been incurred? For growth, the future expected growth is important. Willow seems to be getting a lot of contracts recently which is good for future growth.

Overall Willow meets about half of the criteria. But that doesn't mean Willow has no great future. I would think the future is good based on its recent jobs secured.

tptan45

388 posts

Posted by tptan45 > 2013-04-10 10:01 | Report Abuse

Unfortunately, for me I don't understand its business at all. How is it needed or indispensable? Might need some help here.

houseofordos

936 posts

Posted by houseofordos > 2013-04-10 14:01 | Report Abuse

KC, how does ROIC exlude the cash component of the company ? In the equation fron Investopedia

ROIC = (NI - Dividends) / Total capital

After subtracting the dividends gives the funds available to be reinvested into the company.

And also what is the definition of total capital ? Assets (including long term debt) ? Is cash not part of the capital or it it excluded in the calculation? Care to elaborate ?

kcchongnz

6,684 posts

Posted by kcchongnz > 2013-04-10 14:24 | Report Abuse

house, the formula you get from Investopedia for ROIC is not good. I would say it is wrong because the numerator has excluded the interest payments for debts, but the denominator includes debts. Total capital = total equity +total debts. The dividends in the numerator i guess they refer to dividend to preferred shareholders, which companies in Bursa seldom have preferred stocks. Not everything in Investopedia is correct.

I try searching the net and I think the following link is best in explaining ROIC in simple terms.

http://news.morningstar.com/classroom2/course.asp?docId=145095&page=9&CN=

houseofordos

936 posts

Posted by houseofordos > 2013-04-10 14:46 | Report Abuse

KC, very good... thanks

houseofordos

936 posts

Posted by houseofordos > 2013-04-12 00:27 | Report Abuse

kc, I took a closer look at Prolexus,

Looking at the gross margins, its really tight (at the most around 5-6%) and their revenue growth isnt really that great the past 2 years (2011 and 2012). Their free cahsflow for 2012 was great but it was -ve in 2011 so the high FCF in 2012 could be due to lower receivables.

What's your valuation for this company ? And also did you have time to look at Willow ?

kcchongnz

6,684 posts

Posted by kcchongnz > 2013-04-12 09:01 | Report Abuse

house, prolexus gross margin is 15%. The 5-6% you are talking about is the net profit margin. Yeah, you are right in most of your other comments. The performance and cash flows last financial year ending 31/7/2012 was exceptionally good, spike up in ROE to 16.3% due to higher margin from 3% to 5.1%, high EPS, almost double to 24.2 sen. Great cash flows because of lowering of receivables which is a very good sign. Balance sheet improved a lot with 10m debts retired. Yeah this good performance may not repeat in the future. But do you notice that for the last 6 months, it has already made 22 sen EPS?

Using a simple ROE valuation with a required return of 12%, Prolexus is worth RM1.91 per share. That is basing the performance of last year.

kcchongnz

6,684 posts

Posted by kcchongnz > 2013-05-18 05:40 | Report Abuse

Does Success Transformer satisfies the 5 yardsticks of Cold Eye?
The table below details the 5 metrics of Success compared with the yardsticks:

1 ROE 14.3% <15%
Net profit 32243
Equity 225255
2 Cash flows Bad
CFFO 11043 CFFO/NP<100%
FCF -10698 Negative
3 PE ratio 5.3 <10
Price 1.25
EPS 0.235
4 Dividend yield, % 2.4 <3%
Dividend , sen 3.0
5 Price/NTA 0.82 <1
NTA 1.53

Though success Transformer is successful as an investment in terms of PE ratio (<10), and NTA (P/NTA<1), it is mediocre in ROE (<15%) and dividend yield (<3%). It is particularly poor in cash flows, which to me is the more important metric. Cash flows from operations in 2012 of 11m is just a third of net income. Its free cash flow is not good at all with a negative value because of the need of capital expenses of 21.7m. In fact, Success has no free cash flows for the last three years. Hence it requires continue to borrow money to do its business. This is evident from its borrowing increasing from 15 m in 2009 to 83 m in 2012.

So do you want to invest (emphasis, invest, not speculate) in Success?

kcchongnz

6,684 posts

Posted by kcchongnz > 2013-06-12 07:48 | Report Abuse

Value Investing. Does Lii Hen satisfies the 5 yardsticks of Cold Eye?

