core profits or not is analysts short cut, big funds looks at 3 things....management is good, business model is good and the figures are good. trust your own judgement.
< Posted by fayeTan > Jan 10, 2016 08:10 PM | Report Abuse
Letitgo, in such case one should look at core net profit... Which means exclude out all forex gain or loss... And all other one off items..>
on Vietnam wages., recently I gooogled the ILO wages report. I was totally fascinated. Vietnam wages at 1/3 of Malaysia and China average wages actually already higher than Malaysia. fascinating stuff.
I love it when Malaysian companies go to Vietnam to expand...get involved in the fastest growing economy in the world...like Latitude Tree, This Chinwell, Keinhin....many many others... This are the smart guys.
If you can tap into the growing Vietnam market, even better.
too much focus on forex gain, core profits etc....not enough focus on what is really going on....ie margin expansions, management and business model is the downfall of lazy analysts.
<Posted by YOLOOOO > Jan 10, 2016 10:20 PM | Report Abuse
Mr. letitgo, is chinwel only company experiencing wages hikes in the world? Can't they increase their pricing for making up the hikes? As long as the RM vs US is staying above RM4.00, there is no reason why chinwel & other export counters to will not do well. This stock has no debt denominated in U.S. Dollar which will otherwise worry me.
You can argue whatever point you want. Ultimately, the prevailing share price post next QE will decide who is right and who is wrong I think you better rename your article title to "Chinwel: I missed the boat, I hate it when I see its share prices going up, up & up".
wow...too much in-depth accounting thingy...just a few greenhorn questions: 1) chinwell doesnt do any hedging at all to prevent whatever u mentioned from happening? 2) For Q2 (oct-dec), usd-myr has increased close to 20% quarter-to-quarter (3.5 to 4.2 in average). Will it help to improve its revenue as well as margin purely due to this forex effect? Appreciate advice from fellow sifus.
Me personally is very optimistic about the coming quarter result after reading the qr since 2011 and I have found one interesting thing which is when reading the B3 statement which is the "Prospect", I have found that the management is very careful in using the "word" like shown in the 2015 Nov qr.
It is stated that: Barring any unforeseen circumstances, the Group anticipates satisfactory performance and "growth" in the "next coming quarter".
It is not "the current financial year" or "for the financial year end 27 Aug 2016"
You can view the B3 statement from qr 2011 to 2015 and referring to the each quarter result
I think chinwell profit will slightly higher in coming quarter. sales in USD around RM 4.20. while in previous quarter only RM4.00. The unrealised loss only adjustment on balance sheet item ie bank and debtors or creditors.Low raw material cost will increase its profit margin
Veim82k6: gross profit will improve by abit. But the main point is realised and unrealised portion will gone in next quarter and replace by realised loss. Hence the profit will go back to square in next quarter.
Currently the share price have go up by 32percent since release of last quarter result. Imagine next quarter result come out, the profit same with last year, what is the impact to share price?
One quarter didn't reflect the whole pictures of Chinwell. Why focus on chinwell only? All exports are the same like comcorp, Flbhd,sam , Homeriz and others.
I think the writer of this article sold chinwel too early or jealous on those people who are holding chinwel. if not why he is so interested in spending so much time doing so much work on chinwel to post this article. There are so many goods stocks, Why want keep writing on sth bad on dun spend the time on researching on those potential stocks.
Letitgo, good insight. I do share the same thoughts as you, some people are just blindly rushing into the "export play theme" without checking out the core performance of the company
i dont know what is he trying to write!! When a margin can be maintained, a profit of US$ 10,000 is worth RM 44,000 if USDMYR maintained at 4.4, so the margin in RM term will be higher when compared with USDMYR 3.80. As far as gross margin is concerned, a weak Ringgit will make Chinwell attractive.
