@LiimInvest - Read the AR, they have a very good internal analysis on it.
Previously they were faring badly due to log supply issues which affected up to 50% of the production capacity, with the banning of Sabah timber export, this should improve the log supply issues. Since 60% of the revenue comes from US, the recent strengthening of USD should improve the profits as long as no disruption.

Sorry, I wasn't keeping on track of Gkent for awhile.
If my average is 1.19 before the latest share split (3 for 1 was it?), may I know what's the new average?
Thanks in advance.

Share price is still around 52 weeks low, still value for money.

The divvy yield of Hevea is roughly 5%, which is quite high for a stock.
Hevea definitely worth a lot more than it's current value, as long as they increase their dividend.

Some may question the amount of free float in Hevea, causing price volatility.
But I actually prefer it that way, and at least it doesn't have bazillion amount of shares.

And remember, and remember this well - Capitalism is all about liquidity.
Without liquidity, share of a company will meltdown when it crashes.
Imagine one chunk of shares sold may down 5-10%, that'd be a disaster.

One thing to take note is cash and cash equivalent ballooned again, another 30m in the pocket.
Can we expect higher dividend? Oh, just an old man's wishful thinking.

Everyone is making profit here but I see raider is still being a sour grape here. I feel sad for him man.

@abangadik - Because Pareto's Principle of Least Effort.
It is said that 80% of the results comes from 20% of the effort.
These day I just let it autopilot. So long as they continue to deliver, I'm a happy man. No comment is needed.

"I have nothing to add" - Charlie Munger.

If possible, kindly share with us if you obtained any information from the Agm.
Thanks in advance.

You forgot, management integrity is an issue.
Having invested in Lii Hen previously, I won't say too much, you can search for it yourself.

@firehawk - As mentioned above, O&G division remain stalemate and incurred losses, until Petronas gives a nod on further expenditure.

O&G will not last low price indefinitely. 3 years has already passed.
As with any cycle, at some point of time, what comes down must go up.
Actually, the contribution of O&G is not so significant to WTK. Their main focus is timber division.

@hustle - And yes, I agree WTK is over-diversified. How I wish someone could advice the management in the AGM to restructure the company and cut down unprofitable business.

@steve - You should already knew this. It's in the annual report. I've even written about it.
How can you buy a stock without knowing about your stock?
It's like going to the hospital for an operation without checking the doctor's background.

firehawk, which part you find surprising?
WTK ventured into O&G in the second half of 2014. If you recalled, that's when the O&G plunged.
Can only say their timing was terrible.

Rather than saying "subpar", I'd say it's your "standard" business.
I'd like to think "subpar" as when your ROIC cannot even cover your WACC, destroying it's value over time. Now that is subpar.

Standard business brought at valuable price, is better than wonderful business brought at expensive price. Otherwise I've wouldda've brought Homeriz, which has a higher margin and and better ROIC.

Anyway I don't mean any hostility, I'm just being constructively critical and help to contribute to make the glass full. I may sound crude but that's just the way I say things lol, but my intention is good.

twentybaggers, Your analysis is partially correct, yet not entirely correct.
Let me add to your half glass full statement.

Heveaboard is not a bad business, it is a cyclical business yes.
If it's a bad business, it wouldn't have above average ROIC, and gross margin.

Then there is the least understood part, unless you read all the AR. Just looking at the figures and you'll never figure this out.
There is moat - but narrow, not wide. Their particleboard use E0 and E1 super standard, not the common standard, hence there is some form of barrier of entry. But when the moat is narrow, it all boils down to cost control, cost control itself IS ALSO A MOAT. Go read it up. I'd say Hevea did really well on cost control.


Another competitive advantage Hevea has is the ability to assemble it's RTA division using it's own particleboard division, giving it flexibility to switch between the two depending on industry cycle. Not every board/ furniture companies can do this because of the different standards used. Evergreen only started to emulate Hevea recently, but whether if it's succeed is another story.

"The winding-up petitions against the companies mentioned in the aforesaid article have no material impact on W T K Holdings Berhad."

Hmm, not affected I see.

"As the aforesaid article may give rise to the erroneous impression that Ma is seeking orders to wind-up “subsidiaries..…of WTK Holdings”, the management of W T K Holdings Berhad will be requesting The Edge Malaysia to publish a clarification in their next publication."

Anyone got a copy?

@Eagle_T thanks

Ho, got bonus issue again? This one really auto-pilot multi baggers.
Anyway, who went to the AGM, mind share with us the details???

Just pointing out I really like Gkent's AR, the management team refer Gkent as "your company", which it quite uncommon and has a nice ring to it.

Not so much on family feud, rather I think the business itself is facing tough times in the short term.