The table below details the 5 metrics of Lii Hen compared with the yardsticks:

5 yardstick of investing by Cold Eye for Lii Hen
1 ROE 15.9% >15%
Net profit 21363
Equity 134697
2 Cash flows OK
CFFO 19063 89% CFFO/NP
FCF 6899 Positive OK
3 PE ratio 4.6 <10
Price 1.64
EPS 0.357
4 Dividend yield, % 7.3 >3.5
Dividend , sen 12.0
5 Price/NTA 0.76 <1
NTA 2.16

It appears that Lii Hen meets all the requirements of a value stock. However we need to check to ensure that there is at least a growth in line with the growth of the overall economy and the company is not too risky to invest in.

The company’s revenue and net profit has been growing at a CAGR of 16% and 45% respectively for the last 7 years. Together with the anticipated housing recovery in the US where the company has been exporting its furniture product to, we can say the growth will still be there for some years.

With a total debt-to-capital ratio of 0.17, we can safely say that there is little risk of bankruptcy for this company.

It is concluded here that Lii Hen is a great value stock to invest in.

j harcharanjit a/l jalaur singh dhillon

6,400 posts

Posted by j harcharanjit a/l jalaur singh dhillon > 2013-06-12 08:15 | Report Abuse

where is the best place to view this details daily?? some are available in the company reports and some indicators are always changing ones.. so where to view this changing indicators?? any site online? a good one please recommend

divine

1,153 posts

Posted by divine > 2013-06-12 08:16 | Report Abuse

Lii Hen stood ground yesterday :)

kcchongnz

6,684 posts

Posted by kcchongnz > 2013-06-14 08:49 | Report Abuse

Which is a better stock, Lii Hen or Latitude Tree?

I have stated that Lii Hen meets all the requirements of a value stock and that there is also reasonable growth in the business and it is also not a risky stock basing on its balance sheet. But how is it compared to Latitude Tree, a comparable furniture exporter and also a value stock if you analyze its financial?

Lii Hen Latitude
Growth Trailing twelve months
Revenue 22% -1.0%
NI 92% 122.2%

Lii Hen has a nice growth of its revenue of 22% the last twelve month whereas the revenue for Latitude is basically flat. However, Latitude's net income grew at a higher rate. Between the two, I will prefer Lii Hen which has a good revenue growth which is a higher quality growth and also has a good growth in earnings.

It is such a coincidence that both Lii Hen and Latitude has similar kind of margins as shown below.

Margins Lii Hen Latitude
Operating margin 7.9% 7.9%
NI Margin 6.2% 6.4%

But which is more efficient?

Efficiencies Lii Hen Latitude
NI Margin 6.2% 6.4%
Asset turnover 1.75 1.25
Leverage 1.47 1.55
ROE 15.9% 12.5%
ROIC 17.3% 13.1%


The winner for ROE is Lii Hen with ROE of 15.9%, higher than my requirement of 15%. You can see from the dissection of ROE above that Lii Hen wins in the metric of asset turnover, meaning more sales in relation to assets it holds, even though it has a lower net profit margin and financial leverage.

Lii Hen's return of invested capital at 17.3% is also substantially better than that of Latitude Tree.

One would think that due to the efficiency of Lii Hen, it should be valued higher than latitude, but is it?

Market valuation Lii Hen Latitude
PE ratio 4.6 3.7
EV/Ebit 3.2 4.1

In term of PE ratio, yes, Lii Hen is valued higher than Latitude. But PE ratio is not a true reflection of whether it is cheaper, especially when debts is involved. A better comparison should be the enterprise value over earnings before interest and tax to account for both capital providers. In term of EV/EBIT, it is surprised that Latitude is valued higher at 4.1 compared to 3.2 of Lii Hen. Anyway, both stocks are value stock using this metric.

arv18

2,662 posts

Posted by arv18 > 2013-06-14 08:53 | Report Abuse

Thank you very much. I was wondering about this myself. Can you recommend a good book, with Excel templates for working our ROE, WACC etc, like you do?

kcchongnz

6,684 posts

Posted by kcchongnz > 2013-06-14 09:10 | Report Abuse

arv18, sorry i don't know of any book with Excel templates to calculate those ratios and metrics. I think if you Google, you may find some in the net to do some simple computations.

I do it myself starting from the financial statements from Bursa website. One must of course have some basic knowledge of reading and interpreting financial statements and know how to use Excel spreadsheets. If one doesn't have that it may be a little difficult at the beginning. But they aren't difficult to learn and then practice to make perfect. If not, he also can use calculator to compute those numbers.

arv18

2,662 posts

Posted by arv18 > 2013-06-14 14:55 | Report Abuse

Thanks again. I'll do some research online. Cheers!

