Normally when people ask me what PE are you going to pay, I will ask, what PEG are you getting for the next 3-5 years. (without talking about other variables yet).

When people asked me, is ROE 100% consider good, I will ask, what P/BV are you talking about? 1x or 57x.

In short, when we look at any financial metrics, please, look at it from a few angles. (many are incomplete on its own). Gearing, PE/PEG, EV/EBITDA, ROE based on what P/BV, FCF/sh, DY, etc. These are just tools for referencing for comparative purpose only.

5 minutes research

If a friend asked me, is Nestle trading at PE 56x and ROE of 100% and P/BV of 57x. Given 5 minutes only my answer is, EXPENSIVE, why, CAGR last 10 years is 7.35%. Estimating PE of 8% is natural. ROE is 100% x P/BV 57x, so it looks high. And I take a quick look at McDonald, doing at PE of 24x, so my 5 minutes answer to my friend it, HIGH. (5 minutes research can be dangerous)

VTSAX & VOO ?

Consumer street - some are leaving the ballroom. Perhaps it ran out of booze.

Extract from UOB Kayan Feb 12, 2018

Telco business RM294m
Tower business - Myanmar RM700m
Tower business - Indonesia RM67m
Tower business - Vietnam RM114m
Renewable Energy RM16m
Notional interest savings-warrants RM5.6m

Total Equity Value RM1,197m

Share base 1,135.4m

Target price (RM/share) 1.05

(Share base before warrants conversion - 871m share, not sure why they do not make another assumption of no conversion of shares? The figure may be a lot higher.)

http://www.investorsfriend.com/price-to-value-ratio/
Warren Buffet claims that PE has nothing got to do with Valuation?

1) I do not see myself as a "victim" when I follow some "fella" and lose money, be it a paper loss or a realised loss. Instead, I try to learn from it, what went wrong with myself? Did I not do my own homework properly, or just follow blindly because of FOLO.

2) Bear in mind, you can never follow "the other person's strategy". When OCK warrants spike up to say 28 sen for 2 days, I sold some, and got back some at 23 sen. So, I lowered my overall cost per unit.

3) Personally, I have a bad track record following some "fella". Because, you do not know his or her average costs, strategy, risk profile and investment period. Sometime I gain, I don't thank him, vice versa, when I lose money, I don't blame him or her.

4) Lets just share, the mother share price recover to 95 sen from 80 sen (up 19%), and warrants recover from 23 sen to 43 sen (up 87%), if you make some money, would I get a share of your 87% profits? I may have suggested to average down, but, but the followers ran out of money (say he did not spread out his investment over time).

5) First rule of investment in stocks, be responsible to yourself. Occasionally I also follow "sifu" be it, but I make sure I am responsible for my own investment. Lately, most second liners dropped like a rock, some sifu (which also author some books on investments), now all below their cost when they recommend, so, start blaming that fella again.

6) Sometimes I wonder, is it that "difficult" to make some constructive feedback in a forum. Follow the "issue" in hand, not the messenger.

1) OCK has 871 m shares.

2) All analysts on OCK used 1,135m shares, assuming full conversion of warrants (17.5% premium now). (In reality, there are no listed warrants sell at a double digits discount, which can entice the warrant holders to convert) Full conversion of 264m @ exercise price of 71 sen, it will provide a cash inflow of RM187m.

3) So, their fair value ranges from 95 sen to 100 sen, is based on 1,135m shares (full dilution)

4) Should there be no warrant conversion, the fair value SHOULD be 124 sen and 130 sen.

5) Perhaps that is the reason the MD is accumulating.

Most analysts mentioned that the loss of revenue is about RM1.9b or 20% of total revenue of RM9.7b for FYE 2017 for disposal of leasing biz. Any idea the where to get the figures for loss of EBIT and PAT from the disposal?

