iafx (see I still use your name, not "her" like an uncivilized peoson does), let me show you something else which you are not able to do. Not sure you can understand or not, most probably not.

The following are the short-term and long-term returns of Kfima and cbip.

Kfima 2.13 19/07/2013
Period 2-week 6-month 1 year 2-year 3 year 4 year 5 year
Price 2.10 2.02 2.26 1.85 1.00 0.64 0.42
Return of stock 1.4% 5.4% -5.8% 15.1% 113.0% 235.4% 407.1%
CAR 45% 11.2% -5.8% 7.3% 28.7% 35.3% 38.4%

CBIP 2.91 19/07/2013
Period 2-week 6-month 1 year 2-year 3 year 4 year 5 year
Price 2.66 2.73 2.74 1.99 1.51 1.51 1.78
Return of stock 9.4% 6.6% 6.2% 46.2% 93.4% 92.2% 63.5%
CAR 933% 13.6% 6.2% 20.9% 24.6% 17.7% 10.3%

Ooi,

You can actually check for yourself by reading the full report. To me it clearly shows that there is no turnaround. The so-called "profit" was the write back in liquidated and ascertained damage, not some kind of profit. MTDACPI has not been making any profit for 10 years already.

I will be glad if you an prove me wrong.

lching, serious ah? Can elaborate? Appreciate that.

Posted by iafx > Jul 19, 2013 08:12 PM | Report Abuse
my original comment is CLEARLY stated ABOVE all comments!! how to delete and still above kcchongnz's cmment?? kcchongnz is clearly once again pusing his cerita, anyone still wanna take her word seriously so be it
so call live in NZ? pui pui pui! one hell of sickening liar!

Where did I copy and paste your statement with "revenue" instead of "profit"? It was what you have written. I got the feeling that probably, I said probably, while I was writing my comments, you found something wrong in your statement and you corrected it. So no big deal. But I did not pusing. That was your original statement which you could have deleted.

But do I need to "pusing"? Whether you use "revenue" or "profit", there is no difference. I still provide the 12 year Kfima financial statements to prove whatever point I need to make. While do you have a single number to show how revenue or profit is sliding. Show some numbers to prove.

Similarly, you said cbip share price show better performance. I show you numbers clearly showing Kfima's share price performed much better for the 3, 4 and 5 years, with total return and also CAGR (if you know what it means). Can you show me any number to substantiate your point? None, absolutely none.

"so call live in NZ? pui pui pui! one hell of sickening liar!'

What a nice statement of yours! what kind of personality do you have? Got angry fight because I have exposed that you are proven a liar? too bad, you have shown your tail.

Hevea almost went bankrupt during the US sublime crisis. It had huge amount of debts. Because housing construction went down, their business of particle board and furniture also suffered greatly at that time.

Since then it has recovered. Its debts is decreasing for the last few years in a fast pace, very good. Best of all its cash flows for the last few years were excellent. Incidentally that is how a company can pay down its debts from the free cash flow generated.

With the recovery of the housing market in the US, Hevea may have a good future. It is already shown so with the profit before tax increased by 2.5 times to 13.7m, or 17 sen per share last year.

At 78 sen per share, its PE ratio is attractive at 4.6. Better still, it is trading at an enterprise value of just 3.8 times ebitda.

Posted by hw0706 > Jul 11, 2013 08:23 PM | Report Abuse
i will bet for Haio and my DKSH

I liked Haio too because its MLM business seems to be doing well now. Its price is attractive too. Can it regain its former glory three years ago?

The major shareholders of Haio acquired quite substantial amount of shares of Haio yesterday. Something good coming?

L.C., great explanation. You must be a follower of Jae Jun, me too. Just to share a bit here.

I think the best way for most people to understand invested capital is to use this:

IC=Fixed assets+net working capital or
IC=PPL+receivables+inventories-payables

PPL should include any prepaid lease payment, could include development costs for property companies, biological assets for plantation companies etc.

Receivables should include "other receivables", and likewise "other payable" if any. Do not include any asset items which is not consolidated into the financial statements of the company, such as investments, associates and jv.

Owner's earnings seems to me is the free cash flow attributed to the equity shareholders, in oppose to the FCF of the firm.

Posted by hng33 > Jul 19, 2013 01:55 PM | Report Abuse
How about YTL Power? hidden gem waiting to shine again after long laggard.....

hng33, i admire your deep insight in the company YTL Power, KPS etc you analyze. I don't have the information to do that.

All the time I have been saying I just have to rely on the financial statement to gauge the business and operations of the company, and its value, which is the past. This may not be useful, especially for a company which has great future which has not been reflected in the financial statement, like you mentioned about YTL Power.

Having said that, it doesn't mean that history is not important. for example, a construction company which has been persistently making heavy losses for years doing construction work, what good is it when it secure a big contract? To me they have shown that they couldn't manage projects well all this while, or the management just focus on getting projects for some self interest, but never intend to manage the project well; and how can i have confidence that they will make money in this new project. I would tend to believe for this company, getting more projects may mean more losses.

