Posted by AzmiMerican > Jan 7, 2015 10:39 PM | Report Abuse

Theoretically there ought to be an adjustment to harga ibu, because...

Sum of pre = Sum of post

Else semua company should issue warrant... unlimited warrant... at a conversion price that discourage conversion.... and create value out of thin air for its shareholders

But think the adjustment to ibu is sangat sangat kecil...


This is a most logical argument by Azmi.

A company has 10 shareholders of 1000 shares each. Say the company equity worth $10,000, or $1 per share. It issues 200 share of "free' warrants to each shareholder. The shareholders can sell the warrants to others say at 20 sen each, making $40 and yet still hold the 1000 shares at $1, or $1000 worth of the company as originally did. So a total of $400 is "created" from the thin air?

Bursa may not require the underlying share price to be officially adjusted after the ex-date of the "free" warrant. But if share price before the ex-date is the "true" value, the market will adjust the underlying share price itself by supply and demand. No free lunch.

By right, the total value of the underlying share plus warrants must be equal to the value of the underlying share before the ex date, like what Azmi said.

One way to do it is to value the warrant using option pricing. Some iterations work will be needed to get Azmi's equation of

Sum of pre = Sum of post

Noby,

You may think that I nag nag and nag. But I think my most useful contribution to i3investor, if any, will be this thingy.

http://klse.i3investor.com/blogs/kcchongnz/44344.jsp
http://klse.i3investor.com/blogs/kcchongnz/61822.jsp

For personal investment, it often pays to invert, always invert. Instead of thinking of making big money in the short term, think about not losing big. Don't chase hypes and fads; Don't borrow to speculate. Margin financing for speculation is definitely a no no, and no. I can guess there are numerous margin calls the last few months for some people. It is definite.

"Head I win, tails I don't lose much".

Think of where is the investment pendulum now. I think that is the proper mind set of Noby.

mililia,

Thanks for the information about the RPS can be used as cash to convert the warrant to underlying share at its face value. This is a very good piece of information.

Your information and explanations for the corporate exercise for Insas throughout this thread is very valuable for anyone interested in investing in Insas with its proposed corporate exercise.

Income statement is prepared based on accrued accounting basis and that is the accounting rule. So income is earned once transaction is done, though cash may not have been received yet. Say if you have completed a piece of work for your client, you book that as a revenue because it is completed. Your client may have a month more to pay you and hence you have not received the cash yet, but suppose to be in a month's time.

For me normally I don't take a particular year's cash flow statement as one to look at as representative of the true picture of cash flows but a few years because cash flow is lumpy. So I never consider two quarters cash flow as truly representative.

Posted by paperplane > Jan 6, 2015 06:00 AM | Report Abuse

That's the problem. Why cash not reflected as cash and hidden into receivables

I see their income statement making 11.6m as on 31st March 2014. Their cash flow from operations is even more at 15.2m. Their balance sheet also shows an increase in cash and cash equivalent of 10m in 2014.

So why do you say this?


Posted by paperplane > Jan 6, 2015 06:00 AM | Report Abuse

That's the problem. Why cash not reflected as cash and hidden into receivables

mililia/Gweilo,

this RPS seems very interesting. could you confirm or append the part of the statement which says RPS can be used as a currency to convert the warrants to Insas? Thanks in advance.

paperplane,

That is why Magic formula uses Ebit, not Ebitda. As weakness of EV as mentioned by you in the book, I doubt so as it is the more logical way to measure the total value of a company, not only equity, but other things like debts, minority interest, excess cash etc. You may counter-check what you have read,

As for the cash flow of IQ Group, I saw heaps of cash flow from operations, and huge free cash flows too.

paperplane, cash flows is another thing. But cash flow is a lumpy thing, especially for growing companies. You have to interpret if it is ok.

Greenblatt's Magic formula has been proven again and again that it works. So if you consider other things like cash flow, balance sheet, growth etc, and consider them in the right manner, you will improve your chance even further in getting extraordinary return from the market over a longer period. Agree?

paperplane,

Please read the article and the formula in particular how is net working capital, or rather IC is computed.

The net working capital is the non-cash net working capital. so it is not exactly CA-CL.

Valuation is an art, but still need to follow certain established principles.

