Posted by inwest88 > 2013-07-28 08:40 | Report Abuse

Thanks kc for your feedback.

Posted by Steve Jub > 2013-07-30 12:29 | Report Abuse

kcchong, what do you think of faber and huayang current price? is it fully value already also ?

Posted by TeckChuan Lee > 2013-07-30 14:17 | Report Abuse

Dear All, can anyone give comments on HOMERIZ RM0.38?

FY2012
1. ROIC 27.84%
2. FCF 19mil
3. DY 0.08
4. NTA RM0.36
5. Earning Yield 41.18%

FY2013 Q1, Q2, Q3
1. ROIC 16.31%
2. FCF 17mil
3. Sales dropped slightly, still waiting for Q4 results to reconfirm
4. NTA RM0.38
5. Earning Yield 23.15%

Extra notes.
1. Very good figures of Receivables/Revenue. Only 30 to 40 percent in FY2013 quarters
2. Young company with only 4 years of results to evaluate.

Posted by kcchongnz > 2013-07-30 17:35 | Report Abuse

steve,

Faber does appear to be having a good business. Good cash flows and healthy balance sheet with negligible debt now after 150m debts were paid off last year. ROE was good averaging 18.4% for the last two years.

At RM1.77 at the close of today’s market, PE ratio and price-to-book are at undemanding 6 and 1.2 respectively. Yes, Faber may be a good company to invest in.

Posted by Steve Jub > 2013-07-30 17:37 | Report Abuse

thanks kcchong. what about huayang? fully valued?

Posted by kcchongnz > 2013-07-30 17:50 | Report Abuse

steve, this was what I talked about Hua Yang 5-6 months ago. The problem is its price was just RM1.61, but it is already RM3.14 already now. So as the price already doubled in just 5-6 months, don't you think that people have chased the price too far after its bonus issues declaration?

Hua Yang is one of the fastest growth property companies in the last three years. Its main project is the One South Sri Kembangan development which has a GDV of RM920m, with other minor projects spread over in Johore, NS and Selangor. Revenue rose by a compounded annual rate of 82% and 62% respectively in the last two years to 306m for year ended 31/3/2012 and profit ballooned by almost 5 times to 53m. Net profit margin has expanded every year to a respectable 17.3% last year and ROE to 20%. A dissection of its ROE below shows that the high ROE is achieved with the high net profit margin, NI (17.3%) and skillful use manageable debts and good financial leverage of 1.7.
ROE=NI*AT*FL=17.3%*0.7*1.7=20%

With more projects expected to come on-stream, it is expected that asset turnover will increase and so is the ROE. Earnings per share increases every year, despite the issuance of bonus share each year to its shareholders. In the year ending 31 March 2012, EPS is 37 sen. For the three quarters ending 31 December 2012, net profit increased further to RM53.5m, or 28 sen per share with a another increase shares outstanding to 198m due to the 1 for 4 bonus issues. EPS is estimated to be about 40 sen for the full year. Its balance sheet is healthy with a debt-to-equity ratio of just 0.36 (<1), and low solvency risks with current ratio high at 3.0. However, there is no free cash flow yet as Hua Yang uses all its CFFO to buy up more land for development and other capital expenses. FCF will come soon. Hua Yang gave a dividend of 15 sen for the last few years, despite the increase in outstanding shares. If this dividend persists, this will translate to a dividend yield of 9.3%, with today’s closing price of RM1.61.

Meanwhile the PE ratio is incredibly low at just 4.4. Using the simple valuation with ROE of 20%, a 12% required return,and a net tangible asset per share of RM1.69, Hua Yang should worth RM2.80 (20%/12%*1.69). Don’t you think it is a good investment?

Posted by Steve Jub > 2013-07-30 18:13 | Report Abuse

it's worth is RM2.8, now is RM3.14. but PE is so low 4.4. Hmm?

