Posted by kcchongnz > 2013-07-18 17:44 | Report Abuse

Posted by TeckChuan Lee > Jul 18, 2013 08:14 AM | Report Abuse
Is MAXWELL a local or chinese based company??
MAXWELL Quoted RM0.305 today.
I did it s financial. Not bad at all. A young company, only 4 years of financial history.
1. ROE 20% (higher for previous years)
2. NTA 0.95
3. Free cash flow, though CFFO is lesser than NI.
4. Dividend 0.02
5. Piotroski average 5.33 for 3 years. (a bit less though)

I did invest in this stock before because this was one and the only one Chinaman company paying quite good dividend then. But luckily sold off with some profit.

The problem with all Chinese companies, without exception, lack credibility and nobody trust them any more. Their financial statement look fantastic with good earnings and heaps of cash (>100m)in the balance sheet. But checking the interest payment each year which is a few hundred thousands only. Why?

So I have given up looking at any Chinaman company, though I am a Chinaman myself. correction Malaysian Chinese.

Yeah Teck Chuan, when you analyze a god company with good financial, no need to talk about Piotroski score. It is for hot stocks of poor company which you need to check to make sure they are not going for bankruptcy before you punt.

Posted by kcchongnz > 2013-07-18 17:59 | Report Abuse

kcchong, when the stock has reached fair value, you will start to sell your stock or continue to keep?
Posted by Steve Jub > Jul 18, 2013 04:52 PM | Report Abuse
the dilemma is once sold, duno what to buy when can't find undervalue stock..

My strategy is buy a stock which the company has good operating efficiencies in term of ROE, ROIC (if with growth potential then it is a bonus) at a comfortable margin of safety in relation to its intrinsic value. So when the stock price rises close to its intrinsic value, I will sell and look for other good company with a price much lower than its intrinsic value.

If I can't find one, I go for a golf holiday.

Posted by Steve Jub > 2013-07-18 18:09 | Report Abuse

kcchong, lol, i think now u must have been playing much golf since many stocks has been keep going up hehe

Posted by kcchongnz > 2013-07-18 19:06 | Report Abuse

Halex? Never heard of.

Posted by Najib Zamry > Jul 18, 2013 05:02 PM | Report Abuse
Take a look at Halex Holdings. NTA 0.92, P/E 10 and sitting at net cash RM16 million. The wonderful thing is that the major shareholders are accumulating aggressively in the open since end of June 2013.
The negative point is the stock is very illiquid.
KC Chong what is your view?

Never heard of Halex. That shows how much I don't know about the stocks in Bursa. So still want my view?

[Halex Holding Bhd operates in four segments, which include investment holding, agrochemical, healthcare disposables, and horticulture and agro-biotechnology. The Company is principally involved in the manufacture, formulation, re-packaging, distribution and agency of agrochemicals; propagation of ornamental plants through the application of biotechnology and other related agro-biotechnology activities; propagation and sale of foliage cutting, potted and festive plants, as well as the manufacture and distribution of healthcare disposable products, such as wet wipes, cotton-based products, sanitary towels and tissue products.]

Wow, the business looks interesting, doesn’t it?

The company must be quite new and smallish. Revenue for the past two years is only about 100m with net profit just 4.4m. Yeah, profit margin is also small at 4.3%. ROE and ROIC is disappointing at 4%-5% only. How come? I would have thought this type of business should yield high operating numbers.

Cash flow wise, ok lah, smallish also with average free cash flow 3m a year. Not much money spent on capital expenses also, averaging also 3 m last 2 years. So where will be the growth? In fact the last two quarters results showed a contraction in revenue and earnings already.

At the close today at 65 sen, PE ratio at 12 and P/B 0.7, ok lah but not screaming buy, buy, buy.

This is just my personal opinion looking at the rear mirror. You know I don’t have a front periscope. You must have knowledge of its future better. So don’t let me discourage you.