Paperplane,

Teo Seng's last twelve months result was good. So its financial meets the two metrics although your invested capital is a little low compared with mine, and hence its ROIC a little high. That is provided this year good results can sustain.

bgoon99 Thank you very much for sharing. Greenblatt's book provides another "alternative" or workaround to his magic formula. This is mainly because a lot of screeners do not provide the ratios required by the original magic formula. The alternative formula uses ROA>25% as filter and rank the result descending with lowest P/E. Do you think it will produce similar effect and most importantly, similar performance with the original magic formula?

That is why if one knows how to compute Greenblatt's metric of ROIC and EY, which normal screens do not provide, he will be at an advantage, won't him?

Greenblatt Magic Formula suppose to be the trailing 12 months. But that shouldn't stop you from using whatever tweaks to improve your strategy. I do use many other things over the ROIC and EY.

Posted by bgoon99 > Jan 4, 2015 07:20 PM | Report Abuse
Thank you very much for sharing. Greenblatt's book provides another "alternative" or workaround to his magic formula. This is mainly because a lot of screeners do not provide the ratios required by the original magic formula. The alternative formula uses ROA>25% as filter and rank the result descending with lowest P/E. Do you think it will produce similar effect and most importantly, similar performance with the original magic formula?

I am not aware of this replacement of using ROA. I can't imagine using a hurdle ROA of 25%. Few companies have that kind of ROA except for some asset light technology companies and few light asset industry. Not likely.

Skepticism is utmost necessary in investing. There is no Holy Grail in investing. Independent and critical thinking are other important traits in investing.

Value investing as I have said many times before, doesn't necessary works for everyone. If it does, it would have all been arbitraged away in a seemingly efficient market, and nobody can benefit from the market using this strategy any more. However the evidence has shown again and again it is otherwise.

http://klse.i3investor.com/blogs/kcchongnz/50988.jsp

Well so far, it certainly works for me as shown in the portfolios above, not for the last few months, but a longer period of 2 years for my first portfolio, and 17 months for the second portfolio. Even those periods are too short to be meaningful.

Kevin, happy new year to you too.

bsngpg, from the first question he asked, I know he came with malicious intentions. He must be using new ids all the time trying to do this and feel "siok" about it. It is ok with me as I can counter him, no problem. But I want to curb his "siokness", otherwise he will do it to many others who may be easily get hurt.

To me value investing is the way to go for long term wealth building. But it is difficult, not because the things you do in value investing is difficult, but it is the psychological aspect of it. Few can stay a "value investor" after seeing his portfolio devastated by 20%, 30%. But that happen often. It is only in the long term, value investing will show results, provided you do the right value investing.

My portfolio is nothing as I have a lot of limitations as an individual. You can actually find many good value portfolios in the 2015 stock pick challenge now going on. Try scout from there.

But one thing for sure, those value portfolios there will do well in the long term, but not in a one-year competition like that.

Of course to have better chance of success, one has to learn and do the value investing the right way. Something too simple is unlikely to yield extra-ordinary results. But it doesn't mean value investing has to be complicated.

Don't say you are old, I doubt you are older than me. It is the willingness to spend time and effort, and most of all truly believe value investing works. The last one is the hardest.

Posted by ttb88 > Jan 1, 2015 01:07 PM | Report Abuse
Kcchong no "ball", x dare to join the game.


What is so important that I must join the "game"?

I "no ball"? How you know?

Since exactly one year ago, I have written 91 posts in i3investor, or about two posts a week.

http://klse.i3investor.com/blogs/kcchongnz/

There were about half a million readerships already. Any posting in a public forum like this subject to various scrutinies and criticisms, whether constructive or malicious.

So why you said I "no ball"? What have you contributed to i3investor? How come you got more balls than me?

Something is not right about you. Go see a doctor.

Chinese Tea,

You did very well last year, definitely better than me. Well done.

Allow me to make some little comments.

Looking at your stock list, you are a growth investor. Those companies you have invested do have good growth potential. You also have a diversified portfolio of very good stocks, except I don't like just one crony stock because in my opinion, even if they make money, I doubt they will share with minority shareholders.

I am sure you will do well with your portfolio of growth and some steady earnings stocks. I will be looking at some of your stocks to invest in.

