Posted by Ooi Teik Bee > 2019-06-04 21:27 |

Post removed.Why?

Posted by qqq3 > 2019-06-04 21:30 | Report Abuse

for novices, stick to quality is probably the best advice.

and quality is some thing people will recognize when they see it., if they have a head for quality/ and for investments.



Investing is participating in the growth of excellent companies. Every thing else is speculations/ trading. Proper definitions are important. Proper definitions helps to make money, avoid losses.

for pros like me, I do every thing, any thing, good , bad ugly also I do.

Posted by qqq3 > 2019-06-04 21:36 | Report Abuse

for this year at least, I notice icon not bad.....Icon has his contrarian approach, sufficiently cautious esp in view of trade wars.....Contrarian pick of Jaks at 50 sen is excellent choice, MBM, BIMB delivered in terms of earnings ....and Canone was an excellent pick as I always knew those people at Canone are grand masters.

Posted by stockmanmy > 2019-06-04 22:14 | Report Abuse

Posted by Ooi Teik Bee > Jun 4, 2019 9:27 PM | Report Abuse

kcchongnz,
It is perfectly legal for you to post your article in your blog for educational purpose.
You do not need a license from either SC or Bursa.
A liar here bullshits and tells many lies that you need a special license or adviser license to post your article in your blog.
It is a bullshit and it is not true.

I had checked with the authority, it is perfectly legal for educational purpose.
Thank you.
Ooi
=================

I never said it is illegal to blog , or to organise talks and seminars

but I did say , the SIA has separate sections and licenses for remisiers and analysts .......and publishing research materials for subscription fees needs a separate license....But, its your life, your risk, not mine.

My son, although an analysts with an IB also needs his own licence before he can put his name in the research reports.

Posted by Ooi Teik Bee > 2019-06-04 23:16 |

Post removed.Why?

Posted by stockmanmy > 2019-06-05 02:22 | Report Abuse

otb, its your life, your risk, I just commenting only.

Posted by qqq3 > 2019-06-05 02:23 |

Post removed.Why?

Posted by (US/CHN trade war doesn't matter) Philip > 2019-06-05 07:18 | Report Abuse

Hi Kcchongz, the Altman Z is a wonderful tool, conceptually. I use the metrics often in defining what is a good business and what is not. I truly believe that one cannot use just one metric (20 sma, PE ratio, debt level, NTA, etc) to define quality.

However I have an issue with this:

Z-Score = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E

The fine tuning of ratios were based on taking a group of US companies performance 40 years ago to define what is risk. It is very difficult to apply to a group of US companies in 2000, much less comparing Bursa companies in 2019. The definitions are very very different here from my experience.

Let me simplify what I mean.

Suppose we bring 10 tour busses to Penang to taste the BEST and WORSE food in Penang, and we define metrics it into sweet, salty, spicy, tasty, price, service, location. You will find that the best places to eat are high on everyone's lists, BUT you will find that the gray area can be very fluid.

So using the average results to get a median gray area, you would tune your ratios to get the formula you want.

Penang-Z = 1.3(A kayu benchmark taste) + 1.4(B sisters charkoayteow benchmark service) + 3.3(C gurney drive cendol benchmark location and price)

As time passes by, you benchmarks will change, affecting your formula.

When you come back ten years later, you will realize that the best restaurants will still be there, however on the gray area end, places which you thought were pretty good have gone bankrupt and close down, while places which you thought were pretty bad, are still alive and kicking.

So in the end, formulas should be used sparingly, nothing beats scuttlebutt, as you apply multiple mental models and different analytical analysis differently based on industry, location and business triggers.

It can be very hard to quantify sometimes. But of course I applaud the effort, I believe very few investors know about Altman Z concepts, or even how to apply it.

Never stop learning something new every day.

Posted by (US/CHN trade war doesn't matter) Philip > 2019-06-05 07:22 | Report Abuse

Apologies for the horrible food analogy, but I have been enjoying a horrible long holiday using our harvest festival+gawai+Raya to take a road trip holiday in Penang. The food in Penang, kelantan, perlis and terengganu over puasa month is simply incredible.

Posted by Sslee > 2019-06-05 08:15 | Report Abuse

Dear all,
Salam Aidilfitri Maaf Zahir & Batin. No hatred please learn to be at peace and at ease with own-self and others
(拿得起) (放得下) (看得开)

Thank you

Posted by 3iii > 2019-06-05 08:28 |

Post removed.Why?

