Reply to KYY's point,

If demand for steel rebar is falling, revenue should fall, not profit.

Impairment is 100% sure go up. So quarter predictors need to note this.

This applies to every single company in the Bursa.

Don't forget, MFRS 9 coming on line this quarter.



Posted by stonenut2 > Mar 20, 2018 01:02 PM | Report Abuse

10 days to go. Can't wait.

Just because the expected value is positive. Does not mean you should buy it.

Russian roulette have a EV of 83%! but if you die one time, means gone.

Just avoid points of ruin. And Margin is one of them.

You can diversify all you want. But in crisis, correlation goes to 1. Everything drop for you to see. All the industries etc. At that time, only question is this.

Can you hold or top up? If cannot. Gone case.

stockraider,

I do use leverage, but not margin.

Mine consist of essentially 3-5 year loans from investors. With maximum personal leverage of 50%. Ensuring that i can pay them back without ever having to sell my stocks.

When you use margin, you allow others to dictate when you sell the stock and at what price. Not a good idea imho.

And if you look at 2008 crisis, even berkshire lose 50%. Anyone with a margin of just 1X (can go up to 3x). Die already, it they cannot meet the margin calls.

I think KYY is doing the right move. He is the majority owner of the company now.

If i was an investor, i wouldnt mind him taking over the reins and pushing everything into getting that power plant ready.

I don't think Mr Ooi misrepresented himself or his research maliciously.

He is at the end of the day, a good man trying to do his best.

My only suggestion for Mr Ooi, make it very clear you are a trader, a mid term 3-6 months one. With some lasting a year or so.

So that people wont go and sailang with margin into his picks. But think properly and size their bets accordingly.

Can Tan Sri Cheng either sell all the malls and shut down retail ops, or, if he likes doing retail so much, demolish them and build a mixed development. Condo on top, mall below.

No idea how else retail is supposed to survive unless they make it super convenient like singapore.

I think to an extent spreads are global as oil and its products can be shipped very efficiently even in an embargo.

VITOL have very clearly shown that when they shipped oil from iran despite the US embargo.

Sarifah,

I don't do multi varied assumptions in DCF. If i do use assumptions, they are very conservative.

Look at my WCE one. More than half is all extracted form the contract. Not pulled out of my ass.

Also david,

out of the last 9 years, they made refinery losses in 4 years. Some large some small. And only a small profit in one.

Your 1.3bil refinery profit is insane.

https://klse.i3investor.com/m/blog/PilosopoCapital/150917.jsp

Let me know what you guys think. I worry if i missed out on something.

@soujinhou

Good point. Now the question is, how quickly can previously closed refineries be reopened? And how hard is it to upgrade current refineries. How much time will it take?

A lot of things can happen in 6 months to a year.

The analysis of this company is a little too hard for me. They don't have a retail division to make earnings a little more stable. The Refinery business is not top class i think.

Phillips 66, a refinery in the US never made a loss for the last 8 years. At worst, in 2010, earnings dropped to less than a billion USD.

But really, my concern now is if i missed out on something.

"The refinery made losses last time as they had to sell to Shell at a low price."

Specifically this. Anyone have any idea where i can find it in the Annual Report or?

Haha, you flatter me. Thank you. As always let me know if i miss something.

That quote about owing 10 billion is one of my favorites haha.

My problem with the cash flow is that its only 1x interest cover or so. Though tbf, there's alot of PPE purchases.

If they list the EP at RM5 billion, they might be able to raise some cash. But how much debt can you allocate to the EP?

That division only makes 70M or so per year. How fast can you ramp up the extraction? And do it fast enough to justify that RM5 billion figure being thrown about? That's 70 PE.

But as a gamble. Looks good.

I think the banks just didnt have a choice. Although tbf, the moratorium started in 2014, so it looked better then.

Feel free to find and add me on fb, we could talk privately.




Posted by zero > Mar 16, 2018 01:31 AM | Report Abuse

Jon, always a joy to hear your voice - a beacon of reason in the swamp of i3's mangled logic - and english.

I'll be the devil's advocate here - to list E&P, they may even have 'persuaded' the auditors to write-back some impairments. We shall see ;)

Anyway, they have good cash flow, so this is my moonshot stock for now. To slightly paraphrase what you said, if I owe the bank RM1m, it's my problem. If I owe the bank RM10b, then it's the bank's problem.

And as far as I know, nobody gets a moratorium on billions of debt by being an idiot. Remember, banks only lend to you, when you don't need the money.