Hey I have been in this industry (construction)before, you know.

So you are in a better position to give an opinion on YTL Power about its future, not me.

Posted by j harcharanjit a/l jalaur singh dhillon > Jul 19, 2013 02:11 PM | Report Abuse
kcchongnz
i like your style of searching good quality companies,,you said you look at ROE and ROIC... are there any sites online where we can look for this VALUES??? how about http://www.klsescreener.com/ ?? send a copy reply also to my e mail,, thanks harchar@malaysiaairlines.com
are there any good pre define stocks scanners that can scan accurately ROE and ROIC???? thanks

The stock screener you appended in your post is good to screen for stocks with ROE, PE, NTA, DY etc. I haven't used it though. Things like ROIC, not sure, don't think so. You can goggle what ROIC is and compute yourself.

Fat Cat,
If you look back at my comments, I did say Inari, basing on the growth and operating efficiencies, it is no doubt a great company. I also said its valuation is undemanding.

I only have a couple of reservations. One it eats a lot, meaning it requires a lot of money for capital expenses, which in itself is not necessary to be bad. It could be good because it is only through capital expenses, the company will grow its revenue and earnings, if the capital expenses yield return higher than the cost of capital (10%?).

The other reservation is the one in control. I know those fellows in Insas (if they are the same controlling Inari) did not have a good record of taking care of minority shareholders.

Now there are other comments by others which you may want to take heed below:

Posted by Hustle > Jul 19, 2013 11:19 AM | Report Abuse
If you work inside the company b4 you will see the working environment is like united nation,majority workers is not locals and foreigners majority.
As company directors profile is not too attractive,most of them just a share holder among the locals company and locals funding boss.Simply said,it just like a cumulative funding company that no 1 can really in charge to execute the mission & company direction.

And also below because too dependent on a single cliet is not good:

Posted by houseofordos > Jul 19, 2013 01:52 PM | Report Abuse

Also take note that AVAGO Tech is a major shareholder in this company.. basically a lot of their business comes from AVAGO and so future revenue will have some correlation to AVAGO's business prospects.

Just keep a copy of of the amended copy here for record purpose. The original "revenue" has been amended with "profit". He then used this to say I si-tipu pusing. I was so stupid to apologize for it.

Posted by iafx > Jul 19, 2013 12:48 PM | Report Abuse

cbip share price is weak now, this is a good chance to switch (or split) before cpo price rebound, what would be the price of cbip vs kfima when cpo finally up? cbip stands better chance to payout more div compare to kfima sliding profit and do nothing cash, cbip share price gained proven far better than kfima over the years. yr $ yr choice!

****

Posted by kcchongnz > Jul 19, 2013 11:38 AM | Report Abuse

ipomember, excellent points! But who do you think I am? An analyst working for an investment bank? An investment officer of EPF? A fund manager?

I am a small time investor, working on my own, living thousands of miles from boleh land. What do you think I can do? Go to their office to check their business? Talk to the management and employee, their suppliers, clients etc about their business?

One thing for sure. If the business is good and run well, it is shown in the ROE, ROIC, cash flows etc. You can see if shareholder value is created each year through the grow in their equity and dividend payment.

Agree?

steve, I disagree with you saying iafx is a con man. It is your fault to buy amprop on his recommendation. You must take charge of your own decision. Sorry, can't agree with you.

But from the above, deleted his original post and then re-posted a new one, and alleged that I si-tipu pusing, that shows bloody clear that he is not an honest person.

Beware of him as I knew you have been consulting him. He knows nothing about finance and investment.

Why did I apologize? I was con by this bugger. He deleted his original post and re-posted a new one!!! How I know? I copied and pasted his original post blow. See the "sliding revenue", not "profit".

Wow, the same person who called others si-tipu-pusing-roti-canai!!!!


Posted by kcchongnz > Jul 19, 2013 12:49 PM | Report Abuse X

Posted by iafx > Jul 19, 2013 12:42 PM | Report Abuse

cbip share price is weak now, this is a good chance to switch (or split) before cpo price rebound, what would be the price of cbip vs kfima when cpo finally up? cbip stands better chance to payout more div compare to kfima sliding revenue and do nothing cash, cbip share price gained proven far better than kfima over the years. yr $ yr choice!

Posted by iafx > Jul 19, 2013 01:04 PM | Report Abuse
si-tipu-pusing-roti-canai!! u modified other's comment to make up bogus cerita? aiyoyoo.... y do such bad thing? ok lah ok lah, kfima no.1, kfima fly to $10, if that make u a better person.

It is not a matter of whether Kfima or cbip no 1 or not. I own both stocks and I have given analysis and good comments for both stocks.It is saying something with facts and figures. Have you ever provide any facts and figures?

who si-tipu-pusing-roti-cani? we let others to judge.

Yeah my apology, saw wrongly. But I have the 12 year net profit (in thousands) of Kfima below. Sliding profit?