The party for those exporters counters will over sooner or later. Whoever the last will be crying with no tears to hold the baby!Everyone should be thanking letitgo for reminding.
some people see a company from a mere static point of view, some people analyse a company on dynamic, developing point of view, so the conclusion drawn is very much different. for investors who aim for future growth, and benefit from such growth,is the aim of investment.If you only see a static world and pessimistic about it ,then no point invest.
letitgo, do not care about some people here. This is a good article... After all, you only find out who is swimming naked when the tide goes out.
But, I believe your explanation is clear enough to tell everyone to beware of such unsustainable growth...
They don't care about gross margin/net profit margin/ROE/ROIC and etc. To them, "investment" is just as simple as looking at EPS.
However, if chinwell continues to remain same profit margin and revenue, is it going to grow? The answer is NO. Opps, it might grow provided USDMYR continue to go higher, 1:5???
However, that's good enough to them :) Efficiency of a company just a joke to them :)
Probability, you are right that FLBHD is not the same with ChinWell. At least, the growth margin is extra 5% higher. This is the "growth" I observed but how could it have 300% of profit increase with 5% of gross margin increase? It is again due to strong USD. However, revenue growth of FLBHD still play a part. If I discounted away "other operating income", its profit still increase by 2m+ compared to last year... So, FLBHD is still fine but it is not 300% like what you actually see... But you need to beware if the revenue growth is due to what reasons.(again, due to USD???hmmm... then you might see its bottleneck after a year..)
The author is talking about efficiency of a company and further growth of a company...he had pointed out so clearly that the "increase of profit is mainly due to OTHER OPERATING INCOME"... how do you expect the other operating income to increase further if USD didn't go strong forever??? A growing company needs to have its gross margin to continue improve as well as its revenue... Do you see this in the latest qtr result? At least I don't... Is it going to be forever like this? We don't know... The author is just telling you the truth... do not expect too much...
Perhaps, he is just talking too far away while you guys are talking about ~1 year... if chinwell is able to make up their price, then they wont be maintaining the same/similar gross margin over a year...
========================================================= buddyinvest Mr. letitgo, is chinwel only company experiencing wages hikes in the world? Can't they increase their pricing for making up the hikes? As long as the RM vs US is staying above RM4.00, there is no reason why chinwel & other export counters to will not do well. This stock has no debt denominated in U.S. Dollar which will otherwise worry me.
You can argue whatever point you want. Ultimately, the prevailing share price post next QE will decide who is right and who is wrong I think you better rename your article title to "Chinwel: I missed the boat, I hate it when I see its share prices going up, up & up".
Hi letitgo, Thanks for your sharing. I do have one question and hope you can share your thought so that I can learn more. I am not sure how realized/unrealized gain will impact on topline revenue or bottomline. Please see my simple example below: Using 3 quarter as comparison, occurrence of realized/unrealized gain and their impact on profit: 1st Quarter USD 1 = RM3 Sold product at USD300 = RM900 Hence In income statement, we will see revenue = RM900 2nd Quarter, USD appreciated by 10% USD 1 = RM3.3 Sold product at USD300 = RM990 Profit automatically improved by RM90 At this point, Unrealized gain will occur, as trade receivable at the beginning = RM900 based on USD1=RM3, but further improved by 10% after USD1=RM3.3. Unrealized gain= (RM3.3 – 3)*300 = RM90 3rd Quarter, USD remain the same as 2nd quarter USD 1 = RM3.3 Sold product at USD300 = RM 990 Unrealized gain = (RM3.3-3.3)*300 = RM0 Whether there is realized or unrealized gain, it does not impact the revenue (see Q2 VS Q3), if currency remain flat, their profit is still RM990, 10% increased VS Q1 of RM900. If we assume cost of sales & other expenses remain the same, PBT should still increase by 10% as well. Seems to me that it does not erode the profit? Please help me to learn more, TQ
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
letitgoletitgo
32 posts
Posted by letitgoletitgo > 2016-01-10 22:09 | Report Abuse
From huge forex gain to forex loss. What is the impact? U calculate yourself.