Happy New Year.

johnny cash,

My email address ckc13invest@gmail.com

Oh yes, those interested in learning how to identify good companies, and most of all, how to know if it is not expensive to buy their stocks can contact me at the above address.

What else is more important that this?

Noby, you can see what was the motive of this new id ttb88 in i3investor asking about my pick in 2014. Was it because he really interested in my sharing of stock investing? Read for yourself:

Posted by ttb88 > Dec 30, 2014 07:16 PM | Report Abuse
“So Kcchong, mind to share example of share that u bought recently during the downturn? Thanks.”
The above question was asked twice, exactly the same words, the first one deleted and asked again to make sure I saw it. But again I ignored it. See the “tone” of the question? As I ignored him, he asked again, to Tan KW now.

Posted by ttb88 > Dec 31, 2014 06:32 PM | Report Abuse
“Dear Tan KW, Where is kcchong, why not in the list?”
See his “eagerness” of knowing why was I not in the list? I was then clear of his motive of asking, crystal clear. That was why I posted this comment here:

“Posted by kcchongnz > Dec 31, 2014 07:25 PM | Report Abuse X
Sorry I am a little wary about new id in i3investor and that was why I did not response to your questions. But since you are quite persistent in asking about me, here it is.

http://klse.i3investor.com/blogs/stock_pick_challenge_2013_2h/36174.jsp

Well, this was supposed to be my pick here which Tan KW did not accept it. Read this in the thread

"I would take this as my only stock for the challenge going on now."

after all the ex-dates for 5 for 1 split, its 1 for 1 bonus, dividends etc, at today's price of RM1.44, the total return so far is 275%!”

Tan KW did confirm that. So this guy asked the wrong question to the wrong person. He should know very well that Tan KW is my friend. Or he just wanted to kachau Tan KW also.


“Posted by Tan KW > Dec 31, 2014 10:47 PM | Report Abuse
@kcchongnz, i might miss your pick for 2014. please accept my apology.”

Was I trying to boast? You would understand that I am not that kind of person. This guy just wanted to see what my failure in stocks would be in 2014, if any, then rejoices and “sings” endlessly in i3investor to prove his point? This guy has been trying to do that all the time, each time with a different id, but failed miserably because he just can’t understand anything finance to be able to find mistakes in my numerous posts in i3investor, which I believe there are many.

Well I did have a few stocks in my sharing which did quite badly last year which I will address them soon. If one has written about scores of stocks for the past year, I would unseat all the giants of investing; Warren Buffett, Charles Munger, Joel Greenblatt, Walter Schloss, Peter Lynch etc if I do not have any stock which has gone down in prices in the volatile market last year. In fact I have a number of stocks which did badly.

To curb his “happiness” about it, or "幸灾乐祸”, for now I will just tell him that the overall performance of those stocks I wrote about within the past one year, did reasonably ok though the performance is far below those top 5 in the “2014 contest”. And you do know value investing horizon is not a year or two, but a long-term endeavour.
Read below you will know what I mean about this guy ttb88.

“Posted by ttb88 > Jan 1, 2015 12:20 AM | Report Abuse
OTB, Kcchong and CPteh, tis 3 fellow keep promoting to join their courses but not even dare to join this friendly game.........where are them???”

What has it got to do with him when people make some earnings for the effort they put in? Anyway, thank him for promoting my online value investing course. I have gone through 4 courses now. Some participants did drop out because either value investing is not right for them (which I have explained in details before they joined), or they couldn’t commit their time to do it along the way. But to curb his mindset of "幸灾乐祸”, I would tell him most are very happy about the course, and if I would to put the positive comments written by them here, it would occupy many pages.

Sorry for this long winded post.

Edmund,I like most of your stocks.

Best wishes to you.

Posted by ttb88 > Dec 31, 2014 06:32 PM | Report Abuse

Dear Tan KW, Where is kcchong, why not in the list?


Sorry I am a little wary about new id in i3investor and that was why I did not response to your questions. But since you are quite persistent in asking about me, here it is.

http://klse.i3investor.com/blogs/stock_pick_challenge_2013_2h/36174.jsp

Well, this was suppose to be my pick here which Tan KW did not accept it. Read this in the thread

"I would take this as my only stock for the challenge going on now."

after all the ex-dates for 5 for 1 split, its 1 for 1 bonus, dividends etc, at today's price of RM1.44, the total return so far is 275%!

