Posted by Phileo Peter > 2014-05-15 17:37 | Report Abuse

你的评论让我受益不浅。谢谢！

Posted by Chin Yong Cheong > 2014-05-17 02:13 | Report Abuse

Hi kcchong, I don't think London Biscuit is selling at a lower valuation as compared to Apollo. Quite the contrary, I believe London Biscuit is selling at quite an expensive value compared to Apollo.

Yes, London Biscuit shows a fantastic growth in its sales, representing a CAGR of 18.99% since it was listed in 2001. During the same period of time, Apollo sales just grew at a CAGR of 6.83%. However, operating margin of London Biscuit was deteriorating from 25% in 2002 to just 11% in year 2013. On the other hand, Apollo able to maintain its operating margin in the range of 12% - 16% average.

Another thing worth to take note is the CAPEX / Sales of both company.

For London Biscuit:

2007 - 32.87%
2008 - 18.04%
2009 - 17.58%
2010 - 21.33%
2011 - 12.64%
2012 - 36.16%
2013 - 7.59%
______________

Average: 20.88%
______________

For Apollo:

2007 - 11.73%
2008 - 6.20%
2009 - 8.72%
2010 - 8.99%
2011 - 7.98%
2012 - 4.84%
2013 - 2.89%
______________

Average: 7.34%
______________

For some reasons London Biscuit just spend a lot more on capital expenditure.

For the valuation part of Apollo, with the assumption of 5% growth, operating margin 15%, terminal growth 3% and discount rate of 10%, it worth RM4.67 per share which I think the current price is quite fairly valued.

For London Biscuit - I got a negative value from my model......

Posted by kcchongnz > 2014-05-17 09:00 | Report Abuse

Good analysis Chin Yong.

PE wise, Lonbisc at 9.9 is lower than 12.1 of Apollo. But PE ratio is too superficial a metric to use to compare value of two companies. It is unreliable as clearly demonstrated by this example. Measured with other better metrics, LonBisc is definitely not undervalued. I would even say, it is highly overvalued.

A stock price cannot have a negative value. This is because as a company, the shareholders are not liable to the debt and liabilities of the company. Hence the minimum value is zero, not negative.

Posted by calvintaneng > 2014-05-17 09:29 | Report Abuse

Yes Chin Yong,

London Biscuit has been spending a horrendous amount of money in breaking into the market share of Apollo Food in the Low cost soft cakes & wafers.

1) "London Choco Roll" has been promoted Aggressively and Repeatedly Year After Year on Singapore TV. With the Increasing Value of Sing Dollar it only gets more and more expensive for London Biscuit every year.

2) London Biscuit even took up Advertisement Space in JB Downtown. Paying RM300,000 (2 year contract) for an ad space on a ROOFTOP 20 feet by 60 feet Sign Board. It was a Very Strategic Location.

3) Even in the Factory Heart Land No money or effort is spared to erect the MOST ULTRA MODERN & EXPENSIVE SIGNAGE ON LONDON BISCUIT FACTORY In Taman Desa Cermelang, Johor.

All These relentless & aggressively spending in Fighting to capture market share against Apollo Food has taken a toll on London Biscuit's profits.

It remain to be seen whether these concerted and concentrated efforts and expenditure will translate into long term sales for London Biscuits or just money gone down the drain.

Posted by lmenwe > 2014-05-19 15:03 | Report Abuse

Erm I think everyone here had missed all the questionable acquisitions done by the management in the past. Where is Ze Moola had clearly discuss what a poor job had been done by the management!

Posted by kcchongnz > 2014-05-19 15:29 | Report Abuse

What kind of management in London Biscuits?

http://klse.i3investor.com/blogs/kianweiaritcles/40683.jsp

Posted by lmenwe > 2014-05-19 16:25 | Report Abuse

http://whereiszemoola.blogspot.com/search/label/London%20Biscuits
Pls go here to have a look.

