Used to own SKP from 0.35 to 0.65. Now it is coming back down. SKP's return on capital has been really good. Only thing I don't really like is the founder's salary. Almost as much as how much SKP earns per quarter.

What's the point of all these arguments? It is like football fans from two clubs arguing which club is better. All these pro-China vs protestors arguments are nothing but a projection of your own belief who you want to see as a hero and who you see as a villain.

No need to twist. Let me know when Amway gets implicated as pyramid scheme.

If I had an ounce of intellect says nothing about my current level of intellect right? I am referring to the minimum amount of intellect that is enough to detect BS. Got me? Comon, simple logic.

If I had an ounce of intellect to decide whether you're stupid or Amway is a scam, it will be the former.

If Amway is a scam, it must have been the longest running scam in history of mankind, since 1959 lol

Don't read someone's comment when their name start with 'expert'

Metrics is like formula, it is only as good as knowing when not to use it.

So if everyone uses that 5 metrics, everyone will make 15%?

5 metrics is good to reduce mistakes. But that depends on context. It is like saying DCF valuation can reduce mistakes. But ppl that get killed using DCF is just as many. How many times ppl screen using 5 metrics end up getting trapped? Too many.

Just my thinking on the 5 metrics (used by Fong Siling).

Value investing is about finding 'value'. Value means mispricing (between price and what a business is worth). Which means finding investment in an 'inefficient' market. If the market is always efficient, then there won't be any 'value'.

But here is the problem with those 5 metrics: it is an efficient tool (used to find inefficiency in the market). Anyone armed with screening tool/software can easily find stocks that meet those quantitative metrics. So if you're doing what everyone is doing, how are you going to find value in places everyone is looking at? You can't.

Quantitative screening is efficient and save time, hence the popularity. Imagine trying to buy a house. You normally determine your budget (how much to pay), then the location, then so on down the list of priorities i.e facilities. But everyone else is using the same kind of criteria to buy a house, which means you're competing with everyone else in a conventional way. How are you going to find value and outperform the market if you are doing the same thing as everyone else? Consensus is another word for conventional. And consensus only earns you average market return.

So now instead of using an 'efficient' tool i.e metric screener to find inefficient. You need something 'inefficient'. How about starting from company name A to Z? Now no one is doing that. Takes too much time. But that's where outperformance come from. That's where you'll find potential value. How about screening business by durability, by capital allocation skill? Companies that promote failure? Companies building moat? Now there's no way to quantify those things. Not many ppl will do it. It is hard. But that's where value comes from by doing what others won't do. This is value investing.

HOW DO COMPANY CREATE VALUE AND SUPPORT ITS VALUATION LEH ??
IN ORDER TO UNDERSTAND, U MUST UNDERSTAND THE CONCEPT OF MONEY MAKING LOH...!!

A.SEEN FROM OPERATIONS GROWTH PERSPECTIVE
1. EARNINGS GROWTH - Wrong
2. MKT LEADERSHIP & BRAND - Wrong
3. STABILITY OF EARNINGS - Wrong
4. STABILITY & CONSISTENT CASHFLOW - Wrong

As always, the probability of any catalyst that can unlock this value needs to taken into account. Once those probabilities are taken into account, things might look differently.

Investment lesson: I bought APM and Favco 3-4 years ago due to deep value situation - cash in balance sheet are 40-50% of market cap (if I'm not wrong). Not exactly net-net situation, but deep value nonetheless. Fast forward to present day, I haven't made any capital gain on both so far. Dividend yes. Does it remain attractive? Yes. But then, there is a huge opportunity cost as well.

Before you buy, you better prepare that things are going to stay way longer than you thought. And this isn't something you can say oh I'll hold it for 10 years.

hahah!

Another thing: When a website or an analyst start throwing many valuations at you i.e DCF, Graham, Warren Buffet, Lynch, Ricky Yeo etc - you can safely ignore those valuation

What kind of moat does Dayang has? Scale economies, network effect, process power, brand, switching cost, counter-positioning, or cornered resources?

Impressive, upping utilisation without more capital investment. Like saying instead of turning on a machine for 3 hours to produce 3 hours worth of product, just turn it on for 12 hours then ROC goes up.

No, it has to repay the debt first, then maintenance capex which has been lagging for the past few years (hence the big cash flow), probably need to borrow even more, before coming to dividend

So the selling point is Dayang's past 18% growth rate per year and "5-10 cents per share of dividend per year". Now put it another way, in order for a stock to grow 18% while paying dividend, the stock's return on capital has to be more than 18%, say 20% or more depending on the payout ratio.

