The central problem of this counter, I believe is shortage of cash. They plan to buy 300M worth of lands in PJ, I think this will be a good deal but on the other hand the company really committed a high level of debts.
Sure I believe this counter have a bright future since i also holding this stock but I really wonder how the management to raise the cash. Digging the shareholders' pocket like in 2017? (Issue ICULS).

The PJ land purchasing is a good deal on my opinion however.

When considering the NTA, please note that a lot of this fixed asset comes from its IMAGO MALL revaluation which almost occurred every year. As a prudent investor I will reduce some of the NTA from this counter albeit to RM 0.5-0.6.

If the debts level of this counter is reduced significantly coupelled with better cash flow, this counter's price will fly for sure.
However we had to accepted that in reality this counter's future will depends on the ability of it to earn substantial profit from the lands it holds and how to improve its cash flow and reduce its debts.
Imago is a germ and don't doubt its earning ability. Be frank, I wonder why the car park earning is not up to expectation despite good foot falls in IMago. I expect the quarter earning from car parking itself to be ~2M.

Just sharing my opinion that the general may not notice, any serious investors know that the buying or selling actions always need to come from their calculation of due contemplation.

Some people think they are the smartest person in the world.

When Stanley supports DAP openly 5 yrs ago, after BN win, they say Stanley is stupid.

Recently when Stanley openly support for BN, today they shouting that Stanly is very very stupid.

Had you EVER think why Stanley apologised only when the 14th PRU is around the corner?
Why Stanley appoints/ invited TS Rafidah Aziz as Supermax's chairman FOR NEARLY 5 YRS?


Stanley really stupid whereby he can lead one of the top 4 glove company in Malaysia? He sure stupidly endured the IRS harassment for 5 years then only apologise to Najib?

Can't he wait when the PKR 14 is finished then only pick the party which won to support them?

I believe that Stanley is under great pressure and being forced to apologise Najib
which is similar to Tony.

Pls when people commenting different view, don't say they are hired cybertroops.

IF you wanna be a successful investor, you need to control your emotion
and able to think subjectively and independently. Avoid the confirmation bias psychology trap.

I don't have any intention to offend anyone.

HAPPY THAT WE HAVE A NEW MALAYSIA.
THANKS TO GOD :)

I understand why Mr Stanley apologise. He has been sentenced for JAIL and company being harrased by IRB for few years. I think the JAIL sentence is the main reason that forced Stanley apologise.

Same to Airasia's Tony. Clearly they has been lobbied.

I hope Stanley can get his fair trial for insider trading charge under our how PKR gov and can return proudly as CEO of Supermax.

The share price of Supermax already jumped from RM 1.9-2.0 to RM 2.9-3.0 BEFORE he apologised. Prudent investors should always know the intrinsic value of stock invested/ intend to invest.

Needs wisdom to decide what is the reasonable price to enter this counter

Sing with prices don't make u an intelligent investor

I agree with nanyang's view

Superb99, Market price is uncertain because it is up to Mr Market's call.
Tax things if unusual will normalise eventually. For good earning results to come out in financial report, i expect another 1.5-2 yrs required.

For ppl those can not hold for few yrs or wanna see profit quickly, this counter is not suitable.

For those who leverage using loan, surely they get burn.

Recently, Supermax’ highlighted that it has received the final approval for the installation of water meters for both Plant 10 and 11, and installation works should take a further two to five months.


Read more at http://www.thestar.com.my/business/business-news/2017/09/01/higher-tax-rate-damper-for-supermax/#KKM5zqg9p03aIAFm.99

PS: This is NOT A BUY CALL FROM ME

Stock prices simply doesn't always equal to intrinsic value.
Real logic reasoning (intrinsic value) doesn't always dance coherently with stock prices.

Hence not every time the market price took a dip is reasonable... Because that is what Mr Market does.

Value investor always have to Buy Low Sell High; and hold for a reasonable period
Simple but not easy.

PS: Techinal analysis will indicate sell signal for this stock... That's why FA and TA are quite different

Mr Market throwing tantrum again

Nice article with detailed analysis... Good work bro!