Not sure if is it is true, I was informed that they are restructuring their USD30m short term debt they obtained for SEATH to long term debt. (I suppose they only informed analysts)

Anyway, their coming operating cash flow is around RM120m, together with cash of RM118m, I suppose is sufficient for expansion and acquisitions.

Based on analyst report, Myanmar revenue last quarter is RM15.7m as compared against it preceding quarter of RM13.5m. (Growth of 16.2%). This will reach the blue-sky scenario UOB KayHian talk about in mid 2016 (although) it is about one year late (better late than never). I suppose they can do better than that, as they are still building about 102 towers for Telenor & more for other major telco operators and also improving its tenancy ratio. That will go beyond "blue-sky" scenario, will it?

Don't sell until its Vietnam Yamaha reach maturity (of course if the price runs a lot faster than the fundamental, we have to run first).

As announced in a separate statement, PAT* (excluding forex gain or loss),

PAT* improved to RM32.7m vs RM26.1m
EBITDA also improved to RM99m vs RM63m
EV/EBITDA also improved to 10.7x vs 11.7x

From a business perspective, OCK has gain its footage in Myanmar as a strong player with Telenor as the principal tenant and co-tenants with MPT, MyTel and Ooredoo.

Have to dig further to find out what is the forex difference of RM5.5m and other income dropped of RM1.5m whether it is recurring. EBITDA within analsyts' consensus of RM99m.

Land purchases

Semenyih RM100m
Damansara Perdana RM55m
Pontian, Johor RM149m

Total purchases RM304m

Dividend last 2 years

FYE2016 RM16m
FYE2017 RM19m

(Appears that Gadang is cash rich, when it purchases land in 2016 to 2018)

JV Land
Kwasa Land RM700m
Cyberjaya RM1,800m

Expected Cash inflow from Capital City, Johor RM220m + operating CF about RM150m.

The only way to allay the weak property sentiment in Gadang is the future profits which is expected a CAGR of 12-15% for FYE16-19.

Gadang is focus on affordable housing and landed properties which are still in demand (less negative impact). Therefore, investors need to be patience, one of the important tenets of a good investor.

@Patrick13, I have the same concern 2 years ago. Tomorrow we will see some light.

@ez6699 linked it on 15 Jan 2018, but, the link no longer available.

If I remember correctly, UOB gave Myanmar's valuation at RM705million, but they used enlarged share capital of 1.135b to calculate its fair value of RM1.05. Meaning the total SOP is about RM1.192b. @rkg you can take a look at my previous blog on OCK.

Myanmar Q3 revenue of RM13.5m is better than expected. Hope its Q4 revenue will be another surprise with higher tenancy ratio.

Last 6 days volume, about 20mil, exceed the entire last few years total volume accumulated. ??? That shows that operators can "play" very very low liquid stocks. Top 30 shareholders owns about 95%.

From a business perspective, in Myanmar (now about 700), they are doing quite well (may be a cost leader) with gradual improving tenancy ratio from other major telcos like MPT, Mytel (in discussion with Ooredoo). Towerco, with 27 years contract, is a sustainable small size "monopoly" with good cash flow (EBITDA Margin 50-65%) when tenancy ratio grow.

Similarly, they also purchase about 2,000 towers in Vietnam and gradually improving its cost and also its tenancy ratio besides expanding more towers.

(misconception of high PE. Normally for long term project, IPP, toll roads, water concessions, towerco, the capex is high (but come with >20 years contract from major telco), its initial years PE is very high due to gradual pay down of loan and high depreciation. About half of Shareholders' Funds or RM200m from rights issue and private placement is injected into towerco biz in 2016/7. It need some time to achieve its optimum tenancy ratio.)

