Comparing DKSH with another similar company Harrisons holdings I cant help but realize a few things:

1. both the companies are at a terminal value, the profits and revenues are both stagnating, with no growth triggers in place other than a population growth rate (and inflation rate). Basically, if you look at both companies, if you put inflation, GDP and interest rates into consideration, DKSH and Harrisions have basically been the same company. Stuck.

2. Both companies further exacerbate this by paying a huge amount of their profits as dividends. Your only play in buying these companies is not for the share price increase, but a measly 3.75% and 5.33%, as the money coming out as dividends show that they find no better way to invest in company growth.

3. There is however a silver lining. DKSH made an offer of 480 million for Auric. DKSH is punished by their debt fueled purchase of auric, and the market is punishing them as such. Whether this is unfair punishment, or a brilliant play, remains to be seen. I dont know how profitable the manufacturing of melange can be, or if DKSH can pivot its growth by doing VSS of unnecessary double entry of staff, but definitely doing something is better than doing nothing.

4. Anyone who buys DKSH just for a measly dividend is better off not investing in stock market. Anyone who buys a stock just because it seems lowly priced without understanding the long term effects of auric revenue/earnings generation is just a speculator.

Someone who can understand the logic of a company with a networth of 530 million paying 480 million for its value proposition growth in revenue and earnings in 5-10 years? Now thats called investing.

Yes, selling seafood, chickens, eggs and palm oil.

Basic business.

Wonderful management.

Try to name another competitor to QL in bursa malaysia market? with 10 billion market cap, 1.7 billion equity, 3.6 billion revenue and 200 million earnings and growing. Its paid out 420 million in dividends to its shareholders since 2009, its generated 1.77 billion in cash flows for its shareholders since 2009,

Best of all, it has grown earning at a CAGR rate of 9.7% since 2009.

I sleep well at night, especially knowing there is no other QL behind me, or another QL in front of me to fight with.

PE high estimate is also because of QL fundamentally strong business model with easily scalable economies with low chance of nasty surprises.

Same with Nestle, both businesses are in markets where the major competitors are clear and new upstarts long grounded to dust.

And its not like everyone is going to suddenly stop using palm oil, stop eating seafood, and stop eating chicken and eggs.

You would be surprised how many people are willing to invest heavily in stability.

Just ask EPF, they bought 410K shares in 16th january. Would you want you money to just suddenly disappear in stock market frenzy? Buy a boom/bust cycle like bumi armada?

Ok, can I lari kuat kuat from you? You are pretty toxic keep polluting every thread with your repetitive INSAS ideas. Best is if you move to INSAS thread and post everyday. I surrender, can't beat your long term investment strategy of 2 weeks say insas performance better than QL. Can you stop drowning everyone else with your spam and capslock. I get it, you are master of margin of safety. You have made millions doing your strategy.

Can we move on? I'm tired of listening to old broken record.

Funny how all of these jittery people are those who don't hold any shares. Anyone want to do IDSS? I don't mind lending to you with premium for me to do your speculative shorts.i win either way, if share price drops is cheaper for me to collect more.

Very interesting information probability, I had not anticipated such a requirement in my investing in yinson.

May I humbly ask if it is possible to redirect me to more information on this scrubber thing?

I would like to read further, it is very interesting requirement and would be very damaging to short term earnings of FPSO.

Hi Fabien, for SAM or any other company you need to understand where your growth is coming from, how much revenue they can generate, and most importantly what they will do with that growth. As 50% of their business is aerospace, its a very predictable and easily measured growth ( you can just compare how many planes are in the pipeline from Boeing and Airbus). The growth trigger is what they do with the other 50% of revenue, which is in sam precision and meerkat. I'd monitor my quarterly reports closely on the performance of those business units. If they dont grow well, I'd say you would reach terminal value pretty soon. you can have a pretty clear idea of the growth prospects of the aerospace portion of A320 neo,
the jigs manufacturing part, I dont know.

you can definitely keep you 3% dividend, while your stock price keep dropping. Its definitely a good deal I guess. I prefer long term stock price performance.

To each his own.

whats the difference? if you sell the stock what do you get? dividend and share sales gains.

if you sell insas shares? you get nothing from your so called "profit".

you prefer paper financials or real stock profits?
NESTLE ROE 100%, share price 2009-2019 from RM27 to RM147
QL ROE 11.8%, share price 2009 -2019 from 0.6 to 6.9 (post splits)
INSAS ROE 5.6%, share price 2009 - 2019 from 0.29 to 0.72

I dont care about your paper accounting, or you selling at the top and buying at the low, because we both know it is not possible to time the market.

