If you consider 7-11, family Mart then jump to mydin and giant as the same kind of business competitors, then you really need to go outside into the real world and work a little bit. I feel like I'm wasting my own time trying to explain something that is so basic even idiots would know the difference.

Please don't ask to manage Mr koon fund. It's sad.

You are sad. Choivo. I'm actually embarrassed for you

A 2% position for me now is slightly under 500k, so if you can afford to "punt" 2% of your portfolio on silly things, maybe you should just stop investing other people's money.

Aiyoh, just when I thought choivo had potential, he now comes and put words in my mouth. Firstly I did not say buy any business at any price. What I did say was be willing to buy a good business at a perceived fair value. Just because ql is pe 50 right now doesn't mean anything in terms of its business performance. All it means is share holders are willing to pay 50 times earnings for QL because they believe they will be rewarded in the future with great performance.

Now ask yourself this. What happens if 5 years from now, you stop growing ql business? They will take out 350 million of yearly investments into plant and capex and start giving it back to the investors. That is why when the growth slows down you start looking at PE. You get a nice fat dividend, I sell all of my 2 million shares in QL and I reinvest in something new. And what is the PE now? Definitely not 50 anymore as they start paying tax on the declared earnings ( which I don't like), it probably gets to 8-10 pe and becomes like a defensive maybank stock which you invest by getting dividend (and never getting rich).

First and foremost, find that good business with unassailable moats and good growth potential first. After you have analyzed that, then you look at the pe.

If you do it the other way around, you would have never bought Google or Berkshire or Amazon.

If you want me to show you why QL is better investment in the future compared to Berkshire it can be pretty easy. Even Warren has said it many times in his AGM. It is much easier to go from 1 billion to 2 billion earnings than it is for 250 billion to go to 500 billion in earnings. It's the same thing for Berkshire, he said it many times, the performance of Berkshire today will never match the performance of the last 20 years. He literally said it himself. There is just a limit to how many great businesses you can buy before you have to start holding doles of unused cash.

You will never invest in a business like Amazon or QL or TOPGLOV or Google because you do things the other way around. You never had a ten bagger, and you never will. Why? Your mindset is on perceived value. And not in how the business is growing or how big the moat can be.

If you want to be stuck in value trap like RCECAP enjoy yourself all you want, but in 5-10 years of high PE performance QL had literally performed better than your 32% holdings in RCECAP.

Why? You don't understand your stock or your business. You don't know the ceo's name, what his background is and the basis of your thinking is ahlongs will always make money. Funny.

Let's look back in 5 years and see if you are still on RCECAP.

Oh wait, please invest for longer than 5 years before you start commenting more theories and less facts.

Did you even invest in Berkshire before? You seem to talk about it alot, do you understand the business and all it's business units? Do you know who the CEO of netjets is? Have you ever sat on a netjet before?

I'm saying if you don't know what growth prospects is on all it's business units, the performance of all it's managers and ceo's, their background and business capability, don't waste time drawings figures in the sand. Your investing skills is basically just words with no performance return.

In 2017 I doubled my return on QL, it was a calculated risk but done on a quarterly basis with confidence.

You had -20% on your fund in 2017, you clearly don't understand any of your business. And if you are blaming it on China+US and all the other gooblededook, I truly pity you.

Ahhh,I see. Thanks so much

Hi Godhand, I agree with you totally, air Asia is another tier. But answer me this, how hard is the industry to get into? Basically anyone can go into it, if you have guts, the loans and the air license to run. Langkawi proved it. But just because that idiot failed doesn't mean that there won't be idiots who try to do the same thing by selling cheaper

Basically Tony is not an air man. He was a music producer who bought the old airline license, got a loan from sdb, bought the license for rm1 with all it's debt and got it off and running.

Now he did take a page out of virgin by adding ancillaries to increase the margins and generate good profit to grow and run the business until today.

But if you think air Asia has a moat, consider the fact how many flights are coming in and out of Malaysia. As a passenger, the moment air Asia stops becoming cheaper and more reliable than the other LCC, I'll stop using them and use next cheaper and reliable carrier. Tell me if that is not true. If you don't have pricing power, you don't have a moat.

As for ancillary profits, the moment passenger loads drop, all those items just disappear, you can't sell food if no one flies. And if planes are stranded, they can't make money.

And the most important thing is safety of margin. The risk of your plants and warehouse disappearing for QL is pretty much zero. For air Asia, it's a very real risk, and something they can't control.

Just imagine a scenario where 1 plane disappears in the Indian ocean. Not only do you have do compensation for the guaranteed human loses, you have to buy a new plane, but more importantly the loss of confidence the public is damage can go far beyond anything that can be repaired. The loss of profits will be instantaneous and unforseen. This is one of the factors of undervaluation of AA. Tell me I'm wrong.

Just ask Malaysian airlines.

And for me I prefer to compare AA not to QL but more to an insurance company in terms of business model. It rains far more from the float reinvestment to increase it's profits, but at the same time any overstretching of resources will kill the company in the case of any big disaster.

Everyone always things off growth and profits. But what you really need to think about is also safety of business margin.

Looking at the comments here, I realize that I have been too harsh on this choivo, being quite upset with his holier and smarter than thou attitude for someone who seemed to so knowledgeable but only started learning about investing recently.

I apologize sincerely and will stop bringing you down in front of your future clients.

I hope you do well in 2019 as I know it is difficult to keep your hopes up and your chin straight when the chips are down and everyone is crying for your blood and making fun of your investing skills.

But if you will hear out an old man, my advice will be to you:
1) listen and read more than you speak, as others might have opinions and ideas of worth, but useless to you if you do not take it in, analyze it and understand it.
2) try to trim your fund down to manageable levels, as you can never keep track and understand each stock deeply enough. I think you probably cant remember who the ceo's of each company are and what their philosophy or characters are like without referring to google.

and if you think if details like this is unimportant, let me ask you this:

if you could only buy 1 stock for 10 years, and you had to top up every quarter for that 10 years, what extra edge in information do you need to keep up an open mind to continue investing through rain and shine? Is reading financial reports, quarterly reports, stock price movement enough? Is going to i3 forum for bias confirmation enough? Because that is what everyone else is doing. Do you see them doing well? Minimal effort gets you minimal results.

zhangliang doubled his money in 1 years, and yet he sold. where does he get his conviction to buy and sell?

I bought QL in 2009, topped up every quarter, and never sold even until today. Where did I get my conviction to buy and not sell even until today?

That comes from reading every possible detail from every possible source, visiting sites, going to agms, talking to competitors, talking to suppliers, reading market journals, reading orderbooks, reading third party ctos reports,talking to bank managers, reading on capital allocation reports, loan interest rates, reading fund manager analysis, reading reading reading. All over a 9 year period.

I have a feeling that I spend more time trying to understand 1 stock than you do trying to understand 28 stocks in your portfolio. I hope you get what I mean after all this rambling, without the pretty pictures.

Again,

I hope for you the best for 2019, and good luck!

Hi flintstones, personally i dont think all the small/midcap businesses are all manipulated, its just that the market is so small that investors with margin financing and a quick feet can float or sink a company very easily causing distress, I mean the standard smallcap company is 100-200 million market cap. The standard midcap company is 500-800 million market cap.

For me I dont really look at the company whether smallcap, midcap or largecap. In fact, when I first started buying QL, it did drop below 200M USD valuation (penny stock range).