Posted by kcchongnz > 2013-07-19 06:02 | Report Abuse

Posted by Steve Jub > Jul 18, 2013 06:09 PM | Report Abuse
kcchong, lol, i think now u must have been playing much golf since many stocks has been keep going up hehe

That is the beauty part of using fundamental analysis for investment; buy the stocks of great companies with durable business, good operating efficiencies, at a margin of safety from its intrinsic value. Wait for some time until people (better still institutional investors) discover them and bid up the share price closed to its intrinsic value, then sell. So I actually play golf a few times a week. What for look at the share prices everyday?

Alas, easier said then done. I actually spend a lot of time watching the screen too. Human behavior. But this is more because of I punting call warrants also.

Punting call warrants is not investing. It is gambling. Same for trading of stocks. The warrant price depend on the short-term fluctuation of the underlying share. This changes everyday, every hour, even every minute. That is why this requires time spent on the screen. But it is ok if one has the interest and the time. Don't ever neglect your work doing that.

Posted by Frank Soweto > 2013-07-19 06:42 | Report Abuse

KC play golf a few times a week? now that's good life :)

Posted by kcchongnz > 2013-07-19 07:14 | Report Abuse

Frank,
Yes I play golf a few times a week. Not very good now though. But I like the exercise, enjoy the weather, the talk cock etc. Don't need the extreme work stress anymore. Small bet, unlike those days in Malaysia when we play "cutthroat" with so many people.

Where else can be better than in NZ?

Posted by Frank Soweto > 2013-07-19 07:24 | Report Abuse

LOL KC that's all true :) hey can always improve with constant playing :) and if u're in this part of the world NC,US drop me a note - bring u to go hack some balls! cheers :)

Posted by kcchongnz > 2013-07-19 07:53 | Report Abuse

Frank, thanks for the offer. If I have the chance, sure will get you there. Never have a chance to play in US yet. But very expensive woh there. Got roti canai to eat there or not? (Read so much of this term recently in i3)

Posted by Frank Soweto > 2013-07-19 08:07 | Report Abuse

LOL Tony better be serious and give us some gem and not germ o.k :)

nah KC no worries actually with all the coupons golfing here is not expensive compare $to$ - it cost only less than 25 USD with cart for 18 of course not Pinehurst No2 lah haha but still very nice courses :)
walou still not tired of Roti canai ah - selling everyday LOL. hey funny thing is in the Asian mart we have the frozen one cost 2.39usd for 5 pieces - where can find ohh - cheaper than bolihland per piece la - only problem is no curry la haha

Posted by kcchongnz > 2013-07-19 08:22 | Report Abuse

Frank, $25 with cart! That is damn cheap man. See you in NC.

Wah roti canai also cheap woh. Of course it is cheaper than bolih land, because in bolih land huge amount of money gone somewhere.

Posted by Frank Soweto > 2013-07-19 08:30 | Report Abuse

haha KC ya seriously :) Only problem is getting here cost more than 75 rounds :) but if you're here might as well stay a few more days and golf until u cannot swing LOL - hey clubs here are cheaper too :) of course cannot compare to bolihland la - we have to think of the rezeki fellas :(

Posted by keanpoh > 2013-07-19 10:29 | Report Abuse

Posted by aunloke > Jul 14, 2013 07:36 PM | Report Abuse
I think most of the hidden gems have been uncovered and the market is in the late stage of a mania though it may move up further.I would prefer asset protection to taking a big risk for may be a small gain.With all the bad news stacked against US ,EU,japan and of course our country I don't think we can have a superbull so the risk reward ratio may not be favourable in taking big commitment. Care to discuss ?

Posted by kcchongnz > Jul 16, 2013 05:29 AM | Report Abuse
Is there a a mania? If you go to the wet market, do you hear uncles and aunties giving stock tips? When you go to a coffee shop, are there a lot of people talking about which stock to buy? When you have a gathering with your relatives, is stock a hot topic? In the media (non-business), are there a lot of talk on the stock market?

Bad news? Can't recall which year no bad news. 4 years ago after the sublime crisis, people said we were heading to the great depression. One year after that, the Dubai problem, the PIGS problems, the QE problems, the China problems, the fear of General election etc etc.

So how ah?