You can keep your margin of safety and your calculations and your paper value. I want to know real cash values, real business performance, capability of a good management.

Buy and hold is not buy and forget. just because I dont panic sell like you and panic buy when finger itchy doesnt mean I dont know your paper logic.

Its like you telling me hengyuan is a good buy when you bought it at 10, sell at 15, then panic buy at 18, then hold with your paper losses until today. I just choose not to buy speculative companies.

Funny investing.

I buy cheap durable business I can easily understand AFTER it has reached vertical integration, making it much harder to disrupt. You try to disrupt QL business model see? tell me 1 company doing same thing as QL in bursa and doing it better. Or tell me one company similar to QL in bursa with better ROE.

I bought into topglove after it held a 18% share of the WORLD MARKET in gloves.

I bought into PBB after my wife told me so. Always listen to the wife. Oh it also has the best ROE in the market, for big banks.

I bought Yinson fully after it had pivoted from a lousy transportation company into a fully FPSO charter company, now 6th biggest FPSO in the world with 99% utilization rates, unheard of in the fpso market. just ask bumi armada.

For stoneco, I decided to buy it after reading that it has received merchant aquiring institution by the central bank of brazil. I wouldn't expect you to know what it means, except that it is now a full merchant bank entity with all the perks and access to the high table.


All i bought and held since 2009, 2010, 2012 and 2013.

And now in 2019, I have 5 stocks in my portfolio. Stoneco is a small portion, around 200K shares done at USD19.

What have you done lately?

Dear Sslee,
I have been trying to tell you how to spot those companies in all my articles. You seem to be making the mistake that I am out to hunt down your beloved INSAS stock. I am not. I dont have any interest in your stock or its shareholders.

For your kind benefit, I am posting up 2 more articles on how to value a new company IPO via business sense (see if you can get the same analysis as me after reading boring prospectus of stoneco brazil), and how to understand a business using ROE and all the traditional metrics.

I hope you learn the lessons and apply them in your beloved stocks. If you still see the same thing (why a company like INSAS with ROE of 5.6% has a PE of 5.3), then I really have nothing further to share with you.

FYI, I bought QL back in 2009 when pe was 25+. But if I told you about it then, you would not be around in the investing world yet.

FFYI, I wouldnt put much stock on high dividend stocks that doesnt know how to grow properly. Hong leong industries is a great company with pe8 and a dividend yield of 5%, but if you bought it in 2009 until now, you would have realized its revenues has stagnated at 2bil range for a very long time, its share price have stagnated at 8+pe forever, and all you have to look forward to is a measly dividend of 5% every year with some share price increase. Amazon never paid a dividend, is it a bad company? it just compounds it better than you can.

>>>Sslee
Dear 3iii,
If everyone invests like you and Mr. Long then they would not be books on investment nor a stock exchange market for the simple reason that your way of investment will not generate any economic activities (No trading volume, no start up and no capital market) and no PE of 50 paying less than 1% dividend yield.

Also note that for financial systems, the system is easily replicable, but the government approvals and funding requirments are not. Best business to be in.

having said that, never ever buy into an IPO. It is still for idiots. It listed for 24 USD, and I bought it at 19. Go figure.

If INSAS is a growth stock, then I will eat my cat.

Ok, at least you have learned something. Which is good for everyone on i3. Good luck Stockraider.

Stockraider, do you think hengyuan can export the refined oil to Singapore, Vietnam and Thailand? If you can't send the oil out you can only sell to Malaysians. Do you think Malaysians will have explosive growth of fuel usage? Obviously not right. Then why do you think hengyuan price can go to 45?

But please understand one important thing, refining business is inverse of crude oil prices. It is their raw materials, therefore if oil prices go up, hengyuan will not be doing well. And if crude oil price stays low, hengyuan will do well.

Now ask yourself, now that crude oil is so low, in the future of next 5 years will the price of crude oil go down or up? Logic definitely states it will go up.

Do you buy?

After comparing all the refining stocks, I think hengyuan will do ok. The value will probably be more clear after all the plant work is done, but for now I think petronm is the better trading pick. But not for the reasons Stockraider is promoting.

If he thinks the definition of a bagger is simply a stock rising up 6 times in 6 months and crashing down to earth. That is not a bagger, that is speculation. You are looking for growth, which is far different.

Using historical and comparative analysis, and not some mumbo jumbo speculative crack spread calculation like stockraider, in Malaysia if you look at shell businesses you are expecting to see terminal value of 4.0 - 4.7 billion max sales per quarter after plant upgrade, with a earnings of 200 million per quarter, we are looking around earnings per share of around rm3 in the long run.