ROC of >20% sits on one of the most aggressive measurement whether you look at Dayang's historical return, extrapolate future return or looking at the return all the stocks in Bursa earns.

There is a bit of irony when trying to promote Dayang as high cash flow and high growth stock. Everyone knows to produce high growth you need capital investment, which means cash flow is going to suffer. High cash flow and high growth is possible if the stock's return on capital is say something like 30-50%. What is Dayang's ROC since 2007-2018? About 6.5%

Cognitive dissonance: When IB dowgrade, 'there must be ulterior motive!"; when IB upgrade, "Yes, they're smart."

Perhaps you didn't read what I wrote clearly enough. I never said one shouldn't compare companies within an industry. Comparison between companies are good to understand business models, competitive advantage, market segments and what not.

But when you take that kind of categorial analysis between companies and bring it into valuation, what do you get? Relative valuation aka poor classification.

Please do wish me all the best. I have never used industry categorisation to value. Value comes from the future cash flow a business can generate, in that sense, industry categorisation is irrelevant. Well that goes back to my Buddha remark, do not categorise companies based on industry when doing valuation i.e Uber is a transport company, it should worth [transport industry peers multiples]. No, Uber is a tech company, it should worth [tech industry peer multiples]. Get the point?

Categorisation is also a problem in position sizing/capital allocation. And that is naturally the case when poor classification influence how one does valuation, which in turn influence how much money goes into a particular position.

"Maybe you should stick to reading and not put money into the stock market." - this sentence reveals you more than the advice itself.

OIC

Should I trust Musang or Daniel Kahneman? - ah, this can be done in fast thinking. Thank you.

Oh no, how did someone learn that kind of pseudoscience. Must be from the battles.

Thinking, Fast and Slow by Daniel Kahneman -recommended reading. Think as slow as possible.

Thanks for your advice. Let me think about it.

I didn't know it is a battle ground. Different perspective give you different illusions. Don't laugh too loud

Welcome musang. Battle ground lol. Continue your battle. Go on.

Why does investing has to be "comparing to every similar company in the category"? A dollar of investment is a dollar of investment regardless of whether that dollar is invested in a property stock or a packaging stock, so why do you want to compare [similar] company in the category?

Comparing similar companies in an industry is useful to create contrast, to find out what things a company is doing differently from others, but investing is not bounded by industry categorisation, but circle of competence.

My suggestion is this: Try to see things as it is, reduce categorisation. Why do human categories things? To reduce complexity and ambiguity. To make faster decision 'property company, worth PE XX; O&G: Cyclical etc". We do that to companies. We do that to ourselves. "I am a Value Investor", or "I am a growth investors". You put yourself in a box. Sometimes that works, but there is a great cost when things go wrong.

So see a company as it is. Without throwing them into buckets like property, O&G, tech etc. See it as it is by understanding the structure of the business and how much future cash flow can it can generate.

Another less talk about thing of Scientex is its efficiency. Without its ability to generate current level of cash flow, they won't be able to keep acquiring other companies, and without that, the growth would slow down dramatically.

Scientex isn't a company with massive moat, perhaps narrow moat based on economic of scale and a low cost producer by being as efficient in both property and manufacturing. Hence the reason to acquire companies to achieve EoS. On property end, Scientex embrace IBS because it save cost and can complete a property in less time. A typical landed house takes 24 months from start to completion and hand over, they do it in 16-18 months. Faster completion = better cash flow generation.

It is normal for manufacturing division to have lower profit margin than property division. But the asset turnover for manufacturing side is higher than property, hence results in a decent ROIC. But ROIC on property will still be higher nonetheless.

There is a good possibility for manufacturing's profit margin continue to improve slightly in the future as more of their sales shifted from industrial stretch films to food packaging, which is what they have been heading over the past 5 years.

Manufacturing is going to drive bulk of Scientex growth in the future. Property division will keep growing as they purchase more landbank to build affordable homes, but manufacturing will be the main driver through acquisition (whole flexible packaging industry around the world is consolidating), so company profit margin should track closer to manufacturing's profit margin down the line.

Yea 10% outperformance can justify the right amount of stress lol

The kind of measurement an investor use determines his strategy. Long-term return is the measurement that most investors use, but it is a bit like P/E ratio, there are many area when long-term return can't measure.

As an example, an investor making 13% return over 10 years vs another making 15% over the same period of time. Now everyone would want to be the latter than former. But what if the 15% is achieved with a cumulative of high stress 500 hours (over 10 years), whereas 13% is achieve at less than half of those hours with little to no stress? Which would you prefer? Now that is interesting. Is it worth it to get all the extra stress to achieve 2% outperformance? There is no right or wrong, but something to think about.