I think AR 2016 provides a clear picture of WTK.
To easy understand, let me break them down for you so you don't have to.

-Palm Oil division is still young, so that's why recently there's a loss of 15m expenses. But as it goes forward they shall produce more fruits in the longer term.
-O&G division remain stalemate and incurred losses, until Petronas gives a nod on further expenditure.
-Logging division is temporarily affected by India's recent demonetisation policy, that's why they choose to stay sideline and sell to domestic buyer at lower prices, which was reflected in the few recent quarter. As it goes forward, they will be able to export as the demonetisation effect subsided.
-Plywood division remains alright, as Japanese pickup more plywood usually in the second half.
-Manufacturing of masking tape, etc contribution remains marginal and crappy. (they should sell it maybe)

All in all, as you can read, WTK is facing tough times, this stock so it's not for the faint hearted. Once they overcome it,it's value should unlock in the longer term.

They have 300m cash and cash eq (and increasing) anyway. I the worse case scenario, they should be able to last several years, barring financial crisis.

@Patron - can you provide us the article you saw in The Edge weekly? Thanks.

It's best to ask humbly if you don't really know what is cash burn, lol.
Rest assured, as long as FCF is positive, there is no cash burn.

Mieco is somewhat overvalued due to their factory disposal grain, while Hevea is not.

The correlation is not much. Mieco's business focuses on domestic market, while Hevea focuses on overseas market. Their source of income is different.
Mieco does have a bigger capacity than Hevea though.

Anyway, these are just my advices from years of experience.
Feel free to ignore. I will also stop commenting.
Happy investing :)

1. "Let's market decide, what I think or what you think is not important. I can simply shout at target price of RM1, it does not matter.
If one never read reports & do his analysis before buying, all advices are useless."

Ans: "In the short run, the market is a voting machine but in the long run, it is a weighing machine." - Benjamin Graham

If you have been in the market for a long time, you will know that the market flip flop all the time. From extreme bearish to extreme bullish.

What the market decide in the short term may not be the true reflection of a value. Depending on the judgement of other people in the market (a.k.a market forces) is no different in betting in a horse race - where the payout are dependant on how many people bet on it. It is the worst imaginable way to build your wealth stably and securely.

That is why you must have a thorough analysis of stock, and stick with it till the end, even if the market disagrees with you in the short run.



2. "One more thing to share, no one will look at the counter even price traded at PE 6 times during BEAR market & everyone will chase the same counter even price traded above 15 times PE during BULL market. "

That is why so many people missed the fortune at the bottom of a bear market, and also why so many crashed and burned at the peak of a bull market.

"Only when the tide goes out do you discover who's been swimming naked." - Warren Buffett

Only by asking ourselves the right question, can we have the right answer - the true value of the stock. Like you say "I can simply shout at target price of RM1, it does not matter.", but what is the point if your target price is wrong itself? Food for thought, my friend.

This is a constructive opinion and criticism. Feel free to ignore if disagree.

From a neutral standpoint, simply slapping a industry PE 15 to any technology stock is extremely dangerous. If such method is applied, then all technology stocks in Bursa would have been highly valued at PE 15 for a long time. The fact that it doesn't clearly shows you something.

First we must ask ourselves, on what basis should Frontken command a PE of 15?
Is the business lucrative? Is it a market leader? Does it have moats or other competitive advantage that others doesn't?

Second, what is the return of investment or equity? In layman words, if I invested Rm 1 in this company, how much do I expected to earn back on my RM 1?

Remember, high valuation equals to high expected future returns. If the expected future returns cannot deliver, then it does not deserve a high valuation.

By asking ourselves the right question, only can we get the right answer.

@CCM - WTK is not a pure plantation share, rather it's a diversified company.
It's main business is in logging, plantation only covers a small portion of the business operations.
But is it a net-net investing, as long as cash burn is low while with high cash, I am willing to invest in it until the negative sentiment turnarounds.

Thanks Nikki for the tips. I like Pmetal too, I regret didn't buy it when steel price was down.

If you have studied business before, you'll know that diversification is the most risky section of the Ansoff Matrix.

So in one sense, you are right, but in another sense, you are wrong too.
You forgot Hevea partially runs a commodity business - 40% particle board, and it partially runs 60% cyclical business - furniture which relies on properties industry.

So if Hevea can pull it off this one, it allows Hevea to less reliant on the commodity and properties industry, giving them more options and guarding them from industry cycles.

The intelligent investor takes calculated risk, the stock market gambler gambles and purely on "business sense" -- perish the term, it's called gut feeling.

That makes all the difference.