Posted by 3iii > 2019-06-05 08:31 | Report Abuse

>>>

Posted by Ooi Teik Bee > Jun 4, 2019 9:27 PM | Report Abuse

kcchongnz,
It is perfectly legal for you to post your article in your blog for educational purpose.
You do not need a license from either SC or Bursa.
A liar here bullshits and tells many lies that you need a special license or adviser license to post your article in your blog.
It is a bullshit and it is not true.

I had checked with the authority, it is perfectly legal for educational purpose.
Thank you.
Ooi

>>>


Someone should just bring to the attention of the SC, the activities of otb, for a guidance from SC.


Irrespective, hopefully all taxable fee incomes are declared.

Posted by 3iii > 2019-06-05 08:54 | Report Abuse

Altzman's scote helps to identify the companies to AVOID.

Posted by kcchongnz > 2019-06-05 09:37 | Report Abuse

Posted by (US/CHN trade war doesn't matter) Philip > Jun 5, 2019 7:18 AM | Report Abuse
The fine tuning of ratios were based on taking a group of US companies performance 40 years ago to define what is risk. It is very difficult to apply to a group of US companies in 2000, much less comparing Bursa companies in 2019. The definitions are very very different here from my experience.

That is true. Unless someone here has done some recent research in Malaysia and come out with our multivariate regression model from local companies which had bankrupted, the model can only be used as a guide at best. But again, we may not really have long enough history and adequate sample size to do so.

But if we look at the metrics used; it is still an intuitive method to be used as an additional wedge in our golf bag.

The z-score punishes companies with high leverage. If a company has less net working capital in relation to total asset (X1), it is at risk of bankruptcy as it will not be able to fulfil its short-term payment obligation if forced to (some limitations here as some good companies need little or no working capital). If a company has little retained earnings (X2), it has to fund its growth with excessive debts which makes it risky. If its return on assets (X3) is low, it is not good as earnings may not be enough to pay debts. If the market value of the company is low in relation to its total liabilities, and hence debts (X4), further deterioration endangers its survival. If the asset turnover (X5) is low, how is the company going to make decent return justifying the assets and hence the debts it uses?

So Z-score can be a good guide for the general public to avoid investing in stock tips and rumours. Sendai is one of the best example in i3investor.

I hardly use Z-score, except for teaching purpose, as I never buy risky companies with precarious balance sheet and poor return on assets. Neither do you need to, unless of course if you think about shorting companies, but shorting itself is a risky endeavour.

Posted by abang_misai > 2019-06-05 11:14 | Report Abuse

Jangan marah-marah di pagi raya. Slmt hari raya semua termasuk kc.

Posted by newbie4444 > 2019-06-05 11:32 | Report Abuse

As newbie can I ask question? So if Altman Z-Score near 0 are the companies likely to go bust? Can Kc Chong give examples of them in Bursa eg name 10-20 of them and how they would have done next/past 1 year?

Posted by lachai2004 > 2019-06-05 12:41 | Report Abuse

newbie4444,
Ha! ha! the questions that you posted don't seem like you are a newbie! You look like a veteran ^%^

Posted by kcchongnz > 2019-06-05 13:59 | Report Abuse

Posted by qqq3 > Jun 4, 2019 9:30 PM | Report Abuse
for pros like me, I do every thing, any thing, good , bad ugly also I do.

Pro? The performance of the portfolios below shouted sailang and margin by you in the last 3 years surely reflects the "pro" in you.

Stock price then 5-Jun-2019 Gain/loss Gain/loss %
Jaks 1.80 0.73 -1.07 -59%
Sendai 1.40 0.415 -0.99 -70%
Bornoil 0.10 0.045 -0.055 -55%
CBIP 2.25 1.01 -1.24 -55%
Ecoworld 1.29 0.855 -0.435 -34%
Taan 4.79 2.4 -2.39 -50%
Jtiasa 1.35 0.49 -0.86 -64%
Genting w 1.07 0 -1.07 -100%


Stock 10/31/2018 6/5/2019
KESM 12.00 7.00 -41.7%
Layhong 0.400 0.420 5.0%
Seacara 0.280 0.220 -21.4%
D&O 0.890 0.620 -30.3%
Elsoft 1.29 0.785 -39.2%
Hibiscus 1.12 1.04 -7.1%
Pmetal 5.15 4.32 -16.1%

Posted by stockraider > 2019-06-05 15:53 | Report Abuse

If u follow qqq u go holland loh....!!