Posted by kcchongnz > 2013-07-30 18:21 | Report Abuse

steve, PE of 4.4 was based on previous earnings the previous price of 1.61. At the latest annual earnings of 36.6 sen per share and its price now of 3.14, PE is 8.6.

RM2.8 is just an estimate of its intrinsic value, a subjective evaluation. Not engraved in stone.

Posted by inwest88 > 2013-07-30 18:22 | Report Abuse

kc, may I have your views on Kretam. The stock has moved up almost one ringgit in the last month or so.

Posted by kcchongnz > 2013-07-30 18:29 | Report Abuse

"The stock has moved up almost one ringgit in the last month or so."

Did you direct the question to the right person? As you know, I am not an investor basing on momentum of price volume action.

Posted by inwest88 > 2013-07-30 18:32 | Report Abuse

Sorry kc. Just would like to hear from you based on FA !

Posted by inwest88 > 2013-07-30 18:33 | Report Abuse

At the current price of of 2.91, is it over-valued ?

Posted by kcchongnz > 2013-07-30 19:20 | Report Abuse

What is brewing in Kretam?

Another palm oil company with palm oil mills. With palm oil prices still in downtrend, what is so special about this company? Never pay dividend until the last two years. No I don't have the faintest idea.

Very poor operation efficiencies with ROE and ROIC at 2.7% and 1.5% respectively. I don't even want to pay any attention to it even if it is selling very cheap.

what more it is selling at a PE ratio of 56 and a very low earnings yield (ebit/EV) of just 4%?

inwest88, I don't know why you want to ask about whether Kretam is worth investing or not from a investor with fundamental approach.

Posted by inwest88 > 2013-07-30 19:23 | Report Abuse

I am not well versed in FA and I know that it has high PE and not dividend paying. I thought maybe you can find some other value inside. Thanks anyway.

Posted by Steve Jub > 2013-08-05 10:26 | Report Abuse

kcchong, do you consider those 'turning-around' company as hidden gem? example GHLSYS and TEXCHEM. Turn around meaning to say they seems to turn from bad quarterly result (price also low) to better quarterly result.

Posted by kcchongnz > 2013-08-05 19:50 | Report Abuse

That depends on how is the "turnaround". Is it rally turn around after a temporary set back of a fallen angel, a new and credible management; or is it just a temporary "turnaround, some financial shenanigan of the old ineffective, self-interest management? Really have to look closely at the business and behind the numbers. Can't generalize just like that. Some turnaround can really provide excess return for savvy investors.

Posted by Steve Jub > 2013-08-06 09:00 | Report Abuse

ok thanks kcchong.

Posted by Steve Jub > 2013-08-07 09:43 | Report Abuse

kcchong, what do u think of tambun? current price is undervalue or fully value?

Posted by mansor80 > 2013-08-13 14:59 | Report Abuse

KcchongNZ, how about Scicom. P/E 10.65, Divident Yield 6.19%, ROE = 20.7.


KC Chong what is your view? Thanks in Advance

Posted by aukh > 2013-08-13 21:59 | Report Abuse

hi, kcchong, may i have your comment on SEAL 4286. it looks pretty good to me. for past years the results are as following :-
NET PROFIT (,000) EPS (sen) CASH FLOW (,000)
2009 9,548 5.30 16,697
2010 6,959 3.89 16,129
2011 6,932 3.84 40,490
2012 17,736 8.98 40,466

based on EPS of 8.47sen for 9 months for FY ending 30/6/2013, its annualised EPS should be at least 10.00 sen. the closing price for today is 0.545 and if based on a PER of just 8, its fair value should be 0.80. thus there is an uptrend margin of at least 25 sen. (its NAPS is rm0.76) FY ending 30/6/2013 will be announced end of this month.

kccchong, your view is appreciated. Thank You.

Posted by aukh > 2013-08-13 22:23 | Report Abuse

Hi, KC Chong,
Please note that for SEAL 4286, there was no dividend declared so far.