My investing principles that worked was simply buying into stuff that I know and am familiar with, things that I can see.

I bought QL because at that time I was heavily involved with engineering with boilermech. They were a fantastic paymaster and was a very well run company always finishing biomass projects under budget and on time, and from there I started to look at QL. When I did, I realized that it was running its businesses far far better than all the other poultry/seafood farms, plantations, feed mills around Sabah area.

That was when I knew I had to look at QL deeper. Reading into the financial reports, it was very high pe (around 29 if i remember correctly), but the free cash flow, the growth in revenue, and the speed of implementation. I attended AGM. read into the competitors.

I remember shaking mr chia song kun hand and actually having a talk with him regarding his policies and strategies. Very humble and hands on man who wakes up at 5 and goes to site directly early morning. If I could have him working for me I thought, I'd never lose a nights sleep.

In a weird and funny way, he is working for me! In fact, the reason I could send my daughter to USA for further studies is because of him.

Never underestimate quality of management!

In summary, basically what I am trying to say is there are thousands of stocks in bursa. Some smallcap, some bigcap. There is no way for you to understand deeply all of them or for you to visit all of them. So why try? Stick to what you know, know deeper in companies that you know are very efficient and doing well and keep doing that.

Why feel angry or upset when people like choivo make millions of dollars in their investments? They made it so just be happy for them, as long as you make money on yours as well.

Just dont trust those who buy shares and stocks in 10-20 different industries and recommends to you to buy into rcecap, insas, layhong,development companies, hengyuan, petronas, elsoft, jaks, sendai whatever all in one portfolio (somehow I dont think choivo is doing too well). There is absolutely no way they can have a deep opinion about all those companies just by reading financial report only.

Thats insane.

Even the best investor of all time, Warren buffet doesn't do that. I know for a fact that Warren attends AGMS, talks to tedd and todd every other day to bounce ideas, reads trade journals, reads newspapers, reads financial reports, reads market reports, reads sales and revenue analysis, reads moodys manuals back and front, receives business proposals every day. He basically reads 12 hours a day, and even with that he makes mistakes all the time.

Me? I read a lot, but I stick to the stocks I know. I wish I knew a easier way to make money investing, but to be honest?

Its a lot of long hard work. There is NO easy way.

Stick to what you know (just no confirmation bias, and be brutally honest).

Now here is why AA is not in my list of stocks that I buy for myself (its only included in the stock pick list because we need to choose 5)

There is not much differentiation between carriers other than how low you are willing to go. Everyone pays the same price for fuel, everyone buys the same planes from the boeing or airbus. Everyone has to get maintenance and parts from them.

Meaning in the long run, everyone will start to compete in the same way, so the profit margins will basically be the same for everyone.

Air asia has NO MOAT. Its prices are basically controlled by the prices of jet fuel (50% of operating costs), it doesnt have its own homebuilt planes, it doesnt have a unique business model. If it had a moat, it wouldnt be selling off its planes and would probably be getting more and expanding into more countries.

Its just the best at what managing what it can manage. Which is immediately cutting off bad fly routes, focusing on revenue earning flights, and selling off what is unneeded, maximizing impulse buys. Its a midterm gain, nothing special in the long run.

For me, if a carrier decides to become like netjets business model(with fractional cost, pay first enjoy later) and becomes the first to market then it has a moat. If it becomes like uber with market changing system, then it has a moat.

For me, AA and inari is quite similar, after years of suffering and other plane stocks died horrible death (or in inari case 2005 when all the semicon companies left penang crashing and burning), the survival of the most adaptable had a big lead and kept running with it. its just like the dot.com crash, the ones who survive are by definition the most efficient.

In summary, the low valuation comes from the unknown costs that are uncontrollable (like fuel prices, plane maintenance costs and costs which you just do not have a way to solve). Its also a business where anyone with enough money can get into, which brings down long term profit margins.

It is much easier to sell high price and discount down, then to sell low price and bring it up.

for air asia, the way i think of it is like this.
The indonesia and phillipines is losing money yes, but they are cornering and killing the other lcc's with prices. When we do price comparison of tickets, it is always in comparison to Air Asia, so it becomes the benchmark. the long game for AA is in 10 years, it will continue to gain market share and can afford to kill off the smaller competitors ( like that langkawi fellow), malindo, cebu pacific etc etc with lower margins and more carrying seats. It already has one of the highest loading factors in the industry. So definitely growth is there, but how we look at AA vertical integration is the key thing to increase profit and long term business growth.

In terms of quality of management,
which other airline actively pushes duty free goods and catalogue purchases (even online web buys) to the passengers who have to sit for hours with nothing to do? I know my wife keeps buying impulse buys on almost every long haul trip.

which other LCC sells prebooked meals (which are actually pretty good), rokki plane internet connectivity, special premium seats, and free money from build your own insurance and service charges? in fact, as far as I can remember, AA was pretty much the first airline that sold food on a plane in Malaysia for me. That was when I knew it can survive and prosper.

when you watch a movie in the cinema, the big earnings are usually from the popcorn and drinks and etc you buy when you watch the movie. the tickets they dont earn that much because the movie companies earn the big bucks from there.

AA is even smart enough to get group discounts and special prices to buy bulk planes, which they sell parts off at profit to other carriers, and gives it out as dividends to shareholders.

In terms of carriers and the performance in getting the most bang for buck with its passengers, its pretty much best in class.

However....

I've been around long enough in the market to know how easy it is in the local bursa market to know how syndicates can build their own value trap companies. Especially if you can't short shares and can only buy them.

People seem to think that investing in bursa stocks is the same as investing in NYSE or NASDAQ.

It's not.

It's a lot harder ( and simpler sometimes) to invest in bursa stocks because the market is smaller, the clear investing choices less, the monopolies more moaty.

The best in class stocks in bursa always seem to have a pe between 24-50. I don't know why it's that high, but when everyone is super defensive, that's the way to go.

I started my current method of investment I've lost multiple fortunes investing other methods in the stock market.

Hi Mr Lee soon sheng, I believe there is nothing wrong with buying beaten down value stocks. Every stock, whether growth or undervalue or dividend or defensive is a value stock. Would anyone not buy a stock because of its future value? But looking at stocks you have to see the long game.

And to see the long game you need to understand the story of the business. I have spoken alot on ql and it is easy for me to repeat and sound like the old man I am. However, I prefer to work with things that I also read and know well, so maybe we can talk about the long game of insas, your biggest holding and favorite stock.

What do I see when I look at the company? It is a company that has one lucky break in inari, but is then trying out everything and anything to catch the next lucky break. It does dome cafe ( which is not being managed as well as Starbucks or old town or even Papa rich), it does fashion retail, it does car rental, and of course it also does semicon.

However the feeling I have is that the company is just a company that does m&a, a stockbroking type company, and I think the market knows this and treats it as such. The teams there are just not good at growing their non inari business, and I don't things will change in the future.

You are neither wrong not right because people say it you believe you are. You are wrong or right because the facts say you are.
And the facts are this: INSAS is a one trick pony that got lucky with inari, and it struggles with growing everything else. It's management is not specialists in their business fields, and their only long game relies on finding wonderful jewel businesses at a young age.
If you buy a share in INSAS, you are basically just betting on the long term survivability of inari. But as inari is a listed company and not private, each time INSAS sells inari shares to pay for their m&a items, the share price drop will be more excited, turning INSAS into a huge value trap, it looks nice and valuable with good pe on the outside, but once you dig into the figures of what happens with management and assets, you realize you are on shaky ground.