Nobody ever said that about public bank despite only growing 5% per year for 20 years.

If RCECAP boss says tmr he's aiming for 20% growth PA, i will sell instantly.

Banking is the best business. Sure can make money. When they don't make money, its because they get greedy and purposely become stupid.

I wrote something on this.

https://klse.i3investor.com/blogs/PilosopoCapital/142803.jsp

Let me know if i missed out on anything.

Whey Whey Maybe the problem for rcecap is the lack of growing?
16/03/2018 00:28

Funny story about AEONCR.

Revenue, net profit and dividend have been growing EVERY YEAR at roughly 15-25% per year. But the share price moved up with very high volatility (even after averaging out the splits), with "supports" etc being broken all the time, or one/ two year low prices being hit. As if its JAKS or something.

Makes you think about the irrationality of the market.


TakeProfits Thanks very much Jon...
But disappointed that it can't perform like aeon cr in terms of share price.
But your target if can.be achieved in next few years would be good. Thanks and good night.
15/03/2018 23:04

I do not have that share. But i studied it before. And i used to watch it with sadness by the sidelines as i just could not buy it as the valuation is a little rich for me.

For it to be worth 20PE, a company must be capable of growing at 20% per annum for 10 years.

Krono is in cloud storage for enterprise basically. How can they ensure that they will not be murdered by Microsoft, Apple, Dropbox, IBM and Amazon etc. Locally we even have TIMECOM.

Is it hard to change providers, i don't think so.

Will they have economy of scale? Not as much as amazon or microsoft or apple or dropbox i think.

Is price a main contention point for providers like them? Maybe not, maybe reliability is key. In which case, why are they better than amazon, microsoft etc.

Are they the best service provider at the best price? I don't think so. Personally, if anyone wants 20 PE, they must have a gigantic moat, and good resilient growth. I don't think krono has that. But they do have scalability and a growing market.

At current valuations, i think its mostly fully valued. Does not mean the price cannot go far beyond fair value though =).

Also i may have missed out on something fundamentals wise. feel free to add me on fb and tell me.

From a trading perspective, you need to do a decision tree expected value.

Probability of good QOQ quarter and potential % gain
Probability of good YOY quarter but not QOQ and potential % gain
Probability of good YOY quarter but not QOQ and potential % loss
Probability of bad QOQ quarter and potential % loss
Probability of bad YOY quarter and potential % loss

Good luck.

Stockraider, right now, even you know you're just talking out of your ass.

IRR means what you think this investment will make you without taking into account the effect of time.

Discount rate is used to take time into account. A bird in hand is worth more than a bird in a bush.

if we use your reasoning. WCEBHD should be RM10 now not RM1.13.

The only point here worth arguing is if we should use Risk free rate for comparability (using margin of safety to tweak for the rest). WACC (stupid imho) or a higher rate (assuming risk can be compensated by a higher interest rate).





Posted by stockraider > Mar 15, 2018 11:33 PM | Report Abuse

SAME MAH TIME EXCHANGE FORV MONIES LOH....!!

SAME LOH... MONIES EXCHANGE FOR SHARE LOH....!!

Stockraider,

When i go work. I dont need to pay RM9k for 1000 shares. He just want my time.

My estimate of FV is 2.46. That's as much as ill say.

You can read my article on the valuation of financial institutions to find out how i do my valuation roughly.

I wont write a post on RCECAP as i don't want to push up my own cost price. I think (somewhat arrogantly) that its on a matter of time it hits my target. Id like to collect it till then.

I've spoken too much as it is on this company. Haha

No comment. It works for me, it may not work for you. I think there is a significant discount to intrinsic value. And i love the business.

I have a minimum 3 year perspective. So this may not apply to you.

I personally bought a little more, but they are other companies i'm buying up now as my exposure to RCE is already 22%.



Posted by TakeProfits > Mar 15, 2018 10:06 PM | Report Abuse

Hi Jon Choivo, at these prices, should we accumulate more rcecap??'thank you.

David_Tan

You're fucking up.

You don't take into account stockholding loss/gain, derivative loss/gain, Forex loss/gain, Inventory writedown/write backs. Impairment loss/Gain

The 3 here, is very very volatile. One year you could lose a billion, the next make a billion.

This year is record year for stockholding gain.

If you money payable next year is only worth 1% more to you, i also want leh.