====================

I think when you look at most stock analysts call for BUY BUY BUY and almost no SELL SELL SELL, that's an indicator that the market is over optimistic about the future cash flow that businesses can generate?

Posted by kcchongnz > 2013-07-19 11:11 | Report Abuse

Is Inari that fantastic investment?

Posted by Fat Cat Tim Buddy > Jul 18, 2013 05:48 PM | Report Abuse
kcchongnz, can u tell us your view and assessment on inari?

Inari Berhad is involved in the electronics manufacturing services (EMS) industry. The Company is an EMS company principally involved in back-end semiconductor packaging, which comprises back- end wafer processing, package assembly and Radio Frequency (RF) final testing for the electronics/semiconductor industry. Inari serves wireless RF and microwave telecommunication semiconductor market.

I heard of this company before but don’t know much of it. A spinoff from Isas? Oh, a technology company, something like Unisem?

Looking at the twelve month trailing financial results, Inari, undeniably appears to be a great company with high growth in revenue and profit of 19% and 74% respectively. Operating numbers are excellent with ROE and ROIC of 31%. The quality of earnings also appears to be good with CFFO above net profit.

The only problem (may not be a problem because of it being new and the nature of the business) is it requires a lot of money for capital investment. Hence whatever cash it receives each year, it is not enough for it for capital expenses. Do you notice that it has to borrow more money each year from the banks? If this heavy capital expenses yield future quality growth and earnings, it is ok.

Pricewise, it is trading at a PE ratio and earnings yield (Ebit/EV) of 8.4 and 12% respectively which is undemanding.

The other thing is who control Inari? Is it those Insas people? They are not known for taking care of the interest of minority shareholders.

Posted by Hustle > 2013-07-19 11:19 | Report Abuse

If you work inside the company b4 you will see the working environment is like united nation,majority workers is not locals and foreigners majority.
As company directors profile is not too attractive,most of them just a share holder among the locals company and locals funding boss.Simply said,it just like a cumulative funding company that no 1 can really in charge to execute the mission & company direction.

Posted by ipomember > 2013-07-19 11:23 | Report Abuse

KC you are a good analyst i would say. The only things i want to add on is maybe u should focus your analysis more on the business itself rather than financial accounting. Or maybe you did but since nobody ask so you never disclose. People like me would like to know more on its business, albeit past performance is a good benchmark to find good company.If its not troublesome i would like to hear more from you on this aspect as i believe past performance only contribute some portion to good stock picks.I bring no offence and wish you all the best in your investment.

Posted by kcchongnz > 2013-07-19 11:38 | Report Abuse

ipomember, excellent points! But who do you think I am? An analyst working for an investment bank? An investment officer of EPF? A fund manager?

I am a small time investor, working on my own, living thousands of miles from boleh land. What do you think I can do? Go to their office to check their business? Talk to the management and employee, their suppliers, clients etc about their business?

One thing for sure. If the business is good and run well, it is shown in the ROE, ROIC, cash flows etc. You can see if shareholder value is created each year through the grow in their equity and dividend payment.

Agree?

Posted by datuk > 2013-07-19 11:47 | Report Abuse

Agreed in most of the scenario except when the con management acted as painter.. N draw the financial statement ........

Posted by Hustle > 2013-07-19 11:48 | Report Abuse

You mean RCECAP hehe

Posted by kcchongnz > 2013-07-19 12:29 | Report Abuse

Posted by Hustle > Jul 19, 2013 11:19 AM | Report Abuse
If you work inside the company b4 you will see the working environment is like united nation,majority workers is not locals and foreigners majority.
As company directors profile is not too attractive,most of them just a share holder among the locals company and locals funding boss.Simply said,it just like a cumulative funding company that no 1 can really in charge to execute the mission & company direction.

Hustle, you worked there before? If so this piece of information of yours is very important in deciding if Inari is worth investing for long-term or not.

If what datuk has just said is true and if he was referring to Inari, then the decision of whether invest or not is even clearer.