Posted by cheongcy > 2014-05-20 12:21 | Report Abuse

1.请问伦敦食品近期的业绩表现，接下来的展望如何？
2.该公司资本开销是否会拖累业绩？
3.目前股价约90仙，属于昂贵吗？值得买入吗？
4.股息表现如何？有什么可以期待？
答
伦敦食品（LONBISC，7126，主板消费产品股）虽然是个小型消费股，不过自2002年上市以来，已成功连续12年获得净利。
我们认为，这符合消费领域的稳定趋势，因消费股大致上都是获利企业。
该公司是大马最大的糕饼制造商，产品包括什锦蛋糕、糖果、薄脆饼和零食等。
厂房分别位于柔佛的Ulu Tiram、巴西古当，及雪兰莪的斯里肯邦安、直落坡（Telok Panglima Garang）。
在三年连续出现净利萎缩后，伦敦食品的净利在2013财年增长11%，至1236万令吉。
更重要的是，走势成功延续至今年首季，录得926万令吉净利，按年扬25%。
该公司早前的净利萎缩，主要是因为2010至2012财年时，曾投入高额资金在提升产能、现代化设备和机械上。
资本开销减少
不过，投入庞大资金的时期已来到尾声，因2013财年的资本开销，仅企于2201万令吉，较过去三年平均5627万令吉的资本开销要低61%。
整体而言，我们预计2014及2015财年的净利增长，可分别达15%和14%，比我们所追踪的其他饮食消费股项要高，因后者的增长局限在5%至12%。
受惠于过去四年的投资计划，2014财年的净利料扬15%，报1420万令吉。
管理层曾披露，生产线的增加将让其获得新商机。
我们正面看待此事，因伦敦食品的净利复苏还在初期阶段，因此长期前景料更加明亮，特别是出口市场的新商机。
本益比折价不合理
伦敦食品目前正以9.2倍本益比的水平交易，比同行平均11倍本益比折价16%。
此外，目前的交易价位也只是2.17令吉账面价值的0.42倍。
我们认为，折价是不合理的，因该股的净利正稳健复苏中，获利能力也较其他消费股高。
伦敦食品首季的净负债率，已从2011财年时的0.77倍，显著下降至0.63倍。
现金流改善
虽然其净负债仍比其他饮食消费同行来得高，惟我们正面看待其不断下降的负债率，因这显示净现金流已获改善，且正逐渐将净负债削减至健康水平。
另外，该公司的高资本开销时期已过，伦敦食品理应开始享有较好的现金流。
我们估计该股总回酬可达30.6%，投资评级为“短线买进”，目标价格是1.18令吉。

Source: http://www.nanyang.com/node/622156?tid=687


"该公司早前的净利萎缩，主要是因为2010至2012财年时，曾投入高额资金在提升产能、现代化设备和机械上。"

---> The high capex only happened in 2010 - 2012?

Posted by kcchongnz > 2014-05-20 19:31 | Report Abuse

伦敦食品（LONBISC，7126，主板消费产品股）虽然是个小型消费股，不过自2002年上市以来，已成功连续12年获得净利。

Me:
1) What kind of profit LonBisc made for all these years?
2) If it has been making money every year, how come the balance sheet is deteriorating unabated from a total debt of increases every year (yes every year, no joke) from less than 100m 10 years ago to 260m now?
3) Where has the so-called "earnings" gone?
4) This is despite that there have been a number of cash calls throughout the years when shareholders forked in more money into the business.
5) Earnings reinvested into the business? What kind of return is this "reinvested capital"? 4%? Good?
6) Profit every year? Show me the cash.
7) Without fail, every year LonBisc has negative free cash flows. It even have to borrow money to pay dividends. I haven't seen a company with that poor free cash flows, hardly.

