Posted by Fortunebull > 2013-10-03 20:45 | Report Abuse

KCChongnz! You miss hibiscus as hiddengem!

Posted by inwest88 > 2013-10-03 21:28 | Report Abuse

Fortunebull, Probably you do not understand kcchongnz's investment strategy which is based on a company's performance, cash and reserves, asset quality, management etc (past, present and future). Yes Hibiscus's prospects sounds exciting but the company has no past records and there is no certainty that it can do well in future. Just my opinion - no offence meant.

Posted by kcchongnz > 2013-10-04 09:56 | Report Abuse

Posted by Jaack1 > Oct 3, 2013 07:32 PM | Report Abuse

03.10.13

Dear Mr Chong,

Please have a good look at MWE Holdings Bhd – they have always been profitable & I think MWE is getting more interesting.

MWE hived off their plantation and electronic businesses and recently bought a 27% stake in Kumpulan Europlus Bhd.

In your view, is this good for mid ~ long term investment?

Tks/Rgds
Jack

I think investing in MWE is a very safe investment. It has a lot of cash and cash equivalent, investment in quoted and unquoted shares. Its latest balance sheet shows this cash and cash equivalent of more than RM2 per share is worth more than its share price now.

Yes, their business has been profitable too and there is no worry of burning of whatever cash it has.

As its purchase of Keuro, I really don't know how it will turn out. Was it a good buy. I don't know also. I don't have a good impression for the old Keuro, not sure of the new Keuro. New toll highway? It all depend if the management can manage the project well or not. May be with IJM will help.

Posted by kcchongnz > 2013-10-04 10:00 | Report Abuse

Hey newbiestockreturns,
I am really very curious, just curious. What have I done to you that warrants you to keep on follow me and attack me? I don't know you. I have never offended you. Please clarify.

Posted by newbiestockreturns > 2013-10-04 10:02 | Report Abuse

OK la KCCHONGNZ sorry...me bad...

Posted by kcchongnz > 2013-10-04 11:42 | Report Abuse

What's up for AsiaBio, Jimmy?

Posted by Jimmy Young > Oct 3, 2013 08:20 PM | Report Abuse
Dear KCChongNZ,
http://klse.i3investor.com/servlets/stk/0150.jsp (ASIA BIOENERGY TECH BHD) - not predicting future etc, historically is there somewhere some intrinsic value which could translate to future values etc? Appreciate your kind views/thoughts
Thanks

Are you old enough to know about the dotcom bubble in 2000? AsiaBio fits in perfectly as one of those companies; technology company which has no revenue and year in year out burning cash.

Hey Jimmy, it is very interesting. Go Google and read extensively about the dotcom bubbles. This is the first lesson before investing in a jungle out there.

Posted by kcchongnz > 2013-10-04 12:35 | Report Abuse

Did I miss Hibiscus? How could I when I don't give a damn to this Selling Promises And Craziness (SPAC)?

Posted by Fortunebull > Oct 3, 2013 08:45 PM | Report Abuse
KCChongnz! You miss hibiscus as hiddengem!

Let us see how the fortune teller classified as GEM.

Since listing Hibiscus has been making losses. No revenue, still looking for qualified assets acquisition. While looking for QA, spent million for investment bankers, millions for administrative expenses, millions for financing costs, millions in "other expenses" etc. How not to make losses?

As at June 2013, accumulated losses is 20m! A gem? OMG!

Actually this is expected. SPACs are murder holes.

Think about it!
1) Would a promising company need to do deal or merge with SPAC, or rather it just go public through a IPO on its own merits?
2) SPAC no doubt has some seemingly successful business people behind them. Are you sure they too will succeed in this new ventures? Or they were successful because of luck or through other people? I tend to believe more of the later.
3)Those early birds whose cost is so much lower will unload in droves once listed, leaving those poor retail investors holding the hot potato.
4) Investment bankers will be laughing to the banks with your money. They pay themselves multiple times:
a) When they take it public
b) Consultant to the SPAC on retainer as a potential acquisition is sought.
c)When an acquisition is found
d) The one year process when SPAC is seeking shareholders and regulator approvals.

Fees, fees, fees, an ATM machine for the investment bankers. Guess whose money in the ATM machine?

What is the stories behind Hibiscus? I don't even want to hear.

Posted by Fortunebull > 2013-10-04 12:38 | Report Abuse

Ha! KCChongnz don't know anything! Pretending to be smart! Look at his Mahhsing valuation! Fail!