Stockraider, loan me RM10 mil for 10 years. I will give you 1% per annum. And to top it off, bullet payment at end of 10 year! Ok boh?

You fucking insane ah?

Ask you put in FD at 4.8 dowan. but 1% return on investment you want?

Siao meh. Heard of time value of money anot.



Posted by stockraider > Mar 15, 2018 08:43 PM | Report Abuse

GENERAL RAIDER SAYS CORRECTLOH...!!
WHY GENERAL RAIDER TP RM 22.00 TO RM 42.00, WHEREAS DAVID TP IS RM 19.55 LEH ??
BCOS DAVID USE DCF RATE 3.23% AND RAIDER USE 1% LOH...!!
WHY RAIDER USE 1% DCF BCOS...ANYTHING U MAKE ABOVE O% PROFIT ADD VALUE TO HENGYUAN MAH...!!

I suppose even if all the Goodwill is impaired, the company should still be worth 4bil or 60 sen.

Yeah, they definitely have a chance of turning around, but i wonder if they can survive long enough to take advantage of those opportunities.

I don't think any bank would agree to a liquidation (or push it to that level) as this ain't Toys R Us with great land behind it. If its liquidated, the value will be far below what is owed.

The fact the company is still making large PPE purchases, shows that, in a way, the management is still optimistic. But that's a tenous link.

Still, a very interesting and potentially lucrative gamble.


kcchongnz The market value of a company with liabilities higher than assets is zero, only it is already filed for bankruptcy as common shareholders won’t be able to get anything after everything else is settled.

However, for an ongoing concern such as Sapura Energy, it is not, no matter how high its liabilities over its tangible assets. There is a chance that things may turn better and the business flourish, no matter how slim is the chance. If for example, the O&G industries turns for the better, and Sapura Energy got a lot of good jobs and makes money, it may turnaround.

That is in finance, the option value of a listed entity.
15/03/2018 19:02





If that is the case, why even bother investing. The market is efficient, not accurate. Very big difference.

The market is only right over the very long term. SAPNRG can definitely revert back to the mean, if they survive long enough.


sunztzhe Today all Oil & Gas stocks turned up. Why is this so?

As the Market price discounts the future and the question that begets one now is.."Is the Oil & Gas industries turning better???"

We all may have our views but the market is always right.
15/03/2018 19:09

For the record, im not saying that the DCF is prepared with malice.

Im just saying a 1% increase in any of your many assumptions in a DCF can appear reasonable to the management, auditors and Audit Oversight Board. Despite it leading to very very different conclusions and figures.

Therefore as an investor, you need to pay heed to this. Thats why, for the purpose of my calculations for investments, i just impair the entire goodwill (which in this case, is an absolute must) and about half of the PPE (if its a loss making company), unless it consist of lands etc.

No, she's just saying auditors have no business sense.

The numbers are correct. But numbers like goodwill, rely on alot of assumptions. As investors, one must be conservative. And in this case, ill just impair the whole damn thing for my calculation purposes.


Posted by ozzie75 > Mar 15, 2018 04:02 PM | Report Abuse

Seems to be suggesting that we should be wary of the unqualified financial statements of Bursa listed companies....oh my god....are those numbers reasonable, really? oh my godlie.

"Most of the auditor, their first job is audit and never go in commercial and look at the business."

Angelol,

Petronas does not award contract based on whether the accounts leng anot, but whether you can execute or if you can survive long enough to execute. Everyone know Toys R Us got very heavy debt, but only at the end did suppliers etc refuse to do business with them.

In business, economics and investing, what you think will happen, will take longer than you think it would. And when it happens, it will happen faster than you think it ever could.

Yes goodwill is reviewed on a yearly basis. But its very easy to justify pretty much whatever amount you want. Because a very small change in the DCF, which on a surface level is innocuous can give very very different results.

I can't give half a damn about the qualification the people have. If i does not make sense to me, ill try to see their perspective. But if it still does not make sense, too bad, im not buying it.

During the 2008 crisis, so many incredibly brilliant people seem to have severely fucked up their risk management.

Its incredible the kind of stupidity smart people are capable off when you are incentivised to be stupid. If i'm a bank in 2006, well my risk management charts better show that i can buy derivatives on housing loans, cause if it don't, my profit/market share will drop and my share price will drop.