My general estimates within 5 years of situation revert to mean hengyuan Malaysia will be worth around rm12, although if hengyuan starts to find new business units or growth triggers appears, things will definitely change.

This is such a joke company. Anyone who buys the shares in this company deserves whatever is coming to them. You only need to visit xingquan to ask yourself a very simple question:

Why is a company whose revenues are in China, whose profits and cash is in China, whose products and systems you can't verify are in China, whose management can't even speak English or Malay want to IPO in Malaysia?

You can't find any information on their games their products in Malaysia. All they will do is keep cheating Malaysian investors by asking for warrants, share dilution, and close up shop when the scrutiny and music ends.

Investors beware, previous management learned from xidelang.

Everyone seems to forget terminal value when valuing a business. They seem to think business will grow forever.

But the truth is, if you read enough financial reports, you will realize trend,

A) companies just starting out and have high growth prospects, low earnings high pe
B) companies in mature growth stage with a piece of the market pie medium pe
C) companies slowing down, in risky time, or in sunset industries, low pe

The trick is to be able to understand how big the pie is and how much of it is feasible.

Banks in Malaysia are like b) hard to grow further, but huge moat and stable business

Companies like ql and yinson which were able to identify new business units and expanded organically with great success.

And finally companies like insas,leonhuat and johotin who have hit the maximum growth potential in their market, and not being able to pivot or expand new businesses successfully, end up stagnating.

As for comparison to johotin,
It was easy to see. Johotin was a one trick pony that has subpar management even from early on and just took advantage of market pricing on raw materials to make a profit. If it had branched out to property development back then like scientex, I might have given them benefit of doubt. If it had done vertical integration into final product retail, I would have been impressed. If it had expanded into Indonesia, Thailand or Philippines instead of Mexico, I would have been hopeful. Instead, what I saw was weak management decisions in growing their business. If you compare that to the actions gone by ql management, you would see they have similar starts, but you can guess the end results from their m&a activities.

Sometimes revenue and profit don't mean a thing, unless you have a plan for the long run.

Was ql expansion from feedmill into poultry into marine into palm oil into family Mart masterful? Yes and each time a big success. Will it be able to replicate its business overseas long term? Definitely. I can see a plan for ql to do 10 billion in ten years and 1 billion in profits.

What did johotin do to give anyone any confidence in its ability to grow its business long term? How much growth can you expect from johotin?

>>>
take a look at Johotin lah

In 2009, its revenue was RM100 mil. In 2018, its revenue RM400 mil. A 300% increase !!!

In 2009, its net profit was RM5 mil. In 2018, its net profit was RM25 mil. A 400% increase !!!

Did the market give it 50 times PER ? Nope, 14 times PER (which I think is fair)

What does this mean in the context of the prospectus exactly? What price exactly did you calculate?

Are you just spewing words just so people can hear you speak, or do you actually have something meaningful to add?

It's like saying the intrinsic value is low so he buy.

What does that even mean? How would what you said even aid you in valuing stoneco? Or n other fintech businesses incoming into bursa and sgx? Or even valuing numoni sdn BHD?

Have you even read the IPO prospectus?

Are you even interested in learning anything in life? Or do you think you have learned everything there is to learn?


>>

Why did he buy? He considered the price to be lower than all the future cash flows discounted to present values.

some examples, previous annual report

RCECAP uses 519 million equity to generate 88 million, ROE of 16.95%
PBB uses 37 billion to geneerate 5.4 billion of profit, ROE of 14.59%
HL bank uses 24 billion to generate 2.6 billion of profit, ROE of 10.83%

In this case you may believe that RCECAP is the stock to buy, until you think about economies of scale, performance on large asset base and the quality of the asset (fuel quality), then you realize the reason why PBB is still the best performer overall.

Simply ask yourself this, if RCECAP increased its loan base to 37 billion and lend it to all the poor people in government office, do you think their roe will still be high? Or will they die to NPL.

As it is, ROE is a strong indicator of business performance, but obviously cannot stand alone. Use your business sense wisely.

I will say one thing, all the companies that I have bought I have compared with similar companies within their industries and countries. And in each case the business is simple to understand, with margins and capex that are very straightforward. Among those company's that are straightforward I realized that certain company's perform much better over a long run than others. My investing in that case is simple.

If the entire bursa index consisted of bank stocks, I merely choose public Bank. It may be more expensive than rce, mbsb and Maybank in valuation, but over the long run the outperformance will be more than any undervalued bank stocks in the short term.

Plus I sleep better at night.

