Foolsgold,

You need to know what you're buying, and if you don't know that well, it needs to be cheap enough.

That means at minimum you need to know the risk reward ratio very well.

To an extent, i feel like vomiting blood. But every time i read my article detailing why i sold it, i don't think my reasoning is wrong. I just wonder to myself, why i never bought back a much smaller position 1-2 months ago.

The same question i ask myself on MAGNI when it was RM4, i looked at it for so long.

And Jaks at the start of the year, when i ask myself why was i so preoccupied with KYY's financial assumptions which did not seem right to me. I valued it RM1.34, while KKY numbers seem to indicate bankruptcy. And not correcting my error despite KC telling me my numbers are probably wrong.

Nestle in 2017 when it was 70 bucks.

Why i sold WCE late this year (small position thank god)

Ranhill, oh my god. I looked at it last year, and even did a full comparison vs every utility co in malaysia. And i did not buy a share despite thinking it was cheap.

MAGNUM and BJTOTO. Not that unforgivable this one.

Genting C78, when i bought so damn slowly and hesitated for so long, resulting in my position being only 30% of what i want it to be.

GADANG-WB which i basically recommended in my article in Dec 2018. Super tiny position

PTRANS, looked at it for so long at 19 sen.

I think i focused too much on my job this year (i have not gone back before 9pm in close to a year) vs, stocks. Next year must be different.

Lol personally these result don't say much for me negatively, i'm still OK with my 2.5%.

I noticed Phillip sounds very humble these days.

I think his thoughts are quite clear.

The nature of PCHEM is that, like all companies in the natural gas refining industry, its the question is if you're geographically blessed or not.

Natural gas cost to extract, is either insanely expensive, or pretty cheap. You have places like Qatar, where the refinery can make 80% ROE, or typical oil rigs where natural gas is considered waste and burned.

And because of this "Geographically Blessed" factor, supply is always less than demand.

Having said that, there will always be a need for natural gas, and i don't mean in electricity generation (which most people use it for), but for the production of ammonia and thus fertilizer.

Currently, there is no way to produce ammonia other than via natural gas, and the Haber-Bosch process (Which requires Hydrogen, that is obtained via the Methane in Natural Gas). And this has been the case since 1910, and currently, there is no significant breakthrough in finding a replacement process.

Without a cheap and efficient process of creating ammonia ammonia, we would all starve (and we almost did before the Haber-Bosch process was discovered). And Haber-Bosch process is not efficient at all, taking up about 2% of the world energy supply.

PCHEM analysis can be broken down very simply to.

1) Will PCHEM always be geographically blessed, with direct pipelines to Petronas Gas Production? How much gas reserves does Petronas/Malaysia have left?

2) Is there a better and cheaper way of creating ammonia, other than the Haber Bosch Process coming up, that would not require the use of natural gas? This is more minor-ish, as only 10% of Natural gas is used for ammonia production, but i personally think this use of natural gas is far more important.

Ello Phillip.

Accurate.

Interesting.

Popo, I don't trade. This is a long term investment for me.

Yeah, no shit sherlock, but with NIM of around 6% net, if you can do direct deduction, which banks now cant, it becomes quite lucrative.

I'm only worried about the gov giving out angkasa codes to retail banks.

Decisions decisions decisions.

I really cannot imagine why anyone would want to privatize this co, much less at RM2.20 per share.

There is no such thing as dividend investing. If dividend is your main metric, you are trying to win a race, one legged.

All future cashflows discounted back to present values.

====

Icon,

Would help if you can elaborate your understanding of "Buffet Method"

Dividend4lifez,

Before you take Icon's word of Buffet dont work here, please note most stocks around the world do not beat the index. Even in the US.

https://www.stlouistrust.com/why-most-stocks-underperform-index/

The difference is US got 23,000 companies, while malaysia got 950 companies. For every 1 good company you can find in malaysia with good moat etc, you can find 20 in the US.

This is just difference in sample size, not buffet don't work here.

Buffet investment methodology is very simple.

1) Pay for earnings, not net asset, you're not a liquidator.
2) The value of an investment is, all future cashflows discounted back to present value, pay much less than that.
3) Know what you're investing in. Really know it that you can see the next 10 years with a high level of confidence.


Having said that, trading is also ok. But make sure you know when you're trading and when you're investing.

Phillip, before you comment more on Petronm, go and buy the PFI accounts from 2014 to 2018. Lets talk then.

Phillip,

400m in a good year, 300 in a normal one, and 150-250 in a bad one. With 200m a year being basically fixed deposit earnings (retail earnings).

I too like a company with clear earnings and revenues coming in the future, and a well managed and resourceful one.

Maybe you were just talking about the refinery then, and not including the retail division.

Yes, you are correct, fuel retail industry is relatively saturated, but not so much so that Petronm cannot grow the business at high-ish single digits the last few years.

Are you by extension saying that the refinery business is not saturated? Or the Chicken Egg industry is not saturated, or the surimi business is not saturated?