You say the value of INSAS is rm4. But the business of INSAS is worth nothing if the value is not unlocked. The only guaranteed play INSAS has is to sell it's inari shares for dividends to give to shareholders, because it has no clear way of growing it's business. It doesn't have a moat with a manager like Warren Buffett, who can pick up excellent businesses every year. Inari itself is a wonderful business, but you are buying INSAS instead, why? For the perceived value of inari if INSAS sells all it's stock holdings and dividend rewards it's shareholders. Which it will never do. Because their management would not be able to find another inari. But you do realize, inari shareholders are the last to get paid if a company goes bust. INSAS will probably never sell inari, not have the skills to run the ship properly if Mr Ho and Mr Mai were not around to help fight for projects and technical skills.

When a stock is beaten down, it usually is for a reason. And the equation you need to ask yourself is this. What is the real value of INSAS if you take out the share holdings in inari. What are the business prospects can you look forward to in their growth 10 years from now without inari. Will they be able to find another inari to invest in?

With their current record, I highly doubt it. Same thing, would you invest in a value company with pe5, but where you cannot look at the growth prospects in the long term, the quality of management, the success of their business units? Or invest in a company with pe 50 with a huge defensive moat, consistent growth every year, and successful growth and execution of its new business units.

To be honest, comparing the competitive moat between a semicon factory without it's own foundry and r&d budget to compete with Intel, qualcomm who will compete with you if times are bad, and a surumi business which is asean market leader and growing it's clear which will be safer in the future investment. Then you add business execution of family Mart and dome coffee, and you can immediately see the synergy and quality of management in spending your investments wisely and growing earnings properly.

There is a thing to be said about paying fair prices for great companies.

And being stuck in value traps which lure you in with 2 cents dividends and proceed to eat up your capital.

Sometimes the market does know something you don't.

If you paid fair (or slightly overvalued) prices for excellent stocks, you wouldn't lose a night's sleep.

I bought QL 9 years ago - happy until today
I bought public bank 9 years ago - didn't buy ambank not RCECAP. Didn't lose sleep. Still great profit until today.
I bought TOPGLOV 9 years ago - quality of management never made me worried.
I bought YINSON 7 years - best in class.

Hi Mr tan,
My stock choices.

1. Ql -20%
2. TOPGLOV -20%
3. Yinson -20%
4. Hartalega -20%
5. AirAsia -20% - balance of value

Apologies for the name, I don't know how to change it. And also appreciate if I can join in your stock picking game.

Cheers

long story short, you buy and sell shares when the story changes (which you find out every quarter). The discount vallue and pricing of shares should only serve to guide you, not manipulate you. In fact, I think warren buffet was brilliant when he said we would be better off if the stock ticker didnt exist and shares must be held for 10 years minimum. buying and selling shares based on rumors and panic is crazy. unless everyone knows something you dont. Which if you did your full research, you wont be blind to.

here is the thing, last week i bought 50K shares at 6.25 on 25th December after company announce christmas bonus, now the share price go up to 6.82, should i sell now and enjoy slightly under 10% profit around 28K? most people would say wow that is a good technical deal lets do it! Choivo Capital will definitely say, wow! market down you make 10% surely by luck, speculative play like that sometimes make money other times sure lose money.

my question is, if the only reason you buy or sell shares is when you make money or lose money, then how do you when is a good time to buy or sell?

Do you do technical analysis (which i personally think is very weird for my investing understanding, when people buy you buy, when people sell then you sell more, time instead of being your friend it becomes your enemy. And you have to do many many trades, causing you to have less time to do proper research and judgement, and forces you to rely on charts, which somehow is always correct on backtrades, but when applied to future stock movements always end up correct until one day it doesnt. For me personally, when there is a discount at the supermarket i buy, and i never buy roses on valentines.

Do you do fundamental analysis? ( which i think is the way to go, but you have to read so much and remember so much that even geniuses like warren buffet can remember stock prices 5 or 10 years ago for his particular trades, you have to understand their competitors, the moats and economical advantages, the CEO's, the debts, the future business profitability and opportunity) that to reduce a stock simply to margins, profits, EBIT, revenue, DCF, debts is simply too simplistic and a suicide for anyone who doesnt do enough research into the stock.

Giving another example of a Sabah stock (the owners are sabahans, most of the directors and major shareholders are sabahans, my friends!) which is Mikromb, which were making really good money until 2017 end, if you look at the stock it is a perfect pioneer status company making protection relays and electrical relays that is so cheap and competitive it has been exported to vietnam, africa and overseas, with a huge growth and good track record of dividends and share splits and rewarding to the shareholders. for a value investor and a technical investor it would have been the perfect momentum stock.

However, a simple and detailed read into the company prospects, annual report and attending agm, would have warned you that their pioneer status ends in 2017, and lo and behold starting in 2018, everything is the same, good revenue growth, good dividends, good profit (30%), but receiving income tax from the government for the first time changes the entire company prospectus ( bringing 50% drop in share price). All of these can be avoided if you spend enough time reading and researching before buying the stock. Fundamental analysis will not tell you this, technical analysis cannot predict this.

The only reason why I knew about this was because ah wah the founder of mikro is a sabah friend, and a simple question on low taxes brought this issue up (and also eyebrows). Same with my investments in QL and topglove ( I live in east malaysia, and have seen with my own eyes their amazing growth. Also same with public bank (when all the big bosses and chinese companies in east malaysia all deposit their money with public bank, it means something, especially when the quality of the bank deposits is greatly increasing every year). For yinson, knowing about the company from the days when it was just a transportation company to the day it started to venture in to O&G fpso business I learned something valuable from the company manager, "it doesnt matter what the oil prices are, in the end we are just a transporter, forwarder and storage unit for oil. Our charter rates are fixed, and we will always have a market if we are the cheapest and most efficient transporter.

There is something to be said for knowing your circle of competence, and sticking to it. Until today I still only have 4 stocks, and whenever I meet another new fund manager/trader/ investor who says he invests in 10 or more stocks in different industries, businesses with multiple outlooks I cringe.

Either I am very very stupid and cant analyze google, amazon, facebook, superlon, hibiscus, etc all at once in a day. Or they really dont know what they are doing, and just have skin deep knowledge of their stock investments.

Either way, they are not touching my investments. Or making my decisions for me.

anyway, just some more information for you too digest to understand how ql works. when you try digest a lesser managed competitor LAYHONG try to look at their previous quarter results announcement. Why did they have a big loss? It was due to 8% increase in feedstock prices from soy etc, and a culling of chickens in tamparuli for their broiler farms. Why did this not happen to QL? They also had broiler farms nearby? It is because of their attention to biological safety and agricultural quality (no culling as all the chickens were safe). they also produce their own feedstock mix from palm oil kernels and other materials (which come from their plantations) so the rise in soy prices did not even affect QL.

Thats why when kids like Choivo capital thought they were making a good deal investing in LAYHONG they burned all their money, high revenue, very low margins, no vertical integration. When they got caught swimming naked, all their positions turned to dust.

