Posted by kcchongnz > 2013-10-18 08:29 | Report Abuse

A good article by 夜月 on what cash flow is.

Some people why I don't use PE ratio to value a stock. that is it.

The "E" in this PE ratio is an accounting number. It is not cash. It depends on how accountant recognized that E. That E could be hidden in the inventories, which could be much less than the actual value. The value and quantum of E could have been recognized by what the company thinks it is, by not by the debtors. for example in construction, the contractors can claim for all kind of additional costs such as variation orders, loss of profit and expenses, additional work beyond the contract agreement etc. But are all these claims true? Often not according to the clients and consultants.

Companies also manipulate this E big time often. For example, companies capitalize marketing cost rather than expending them; take one time off gain as if it is regular E etc. There are thousand ways this E can be manipulated.

Cash flow is not that easy to manipulate because it involves real cash, affecting the bank balance of a company. But it doesn't mean the company cannot manipulate at all. One can see many Chinese companies having good profit and cash flows too. And they can also show you the bank statement that they have plenty of cash (note cash flow is not cash in banks). But can one verify whether if this cash is real? Can one goes to the Chinese banks to verify? Wonder why these "great" Chinese companies nobody wants to invest?

Basically if you invest in a company your friend asks you to, are you happy to hear him saying the company making a lot of money, but tell you to put in more and more because those money is still owed by the debtors for so long already. Or you have to put in more money because the equipment need to be maintained or have to buy more new equipment.

Or will you be happier if your friend tells you the business is making 20% return and now he gives you 15% dividend and the rest reinvested for more profit next time?

Posted by sense maker > 2013-10-18 09:34 | Report Abuse

Chinese companies listed on KLSE show fantastic level of cash and bank balances but most cash and bank balances, if not all, cannot be reconciled to interest income, suggesting most cash and bank was moved in before quarterly closing and out thereafter by the management.

They need only to pay good dividend obviously to overcome any stigma but most have been paying none, which speaks volume about the philosophy of the controlling shareholders treating the companies as all theirs, disregarding the need of minority interest.

Lastly and most importantly, whatever shown on FS may disappear one day with the controlling shareholder and it is quite impossible to track them down as China is like a world by itself. Minority shareholders can do nothing at all while the controlling shareholders enjoy their wealth in unknown corner of the world, if and when that happens.

Posted by iafx > 2013-10-18 09:39 | Report Abuse

kfima, ptaras, fibon, haio, pmcorp etc all have symptoms like the above, included?

ada hantu!? hahaHAHhahahaha...

Posted by kcchongnz > 2013-10-18 09:49 | Report Abuse

In this cyber space, there are all kinds of people. There are people who talk sense and we can learn from them, like sense maker. There are people who know nothing and we don't know wtf he is talking about, like this guy iafx with the statement above who never dare to swear that he did not cheat by altering the word "Revenue" to "Profit" in the Kfima thread, and yet accused others for doing so.

Posted by iafx > 2013-10-18 09:55 | Report Abuse

oh ya... forgotten, kcchongnz cheated by modified other's comment to suit her statement, later claimed ghost did it!

not to mention about her wonderful "explanation" of PE, pusing & pusing & pusing!

hahahahAHAHhahahaha...

Posted by kcchongnz > 2013-10-18 10:29 | Report Abuse

Ha, I have sworn in the Kfima thread that I did not do such a low class thing. Have you?

Posted by iafx > 2013-10-18 10:42 | Report Abuse

Ha, anyone asked u to sworn? obviously, siapa curi tipu, siapa rasa pedas!

Posted by kcchongnz > 2013-10-18 11:22 | Report Abuse

Sorry guys here, whenever i am attacked for curi tipu, I would like to console myself with some real figures.

New Portfolio Return 18/10/13
Two months 18 days have passed since we first started our portfolio. In this period, KLCI has risen marginally from 1773 to 1798, or 1.4%. but how have our portfolios performed at real time now? Please refer to the thread below:

http://klse.i3investor.com/servlets/pfs/19386.jsp

kcchongnz's portfolio has gained an average of 11.3% in the period. That means the portfolio has returned an alpha of 9.8% using the KLCI as a benchmark. 9 out of the 11 stocks made positive return with 4 of them in double digit percentage. They are Datasonic (47.2%), Fibon (33.3%), Pintaras (21.8%) and Daiman (13%). The only two losers only lost marginally, Kfima (-3.9%) and Willoglen at just -2.8%. Details of the return of the portfolio is appended below.


Yes, many counters here were chosen based on good cash flows. So from the results so far in two months, nobody can ridicule me of tipu pusing, bullshit, con people, bluffing, cheating etc, at least for this short-term. Can he?

Ref date Now
New 1/08/2013 18/10/2013
Pintaras 4.990 6.080 0.000 1.090 21.8%
Kfima 2.060 1.900 0.080 -0.080 -3.9%
MFCB 1.700 1.820 0.030 0.150 8.8%
Haio 2.670 2.690 0.000 0.020 0.7%
Fibon 0.330 0.440 0.000 0.110 33.3%
CBIP 2.830 2.890 0.000 0.060 2.1%
Tien Wah 2.510 2.520 0.077 0.087 3.5%
Homeritz 0.430 0.420 0.010 0.000 0.0%
Willow 0.530 0.515 0.000 -0.015 -2.8%
Daiman 2.530 2.860 0.000 0.330 13.0%
Datasonic 3.350 4.930 0.000 1.580 47.2%

Average xxxx xxxx xxxx xxxx 11.26%
KLSE 1773 1798 xxxx 25.000 1.41%
Alpha xxxx xxxx xxxx xxxx 9.8%