Year 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
Net Income 104250 116543 107502 86433 70627 43274 40649 46869 32040 19418 13086 -74940

"cbip share price gained proven far better than kfima over the years" iafx

Posted by kcchongnz > Jul 19, 2013 11:48 AM | Report Abuse X
Posted by iafx > Jul 19, 2013 11:04 AM | Report Abuse
cbip offers much better return :D

Sure or not, or just simply shoot?
Show me the comparison of long-term return of both for comparison, total return and compounded annual return for 3 years, 4 years, 5 years.
Can or not?

well if you can't show the numbers to prove your point, allow me to show mine below:

Kfima 2.13 19/07/2013
Period 3 year 4 year 5 year
Price 1 0.635 0.42
Return of stock 113.0% 235.4% 407.1%
CAR 28.7% 35.3% 38.4%

CBIP 2.91 19/07/2013
Period 3 year 4 year 5 year
Price 1.505 1.514 1.78
Return of stock 93.4% 92.2% 63.5%
CAR 24.6% 17.7% 10.3%

So which stock provide better long-term return?

Posted by iafx > Jul 19, 2013 12:42 PM | Report Abuse

cbip share price is weak now, this is a good chance to switch (or split) before cpo price rebound, what would be the price of cbip vs kfima when cpo finally up? cbip stands better chance to payout more div compare to kfima sliding revenue and do nothing cash, cbip share price gained proven far better than kfima over the years. yr $ yr choice!


So my question is what if cpo price continue to slide?

Kfima sliding revenue? This is what I got for Kfima's 12 years revenue. 12 years!!! Is it sliding? Or somebody simply shoot again?

Year 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
Revenue 486524 470753 431884 411432 369070 308712 294477 300331 247121 223076 221136 187310

"cbip share price gained proven far better than kfima over the years"?

Posted by kcchongnz > Jul 19, 2013 11:48 AM | Report Abuse X
Posted by iafx > Jul 19, 2013 11:04 AM | Report Abuse
cbip offers much better return :D
Sure or not, or just simply shoot?
Show me the comparison of long-term return of both for comparison, total return and compounded annual return for 3 years, 4 years, 5 years.
Can or not?

yfchong, please note the statement

"checkout cbip annual reports, read cbip projects intake so far. cbip does NOT sit on 250m doing nothing"

That statement is not made by me. did you make a mistake asking me?

Posted by Hustle > Jul 19, 2013 11:19 AM | Report Abuse
If you work inside the company b4 you will see the working environment is like united nation,majority workers is not locals and foreigners majority.
As company directors profile is not too attractive,most of them just a share holder among the locals company and locals funding boss.Simply said,it just like a cumulative funding company that no 1 can really in charge to execute the mission & company direction.

Hustle, you worked there before? If so this piece of information of yours is very important in deciding if Inari is worth investing for long-term or not.

If what datuk has just said is true and if he was referring to Inari, then the decision of whether invest or not is even clearer.

Lets see which company has been more consistent in dividend payment. Below is what I have for their dividend payment in sen, not just simply shoot.

2012 2011 2010 2009 2008
CPIB 55 0 4.8 4.8 4.8
Kfima 8.0 8.0 7.0 5.0 3.0

Except for last year when cbip sold of some palm oil plantation and made a lot of money, Kfima's growth in dividend payment looks better lei. But that is not the point, just that I don't simply shoot.

" checkout cbip annual reports, read cbip projects intake so far. cbip does NOT sit on 250m doing nothing"

So much to read lei. Can summarize and let us know why cbip is so much better as claimed by you ah? Business wise, operating efficiencies, cash flows, and don't forget their values in relation to price etc. Please summarize in your own words.

Posted by iafx > Jul 19, 2013 11:04 AM | Report Abuse
cbip offers much better return :D

Sure or not, or just simply shoot?

Show me the comparison of long-term return of both for comparison, total return and compounded annual return for 3 years, 4 years, 5 years.

Can or not?

ipomember, excellent points! But who do you think I am? An analyst working for an investment bank? An investment officer of EPF? A fund manager?

I am a small time investor, working on my own, living thousands of miles from boleh land. What do you think I can do? Go to their office to check their business? Talk to the management and employee, their suppliers, clients etc about their business?

One thing for sure. If the business is good and run well, it is shown in the ROE, ROIC, cash flows etc. You can see if shareholder value is created each year through the grow in their equity and dividend payment.

Agree?

Is Inari that fantastic investment?

Posted by Fat Cat Tim Buddy > Jul 18, 2013 05:48 PM | Report Abuse
kcchongnz, can u tell us your view and assessment on inari?

Inari Berhad is involved in the electronics manufacturing services (EMS) industry. The Company is an EMS company principally involved in back-end semiconductor packaging, which comprises back- end wafer processing, package assembly and Radio Frequency (RF) final testing for the electronics/semiconductor industry. Inari serves wireless RF and microwave telecommunication semiconductor market.

I heard of this company before but don’t know much of it. A spinoff from Isas? Oh, a technology company, something like Unisem?