These are not new things, and you could see it coming a mile away. It just takes business sense to see beyond just numbers and figures and truly understand how a business works, what challenges they face, and what their competitors are doing differently. PE will never tell you this.

that is called understanding your stock.

tah16600, how do you know that the pe is high? what is low pe for you? I have a feeling you will probably never buy a single share of QL if you are always looking for cigar butt lying on the ground.

why would they throw for no reason? If the business is good if they throw isn't it even better for retail investors like you and me to collect ?

but anyway, tah16600, lets try a test. Because i ran into the same problem when i first bought the stock in 2009.

it is 2018, the pe is 50, share price is around 6, 8-15% revenue growth every quarter ,low dividend but high investments in new equipment to maintain their monopoly.

in 2009, how much do you think the PE was? revenue in the 4th quarter was 300m, 7-8% net profit,even with the big investments in factories. I wont tell you, you need to believe it for yourself, why i bought then.

Here was my reasoning, with that growth, the PE was indeed high. But if they stopped investing in new equipment every year, collected the dividend and handed it out to investors? How much would the PE and dividend yield be then?

How much would the effective PE be?

Secret is to look at cash flows and generation of FCF. Because profits and earnings are only after you minus all your investments and expenses.

Now, fast forward to 2017, they spend 338 million ringgit on new equipment, new factories, staff training, amortisation etc etc. all this to maintain their moat and the right to be called number 1 biggest surumi supplier in asia (not to mention egg king).

How many other competitors can fight on the same ground, much less do the same investment to push QL out. lay hong? not even close.

now, what is the demand for seafood processed meat, chicken, eggs, palm oil? in 5, 10, 20 years from now? how big is that market demand?

now you tell me if buy now overvalued or undervalued? I will tell you in 10 years time, which undervalued stock you bought that performed better than QL. Maybe ill regret then. but hindsight is always 20/20

Enigmatic, how do you defined overvalued? I sell only when the story changes. For me I will sell when
a. either the founder and family stop going to site, pass away and being so hands on in the business. Did you know the ql founder has a PHD in agriculture field?
b. People stop eating eggs, chicken, palm oil, seafood. Or if a cheaper source becomes more acceptable readily available.
c. They start giving out big share options to directors in lieau of salary or start spending willy nilly on bad companies. I almost did that with TOPGLOV when they bought the company last year. But I forgave them and moved on.
d. My son need to go to university and fails to get his scholarship. So I have to pay for his education.

For me, why traders buy or sell shares I really don't know and don't care. All I know is in 2009 when I first started buying ql, the quarter they sold 300 million worth of products. In 2018 quarter they sold 900 million worth of product. If that is not a most I don't know what is. I've been consistently buying some 2009 every quarter until today rain or shine. Now with multiple stock splits etc I have 2 m shares, not much but I'm just a old uncle working for other people. For me as long as the story doesn't change for ql, and no competitors come in to fight their surumi monopoly, I'll continue buying whether or not this brothers sell it buy etc.

I remember in 2011 when ql did their rights issue, all the find managers was telling me ql is overvalued, not a good buy etc etc. Same thing with Nestle, forever overvalued.
But if knew 2018 results for QL, would you have bet the farm in 2011? It's undervalued then compared to now. But if course hind sight us everything.

Tah16600- downtrend is just a technical word when Mr market buys and sells shares. If you really want to know the meaning of the word downtrend, take a look at the quarterly revenue and sales of QL, is that a downtrend? Or did they just have the best quarter revenue ever in ql ?

Small advice for you warchest, I started investing in 1997, back then still using remiser with their 10% brokerage fees. After the crash I also first started buying those small/midcap with small success. But after Bursa stopped shortselling activities, I notice the market here become very weird and hard to analyze properly. Basically you cannot punish bad companies, you can only reward good companies. So after I changed my investing policy ( I lost money for 6 years), to only buying companies with growing or good moats and great management, I started to make money.

My summary is for bursa market since 2000 to make money, you need to be willing to pay fair or slightly overvalued prices for great companies. All the others small/midcap with good people/lowdebt etc, a lot of them are value trap that is being manipulated by cartel. They put out announcements and fudge figures to make you think it's a Warren buffet buy, then they push the price up and make you excited. Then when you think you can wait longer to gain more, they pull the carpet from your feet. In 20 years of investments I have seen these trends repeat over and over.

Only in Malaysia Bursa because it's a small cap stock exchange. The only time I make ten-baggers, is when I pay fair price ( what I believe to be) got great companies do u get rewarded properly long term. Like QL. Like TOPGLOV. Like public bank. Like YINSON. Those give you ten-baggers.

Funny thing is, the so called chia family just bought 4 million shares in QL from 21st ones when people lost faith in QL. Is that a sign that they are confident in QL business prospects? Or are they still selling according to choivo? I wish they were still selling so I can collect more, but 50k shares is my limit this quarter.

Slow and steady wins the race.

Problem is, choivo still thinks RCECAP is a good undervalued business because it has 30% profit margins, spews out 2 dividend payments per year, has good roe, good gearing.

He doesn't think of RCECAP in terms of a going business.

I won't teach you how to evaluate QL, but I will give you FREE hints on business fundamentals on RCECAP by asking you these few questions that you should think hard on.

1. RCECAP enjoys good profits, but how far can it increase revenue every year for the new 10-20 years? Where does the revenue come from?
2. To increase the client base, where does the challenge come from? What will the percentage of NPL look like with bigger loan base? What guaranteed returns are we looking at if we have to do write offs with no collateral base? How much of a hit can RCECAP absorb? Are payments of government officials guaranteed? Or is it like 2007 when housing prices were guaranteed to go up forever?
3. Is RCECAP the market leader? If not, is MBSB the market leader? What is the returns of comps? What is the NPL performance? What are their returns like? What is the possibility of RCECAP outperforming the market leader? Why?
4. Is RCECAP using their share options responsibly with shareholders in mind? Are they treating share options as free cash?
5. Is the management trustworthy? Why are the ambank kids running the show? Why is the asset Management not profitable?
6. Why is the pe perpetually so low? Is it because the market is undervaluing RCECAP? Why is every fund manager undervaluing RCECAP? What is the reasoning behind them not investing in RCECAP despite the performance? How high is the business risk that it would be valued so low? Are they blind? Are you blind?

Choivo. My advice to you. Before going into technicals and fundamentals, think of investment like buying a piece of a business. Understand the business risk, business model and future growth possibilities first.

First rule of investment: don't lose money.
Second rule of investment: don't lose money.
3rd rule of investment: don't be choivo capital.

Once you understand that, you will understand why I buy, bank and use only public bank. Quality of assets is everything. Savings and deposits is the closest thing to risk free business you can find.

Just because RCECAP is making money on risky assets( and if you think borrowing money to government officials is guaranteed returns then you are as stupid as stupid does) doesn't mean you won't be swimming naked when the tide goes out.

QL on the other hand is built on quality assets with guaranteed supply and demand. That's why it's pe50. And that's why your RCECAP is pe 5.

I rest my case on your business acumen.

He can't go far, his mentality and his investing skills is just looking at top layer to make decisions. So he keeps on buying stocks with low pe and low debt, not knowing that many of these stocks are small/mid cap and results easily engineered.

