I have never said other methods can work, as I am certainly the first one to say I have tried everything in more than 25 years of investing tragedy.

The only thing I can say is my method give me the least amount of stress, and the highest margin of safety in putting large capital to work.

Many roads lead to Rome. I just go there via the most comfortable method.

Some choose to fly Concorde high risk high reward.
Some choose to go by bus low risk low reward.
My method of there is such, is to evaluate risk, opportunity cost, cost of capital and then weigh it versus possibility of profit.

In other words, I look at how much money I can lose first, then decide how likely am I to make a profit.

For Pantech, it is more a case of opportunity costs for me. I don't think I will lose money with Pantech. But future returns compared with my other investments define my imperfect knowledge of the future.

Simple mental model, if I had 2 stocks to choose from Pantech versus PCHEM, if I had to hold longer term with borrowed money from ahlong( where being wrong results in death), which would I rather hold? PCHEM or Pantech. Fate of the universe on the line.

I think we both know the answer. Especially when I have no way of knowing how three market will fluctuate for Pantech short term.

>>>>>>>>>>>>>

So all methods can work, nobody can claim to have monopoly of wisdom

That is all I want to say

I prefer to think with facts. PCHEM has stated their revenue drop will recover next quarter and is due to schedule turnaround, thus is temporary not permanent. US dumping on East Asia is also a temporary and not a systemic issue. Plus when the PIC get completed the revenue will increase.

The led upgrade of streetlight is definitely true, as my subcon package of pan Borneo is using led 12m highway led bay( maincon have not awarded it to Success but instead to IQ group) Success has not won any major contracts and so far has no major announcements of any. But what is apparent is this qoq drop 88% and yoy 32% for success.

But of course, what you say can happen and success may win all 800,000 streetlight upgrade tender in Malaysia. Hopeful, but unlikely.

I try to keep an open mind all the time.

But I don't need to buy 6/55 toto to know that chances are I won't win lottery in this lifetime.
>>>>>>>>>>>

Why do you buy pchem ? The pertrochrm industry is facing overcapacity due to US dumping on east Asia and new plants completed

It is the same logic

Every investment decision is based on a set of assumptions. The less assumptions you need to make about an investment the clearer the possibility of it coming true.

How possible that Pantech will lose money? Obviously very low, as the management is competent and in an industry that has a niche requirement where price and quality and dependability converge.

How possible will Pantech increase its long term margin to +15% pat? Again very low. It is the nature of trading industry to have lower margins. Worse, once Petronas has tasted and used more lower cost discounts for products in their projects, it will be very difficult to charge then higher prices next time.

How possible is it for Pantech to increase its revenue by 10% or more next year? It is quite possible due to manufacturing picking up the slack from trading arm next year.

How possible is it for Pantech to double it's revenue by 100% or more next year? Impossible. It doesn't have another IPIC in the horizon, the competitors and market is becoming more competitive and streamline, and they don't have the factory space.

Businesses usually follow a consistent trajectory in the long term. Especially brick and mortar businesses. By comparing the trajectory of similar businesses you can have a more POSSIBLE idea of what will happen in the future.

Still miracles happen.

For me, I fully agree with Pantech valuation right now, and in fact believe that Pantech should be selling at a lower price than currently.
Especially when management has said that business next year will continue to be "challenging".

Instead of using or, fleet size, market share etc, the most important metric in investing in an airline is one which no one seems to pay attention to.

What is air Asia seat cost per mile (or km). It doesn't matter how big your market share is or how many planes you own. If your total seat cost per mile is lower than the competition and still profitable, then the whole system works.

Problem is when fuel and ancillary costs escalate and the selling price per seat doesn't make sense, then losses can loom far faster than one can imagine.

My flight from kk to kl cost me rm214 return ticket. It's definitely good for me and keeps a full flight, but is it a workable system for air Asia investors?

Obviously, that is not to show that the anti dumping plan was permanent, buy it serves to show why the revenue dropped so suddenly, and what the uncertain future will be for Pantech.

A simple thing. If China cannot export to USA anymore, where will it flood the markets next?