Lucky88

408 posts

Posted by Lucky88 > 2013-06-14 16:55 | Report Abuse

Hm.. I think CSL could beat all your PE, ROE, NTA, ...

kcchongnz

6,684 posts

Posted by kcchongnz > 2013-06-14 17:40 | Report Abuse

Is CSL a value stock?

Posted by Lucky88 > Jun 14, 2013 04:55 PM | Report Abuse
Hm.. I think CSL could beat all your PE, ROE, NTA, ...

Yeah Lucky, thanks for your contribution here. CSL is definitely a value stock if you use Cold Eye's 5 yardsticks. Actually I didn't do any computation and i already know. Why?

Let me show you the return you can get if you buy CSL at various point of time since it listed more than a year ago as tabled below:

CSL 0.300 14/06/2013
Period 2-week 6-month 1 year Since listing
Price 0.36 0.78 1.42 1.00
Return of stock -16.7% -61.5% -78.9% -70.0%
CAR -99% -85.2% -78.9% -60.4%
Dividend 1.1% 21.0%
Stock price appreciation -99% -85.2% -80.0% -81.4%

The table shows it doesn't matter when you purchase CSL, you would have lost money. the loss is heavy, for example, if you have bought CSL 1 year ago, you would have lost 78.9%! So investors of CSL have to sing the song "Cry Me A River" by Julie London. Have you ever wonder why?

http://www.youtube.com/watch?v=BO_g5Ocr4K0

Jonathan Keung

4,438 posts

Posted by Jonathan Keung > 2013-06-14 17:55 | Report Abuse

there is no 100% safe investment. criteria is a guide. ultimately it's you who decide to invest in shares, properties or reits. everybody has their own preference

xingxian

78 posts

Posted by xingxian > 2013-06-14 17:56 | Report Abuse

While it is good, one thing to think about Lii Hen is its corporate governance. With so much related party transaction going on... for example this one...

Paragon Progress FD, LHF to purchase RM21.6 million Monthly Chua Lee Seng
Sdn Bhd8
the lacquer, thinner and Tan Bee Eng
- principally involved furniture parts and Tok Heng Leong
in manufacturing of to award finishing works Chua Yong Haup
coating, polyurethane
furniture parts

and this one...

Double Soon Huat FD to award sub-contract RM2.0 million Monthly Chua Yong Haup
Enterprise7
work for furniture parts
- furniture parts and components
sub-contractor

why do we need a subcontracter in the family???!!!!

I think another criteria to add in would be good corporate governance. Which will effectively rule out CSL. And the likes of XingQuan, Xidelang.

Freight was good at one point but now it is just too exp! I really like the good corporate governance.

arv18

2,662 posts

Posted by arv18 > 2013-06-14 18:12 | Report Abuse

Hey guys. KC has taken the time to show you how to do FA. The POINT of the Cold 5 Eye Yardstick is to enable you to make a quick "Cold" decision, without getting too emotionally involved. Whether or not a company is involved in RPTs is secondary to this initial analysis. Of course it is important, but that is not what is being discussed here.

arv18

2,662 posts

Posted by arv18 > 2013-06-14 18:16 | Report Abuse

@Jonathan Keung is KC promising a 100% guarantee with this analysis? Is he charging you a fee for this valuable knowledge? Why don't you take this time to do the sums yourself and see if it works out for you?

kcchongnz

6,684 posts

Posted by kcchongnz > 2013-06-14 18:31 | Report Abuse

Thanks for all the constructive comments. I particularly appreciate xingxian's input regarding Lii Hen's RPT issues which I myself have not paid particular attention to. This is a very important issue, I agree.

What Jonathan said is also very true. He helps me to forewarn others what I have written is a guide and each and everyone has to make his own decision.

arv18, I have my own "template" for analysing a company's business. I made it up myself. However, it is not user friendly. One needs to do quite a bit of work like input all the financials; income statement, balance sheet and cash flow statement. Once input these information, you can get the ratios and some metrics. Let me know if you are interested.

arv18

2,662 posts

Posted by arv18 > 2013-06-14 18:38 | Report Abuse

Yes please, that would be great. I also wouldn't mind knowing how you ascertain good governance, as you did in your high dividend yield stock post (in addition to the very valid point xingxian raised about RPTs). Cheers.

kcchongnz

6,684 posts

Posted by kcchongnz > 2013-06-14 18:52 | Report Abuse

arv18, give me your email address.

sense maker

794 posts

Posted by sense maker > 2013-06-14 18:54 | Report Abuse

Estimated total amount of RPT to be entered into by Liihen in the coming 1 year is Rm25m, which represents 8.5% of total cost of sales in 2012.