Posted by houseofordos > 2013-08-13 22:44 | Report Abuse

From a quick glance at the 2012 annual report, SEAL main revenue was derived from Penang Bayan City development which was recognized in 2012. This spike in revenue is unlikely to be repeated as based on the report, they do not have any more prime landbank like in Penang Island.. most of their remaining land is in Kedah...

The property development segment has become the main contributor to the Group’s financial results in the current financial year, with
revenue amounting to RM86.7 million representing 71% of the Group’s total revenue. The strong performance was mainly contributed
by Bayan City, Penang which generated RM80.7 million accounting for approximately 66% of the Group’s total revenue

The free cash flows does look good all the way back to 2009.... assuming we dont consider the recurring payments for timber concessions to be PP&E ? These payments for the timber concessions seems to be rather high compared to the revenue received from this segment... I m not sure about that... I ll leave it to KC to comment on that...

Posted by kcchongnz > 2013-08-14 11:52 | Report Abuse

aukh,
Another property company? It does seem it is moving from logging and saw milling to property development.

I concur with house about the transient good performance of Seal last year. Previous years were not good. ROE was between 5%-7%. The question is after Bayan City, what is next? Any? Property companies always have the same problem, after this development, what is next?

I would like to talk about one thing which could be important which most investors fail to pay much attention on, the capital allocation by the management. Does the management makes use of the capital wisely to enhance the shareholder value?

Seal has a lot of cash last year, 40.9m cash (note cash flow is not cash, see your tabulation above)and 25.4m in unit trust, or a total of cash or cash equivalent of 66.3m. This was a huge increase from two years ago of only 16m. Good eh? But where did this cash come from? From the cash received from doing the business? it doesn't seem so. The cash was from issuance of additional shares (8m, hence dilution), from delay payment to creditors (25m), draw down of term loan and redemption of unit trust.

How did Seal spend money? Did it pay any dividend last year? Did it pay any dividend for the past 5 years? None, kosong. Instead it used the money to buy unit trust, 21.6m in total last year.

So judge by yourself what kind of management is that. does it have the interest of the shareholder in mind?

Posted by TeckChuan Lee > 2013-08-14 17:34 | Report Abuse

KC have you done any analysis on EKSONS? Please point me to the thread if you do?

This is the data I got from EKSONS FY2012, MARCH
1. ROIC 14.9%
2. ROA 9%
3. ROE 10%
4. CFFO/IC 165%
5. DY 0.05
6. P/NTA 0.46
7. EV/EBIT 4.2
8. EY 23.7%
9. P/BV 0.46

Price is still low for this counter. Considered a GEM?

Posted by kcchongnz > 2013-08-14 18:01 | Report Abuse

Eksons a gem? Really?

Posted by TeckChuan Lee > Aug 14, 2013 05:34 PM | Report Abuse
KC have you done any analysis on EKSONS? Please point me to the thread if you do?
This is the data I got from EKSONS FY2012, MARCH
1. ROIC 14.9%
2. ROA 9%
3. ROE 10%
4. CFFO/IC 165%
5. DY 0.05
6. P/NTA 0.46
7. EV/EBIT 4.2
8. EY 23.7%
9. P/BV 0.46
Price is still low for this counter. Considered a GEM?

TeckChuan, the data you provided is for march 2012, why not March 2013? Do the same thing for the latest annual result and tell me if it is a gem.

Posted by j harcharanjit a/l jalaur singh dhillon > 2013-08-14 18:28 | Report Abuse

LBS is shooting like a rocket.. malton is hopping slowly

Posted by hng33 > 2013-08-14 19:38 | Report Abuse

How about next hidden gem: DRB-Hicom

Posted by hng33 > 2013-08-15 00:43 | Report Abuse

DRB HICOM

(a) An integrated automotive player
1. Proton
2. 34% owed Honda Malaysia
3. Motorcycle assembly plants for MODENAS, Honda, Yamaha and Suzuki.
4. Passenger and commercial vehicles for Mercedes, Suzuki, VW, Isuzu
5. DEFTECH that is designed for military vehicles. It has been awarded a contract worth RM7.5bil to supply 257 units of 12 variants of the 8x8 armored-wheeled vehicles throughout 7year contract.