Good comments from you ks55 on Reits

Posted by willnck > Dec 31, 2014 11:11 AM | Report Abuse
Referring to anyone in particular,KC?Have a happy 2015!

No, not referring to anyone, but a suggestion that one shouldn't over-rate his skill and thinks that everyday is Sunday in Bursa, and take unnecessary risks like margin financing and swing the fence etc.

Stay high in your capital structure. Invest and not speculate. And a happy new year to you too.

Posted by Tan KW > Dec 31, 2014 11:35 AM | Report Abuse
@kcchongnz, join http://klse.i3investor.com/blogs/stock_pick_2015/67467.jsp ?

Tan KW, thanks for the invitation. I can tell you in your list of confirmed participants there are many good investors. They may not emerge that great during the last "competition" but they really are good.

I will continue to share my stock picks progressively and hope to get constructive feedback. That I have been doing all the time, haven't I? I can't just give you a list you know what I mean.

Thanks Tan KW for publishing this article.

Just to clarify, the statement was copied and pasted from a website on an article written by Warren Buffett, just for convenience. That is why the statement is in parenthesis " ". Otherwise some people will shout plagiarism.

This coin flipping thingy is not originated from Buffett, I think. It is widely used in teaching of market efficiency in finance.

Posted by ks55 > Dec 31, 2014 11:00 AM | Report Abuse

"kcchongnz --

Making 'pocket money' from market meaning that I use very small percentage of my cash asset to keep my brain working, at the same time reward for the effort I put in. Otherwise where got thrill. I also don't want to risk my nest eggs unnecessarily.

Every share has its fair value relative to market sentiment. Good buy today may not be good buy tomorrow. Buying on FA coupling with TA and invest in framework of calculated risk is what make me today as a share market investor."

I fully agreed with you your above statements. Remember why I addressed you as "Lau Jiaw"? Those are some of the good words and examples for many people to follow.


"It will be better if you give little bit of qualification whether at the time of writing, is the price consider good buy. Tq and wishing you a Happy and Prosperous New year."

If you care to read what I write, you will see that I don't stop at if a company is a good company. I always go another step to provide you substantiations if it is worthwhile to buy at that price (not asking you to buy though). In fact I think the later is more important, but provided its value is worth the price even if it appears to be cheap.

Happy and prosperous new year to you too.

ks55,

I assisted a philanthropist who made multimillion investing in the stock market and he gave out a lot to charity, helping the needy people to universities, and contributing to social activities. We are not talking about RM5m or RM10m, but may be RM100m. Yet he seldom talked much about it.

I have so many friends, classmates whose children have graduated from overseas becoming doctors, dentists, engineers, accountants, successful chefs and great home makers. Many of my friends and classmates also have a lot of money from their career, business as well as from the stock market, yes , many from the stock market, and yet they never talked about their wealth etc.

But I doubt anyone cares about all these, about how rich one is. so lets concentrate on discussion and sharing about investment in i3investor.

Lets talk about your London biscuits since you peddled it so much in another thread as it seem someone named milopanas is not happy about us discussion about the fundamentals of stocks and investing here, or he seems only think that whatever his comments, all over the place, are much valuable than anyone else. Let us go here:

http://klse.i3investor.com/servlets/forum/600067199.jsp

Posted by ks55 > Dec 30, 2014 11:46 PM | Report Abuse
“kcchongnz -- There are two purposes why people invest in stock market.
1. For long term investment - that should form the bulk of your investment. In my case, the REITs. Up to 50% of my cash asset is in numerous REITs. That give me steady income from investment (Low risk medium gain). “

Well, I respect your choice of REITs as your long-term investments. At least it is better than London biscuits, many times better. I presume you have “careful FA” check before buying? Just that I personally don’t see them as such great investments.
Care to share your “careful FA” on your REITs?

“2. For shorter or medium term, that means buy and sell following market trend. No sentimental value, everything is for sale at the right price. I have so far committed 20% in share other than REITs, with 30% still in FD intact. “

So this one is without your so-called “careful FA” check? And this is what you advocate here?

“As for Lonbis, I agree it is not fundamentally very good but I see it as value buy more on TA. You have read and comment on my posting in Lonbis, you know why I buy into Lonbis. Do you think I will keep this counter for long? I believe if I sell by tomorrow, it already give me 20% return.”