If im an auditor, i am incentivized to be accommodating to management if possible. I will not be accommodating if it is clearly wrong, and i will go to jail if found out by the AOB. And its very very hard to prove that i am clearly wrong or have malice in preparing the DCF. I can always argue that, its easy to say i was clearly wrong in hindsight. But, if placed back in that situation not knowing what i knew now, my assumptions in the DCF were reasonable.

Is it unreasonable to say that oil prices will go back to around USD80 per barrel? I can do a study that shows that it should be at USD80 per barrel, just as easily as i can find a study to show that it will drop to USD40 per barrel. There's a lot of really smart people at both ends of the argument.

Business and valuation is a completely different issue. A good business, given a high enough valuation, can be a bad investment. And a bad business, given a low enough valuation, can be a good investment.

I never said that you must impair all the goodwill of a company. Coca Cola got zero goodwill on their balance sheet, but that does not mean they have no goodwill.

There is a value and a price to be paid for a good business, a good brand, a good team etc and good prospects. And this value is very very very hard to determine. More often than not, people overpay for it. Just look at Tesla.

I dont time price. I estimate intrinsic value.

Where the price want to go, none of my problem.

Let me know if you think i missed out anything fundamental in my analysis.


Posted by qqq3 > Mar 15, 2018 03:14 PM | Report Abuse

up 7 sen today...why your timing so accurate one? in a negative way.

Yes, you do a comparative to the previous year budgeted to actual. But you just need to make sure it is reasonable. Which, well... depends on how good you are at arguing your perspective.

Look at it like banks in 2008, they take on all that risk using great calculations and take their fat bonuses. Then when it crash, they say that this is a six sigma event, a one in a million, we could not have possibly predicted, therefore not my fault.

Auditors stay within the lines drawn very well. The problem is where the lines are drawn. And its impossible to get a solution that is 100% true and fair that has no trade offs.


ozzie75 If the same DCF representation is given year after year and those prior representations do not materialise, wouldn't that exception be spotted in the course of a comparative review?

"As an auditor, I also know how we would justify this figure. Review a semi acceptable DCF from the management about how the companies bought are still worth the price paid, if oil prices go back up. The thing about DCF’s is, it’s a Hubble Telescope, move it a millimetre and you’re looking at a completely different universe."
15/03/2018 14:21

Again, when calvin is selling you stuff, he always conveniently forgets to tell you the expected time frame.

I'm ok with TA and TAGB as a asset play. It is pretty good actually and meets my criteria of less than 30% of RNAV.

But as i said, if you pluck out the investment income, they barely made anything compared to how much was invested.

If TA is the kind that wants to unlock value, they should just sell all the hotels and give back the money, hotels are just rubbish as a business.

Having said that, TA and TAGB is in my portfolio as a net asset play at like 4% total for both. They are alot of net asset plays in the bursa after all.

As an investor, he only looks at what is quantifiable. Forgetting that, not everything of worth is quantifiable and not everything that can be quantified is of worth.

He is the kind that would sell off public bank at RM3 for a company selling at 50% of NTA.

He is the kind that would pass one See's Candy because its at 2x book value, for the sake of a retail company selling below liquidation value. Which was the opposite of the choice WB and Munger would have made. Schloss on the other hand would choose the retail company. Not a problem.

Except, Calvin is a salesman. That means he will only tell what he wants you to know, and not the complete story. As long as it fits his narrative, he will say the good things. If it does not fit his version of the truth, he will ignore the facts. Like when he said Airsia was rubbish and will die at RM2.1.

He is also retired. So everyday can write story.

Anyway, need to go back to work. Calvin, just write more lah, here or there anywhere also can.

The only thing you even have a chance of affecting is the price, all your writing can never affect the intrinsic value.

You talk it down, ill just buy more. You talk it up, ill just sell. Not bad, got free worker that i'm not paying anything for! Haha.

Is not the FA that is the problem. Its the valuation.


Yu_and_Mee If this is bad FA company, then I have no say.
If this is good FA company and the Theme in infrastructure improvement.
So, there's no reason shouldn't hold longer for better juicy harvest.
May be a question to ask: Are you trader or investor. That make different.
15/03/2018 11:13

https://klse.i3investor.com/blogs/PilosopoCapital/150801.jsp

He did not buy that, that is what is remaining.

He had 600mil shares at the start of last year, sold 368mil shares. 220mil is whats left.

This company is not cheap. its damn expensive.