Looking at the twelve month trailing financial results, Inari, undeniably appears to be a great company with high growth in revenue and profit of 19% and 74% respectively. Operating numbers are excellent with ROE and ROIC of 31%. The quality of earnings also appears to be good with CFFO above net profit.

The only problem (may not be a problem because of it being new and the nature of the business) is it requires a lot of money for capital investment. Hence whatever cash it receives each year, it is not enough for it for capital expenses. Do you notice that it has to borrow more money each year from the banks? If this heavy capital expenses yield future quality growth and earnings, it is ok.

Pricewise, it is trading at a PE ratio and earnings yield (Ebit/EV) of 8.4 and 12% respectively which is undemanding.

The other thing is who control Inari? Is it those Insas people? They are not known for taking care of the interest of minority shareholders.

Frank, $25 with cart! That is damn cheap man. See you in NC.

Wah roti canai also cheap woh. Of course it is cheaper than bolih land, because in bolih land huge amount of money gone somewhere.

Frank, thanks for the offer. If I have the chance, sure will get you there. Never have a chance to play in US yet. But very expensive woh there. Got roti canai to eat there or not? (Read so much of this term recently in i3)

akuree, at least you are aware of what could be happening and willing to ask. Many don't.

I don't know anything about Clig. It sounds like you just need to click some buttons and huge profit is on the way. I heard a famous blogger recommending it in myfm a month ago, and probably many analysts also strong recommending it. And everyday, it appears to be one of the top volume. So because of that i avoid it.

Is it a oil and gas stock which just public listed at about 70 sen with free warrants, its share price plus warrants have already risen quite substantially till now still hasn't discovered any oil yet?

Malton? Heard many positive recommendations before, but when I looked at its financials, it was not exciting to me.

I may be wrong about what i have said, especially their stock prices (oh no, I didn't talk about their stock prices but just fundamentals). You don't have to listen to me. Below are some famous sayings for you reading if you are interested.

“The individual investor should act consistently as an investor and not as a speculator.” Ben Graham

• A friend of mine decided to get into the stock market and called his broker. “Buy me 10000 shares of XYZ.” And sure enough he bought and the price went up. He says, “This is great. I’m making money.” He picks up the phone three days later. “Buy me another 10000 shares.” The price goes up again. And this goes on for weeks and the price is mounting and he’s building a huge block of stock in his portfolio. My friend says, “You know, I have gotten to the point where I don’t want to be too greedy. I want to sell.” He picks up the phone, once again to call his broker. He says, “Jim, I’ve had enough. I want you take all my stock and sell it.” The broker responds, “To whom?” Jack Bogle

• The greater-fool theory: The notion suggests that there will always be a greater fool to buy from you what you yourself purchased at far too high a price. Alas, at market tops, all fools have bought, so there’s no new fool to bail them out.

• Painting the tape: Professional investors frequently banded together to generate action in the selected stocks. They would aggressively bid up the price of a company’s share, making the price trend look better than it would otherwise have been. The pros would then entice the public to get in on the action. As the public chased the rising stock with reckless abandon, the pros would abandon the stock, leaving it to fall sharply. They made a tidy sum while the public got bagged.

Frank,
Yes I play golf a few times a week. Not very good now though. But I like the exercise, enjoy the weather, the talk cock etc. Don't need the extreme work stress anymore. Small bet, unlike those days in Malaysia when we play "cutthroat" with so many people.

Where else can be better than in NZ?

Posted by Steve Jub > Jul 18, 2013 06:09 PM | Report Abuse
kcchong, lol, i think now u must have been playing much golf since many stocks has been keep going up hehe

That is the beauty part of using fundamental analysis for investment; buy the stocks of great companies with durable business, good operating efficiencies, at a margin of safety from its intrinsic value. Wait for some time until people (better still institutional investors) discover them and bid up the share price closed to its intrinsic value, then sell. So I actually play golf a few times a week. What for look at the share prices everyday?

Alas, easier said then done. I actually spend a lot of time watching the screen too. Human behavior. But this is more because of I punting call warrants also.

Punting call warrants is not investing. It is gambling. Same for trading of stocks. The warrant price depend on the short-term fluctuation of the underlying share. This changes everyday, every hour, even every minute. That is why this requires time spent on the screen. But it is ok if one has the interest and the time. Don't ever neglect your work doing that.

tony, you were the one who first have interest in Bursa call warrants. When you asked me about punting on them, I gave you a positive response. So did you punt and make a lot of money from them? You would have because a couple of them have gone up by close to 100% since then (2 weeks ago?), for example C4, form 8 sen to 15.5 sen now. I must thank you as I made some from CZ and C4.

Btw, I sent you the spreadsheet for call warrants, you never even acknowledge receipt. Was it like other stuff you asked me to sent, and then you just left it in the dustbin?

And if you have received it, did you look at it all, or just for the fun of asking? And if you have looked at them, have you made use of them to scout for good warrant to punt? Willing to share with us which ones have you discovered?