Posted by ipomember > 2013-07-19 12:47 | Report Abuse

KC, alright i get your points and i agree with you. However, it rather important too if we understand the business, their future plans, their business approach and etc to justify whether it is a good investment that worth your risking rather than solely based on past performance. I agree that what the retail investor can do is limited, which we need to read research report to get know to what we dont know from the management side. What i looking for is just discussing and sharing purpose. Nothing else.Cheers

Posted by Hustle > 2013-07-19 13:08 | Report Abuse

Yup KC my cousin work there initially,since last time so many people rumors that his company can reach TP1.20 that why I ask him regarding the inside condition.But,these scenario is really amaze me by the way the workers turn over rate is very high.No offense to Inari fans just reality sharing since we cannot invest with fairy tale story.

Posted by houseofordos > 2013-07-19 13:52 | Report Abuse

Also take note that AVAGO Tech is a major shareholder in this company.. basically a lot of their business comes from AVAGO and so future revenue will have some correlation to AVAGO's business prospects.

Posted by hng33 > 2013-07-19 13:55 | Report Abuse

How about YTL Power? hidden gem waiting to shine again after long laggard.....

I've extract some of the information in regard to YTL Power 1bestarinet and its latest contract to supply chromebook laptop to school.

As of end-December 2012, 70% of the nations schools have been connected. And the laptops would be Chromebooks running Google Apps, the Mountain View, California tech giant’s cloud-based solution suite. Google and its Chromebook is selected base on its low-cost cloud based services versus the PC-era architecture of the others; instant-on ability; and all-day battery life.

Under the first phase to supply chromebook laptops, it costing up to RM 513.3m encompasses fixed term licensing fees of RM 250.5m and management and maintenance cost of RM 262.8m. Each school will have 41 Chromebooks made by Samsung with 3,000 schools to get them initially.

[Remark: the Samsung Chromebook is listed at RM1,299; or RM988 under the YES 4G Chromebook Plan, for RM69 per month with a monthly 3.5GB data quota].

But, with the Barisan Nasional having made an election promise that it will provide every student, plus teachers and parents, with a laptop, The numbers are daunting – 10,000 schools, over 5.3 million students, 500,000 teachers and 4.5 million parents, on one unified platform the irresistible lure of supplying 10 million laptops, now that the Barisan has been returned to power.

With each student in the country given a unique YES ID, the Chromebook becomes that student’s personal computer and with it, the lessons and e-books of that student.

YTL Communications would use the tower to roll out commercial YES 4G services to the residents of the surrounding community. As each tower can cover up to 4km radius, This infrastructure will also enable teaching to go beyond classrooms, not just anywhere in the school compound but also the surrounding areas up to a 4km radius. With this broad coverage, students, parents and teachers can use this network to access the Frog VLE from home and continue the learning experience.

Posted by Hustle > 2013-07-19 14:08 | Report Abuse

Hi harcharanjit do you have any insider news regarding to MAS? Please share & don't be kedekut ilmu hehe...

Posted by j harcharanjit a/l jalaur singh dhillon > 2013-07-19 14:11 |

Post removed.Why?

Posted by Hustle > 2013-07-19 14:50 | Report Abuse

Possibly can ask your son to interview there hehe

Posted by kcchongnz > 2013-07-19 15:04 | Report Abuse

Fat Cat,
If you look back at my comments, I did say Inari, basing on the growth and operating efficiencies, it is no doubt a great company. I also said its valuation is undemanding.

I only have a couple of reservations. One it eats a lot, meaning it requires a lot of money for capital expenses, which in itself is not necessary to be bad. It could be good because it is only through capital expenses, the company will grow its revenue and earnings, if the capital expenses yield return higher than the cost of capital (10%?).

The other reservation is the one in control. I know those fellows in Insas (if they are the same controlling Inari) did not have a good record of taking care of minority shareholders.

Now there are other comments by others which you may want to take heed below:

Posted by Hustle > Jul 19, 2013 11:19 AM | Report Abuse
If you work inside the company b4 you will see the working environment is like united nation,majority workers is not locals and foreigners majority.
As company directors profile is not too attractive,most of them just a share holder among the locals company and locals funding boss.Simply said,it just like a cumulative funding company that no 1 can really in charge to execute the mission & company direction.