(b) Concessions
1. Puspakom: It is Malaysia only comprehensive national vehicle inspection company.

2. KL Airport Service: provide a comprehensive range of services to commercialairlines operating into and through Malaysian airports, from
ground handling and cargo handling to in-flight catering and aircraft maintenance & engineering services

3. Alam Flora is 60.5%-owned: Solid waste management services in Kuala
Lumpur, Putrajaya, Pahang, Kelantan & Terengganu, serving 30% of the
Malaysian population.

4. Pos Malaysia is 32.2% owned



(c) Financial
1. 70% own Bank Muamalat
2. UniAsia insurance



(d) Property and landbank
1. Glenmarie Puchong, Glenmarie Shah Alam
2. Proton City
3. Iskandar, Johor

Posted by kcchongnz > 2013-08-15 09:44 | Report Abuse

Scicom? Yes, Yes, Yes

Posted by mansor80 > Aug 13, 2013 02:59 PM | Report Abuse
KcchongNZ, how about Scicom. P/E 10.65, Divident Yield 6.19%, ROE = 20.7.
KC Chong what is your view? Thanks in Advance

Scicom (MSC) Berhad is engaged in the provision of customer contact center services within the business process outsourcing (BPO) space. It provides customer contact center outsourcing services, customer services training products, as well as contact center consulting and marketing services.

Scicom has a very good business. Its operating and valuation numbers are even better if you look at the enterprise angle. ROIC is 35%. Cash flow, my favorite, is very good with average CFFO 130% of NI. FCF is aplenty at 10% and 24% of revenue and invested capital. Very good.

Posted by inwest88 > 2013-08-15 10:00 | Report Abuse

Kc, perhaps you may want to add this counter into your stock pick challenge ?

Posted by kcchongnz > 2013-08-15 12:11 | Report Abuse

Homeriz anyone?

This guy wrote this below is good. For your information, he just started to learn analysis financial statement recently. He had no background at all on finance. Who say learning fundamental investing is difficult?

I have taken his recommendation and bought some Homeriz because it is a great but young company trading at attractive price.

Posted by TeckChuan Lee > Jul 30, 2013 02:17 PM | Report Abuse
Dear All, can anyone give comments on HOMERIZ RM0.38?

FY2012
1. ROIC 27.84%
2. FCF 19mil
3. DY 0.08
4. NTA RM0.36
5. Earning Yield 41.18%

FY2013 Q1, Q2, Q3
1. ROIC 16.31%
2. FCF 17mil
3. Sales dropped slightly, still waiting for Q4 results to reconfirm
4. NTA RM0.38
5. Earning Yield 23.15%

Extra notes.
1. Very good figures of Receivables/Revenue. Only 30 to 40 percent in FY2013 quarters
2. Young company with only 4 years of results to evaluate.

Posted by sstan11 > 2013-08-15 12:14 | Report Abuse

anyone have any idea bout SCICOM?

Posted by TeckChuan Lee > 2013-08-15 17:31 | Report Abuse

FLBHD is another young company with okay financial evaluation. Selling at RM0.72.

FY2012
1. ROIC 13%, ROA 9, ROE 10
2. FCF 26mil, CFFO/NI 244%
3. DY 0.08
4. NTA RM1.12, P/NTA 0.63
5. Earning Yield 50%
6. EV/EBIT 2, P/BOOK VALUE 0.63


Extra notes.
1. 2013 Q1, sales okay, negative cash flow, 5mil
2. Listed for 2 years only.

Posted by mansor80 > 2013-08-15 23:26 | Report Abuse

Posted by sstan11 > Aug 15, 2013 12:14 PM | Report Abuse

anyone have any idea bout SCICOM?