Anyway he only started in 2017, already think he can advise people charging 50 cents for his word of advise. But if you look at his performance and his analysis of stocks, it's more than laughable. His so called "fund", which is only 2 years old and not even securities commissions approved, is already in the red, he has to take margin to buy stocks, which all have poor management capability, no moat, and looked growth prospects, always look like a good cigar butt deal.

If just judging from 2017-2018 period, my quarterly investment in QL already outperform all his other so called fundamental stocks. I'm sure he will use hengyuan as his example of a good purchase stock. But when he can't even evaluate what the true value of the stock is i.e sell high, buy lower, cringe as it went lower, he just sit and blame others as if he is qualified to teach people how to invest.

Maybe choivo should just keep quiet and come back in 5 years when he has a proper stock portfolio with a good track record to speak of?

If you don't have the conviction to purchase a stock for more than 5 years, it shows you don't have a clarity of purpose, valuation capability and a stable mind.

You don't need to teach uncle or be smart. You just need to be disciplined with your approach, and have a good grasp of the stock more than just numbers but as a business concern itself.

No need to teach uncle. Uncle already buy and hold QL for 10 years. I know how ql business works and how it will look 10 years from now.

That's why I'm still buying. Every quarter.

this jon choivo come back and talk crap again, 3.5% after 2 years still want to be a fund manager? I could make better money of the FD. lets see, you bought hengyuan and chased till negative even with no fundamental skill on business sense (not noticing they were closing down refineries for upgrade), you bought liihen when the malaysian workers salary had just increased tremendously (compared to other countries). And you think RCECAP is the best performing lending institution in malaysia (there is a reason why major banks dont lend personal loans to individuals without COLLATERAL, and why ahlongs always have tatoos and gangsters to chase money) <------ this is far more speculative than any other foolish thing i have ever heard. You buy simply based on PE, profit margins, and ROE without looking at the business model. You are like GOLDMAN swimming in the beach without any underwear. When the tide goes down, then we can see if you are naked.

For QL, i dont gamble like you do, with your sailang and your betting method. I look at the quarterly reports, and every quarter, i buy more in QL. Unlike your weak way of investing. I have been adding up my position in QL for almost 10 years now, with almost 2+ million shares. and those are accumulated personally slowly, and with short term leverage from trading houses. I have been "speculating" for 10 years now on the same stock, rain or shine, and will continue to do so as long as the business model doesn't change. And it hasnt, the business is more idiot proof than ever.

And yes, I bought 50K shares at 6.25 these past few days, after year end bonus and dividend came in. I do have that conviction. And I dont need to pull in my friends and family into bad business ideas.

In any case, you only spout those american stocks, with no idea of how they got where they are (if you did you would have bought them, which you didn't). I dont buy american stocks, I have no way of knowing how to value them, nor able to attend the agm to know the management well enough to make a business decision. I do know how to value QL stocks. I went to visit their factories. I have friends who are suppliers and contractors to QL( and are also shareholders because of the wonderful paymaster that QL is), and they give their very best service to QL because of it.

You know nothing about all those companies, nor who the CTO,CFO or CEO's are (because you dont know how to value management quality nor attend any AGM/ site visit) nor have any business sense to invest in any companies at all. Other than reading some books and think you know all there is to know about investing.

Do you know what a 10-bagger is? You obviously dont, because you dont have the acumen to invest in companies like that.

I have. I bought ql and topglov in 2009.

Now, why dont you go away from this QL forum (since you think it is so bad) and go goreng your RCECAP stock ( which i have taken a good hard look at, and know it is a non-growing business with finite potential, there is a reason why public bank and other major banks doesnt do big business in personal loans to individuals, guaranteed or not guaranteed by government) and what happens if they increase their loan basis (NPL is guaranteed to increase tremendously). but yeah, why dont you go 40-50% of your assets into RCECAP ( i did that with QL and TOPGLOV which i held big for 9+ years, so called speculatively).

And stop insulting other people on this forum. You dont have the right, you dont have the business sense. And you definitely dont have the results to show for it.

Be foolish elsewhere.

Oh good good, another amateur fund manager. And worse, a kyy follower to the bone. I do consider learning, but definitely not from you. And a fool and completely blind to boot!

Incredible. Please don't talk to me about margin, when you pulled your friends and family into those bad businesses like liihen, Latitude tree and rce capital in 2017( buying high and selling low). Oh yes I've read your so called memo, when you took your fund into Maybank margin to take advantage and buy even more Latitude tree, liihen and rce capital. Wonderful! Any margin call yet?

A bad business is a bad business no matter how cheap it is. You will learn that too late, because the market is never stupid. Invest in a company that gives free shares options to it's staff at cheap rates? That's a bad business that gives great profits, but hides dilution and poor management. The only thing they do is be ah long, but never making money on asset management, not having a monopoly or market leadership, all you have is an investment in a "value" trap that you probably don't even realize. If you had invested in QL instead of rce capital since 2017, you would have doubled your money for your investors ( even with this huge drop this month), and made good money for your family.

Liihen and Latitude? Please, don't make me laugh. You bought Latitude at it's height, when signs were very clear that their business impact had changed drastically ( workers salary had increased tremendously), but you still looked at cash and their "intrinsic value", until their revenue prospects changed and the market turned on you.

With your investing skills, I sincerely hope you don't use margin it drag your family members into your fund. It's horrible when you are the fool and completely blind to many things at the same time.

FYI, I only used margin once in 2011 after my shares had doubled in value, and only buy in every quarter after the quarterly financial results come out.

And actually, I do appreciate Ricky, he is definitely not stupid and humble. I was only angry with him for his attitude to the other investors on the ql page, and I do regret that.

You on the other hand, are neither humble, not smart, and definitely not perfect.

And calling me a fool and blind in one sentence? Talk to me again in 5 years after tripling your investment in Latitude, liihen, and rce. Do you have that conviction? I've been adding to my position in ql for the last 9 years. I may not know much, but I definitely know my stock.

Let's see which stock performs better in 5 years, the superb business with pe50?, Or the bad business with pe5.

Ricky, I thought you were talking about future return of capital? If they bought 1000 acres of land in tawau 20 years ago and have not restated the values to current valuations, wouldn't you have an abnormal capital gains when it is restated to the value of the other averages value of average owned by ioi and hap Seng, and sold 10 years later. That's how I do deep value asset analysis, and that is how I added shares of QL.

As for justification, I could give you exact figures, but I prefer for you to come to the same line of thought, instead of asking uncle Google to just give you things as if you deserve them.
My hypothesis of current value 10 billion+.
1. Plantation asset valued below market(I used valuation reports from trade journals I bought of Sabah and Indonesia po industry and compared to comps from other plantations.) Yes it's very undervalued. By a few hundred million. It will correct sooner or later.
2. FM ctos reports of maxincome sdn bhd( assets and capital costs spent show new stores construction below 180k per unit, and daily turnover hitting 9k average in Klang valley), p/l shows breakeven, showing future growth not requiring outside capital. On track for 300 stores target in 5 years and daily sales with inflation at 10.5k imho
3. Myr exchange rate on track for 4.2 in the near /mid future, making me sad. But good for export gains. You can check quarterly report on the forex gain alone.
4. Looking at projects, projections and market growth, we are looking at 300-500 million of revenue growth average increase every year conservatively. Meaning they will be projecting conservative revenue of at least 6 billion yearly in 5 years.
5. However the capital investments to grow the business is massive, around 338 million. They are currently now after completing all of this years construction at 68% capacity. Meaning sooner or later, the growth will slow and they no longer need to build that many new plants, only refurbish or repair existing upstream and downstream activities. So if I fudge and bring down their operating capex flows, to 50% that is still around 150 million per year. Or more demand could come meaning even better prospects. And yes I know everything about depreciation and amortisation, but to be honest those are just estimates given by accountants with no basis on how well the equipments assets are maintained and serviced. And I can tell you management for ql is bar none in this regard. However imagine if ql instead of employing capital to more growth declared it as operating income. That would be at least 400 million in net profit instead. But why pay all that tax? I have no qualms with them spending ferociously on growth.