>>>>>>>>>>>
https://www.thestar.com.my/business/business-news/2019/06/18/pantech-resumes-exports-to-us/

The brands that are submitted by Pantech. These are the big ones, the seamless steel pipes used for o&g processes.
Nautic Steels (UK)
Kobe, NSSMC, Sanyo (Japan)
Posco (Korea)
Schoeller Bleckmann (Austria)
SMST (Germany)
Tubacex (Spain)

In my humble opinion, I find the sentence below and highlighted in black to have a misleading connotation that seems to imply that Pantech will have a monopoly with Petronas. This is far from the truth.

Make no mistake, pantech is just another trading house which added a manufacturing arm and a loss make hot dip galvanizing process which is at 50% capacity.

The trading of the above brands last this year did around 387 million will the manufacturing arm dropped a lot to 222 million. In a nutshell they did 607 million which is slightly lower than last year of 614, but with better margins which is pbt 61 million Vs 58 million last year.

Really profits are around 48 million with 15 million in dividends.

Here is the issue, 2 years ago they did 479 million with 29.7 million in net profit.

Basically the main reason for growth was due to turnaround process and PIC which will be completed soon.

Will there be further growth in the future for Pantech?

If you think carefully, trading houses carry other peoples products, meaning they are only able to complete supply in localised areas, aka export future is very limited. There will be appointed agents in other countries with licenses and heavy competition.

Aka major growth for trading is only in Malaysia market. After pic is complete any other major projects coming up? For replacement schedule how long do you think all these heavy duty seamless pipes last? Do you think it is a disposable product which need constant repair like aircon and chemicals? Or is it a structural process with long replacement cycles?

And if we go into manufacturing, Pantech is a butt weld fittings and long bend manufacturer which had a drop from 266 million to 222 million in revenues.

In the end local or no local Petronas is going in a different direction.

There is a perfectly concrete reason why investors are only willing to pay 8.74 PE for Pantech.

There is no economic or business advantage to a company that is only a trading house and a Manufacturing that does 6% PBT on specialized goods.

If there was something unique about Pantech, it would have grown much further, captured much bigger market share. As it is, evaluate the risks of the company, with another hidden bomb that can occur at any time.

https://www.theedgemarkets.com/article/us-trade-war-claims-first-malaysian-victim-%E2%80%94-pantech

>>>>>>>>>>>>>>>>>>

12. Pantech is the <ONLY locally owned pipe supplying company> under the “Petronas Framework Agreement” - PANTECH provides pipes, valves and fittings not only used for the transportation of oil and gas, but also for the engineering and construction (E&C) phases of the fields (e.g. used as topside structures and jackets, subsea platform pillars, etc). “Petronas Framework Agreement” is to promote more local content, should there be any such ruling.

Hi can anyone point me out to the list of their contracts and projects sites? A major part is in middle east, I would like to have an idea where it is and what serba is doing there

Whenever I see Calvin tan post his blogs and buycalls I have the image of the pastor in the video. Looking so shifty with his beady eyes,. Fearful demeanor and you can literally smell the charm of a snake oil salesman.

The real Calvin tan might even be a gentleman and a nice Singaporean. But the online personality Calvin is line comrade dyatlov in the TV series Chernobyl, telling everyone to follow his instructions, and shooting down everybody who disagrees with him instead of verifying with his own eyes the status of the nuclear reactor.

>>>>>>>>

Tan Sri Chan has been popular for the wrong reasons especially in the property industry sector. He has more bodyguards than the prime minister!

https://www.youtube.com/watch?v=tvaJbMPzRZc&feature=youtu.be

11/06/2019 5:47 AM

Young kids only consider how much money they make, not the risk which they take to make it.

What is the point of making 1000% if the next year you lose 60% of your portfolio and 20% the next year.

Give me the slow and steady company anytime which give me 15-20% growth every year consistently.

Why? If I know I won't be losing my capital, I can go big and put huge capital to work in one stock without worrying too much on the hidden traps.

But I guess things like this only become important when you start employing huge sums of money, your kids college fund, your wife's retirement money into businesses that you have no control over.

In either case modec has decided not to bid for both contracts, do one of them is sure to be won by YINSON.

First major charter contract in Brazil. And a huge one at that.