Fundamentally "not very good", but good? How good?

Value buy? Please share your perception or your estimation of the “value” in London Biscuits.

Based on TA? Can’t comment much but would be happy to see your TA here. Maybe there are better TA people who can share how great is London Biscuits’ TA.

Or are you trying to create the TA for this stock for shouting buy buy buy? Sure the TA will look good if enough people follow your calls.

Posted by ks55 > Dec 30, 2014 05:34 PM | Report Abuse
kcchongnz -- You didn't come across, that doesn't mean none. With a little bit of luck, I dare to tell you, there are people with that type of calibre.


"I would like you to imagine a national coin-flipping contest. Let's assume we get 225 million Americans up tomorrow morning and we ask them all to wager a dollar. They go out in the morning at sunrise, and they all call the flip of a coin. If they call correctly, they win a dollar from those who called wrong. Each day the losers drop out, and on the subsequent day the stakes build as all previous winnings are put on the line. After ten flips on ten mornings, there will be approximately 220,000 people in the United States who have correctly called ten flips in a row. They each will have won a little over $1,000.

Now this group will probably start getting a little puffed up about this, human nature being what it is. They may try to be modest, but at cocktail parties they will occasionally admit to attractive members of the opposite sex what their technique is, and what marvelous insights they bring to the field of flipping.

Assuming that the winners are getting the appropriate rewards from the losers, in another ten days we will have 215 people who have successfully called their coin flips 20 times in a row and who, by this exercise, each have turned one dollar into a little over $1 million. $225 million would have been lost, $225 million would have been won.

By then, this group will really lose their heads. They will probably write books on "How I turned a Dollar into a Million in Twenty Days Working Thirty Seconds a Morning." Worse yet, they'll probably start jetting around the country attending seminars on efficient coin-flipping and tackling skeptical professors with, " If it can't be done, why are there 215 of us?"

Posted by murali > Dec 30, 2014 05:39 PM | Report Abuse
Kc,sometimes its easier to make money when MKT is down...

Murali,

Fully agreed with you. That is when the cheap sale is. Either buy socks or stocks, it is good to buy when the market is down.

We buy stocks for long term wealth building, not for 湿湿水 pocket money. What to do, not rich mah. No so much luck, oop luck?

Love to hear your "careful FA" on London Biscuits.

Posted by ks55 > Dec 30, 2014 04:23 PM | Report Abuse

Hey kcchongnz. Win is win, lose is lose. Where got meaning to blame on market
"You were kind of unlucky that the overall market turned south the last few months of the year."
How to make money consistently over long period of time (meaning every year making money). When market is good, you make money. When market is bad, you lose money. Mind you, this type of standard is the same standard I have 30 years ago.! I took three years paying tuition fees, making then losing, then making only to lose again.
You disappoint me, if you are of the same standard.

I have never heard of anyone making money in the stock market all the time so far. I also never heard of any investment strategy making money all the time, every year. For all I know, there is none, zero, kosong, nobody has been making money every year.

I found one now. You have found the Holy Grail and You are the chosen one.

You lighted everyone up.

Posted by ks55 > Dec 30, 2014 04:23 PM | Report Abuse

Hey kcchongnz. Win is win, lose is lose. Where got meaning to blame on market
"You were kind of unlucky that the overall market turned south the last few months of the year."
How to make money consistently over long period of time (meaning every year making money). When market is good, you make money. When market is bad, you lose money. Mind you, this type of standard is the same standard I have 30 years ago.! I took three years paying tuition fees, making then losing, then making only to lose again.
You disappoint me, if you are of the same standard.

Well, I don't have to please anybody for sure. if you are disappointed by me, or anybody else, it is your own doing. Nothing to do with me.

One thing, I never in this forum tell anybody which stock to buy, which stock to sell, whether I buy this or that or how much I made, but merely sharing information about if a company is good, or not good. If you are disappointed about me blaming the market for my losses, I think you are barking on the wrong tree.

jetster,

Also allow me to make a comment about your stocks.