Stock market is a place that will rewards the intelligent investor and punish those who are ignorant. When the market shos its true face, often people will have their lesson learnt.
Intelligence in investing doesn't correlate with IQ once you hv IQ of 110 or so.

Rich people are rich because they are frugal. Well written article!

In first scenario, xiao ming's brother should dispense interest to xiao ming.
130k is not a small amount to xiao ming, that money borrowed should be protected by a written contract in lawyer firm with agreed interest rate.


In any scenario, xiao ming is exposed to debtor's default and his compensation solely depends on sympathy of debtor.


Xiao ming is terrible in managing his money

PS: any money borrowed to relative or friend, you should expect that you can not get those money back.

The next thing that a VALUE shareholder should be doing is, compare the intrinsic value of Hevea and its current price.


One of the form of value investing is just simply buy a stock so cheap that even if it bankrupt you can still get profit.

(ps: the above bankrupt statement may not applicable to Malaysia because the liquidation process in Malaysia is to inefficient)

Margin of Safety by Seth Klarman has illustrated such form of value investing.

Investment is most intelligent when it is most business like.
Benjamin Graham

The activity of unscrupulous owner tries to cheat investors, this Hevea case is not the first and will be not the last.

Anymore still remember the case of 金鹏 in fraud accounting?

Anyway a good stock is not easy to find.

The small investor also can learn something from this case:
the need to avoid the confirmation bias (human psychological misjudgement by Charlie Munger) and the paramount importance to interpret financial statemment.

I personally think that no matter what methods you use, earning profit is of paramount importance (in decent way).

The difficulty for an investor is to CONSISTENTLY achieve APPLICABLE ANNUALIZED capital return (I believe using TA investors will be harder to achieve above target). Good profit for 3-4 years doesn't really prove anything. Consistent results for 10 years and above only can be considered as an capable investor (his/her wealth should have been significantly amplified during the 10 years).
I do not condemn Mr Ooi or praise Mr KC Chong, it is just my humble opinion.


I would recommend a book by Seth Klarman: Margin of Safety. His investing methods revealed in the book is quite orthodox to Warren Buffett but truly belong to value investing.

Investment is knowledge pay best interest
Investment is most intelligent when it is most business like. Benjamin Graham

When the liquidity vanishes then you will know who is swimming naked

Greatest return comes with lowest risk... It is one of the core concept of value investing...
The most important things by Howard Marks illustrate this concept in a graphical form... Interested people can read this book...

Obviously he is a financial idiot, later when the tide really comes Malaysia got nothing to cover already but to taste the real hard crash

Very nice article.... like it

Good comment about gold.
It is a greater fool game :)
No offense to gold lover, you can make profit from it. I just don't know how that game works.

the sole reason to buy this stock is anticipated revenue and profit gain from IMago mall operation... fundamentally sound from view of NTA and operation wise, financially this is a highly geared stock.

batmanforever, mind to share how the owner has bad record? what happened to SMI?

Who knows how to buy the Vanguard's in US from Malaysia or Singapore please kindly enlighten me here. :)

Hi Mr Calvin,
Thanks for your view,

1) Behind every stock is a business. Selling goods or services. Some businesses are thriving like export stocks caused by fallen ringgit. But people can overpay for these stocks in times of euphoria.
-- I totally agree with you. Value investor is a contrarian.

2) Besides 33% discount from NAV or Net tangible assets, thought should be given to their ROE and gearing condition.

3) Microeconomics of important but i don't think value investor need to follow closely, instead should follow the business closely (quarterly reports, company announcements etc.)

Just my humble view. Thank you.

Hi Mr Ali, I think Mr Fong's article is not really mean to attack you or insult you. I hope you don't take it too hardly. Your purpose is mean for altruistic and most investors should understand. Well, Mr Fong requested you to stop sharing his portfolio and you did response to that request... Nothing further damage already... Nice and case closed.

Between, for Warren Buffett, it is not easy for you to trace his buying. He often stated in his annual reports that the newspaper often misquoted the stocks he is buying. The newspaper often followed the news released in SEC US (changes of major sharesholder's stock) and publish the that buying/selling as WB's move.

WB often clarifies that such buying and selling is often done by other Berkshire's manager. The correct title for the news should be "Berkshire buying xxx". I think we all understand why WB make his stock buying/selling discreet.