Hence, on top of having a long-term return as a measurement, one should also measure their return on invested time (ROIT). Just like ROIC and its CAP (competitive advantage period) differentiate quality from mediocre companies, ROIT gives you an idea how much dollar are you generating for every hour you have invested in. And as a benchmark, it should be people who invest in index fund and spend 0 hours studying investing. If index fund investors can get 10% return long-term with 0 hours invested, an active investor that can achieve 13% spending 250-300 hours are wasting their time just to get that 3% outperformance.

I think there should be a definition what does 'good' sharing, analysis means? What defines good from bad? Is it the length (the effort) of the writing, the factual/non-factual ratio of the writing, the lucidity of the writing, or something else?

My definition of good writing is accuracy of judgment, because it leaves no room for argument. In this case, the writing cannot be good or bad because author predicts 68 cents a year from now. So only then can the writing be judged on whether it is good or bad. But one can infer on previous predictions to find out the accuracy.

"My friends.... if you hold share already P/E more than 20, dont tell anyone ... sell lo... and you see a share P/E less than 7 like Dayang.....you should invest.." - that has to be one of the smartest comment I have ever seen

@ 684780829 "You do good good things will happen to good people. " - Then why are you here? You can be rich just being good, then why bother the stock market.

@pjseow - As far as my understanding, 50% of this article is about extrapolating the past into the future. You would agree everything about the future is not 'fact' but hypothesis. Just as I can state the same kind of fact but come to a totally different conclusion.

The elephant in the entire article is the $294 mil cash flow over the past 3 years, and the assumption if that can be maintained over the next 3-5 years, then Dayang is worth PE 7-8 and price XXX. Based on an equity of $1.3 bil. The ability to generate that amount of cash flow in the long run is like amazing (22%). Literally putting it in the top 5% of bursa.

But no one talks about the fade rate, how long can this go? Oh right, someone forgot to talk about depreciation of close to $130 mil per year. Purchase of PPE has not been keeping up with depreciation, accounting for only 10% over the past 3 years. Yes sure Dayang can pay off all the debt in record time. And how long before they can skim on purchase PPE before the big bills comes in to normalised the cash flow figure?

@connie555, yes i don't like to contribute shit, like overly optimistic shit.

Best time to revisit David's thesis - https://klse.i3investor.com/blogs/lionind/201179.jsp

Skip entire article and focus on this - Annualize = 320mil, discount 20%, discounted annualized profit = 256mil --> Estimated FY19 EPS = 26.5 sen x PE 7-8 = $1.8-2.10.

You see, that is a 100% upside. As for 320 mil? Good luck!

I dont see how reducing administrative & selling/marketing expenses is a commitment to improve bottom line? Unless you mean improve short term bottom line and destroy long-term bottom line

Common, asset light should be P/E 25x at least.

Buying great companies is great, but doesn't mean buying cheap companies are stupid. IF everyone believe in that, there is more of a reason that buying cheap proves more profitable than buying great. All that matters is if Icon8888 think he is well compensated for taking the risk. If the expected value is positive where odds is in your favour, buying cheap can be as good as buying great.

Where did you get that? Never said anything about grandmaster. Of course I plagiarise. I never dare to claim I can create any original idea. You think too highly of me by comparing to Mary Buffett lol.

Aigoo, that is up to you to decide whether you want to believe or not. Great if you believe; awesome if you don't believe

lol webnovel, i like that.

Alright alright, if you want credibility, I bought Scientex since 2012 and Aeon Credit since 2014. I bought others like APM, Favco too. Is everyone satisfied?

"when i say something like if you bought a share today and tmr it gone up 500%, by using value investing logic, value doesnt create out from thin air or just one night, so those are consider as speculative profit, are you going to refund your profit to your IB as those are your so called unethical profit made from market. jon and ricky can't answer me... " - I seriously have no idea what you're talking about. You're more than happy to quote when, where, what did I say, but I never say anything about unethical profit. Which is why I never reply you.

Of course, it is not "fantasy essay writing webnovel", because you haven't read anything on my blog.

"the way you guys comment on other peoples writings without a shred of credibility" - I didn't comment on David's writing, did I?. I hope Dayang can restore David's credibility on his call on HY.

I had read her blog. And what is there to compare? I have my own way of writing, do I have to write like her to increase my credibility in the small world of i3? I enjoy writing about worldly wisdom and mental models. IF you prefer her way of writing, good for you.