Posted by tonylim > 2013-10-04 12:43 | Report Abuse

hey fortunebull, so what if one miss the valuation.
how long you in the market, kaneeneh.
another retard in the making.. pls ignore him

Posted by johnny cash > 2013-10-04 12:43 | Report Abuse

LATELY OSK RECOMMENDED TSH SHORE...KENANGGA RECOMMENDED BJ FOOD AS A BUY

Posted by Fortunebull > 2013-10-04 12:46 | Report Abuse

Read KCChongnz on Mahsing! He got his figures wrong! I follow his recommendations! Many stocks he put down has shot up!

Posted by tonylim > 2013-10-04 12:47 | Report Abuse

why follow him. who did you follow?

Posted by kcchongnz > 2013-10-04 12:49 | Report Abuse

Posted by Fortunebull > Oct 4, 2013 12:38 PM | Report Abuse
Ha! KCChongnz don't know anything! Pretending to be smart! Look at his Mahhsing valuation! Fail!

This is interesting. Tell me what is considered as "fail"? What valuation you are talking about? What part of the "valuation" "fail"?

Please take note that I am not a fortune teller like you who knows about future share price.

Posted by tonylim > 2013-10-04 12:51 | Report Abuse

fortunebull, you sit behind your computer to talk about now... today.
why not tell me about which counter to buy/sell in the afternoon session and next monday and tuesday.

dont talk about the past.

Posted by kcchongnz > 2013-10-04 12:53 | Report Abuse

Posted by Fortunebull > Oct 4, 2013 12:46 PM | Report Abuse
Read KCChongnz on Mahsing! He got his figures wrong! I follow his recommendations! Many stocks he put down has shot up!

You stupid fool. Why did you follow me and lost the opportunity to make killings in those stocks?

by the way, what "figures wrong" ah?

Posted by Fortunebull > 2013-10-04 12:53 | Report Abuse

Ha! Ask you KCChongnz! Read his comments on Mahsing!

Posted by limko1 > 2013-10-04 12:54 | Report Abuse

'Many stocks he put down has shot up!' May I ask these stocks shot up because of fundamentals or speculation?

One needs to be clear of one's investment objective. If you are in for a quick punt, then it is a different story.

Posted by tonylim > 2013-10-04 12:56 | Report Abuse

You deserve to loose money by your own doing.
Such an attitude better to play shares la.

go for a walk. Nothing to say, better keep quiet than to blame others for you trades. kanneeneh.

Posted by kcchongnz > 2013-10-04 12:58 | Report Abuse

Did I say the share price of Mahsing will plunge? And which figure below wrong and "fail"?

Posted by kcchongnz > Sep 28, 2013 01:27 PM | Report Abuse X

Posted by bsngpg > Sep 28, 2013 12:05 PM | Report Abuse

Hi KC Chong : My current biggest holding is Mahsing. I have strong faith in it and am very conformable with its current trend and biz, not perplexed as in GTronic and Zhulian. Anyway as I have the largest $ in it, if you would mind, I would like to see your valuation on Mahsing. Pls post it under the thread of Mahsing if you wound mind.

Look at the growth in revenue and net income of Mahsing from the table below:

Year 2012 2011 2010 2009 2008 2007 2006 2005 CAGR
Revenue,000 1775260 1570696 1110108 701562 651639 573365 495625 473491 24%
EBIT,000 307728 231501 176393 146398 138598 122994 97544 73354 21%
Net Income,000 230617 168556 118071 94282 93168 81126 65370 48346 23%

Mahsing is a very aggressive property development company. It has one of the most amazing growth story in Bursa. Revenue and net income has been growing at a compound annual growth rate of 24% and 23% respectively. Last year, its revenue is 1.8b and net income 232m. Few companies has shown such a high and consistent growth for such a long time over an economic cycle.

Its operating efficiencies are also not bad and improving throughout the years. Last year ROE and ROIC was 18.5% and 14.5% respectively, more than the costs of capital by quite a good margin.

Price wise, at a PE of 8.0 and enterprise value of 7 times ebit, it is inexpensive too. But why is it that its share price, now at RM2.20, doesn’t grow at the fast pace as its revenue and earnings?