Disclosure: Punting call warrants is gambling basing probability. Punt at your own risk.

Halex? Never heard of.

Posted by Najib Zamry > Jul 18, 2013 05:02 PM | Report Abuse
Take a look at Halex Holdings. NTA 0.92, P/E 10 and sitting at net cash RM16 million. The wonderful thing is that the major shareholders are accumulating aggressively in the open since end of June 2013.
The negative point is the stock is very illiquid.
KC Chong what is your view?

Never heard of Halex. That shows how much I don't know about the stocks in Bursa. So still want my view?

[Halex Holding Bhd operates in four segments, which include investment holding, agrochemical, healthcare disposables, and horticulture and agro-biotechnology. The Company is principally involved in the manufacture, formulation, re-packaging, distribution and agency of agrochemicals; propagation of ornamental plants through the application of biotechnology and other related agro-biotechnology activities; propagation and sale of foliage cutting, potted and festive plants, as well as the manufacture and distribution of healthcare disposable products, such as wet wipes, cotton-based products, sanitary towels and tissue products.]

Wow, the business looks interesting, doesn’t it?

The company must be quite new and smallish. Revenue for the past two years is only about 100m with net profit just 4.4m. Yeah, profit margin is also small at 4.3%. ROE and ROIC is disappointing at 4%-5% only. How come? I would have thought this type of business should yield high operating numbers.

Cash flow wise, ok lah, smallish also with average free cash flow 3m a year. Not much money spent on capital expenses also, averaging also 3 m last 2 years. So where will be the growth? In fact the last two quarters results showed a contraction in revenue and earnings already.

At the close today at 65 sen, PE ratio at 12 and P/B 0.7, ok lah but not screaming buy, buy, buy.

This is just my personal opinion looking at the rear mirror. You know I don’t have a front periscope. You must have knowledge of its future better. So don’t let me discourage you.

This blur blur blur thingy is the greater fool theory in stock trading.

• The greater-fool theory: The notion suggests that there will always be a greater fool to buy from you what you yourself purchased at far too high a price. Alas, at market tops, all fools have bought, so there’s no new fool to bail them out.

kcchong, when the stock has reached fair value, you will start to sell your stock or continue to keep?
Posted by Steve Jub > Jul 18, 2013 04:52 PM | Report Abuse
the dilemma is once sold, duno what to buy when can't find undervalue stock..

My strategy is buy a stock which the company has good operating efficiencies in term of ROE, ROIC (if with growth potential then it is a bonus) at a comfortable margin of safety in relation to its intrinsic value. So when the stock price rises close to its intrinsic value, I will sell and look for other good company with a price much lower than its intrinsic value.

If I can't find one, I go for a golf holiday.

Posted by TeckChuan Lee > Jul 18, 2013 08:14 AM | Report Abuse
Is MAXWELL a local or chinese based company??
MAXWELL Quoted RM0.305 today.
I did it s financial. Not bad at all. A young company, only 4 years of financial history.
1. ROE 20% (higher for previous years)
2. NTA 0.95
3. Free cash flow, though CFFO is lesser than NI.
4. Dividend 0.02
5. Piotroski average 5.33 for 3 years. (a bit less though)

I did invest in this stock before because this was one and the only one Chinaman company paying quite good dividend then. But luckily sold off with some profit.

The problem with all Chinese companies, without exception, lack credibility and nobody trust them any more. Their financial statement look fantastic with good earnings and heaps of cash (>100m)in the balance sheet. But checking the interest payment each year which is a few hundred thousands only. Why?

So I have given up looking at any Chinaman company, though I am a Chinaman myself. correction Malaysian Chinese.

Yeah Teck Chuan, when you analyze a god company with good financial, no need to talk about Piotroski score. It is for hot stocks of poor company which you need to check to make sure they are not going for bankruptcy before you punt.

A good day for punters of call warrants. Call warrants of Maybank, Bursa, AirAsia, Mudajaya,MISC etc. Punting is not such a dirty word after all, or once a while.

Frank, good one.
"I have nothing more to add" Charlie Munger

Is FABER good enough, a Dupont analysis of its ROE?
Posted by TeckChuan Lee > Jul 18, 2013 12:28 AM | Report Abuse
GLC, no competitor, hospital service and properties development.
Good ROE. Free cash flow. Good and increasing NAT every year. Piotroski average up 5.83 only from 2007 to 2013. How do i print screen and put it here?

TeckChuan,
I commented on Faber before 2 weeks ago as below.
Faber (3/7/13)
Faber does appear to be having a good business. Good cash flows and healthy balance sheet with negligible debt now after 150m debts were paid off last year. ROE was good averaging 18.4% for the last two years.
At RM1.82 at the close of today’s market, PE ratio and price-to-book are at undemanding 6.1 and 1.3 respectively. Yes, Faber may be a good company to invest in.