Posted by risktransformer > Mar 14, 2018 10:08 PM | Report Abuse

@Jon Choivo: See for yourself the latest major shareholders of SAPNRG (scroll down to the middle of the webpage.
http://www.4-traders.com/SAPURA-ENERGY-BHD-12615775/company/

How would it be clearer. This company any quarter can profit, another can make loss. And this is normalized earnings.


Posted by Pmaster > Mar 14, 2018 10:02 PM | Report Abuse

Haha ! Only the qtr result come out than everything will be more clear. Im waiting .

Unlikely.

Posted by risktransformer > Mar 14, 2018 10:02 PM | Report Abuse

I just found out that Khasera Baru Ltd. (Mokzhani Mahathir's company) has bought back 220,030,813 shares of SAPNRG comprising 3.67% of SAPNRG's total shares.

Hahahaha funny lah you Pmaster.

Privatize for fucks ah.

You want to own all the debt is it? And at this point, they need all the money they can get from the markets, right issue etc etc.


Posted by up4321 > Mar 14, 2018 09:54 PM | Report Abuse

@Pmaster
Sapnrg major shareholders have not easy to do privatise as they hold no much shares, other shareholders will vote against too. Shareholders structure is different from mas which has government agencies hold more than 51% shares.

That's rich of you calvin.

Its like saying SAPNRG used to be RM4.9 but now market for oil bad.

In your case, the facts are true, but the news is fake. Haha

Yeah sifu,

I like what howard marks said, when you buy an index, you need to ask yourself what is the percentage of rubbish do you like to buy? Haha.

kcchongnz One of the perils of buying ETF.
14/03/2018 20:15

Never in history have we ever had negative interest rates and the Federal Bank balance sheets at current sizes.

If we have recession at low interest rate. It is going to be very very interesting. I hope im lucky enough to see what happens then.



Posted by Freeeasy > Mar 14, 2018 06:35 PM | Report Abuse

In history, crisis never come in low interest rate.

If OTB is hng33 remisier, no need play market d. Every day make 200 easily haha. Can sleep, no stress except when margin call.


Posted by hebeds > Mar 14, 2018 03:06 PM | Report Abuse

hng33 can i be your remiser, banyak good earn

Logically, i would prefer buybacks to div any day, less tax. But, i cannot deny the pleasure of having money come in. But it makes zero difference to me, since all dividend i receive goes back in the fund.

The only point i would argue is that the directors should accelerate the buybacks.

Salary is a touch high. But its not too bad. 10mil each is not that bad.

Top GLove, Supermax etc also pay 8-15 mil to their big bosses. And they earn less than KSL.

I have a small position at 1.25. I doubled up at 1.02.


Posted by RVI123 > Mar 5, 2018 03:02 PM | Report Abuse

@Jon Choivo, how long have you been invested in KSL? I believe it is quite recent. I am pity for those who have invested 3 years and longer. The company is making a lot of profits but the minority investors are not enjoying the benefits. The investors may probably want to divest due to whatever reasons but find that they are making losses after investing into KSL for a long time.

SPRNG cost RM18billion if you were to buy it as a business.

Tell, me, too cheap or too ex?



Posted by nicky > Mar 14, 2018 12:05 PM | Report Abuse

Everyday down.. bottomless .. Seriously Sapnrg only worth 0.43 ? ... so bad

He is a trader who mistakes himself for an investor.

Which is why he can make some seriously big money, and in cases like this, likely to lose alot.

Taking into account MASTEEL and Hengyuan drop this year, his wonderful 73% CAGR for 5 years, should have dropped to something like 25% CAGR for 5 years. Still pretty great.



Posted by AzerothJr > Mar 14, 2018 10:50 AM | Report Abuse

If trader they already long time cut loss.
A trader that does not adhere to technical discipline will eventually learn by paying with tuisyen fee.
Unless one is still profiting > 50% even after market drop by 50% then they may consider to hold. Else with paperloss of 30% one is not fit to be called a trader.

OTB is a trader.

He is in no way long term.

Got so many companies with way larger margin of safety on an NTA basis other than TAGB.

Haha, thanks for your concern.

Personally, i don't get trapped. If i buy a house that yields 8%, which is more than enough to cover loan. And the price drops making it yield 10%. I'm not going to shout i got trapped. Ill just buy another one.

The lower the price goes, the more i like it, as long as fundamentals remain.

Its easy to maintain this mindset, if you don't look at your portfolio everyday, use cash only, and use super long term money only.

If you cannot maintain this mindset, i would suggest you either leave the market, or become a trader and lose money like 90% of them (or be the 10% that really make money).