The management of Mahsing has very high ambition, wanting to have a 3b revenue company in a short time to come. Generally most people view this as positive but not me. I have involved in construction before and know that big (in revenue) is not necessary good. Big in net income and cash flow is good for me. The more projects you have, the more headache you have. In order to grow very big, Mahsing keeps on borrow more money, its borrowing also reaching billion ringgit club soon, issue more shares and warrants. Interest payment were not made but rolled over each year and hence made the net income appears to be good (I guess only by looking at its financial statements). It uses the money to keep on buying land for development. What happen?

The Achilles’ heel of Mahsing is its cash flows. Imagine half the time the cash flow from operations (before capex) is negative because of increasing development cost and growth in receivables. So I don’t have to even talk about free cash flow which I value the most in making my investments decision.

I feel this kind of operation, seeking growth without caring about cash flow a very dangerous management decision. Imagine when we hit a serious recession. Think about another financial crisis. I like to look down rather than look up, caring more on not losing than winning big. I personally will not invest such a company because I always believe what Warren Buffet’s rules:

Rule no. 1: Never lose money
Rule no. 2: Always remember rule no. 1.

Of course this is just my personal opinion. I am often wrong in my opinion.

Posted by kcchongnz > 2013-10-04 12:59 | Report Abuse

And which figure below "wrong" and 'fail"?

Posted by kcchongnz > Sep 29, 2013 08:28 AM | Report Abuse X

Posted by bsngpg > Sep 28, 2013 08:24 PM | Report Abuse

To all: pls do not get confused by our discussion. All in all, Mahsing is still a great company in most of the aspects, just imperfect with negative cash flow. I believe there are many companies with negative cash flow in Bursa which can last long and grow successfully. Pls do your own assessment; negative cash flow is not a forbidden factor in biz world but definitely need extra attention.

Most of the members do not understand and always complained about the dull price performance of Mahsing, maybe the negative cash flow is the reason behind.

Good luck.


bsngpg, I agree with you the above. I also agree with your point that all interest payments were made except that in the income statement, they did not show the interest cost for development projects, but capitalized them, which i think is ok.

So my only concern is its fast growth and hence bad cash flow. But again fast growth may be good for many growth investors and good cash flow may eventually come.

Posted by bsngpg > 2013-10-04 13:12 | Report Abuse

Hi : I have quite a lengthy discussion with KCChong on Mahsing last weekend. I try to summarize the discussion into few points:
i) Mahsing is a good company with very aggressive, amazing and consistent growth be it on revenue or net income.
ii) Not bad and improving operation efficiency
iii) PE and EV indicates it is inexpensive
iv) Negative cash flow
Conclusion : Mahsing is a good company but with negative cash flow which does not meet KC’s first and most important criteria in counter selection.

He said he liked other counters with positive cash flow, this has nothing to do with Right or Wrong.

Please be fair to KC.

I also do not think share price of Mahsing at 2.40 is great.
Thks

Posted by Fabien Wong > 2013-10-04 15:09 | Report Abuse

WEIDA

A key player in providing integrated environmental solution from provisioning of materials, construction and consultancy services such as waste treatment, renewable energy and other green initiatives. The barriers of entry into this industry are high: substantial capital investment, intensive research and development programmes and specialist technological expertise developed in-house over the years. This industry is generally capital intensive for big scale manufacturers.

It is now trading around 1.70 below its NTA of 2.91 with a cash per share of slightly below Rm1.00. It achieved an EPS of 7.91 per share.

Strength of company.

Strong recurring income from waste treatment plant concession and telecommunication tower
Manufacture base material and products required for water and waste treatment industry, which is good potential growth
Very strong financial and trading at a forward P.E of 6 times. The share price has a potential upside of 75%.

Risks

New technology unlikely but possible
Poor market sentiment may temporary be a damper to the share price. Not a concern for long term investor.
Freeze on local infrastructure project but unlikely as these are essential infrastructure which is very much lacking in east Malaysia.

Latest venture in property quite successful – Urbana at Ara Damansara soft launch at 700 per sq ft; 80% sold !

Posted by ProfitMan > 2013-10-04 22:49 | Report Abuse

Fortunebull, just a piece of advice. You need to evaluate the share yourself and then decide whether to trade in it or not based your own time frame for holding the shares and based on your own risk appetite. KC may suggest some counters based on his evaluation and if we choose to follow his recommendations and we lose money, then we ourselves take the blame.