Judge risk first, then count your returns.
>>>>>>>>

Posted by OrlandoOIL > Jun 22, 2019 10:01 AM | Report Abuse

Looked at tis stock b4 d price never fall low enough for u to buy n after so so long now only it moves

Made more money from Hibiscus n Dayang

Pathetic fallacy

If Calvin knew what a sure thing was, he would have sold all his stocks and just held one stock. But his knowledge of stocks is poorly deficient.

That's why he holds many stocks and buys everything, he can't recognise good stocks, and he can't compare them well enough to with between holding a good stock and holding a sure thing.

Maybe you should think as well.


Posted by stockraider > Jun 19, 2019 4:23 PM | Report Abuse

Use your HEAD & think lah....!!

Performing better? Totally depends on your misguided concept of performing better. But please tell me ask about how your rm3 in 3 years 3 months is going to perform better with your concept of 1 cent increase every day for sape...

I don't think of share increases as performing better. I think of business fundamentals, business strategies and revenue earnings and the business itself as a core valuation of business performance.

I rarely listen to Mr market.

>>>>>>>>>>

Then why MNRB & Insas performing better this year than topgloves & QL leh ??

If you look at my online portfolio where I post my investments, I don't really worry much what the market price of yinson is, I just buy quarterly when the price opportunity is reasonable and cash presents itself and the business fundamentals still stay intact.

I first started buying the stock when the share price was around 1.18.
I bought 20k share in Feb at 4.08.
Then 10k share in April at 4.57.
Then 10k share in may at 4.64.
Then 10k share in June at 5.15.

If you buy a wonderful company, it is much easier to stay invested over a long period of time. And if you know enough about the long term prospects of the company, you can buy more on large quantities without being afraid or second guessing yourself.

Hopefully in the next few years it will be my third 10 bagger that I have put meaningful money into.

I think a lot of people try to unnecessarily complicate investing with so many strategies and options and methods etc. I think if you can identify the characteristics of a wonderful businesses, you can simplify your job by searching for ones that present a fair price compared to its future potential.

I say future potential because even I am at fault of using too many assumptions in valuing companies.

Charlie munger says assume makes and ass out of u and me.

The less assumptions you have to make about a business, the easier it is to predict it's future earnings.

In yinson case I don't have to worry about cash, debt, corruption, management capability, them diworsification their business into new unknown business.

All I need to concentrate on is their capability of winning their tenders, the risks they take in those bids, the returns and profit, and how well they are competing with their peers.

Share price will take care of itself.

Short term thinkers and long term investors are two different worlds. What is the 5 year track record of QL Vs naim and lafarge?

Is very very well run. I like it's long term prospects.

I like cypark a lot. It's a very well managed company with a good reputation. The only problem for me was the future of large scale solar systems, which doesn't seem to work without government subsidy. But it's waste management and other energy generation business.

Calvintaneng lives in his own bubble world, whatever people say he will just rebut with his own made up answers. It's ok, we pull him down to reality, whenever his ego comes up and he talks bullshit, we just repost his 2019 promoted stocks portfolio into his face and bring him back down to earth.

His portfolio here.

https://klse.i3investor.com/servlets/pfs/123029.jsp

I am too lazy to compile his 2018,2017 etc, but will do every time from now on whenever he open his mouth.

Too much bullshit from a harvest city pastor.

But it is simple, there are many stocks that I don't know a thing about, should I comment on every single one of them like Calvin?

You give so much warnings, if you know the stock closely then good for you. If you don't, and the stock is actually a turnaround stock, you would have unnecessarily harmed others for no good reason.

This is why it is good to stick to your circle of competence. It seems you are competent with every single stock in bursa.

Congrats. You are now better than even Warren buffet who knows what he knows and doesn't presume he knows everything.

https://klse.i3investor.com/servlets/pfs/123029.jsp

This is your portfolio which you think you know everything.

SO MANY OTHERS CALVIN GAIN WARNING (WHERE IS STUPID 3iii & PHILIP (NEVER GIVE A WORD OF WARNING?)

Hmm Calvin, you talk so much about QL resources as a bad investment... I'm surprised you did not lump in your room and gloom warnings.