在三年连续出现净利萎缩后，伦敦食品的净利在2013财年增长11%，至1236万令吉。
更重要的是，走势成功延续至今年首季，录得926万令吉净利，按年扬25%。

Me: Don't bullshit to shareholders about net profit. It is terrible to borrow money at 5% and earned a return of capital of 4%. Talk about return of capital. You can fool most people most of the time, but you can't fool everyone all the time.

该公司早前的净利萎缩，主要是因为2010至2012财年时，曾投入高额资金在提升产能、现代化设备和机械上。

Me: Only high capital expenses in 2010 to 2012? Another bullshit. My record shows capital expenses of average 50m every year.That is more than three times its so-called net profit averaging every year.

资本开销减少
不过，投入庞大资金的时期已来到尾声，因2013财年的资本开销，仅企于2201万令吉，较过去三年平均5627万令吉的资本开销要低61%。

Me: Really? You have been bullshitting all these years. What can induce me to trust you in the future?

整体而言，我们预计2014及2015财年的净利增长，可分别达15%和14%，比我们所追踪的其他饮食消费股项要高，因后者的增长局限在5%至12%。
受惠于过去四年的投资计划，2014财年的净利料扬15%，报1420万令吉。

Talk to me about return of capital and cash flow. don't bullshit about net profit.

管理层曾披露，生产线的增加将让其获得新商机。
我们正面看待此事，因伦敦食品的净利复苏还在初期阶段，因此长期前景料更加明亮，特别是出口市场的新商机。
本益比折价不合理
伦敦食品目前正以9.2倍本益比的水平交易，比同行平均11倍本益比折价16%。

PE low? First you must know what kind of "E" is LonBisc producing. Secondly you got the wrong metric to compare with other companies. LonBisc has loads of debts but most other don't have any borrowings at all.

此外，目前的交易价位也只是2.17令吉账面价值的0.42倍。

P/B low? What kind of book value it has? Cash, or some dated plant and machinery worth 517m or 3.60 per share? How much can this plant fetch in a fire sale?

我们认为，折价是不合理的，因该股的净利正稳健复苏中，获利能力也较其他消费股高。
伦敦食品首季的净负债率，已从2011财年时的0.77倍，显著下降至0.63倍。
现金流改善

Talk about debt-to-equity ratio? Why don't talk about its total debts still increasing unabated from 2011 to now?

虽然其净负债仍比其他饮食消费同行来得高，惟我们正面看待其不断下降的负债率，因这显示净现金流已获改善，且正逐渐将净负债削减至健康水平。
另外，该公司的高资本开销时期已过，伦敦食品理应开始享有较好的现金流。

Improving cash flow? What makes me to believe when for the last 10 years, you don't even have one year of positive free cash flow?

我们估计该股总回酬可达30.6%，投资评级为“短线买进”，目标价格是1.18令吉。

Source: http://www.nanyang.com/node/622156?tid=687


"该公司早前的净利萎缩，主要是因为2010至2012财年时，曾投入高额资金在提升产能、现代化设备和机械

Posted by stockoperator > 2014-05-21 17:32 | Report Abuse

Dear friends, KC reply is typical. You really need to analyse tons of company to come out answer in a seconds.

Posted by dragonking > 2014-05-21 17:56 | Report Abuse

london biscuit cakes not sedap as apollo layer cake. Too kedekut in filing.

Posted by lching > 2014-05-21 18:11 | Report Abuse

impressive reply!

Posted by cy1988 > 2014-05-25 15:14 | Report Abuse

kcchongnz
Talk about the return of capital ,there are some diff version,
What version did you use. is it NOPAT/(Total borrowing +Total Equity -cash)=answer?
And usuallyhow many percent of return of capital did you think is good,above 10 %?
Appreciate your reply

Posted by kcchongnz > 2014-05-25 16:14 | Report Abuse

Posted by cy1988 > May 25, 2014 03:14 PM | Report Abuse
kcchongnz
Talk about the return of capital ,there are some diff version,
What version did you use. is it NOPAT/(Total borrowing +Total Equity -cash)=answer?
And usuallyhow many percent of return of capital did you think is good,above 10 %?
Appreciate your reply

Yes, there are different versions of return of capital. The difference is what do you consider as invested capital.