So, I don't think its fair that you criticize him or anyone for that matter. (By the way, I have not read KC's recommendations and neither do I know him)

But do bear in mind that some fundamentally good shares may trend down in the short term but they will find its way back to its worth, i.e. its intrinsic value, in the medium to long term.

Posted by kcchongnz > 2013-10-12 15:14 | Report Abuse

Posted by Jimmy Young > Oct 12, 2013 08:04 AM | Report Abuse
Dear KCChongNZ,
Want to ask your opion/thoughts/views on the following stock

1. Instacom - reason: LTE
2. Cuscapi - reason: there's some news says he expanded outside Malaysia also somewhat a leader in POS system according to news etc ..
3. Pantech - all one stop steel solutions etc for all industry
4. PMCorp - potential of being the next nestle according to some etc on i3 ..
5. ULICORP - somewhat a cabling system leader in his field ..

Jimmy, my quick response to your queries.

(1) Instacom
I don't know anything about this company yet. I notice in the recent i3 challenge, many of them "bought" Instacom. May be they can provide some answers. If I am not wrong, Tan Kian Wei is one of them.

I read something from a finance blogger which made me ruled out investing in this company. to me, this thing is serious. Check the link below here.

http://www.intellecpoint.com/

(2) Cuscapi

Ha, someone just pointed a finger at me about this stock that I "failed" in my assessment about this stock when a forumer asked me about it some time ago. Please read the thread appended below. You would understand my philosophies in investing. It so happened that I gave a very thorough explanation on my assessment.

http://klse.i3investor.com/servlets/forum/800001960.jsp

The re-posting was done by this gentleman fortunebull yesterday at 5.34pm.

(3)Pantech
Posted by kcchongnz > Jul 25, 2013 12:20 PM | Report Abuse X

Nobody seems to agree with me that Pantech is already fully valued.

[Posted by kcchongnz > May 13, 2013 01:26 PM | Report Abuse X
Pantech share price has an excellent run. It ran up from about 70 sen at the beginning of the year to about RM1 now, for a gain of more than 40%, in just 4 months. I hold Pantech for a long time already and happy with the return from it. I am still holding some. But is Pantech fully valued now?
I opine so. Even if I take an assumption that it will grow at 15% for the next 5 years and 3% subsequently, which in my opinion is a fantastic feat, and a required return of 12%, Pantech at 1.00 is almost fully valued already.]

In discount cash flow analysis to find the intrinsic value of a company is very subjective, in particular, one has to input a growth assumption. A slight difference in this assumption yields a very different intrinsic value. But if you use the DCFA in a reverse way, ie, try various growth rate assumption as input and see what assumption yields an intrinsic value exactly equal to the market value, then you can see what the market is expecting its growth rate. Then you can gauge whether this expectation is realistic or not.

(4) PMCorp
I have posted a number of posts in the PMCorp. I even gave a Graham net-net analysis on it in that thread.

In summary, my opinion is investing in PMCorp is a very safe thing to do. It has all the upside potential as its quality assets less all liabilities is worth more than its present share price. It business in chocolate is small but profitable. Potential to be the next Nestle? I think this statement is too far fetched.

Balance sheet healthy and no sign of burning of cash. there is little or no downside unless the major shareholders squander away the money it has.

(5) Ulicorp
Don't know anything about it. But since you mention there must be something there, isn't there? If so I will take a look.

Posted by sense maker > 2013-10-12 18:24 | Report Abuse

I did not comment much except for those I have invested in. If you read my previous postings here and in investlah since 1.5 to 2 years back, I wrote and recommended Wellcal in early 2012, Prolexus in Jan 2013 and ILB in Feb 2012. I was lucky that all performed really well.

The only other counters I have which took a beating lately is Liihen. I think it will recover to RM2 in 1 or 2 quarters. On Liihen, I hope it can make RM0.3 EPS a year on average for the next 5 years. If that happens, it is a matter of time before the price moves up.

:D

Posted by Ooi Teik Bee > 2013-10-12 19:04 | Report Abuse

Dear sense maker,
I noticed your postings are full of facts and logic, please post more and I also like to learn from you. Good work.
Thank you.

Posted by Fortunebull > 2013-10-12 20:44 | Report Abuse

Sense Maker really make sense! Can tell whether he is trying to be smart or really coming from financial background! His explanation is very much typical way any financial expert sound! Read you PMCorp assessment know straight away a great financial analysis!