A clear example is sapura. In quantifying the quality of sapura and INSAS, we realize that the share price of these 2 companies has dropped at a far faster rate than it's overall business, assets and earnings, making it look like a business selling at a wonderful price.

But make no mistake, the revenues and earnings are dropping. As it drops these investments suddenly seem like wonderful businesses to buy with lots of cash, land and business assets.

But exactly like how Kcchongz and 3iii puts it, there are many ways to quantify quality.

You can look at p/e as a measure of a company's value, profitability. A low pe can be a good thing, as it appears that you are paying a low price for the company to gain the share of earnings. A high PE is a no-no, as it means you are paying for an overpriced company.

But p/e does not define risk, debt, future company prospects. Only metrics that to be honest are easily gamed by auditors and business owners.

In that vein, you can also then look at p/e as a measure of the investors faith in the company. A high PE means investors are very hopeful, are looking forward to the company future and everyone is holding tight for the ride. While a low PE could also mean that investors are hesitant to pay top dollar for a company with limited prospects/unknown future.

I totally agree with this concept, and this is certainly something to learn for both sslee and stockraider.

I have learnt from my bad experience many many years ago that someone every the annual reports, quarterly reports and even AGM all the wordings are manipulated, positives opined, negatives redacted, so that everything looks rosy.

High quality businesses are very clear cut companies which everyone can see the competitive advantage. That by itself is a margin of safety. Those that invest simply based on NTA and simplified metrics fail to realize one thing: companies can and have been known to lose their competitive advantage due to distruption, corruptness, carelessness and mismanagement.

Funnily enough, a lot of those companies suddenly start to look like deep value investments when the share price drops at a faster rate than the NTA, cash and earnings.

But once the moat is gone, sooner or later the barbarians will come to the gate.

>>>>>

By staying with very high quality businesses (those with durable competitive advantage for a very long time), you have locked in a lot of margin of safety.

4th quarter 50 lines will open up, so revenue and earnings will definitely go up in the long run. Issue note is due more top start increase in raw materials prices which will only be reflected on next quarter earnings to balance out. I'm content to collect my dividends and wait.

Rather than a suitable price to sell, it's probably better to look at a bit permanent cost increase instead in feed materials, which effects the selling price and margins of PCHEM. If this happens consistently over a long period of time, then I will consider dropping the stock. Consider LCTITAN, , the share price has dropped over half since IPO due to a permanent constraint in supply vs demand and the dwindling profit margins. If PCHEM starts to show similar signs, then it is a suitable target to sell. Although I don't see much signs of it happening within the next 5 years. Their cost of raw materials from aramco and petronas is a huge business advantage over it's competitors.

So funny, 95% of YINSON contract is international. Only 1 contract this year is won in Malaysia under Nippon jx. Even if MACC wanted to check, they have to go to Brazil and ask them instead.

I could answer this question, the reason was actually very simple. Prior to 2018, iq group was going very well as a ODM and OEM for other international companies. Meaning they would make products that were used and branded by Osram, Phillips, L&E, etc. Demand and sales were doing very well.
However it decided to tip it's hand by using the design learned from it's customers and produce it's own product, which directly competed with it's own customers. This was a disastrous move.

Being very unhappy, and as the main players for LED lighting is very small, almost all of them decided to drop purchasing from iqgroup and found other manufacturers instead. Almost overnight the sales and earnings dried up.

Moving forward, iqgroup will no longer be able to do OEM or ODM business as they have burned that bridge. Time Will tell if lumiqs is able to compete in a very competitive marketplace.

>>>>>>>>>

in FYE March 2018, the group's profitability was adversely affected by a combination of the followings :-

(a) slow down in sales (reason unknown);

A very specific usage of hanlon's Razor is in using epf, majority shareholders that are buying or selling stocks in large quantity as a guide to buy stocks. Many i3 investors assume epf as an evil agent that wants to entrap/scare off/pump & dump/ etc as to make a big profit. When in reality, there are many different parties inside that have vastly different motives for doing things and therefore should be ignored.