@mianpao,
1.Gadang has 82m ESOS at 86 sen.
2.ESOS is spread over 5 years
3.Total proceed raised is RM71m.
4.Impact on NTA is 1 sen (based on enlarge share capital + SF)
5.Impact on EPS is 1 sen (based on enlarged share capital vs additional profit of say RM5m from the proceeds)
6. Theory impact on market cap is, improved RM5m profit x PE 10x = about RM50m.
7. In conclusion (divided over 5 years), negligible. (the bigger the SF, the smaller the impact, the higher the profits, the smaller the impact over the years)

Just an estimates. A very conservative estimates will be RM67m p.a. earning contribution for next 3 years. So, taking RM200m is reasonable. (lower valuation can use as buffer).

Simple calculation (using market cap instead of EV):

INNO = RM28.6k/ha
Dutaland = RM64.8k/ha
Pontian = RM74.1k/ha

(INNO's plantation = 20% immature, 15% mature (7-10 yrs), 65% young mature (4-7yrs)) Extraction rate is 24.6% for FYE2016. From a business point of view, a bargain.

Q4 production of FFB is 64,200 mt (2016: 43,200 mt), an increase of 49%.

Today's closing price of 71 sen appears a bargain compared with:
INNO has 11,905 ha, market cap is now RM340m

1) FGV bought over Pontian - RM1.2billion for 16,188 ha (Sabah)
2) Boustead bought over land from Dutaland Oct 2017 - RM750million for 11,579 ha (Sabah)

Any major negative news not reported yet?

It's announced today that EPF bought 650,000 OCK shares and its shareholding is 5.0001% as of yesterday. EPF may have taken a year to accumulate this much shares. Hope they are here for a long haul.

Q3 - Myanmar towerco biz produced revenue of RM13.5m, better than expected, not many aware of this, as reported by UOB KayHian analyst. Imagine, only 650 towers (if we annualise Q3) is equal to RM54m, the full 920 towers will be RM76m, what UOB KayHian called it 'blue sky scenerio" - TP1.30

consumer stocks are sensitive to inflation and interest rates as well. price increase is common with better features. (one cent increase for coke is equal to additional USD6.45 billion profits).

Vietnam growth may be one of the catalyst for its Yamaha motorbike business coupled with recovery of sales in Malaysia. Yamaha is a sustainable "brand" and "moat". It's just waiting for more investors to discover it.

Forget about the price first (RM10.98), go get an estimates of the value, then compare with the price. Always look at 2-3 years in advance, if you can see something/catalyst that others haven't seen it, your return will be above consensus.

Growth only add value when ROIC > COC. Focus on its capital allocation, make an estimates between its ROIC vs COC on its RM149 million investment. Was told the GDV is RM550 million.

@azlan88 mentioned OCK has about USD69m term loan outstanding. It will be effected marginally by the increase rate by the Fed. The other positive side is, it will also benefit marginally from the appreciation of RM lately (10%), for its repayment and also new capex.

Interesting disclosure on Gadang:

1) CITIGROUP NOMINEES (TEMPATAN) SDN BHD EMPLOYEES PROVIDENT FUND BOARD - 23,210,500 shares
2) CITIGROUP NOMINEES (TEMPATAN) SDN BHD EMPLOYEES PROVIDENT FD BD (PHEIM) - 4,461,400 shares
3) CITIGROUP NOMINEES (TEMPATAN) SDN BHD EMPLOYEES PROVIDENT FD BD(TEMPLETON) - 2,413,350 shares
4) CITIGROUP NOMINEES (TEMPATAN) SDN BHD EMPLYS PRVNT FD BD(RHBISLAMIC)IC - 10,584,400 shares
5) CITIGROUP NOMINEES (TEMPATAN) SDN BHD EMPLYS PRVNT FD BD(F.TEMISLAMIC) IC - 4,113,300 shares

2017 - EPF gave 6.9%
2018 - Hopefully higher

It is fine for layman not to understand how PE works. But it is an embarrassment that some refuse to learn about it and keep harping as if they know what is high PE or low PE all about. Sigh......

That is why they will never understand why toll roads, plantation, IPPs, water concessions, solar energy and tech stocks will always has high PE before the full earnings comes in after a few years of commencement.