Stop worrying about Mr Fong's allegations, let's see what can be bought in the Malaysia's Stock Supersales NOW. Mr Ali, don't miss the sales yea.

Decision to buy or sell, as an intelligent investor still will depends on own's notion.


Happy investing and wish you have a nice day!

Rainy day will eventually come (i don't actually suggest it come now through). :)

Ayle...

When investor know everything about price but nothing about value, you know that they are naive investor...

Thanks for your sharing! Like your article

It is impossible to predict what will happens tomorrow, yet this is a very interesting article indeed. Thanks for sharing your thought.

It will be wise to always prepare for the rainly day because the rain will eventually comes.

When the investor know all about price and nothing about value...
They are not value investor.


When the investor ask capable CEO to resign or die,
You know they are naive investor.

No offense, but mature people will think twice before they post anything, even in anonymous internet.

Thank you for your sharing Mr KC.

Undervalued/ Margin of safety is indeed one of the most important criteria for stock selection.

I personally would avoid stocks that the price being chased up/ told will be "burst" soon. These type of catalyst is not for a value investor.

Share split= fake bonus, rarely has served it real purpose other than the otherwise.

However in the book Margin of Safety by Seth Klarman, he got mentioned a few types of situations that less people would "dare" or bother to consider. It may worth to give a visit to this book. (no charting in this book but i do ever wonder that is Seth Klarman a speculator or a value investor :)

Inactivity on good stock is difficult because “Investors today lack assiduity”. Deciding when to sell or buy will again depends on the investor's skills to access the intrinsic value of that particular stock in relation to its price.

Beside of difficulty to calculate intrinsic value, psychological misjudgments may also contribute to the lack of assiduity in some investors.

Value Investor is required to form own's view, calculation and most of the time need to be acting like a contrarian. Temperament control perhaps is the more difficult part once that people have IQ of 100-125.

Inability to pay debt= one of the stupidest thing you can do in this world

Debt is cancerous, debt is evil... :)

"Bonus" is a gimmick term used by investment banker and the board of director. More proper term will be share split or share "dilution".

There is no free lunch in this world. No tooth fairy in stock investment as well.



Thanks for your sharing Mr KC.

Mr KC, thanks for your sharing. Please don't be discouraged by certain people that attacked you.

The comment below does not refer to VS but to stock as general.

Those who focus on the stock price of tomorrow or next week are not value investor. They view the risk in a different way. They probably think that profit is proportionate to risk (linear graph relationship) which is wrong as suggested by Howard Marks.

Trying to use different valuation methods with more liberal criteria in order to justify the entry price will fall into a Psychological Misjudgment-- Confirmation Bias as suggested by Charlie Munger.

Using more liberal criteria like higher growth rate forecast or lower discount factor in DCF model will also reduce or abolish the margin of safety that favored by value investor. Ignoring the business valuation (cash flow, profit margin capex etc) will make any valuation method useless.


I found this sentence in The Intelligent Investor present the theme very eloquently:

"The development of the stock market in recent decades has
made the typical investor more dependent on the course of price
quotations and less free than formerly to consider himself merely a
business owner. The reason is that the successful enterprises in
which he is likely to concentrate his holdings sell almost constantly
at prices well above their net asset value (or book value, or
“balance-sheet value”). In paying these market premiums the
investor gives precious hostages to fortune, for he must depend on
the stock market itself to validate his commitments."


Buying high PE company and expect PE it(not earning) to grow higher is greedy. Paying hostages will not make you rich


"Be greedy when others are fearful and be fearful when others are greedy"

Stock market will never be efficient because of human psychology.


PS: no wrong with speculator, just make sure you are intelligent and astute enough as told by Benjamin Graham.
Avoid the man with one hammer syndrome as suggested by Charlie Munger

1MDB = DAYLIGHT ROBBERY

The worst is it may be just a tip of the iceberg.

Gungho92, i agree with you. Voracious ESOS is devil in nature, although i must say this company have some good competitive features.

Honest-to-god act is to grow and share together with shareholders (partners) but not undermining their wallet.