For Occam's Razor I use it all the time in comparing the possibilities of the growth of a company ie reducing the usable assumptions or stretching the possibilities of a company working out, or how a company like sapura/armada will do well in the long term ( a lot of assumptions) versus a company like yinson doing well ( far less assumptions to make).

This helps immensely in me cutting down the companies that I need to monitor, and most importantly: how likely is a company like dayang ability to succeed in the next few years ( cut down the many likely and unlikely assumptions). Kyy did it with hengyuan and dayang, so did stockraider and Calvin with their projections on sapura etc.

I applied this mental model and asked myself: how likely? Everything should be kept as simple as possible, but not simpler.

Apologies if I went off base, but I loved your title quantifying quality. And I thought people don't think on that term enough, but simplify their minds into thinking of investing as just a simple formula based approach.

For those interested in further understanding the depth of that term quantifying quality, take a read here. Once you get these basic mental models out of the way, use it on valuing your investment, it would change your entire scope of horizons of what is value investing.

https://getpocket.com/explore/item/mental-models-i-find-repeatedly-useful

Then when you realize how we ALL use some mental models on stock picking, imagine what happens when you have 100 different mental models that you can quantify to get a much better understanding on the long term competitive advantage of your stock.

Sorry for hijacking your thread KChongz.

If anyone is interested, I am also doing a talk on mental models for my secondary school graduates for my rotary club sponsored school tomorrow, about the vice chairman of brk, who is a trained later but studied physics, maths, architecture, biology, economics in University and the value of popping into unknown classes to understand the big picture, the overall mental model of the class. And how to use mental models to get ahead in life. I'll try to post my transcript if anyone is interested.

A good article. My opinion on value investors though is very different.
In fact all stocks investment are bought based on some perceived form of value.

(Value investing to mean, and responses will likely be consistent; buying stocks at low Price/Earnings, Price/Book, Price/Cash flows, high dividend yield etc.) = This opinion of the value investor basically means that one is a Ben Graham value investor. This assesses one form of quality.

Warren Buffett himself commented that Ben would not have bought many of the stocks that he holds today, least if all Berkshire Hathaway, it is true if you are that kind of Graham value investor.
I believe Warren buffet value investing adds a few more parameters: total addressable market, market share dominance and durability, business longevity, management capability for organic and inorganic expansion, long term competitive advantage. These are less direct formulaic metrics, but also gives you more insight on long term value. Any way to assess quality.

What may seem to be a bad investment for the Graham investor is a wonderful investment for the Buffett investor. Graham would never have invested in amex during salad oil crisis, nor put money into Amazon at any price.

Buffet investors would not have bought Intel, GE or a plethora of seemingly undervalued companies.

Words and terminology are very very important.

Before you can become a "value" investor, one must understand how to each investor derives value.

I like to think myself as a munger value investor. His position on value investing is based on different mental models for different businesses. You can't use the same one metric to measure the different businesses. But using multiple mental models for can valuation, you can tie things together to get the long term competitive advantage of a business.

My favorite mental models,

"People like to calculate too much, but think too little".
"The big money is not in the buying and the selling, but in the waiting."
"Hanlon's Razor."
"Occam's razor."
"Cognitive bias"
" Power law" I loved this mental model which comes from engineering. Pareto 80% of effects come from 20% causes.
Charlie munger uses more than 100 mental models to aid his thinking. I believe him as I use a lot in understanding my own investments.

This remark is a bit yogi sadhguru for my liking. The question remains, if all roads lead to Rome, shouldn't we choose the easiest, most efficient and least risky way of going to there?

Some cats do it by going to genting, buying binary options, over leveraging
Property loans and buying trading indicator software.

There is an easiest way to invest in stocks. Problem is, it's just not that easy.
>>>>>>>>>>

cheoky dont overemphasis on quality. do your own way.
ceo make money from salary.
senior make money from salary and corruption.
blue collar make money from salary and part time.
price to pay for each catagory?
ceo might become like steve job lo.

all cat can catch mice to fill stomach is good cat.
16/06/2019 11:03 PM

The tariff not paid by gonna government or even come nationals... It's actually paid by local US importers and manufacturers and trading houses who suddenly lose a source of cheap goods.

Expectations and reality very different.