And also below because too dependent on a single cliet is not good:

Posted by houseofordos > Jul 19, 2013 01:52 PM | Report Abuse

Also take note that AVAGO Tech is a major shareholder in this company.. basically a lot of their business comes from AVAGO and so future revenue will have some correlation to AVAGO's business prospects.

Posted by kcchongnz > 2013-07-19 15:59 | Report Abuse

Posted by j harcharanjit a/l jalaur singh dhillon > Jul 19, 2013 02:11 PM | Report Abuse
kcchongnz
i like your style of searching good quality companies,,you said you look at ROE and ROIC... are there any sites online where we can look for this VALUES??? how about http://www.klsescreener.com/ ?? send a copy reply also to my e mail,, thanks harchar@malaysiaairlines.com
are there any good pre define stocks scanners that can scan accurately ROE and ROIC???? thanks

The stock screener you appended in your post is good to screen for stocks with ROE, PE, NTA, DY etc. I haven't used it though. Things like ROIC, not sure, don't think so. You can goggle what ROIC is and compute yourself.

Posted by kcchongnz > 2013-07-19 16:23 | Report Abuse

Posted by hng33 > Jul 19, 2013 01:55 PM | Report Abuse
How about YTL Power? hidden gem waiting to shine again after long laggard.....

hng33, i admire your deep insight in the company YTL Power, KPS etc you analyze. I don't have the information to do that.

All the time I have been saying I just have to rely on the financial statement to gauge the business and operations of the company, and its value, which is the past. This may not be useful, especially for a company which has great future which has not been reflected in the financial statement, like you mentioned about YTL Power.

Having said that, it doesn't mean that history is not important. for example, a construction company which has been persistently making heavy losses for years doing construction work, what good is it when it secure a big contract? To me they have shown that they couldn't manage projects well all this while, or the management just focus on getting projects for some self interest, but never intend to manage the project well; and how can i have confidence that they will make money in this new project. I would tend to believe for this company, getting more projects may mean more losses.

Hey I have been in this industry (construction)before, you know.

So you are in a better position to give an opinion on YTL Power about its future, not me.

Posted by TeckChuan Lee > 2013-07-20 01:06 | Report Abuse

AHEM. FOCUS POINT(0157).CURRENTLY SELLING AT RM0.280. SECOND BOARD. ANY COMMENTS? SEEMS QUITE OKAY TO ME.

PROS
1. FCF
2. NAPS HEALTHY FIGURE COMPARED TO PRICE
3. OPERATION CASH FLOW HEALTHY, MORE THAN NI.
4. ROE IS ALSO HEALTHY
5. DIVIDEND PAYING COMPANY, ALTHOUGH EPS IS LOW, PAYOUT RATIO 50 PERCENT.
6. GOOD CAPEX
7. SHARE PRICE IS CURRENTLY AT THE BOTTOM, SINCE IPO 2 YEARS AGO.


CONS
1. YOUNG COMPANY, NOT ENOUGH OF FINANCIAL HISTORY TO ANALYSE ON
2. LOW PROFIT MARGIN
3. PIOTROSKI SCORING ONLY 3 POINTS FOR FY2012
4. I HAVE NO IDEA HOW TO CALCULATE ROCI


PLEASE CHECKOUT MY CALCULATIONS BELOW.


FOCUS POINT RM0.28 20-Jul-13

Year 2013 2012 2011
Revenue 130,578 120,226 74,649
Cost of sales 54,829 49,712 30,088
Gross margin 58% 59% 60%
Margin 5% 6% 8%
Net Income 6019 6961 6214
Profit to common share 6035 6974 6234
No. of shares 165000 165000 137574
EPS 0.037 0.042 0.045
Dividend 0.02 0.02 0.02
Payout ratio 55% 47% 53%
Net asset per share 0.32 0.30 0.34
Operating cash flows 10,250 9,865 7,428
Capex -6,660 -6,641 -6395
Free Cash Flow, FCF 3590 3224 1033
CFFO/NI 170% 142% 120%

Total Common Equity 53,475 49,999 46,324
Common Stock 33,000 33,000 33,000
ROE 11% 14% 13%

Total Asset 98,895 91,617 88,312
ROA 54% 55% 52%

Long Term Borrowing 4,381 2,733 4,883

Current Asset 67,032 65,234 62,296
Current Liability 38,803 36,886 34,901
Current Ratio 1.7 1.8 1.8

Posted by kcchongnz > 2013-07-20 11:21 | Report Abuse

Teck Chuan, you got everything computed correctly except the return of assets. A return of assets of 55% is too good to be true.