Expected completion by June 2019, one and a half year from now.

I hope investors will not get freaked out if they receive about RM220m in the next 2 years from Capital City.

Came out in the Edge Daily, the Johor Land GDV is about RM550m, or RM560k per unit, slightly lower than Setia Eco (selling at RM600k) seems reasonable. After all, it is a landed properties, hopefully demand is not too bad.

Good fundamental stock with growth. Currently undervalue due to one off impairment. Making about more than RM330m p.a. this FYE.

@bpng thanks for the info.

i3 needs more people to contribute (like bpng0904, VFTRADER, zai zai, ez6699, etc for OCK) good info/knowledge that can be applied in the real world.

In fact negative news/info on OCK is also welcome. Else, i3 become a "gossip" website.

If we still believe that long term, the market is a weighing machine, Gadang potential is good, both in value and growth (because the next 3 years average PAT is about RM130p.a or more., now is only RM100m).

FA does not tell you the direction of the stock price. Liquidity and sentiment will.

(Hap Seng Consolidated stagnant for 5-6 years (when it was around RM2), until the last 4 years, it went up 5x (from RM2 to RM10), not many can hold that long.

Gadang is anticipating to receive huge cash inflow from Capital City. For manufacturing, it will expand the capacity by starting a new manufacturing line, so, it is very natural for property developer to increase capacity by buying new land banks.

Including this purchase, Gadang has bought about RM300m worth of land over a year plus + entered one or two JVs with land owners for property development, which has increase drastically its GDV, from perhaps RM3b to RM5b. Of course, depends on the scale, it may takes many years to develop. More importantly, Gadang is able to sell, on the pretext the location is in demand.

Unfortunately, sentiment towards property development is negative due to "glut" in a few segments like luxury condos, retails, offices, shoplots etc. For landed properties, demand is still positive.

After all, based on the plot of 78 acres purchased, they are only allow to build 12 units per acre, total of about 900 units. With a good location, demand should be there. Anyway, it takes time, its not immediate. (if we look at IJM Corp or Gamuda, both went into property development, and if you look into their past earnings, you will not be able to tell what is the property sector contributing. As long as it makes reasonable cash flow, it is a good business, although its tough. Even Scientex, a manufacturing company, did quite well in its property development foray).

The land they invested for Capital City, Johor, is only RM30m over 20 years ago, today, they get share of GDV of RM326m, a very respectable return.

Property has similarity like restaurants. Property is for location, restaurant is for taste, so it is very difficult to generalised the entire property sector industry. Just like some restaurants (also glut), some property developers are doing good, despite generally sentiment (due to overbuilt) is not good.

The critical issue here is the ability to sell. Good location (like good taste), normally will attract buyers (customers).

sorry, it takes 1-3 months to build. Can generate revenue almost immediately, unlike toll roads, plantations, and IPP, which the first 3-4 years, there is no revenue, and toll roads traffic projections is uncertain or very low at the beginning, there may be higher cost overrun, due to the duration it takes to build them (cost of material fluctuates), similar to IPP (cost overrun, delay, inability to start like the Indian IPP, many other issues).

@SSP, actually it wouldn't harm if Mr Fong Shiling explains why he bought 2,000,000 warrants because many retail investors look up to him and also want to know.

On top of that, SSP you are right, we also need serious long term investors (with deep pocket, foreign or local doesn't matter) to accumulate aggressively at this low level (84 sen). After which, once it met all the technical indicators, it will attract traders and improve the liquidity.

Unfortunately, not many retail investors at the moment understand towerco business model (lack of reference in Malaysia other than Edotco, which is yet to be listed).

In fact, if we research carefully, towerco business model is better than toll operators, IPPs, Plantations, because they take 3 months to build, can lease for 27 years, low maintenance, useful life is 50% longer than accounting depreciation of 20 years. That's why, for heavy capital company like this, we should look at the company Operating Profits instead, which is more than 50% of revenue.

