Posted by Probability > 2016-03-10 14:03 | Report Abuse

excellent presentation shinado...
you are really improving well.

I have not made a study by myself yet...but sure getting curious.
on the Cash yield, was is taken for TTM? Could you share the figures for TTM
and also the EV/EBIT for TTM...thanks :)

Posted by shinado > 2016-03-10 14:33 | Report Abuse

Probability, I get the figures from Q4 report. I know FY2015 annual report is not out yet and I know Q4 report is not fully audited, but the figures should not vary by a lot.

For Free Cash Flow yield, can refer to table above. All figures for 2015 taken from Q4: http://www.bursamalaysia.com/market/listed-companies/company-announcements/5012893

All figures in RM ('000).

Revenue = 72,506
Free Cash Flow = Net Cash Flow From Operations - Capex = 17,210 - 681 = 16,538
FCF vs Revenue = 16538 / 72506 = 0.228 or 22.8%

To calculate EV, we need Market Capitalization + Total Borrowings - Cash Balance.

Market cap is calculated from price per share x number of outstanding shares.
Total Borrowings is 14,597 and Cash balance is 4,140

EV = (297892 x RM0.29 per share) + 14597 - 4140 = 96845.68

EBIT can refer to table, is 11,251.

So EV / EBIT = 96845.68 / 11251 = 8.6 (rounded up)

or EBIT / EV = 11251 / 96845.68 = 11.6% (rounded up)

It's not exactly cheap, but I am willing to pay for it.

Hope this helps. Cheers.


Posted by Probability > Mar 10, 2016 02:03 PM | Report Abuse

excellent presentation shinado...
you are really improving well.

I have not made a study by myself yet...but sure getting curious.
on the Cash yield, was is taken for TTM? Could you share the figures for TTM
and also the EV/EBIT for TTM...thanks :)

Posted by shinado > 2016-03-10 14:37 | Report Abuse

Sorry, forgot to include minority interest. EV = Market Cap + Total Borrowings + Minority Interest - Cash Balance. It can be obtained in the balance sheet section. Opensys have 0 minority interest.

Posted by Probability > 2016-03-10 14:40 | Report Abuse

It looks really good Shinado...care to check that if you are deriving based on the latest quarter, to exclude any sudden contribution on the Cash flow from the Net Working Capital changes. This can sometime skew the figures..

Posted by shinado > 2016-03-10 14:44 | Report Abuse

Good call Probability. However, do note that historically the FCF vs Revenue has been quite high for the past few years.
2015 2014 2013 2012 2011
FCF vs Revenue 22.8% -11.0% 18.4% 16.7% 25.6%

Posted by Old90 > 2016-03-10 15:11 | Report Abuse

Nice, thx for sharing.

Posted by NoPainNoGain > 2016-03-10 16:05 | Report Abuse

Nice sharing and a lot of new information for newbie like me. Reading this made me realize there's a lot more I need to learn.

Posted by Ezra_Investor > 2016-03-10 16:26 | Report Abuse

Seems like you have done your homework well, shinado.
There are actually a lot of companies like these, which is low margin but compensated by high volume of sales.
Many of them usually has to do with the tech sector - KESM, ECS ICT, to name a few.
Anyways, good presentation. Thumbs up. Hope to see more write up from you in the future.

Posted by shinado > 2016-03-10 19:27 | Report Abuse

Thank you all. I am also learning just like you all because there is still alot that I do not understand. I only share what I learn.

Posted by alvin1314 > 2016-03-14 21:44 | Report Abuse

Shinado, in regards to your post above, could you pls explain below?

So EV / EBIT = 96845.68 / 11251 = 8.6 (rounded up)
or EBIT / EV = 11251 / 96845.68 = 11.6% (rounded up)

i am not very understand this part. Cheers!

Posted by shinado > 2016-03-14 23:57 | Report Abuse

Hi alvin1314,

EV is Enterprise Value whereas EBIT is Earnings Before Interest and Tax. Both EV/EBIT & EBIT/EV are used to calculate a present value of a company.

EV / EBIT calculation usually return a single or double digit number, while EBIT / EV is in percentage.

Usually companies trading at EV/EBIT of 7 or less is considered undervalued, while in EBIT/EV it is 15% or higher that is considered undervalued.

I hope that answers your question? Cheers.

Posted by loveygramps > 2016-04-04 11:18 | Report Abuse

@shinado, I trust that your valuation calculations are correct and it looks promising. However this article could be better if there was a report on the industry trend & growth potential for such machines & the company's core business. Among the first questions that come to mind are: shrinking branches, switch to online banking, rapid adoption of non-cash currencies, and even BNM is promoting the phasing out of cheques in favour of IBG. It would be good if you can provide an industry report, because, all might look good on the surface, but we do not know if this is a dying industry.

Posted by moneySIFU > 2016-04-04 11:41 | Report Abuse

Very good analysis, well done, shinado.

Posted by shinado > 2016-04-04 19:27 | Report Abuse

@loveygramps Good point. I agree that such report would be good to better understand the industry. However, I do not know much of the banking/financial sector and don't even have access to resources for such reports. Hence, I can only write up analysis on what the company was able to do in financial terms.

Perhaps someday I might find a way in the future. Who knows? Cheers.

Posted by loveygramps > 2016-04-06 09:27 | Report Abuse

@shinado, thank you for replying. Wishing you the best.

Posted by pputeh > 2016-05-15 11:03 | Report Abuse

Shinado, just came across yr article. Am a newbie and just starting out but age wise past 70. I find investing in GOOD stocks keep me going and puts the zip into my life. Thanks again

Posted by kl foong > 2016-05-15 12:04 | Report Abuse

Good write up.
I keep this stock on my radar screen.

Posted by Edwardong53 > 2016-05-15 23:34 | Report Abuse

Shinado, this is the fist time I learned such analysis of a company. Thanks a lot for your sharing, and hope to learn from you in future.

Posted by shinado > 2016-05-16 10:13 | Report Abuse

Hey guys thanks for your feeback. I'm hoping to write more but unfortunately do not have the time in recent weeks. Will try to write whenever I can!

Posted by paoblocrk > 2016-05-16 22:09 | Report Abuse

Hi Shinado, the edge recently covered the stock in the top 10 ACE market listed stock and one of them was opensys. Well, I am still a newbie on this but I think the biggest issue is not the growth of the company but the liquidity of this share. It still take a lot of effort for this share to climb to main board to gain the momentum, nevertheless, all the fundamentals are pointing the positive direction, a bit of patience of 5 years will make a superb investment if this company continue to perform. I didn't buy any of this share (but most probably looking forward for) but I wish you all the best on your investment

Posted by Yong Jui Foo > 2016-07-15 22:21 | Report Abuse

Hi, Shinado, do you have a blog. I am impressive with this article. I am interested in investment-related article. I believe I can learn more from you and you will be the best mentor.

Posted by shinado > 2016-07-20 09:56 | Report Abuse

Hi Yong Jui Foo, I do not have a blog. I can't call myself a sifu or mentor because I am a learner just like you. I do share what I learned by myself or from others though. But I'm sure you can find other investment-related articles and here in I3investor is a good start.

Hopefully, I can find some time to write more articles in coming weeks or months. Thank you.