Some of the wood exporters has shown signs of recovery, will Hevea follows?
We do not know, but I think it's fair to be cautiously optimistic. I am bullish on Hevea.

http://klse.i3investor.com/blogs/Investnowlah/123004.jsp

Wow, Focus Lumber's 1Q earnings up 89% on improved production recovery rate, lower cost.
Buying at the time when no one wants takes the greatest courage, but also it yields the best rewards.
Congratulations to all those had faith in Flbhd. Patience rewards those who waited.

Oh just to clarify, PE is still useful for dirty and quick valuation, otherwise we normally don't use it, but we don't completely shun it either.
Just because I've mention it doesn't mean I use it, rather it's because it's easier for others to understand, haha.

I disagree with you view that P/BV should follow ROE, I think they are two different components.
A well managed company does not necessarily purchase higher assets, it may due to internal restructuring, cost cutting, etc. Remember what is the composition of ROE again? NPM x AT x FL.

On contrary, ROE and P/E is connected. Think this way, because a company is efficiently managing a company, it generates high profit, thus command a higher valuation.

Companies with high growth rates have high ROEs and correspondingly high P/BVs. This is totally wrong. Amazon for one, is already enough to refute this. Similarly to other asset light companies.
Not sure if you missed it, for the examples you've given me such as Nestle, Dutch Lady and F&N as I wrote already, this theory only applies in manufacturing companies.

It's alright. Remember, as the investment adage goes: "Valuation is more of an art than a science". Different people has different strategy. No right or wrong.

Sorry for the long post, lol.

@nikki - I've just looked into the article in Investopedia, the explanation given by J.B. Maverickis quite insufficient. No extensive elaboration, no application, no backtesting. I think it is most likely written based from his personal observation or judgement.

Well, he did disclaim that a high price to book (P/B) ratio doesn't necessarily correspond to a high return on equity (ROE), but it does under ideal circumstances.

I think these paragraphs in particular though, is quite wrong. Let us deconstruct the theory.

"A high P/B ratio stock commonly has a correspondingly high ROE, since investors are inclined to pay higher multiples of book value for a stock that is showing them a good return."

- Wrong. In Bursa alone, there's shitton of companies with high P/B, this is because they have a lot of asset over the years, but they are not necessarily efficient, hence commanding a low ROE.
As an investor, your job is to buy undervalue stock and sell overvalue stock, when you pay higher multiplies of Book Value over a stock that is high ROE, you defeat the purpose of Margin of Safety.

"Companies with high growth rates are likely to have high P/B ratios. Divergence between the two measures, high P/B with a low ROE, can be a warning signal that shareholder equity is no longer increasing."

Companies with high growth rates are likely to have high P/B ratios? No, not really, that should be high P/E ratio, not P/B.
A company growth also does not necessarily stem from the growth of it's asset, only companies such as manufacturing does. Plus you have companies that are asset light, as I told you before. So the divergence will most likely be wrong.

End of the day, a theory is just a theory. Understanding it is more important than applying it.
His theory by itself, is not wrong, there is some correlation.
Just that he did not properly elaborate on which circumstances it is applicable, and which is not. It is only applicable in certain types of companies, and not all.

@nikki - It's alright. As the investment adage goes: "Valuation is more of an art than a science". No right or wrong. Different people has different strategy.

Just out of curiosity, I'm trying to understand your thought flow but I don't quite get the logic / calculation behind it. Please let me hear your thoughts about it.

1. I don't understand why would you link ROE with PBV. These are two different thing.
- ROE defines how much company is generating income from it's equity. NPM x AT x FL.
- PBV is how much the current price is measured against it's tangible assets.

One is efficiency ratio, the other is valuation ratio. How does they link?


2. I don't understand why would you want a PBV of 2.1x? In valuation, we want the lower the better. Graham advocates not more than 1.5.
Even ROE is at 20%, if PBV is at 2.1x, it pretty much indicates overvalued.

Yeah, it's true. But branding falls under moats, and we're discussing on metrics so it's kinda out of the discussion.

Sure thanks

If i remember correctly, I think the construction of the new line is around end of this year iirc.
I remember seeing it in the AR, you can try check again.

@nikicheong - Once the new line is constructed, most likely the BV will catch up.

Here's some tips from me, P/BV isn't necessary a good measure of every stock.
Let's take an example, PBV isn't good in measuring technology companies or direct selling companies, this is because the bulk of their income doesn't necessary generated by assets, as they are assets light.

In Hevea's case, I think PCF is a better measure of it's value.
If you want to invest in BV, you need to check out the what are the compositions, the state of the asset, the depreciation rate, etc.

No, contrarian sense will tell you buying in the bad times yield the best reward.
If all bad news come and hit the stock and yet the stock doesn't goes down, you can pretty guess where the downside risk is.

Anyway I think I had my fair share of constructive criticism and should stop here.
Happy investing everyone.