Return of assets=Net Income/Total asset=6019/98895=6.1%.

I also agree with all your “pros” and “cons” comments on focus Point.

Invested capital=Fixed assets (PPE)+non-currentreceivables+inventories +current receivables-payables=61475

Return of invested capital=ebit*(1-tax rate)=10402*(1-36%)=6606
Hence ROIC=6606/61475=10.7%.

So ROIC is about the WACC, ok lah.

One thing you notice that there is this item “deferred income” in both the current and long term liabilities sections. This to me mean that they have booked in future income, even up to 5 years from the franchise fees I think. So is their current profit accurate or overstated?

So if your opinion is FP is a reasonably good company with ROE and ROIC at about the cost of capitals, then the next step is to find out if the price right. Will you?

I suggest you try using PE, earnings yield (ebit/EV) etc.

The other thing is what is your comments on the durability of its eye care business. What about its growth? I suggest you look at the recent quarterly report to see if there is a rise or fall of their revenue and profit.

Posted by sense maker > 2013-07-20 11:36 | Report Abuse

Deferred income as liability on one side is corresponded by cash and bank on the other, both balance sheet items. Its cash and bank has reflected benefits from future (franchise) income. Profit recognition in income statement is not an issue.

Posted by kcchongnz > 2013-07-20 11:52 | Report Abuse

sense maker, thanks for the clarifications. That is the beauty of the forum here, learning from each other.

I could be wrong in thinking that Focus Point have recognized the franchise fees (appears to be 5 years in the future) as profit for the current year. Profit should be recognized for the relevant year, and not in the future years.

So Focus may not have done that. And most likely not. I didn't go through in details.

If these two items are just balance sheet items, yeah, no issue.

Posted by TeckChuan Lee > 2013-07-20 11:55 | Report Abuse

thank you for pointing out my ROA error. However I got the calculations based on your KFIMA piotroski template. ROA = Equity / Total Asset??

will check out all the things you have mentioned.

Posted by kcchongnz > 2013-07-20 12:06 | Report Abuse

ROA='Table 1 IS'!B18/'Table 2 BS'!B24

Cell Table 1 IS'!B18 is "Net Income" in income statement
Cell Table 2 BS'!B24 is "total assets" in balance sheet

In the "Piotroski" spreadsheet, that is Change in ROA, not ROA and it is also not equal to "Equity / Total Asset"

Posted by TeckChuan Lee > 2013-07-20 12:15 | Report Abuse

In the "Piotroski" spreadsheet, that is Change in ROA, not ROA and it is also not equal to "Equity / Total Asset"

you lost me.....

Change in ROA
='Table 1 IS'!B20/'Table 2 BS'!B24-'Table 1 IS'!C20/'Table 2 BS'!C24

Posted by kcchongnz > 2013-07-20 12:36 | Report Abuse

Table 1 IS'!B20/'Table 2 BS'!B24 is the ROA for 2013
'Table 1 IS'!C20/'Table 2 BS'!C24 is the ROA in 2012

So 'Table 1 IS'!B20/'Table 2 BS'!B24-'Table 1 IS'!C20/'Table 2 BS'!C24

is equal to change of ROA from 2012 to 2013

Posted by CityTrader > 2013-07-20 12:44 | Report Abuse

Very fruitful info but the sad thing is i dont know where to get the past financial statements to compute all the mentioned ratios. Any advise? I notice that kcchongz has all the statements at merely finger tips which i really admire. Tq

Posted by kcchongnz > 2013-07-20 12:47 | Report Abuse

CityTrader, all information is public. You can obtain them from bursa website.