6.They are spewing almost 300 million of cash flows every year, in 2014 their plant activities was around 180m and revenue was around 2.6b. in 2017 their plant activities was around 338m and revenue was around 3.6b. their debt gearing ratio is outstanding for such a fast growing operation( which is another value why we justify 10b valuation) because it is a snowball rolling with its own strength now. Show me another business with similar metrics growing with debt that low in bursa. And please don't quote me aeon credit, because the main retail is complete trash. If the retail went bankrupt aeon credit would disappear tomorrow.

These are hints. You should look for the details yourself Ricky.

Hi avangelice, it has only dropped by about 10% from last peak I think. I usually don't do impulse buy. My method of investing is usually every quarter, once the quarterly report comes out, if the business model doesn't change drastically (it hasn't), I continue buying. Sometimes I pay more, sometimes I pay less. But I've been buying every quarter for the last 8 years as far as I can remember.

Godhand: it's not a simple question, that's the point. Your say it's a superb company, that I agree with. You say it's expensive, I say it's fair. And by that metric you can argue until the cows come home because everybody has a view on the intrinsic value.

And it's only after Ricky has started deriding and trolling the other investors in this page that I started commenting and trolling him back. You can look at his past comments on his profile page. He is a troll through and through. He doesn't want to listen to your answers, he just wants to argue.

Ricky,

Why don't you do some self study instead.
You said you bought scientex at 2.47 in September of 2012 and held it until today. Good for you. Did you buy more?
You said in April 2014 that it was fairly valued( with that growth and retirement pattern?) Did you have the conviction to buy more?
In 2015 you said it was overvalued, but you wished it went down so you can buy more. I would assume you didn't, because if you were you would be helping the scientex forum teach investors instead of trolling this one.
So I'm pretty sure you didn't buy any in 2016,2017 nor in 2018

Why don't you do your DCF, and look back at your track record of your roc, fcf, etc and tell me what you thought back in 2014 on the possibility of scientex hitting 4billion market cap. You definitely didn't think it was good enough for you to invest in it.

Let me tell you a bit about ratios. Roc, or my understanding of it is return of investment capital is based on your operating profit divided by your total assets minutes current liabilities. All of which can be restated or fudged. Land values can go up, operating profit has to take into account opex ( which you should be asking if it is abnormal), and in a comnodities traditional mode of business, it takes time for manufacturing to pick up.

Future cash flows based on DCF is also just as hard, because which discounts will you apply? I can use any number of figures to basically come up with anything I want? If based on dividends, definitely ql is a crap company. If I use weighted average cost of capital? Slightly better. Cost of debt? Growth rate? Discount rate? All of these are just ratios, garbage in garbage out. It's like reading horoscopes, you can get multiple results based on which bias you are working on.

Let me show you a better way. Yes you can mix those figures in to give you an idea of how a company can perform, but you need to temper it with business foundations. Here's what I did, when I went to the AGM 4 or 5 years ago, I asked the brother chia song kun, during the big bird flu scare, how many chickens did they need to cull, and how much of a percentage it was compared to the market average. His answer in the AGM regarding the culling and their care to biological health really impressed me( founder has a PhD) and I've been buying ever since.

You should read Peter Lynch sometime. His scuttlebutt method works so well with me for why I chose public bank ( all the major Chinese companies bank with them ), yinson( very well managed fpso business and dying bumi o&g competitors, and if course top glove (even nhs buy from them)

Have fun playing sandcastles and never needing to make big decisions in life.

But seriously. Take a risk. Attend AGM. Fork out the same money to buy trade reports, journals and read the financial statements.

I wish you all the best in the future Ricky. Talk less sand listen more.

Anyway, I'm sure none if you kids went to agm last year, which had pretty good food. If you did you will be far more interested in the details of their business more than anything. Here are some details that you probably won't learn unless you went to the agm directly and heard what they have to say:

1. QL spent 25 million in the cold storage factory in tuaran, KK last year to basically freeze and process tiger prawns for sale to China and Australia. And if you know anything about construction ,25 million just to build a huge freezer is very impressive. I won't tell you the metric ton per month they sold last year, you can find that out from Google yourself. And yes some of it is also being sold to premium FM at much higher profit margins than normal.
2. They are now 3% of Vietnam poultry and egg market. And growing exponentially.
3. They are now 10% of Indonesia poultry and egg market. Definitely growing exponentially.
4. They also are now one of the cheapest and fast growing feed mill manufacturer in both countries. Vertical integration. And when Ricky says QL business is only in Malaysia I shake my head and laugh.
5. Their surimi business is biggest in asean. FYI this is pure monopoly, as they are providing interest free loans to fishermen to buy or lease boats and equipment with the only requirement being that all catches to be sold QL first. Guess how many fishermen in asean owns their own boats versus loans from QL?
6. It's looking more and more likely that QL will own the entire egg industry in Malaysia. And as there is no control over monopoly in Malaysia, guess who wins?
7. Guess how many new acres of land in Indonesia is QL investing in for their palm oil activities?
8. Guess who family Mart has to buy all their fresh foods and materials from daily? Who else has that funky seafood dip food contraption? When family Mart wins, ql wins bigger.
9. I forgot. It's pretty important, but this uncle getting sleepy now, jet lag and attending my daughter's graduation in San Fransisco.

Have fun digesting.

Hi pewuf,

My other 3 investments since 2009 buy and hold till now was in yinson, public bank and top glove. All lucky picks taken from Google, affin, and whatever the other one Ricky said. :)

Funny thing is, when I bought shares of each stock back then, the same financial asset managers said these counters were risky, they were too high, pe not good, growth prospects max out.

Luckily I listened to myself instead. To be honest, I'm not really good at reading all those details and ratios and technical analysis mumbo jumbo.

All I know is in bursa you can buy shares but you can't short them. Therefore our market becomes very unique because you can't punish bad stocks, only can don't buy them. And because of that the market will value good companies far higher than normal.

So my job becomes easy. I don't know about all those methods, but I do know business. And in business companies with monopolistic characteristics will be far more resilient and reliable in the long term than normal malaysia counters.

In Malaysia most companies are basically small cap. That's why there are many cartels that know small fish like you who just learned about Warren buffet 1-2 years and think they can invest like him based on PE and time of thumb etc. And most of the time, they will work to push those small caps to present value traps which looks nice to newbie 1-2 year investors like Ricky yeo with their smarts into "investing" in those companies which they then goreng and let the bottom fall out. I pity people like Ricky because I see them all the time. They never make money in the long run.

All I am saying is if you want to invest in bursa, always look to the business first and foremost. Understand the business. Then look at the numbers. After you look at the numbers and the business, then you ask yourself am I buying a wonderful business at a fair price?