@abngadik - Haha, glad to see you as well. Hope you are doing great in your investment. See you around.

Well said, Fortune Bull.
Just as you said, no need to beat around the bush, if you're speculating, just admit you are speculating, it's easy as that.
No need to x factor this and that. Giving it a nice name doesn't change the underlying foundations - "Speculation".

However if one is speculating, one should not go and tell someone who is investing "Your method is wrong, I made more than you, blah blah blah."
One is speculating and not investing, mind you (don't mean you).

In February 2000, hedge-fund manager James J. Cramer proclaimed
that Internet-related companies “are the only ones worth
owning right now.” These “winners of the new world,” as he called
them, “are the only ones that are going higher consistently in
good days and bad.” Cramer even took a potshot at Graham: “You
have to throw out all of the matrices and formulas and texts that
existed before the Web. . . . If we used any of what Graham and
Dodd teach us, we wouldn’t have a dime under management.”

His fund crashed to the bottom in the Dotcom bubble.


Posted by Fortune Bull > May 13, 2017 02:19 PM | Report Abuse

Ezra! Precisely! We are speculating that the next QR will be good! There's no need to paint brush and make believe x factor as something so elusive! It's only speculating! If you are right, you make money, if you are wrong, you lose! It's as simple as that! There's no need trying to be like Stockmanmy!

Actually, let me tell you what is X.
I already knew all those nonsense he sprouting from long time ago, he did not invented it, he merely adapted it. It has been around for a long time.
It's called "speculation".

Speculation itself is not evil.
It is neither illegal, immoral nor (to most people) fattening to the pocket. Even in investing, some degree of speculation is necessary and unavoidable.
Hence is an investor's duty to keep the speculative factor in his investment under control. That is what a value investor does.

But there is intelligent speculation as there is intelligent investing.
When a speculation is unintelligent, it causes great financial loss, and some even went bankrupt as a result.
I'm afraid his "dynamite investing" belongs to the later.

If you noticed, I don't always go and whack him, unlike how he likes to flame KC and other value investors.
I only like to whack him when he starts to run ahead of himself, when he starts being overconfident and arrogant.
This trait, is extremely dangerous and disastrous.

In other words, you cannot prove it.
That's why you keep giving excuses.
If your method really works, you'd have no difficulty in proving it in the first place.
The very fact that you yourself the creator, have difficulty in proving it itself, then it already shows how "useful" it is.


Posted by stockmanmy > May 13, 2017 01:24 PM | Report Abuse

too bad you don't the intellect to understand X factor or even the maths to show you that value investors have lagged far behind the Dynamic Investors in 2017 thus far.

Did you not just read what I wrote?

"If you cannot prove it, then there is no evidence supporting it's existence.
It becomes no different than talking on a piece of paper, or another hoax."

Either you do not understand English, or is too stupid to understand them.



Posted by stockmanmy > May 13, 2017 01:15 PM | Report Abuse

members of this forum...students of KC, value investors all over the world

if you pay more attention to X factor is the following equation,

share valuation = FA plus X factor

I guarantee you, you will gain more for the rest of 2017.

My job is done and I can take deserved rest.

Stubborn, obstinate, will go nowhere , and share market do not reward stubborn obstinate people ......do not reward mathematicians .

A methodology is of no use if you can't prove it's usefulness or backtest it.

It is no difference from a stock market hoax, and we have so many of them in the stock market such as the Dow theory, Sell in may and go away theory, and now the so called "X-factor".

If you cannot prove it, then there is no evidence supporting it's existence.
It becomes no different than talking on a piece of paper, or another hoax.

KC's method, or should I say Graham and Dodd's method have been proven and backtested for more than 50 years - surviving World War, worst economic collapse, terrorism, war.

Now, what is the evidence supporting your claim? Show us.

They really need to move from Sarawak to Sabah.
6,250%, buncha blood sucker.

http://www.thestar.com.my/business/business-news/2017/05/12/sarawak-timber-companies-take-a-hit/

My stance on FLBHD has remained unchanged since a year ago, it's fundamentals is still sound.

Whereas technical wise there has been some bullish signs.
FLBHD now stands above 200 days average, which reversed from downtrend.

When a MD focuses more on shares and less on day to day operations, I'd start to worry, like very seriously.

Even though I agree with felicity's view most of the time, for once I disagree with him.

From a neutral standpoint, in this case I think felicity may be subconsciously influenced by confirmation bias - possibly due to having an interest in Ekovest.

As many has pointed out, in any contract, if one party fail to meet its obligation, the contract may be rendered nulled and void.

A promise is a promise, but it is as good as none under conditions such as:
1) It is not supported by any "consideration"
2) If the party failed to oblige the agreed terms and condition.
3) time lapse

Anyone going to the AGM?