You did well too if not for this "Sai". This is another company which is built on hype and hope, hype of everything oil and gas, and hope that the major shareholder will take care of you, despite all the writings on the wall that his interest is utmost compared to yours. See some of my comments here:

http://klse.i3investor.com/servlets/forum/700905889.jsp
http://klse.i3investor.com/servlets/forum/800000053.jsp?fp=4&ftp=11

For your other stock picks, i guess given enough time, they will do reasonably well in the long term.

YiStock,

Allow me to chip in some comments on your portfolio.

You were kind of unlucky that the overall market turned south the last few months of the year. Otherwise you may emerge champion in this fun challenge if the market were to follow that of the US market, a bull market, as leveraged instruments like warrants will generally do much better.

As the market is not in your favour, it is understandable that you did badly in your portfolio as it is comprised of 80% of warrants. But why did Ooi Teik Bee do the best with his two warrants, HapSeng Wa (178%) and Inari Wa (92%)? HapSeng is a solid diversified conglomerate with sound fundamentals, although I am a little surprise on Inari. So betting on the right horse makes a difference.

The other thing is OTB bet on the right furniture industry on the spot, although I thought he was a little concentrated in his portfolio. Anyway, he was right.

At least I was very skeptical about the warrant of Instaco (-55%). I am always very skeptical when a CEO hogs the limelight in public medias telling everyone how good their company is, how undervalued is their stocks, how fantastic their prospect going to be, what projects they are going to do and how much they expect to make etc, when they have never shown any in the past before. It has been shown again and again, under this kind of circumstances, the insiders are distributing their shares at the back.

I am really surprised you place so heavy bet on this cuscapi (-65%), and on its warrants some more. Someone asked me before about this Cuscapi, I didn’t think any good of it:

http://klse.i3investor.com/blogs/in_search_of_excl_kcchongnz/34628.jsp

Basically you are right as you just said; you are putting too much expectation on its future, meaning you pay too much for expected growth. I can see you are moving towards value investing. Well done.

http://klse.i3investor.com/blogs/kcchongnz/66355.jsp

Posted by KBYap > Dec 28, 2014 06:39 PM | Report Abuse
Posted by kcchongnz > Dec 28, 2014 05:18 PM | Report Abuse
Does Homeritz uses rubber wood for its furniture production???

Very surprised and disappointed that you have written such a long writeup on local furniture companies but don't even know their main raw material is rubberwood....


Aiyah, no need to be surprised nor disappointed one. I am just a small time retail investor trying to share some simple valuation techniques by using furniture companies' financial results as examples. Never asked you to buy any also.

Yeah, I definitely don't know a lot of things. That is undeniable and also why I write stuff in i3investor, and not for investment banks. I actually hoping to learn from people like you from here.

So first I would like to learn from you what does Homeritz do in its furniture business? What kind of business model does it use, what kind of furniture does it produce etc.

Appreciate your feedback and again please don't be disappointed for me asking you. Trying to learn from you mah.

soojinhou,

You are absolutely right. That is why their profit has been increasing by leaps and bounds this couple of years.

Having said that, furniture market is cyclic. What goes up must come down. the problem is we don't know exactly when. My view is that it won't be so soon as US market and I think Europe too is still ok as the stock markets there as a leading economic indicator, is still bullish.

Does Homeritz uses rubber wood for its furniture production???

Posted by bsngpg > Dec 9, 2014 04:48 PM | Report Abuse
Regarding timing the market, I agree with you that no one has crystal ball in predicting the movement of the market else there would not have beggar in the street already. Nevertheless I believe in quote that history may not repeat itself but it does rhyme. Base on the my limited experience in the market, I choose to time the market this time that it is going down south further, therefore I have lately disposed lot of counters with some profit and some loss. Most importantly, I want to prepare war chest to catch bear if it really comes at last. If my prediction goes wrong and the market rebounds strongly herewith, I am willing to lose the opportunity.
Sometimes, we just have to take a bet. This is also tally with the saying that Share Market is a mix of science (calculate value) and art (emotion bet).

How to decide how to bet it? I find it very difficult. For take for example a stock Pintaras. It dropped to 3.20 just 10 days ago. That time was the most pessimistic time and I think according to the chart (I actually don't know), one should sell as the chart must have shown it. Now it is 3.90, up 21%. There are many similar small cap stocks like that. So how reliable is the timing of the market?

I really don't know, but this is what John Bogle said, not I said.