This qqq cannot be trusted loh.....!!

Posted by kcchongnz > Jun 5, 2019 1:59 PM | Report Abuse

Posted by qqq3 > Jun 4, 2019 9:30 PM | Report Abuse
for pros like me, I do every thing, any thing, good , bad ugly also I do.

Pro? The performance of the portfolios below shouted sailang and margin by you in the last 3 years surely reflects the "pro" in you.

Stock price then 5-Jun-2019 Gain/loss Gain/loss %
Jaks 1.80 0.73 -1.07 -59%
Sendai 1.40 0.415 -0.99 -70%
Bornoil 0.10 0.045 -0.055 -55%
CBIP 2.25 1.01 -1.24 -55%
Ecoworld 1.29 0.855 -0.435 -34%
Taan 4.79 2.4 -2.39 -50%
Jtiasa 1.35 0.49 -0.86 -64%
Genting w 1.07 0 -1.07 -100%


Stock 10/31/2018 6/5/2019
KESM 12.00 7.00 -41.7%
Layhong 0.400 0.420 5.0%
Seacara 0.280 0.220 -21.4%
D&O 0.890 0.620 -30.3%
Elsoft 1.29 0.785 -39.2%
Hibiscus 1.12 1.04 -7.1%
Pmetal 5.15 4.32 -16.1%

Posted by newbie4444 > 2019-06-05 15:59 | Report Abuse

Subject is Altman Z score. Stock performance any relationship?

Posted by Air_Asia > 2019-06-05 16:33 | Report Abuse

How abt AirAsia stock performance vs Altman Z score?

Posted by kcchongnz > 2019-06-05 17:13 | Report Abuse

Posted by kcchongnz > May 12, 2013 1:37 PM | Report Abuse X
The Unloved Altman Z Score for KNM
Z = 1.2X_1 + 1.4X_2 + 3.3X_3 + 0.6X_4+1X_5
From the last financial statements of KNM, Z=0.54

Posted by kcchongnz > May 15, 2013 7:25 AM | Report Abuse X
The Unloved Altman Z Score for Ivory
Z 1.700


Some one brought up my post in i3investors 6 years ago on Altman Z-score with certain motive.

The above two companies' Z-scores were done 6 years ago with the conclusion that both companies were having high risk of bankruptcy.

None of them went bankrupt. However the share prices of these two companies had lost 70% or more since then while the overall market has gone up.

5/13/2013 6/5/2019
KNM 0.6 0.185 -69.2%
Ivory 0.75 0.195 -74%

Posted by 4444 > 2019-06-05 17:15 | Report Abuse

Reits can go bankrupt on Altman Z score?

Posted by Ivory > 2019-06-05 17:37 | Report Abuse

Ivory no bankrupt merely share drop is true.

Posted by Ivory > 2019-06-05 17:40 | Report Abuse

Even share drop doesn't mean cannot go up back as seen after May'19 QR.

Posted by qqq3 > 2019-06-05 18:32 | Report Abuse

kc...like I say, I am a pro....any thing also I do, good bad ugly also I do.......

but for novices, stick to quality, low turnover should be better than your value here, value there, Z score here, Z score there.

Posted by qqq3 > 2019-06-05 18:43 | Report Abuse

and kc...quality shares are those that fit the 3 tests - its business ( sense), its management and its Z scores and other scores in that order.......... and fit the definition, investing is participating in the growth of excellent companies.

Posted by qqq3 > 2019-06-05 19:00 | Report Abuse

kc...like I say, I am a pro....any thing also I do, good bad ugly also I do.......

but for novices, stick to quality, low turnover should be better than your value here, value there, Z score here, Z score there.

I would not recommend novices to follow me or even bother what I do. I do not wish to be responsible for anybody but me.

As a pro, selling ( and indeed buying ) is only a click away.

Posted by king36 > 2019-06-05 19:14 | Report Abuse

TQ KC.

Always learn from reading your blog.

BTW, what is "BEAVER"? How do we calculate it and apply it as you have explained above?

Posted by qqq3 > 2019-06-06 01:12 | Report Abuse

kc.....................high Z scores....I would assume all cash rich companies have high z scores,
other companies with high z scores.......companies in matured industries, companies over the hill, companies worth more dead than alive, companies with lousy growth prospects, companies with Directors without ambitions, companies investors call value traps..........and prominently in last few years, red chips with manipulated accounts.



so, kc....how about a new category called Z score traps?