Posted by Eric Wong > 2013-10-13 17:51 | Report Abuse

Dear KCChongNZ,

Civil engineer here, just started investment last few months. Surf through few sites and found this thread quite interesting.

Anyhow, straight to the point - is Cresbld (construction shares) still consider as hidden gem, almost 100% rose from early this year till now (1.38) but with NTA RM2+ and EPS 20~30 cents, the price should be much more higher.Maybe due to their debts which were half of their revenue? As for the FCF part, can you please guide me. From the 2012 annual report, it stated "CASH AND CASH EQUIVALENTS AT THE END OF FINANCIAL YEAR = RM15180661" or they don't have any due to huge debts that they carried?

How about SYMLIFE (property share) and AMEDIA?

For SYMLIFE, a property share and there're lots of undervalued property shares mentioned in this thread. Maybe you will questioned there's lots of undervalued shares out there, why this? Nth special, just want to learn and it just happened that i had found this and there're still a lot that i don't even know. This share condition almost same like CRESBLD, NTA and EPS quite high but also with high debts. And how bout FCF?

As for AMEDIA, i think most of us know about it and i categorized it as under recovery gem. High profit margin, slowed down growth rate and earning, debts? 10% of its revenue, is this consider high?

Please enlighten. Thanks.

Posted by kcchongnz > 2013-10-13 18:11 | Report Abuse

Eric, oh a civil engineer, me too.

First of all in this cyber world, I really don't know if an identity is what it says it is. I kena many times before. Someone, or may be a couple of them came with fake, new identities and asked questions like you do. I provided with some arm-chair investor's view, yes, that is what I am, and ended up with all kind of nonsense.

Do you notice that someone is calling me a liar now just because some people asked my opinion on some companies and I busy body spending time looking at the financial statements and provided my opinion? For what?

This is your first post, I really don't know who you are. So I refrain from any comment to avoid all kind of accusations.

But if you are really interested to hear from an arm-chair retail investor on Cresbld and Amedia, I have done that before in i3. Go Google them.

Posted by Eric Wong > 2013-10-13 18:22 | Report Abuse

No problem. Yes, i have surfed some threads in these 2 days and just think that maybe i can learn something from here. Anywhere, nice to meet even you dunno me. Probably if we can talk personally in order to avoid any "attacks" here.

I just want to learn, that's why i asked. Never mind, i go google search 1st. Anything i don really understand, will post here. Or if i can PM u? :)

Posted by kcchongnz > 2013-10-13 18:41 | Report Abuse

Lets start with Cresbld. Even if you asked me a year ago, I would still say it is not my cup of tea. Now it has risen by 100% as mentioned by you. Wouldn't you accuse me of misleading you?

You see a value fundamental investor like me is not a fortune teller. He can't tell you the future price of a stock. He can only based on its business, its prospect, its past performance and form a judgement, a judgement of whether it is a good company, and then loo at its price if it is worthwhile investing, even if it is a good company.

Assets and earnings of a company is just accounting number. One has to look deeper into what these stuffs are. Debt is alright if the company has adequate cash flow to cover interest. FCF is not "CASH AND CASH EQUIVALENTS". etc.

Below please read the comments which appears in this thread.

Posted by houseofordos > Apr 8, 2013 01:07 PM | Report Abuse
KC, what do you think about CRESBLD ? This stock looks undervalued to me.. KENANGA has a TP of RM1.35 for this stock. Havent done a detailed study, but a quick check on latest results :-
ROE 12.7077
P/E 3.25
EPS 29.2277
DPS 4.97
DY 5.23%
PTBV 0.4130
Market Cap 130M

Posted by kcchongnz > Apr 8, 2013 01:47 PM | Report Abuse X
house Cresbld looks attractive from your statistics. My intention of this thread is about a growth stock trading at a reasonable price. Criteria are:
1) Profit growth >15%
2) Revenue growth >10%
But at reasonable price
1) PE<15
2) PEG<1
And good quality of growth
1) ROC > WACC
2) ROE> 12%
Or a value stock
1) PE< 10
2) P/B <1
3) DY > 3%
But not a dead wood
1) revenue and profit growth >5%
And not going to bankrupt
1) D/C <60%
Not cheating on earnings,
1) good quality earnings in terms of good cash flow
Can share with us how Crebld fits into one of these two?

