I see, thanks for clarifying man! I too, enjoy FA :D
Thanks for your compliment!

Hey Jim, thanks for the kind comment.

Investmentisgood, usually all exports/imports are quoted in USD. It does not mean that they export to the US specifically. They have mentioned that they export, however, in the past two Q, they recognized forex loss due to stronger USD and a derivative hedging gain. This means that they suffer from stronger USD.

Also based on 2014's annual report, they have RM120m of USD receivables out of a total of RM260m receivables. This means that they are exporting approx 46% of their products in USD. But still suffering from strong USD. Why? @_@

Unfortunately, there are no raw material deriative instruments, only forex instruments. It is possible that they purchased earlier when raw mat was more expensive, but looking at inventory days of 60, they couldn't have bought when it was very expensive.

I am still guessing that it's due to lower selling prices from competition but it's only a hypothesis.

Thanks for the encouragement man, let's not give up!

Hi Yistock, thanks for your writeup.
Just wondering, why did you insert a picture of "your" average price? What is the intention of this information?

Ho lee sheet! Here I am expecting people to stone me for assigning such a TP to Can-one and it's result tanked. Instead I get KYY lavishing me with such praise! (although he did mention that I caused people to lose money)

Nevertheless for those who are still reading, I apologize that I was not able to foresee these latest results. I have not reached the level where I am able to accurately predict earnings. As well thought out as my article was, the results were still disappointing. Kian Joo definitely played a role in the disappointing results, and Can-one's milk division only registered a PBT of RM10m vs an average of RM17mil for the previous 3 quarters.

I suspect this could be due to higher raw material cost - commodities quoted in USD and weaker sales from strong competition - F&N / Johortin (Jtin is undergoing an expansion). However I am still puzzled as F&N has registered stronger profits from low milk commodity prices and Dutch lady registered stronger gross margins.

Therein lies the weakness of Canone & Johortin - the lack of brand strength. F&N and Dutch lady can sell directly to the customer, giving them the ability maintain prices. OEMs like Johotin and Can-one has to fight on price if there is an oversupply, eroding margins. At least this is what I hypothesize for now.

Thank you Repusez!

Dude, can you please post all 10 stocks and not post one by one like a strip tease?

hey investmentisgood. That's a good question. I was looking at KJ's overall Q it and pondering as well.
I'm concerned about overall declining margins, and high op expenses.
The MYR vs USD and MYR vs VND both were relatively stable from Oct 1 to 31 Dec 15, so I'm a little preplexed with the forex losses as well. I can only imagine that they did not mark 2 market their obligations in the last Q and are only doing so this Q. Although I can't be certain.

Sorry, I don't have a good answer myself

If anyone's still reading here, Dlady's results just came out. Gross margin is up but net profit is down. Gross margin improved from 34.6% to 42%, due to low milk prices.

Net profit is down because of high advertisement and promotional activities. (management tends to lump more expenses in healthy quarters to cushion the impact)

My point is that milk counters are still benefiting from low raw material prices and Can-one is one of them.

natyrag, thanks man. That means a lot.
Duit, I wish there was such an award haha. In any case, thanks for re-reading

Hey 3iii. Thanks for the nice compliment :)
Unfortunately your question is a little too difficult for me. Projecting 9 months ahead is really difficult, even more so 5 years ahead. There could be a variety of factors which may swing padini's fate in the future. Online shopping could really pick up in Malaysia. Padini's over ambitious expansion could have a backlash at them when the economy takes a massive hit. I can't predict the future, I can only make bets.

What I can tell you is this is a high ROE (excluding unit trust/cash) company that has delivered and consistently paid dividends for the past 2 years. They have also been successful in building their brand and p I wouldn't mind holding it for the long run, but at the same time I would be diligently looking at Q results and annual reports whenever they are available to keep reassessing my buy/ hold call.

So I'm sorry I can't give you that sort of answer. If you want a hold and sleep type stock, I think maybe the only one I can think of is Berkshire Hathaway. But then again that's until that old man kicks the bucket

Thanks for the encouraging comments, projecti and Vijayy. Thanks for following my series haha. Hopefully I'll Be able to write sufficiently frequent unlike the Sherlock Holmes series.