“In 30 years in this business, I do not know anybody who has done it successfully and consistently, nor anybody who knows anybody who has done it successfully and consistently. Indeed, my impression is that trying to do the market timing is likely, not only not to add value to your investment programme, but to be counterproductive.”

Posted by belkg > Dec 11, 2014 09:58 PM | Report Abuse
Tks mr chong tks f u report of fgvb,i and other.investor r now in the crossroad.we need advice which type of stk.can look.into, n whether t market going to crash

I think I can judge if a company is a bad company pretty well:

http://klse.i3investor.com/blogs/kcchongnz/67199.jsp

Whether the market going to crash or not? May be you should look for Snake oil salesman for your answer to this.

Which type of stocks to buy? How wish I have a crystal ball. But I did sum up what you should look out for here as a long term value investor:

http://klse.i3investor.com/blogs/kcchongnz/54243.jsp

But of course you got to do it yourself. Only you can help yourself, and nobody else can help you.

Of course this is the most useful comment here. I think one should take a lot at this as it offer good opportunity to make long term extra-ordinary return.


Posted by sense maker > Dec 23, 2014 09:59 AM | Report Abuse

Liihen's expected EPS is about 45sen for whole year of 2014, given the better biz volume, strong USD and after including the bonus provision for staff in Q4 2014. This translate into 6.2 PE multiple.

But one of the pluses of holding Liihen is also that it gives 5 times of dividend a year and gave all its last quarter profit as dividend last year. There is a chance that it may give in the coming quarter dividend higher than last year's 6.5sen (final plus special dividends), given the much improved profits in 2014. That means dividend yield would be at least 6% if the estimate materializes.

Also, the revaluation of its property will also be reflected in Q4 2014, and this is expected to result in a NTA of close to Rm3 a share.

Based on latest annual report, a fund and Mr Ng Ah Chai (A major shareholder in Incken, SYF, etc) have bought in and that explained the steady increase in the share price of Liihen over the last 12 months.

These are the specifics of Liihen. Not sure of specifics of other furniture companies.

Posted by mahorse > Dec 21, 2014 04:49 PM | Report Abuse
I think should not ignore TAFI as CEO said rm 14 million will be spent to expand production capacity. Seems big orders in hand.

This is one of the very few relevant comments here. I wish you can elaborate how this capex enhance the value of Tafi. There really isn't much done by Tafi during this bull cycle of furniture stocks. Nay Pro-Forma financial forecasts?

AzmiAmerican,

Good question. But I don't ave the answer for you, sorry.

but these are some of the things the wise men said:

"Patience is a Virtue"

“Investing should be more like watching paint dry or watching grass grows. If you want excitement, take $800 and go to Las Vegas.”
– Paul Samuelson

"Investing is a Lifelong Journey"

"All Good Things Come in Time"

“With a wonderful business, you can figure out what will happen; you can’t figure out when it will happen. You don’t want to focus on when, you want to focus on what. If you’re right about what, you don’t have to worry about when”

Posted by SS661M > Dec 27, 2014 03:38 PM | Report Abuse
KC. This one is off topic but i like to seek your view. If the capex is huge due to price of real estate, are we supposed to offset the depreciation by fair value gain? The management can build a plant in the middle of no way to minimize the cost of doing business. It can also build on a strategic location with the intention of fair value gain. However, they are unlikely to include fair value gain in the income statement. Are we underestimated this company in this circumstance?

As your question is an off-topic one, my answer is a layman opinion here.

Fair value gain has nothing to do with the ordinary business of the company. I always look at the core business.

For a plant, wherever it is located, there is no depreciation on the land, but only the building sit on it. So I think there is not much difference in where you build your plant in term of depreciation cost.

This is my thinking as a non accountant. So I am not sure what are you getting at.

Posted by SS661M > Dec 27, 2014 08:31 AM | Report Abuse
If we exclude dividend payout (which is not an indicator of financial strength), Hevea won 4 (PE, PB, P/sale, P/FCF) out of 6 comparison metrics. The reason of low EY is due to high depreciation, which is non cash item. Depreciation will diminish slowly and eventually fall to a level corresponding to maintenance capex (if no further expansion). If we look at the EV/ebitda, it isn't look too bad. Why not put Hevea in the 3rd spot? :))))))


Even you say Hevea is the first choice, I can’t say you are wrong too because Hevea is really the cheapest except for earnings yield in term of Ebit/EV, the firm based valuation.