Stock investment is probably one of the few economies where if you give it for free no one wants it, but if you charge 5K for it, everyone suddenly has to have it.

Thanks for the app.

I think the best advice I could give new investors is to first look at the business itself, then into the price. Because the price fluctuates whole the business model rarely changes, if you can monitor the good businesses, when the right price comes you will not hesitate to put all your money in.

But buying a stock based on PE, NTA alone can prove very dangerous if you do not understand how the businesses got it's lending status the way it had.

As for Intel, my advise is to not invest in it. Intel the name is very different from intel the company.

For tech companies the ability to pivot, to push new technologies and to efficiently push your team to be more efficient than the competition means everything.

In every single way Intel has underperformed. For a company that was the leader in semiconductors advances it has declined in many uninspiring ways. Intel inside today means expensive and lower quality.

Intel missed mobile.(tsmc & foxconn took over).
Intel missed graphics. (AMD turned their fortunes on gpu processing).
Intel's 10nm wafers were years late to the party, while competitors with smaller R&D budgets were able to produce further advancements than intel.

For me it's all about the node race. And it has proven that the bigger company with larger resources does not seem to have the competitive advantage that smaller companies have.

I think the mark of good investor is someone who never stops learning something new every day, improves his thought process and absorbs new mental models.

In a nutshell the points you made are all facts which made me not invest in rce capital. And you are right, it may not happen today, it probably won't happen this year. But 5-10 years from now, it will definitely change.

I'm not a good predicter of time. But I believe I'm an ok judge of long term trends. All I can say is don't be disheartened if once you sell your shares the price goes up for a little while. In the end the long term is what matters.

Take your time, just buy quarterly and add on the position. PCHEM will be around for the next 10-20 years growing.

I don't think it will be a good result this quarter. not enough time to complete some progress works and claim big boss.

Calvin tan just put his own self under the bus by reposting his comments in 2014. From zero respect he has made me lose even more respect for him and his stock pick skills. In 2014 he bought a dead end stock, going up her promoted kaw kaw saying it is worth xxx... But if you followed his full recommendations he conveniently left out how much he bought and how much he sold ASB. But the fact is in 5 years the stock has been a dead end. Only Calvin will say he make big profit can see the future Chun Chun buy and Chun Chun sell.

This is his portfolio for 2019:
https://klse.i3investor.com/servlets/pfs/123029.jsp

The funny thing is with all his comparing himself to Peter Lynch, none of his stocks have stood the test of time.

In retrospect, in the similar time period I had bought into YINSON, and because I had confidence in the business every quarter I topped up my investment without fail, knowing that only wonderful businesses will give you the faith to buy on weakness, average up/down and just hold.

If this is Calvin idea of eating steak, thank God I am a vegetarian.

Again,
Calvin's portfolio for 2019:
https://klse.i3investor.com/servlets/pfs/123029.jsp

http://www.xinhuanet.com/english/2018-08/18/c_137399728.htm

This durian seller is using alipay and wechat to receive payment from tourists.

The convenience for tourists and for himself in not needing to hold can that can be stolen by thieves is definitely a boon.

Hi I received mine from CTOS.

True story, I bought durians in tangkak using alipay.

The intrinsic value is based on a proposition that trajectories will stay current. I guess the big puzzle is to always understand if any slowdown in growth is permanent or temporary. Opensys already had a drop-off in machines sales in the latest annual report.

The usual mathematical assumption is
If 1 bottle of beer is sold at $1, then 100 bottles of beer is $100.
But in the real world if you went to the market to buy 100 bottles the price is more likely to be $90. A bigger bulk discount. As different modes of payments compete, I believe most banks will choose the option the involves the lowest cost of maintenance and financial expenses.

I believe based on slower than expected contribution over a longer period of time than expected, inclusive of increasing costs, exchange rates and competition, you will be be closer to a intrinsic value per share of 19 to 25 cents. Using your crm projection based on projected sales. But again this is projection as I am more conservative on the real number of CRM upgrades, replacements and it's maintenance in the long term.

In my opinion, the dividend payout will not match the earnings growth in the long run, as the earnings and revenue of the latest quarter will not match the expectations of further growth as expected.