Mr Stanley, i hope you write out a better chairman statement. The quality of your chairman statement is deteriorating over the years.

I don't care EPF dumping your share or LHDN harassing you or now Bursa want to charge you with insider trading that claimed to happen many years ago (in 2007, more than 7 years ago).

I admire your integrity and ability. However if you ignore the most important chance to discuss the performance of the company and present the analysis with shareholders in Annual Report, well you had disappointed some loyal shareholders that always support you. (Try to read the annual report 2014).

I know you are under a lot of pressure due to some political repressions. All Malaysian suffered due to this government and its quality is obviously. (Think about 1MDB, GST, abduction in Sabah, Private Jet, Petro price and countless more).

I hope you don't give in to the political repressions. There are always people who support honest people like you.

Poor results of Nomad

Ability of the management to turn Nomad into profit/cash generator with decent ROE will now be tested.

Nomad has hotels that are beautifully designed and their locations are strategic.

Should the management accomplish their promises? Will this acquisition generate value to shareholders as promised? Your own notion will be required.


Let's open our eyes and read the coming financial reports.

'Investment is most intelligent when it is most business like' Benjamin Graham

Good sharing. Thanks Mr KC

闕又上搬出巴菲特的名言說：

投資人若無法承受股價下跌50%，

根本就不適合投資股票。

volatility is far from synonymous with risk-- Warren Buffett

IMPOSSIBLE ROBERT KUOK is a crony of Najib la... Looks what conies done to his MSM. Please la, please, don't insult Mr Kuok,

we should be greatful for what Mr Kuok done in helping our country and poor students via Kuok Foundation.

Hi Noby, yeah oh... ROE won't drop. Thanks for enlightenment :)

Mr Noby,

First i would like to apologize because the term I used is a bit misleading.


The meaning of bonus share that I mentioned in the article actually refers to distribution of share bought back (as known as treasury share) to shareholders according to proportion of share owned compare to whole company. It would be more properly to be termed as distribution of treasury share/ share dividend.

I am not an accountant and please correct me if I am wrong.

The other condition that the shareholder can receive "bonus/free" shares is when the listed company issue additional shares.

Let's take a COMPANY ABC as an example:

SHARE CAPITAL as at 02APRIL 2015
Authorised Capital:RM100,000,000
Issued and Fully Paid Up Capital :RM50,000,000
Classes of Shares :Ordinary Shares of RM1.00 each
Voting Rights :One vote per ordinary share
No. of Shareholders:2,436


For Company ABC, there are 50,000,000 shares circulating in the market.

The company can issue additional 10,000,000 to its shareholders. By proportion, for every 5 shares held, 1 new/bonus/free share will be given.

The expense of issuing additional/new 10,000,000 share will cost
RM 10,000,000 to the company. The fund will be charged under title of share capital. The fund i think usually come from retained earning. (borrowing loan to issue additional shares sound awful)

However, note that the ROE,DY,EPS will drop because more circulating shares (larger denominator)



In summary
1. distribution of share bought back (as known as treasury share)

2. listed company issue additional shares

Lucky lum, acutally Warren Buffett constantly discuss how he view about share repurchase especially for Berkshire Hathaway. However you may find that the 1999's letter to shareholders (page 16) particularly useful.

Have a visit to 2002's letter to shareholders and get impressed by Warren Buffett's humor and wisdom on how the Board Directors swindle shareholders.

I also pay a great attention to treasury maps (disguised in book form) recommended for reading by WB in his letters to shareholders. Don't miss the exciting part yea, enjoy your reading.

Mr KC, Thanks for your kind comments. Again thanks for your altruistic sharing on VS and value investing.

Value investing is indeed very fascinating.

Let's see when the time for us to apply
"Be fearful when others are greedy and be greedy when others are fearful"-- WB

Good analysis Mr KC!

ESOS is unreasonable. The current ratio (lastest annual report) is 2, debt level just increased by 50%. Raising capital through ESOS seem unreasonable. ESOS + share division will further damage the already low ROE (6-7%).

Selling this stock is a reasonable decision!

If ROE of Nomad can be improved under management of Plenitude then this acquisition is good, hopefully it won't drag ROE and EPS of Plenitude (share dilution effect)