I would like to take this opportunity to discuss on investment here regarding keanpoh's posting above on the Dupont Analysis which is very useful to dissect and see where the ROE comes from:

Revenue, S 886280
Net Profit, NP 147434
Profit margin, PM 16.6%

Total asset, TA 958498
Asset turnover=Revenue/TA 0.92

Total Equity, TE 620310
Financial Leverage, L=TA/TE 1.55

ROE=NP/TE 23.8%
ROE=NM*TA*L= 16.6% X 0.92 X 1.55 = 23.8%

As you can see, the high ROE of Faber came mainly from the high net profit margin of 16.6% last year. Asset turnover is satisfactory at 0.92. The leverage of 1.55 is ok too. ROE will improve if any of the factors increases; for example if Faber has more business, AT will be higher and hence the ROE. If Faber borrows more money (with a limit in order not to subject it to the risk of bankruptcy), ie increases its leverage, ROE will also increase.

Posted by Jyen > Jul 17, 2013 01:43 PM | Report Abuse
KC, we need to have some sense of humour if we don't want to end up in Tanjung Rambutan, what is done is done, no point crying over spilled milk, lose here but gain from somewhere else. LOL.
And I also listen to the wise Master Ah Fet.
“The most important thing to do if you find yourself in a hole is to stop digging.”
“Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.”

Jyen, well said. You are a good learner from Ah Fet. You can recite some of his wise investment quotes too. But it seems like some people just don't get it.

Hustle, I would avoid all Chinese based companies. Guaranteed financial shenanigans.

Posted by Avocado_C > Jul 17, 2013 02:03 PM | Report Abuse
KCChong, thanks for sharing your view. What is your threshold for "a lot of debts"? FIAMMA's debt/equity ratio is 0.33 (total liablities/equity), is this low or high or average?
What is your interpretation of "value" stock? Meaning?

There is no threshold of how much debts a company should limit itself to. In a capitalist market, most companies borrow certain amount of money for their business. Important thing is the company must have adequate earnings or enough stable cash flows to pay interest of its debts. If say the cash flow coverage is good (ie, CFFO/interest>5), there is no issue of how much the debts the company has. Notice that blue chip companies like BAT, Nestle, Digi, Berjaya Toto etc carry huge amount of debts? Do you think they are likely to go bankrupt?

But for companies which don't earn much and no good cash flows, a total debt to equity ratio of 1 can be too highly geared and risky. I am sure you can find quite a number of this type of company.

Value stock for me I mean cheap stock in term of PE, Earnings yield, high dividend yield, low price-to-book etc, but with some restrictions, eg, must have a minimum growth of beating inflation, not too much geared, a certain cash flows, certain minimum ROE etc. I have been talking a lot about value stocks, haven't I?

steve, look at this way. For blue chips:

(1) Every investor wants to invest in a safe counter
(2) Most analysts cover blue chips
(3) almost all unit trusts and institutional investors own blue chips
(4) Overseas investors wishing to invest in Malaysia as they have to depend on analyst reports, and they have so much fund that only stocks they are able to invest without causing a big impact of their share price.

So that is why blue chips are usually fully valued. A blue chip with good growth potential (>5%) may not be too expensive at a PE of 15, or even 20. And I don't think it is risky to invest in blue chips at a PE of 15-30. This is because they have established business and their cash flows are more certain.

Jyen, good to be candid of yourself.

•When you realize that you are riding a dead horse, the best strategy is to dismount:

Sioux Indian proverb

hornydog, good one. I am quite sure though people like Jyen lost 90% of his investment in KNM, the insiders could have become richer and richer.

so what about Fiamma?
Posted by Avocado_C > Jul 17, 2013 12:08 AM | Report Abuse
What about- FIAMMA (Not KFIMA)?
1) ROE = 10.3% (Profit: 26.9m, Equity: 260.9m)
2) CFFO = 12.6m
FCF = 11m
3) PE ratio = 7.83 (Price @ 16 Jul: 1.69, EPS = 0.2159)
4) DY = 4.14% (Dividend 2012: 7 sen)
5) NTA = 2.02

Looking at the metrics you have computed. Here are my comments:

Fiamma doesn't appear to be a great company to me with ok lah ROE of 10.3%, less than my minimum requirement of 12%. That also depend on how clean is its balance sheet. If it has a lot of debts, I may want a ROE of at least 15% because of its riskiness.

The quality of its earnings is not good with CFFO/NI less than 50%. It should be around 100%.

However, FIAMMA may qualify as a value stock because of its low PE, low P/B and high dividend yield.

The share price of MTDACPI was 29 sen three months ago. At the current price now at 59 sen, those lucky guys who have bought MTDACPI three months ago would have made 100%! Good on you guys. But how many of you are those lucky ones?

However, I know how there must be heaps of unlucky investors who have invested in MTDACPI for long-term. Those who have bought and held the stock 10 years ago at RM3.08 would have lost 81% of their investment. Those who bought at 13.5 years ago at 7.00 lost 92%! They really want to cry also no tears 。。欲哭無淚

Appended below is how bad the return of investment like for MTDACPI for various years of holding.