It is the age old question, give out dividends now and sacrifice future growth, or withhold dividends so earnings growth can match future expectations.

It is like asking people in the 50's if credit card will ever take off, everyone believed then that credit card fraud will be it's downfall. If you told them visa would process 11 trillion dollars in payment volume in 2018 it would boggle their mind.

My personal opinion is that fintech will be a booming monstrosity, and as usage becomes more prevalent, there will be less and less OTC transactions and machine cash applications in the future. I can't remember the last time I carried a 1000 ringgit note, much less bringing the 10,000 singapore dollar note around.

I believe cash will definitely have it's place in the future, but ATM, CRM usage will definitely drop as cashless payments become more secure and easy to use.

Lightning always finds the path of least resistance to earth.

I think it is exactly because of that mindset of trading that has caused much grief among general investors on this. If you trade a lot the transactional costs can pile up very much higher in a year.

Trust me, you will be very much happier long term if you bought sucks the same way you buy a house, carefully choosing, finding the best location, buy very rarely but but based on the quality of the asset, not the price at which you can get it at.

The real money in stock is made in the waiting, not in the trading.

>>>>>>>>

Posted by risktransformer > Jun 7, 2019 4:22 PM | Report Abuse

Philip, I think it is not proper to compare buying/selling a house with stock. A house is not a liquid asset whereas a stock like PCHEM shares is very liquid.... u can sell it within seconds & buy it back any time with very little transaction cost (unlike a house.... the transaction cost is very high).

Actually one interesting point which I am trying to figure out. Opensys does not do their own R&D for these machines, and it is instead a licensed technology from OKI, Japan. The question which I could not clear up the answer to is:

1) what is the terms of the technology partnership. Is it a profit sharing deal, or just a pure franchiser/franchisee deal where OKI sets the master price and opensys sells based on the listed price to customers. What is the minimum stocks level to keep, will the system buying costs erode/increase over time, and most importantly is opensys working on their own homegrown solution in the future to compete with fintech and peers.

2) it seems your assumption of profits here are all based on pure sales only ( correct me if I am wrong). But another part of opensys sales is also based on leasing of machines as banks I believe will be far more interested in short term 1-3 year leases of the esm equipment at a higher service price, but without the hassle of buying and storing the equipment. For opensys looking at note 14 of inventory there is write down of used machines, as these machines cannot be cannibalised for new equipment or reused for other applications. There is a 10,313,089 write off of esm equipment which I assume is the leasing part of equipment that has been obsolete/ revamped. As OKI does not have a policy of taking back old machines and refurbishing I believe the difference in service actual profits will be quite substantial, as I am taking the example of my office leasing the latest xerox photocopy machine for a 3 year contract and returning it after the lease is up for a newer model, which is cheaper than buying a new machine.

In the end what will be the market size of this industry, what will be the acceptable method for it's main customer base ( fintech, direct purchase and ownership, leasing) and how clear will be the profit and revenue growth 5-10 years from now are frankly speaking quite murky for me.

I would say it is not a bad business, but neither will I submit capital into such an endeavor. Opensys has a huge market share 80%, but in a space where the total addressable market is very small. The customer base is also very niche, which is worrying all the same as some believe opensys is worth 300+ million.

Time will tell.

I arrived Melaka on Sabah harvest festival 30th May 2019, Thursday, which is normal weekday (I believe west Malaysia does not celebrate harvest festival, as the roads were still empty). the queue during the Friday and weekend at jonker street is far more lively during the pasar minggu at jonker street.

But you are right, you should assess normal condition, not unusal event. Which is why I did not take pictures on the weekends.


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Posted by pak_pandir > Jun 8, 2019 11:18 AM | Report Abuse

the queue at 11pm the last few days are invalid. if you want the accurate assessment, come during weekdays, not during the holiday season. If that queue still that long, then yes, the logic can be considered.

we assess normal condition, not unusual event.

Hi,

Care to elaborate on same thing?

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Posted by shpg22 > Jun 8, 2019 11:09 AM | Report Abuse

There are so many competitor offering the same product as Familymart popping up like mushroom across the country. Even Mynews also start to offering the same thing

Judging from 11pm queues at jonker street, the financial report, the belief is yes, there is room for 400 fm in Malaysia. But I am interested in your logic on "highly not". In either case total population of Malaysia is 32.8 million in 2018, with 1.5% growth rate (roughly 500k increase in population yearly).