Posted by qqq3 > 2019-06-06 02:53 | Report Abuse

y 3iii > Jun 5, 2019 8:28 AM | Report Abuse

After losing 80%, icon is more cautious / risk adverse.
========

at the bottom icon probably down 30% from the peak...by now probably back to historical peak or near............but I would not know, I am not his broker.

Posted by kcchongnz > 2019-06-06 05:19 | Report Abuse

Posted by king36 > Jun 5, 2019 7:14 PM | Report Abuse
TQ KC.
Always learn from reading your blog.
BTW, what is "BEAVER"? How do we calculate it and apply it as you have explained above?

Glad that you learn something.

What is "BEAVER"? I don't get your question.

Posted by kcchongnz > 2019-06-06 05:23 | Report Abuse

Posted by qqq3 > Jun 5, 2019 6:32 PM | Report Abuse
kc...like I say, I am a pro....any thing also I do, good bad ugly also I do.......
but for novices, stick to quality, low turnover should be better than your value here, value there, Z score here, Z score there.

You are a ""pro""? There are many kinds of ""Pro"". Pro in cheating, in swindling, in bullshitting, in lying, in PLP, slandering, etc.

Which one or all of the above?

Posted by king36 > 2019-06-06 05:27 | Report Abuse

Dear KC,

It is a financial ratio.

If you go to this link you can see there for AWC or any other stock.

https://www.isaham.my/stock/awc

TQ.

Posted by kcchongnz > 2019-06-06 05:45 | Report Abuse

King36,

I have not used this ratio before. Goggling it there is an academic paper by Beaver William. You may learn something from there.

Anyway, when you invest in good companies, which you should instead of speculating, you need not go through these kinds of checks, unless you are thinking of shorting stocks, which itself is even a more speculative endeavor.

Posted by king36 > 2019-06-06 06:22 | Report Abuse

Posted by kcchongnz > Jun 6, 2019 5:45 AM | Report Abuse

King36,

I have not used this ratio before. Goggling it there is an academic paper by Beaver William. You may learn something from there.

Anyway, when you invest in good companies, which you should instead of speculating, you need not go through these kinds of checks, unless you are thinking of shorting stocks, which itself is even a more speculative endeavor.


TQ, KC.
Its a pleasure to learn from you always.

Posted by qqq3 > 2019-06-06 10:42 | Report Abuse

kc...nothing worse than half tong water.....second worse is running fire enter devil.

in any case, its just a tool, a financial ratio,

kc.....................high Z scores....I would assume all cash rich companies have high z scores,
other companies with high z scores.......companies in matured industries, companies over the hill, companies worth more dead than alive, companies with lousy growth prospects, companies with Directors without ambitions, companies investors call value traps..........and prominently in last few years, red chips with manipulated accounts.



so, kc....how about a new category called Z score traps?

Posted by Sslee > 2019-06-06 11:00 | Report Abuse

Hahahaha,
Pity poor qqq3, had not learns anything useful from his Buddhism study. Still hold tight to his past pain, resentment and animosity like a confusing young monk.

Posted by qqq3 > 2019-06-06 11:04 | Report Abuse

so ss....now u have a new category to play with ...its called z score traps............

Posted by Sslee > 2019-06-06 11:12 | Report Abuse

Hahahaha,
Long ago already knew SENDAI is a Z score trap.

Posted by qqq3 > 2019-06-06 11:49 | Report Abuse

Buddhism very useful...........With Buddhism, meditation, can see things clearly, can be enlightened,

not deluded.

Posted by BoPoint > 2019-06-06 11:52 | Report Abuse

Wonderful educational material by KC. Thumbs up for your write up. Z-score is a good indicator. Coupled with some logical analysis of whether a business is recurring/cyclical/project-based etc, one can start investing with good foundation.

Posted by kcchongnz > 2019-06-06 12:00 | Report Abuse

Posted by qqq3 > Jun 6, 2019 1:12 AM | Report Abuse
kc.....................high Z scores....I would assume all cash rich companies have high z scores,
other companies with high z scores.......companies in matured industries, companies over the hill, companies worth more dead than alive, companies with lousy growth prospects, companies with Directors without ambitions, companies investors call value traps..........and prominently in last few years, red chips with manipulated accounts.