Years of holding 0.5 1 2 3 5 10 13.5
MTDACPI 17/07/2013 RM0.59
Period 6-month 1 year 2-year 3 year 5 year 10 years 13.5 years
Price 0.32 0.40 0.51 0.52 0.62 3.08 7.00
Return of stock 84.4% 47.5% 16.8% 14.6% -4.1% -80.8% -91.6%
CAR 239.9% 47.5% 8.1% 4.6% -0.8% -15.2% -16.7%
Dividend 2.0% 1.6% 1.6% 1.3% 1.6% 1.1%
Stock price appreciation 239.9% 45.5% 6.5% 3.1% -2.1% -16.9% -17.9%

With the last financial year result, MTDACPI made RM43.11m. Hooray! But does it mean that MTDACPI has turned around last 10 years of continued losses? Far from it, in my opinion.

First thing strikes me in the 2012 result was 2012's revenue decreased to 258m from 326 m, but the gross profit increased to 54.3m (gross margin 21%), from 18.8m (gross margin 6%) the previous year. How come? Then I read the review of financial statement by the management:

"The Group also recorded >100% improvement in pre-tax profit
of RM43.11 million as compared to a pre-tax profit of RM2.0
million in the immediate preceding quarter. The improvement
was attributable to write back of liquidated ascertained
damages from completed projects incurred by the construction
division which was booked in the previous financial year
coupled with positive contributions from its overseas
manufacturing units. "

Yes, the profit improvement is purely a write back of LAD. Positive contributions from its overseas manufacturing units? Where? Associates and JV? That was only 6.8m. A write back of LAD has no cost and hence the increase in the gross margin. A write back of LAD cannot be considered as a revenue and profit. It is a EO item! Worse still, is it right to book in a write back in LAD as revenue?

I could not find this EO item being excluded from the cash flow statement. There is no bloody profit or cash involved. What kind of financial statement is that? Very dangerous kind of management. Accounting shenanigan?

I don’t deny that people can make short-term profit from the market., like when the company announced turnaround profit and people start chasing the stock without going deeper into the financials. And chartists make a lot of money also, but through the greater fool theory. But those are short-term euphoria, nothing to do with fundamentals, absolutely nothing!

Average price of 4.28 bought some years ago and it is now 48 sen per share. That is 90% losses! Sorry to hear that. But take this as a lesson for everyone.

1) Never chase hot stocks.
2) Never blindly chase stocks recommended by investment banks.
(a) They have different agenda. they may have business deals with this company.
(b) The analysts may not understand the company enough.
(c) The analysts may have given good recommendations because of getting "something" from the insiders. Very common.
(d) the analysts may simply very poor in their analytical skill.
3) Never chase stocks owned by flamboyant management/directors who:
(a) Always make public statements, having analyst conferences and telling the world that how good and how good, how undervalued their shares, how they intend to take the company private etc. Those are all bullshits.
(b) The management buy back shares when clearly there is no reasons to do so. Actually the insiders are the one distributing to the company.
(c) The management always talk about the company's share price, rather than their plan for the company, how to improve revenue and profits etc.

(4) You must know the company well enough before investing.
(a) Read and analyze their business, their performance etc
(b) Check facts rather than following the crowd. The more people peddling for the stocks, the more worry you should be.

(5) Don't chase the stock when there say they have expanded overseas with so so much revenue, profit etc, especially those things are not transparent. The more jobs it is going to get doesn't mean the more profit they will get. It could mean they are heading faster for big troubles if they don't have the experience to execute the jobs.

In the stock market, it is a jungle out there.

OKA ok?

Posted by hng33 > Jul 16, 2013 05:44 PM | Report Abuse
How about OKA, EPS= 9.3sen, NTA= RM 1.63, Dividend 3.5sen TE, yield at 5.5% nett

OKA Corporation Berhad is engaged in the manufacture and sale of pre-cast concrete products and ready-mixed concrete, trading of ready-mixed concrete, construction and provision of transportation, and other related services.

From the business of OKA, I can’t picture OKA as a great company. Its business is in a problematic and competitive environment. It is highly subjected to the cyclical nature of the construction industry. Net profit margin is thin between 4-5%. Inflation often adversely affect its bottom line. Bad debts and construction disputes in this industry is common.

OKA does have some decent stable earnings for the last 5 years of 5-8 m. It pays regular dividends of 3-4 sen. Last year 3.5 sen of dividend was distributed. At a price of 63.5 sen at the close of 16/7/13, the dividend yield is quite attractive. However, as I have mentioned before, research shows there is no statistical evidence to show that high dividend stocks provide high total return. OKA’s past years share price has shown that it is not an exception. So whether OKA is worth investing, may be it should be best evaluated using ColdEye’s five yardsticks.