I'm proud to say I've never sold a single share of these companies since 2009, and I've been DRIP personally and with my excess cash ever since.

Before Ricky goes into another troll rant, just ask yourself this. What shares in bursa market have you bought and held for at least 5 years, and made a profit? And if you had to hold a share for the next 10 years what would you buy and hold? Because it's been proven, long term investors like me win over short term daytraders like Ricky yeo over any metric.

Whatever Ricky says about ql not being with 10 billion and overvalued etc, I know that sooner or later ql is going to be worth northwards of 20 billion value. I don't know when, but I do know that ql is paying me a growing dividend every year to find out and splitting my shares. And since my risk is basically near zero, I don't mind waiting.

Now Ricky, do share with us your latest grand profits from your forex currency trade? Don't bother denying, I know amateur fund managers like you always think zero sum games are winnable.

The star news is your source of facts? Ok you have the upper hand. Anything other people say you will just have guesstimates, worthless talking to kids like you who don't ever read financial reports from sdn bhd or even annual reports, and simply rely on Google for everything.

Why should I show you numbers from reports that I paid money to buy?

Good luck in your investing future, lazy to even explain to you investing principles.

FYI Ricky, how is comparing Nestle Malaysia and QL resources stretching the definition of comparison. Who else do you compare QL to in bursa?

Both are into commodities, one basically imports raw materials from overseas/local and processes it for local Malaysia consumption.

The other processes locally manufactured goods( seafood, eggs, chickens, palm oil) into finished goods for local consumption.

Both have retail operations ( one uses shelf space from hypermarkets and distributors like Harrisons /wholesalers etc) while the other uses FM/ hypermarkets/ and sells to wholesalers.

One is 30b market cap with slowing growth, pe50 and 10+% margins for commodities with brand recognition. 5 billion sales.

The other is 10b market cap with high growth for commodities market, pe50 with 7% margins with brand recognition (family Mart). And growing 3.6 billion sales.

I mean, who else is in this market?

Do you even know what QL resources does?? It's really not a stretch to say once layhong lays over, and fm has 300-500 stores around Malaysia, once palm oil plantations recover, seafood demand increase and supply constricts, that margins go up to 9%, sales go up to 5 billion revenue. When that happens, would it be fair for QL resources to hit at least 20 billion market cap?

Obviously I don't know when that will happen. But it will happen sooner or later. I guarantee it in a commodities market ( unlike construction, or tech) because of human needs, volume, vertical integration.

If 3-5 years from now the market cap doubles, if you buy now you would make almost 20% annually. It's the kind of business even idiots can run once the system is in place.

Monopoly.

The words let's ignore ql and focus solely on fm shows you are totally in your own world, ignoring facts and just plucking figures out of the air to fit your thesis. When you say paying pe50 for ql ( which obviously includes all the net fixed assets, where again I repeat ql did 338 million in new fixed capex overall from the annual financial report last year) but try to fit only fm into the pictures, where exactly do you get the "numbers" other than ql saying their fm operations broke even this year ( after spending 100m in 2016 to start the fm business). Anyway, how does a single fm store costs you 300k to build with 100k refurbishment every 5 years? I'm really curious where you got these figures.

Here are REAL figures because you really should get instead of plucking figures out from the air.

The master franchisee in Malaysia of family Mart is maxincome resources sdn bhd, which is a full subsidiary of QL. As far as I know QL doesn't report the breakdown performance of family Mart. Correct me if I'm wrong on that.

So if you really want to look at exact performance, you should go and invest and buy the ctos/ccris reports of maxincome sdn bhd so you can have an exact idea of how they are doing.

Key questions you should be asking, after they pumped 100m into starting the franchisee, how much more did they have to pump to keep the company afloat. They also said they are breaking even in 2019, 3 years after starting fm, what does that mean? And their p/l breakdown? Their assets? Their company stability? All of these are available when you buy the reports, same as a bank when they do analysis on whether to give a loan to you.

They don't pluck figures out of the air. Anyway, I first bought 100k shares when it was really cheap almost 10 years ago and held on to it until now, with stock split and price increase until today.

And in all that time the only reason why I never sold those shares and even added with my dividends was for one simple reason, monopoly.

As long as that doesn't change, my buying habits into ql will simply not change 20 years from now. Hopefully.

Warren buffet says that you should invest as if you only have 3 stocks that you can buy in your entire life. When you realize what he means you will quickly find out that there are only a few guaranteed stocks you can buy, stocks with monopoly/duopoly structures that are economy resistant.

I'm now happy to say that I have more than 400k shares in QL collected over the years which are almost ten-baggers in capital gains now.

It may be small compared to the profits you have gained from your trading/fundamental pe/ etc, but I have the conviction to go big and go long on this stock almost 10 years now. I only have 4 stocks in my portfolio.

How well have you done with all your research, Ricky boy?

Shpg22 fyi, if you want to fudge numbers I can just as easily change the earnings part by omitting their opex growth to get a feel of how the business is doing.

If we take out their future expansion of 338 million, and use that plus the 65 million declared profit we'd get roughly P/E 3+ if they stopped investing in growing their business.

What do you say to that?

Also your book value is also not accurate, because a lot of their land assets for palm oil and factory grounds and lands have not been restated for a long time. So if you just want to invest based on wsj or morningstar estimate of book value you better spend a bit more time on reading financial reports. Otherwise you'd just be another Warren buffet wannabe.

Sorry a bit more of a rant Ricky, cos you don't seem to want to digest what other people are saying.
Last year annual report,

Nestle Malaysia spent a part of their 5 billion revenue 138 million in new equipment, plant and machinery.

Now look at QL resources, they spent 338 million of their 3.6 billion revenue on new factories, plants and machinery. That's how much cash they are churning out, that's how much growth they are expecting.

Now for those who didn't buy Amazon back in the day ( I learned this lesson far too late) because pe was like 300+ or something, digest this.

In fact, I won't give you the answer, find out and reply back here.

Did Amazon lose money every year for all those years? Or did they just make a minimal break even every year because they were pumping every single cent back into growing the business?

And now Amazon is a trillion dollar company.

PE is just a ratio. I can turn it into any figure I want. If you want to understand a business, read the financial notes. Then read the cash flow statements. Then read the assets and debts. Then look at the business and see who else above them. That's how you do comps.

Ricky how about these for hard facts, let's use comps.

There are 80 fm stores in Klang valley area, daily turnover around 6k with mostly fresh food and seafood kombi direct from ql, higher margins than seven eleven which doesn't carry their own products ( low margin). No differentiation between 7-11 and mynews etc. QL spent 100m in 2016 to in operating budget open up these stores, and they have a much deeper capital to reinvest. FYI the profit returns from fm is enough to generate new store openings, unlike 7-11.

There are 2240 7-11 stores in Malaysia, with low margin items and high debt ( from which you can do comparison), the returns from 7-11 are only enough to pay dividends and small growth. They are taking on more debt to grow the 7-11 stores, which are becoming more saturated and can't be grown organically.

Now, which do you think has the bigger future and growth opportunity, the vertically built company with production, manufacturing and now retail? Or the other company which frankly is built to only drive out and bully the mom and pop kedai runcit and doesn't even make a good profit. Do you think 7-11 can double the number of stores in the next 5 years? Is that even possible?