Remember, today is only RM730m market cap, UOB gave it about RM1,200m (as reference). For new retail investors, this is a good long term stock, why? earning is expanding, not only that, operating margin is also expanding and towerco biz is a sustainable biz (>20 years), not many around traded at such discount.

Bought a piece of 78acres residential land (12 units per acre) connected to Second Link Highway and surrounded by Setia Eco Garden from Vincent Tan, for RM149m. Should be positive (strategic location). (although sentiment wise at the moment is not so positive, but most importantly, the location is good, hence, potential profits will be good.

1. UOB Kay Hian (dated 12 Jan 2018) research gave the Towerco biz = RM900m and Telco service biz = RM300m. Total fair value or TP is about RM1.2b.

2. At the moment (6 Feb 2018) the market cap is RM733m (84sen). Upside, about RM500m.

3. Towerco biz - leasing of 27 years (co-tenant is about 15 years). Long term sustainable, increasing capacity and also profit margin.

Will be recognise when edotco go for listing. ROI is about 12-15% (depends on tenancy ratio). Towerco biz is a little bit better than toll, IPP and plantation. More investor will recognise it when they see its Sales and EBITDA and PAT expansion every year.

Next 1-3 years, its margin is expanding (EBITDA Margin from higher tenancy ratio) & its capacity is also expanding (New towers + higher tenancy ratio + acquisition) = improved valuation.

Valuation (PE or P/BV or FCF or DCF) does not determine the direction of the market (or stock), it only determine the market risk, it is the sentiment (confidence) & liquidity (Fed's action) that drives the market.

sold some coin, bought some ock wa.

Perhaps, the Company should consider to do a share buyback (since it is below its intrinsic value).

MD bought 6.6m shares last 6 months (DIRECT INTEREST), about RM1.10-1.30 (equivalent to about RM3.20 including bonus, split, dividend). The last time he sold (DIRECT INTEREST) was in Sep 2016, at about RM2.90. I remember he mentioned, his DIRECT INTEREST is for pocket money.

I remembered he was "laughed at" for investing (c. 20%) in GPacket at around 30sen, now is about 56sen, and I think he is laughing to the bank. I think he doubled in less than 4 years. As far as I know, he is very conservative MD.

Last 2 years, he bought almost RM160m of land, for long term development. Remember, many years back, Gadang invested into Tampoi land, Johor for RM30m, now, share of profit for the land is RM320m. Make 10-fold, not too bad. Good thing, it is risk free, only provide land, and able to share up to RM320m. Perhaps, this is called foresight?

Despite improvements in fundamental, still remains a hidden gem.

OCK's broad strategy is to attain 5,000 towers in ASEAN countries, almost 80% higher from current 2,800 towers. With improving tenancy, EBITDA growth will accelerate. CAGR on profits will widen from 11% to 15%.

@Dylan+@Value One of the contract secured from TRX City is RM327m, Gadang:CRFG, 51:49. Effectively Gadang's portion is RM167m.

Last 3 years average construction PBT Margin is 16% p.a. 1H FYE2018 is 26%.

FYE 2018 estimated > FYE2017 by RM10-20m

The PBT for 1H, construction:property ratio is 70:30 vs 40:60 (last year), it is good (Construction enjoy higher PE). Looks like Capital City's recognition will only be in over the 2nd Half, likely will be a bulky one. With construction improving + exceptional gain from Capital City = good prospect.

Valuation does not determine the timing of share price movements. Price are also effected by elements not easily measurable like liquidity, popularity, volatility and sentimentality. However, in the long run, the price will catch up with the intrinsic value of the company as its fundamental keep improving.

Fundamentally it has improved. The order book today RM1.98b, is same as the aggregate of the revenue for construction of the last 5 years. With growth in contribution from property, it has added an additional complementary segment. Concession assets also increased 5 fold since 2013. When it's raining gold, reach for a bucket, not a thimble (WB).