Hey ""Accountant"", look at the formula for Z-Score and those metrics used, which of your 7 categories of companies above fit the high Z-score you claimed to be? Name just one, not necessary all 7 and explain to justify if you have any common sense at all.

X1 = Working Capital / Total Assets
X2 = Retained Earnings / Total Assets
X3 = Earnings before Interest and Taxes / Total Assets
X4 = Market Value Equity / Book Value of Total Liabilities
X5 = Sales / Total Assets

Z = 1.20(X1) + 1.40 (X2) +3.30(X3) +.60(X4) + 1.0(X5)

Posted by new_in_share > 2019-06-06 12:09 | Report Abuse

Dear KC Chong, thank for info. Can you tell where(web link) to get latest Bursa listed companies Altman Z-score. Again thanks in advance.

Posted by new_in_share > 2019-06-06 12:23 | Report Abuse

Altman Z score is not static like share price right? It can be up or down depend on QR true?

Posted by kcchongnz > 2019-06-06 12:23 | Report Abuse

Posted by new_in_share > Jun 6, 2019 12:09 PM | Report Abuse
Dear KC Chong, thank for info. Can you tell where(web link) to get latest Bursa listed companies Altman Z-score. Again thanks in advance.

Hi new_in_share,

I hardly use Altman z-Score as I always try to find good companies to invest in, as good companies always have very high Z-score because of their consistent earnings and healthy balance sheets.

You should do that too. But in case you need to check z-Score because someone tells you to buy a random stock, here is a link which I just found out. Courtesy of king36 in his comments in this thread.

https://www.isaham.my/stock/awc

Posted by qqq3 > 2019-06-06 13:01 | Report Abuse

by kcchongnz > Jun 6, 2019 12:00 PM | Report Abuse

X1 = Working Capital / Total Assets
X2 = Retained Earnings / Total Assets
X3 = Earnings before Interest and Taxes / Total Assets
X4 = Market Value Equity / Book Value of Total Liabilities
X5 = Sales / Total Assets
=================================
kc


chicken or egg? which comes first? good business or good scores?
what does one or two bad years do to all the scores? do the scores affect the business or the business affects the scores?

how good is it as a forecasting tool? assuming zero knowledge of the business.


investing is participating in the growth of excellent business. At the end of the day, it is still good business ( sense ), good management and good numbers in this order, not the other way round.

in the hands of people who are not ready, it is easily transformed into half tong water. Seeing the trees not the forest.

As Buddhist like to say, cause and effect.....but which is cause which is effect? chicken or egg?

and reliability of the tool?

Posted by stockraider > 2019-06-06 13:07 | Report Abuse

Does it matter which come 1st ??

It is natural mah....a good business will attract a good score & bad business will attract a bad score loh...!!

Do not get confuse argue for sake of argue academically loh...!!

Posted by qqq3 > Jun 6, 2019 1:01 PM | Report Abuse

by kcchongnz > Jun 6, 2019 12:00 PM | Report Abuse

X1 = Working Capital / Total Assets
X2 = Retained Earnings / Total Assets
X3 = Earnings before Interest and Taxes / Total Assets
X4 = Market Value Equity / Book Value of Total Liabilities
X5 = Sales / Total Assets
=================================
kc


chicken or egg? which comes first? good business or good scores?
what does one or two bad years do to all the scores? do the scores affect the business or the business affects the scores?

how good is it as a forecasting tool? assuming zero knowledge of the business.


investing is participating in the growth of excellent business. At the end of the day, it is still good business ( sense ), good management and good numbers in this order, not the other way round.

in the hands of people who are not ready, it is easily transformed into half tong water. Seeing the trees not the forest.

As Buddhist like to say, cause and effect.....but which is cause which is effect? chicken or egg?

and reliability of the tool?

Posted by qqq3 > 2019-06-06 13:11 |

Post removed.Why?

Posted by stockraider > 2019-06-06 13:20 | Report Abuse

OTB is more successful than u loh....!!

U call that mistake ?? Raider don't loh.....!!

Posted by qqq3 > Jun 6, 2019 1:11 PM | Report Abuse

y stockraider > Jun 6, 2019 1:07 PM | Report Abuse

Does it matter which come 1st ??
============

your good friend OTB regularly keeps repeating the same mistakes ...OTB and his rear view drive has regularly produced disappointing results going forward......

so, I ask the same question...chicken or egg?