Hevea has a lower earnings yield more so because of its high enterprise value due to the debts, although the accounting earnings does also contribute.

Just bear in mind that boasting up equity based value can cut both ways; in time of economy upturn, leverage amplifies return to shareholders, but in time of economic downturn, it cuts the other way. Hevea was almost at the verge of bankruptcy in 2008 during the financial crisis because of heavy debt. And what do you think the position of the economic pendulum now?

Depreciation, although is non-cash, it is a real cost of doing business. A company has high depreciation because it had high capital expenses. Why do you think there won’t be another high capital expenses in the near future, if there was one a few years ago?

But again as I have responded to the above comments about my choice of Lii Hen and Poh Huat over Hevea is because of the higher profitability ratio of others based on the present. Hevea’s latest ROE and ROIC at 11.9% and 11.1% is not that impressive as they are also not much higher than its cost of capital, especially cost of equity, in my opinion. Of course the future may change but I have no foresight of that.

Posted by sangharimau > Dec 26, 2014 11:40 PM | Report Abuse
If you look at Hevea, PE only 5.2, Price-to-book 0.6, Price-to-Sale 0.4, these numbers are the best among the whole bunch, how can it fell out from the top four?

Great comments. The top four picks are my choice. It need not to be your choice. I respect your top choice as Hevea, for Hevea does appear to be the cheapest based on those metrics mentioned by you. I like all those metrics too.

Not only those, Hevea also is cheap if you look at other equity-focus metrics such as P/CFFO, P/FCF if you know what I mean. They are also important metrics.

It is just that I look harder into the firm, not just the equity shareholders. That is why I like earnings yield in the form of Ebit/EV. I did explain why in this article itself, for example a company with higher ROE should deserves a higher P/B. I also explain what are the pitfalls of depending too much on P/E ratio, instead of EV/Ebit; and why P/S may not be important for these furniture companies as they are all making money.

All the above only measure the “cheapness” of a stock, but not considering the “Goodness” in my the other article here:

http://klse.i3investor.com/blogs/kcchongnz/66908.jsp

In term of “goodness”, you can see Hevea is far behind with its ROA, ROE and ROIC.

My order of choice is a combination of “Goodness” and “Cheapness”, not just “Cheapness”.

However, I respect your choice.

Posted by sense maker > Dec 26, 2014 11:17 PM | Report Abuse

P/FCF and dividend yields of Liihen as stated by you are incorrect or inappropriate for reference.

Liihen's dividend yield is 6.48%(based on past 4 quarters' total dividend of 17sen/ current price).

For a company's with PE below 7, with capital expenditure not much higher than depreciation, P/FCF will not be much higher than 7 for valuation purposes. Increase in funds tied up in working capital such as stocks and receivables in recent 2 quarters of 2014 due to the increase in sales volume is one-off in nature as it will not happen each year, and thus it should be excluded for valuation purposes in a simple single-year calculation method.

Had you used a spreadsheet for DCF model, the increase in working capital would have hit just one out of the multiple-years time horizon which expand into perpetuity using a long-term growth rate. So, using a 23.5 times P/FCF for valuation of liihen is misleading.

Me:

Thanks sense maker for the feedback.

As an individual retail investor trying to compare the performance of 7 companies, that is the best I can do with the limitations of time and information; ie I am using a single year trailing twelve month result. That is already tedious enough trying to search for information and to sum up the 4 quarter results. That is also why this article is "Some simple valuation techniques", not "Comprehensive Analysis" which I am not in a position to do it.

So I apologize for any mistake made and appreciate the feedback and constructive criticisms, the more the better. I am sure there are a lot more mistakes there.

FCF is lumpy in nature and I agree the single year figure is not representative. The mistake I made in Lii Hen FCF was more because I took an outdated unaudited annual figure in 2012. So for apple-to-apple comparison, with the latest FCF of 25433 in 2013, the P/FCF of Lii Hen is 6.4, the same as Poh Huat.

I would also take sense maker's number on dividend yield as I think nobody here knows better on Lii Hen than him.

Price wise Lii Hen is as attractive as Poh Huat, but Lii Hen has better operating numbers. So my choice now is Lii Hen over Poh Huat.