APPLE

Steve Jobs has changed the world.  

Like any other creators or innovators, HIS CREATION was suppose to improve the quality of life of human being.  No only does his invention or creation was economically and insanely rewarded, when APPLE market capitalisation peak at USD750 billion (past 52 weeks high of USD134 per share) and today (11 Jan 2016), it is about USD540 billion or USD96 per share.

Yes, comparing with the peak, in ringgit terms, it has basically wipe out the entire GDP of Malaysia of 2015.  This is how insignificant Malaysia is. Or shall I said, it has wipe out about 60% of market capitalisation of the entire KLSE.

How much more can it drop? Even Sir Isaac Newton with his scientific formulas cannot tell us.  Because, share price movements is not perfect science.  If it is the case, everyone will be wealthy.  Not even the genius in LTCM can predict the rise and fall of Russia market. 

SCHOOLS OF INVESTING

From i3, there are many schools of investing.  The fundamental school (Warren Buffett) and the techincal school (xxx, sorry, am not famillar).  Some follow both fundamental and technical schools.

Looking for value stocks actually its both arts and science.  It is science when you can actually measure it with ROE, NP, NTA, CF as well as technical, i.e. MACD, SMA, RSI, etc.

The art part is of course, cannot be learned from books.  It is through experiences and judgements, which new investors need to "pay" for the tuition fees.  No short cut about it.  

If you make lots of wrong judgements in stocks, you will have good experience in stock investing.  

Experiences that cannot taught in schools (for Malaysia stocks)

1.  Don't touch Chinese stocks (from mainland China - because it is hard to know if the figures is fictitious)

2.  Try to avoid airline stocks for long run (as what Warren Buffett said)

3.  Avoid stocks run by certain race (that proven not performing)

4.  Avoid Lemons ........... (some of the sifus that have mentioned)

WHY OCK?

1.  Because last 18 months it raised about RM220 million via equity

2.  Because it has a standby islamic loan of RM150 million

3.  Because it secured from Telenor a project in Myanmar

4.  Because it bought a telco managed services in Indonesia

5.  Because it listed in 2012 in ACE and promoted to main market in 2014 (management is aggressive)

6.  FA looks ok la (7 out of 10).  TA not so great, still below 200-day SMA

7.  Beware, FYE2015 may dissappoint.  For me, it is norm for delay in implementations, as long as the project is secured, timing differences of one or two years is ok.  As long as it is successfully implemented.

Projects are secure one by one.  It is about IMPLEMENTATIONS.  Once it s properly executed, it will convert into earnings growth of 20-30% earning growth for next few years.

MARKET COLLAPSING?

Major stock market is dropping like an apple.  So, be extra cautious.  Accumulate if price drop.  

WILL OCK BE THE CHINESE NEW YEAR ANG POW?

Lets see.  

(added on 14 Jan 2016) The good think about this stock is the share price went up from 50 sen to 90 sen in the first 3 quarters of 2014, then yo-yo to about 70 sen in last two quarters of 2015.  While the catalysts actually comes in after Q3 of 2014 (acquisition of PTM) & end of 2015 (Rights issue for expansion and Telenor project in Dec 2015).  Earnings (double or triple from 2014 earnings of RM16m) will come in by end 2017.  

QUICK ANALYSIS (UPDATED 12 JAN 2015)

1.  Refer to quarterly results (amended), mentioned that 30 Sep 2015, Equity is RM203m (before rights issue of RM145m).

2.  Also mentioned, debt of 30 Sept 2015 will increase from 0.37x to 0.80x with Telenor project, that means, total loans will increase from RM102m to RM222m.

3.  With the Rights Issue, total Equity (excluding Q4 result) is RM348m.  

4.  Total debt is about RM222m (end of 2016) less cash is about say, RM40m, net debt is RM182 million.

5.  So, the EV = Equity + Net Debt = RM348m + RM182m + RM50m (Earnings from FYE15 and FYE16) = RM580m

6.  Assuming EBITDA (major assumption) = RM45m (est) for 2015.  EV/EBITDA = 580/45 = 12.9x.  2016 estimate of EBITDA = RM60m, EV/EBITDA = 9.7x.  [actual EBITDA from bursamarketplace is about RM58m]

7.  On the pretext that debtor collecttion + cash outstanding, total = RM180m, is quite substantial.  But was told, high trade debtor due to leasing biz to telco, collect based on lease rental, i.e. could be 8-10 years (need to confirm - confirmed average is 4 months).

8.  Growth is good, on the pretext that collection of debtors is not a problem at all.  Equity as at listing (2012) has increased from about RM100m to today RM566m.  Awaiting the implementation of the Equity into strong ROE. 

Disclaimer

Not an invitation to buy or sell or hold.  Just sharing information.  Buy at your own risk.