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Posted by cheoky > Jun 8, 2019 10:40 AM | Report Abuse

U see only the internal pros of FM, perhaps u managed to visit the best FM in FM group. The issue is there a market to absorb 400FM in msia? Highly not. Perhaps in China yes.

FM doesn't sell batteries. you can buy it from 7-11.

You keep thinking 7-11 and FM does the same business model. Look closely, the approach is different, the items on sale is different, the feel and quality is different.

You go to FM combini to buy healthier choice sandwiches, bread, pan and Japanese imported snacks. You buy tasty soft serve ice cream, you get instant hot oden and good tasting coffee.

You go to 7-11 to buy batteries. how often do you really buy batteries from 7-11? The answer is, very rarely.

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Posted by jellyfish > Jun 8, 2019 9:22 AM | Report Abuse

if for example, i want to buy a battery, i will buy from 7-11 with no queue, rather than wasting time queueing at FM

cheoky, behind every 99 speedmart and seven-11 is something called a fulfillment center. The distribution warehouse is what determines the bottom line margin of the overall business. Basically the more they expand, the cheaper the overall costs will drop. If they have 5 or 6 convenience stores on one area, it will be far far cheaper to deliver everything fresh to the 6 stores in one go, rather than deliver to one convenience store. This is the true barrier of doing convenience store business and why a lot of small scale family owned minimarket are closing down.

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cheoky Marginal utilities. Upon 400nos FM, bottom line becomes worst. Expand for the sake of expand only. Ntg worth an infinite price
08/06/2019 9:37 AM

That is not the question. the question is how to differentiate your business model and be the market leader in industry.
You need to understand the difference between a KFC and a FM, on has 2-3 staff per location, the other is a full restaurant (10+ workers) with associated costs. One is easily scalable with high profits, the other requires specific locations.

Simple idea of scale:
there are more than 700 locations of KFC : profit margins unknown (until QSR listing soon, but previous QSR annual report 2011 they did 144 million from 2.8 billion revenue for KFC, around 6%)
there are 2250 locations of 7-11: 2% profit margins reselling other peoples items.

I would say Family mart will be the happy-in-between of 1000 locations around Malaysia with higher margin and quality Japanese food, but with 9% profit margins going forward. Dr. Chia does not have to think out of the box. QL bought the franchise and leaving it up to the Japanese management to use big data and fulfillment centers to increase customer purchase locations.

Obviously Cheoky is correct in that as more stores are increased the costs become higher and profit margins lower.

but an interesting point is also how RESILIENT is the business, what is its difficulty of being replaced by a speedmart99 and a Mynews, and how well it can take market share from 7-11 and those other stores.

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The question now is why with the long queue, FM has the store sales of 939K and Seven-11 1 million? Can FM increase it sales per store in the coming year? Who are the customers that prepare to queue? Can FM evolve from a neighborhood convenient store that serve local community, single person or people on the hurry into serving who family? The answer is yes if Dr. Chia prepare to think out of the box and have confident on the foods FM serve then he should think of KFC and McDonald's model serving FM Japanese Foods to the crowd and whole family in fast foods style.

Thank you

I thought you are giving up on Malaysia and gone to shanghai? Why are you still posting in horrible no future Malaysia investment forum?

In either case, everything has to be based on context. I would say Mcdonalds has exemplary service, when put in the context of the hordes and millions of customers served daily, 2 minute burgers (you can complain many things, slow and badly cooked food is not one of them, even during heavy queues).

As someone who used to work as a waiter in his school days in whitecastle at jalan raja laut (when there was a whitecastle in Malaysia), I can tell you it is easy to be a friendly service counter when the restaurant is near empty, and almost impossible to keep your cool when there are hundreds of hungry barbarians at the gates.

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Heavenly PUNTER UBS Shanghai Future Analyst McDonalds friendly service counter? WAHAHAHAHAHAHAH Joke of the day thanks
08/06/2019 8:11 AM