As it is, enough about ql. I have made 10 times my investment by holding it long term since 2009. Every quarter for 40 quarters I have reinvested my earnings into it. All because I know what I see in it. I no longer feel the need to explain it rationalize to anyone my decision in holding and monitoring the stock anymore. All I can say is time will tell on my long term investment 10 year investment into topglove, pbb, yinson and ql. As I see no reason to sell as the story has not changed, I don't feel any need to explain long game investment theory to traders. Good luck

I apologize, I seem to have mistaken and thought that icon8888 is a young banana, with little experience in investing. I stand corrected in the face of an elder. Your profile image before confused me.

Cheers

Actually Stockraider was the one who started on ql. I have avoided repeating stories to people who don't understand.

I'm just interested in sifu opinion on investing in stocks like stoneco.

But again this is not a promotion or a push to ask someone to invest in a pe50 stock. That would again be insanity for new investors.

My question is merely: if stoneco were to do an IPO today in Malaysia, how many of you would invest in it? It's got huge borrowing, negative income, high growth, low earnings, low margins, what's metrics would you use to invest in it?

Ta doesnt with for IPOs, fa doesn't work for start ups. What then would be Warren buffet reasoning behind a high pe buy?

Ql produces their own raw material. They started in the feedmill business in the 80s before buying their poultry business.

Everybody can make coffee. But why Starbucks making profit and dome stagnating?

Everybody can make burgers? Why is MacDonald king?

It's all the same answer. Vertical integration. If you spend on debt to do vertical integration isn't it with more in the long run?

Everybody can raise chicken at home. You can grow to 3 billion business with chickens?

Chicken and egg business very predictable. I like predictable.

Dear icon8888,

I'm finishing my read of stoneco prospectus, and formulating my reasoning behind why berkshire Hathaway and ant financial (Alibaba) is buying the fintech company. It has the same reasons as to why I believe ql is a good buy.

Once I'm done, I'll try to do a long game on why they paid 22pe 2018 earnings for stoneco.

Gearing is reducing, it's use of debt is far more efficient than majority of the other listed chicken and eggs companies in all the listed companies in other countries of ASEAN than I have read through.

The main ideas I had were similar in terms of economies of scale, vertical integration, and business unit replication.

Personally, I believe in 12 years ql will hit matured business growth and end terminal value and I'm looking at 10-15 billion of yearly revenue and 1 billion in earnings. By that time they will have negative growth in doing capex to generate growth and will start giving out fatter dividend of 3-5% like the other similar companies.

I have followed 10 other companies financial report in other countries with 10+ years in similar performance factors, so I probably have a good idea of how ql will turn out.

Or I may be wrong. But I started with 200k in 2009, so I think I'm still up.

Ok, stockraider is super good investor. May I listen to your advice one day.

As for why I don't buy cp foods? It's the same as why you don't buy brk. Every business has a terminal value. Why should you buy a business with 28 billion revenue and slowing growth, versus buying a company with 3 billion revenue, higher margins and escalating growth?

My answer is clear.

But learning a lot of things here. Value trading is a thing! I look forward to seeing how it goes.

Insurance business is the same everywhere, is what you do with the float that makes the difference. To say that ql only does chickens is to say Berkshire only does insurance. Chicken and surimi are probably the same thing I guess.

Stockraider, u win! You are the great sifu. Everyone else is rubbish, compared to you. You are the great investor and super value trader!

Too bad we don't have to show everyone our remisier record of 10 year portfolio investment details, otherwise then we would be able to really compare your 12 year portfolio performance till 2022 vs ql stock performance in that same period.

It's easy to say whose equipment is longer when we don't have to show and tell.

And as for my 10 year investment in ql? Selling eggs and chickens is a very simple business to understand. You see business like it in every country and market from thailand to Singapore to Philippines to Indonesia. In Malaysia you see companies like lay Hong all the time. It is very high capex and very low margins. The growth is snail paced, profits are low, margins are low.

Then you see companies like ql which start from a gruesome business like layhong and maximize every single cent into new business units successfully, growing from 300 million to a billion in revenue quarterly, while in the same period and having a head start companies like layhong stuck in the 100+ million range for the longest time.

Going from a dead textile business into the biggest reinsurance company ever, and going from a dead chicken business into the most vertically integrated food production business ever in Malaysia, is why pe50 is understandable, and why I have yet to sell until today.

But I will sell when the story changes, which is why buy and forget is stupid. Those who don't know ql compare it to pos Malaysia. Those who know ql are looking to the growth patterns of a cp foods.

Very interesting frame of thought. I like this icon8888 young man.

I think he shows brilliance in his thoughts and ideas, far more than the other guy Jon choivo. Maybe young men should alto later till 5am to get clear thoughts? Brain turns to much after 9pm.