Unfortunately I manually made all my historical PE charts. I couldn't find any free ones online

Oh lol Ian sorry the late reply.
Yes I did make all the charts myself (besides the Bloomberg ones/ commodity ones). Thanks for the compliment

My mentor is a low key dude. He's one of the biggest individual investors in nestle

nice, I got a like from si fu Icon! :P
Thanks for all the supportive comments, 360capitalist, rosmah (haha!), bull hunter and even pure bull (dude, are you high?)

Dusti, as much as I am confident in Can-one, I do agree that the Aspire deal can be a strong catalyst. The deadline for that is 31 March 2016. However KJ has extended this deadline 4 times and there is no assurance that they won't extend it again.

Thanks for the great encouragement guys (and dudess)!

Kylo, thanks for the comment! The offer price for KJ hasn't been revised. However first of all this article argues that Canone is worth RM5.72 regardless of the sale of KJ. Secondly, due to the delay, Aspire will resubmit the draft circular for acquisition of KJ by 31 Mar 2016 (if there is no further extension). They will not announce a revised offer price until they release the circular. Finally, I thought the way you killed your father was a little cliche (heck but that's just my opinion)

lching, thanks for your opinion too. The revised Toyota offer is used for the calculation of the RM7.08 TP. I'm not using that TP as it is too optimistic. Also, I'm sorry, perhaps I have not been sufficiently clear that I am using the Aspire/TTC as a proxy for value and the acquisition does not need to materialise for the value to be realised. KJ is making healthy profits as we speak.

KianJoo writeup - please check it out.
http://klse.i3investor.com/blogs/rarecharms/91402.jsp

Canone writeup:
http://klse.i3investor.com/blogs/rarecharms/91402.jsp

Wow thanks, I am so flattered by all these encouraging comments. Thanks winner, sosfinance, unclejoe, shinado, jason, insider and newbhere!

Speakup, I am not quite aware about Padini contemplating takeovers. I can only source publicly available information, and I have not stumbled upon any sort of news like that.

Newbhere, thanks for your questions. I will try to address some of them quickly, however I suspect that my answers may be a inadequate.

1. Online sales is a tricky distribution channel . Padini has mentioned that they are exploring this avenue. However I have seen brick & mortar business like Parkson try to venture into the online space and fail. I would actually prefer them to focus on what they're good at and excel at it. There are still plenty of Malaysians who prefer to shop in malls. I see the pressure of Padini to venture into the online space as a threat, really.

2. Foreign contributions as I mentioned is about 5-6%. I didn't find disclosures on effects on net profit. They have recognised some foreign gains in recent quarters but it's negligible to my overall thesis. My friend has asked me about the possibility of foreign expansion, and I think that while it is a possibility, Malaysia still has enough room to grow, and they are doing it well.

3. My investment mentor did tell me that the Anti-profiteering act may be irrelevant. You're right in pointing it out. I added that in because it could be a possibility (mentioned in their latest Annual Report), as unlikely as it may seem/ it may even be a bad idea.

4. Unfortunately, this exercise is a little tedious, and I decided against it in this article. I do appreciate DCF/ FCF analysis though, and thought that LC Chong has done a good job with it. I might dare to borrow his work instead.
http://klse.i3investor.com/blogs/kianweiaritcles/87393.jsp.

Overall though, I am grateful for your comments (: Thanks Newbhere!

Thanks alpha, teck chuan, seius and maroken!

Will write the next piece after another thorough round of analysis!

Ohh haha, thanks for clarifying, KCCho.. I mean brother ;)

Wow, thanks for all the kind words and encouragement bracoli, kcchong, duitKWSP, KL foong, apini, pputeh and icon8888!!

I am honored!!

While I don't know how to get i3 to link my Padini article, I'm going to link it here first. Please read and comment :)

http://klse.i3investor.com/blogs/rarecharms/90715.jsp