1 ROE No 5.8% <12%
ROIC No 5.5% <WACC
2 PE ratio Yes 6.7 <20
EY (Ebit/Ev) Yes 17% >10%
3 Cash flow
CFFO Yes CFFO/NI 210%
FCF No Usually negative
4 Dividend yield Yes 5.5% >3.5%
5 P/B Yes 0.4 <2.0

The evaluation shows that it is a mix results. The operating numbers are not encouraging with ROE and ROIC less than 6%, or way below the costs of capitals. CFFO is good but it requires a lot of cash for capital expenses and hence there is generally no free cash flow except for last year.

The good parts are its high dividend yield, and low valuation with PE ratio of less than 7, earnings yield (Ebit/EV) of 17%, and a price-to-book value of 0.4.

High dividend is not sustainable if there is persistently no FCF because only from FCF there is money to distribute dividends without keep on borrowing. Do you notice that the short-term borrowing of OKA is increasing each year from 2006 until 2012? Is that a good way to distribute dividend?

For me, I place much more emphasize on operating numbers such as ROIC and free cash flow. Hence OKA doesn’t suit my taste of investment.

Kia ora - A&M Realty Bhd
Posted by leviathan > Jul 16, 2013 04:36 PM | Report Abuse

Another property development and construction company? I never read anything about their land bank, development plan, location, niche etc. Its Kota Kemuning projects seem to be doing well recently.

Looking at its financial statement also doesn't excite me; No growth. I does have a healthy balance sheet, cash rich, and profit from its business. So I have to look at it if it is a cheap stock to invest by using ColdEye's 5 yardsticks.

ColdEye 5 yardsticks
A&M 1.130
1 ROE 5.2% No
Net profit 27133
Equity 516927
2 Cash flows, average
CFFO 20009 <28600 No
FCF 15674 OK
3 PE ratio 15.2 >10 No
Price 1.130
EPS 0.0743
4 Dividend yield
Dividend , sen 0.00
Dividend yield 0.0% <3.5% No
5 Price/NTA 0.80 <1.0 Yes
NTA 1.416

As I have said, nothing excites me. It has low ROE but selling not cheap at all at a PE of 15. Besides never distribute any dividend for the last few years already. Do this realty really has so much cash ah? If so who get the benefit of the cash?

Questions :
1. I believe the aforesaid 2 items will not affect profit for the period of 42,120,000. They are not included in counting of profit of the company.
2. The aforesaid 2 items will improve the cash flow of this company.

Yeah, the above has no effect on the profit of MTDACPI. MTDACPI didn't hide it anywhere in the income statement. They show clearly these in the cash flow statement under "cash flow from investment".

Aiyah, I don't know anything about MTDACPI lah! anyway, since my opinion is sought, just bullshit a bit here lah.

The report by the Research House and the article appeared in Bloomberg are just copy and paste from the management review in MTDACPI's last financial report. They don't add any value to the report at all.

First thing strikes me in the 2012 result was 2012's revenue decreased to 258m from 326 m, but the gross profit increased to 54.3m (gross margin 21%), from 18.8m (gross margin 6%) the previous year. How come? Then I read the review of financial statement by the management:

"The Group also recorded >100% improvement in pre-tax profit
of RM43.11 million as compared to a pre-tax profit of RM2.0
million in the immediate preceding quarter. The improvement
was attributable to write back of liquidated ascertained
damages from completed projects incurred by the construction
division which was booked in the previous financial year
coupled with positive contributions from its overseas
manufacturing units. "

Yeah this is a replica of the investment bank's and Bloomberg's report. Yes, the profit improvement is purely a write back of LAD. Positive contributions from its overseas manufacturing units? Where? Associates and JV? That was only 6.8m. A wite back of LAD has no cost and hence the increase in the gross margin. A write back of LAD cannot be considered as a revenue and profit. It is a EO item! Worse still, is it right to book in a write back in LAD as revenue?

I could not find this EO item being excluded from the cash flow statement. What kind of financial statement is that? Very dangerous kind of management. Accounting shenanigan?

Well I may be wrong and i smell dead rat. Anyway, this is the opinion of someone not knowing much of MTDACPI and a non professional.

Posted by mlg123 > Jul 15, 2013 12:25 PM | Report Abuse
kcchongz,
what do you think of GUH? the company have net cash per share of 90 cents and eps is roughly 3-4 cents per share lately due to much lower contribution from its main business of PCB manufacturing.

If you want to hunt for a value property stock to invest, I think GUH may suit you. The only, yea the only, problem is its earnings will be likely to be stagnant and without any growth in the future. But as it is selling so cheaply, it is worth investing in my opinion.

Below I use ColdEye's 5 yardsticks to see if GUH is a value stock. It is yes yes and yes.

ColdEye 5 yardsticks
GUH 1.370
1 ROE 8.5% OK
Net profit 36111
Equity 422708
2 Cash flows, average
CFFO 40837 Yes
FCF 24096 Yes
3 PE ratio 6.9 Yes
Price 1.370
EPS 0.1985
4 Dividend yield
Dividend , sen 0.06
Dividend yield 4.4% >3.5% Yes
5 Price/NTA 0.60 <1.0 Yes
NTA 2.280