No they are not in my finger tips. I need to go to the Bursa website and enter the financial statements one by one into my spreadsheet.

Posted by CityTrader > 2013-07-20 12:54 | Report Abuse

Tqvm for yr prompt reply, kcchongnz. N tq for yr kind sharing or rather say imparting your analysis knowledge to me. I m only a ta who trades without knowing anything about the co.

Posted by TeckChuan Lee > 2013-07-20 13:02 | Report Abuse

Return of invested capital=ebit*(1-tax rate)=10402*(1-36%)=6606

kc have you missed out the D&A on your ebit?

Posted by kcchongnz > 2013-07-20 13:17 | Report Abuse

Teck Chuan, ebit is obtained after deducting D&A. So I did not miss anything, did I?

Return of invested capital=ebit*(1-tax rate)

Not ebitda*(1-tax rate)

Posted by kcchongnz > 2013-07-20 13:43 | Report Abuse

Posted by CityTrader > Jul 20, 2013 12:54 PM | Report Abuse
Tqvm for yr prompt reply, kcchongnz. N tq for yr kind sharing or rather say imparting your analysis knowledge to me. I m only a ta who trades without knowing anything about the co.

Citytrader, you are welcomed. I am trying to learn from others too. How I wish I also have your TA skill.

Posted by Steve Jub > 2013-07-20 15:10 | Report Abuse

kcchong, do u also look into "Net Free Cash Per Share". I checked and saw some of them got negative value, ie huayang, is RM -0.776. u know what it means?

Posted by kcchongnz > 2013-07-20 15:28 | Report Abuse

From the cash flow statement under the "Cash flows from operations", you see that the 2012 results shows that the cash flow from operating activities (CFFO) is 190m. This is the net cash the company received during 2012; eg cash payment from house buyers less the operating costs in cash payout. From the "cash flow from investing activities", you see that the company spends about 200m in acquisition of property, plant and equipment and "Land and Development costs". That 200m is the capital expenses for Hua Yang.

that means Hua Yang receives net cash of 190m from the operations, buy spend 200m for capital expenses. So the company, before doing any dividend distributions, investing in properties and subsidiary company, it is short of 10m for the year. So that negative 10m is the free cash flow. Meaning the company doesn't have any money left (FCF) to do other investments and distribute dividend.

So where to get those money? Yes, from more borrowing. Because Hua Yang spent more money for capital expenses.

Generally I prefer a company with positive FCF. But in this cash it doesn't mean it is no good. I think it is more good than otherwise. Because Hua Yang spent money in development of more housing projects, which likely to make more profit and cash flow in the future.

Posted by Jaack1 > 2013-07-20 15:31 | Report Abuse

Dear Mr KC Chong,

MFCB (MEGA FIRST)

MFCB has always been profitable, Net Cash, pays good dividend, sustainable industry, etc., The only concern is they have huge exposure investing in the market.
What is you view on MFCB (Mega First)?

Tks/Rgds
Jaack

Posted by TeckChuan Lee > 2013-07-20 16:29 | Report Abuse

KC, how do you get WACC? Based on Focus Point 2012

Posted by kcchongnz > 2013-07-20 17:18 | Report Abuse

Total equity Total debts Total capital
53530 21317 74847
Percentage 72% 28% 100%
Cost 12% 8%
WACC 8.6% 2.3% 10.9%

WACC=cost of equity*percent of total capital+cost of debt*percent

I just use cost of equity as 12%, the return I required for investing in this company. And cost of debt (after tax) as 8%

So WACC is 10.9%

Posted by kcchongnz > 2013-07-20 17:22 | Report Abuse

Posted by Jaack1 > Jul 20, 2013 03:31 PM | Report Abuse
Dear Mr KC Chong,

MFCB (MEGA FIRST)

MFCB has always been profitable, Net Cash, pays good dividend, sustainable industry, etc., The only concern is they have huge exposure investing in the market.
What is you view on MFCB (Mega First)?

Tks/Rgds
Jaack

Jaack, i strongly suggest you give a try like what Teck Chuan did for Focus Point. I can guide you. MFCB looks interesting.