Posted by tptan45 > Apr 8, 2013 11:26 PM | Report Abuse
Key Results Highlights QoQ, 4Q12 pretax profit grew tremendously by >100% to RM28.7m, largely due to the fair value gains of RM20.0m arising from revaluation of its investment properties i.e. The Crest office tower, car park lots and two other shop units located in Taman Megah and Sentul.
The above from kenanga regarding crest builder.
Does it mean that without the revaluation its profit was only 8.7 m for that q?
Was that revaluation a one time thing?
If it was, then we should take it out and focus on profits from operations.
Then its fy 12 profit would be down to 27 m, as compared to 37 m for fy 11.

Posted by kcchongnz > Apr 9, 2013 05:51 AM | Report Abuse X
tptan45, you are absolutely right on all your comments above. I could see this things from their cash flow statement.
Just a glance at its financial statement ended 31/12/2012, I feel uncomfortable about investing in this company. The income statement lumps everything into revenue and profit, which includes that revaluation of its investment properties. This is inappropriate in my opinion. This stuff has to be specially separated as revaluation gain, or extra-ordinary gain or whatever, after the "profit from operations", and should not be classified as "other operating gain". How can a revaluation of assets be classified as "operating gain"? How can this gain be lumped together in earnings per share? Hiding the fact in the explanatory notes is irresponsible.
Financial Auditors: GEP Associates (2011). Who the hell is this?
I view it as a financial shenanigan. I may not be qualified to say so as I am no accountant. But I will definitely avoid this stock. There are so many to choose from Bursa.

Posted by Eric Wong > 2013-10-13 18:54 | Report Abuse

Just in the middle of google search, u replied. Thanks. Save me lots of time.

Of coz, i know u're not fortune teller (as KFIMA dropped to 1.9+; anyhow, thats not the point, we have to see the company overall, future will be better, just the matter that if we can hold until that time or not) but i know you analyze well enough for me to learn as i mentioned earlier, just started investment few months ago.

And just to clarify, i'm here not to get TP or advices from you all to buy or not to. I just want to get more infor, more analyzes and how to get them correctly. So, please dun misunderstand. :)

This is forum and free for all to talk, just treat those critics, accuses as "advices" to be better lolz. I know its kinda hard but just think about it, there're still a lot of ppls support u for ur willingness to provide guidance and info to amatuers like us.

Hmm, can u show me how to get the FCF for once, coz i dun really understand the financial statements :)

Posted by kcchongnz > 2013-10-13 19:08 | Report Abuse

http://klse.i3investor.com/servlets/forum/900214344.jsp

Go read my explanation of cash flow and free cash flow from the above thread.

Posted by Eric Wong > 2013-10-13 19:10 | Report Abuse

Ok, thanks.

Posted by Sky Lim > 2013-10-13 19:43 | Report Abuse

kcchongnz, been reading your articles on and off for quite some time. just to share that there is alot people out there value and appreciate your sharing's , at least i find it useful and logic , keep up the good work ! *thumb up*

Posted by bsngpg > 2013-10-13 19:54 | Report Abuse

I give one vote too

Posted by Leong Hong Haye > 2013-10-13 20:47 | Report Abuse

Yes...I wholeheartedly support kccchongnz. In fact, he is very hardworking. Doing all the analyses on the counters and giving comments. The decision to invest or not is the reader's choice. kcchongnz, keep it up your good work.

Posted by kcchongnz > 2013-10-16 09:51 | Report Abuse

Is Asia Media a hidden gem? Hah!!!!!

Posted by Eric Wong > Oct 13, 2013 05:51 PM | Report Abuse
Dear KCChongNZ,
As for AMEDIA, i think most of us know about it and i categorized it as under recovery gem. High profit margin, slowed down growth rate and earning, debts? 10% of its revenue, is this consider high?
Please enlighten. Thanks.

This is what I said when asked 6 months ago when it was about 13.5 sen.

Asia Media (16/4/2013)

My favourite analyst, Phillip Capital (PC) made a strong recommendation to invest in Asia Media in mid 2011. That was the time I first exposed to this company. At the beginning of 2012, PC still favoured this stock as they wrote:

“Asia Media business remains intact with its 9MFY2012 net profit of RM12.9mil came in within our expectation. It has recently rewarded its investors with bonus issue (1:1) and free warrant (1:1). Besides, our channel checks reveal that the company is still eyeing for its Main Board migration.”