And if you do the math, right now fm is worth more than 2 billion to ql simply because 80 stores generate 150m in sales per year, ql has the opex cashlow to add even more stores if needed, and if you think 5 years or 10 years ahead (pe10), you are looking at 200-300 stores in Malaysia which would add 300-400m in sales, at 5% profit margin internally is around 20m. However when you look at ql bottom line which is linked to surumi, poultry, eggs and palm oil products then you will understand what is meant by vertical integration.

Now look even deeper into things. What happens when fm hits 800-1000 stores? QL would be able to start producing and selling even more specialized products under their brand umbrellas mushroom, suria, ika, ql Omega and Sakura at higher prices because right now people look at fm and think quality, same way people look at Nestle and think quality.

If you really want to do comps, don't just look at pe or profit, compare growth speed and market valuations.

Nestle Malaysia is a 30 billion company with 5 billion sales at 12% margins, pe 50

QL resources is a 10 billion company with 3.6 billion sales at 7% margins, pe 50

But now look deeper and look at how the much cashflow is being used to grow the business, affecting current profit now for future growth. Look at the factories, refineries and plants being built right now that can handle future orders.

Now ask yourself what a monopoly means, how growth works, and what people are investing in. There are hundreds of companies which have pe of 2 and 3 etc but never make you money because it doesn't grow, but only a few companies in Malaysia similar to Google or Facebook or Amazon which can consistently grow over a 20 year period.

In the end a business is only worth holding if it grows, and pe doesn't mean a thing if no one buys the shares.

FYI I also continuously bought my shares at 3.90 more than 7 years ago, then it split, and then it went up to 7, so whatever drop you are looking at now doesn't change how a great business works.

Shpg22, in all time you were saying fcf is negative, the business kept growing revenue and earnings. And I'm all that time I kept and reinvested my shares, I had share splits, dividend increases, share price up, I basically made 10x my original investment. For all your book smarts and outlying factors, how do you explain why people still invested in ql throughout the entire time, and were rewarded?

In terms of fcf, you really need to check out what the capex is and what they are doing with the capex.if you ever come down to Sabah id be glad to bring you visit the megafactories they are building now to get so that seafood processed and exported out.

If you remember when Warren buffet drove to visit Geico to see what the business is about, my advise is to come visit QL to see what the business is about. Then you'd probably stop reading too much into technical charts and start understanding businesses...

Hmm, if your logic is 10b cap must have 100m profit per qtr, then why do people buy Amazon, Tesla and so many other companies? Why did Alibaba buy lazada? Why are they so special? I think the answer is revenue growth possibilities, market moat and monopolies.

I don't know if you mean Dr Chia, but I do live near one of the other Chia brothers, problem is do you know they own 600 million shares, and they are only selling around 500k-1m shares once in a while to fund their lifestyle, they still own majority share, and one of the purchases they did was to buy a property in Australia. He is 68 years old with 4 billion net worth, why do you think he still needs to buy to prove something? If he sell when business is bad will kena insider trading, so when else to sell?

Think about it, ql just announced 920 million in revenue in one quarter, do you think it all comes from just eggs and chickens? If you think carefully, why will LH report loss, while ql report big profit and revenue growth? It all comes from being integrated. They have their own production, their own feed mill, their own plantation, the biggest surimi in Asia, they even have their own retail ( family Mart), they are a full fledged juggernaut. If you are looking for a moat in a bursa company there is nothing bigger. I've held and collected every year this stock since 2009, and every year there is someone who looks only at pe but not the business.

When you hold 1 million shares ( after buying for 10 years, share split, steadily up year after year), then you realize kids like 4444 know nothing about business.

So my question is, do you think our country which had 7 years of bad economy will be balanced out by 7 years of good economy in the future? ( Past results doesn't guaranteed future performance)

And if you think Malaysia will catch a break sooner or later, do you think a company that averages 36% net profit during the bad times will outperform during the good times?

Basically it's like buying that semi-d in puchong for 300k, you don't know what the value will be like, but the location will almost guarantee value sooner or later.

Hope this gives you more clarity. Until then, buy and hold!

Hi Singh1, I may be wrong on this, but I think your conclusion on price alone as a factor of investing in stocks is pretty flawed. Example, the house I bought in puchong was pretty low for a good 10 years before suddenly the price jump to catch the value of the location in recent years. So price and value is unconnected from my opinion,

In 2009( best year in Malaysia), rce did around 200m revenue, the net assets per share is 40 cents, earnings is 9 cents.
In 2018( after the worst set of years in Malaysia), rce did around 245m revenue, net assets per share is 151 cents, earnings is 26 cents.

If you assume that IMDb d didn't exist, and market factors from our spending (usd3.0 to usd4.5 exc) has no effect on business, then yes fd would have been a much better investment. But imagine if you had bought 10k every quarter from 2009-2018( knowing that you had a solid business and just keep on buying consistently), the dollar cost averaging itself u would realize that your average buying cost + dividend would be around rm1.20.

I noticed that a lot of investors seem to just look at pe as the all around deciding point of whether to buy a stock. The thing is though not all businesses are the equal. Construction businesses have naturally low pe because their sales are always cyclical and people have a choice not to buy. Banks can afford to have a higher pe because of monopoly and everyone has to use their services. But imagine Titans like Nestle and ql, do you think people will stop using their products? Where else are you going to get surumi and daily consumables from? When you realize companies like this can have neutral days and profitable days but never down days, then you know how safe your money really is when investing in these companies. What is the chance of bankruptcy? Pretty much zero. What is the chance of some profit? Pretty much guaranteed.

a company that pays 15% of its profits as a dividend means it can pay a lot more without any stress. revenue growth of 6% YoY and 15.2% QoQ definitely means its growing it business. dividend increase from 6.3 cents a year to 12 cents a year? 200 million war chest to help it compete against china competitors? definite moat business. And you think its a value trap? Please elaborate.

I like their annual report best: with respect to investor relations, 10 analysts came to visit us. share movements should be left to market forces, it has no correlation with our business.

Hi superpanda, just read the past 5 years report of mmsv, I like the company, here's my 2 cents,

Both company worth 200m market cap, so if I got 200m to buy just 1 company, which will I choose?

Hmm,
If I buy iq, based on last 5 year results, if the company stagnate - 10 years earnings I can earn back
If I buy mmsv, based on 5 years, 30 years to earn back if the company no change on profits

Both company no debt... But
Iq got 60m in cash
Mmsv got 8m in cash

Iq does oem to US, Europe, Germany. But they also transitioning to do own design product ( which explain last quarter lower profits due to new launching) and got ang moh director.
Mmsv does oem to.... Dunno who. Can't find list of their customers. You would probably know better since you research their company before buying their stock? Can update? Id like to know more.

Iq did 200 million in sales last year, and increase around 5% every year with more r&d soon the way. Their profit was 35 million.
Mmsv does... 35 million in sales. Profit was 8 million I think? But of course this year looking to hit at least 15m, but caveat from last 10 year progression tells me 8m was the average profit so it seems like an abberation so will need to look at the next 2 quarters to see how, but seems good for now.

In either case investing in the end it's still a bet, just now calculated and risk controllable compared to casino. But for now IQGROUP is still the safer bet for the long term. Of course, mmsv just doubled it's revenue this year, but is the premium worth it?