===

Now i have margin at 4.5% (do note its barely used), lets say i use it. In exchange for the 4.5%, i am getting a company yielding me 13%, of which about 30% is paid out, with the remaining 70% reinvested at 10-20% returns. Sounds good to me.

===

On GKENT, i dont deny the management is fairly decent, but at that price, you are getting a water meter business at 16 times earnings (lets assume they are good at water meters). Not much of a deal to be honest, though when compared to QL, it may very well be a bargain.

Kidding aside, The key part here is how good is the construction division.

How good are they at their rail works etc. Is that company more than just a golfing buddy of najib? How do they compare against GAMUDA etc?

How badly will they get chopped on the MRT contracts?

Well, i don't see them getting any overseas rail projects, so we can at best think they are a jaguh kampung, except with GAMUDA around, i don't see them being even that.

Whether they will get chopped on the rail projects, i have no idea.

Does not mean its a bad buy, i was thinking about it for abit, but its by no means better than the petronm you so keenly deride.

Statutory reserve requirement, not interest. Scare me like crazy when i first saw the number

The value of an investment is ultimately, all future cashflows discounted back to current value.

Low PE can be expensive, high PE or even loss making can be cheap.

Having said that, balance of probabilities. Chances higher that if you pay a low pe, you are getting it cheap, compared to if you were to pay a high one.

Case in point, i'm looking at ELKDESA (other than MBSB, its the most exp by quantitative) , MYNEWS as well.

And i also think companies like Mulpha etc may be expensive.

And if you buy the bottom of a cyclical co, chances are the PE then is high. And when you sell at the top of a cyclical co, PE is low.

I don't want to make any comments on Phillip, god knows we will probably end up arguing and wasting each others time.

I actually don't have much criticism when it comes to his picks, other than QL, and maybe Yinson at this price.

He does have alot of comments on mine though. I welcome any comments, especially criticism, but when you start by making broad statements that get the facts wrong, i can't help but think the criticism is not constructive.

A real masterpiece of his, is his article criticizing TIMECOM, it actually inspired me to buy more.

"All of these questions tie into one simple answer. petronm has been doing below 3 billion in revenue a quarter since forever, and it is very very likely that this will continue. Petronm has been doing below 5% net profit margins a quarter since forever, and it is very very likely that this will continue. "

Are you sure you read the accounts etc? Last year Q2 and Q3 above 3bil. This year Q2 above 3 bil and i bet Q3 will be as well.

I'm not sure how you would make a factually incorrect statement like that if you have read the accounts.

And if you get the facts wrong, the probability of the "opinion" being wrong as well becomes much higher, as this is much more subjective.

In any event, ill just take your word for it. In that case, explain to me the fuel retailing industry in Malaysia and how its different with those globally.

This is key.

In any event, the revenue don't matter as much, the thing that matters is fuel sales volume. For the retail division at least. Have you seen the growth rates for fuel volume sold? Have you seen the market share trend for retail fuel in Malaysia for the last 5 years?

=====
Philip Greta I don't think you have been to their AGM before to be honest. I always go through all financial reports, AGM transcripts and shareholders discussions before I comment. Those I don't have much interest in I rarely comment.

I don't think you actually understand the business or its history to be honest. Take a look at the accounts from 2013 to 2018 at least, and let me know what you think.

Phillip,

Long time no see.

Correct questions, just more long winded. Its only a basic understanding post, i'm too busy to do a full write up to share.

This is a volume business, not luxury goods, 5% is pretty damn good. Go and buy the PFI accounts, and you can see the ROE for the retail division of the unlisted entity. Its a good proxy.

Anyway, QL is 6% margin. Haha.

same, you need to get the Maybank one, not the Maybank IB one.

but can't buy structured warrants lah

Having said that, there are three ways for a smart guy to screw up his life.

1) Ladies
2) Leverage
3) Liquor

I keep margin mainly for the optionality, and keep it way below 30% of portfolio most of the time. Its currently like 3-4% only. Its only for me to leverage up in downturns or interesting opportunities, with salary going in next month to pay it off.

Icon, i think you're overpaying for your margin.

Mine is only 4.8% interest.

I only have a few qualms for PETRONM,

1) Do not do pension plans for employees, EPF only. Its only 50m but id rather it not even appear in the books.

2) I would rather the petrol stations be a separate business and the refinery another. Alot of the cash goes to upgrading the refineries etc. I suppose we can see it as one whole integrated package, but i'd really rather just own the petrol stations only.

Here's the basic understanding to Petron.

They make about 200m a year net from the petrol stations.

So each Q, you can expect 50m from that.

Refinery, makes either 200m in a good year, 100m normal, and -50m to 50m in bad times. This depends a lot on spread.

So the thing you need to know now is, you're paying 7 times earnings for a very stable and well run petrol station business, and you get a refinery for free.


Only question you need to ask in this case is,

1) How efficient are they compared to the competitors in the refinery business? Pretty good.

2) Is there a structural decline or slowdown in demand for fuel related products? Nope.

3) Can you handle volatility in earnings? Yes.