What Xingxian wrote is incorrect therefore as the amounts are all yearly, not monthly.

arv18

2,662 posts

Posted by arv18 > 2013-06-14 19:38 | Report Abuse

email is nasa10100@hotmail.com

arebear

86 posts

Posted by arebear > 2013-06-14 20:31 | Report Abuse

Lii Hen is in my watch list. While Prolexus is in my portfolio at average price of 0.644 (icluding brokerage).

arebear

86 posts

Posted by arebear > 2013-06-14 20:33 | Report Abuse

Comparing Latitude Tree and Lii Hen. A sure and undoubtly winner is Lii Hen consider revenue, profit and debt trend.

faberlicious

545 posts

Posted by faberlicious > 2013-06-14 20:55 | Report Abuse

bro kcchong,I also want to learn from you, please add my email >>> ch33h3ng@gmail.com. Thanks a lot.

calvinwky168

44 posts

Posted by calvinwky168 > 2013-06-14 21:19 | Report Abuse

Kkchong sifu, I've been learning a lot through your postings. Is it possible to email me too. >> calvinwky@hotmail.com
Thanks a lot.

sharonsee

244 posts

Posted by sharonsee > 2013-06-14 21:47 | Report Abuse

Hi KC, please email to me seesiokngoh@gmail.com

KAHFIEHLAI

677 posts

Posted by KAHFIEHLAI > 2013-06-14 22:08 | Report Abuse

Dear kcchong,
Though i am new and initiate stage of learning TA/FA. Hope do have a copy and try see i can learn & understand.
kflai5001@gmail.com

tks in advance

mansor80

100 posts

Posted by mansor80 > 2013-06-14 22:10 | Report Abuse

bro chong plz email to me too .. jebat_jb@yahoo.com. tqvm

iafx

4,632 posts

Posted by iafx > 2013-06-14 22:14 | Report Abuse

@lucky, good point u got there. :)

plutus

24 posts

Posted by plutus > 2013-06-14 23:22 | Report Abuse

Hi @kcchongnz, if you don't mind, could you send a copy of your FA worksheet to achilles_hee@hotmail.com? Many thanks.

I have hard time calculating ROIC actually, according to morningstar definition you based upon, ROIC=NOPAT/IC
The issue is how to judge IC (invested previous year) like you do..
Can I interpret it as
Total asset -
(free cash flow at the end of last year?) -
(non-interest bearing current liabilities ex:payable, provision, deferred tax) - (other liabilities ex: pension fund etc.?)

xingxian

78 posts

Posted by xingxian > 2013-06-14 23:25 | Report Abuse

sensemaker i just copied that from the annual report. the term is to be renewed monthly. not 21 million monthly. but anyway if u sum up all the RPT it is about 10% of Lii Hen's sales I believe. .

But I think the profit of these deals that they rake out for the family can be as high as 20% of the company profit? I don't know la I dont invest in them and I focus on a different list. if anyone has done some research on this would be great if he can share it!

Lii Hen is good but i think there are other choices also which i am more comfortable with the corporate governance.

gordan85

91 posts

Posted by gordan85 > 2013-06-14 23:35 | Report Abuse

kcchongnz,please send to me also, thanks!
gordanoh@gmail.com

kpang76

1 posts

Posted by kpang76 > 2013-06-14 23:36 | Report Abuse

Hi KC, mind to share your template? my email is kpang76@yahoo.com. tks..

investor_cwc

12 posts

Posted by investor_cwc > 2013-06-14 23:51 | Report Abuse

Kindly send to me also, my email cwc_chong@hotmail.com

sythong7

7 posts

Posted by sythong7 > 2013-06-15 00:00 | Report Abuse

Hi kc, if you don't mind to share the template, pls email to me at sythong7@gmail.com. Glad to learn from you. Much thanks!

cklim

30 posts

Posted by cklim > 2013-06-15 07:45 | Report Abuse

Please send to me as well, Thanks.
myissac@msn.com

spastok

8 posts

Posted by spastok > 2013-06-15 08:40 | Report Abuse

Hi kc, i am new and have read a many of your posts....would be grateful if you could send a copy of your template to spapeter@gmail.com . Thank you in advance

houseofordos

936 posts

Posted by houseofordos > 2013-06-15 08:42 | Report Abuse

kc,please send to me as well.. noby81@yahoo.com... thanks

Lai Kim Chuan

54 posts

Posted by Lai Kim Chuan > 2013-06-15 08:43 | Report Abuse

Please sent to me, thanks a lot..

kcl7948@hotmail.com

seedarren

12 posts

Posted by seedarren > 2013-06-15 09:10 | Report Abuse

Please send to me too.
seedarren@yahoo.co.uk

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