Scicom? Yes, Yes, Yes

Posted by mansor80 > Aug 13, 2013 02:59 PM | Report Abuse
KcchongNZ, how about Scicom. P/E 10.65, Divident Yield 6.19%, ROE = 20.7.
KC Chong what is your view? Thanks in Advance

Scicom (MSC) Berhad is engaged in the provision of customer contact center services within the business process outsourcing (BPO) space. It provides customer contact center outsourcing services, customer services training products, as well as contact center consulting and marketing services.

Scicom has a very good business. Its operating and valuation numbers are even better if you look at the enterprise angle. ROIC is 35%. Cash flow, my favorite, is very good with average CFFO 130% of NI. FCF is aplenty at 10% and 24% of revenue and invested capital. Very good.

Posted by haikeyila > 2013-08-16 09:25 | Report Abuse

how would you factor in liquidity in the assessment of a company? companies like FL are financially good, but lacks shareholding liquidity.

Posted by Steve Jub > 2013-08-20 13:22 | Report Abuse

kcchong, any thought on Malton? Going up much lately.

Posted by BBB79 > 2013-08-20 13:33 | Report Abuse

kcchongnz, i treat LBS as a hidden gem, you can consider and study on it...

Posted by kcchongnz > 2013-08-20 14:18 | Report Abuse

Malton? so many good property companies, why Malton?

Posted by Steve Jub > Aug 20, 2013 01:22 PM | Report Abuse
kcchong, any thought on Malton? Going up much lately.

Looking at its third quarter 2013, didn't make much and big drop from last year, just 4.3 sen for three quarters. Balance sheet not good. Huge amount of receivables, 325m in all. Inventories also scary at 112m. What about cash flow? Not even positive in cash flow from operations, no need to talk about free cash flow. Not only for this three quarters. Last year same.

Malton is a darling of the stock market. Everybody cheering and hohohoing about it. It is for this same reason that I won't want to get near to it. It is just me. You don't have to follow me.

Posted by BBB79 > 2013-08-20 14:21 | Report Abuse

Malton very hot recently due to politic share, almost can read from newspaper once a month...

Posted by Steve Jub > 2013-08-20 17:27 | Report Abuse

thanks kcchong for your tot :)

Posted by kcchongnz > 2013-08-20 17:31 | Report Abuse

Hey, this is Ooi Teik Bee's stock. You should ask the right person.

Posted by BBB79 > Aug 20, 2013 01:33 PM | Report Abuse
kcchongnz, i treat LBS as a hidden gem, you can consider and study on it...

I remember reading an article courtesy of OTB in i3 about LBS's sale of Properties in china which enable LBS to rake huge amount of profit of cash. That would be an excellent point for LBS, provided the management is willing to share with all shareholders.

Just wonder why the special dividend just announced is so little at 8 sen only.

Posted by hng33 > 2013-08-20 17:47 | Report Abuse

How about next hidden gem: MNRB

Posted by kcchongnz > 2013-08-20 18:04 | Report Abuse

Posted by haikeyila > Aug 16, 2013 09:25 AM | Report Abuse
how would you factor in liquidity in the assessment of a company? companies like FL are financially good, but lacks shareholding liquidity.

If you value a company with comparative industry or sector, you may want to add a liquidity premium, say 15% to the PE ratio, P/Sales, P/Cash flow. EV/Ebitda, Ev/Ebit or whatever.

In finding the intrinsic value of the company, perhaps you may want to use a higher required return, say 15% instead of 12% to find the present value of its future cash flow. Or perhaps you may want to use a higher margin of safety.

This is all art.