I only have only one thing to comment, I believe there is a big misunderstanding between the sentence buy and hold, and buy and forget. Most people seem to think both are the same thing. I think that is insanity, every business has an up and down, nothing stays the same forever. Anyone who doesn't keep track of their investments is just asking for trouble.

My only difference is I prefer to use real, current, accurate quarterly reports to tell me what I should do, instead of the stock price action of emotional monsters like Stockraider.

And to answer you final long question with a simple explanation:
Look at the latest quarterly report. At the back page they give the seasonal or cyclical factors of 0.28.

Last quarter ql did the highest revenue sales ever. The growth of family Mart is explosive as expected (89 stores Vs 20 dome cafes wth better earnings and profits.), Recovered sea food catch, recovered prawn disease, recovered poultry livestock ( compared to layhong culling), and incoming Christmas revenue and sales figures.

What do you think the results of ql will be in the December quarter. You can calculate and estimate that.

What will insas results be in the latest incoming quarter. Do you think they will outperform?

But you can't escape one undeniable fact.

Insas main profit driver is only from 1 activity, dividend of inari and sales of inari share to provide profit. However it uses those earnings on activities such as funding fintech(numoni) which is not competitive, dome cafe, which is non competitive, sengenic which sounds interesting but does not contribute anything. Nothing they do has shown any formn of growth that should award it a big share price increase.

On the other hand, you also cannot avoid:
Ql started in a industry with high capex and low margins. And yet it's management has used every cent of those earnings and embarked on organic growth in their core management competence by investing in new businessess that are wildly successful. It started from feedmill trading and venture into integrated livestock which is bigger than layhong today.. then it venture into palm oil plantations right before the palm oil boom of 2007. Then it venture into marine catch and surimi becoming one of the biggest integrated marine industries in ASEAN. Then now it is venturing into retail by franchising with family Mart, a convenience store concept with better margins and management than 7-11. At each point it uses its earnings to the best possible growth.

Why should you try to punish excellence and reward incompetence.

I am reminded of the story of the old man who couldn't wait for the goose who layed golden eggs to hatch into more golden geese. He grew frustrated when the golden eggs turned into chickens. He started selling the eggs, then when grew frustrated that the eggs were dropping so slow, he decided to kill the goose to get everything inside.

He found nothing.

I'm sorry I don't want to be vegetable trader like you. I prefer long term wealth creation. Your method only works until it doesn't.

À you should concentrate on buying stocks with PE below 5, is sure chun chun win one.

Jellyfish, you don't have to buy ql, and I will definitely recommend that you don't. It is overvalued and a bad buy. What I would recommend is you revisit your klse screener outlook by filtering out all stocks with higher PE than 20. Or 15. Or 10. Or 5.

Look to the business value first before making your choice in stock.

MYEG? I don't think so. It has many more bombs that it does growth trigger.
1. MSc status company 10 year tax incentive expiry. It will be hit from 0.54% -24% soon
2. gst system impairment 90 million which I had expected the moment they changed government and announced cancellation.
3. New concessions not to favour MYEG due to Zahid.
4. Corruption cases and possible penalties levied.
5. Lack of clarity on profit margins and revenue generation ?figures from Philippines and Bangladesh.
6. If government contracts gone out revised margins on concessions, will MYEG still be a 4 billion dollar company?

and most of all, if you can find a warren buffett like man to run your company, he can grow from a dying low margin textile business, and diversify SUCCESSFULLY into furniture, insurance, tooling, shoes, clothes, underwear,candy, etc etc etc please tell me. I would love to buy that company in a heartbeat.

Business performance always equal stock price increase.

FYI - Please dont buy QL. AFter 2009, they never diversified or integrated into anything new. They probably dont have any more ideas of how to maximize their limitations. Most likely declining sales and problematic cash flow problems in the next 5-10 years.

You can consider buying it when it is PE5.

by part time investor of course I mean having 28-100 other stocks in your counter. If you cant keep track of your stocks and use indicators and charts and short cuts, you deserve everything coming to you. Stock investing is laborious, boring and financially satisfying.

Most importantly, try to understand the logic behind the fact that all the top quality blue chips always sell at a certain premium. Why?

Please don't buy and sell to support price. Buy to support business performance. If the business monopoly is gone, then I will be the first to sell. But as long as the business doesn't change, why sweat the small things?

I think the biggest missaplication here is the understanding of the word PE. I will try to do a long winded explanation on the logic behind the usage of PE because I think a lot of investors don't understand it properly.

I apologize in advance to Stockraider for being long-winded. My previous post it seems no one understood.