Obviously the ROC must be higher than the cost of capital, and cost of capital for different companies are not the same.

Posted by cy1988 > 2014-05-25 18:05 | Report Abuse

kcchongnz
How u define cost of capital?which thing should I add up to cost of capital in the balance sheet?

Posted by kcchongnz > 2014-05-25 18:15 | Report Abuse

Posted by cy1988 > May 25, 2014 06:05 PM | Report Abuse
kcchongnz
How u define cost of capital?which thing should I add up to cost of capital in the balance sheet?

If you as an investor, intend to invest in a company's stock, what would be your required return? Take into consideration your opportunity cost, and the risks involved in that particular company and the stock market as a whole.

If a company borrows money for its operations, what would be its cost of this borrowings?

Say the earlier one is x%, and the later one is y%, and its capital structure is 60% equity and 40% debt, so theoretically its weighted average cost of capital (WACC) is x*60%+y*40%.

Yeah, that is theoretical.

Posted by AyamTua > 2014-05-25 18:27 | Report Abuse

stockoperator: if one tries to understand kcchongnz - one can see kcchongnz style of investment is based on certainties ... not on hope, not on wishful thinking etc etc .. some likes it slow, some like it fast. by now we all should understand his objective views.

kcchongnz: how about EAH ? what your view ? ok or not ok - appreciate details but if not worth your time - tak apa . im just asking

thank you big man.

Posted by kcchongnz > 2014-05-25 19:22 | Report Abuse

EAH, yeah a hot stock?

I still remember vividly how a famous Malaysian financial blogger posted a number of articles on the rosy prospect of EAH, with its acquisition of a RFID company, DDSB about two years ago. He said EAH was so clever in acquisition of DDSB, such a fantastic company at such a cheap price. And that EAH’s business was going to rocket to the sky. At that time I was thinking myself, if DDSB is such a great company, why did they sell to EAH at such a cheap price? What is this EAH so special?

So what happen after that acquisition? Yes, EAH’s revenue has increased from 21m to 92m from 2010 to 2013, or close to 500%. This is a huge increase, but the absolute revenue is still a small number. More important is what happened to its bottom line? Yes, profit also more than doubled from 4.1m to 9.3m for the same period, but it is still a very small number. Before the shareholders jump in joy, they must be reminded that the number of shares have increased from 155m to 426m now, about three times the number more. This increase in the number of shares was a result of a right, bonus and share split carried out two years ago. And don’t forget, there are warrant A and B also.

After 2013, there are more bonus and right issues. I am just lazy to follow all these corporate exercise. Let us just focus on its business.
The return on equity for EAH last year is 13% and return on invested capital 11%, nothing to shout about. In fact I would rate them as bad as these type of business normally have much higher ROE and ROIC. They were actually halved post acquisition of apa itu DDSB.

The quality of earnings for EAH is very poor. Cash flow from operation last year is a meagre 2.7m, or 53% (<<100%) of net profit. There is little free cash flows left after capital expenses of 2.7m. Balance sheet wise, much of its net asset is made up of “Goodwill”, an over payment on the acquisition of DDSB above its book value.

So even if EAH is seemingly “cheap”, which at 13.5 sen, is trading at a PE ratio of 6.4 and price-to-book of 1.0, I wouldn’t want to include it in my portfolio.

And again don’t forget about its huge amount of warrants which will have a claim of what the company earns.

Yeah, I have not included its apa itu future which is so bright as projected by some people.

Posted by Intelligent Investor > 2014-05-29 16:51 | Report Abuse

Mr Chong, I have summarized the red flag on LONBISC http://intelligentinvestor8.blogspot.com/2014/05/red-flag-on-lonbisc.html

I really appreciate all your post. Thanks for spending time and effort to provide guidance to us.