Posted by TeckChuan Lee > 2013-08-20 18:48 | Report Abuse

SUPER ENTERPRISE HOLDING BHD
SUPER. 8656

RM1.175

FY2013 MAR 2013 REPORT
1. ROIC 13
2. ROA 8, ROE11
3. NTA RM2.08, PRICE/NTA 0.39
4. DIV YIELD 0.03, PAYOUT RATIO 10%
5. PE RATIO 3.46
6. EV/EBIT 3.07
7. EARNING YIELD 32%
8. PRICE/BOOK VALUE 0.39
9. FREE CASH FLOW FOR SINCE FY2009

NOTES
1. REVENUE GROWTH SOSO
2. HAVE YET TO READ UP ON THE COMPANY STRUCTURE, GOVERNANCE AND PRODUCT DURABILITY.

Posted by kcchongnz > 2013-08-20 18:51 | Report Abuse

Posted by hng33 > Aug 20, 2013 05:47 PM | Report Abuse
How about next hidden gem: MNRB

Not sure if you are asking me. I think you know more about this company than me. But anyway, I just give a shot.

MNRB certainly meets your high dividend yield criterion.

Insurance companies very hard to value, especially those contingent liabilities; how much it has to pay out due to future claims etc.

Other assets are more straight forward, especially the financial assets which are marked to market. So normally I value the stock using ROE. Average ROE of MNRB last two years was 9.1%. So fair value =ROE/required return*NTA=9.1%/12%*5.32=RM4.06

Using PE ratio say 10, fair value =10*.4725=RM4.72

47.25 sen is the average EPS for last two years

Posted by TeckChuan Lee > 2013-08-20 18:52 | Report Abuse

SEAL INCORPORATED BHD
SEAL, 4286
RM0.525

FY2012 JUNE
1. ROIC 25
2. ROE 11, ROA 12
3. P/NTA 0.58
4. EV/EBIT 1.7
5. EY 58
6. P/B 0.58

Posted by Steve Jub > 2013-08-20 20:15 | Report Abuse

kcchong, for malton, i saw the net asset per share pretty high (1.37) and PE ratio pretty low (5.84). what do you think of these 2 area?

Posted by kcchongnz > 2013-08-21 06:08 | Report Abuse

Posted by Steve Jub > Aug 20, 2013 08:15 PM | Report Abuse
kcchong, for malton, i saw the net asset per share pretty high (1.37) and PE ratio pretty low (5.84). what do you think of these 2 area?

steve, you are talking about the financial results ended 30/6/2012 which is more than a year ago. Malton's 2013 results will be announced soon. So the PE ratio you are referring to is history. But even for the 2012 results, you notice that revenue and profit has declined. Malton reported that they made 64.4m, or 15.4 sen per share in 2012. But show me the cash. Why is that that year they have to pay out a net cash of 52.6m? What is this 118.2m as "short-term fund" appearing in the "Cash Flow From Operating Activities" statement? Strange.

Now let us come back to its 2013 ending 30/6/2013 which will be announced soon. I won't think it will be pretty. The three quarters results showed that it only make 19.2m or just 4.6 sen per share. What do you think the EPS will be for this last quarter? How much higher can it be when compared to its third quarter of just 0.36 sen? So what is its latest PE ratio then? Don't forget that it has loan stock and warrant holders who are also will be sharing any profit made in the future.

Earnings is one thing which I never trust it standing alone. Look at its cash flow. Just three quarters, its CFFO is a negative of 192m! this is a result of increase in inventories and receivables of 83m and 215m respectively. As I have mentioned, the total inventories and receivables amount to 437m as at 32/3/2013. They are already more than its NTA of RM1.43 in its balance sheet. These assets are what I consider as "bad" assets" My feeling is that Malton will soon try to borrow more money from the bank. I don't know the bank will lent them any more and if not, a right issue or private placement is on the card.

Damn scary.

Posted by kcchongnz > 2013-08-21 08:51 | Report Abuse

Fat Cat, I have posted my opinion on Inari before as below. My view has not changed.

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 Steve Jub > 2013-08-22 10:06 | Report Abuse

kcchong, any tot on LIIHEN? i have its fundamental looks ok.