Not even close, your revenue figures are completely off.

I doubt WCE will hit even 400m revenue in the first year.

Keep margin below 30% of capital/equity, and think about your risk properly in terms of sizing, and you should do fine.

Quite a good tool in that case.

Just not a fan of the higher brokerage fees.

Haha, lets make a fun bet sheldon.

And this is despite the announcement below, petron corp owns petron malaysia, and consolidates the earnings in, so its a proxy to the malaysian results. ;)

https://www.gmanetwork.com/news/money/companies/714256/petron-corp-reports-70-bottom-line-drop-in-jan-sept/story/

C/D.

Haha quite happy i topped up then, i actually think of buying more. Its still very close to my cheapest top up. Personally, i think the shares are worth RM10 - RM12.

If people go crazy, well, we know how much it shot up back then, but im not banking on that.

The thing you need to know about LCTITAN is that, they IPO'ed at all time high earnings, off the back of demand for polymers being stronger than supply from 2013-2017.

Now that supply have caught up, spreads will fall and their profits will naturally fall. This is the normal earnings.

They perform fine.

At this price, you are getting a refinery at roughly 5-6 times net "normal" earnings, if you net off the cash. If you count the all time high earning, its more like 2 times lol.

The question now is, the cash (plus additional debt) is going to a new refinery in Indonesia. Do you think their decision process for the new refinery is the right one?

RAPID is coming online, and they will supply some polymers, is the demand strong enough to absorb this without causing a prolonged drop in the crack spread, or structural drop in price of polymers in South East Asia?

Recession? Well, this one i don't really care, important to know, but mostly unknowable. The question i'm more interested in, is if there is actually an economically viable alternative to plastics? I don't think so.

I'm still holding and thinking of buying more, but do note this is only 1.7% of my fund, in terms of cost, it was like 2%.

I made a mistake of buying at RM4, thinking their all time high earnings was normal, lol. After studying more, bought a little more at RM2.8. I'm definitely thinking of buying more at this price.

Id rather Bursa stay dead tbh.

Quite satisfied with the results, in line with my expectations/understanding for the business.

My only complaint is that i didnt buy as much of the structured warrant as i would have liked, was planning to at least triple to quadruple the current size over November.

Oh well, at least i accidentally added one extra zero when buying the actual shares itself.

So, its basically paying 13 EV/EBIT for a water meter business. Assuming the construction goes nowhere.

I wonder what is so good with their construction division.

Looks nice.

This is looking very delicious.

Interesting

:)

I bought at 15.1 before Q out, and was thinking of doubling up at 14.7, but kept trying to get more discount.

Haha i'm really not suited for trading. I should just stick to business analysis.

Experience and time.

This time i actually studied the entire toll industry, both local and foreign.

I'm thinking about writing an update to my WCE post, but i wonder how much i can actually disclose as a lot of the specifics i now know are highly confidential and relates directly to my day job.

Haha. My name is not KYY. My whole portfolio only few hundred thousand.

This is a 15% position for me, so when i buy 10% more, i'm only putting an additional 1.5% of my portfolio to it. The first few purchases today is mine.

Flying cars, well that's going to be a complete game changes, when our Malaysian prototype is complete next year, i predict by 2021 at least half of car sales will be flying cars!

Globally, electric cars are 0.4% of the total. In norway, where they are the most passionate, its 10%.

It cost more than Internal Combustion "IC" engine cars, easily 30-40%. And its carbon emission is close to equal to "IC" cars, when taking into account the production of the cars, and carbon emission for the generation of electric.

Its very unlikely it will be significant in Malaysia, an oil producing country, with zero supercharging network.

In any event, i increased another 10% today.

I increased my stake by 10% ytd. Wondering if i should be more aggressive.

This and Wellcal, is two companies i really want to understand, but just cant.

On average, highways need to lose money for about 10 years before it turns profitable (assuming their growth assumptions is correct).

So you'd want to keep this in mind.

People usually take the money out of the highway via,

1) constructing it
2) maintaining it
3) preferred shares/bonds (like PLUS)

Even duke is technically still losing money, though their growth is strong enough, that it should turn consistently green in 2-3 years.

Well, i can say i think it will only be saved if govt decide to buy it over.

I can tell you that profitable highways in malaysia are only in the central region.

These are highways that make a profit.

Kesas, CKE, Besraya, NPE, Litrak, AKLEH, Guthrie, MEX, Grand Sepadu, PLUS (portions of it).

Everyone else is losing money like crazy.

This is the full list of highway in malaysia.
https://en.wikipedia.org/wiki/List_of_expressways_and_highways_in_Malaysia


Good luck.

Due to professionalism, i can't. I can only share with you what is public knowledge.

I can only ask you to go and check the MARC rating reports, and potentially buy the latest one.

https://www.marc.com.my/index.php/marc-rating-announcements/1022-marc-affirms-aaais-rating-on-plus-rm23-35-billion-sukuk-musharakah-programme-revises-outlook-to-stable-20190325

Your news is too old.