I also have read a couple of articles from a couple of investment bloggers and they cast doubts on Amedia’s business model. Hence I didn’t pay any attention to this stock at all. In May last year, Amedia came into limelight with its adjusted share price jumped from 15 sen after a 10% private placement, to 55 sen, or a 300+% increase just within four months. However, shortly after that, the share price plunged within two weeks to where it began when the major shareholder sold 9% of his holding. Guess who made the killing?

Now at a price of 13.5 sen, at an adjusted price of almost at its lowest since listing, and a “PE ratio” of just 5.8, is it worth to invest in this stock? Let’s look at how Amedia has been performing recently and what is the financial health of this company.

Table 1: Financial performance of Amedia (value in thousands)
Year 2012 2011 2010
Revenue 44766 36548 16554
Net Income 11739 15009 10282
NI Margin 26% 41% 62%

Table 1 shows that the revenue of Amedia is indeed growing very fast since its listing from 2010 to 2012. Its earnings is also decent with net income margin of 26%, although the earnings in 2012 has decreased by 3.3m. The net income margin decreased at an alarming speed, down from 62% in 2012 to just 26% in 2012. Why? We will have a look at its cash flows.

Table 2: Cash flow of Amedia
Year 2012 2011 2010
Revenue 44766 36548 16554
CFFO 12466 44471 4870
CFFO/NI 106% 296% 47%
Capex -24259 -54496 -2959
FCF -11793 -10025 1911

Table 2 shows that the cash flow from operations (CFFO) is good at 106% of NI in 2012. In 2011, CFFO is a whopping 296% of NI, fantastic. This shows the good quality of its earnings (or is it?). However, Amedia, after spending for capital expenses, expenses required to grow its business, it has no free cash flow (FCF). In fact FCF is as much as its earnings of 11.8 m in 2012, abeit at a negative value. Capital expenses of 24.3m in 2012 and 54.5 m in 2011 are just mind boggling, considering the amount of business it has been doing and the earnings it made for the two years. Why so much?

A closer look at Table 2 shows more discrepancies of its account. For example, how come the CFFO for 2011 is so huge at 44.5m, even higher than its revenue of 36.5m? The high CFFO of 44.5m higher than revenue coupled with the even higher capital expenses of 54.5m in 2011 makes one feel that there is a manipulation; something like boosting of CFFO with financial shenanigans. I now have doubts of its financial statements, not only for 2011, but also for 2012.

Amedia’s balance sheet appears to be healthy with a tangible asset backing of 15 sen per share. However, the bulk of this NTA of 90% is made up of “Properties, plant and equipment” which we won’t know what is the actual realizable value. It has a net cash position of 8m. This is because of money from new issues and additional bank borrowings for the last two year; total 24m and 12m respectively in 2011 and 2012.

Am I right in my analysis? I am not 100% sure but when I am in doubt, I don’t even want to look at its other things. I personally would avoid the stock of this company.

Posted by whkwoon > 2013-10-16 10:34 | Report Abuse

Should avoid , capital expenditure very high, high risk low return should look at Catcha expending very fast

Posted by rlch > 2013-10-16 10:45 | Report Abuse

If Amedia so bad, why my 10sen queue is not done?

Posted by Ooi Cheng Kee > 2013-10-16 11:07 | Report Abuse

Hi KC, what do you think of Homeriz? Still can add on since price drop?

Posted by kcchongnz > 2013-10-16 11:18 | Report Abuse

Posted by Ooi Cheng Kee > Oct 16, 2013 11:07 AM | Report Abuse
Hi KC, what do you think of Homeriz? Still can add on since price drop?

Ooi CK, please note that I can't predict share price movement. My belief is that nobody can. But if you are interested my view in fundamentals of Homeritz, you can read the link below and make your own judgement if you want to invest in it.

Please note that I have emphasized the word "invest".

http://klse.i3investor.com/blogs/stock_pick_challenge_2013_2h/34945.jsp

Posted by Ooi Cheng Kee > 2013-10-16 12:27 | Report Abuse

Thanks for your reply. I will hold it and invest more if drop below .4

Posted by wwwcomment > 2013-10-16 13:59 | Report Abuse

Hi KC, starting to follow your analysis. Any commet regarding oil and gas stocks like dialog, perisai, etc? Thx

Posted by Joshua Lee > 2013-10-16 16:51 | Report Abuse

KCChongNZ, would mind help to value BJFood? It looks interesting but PE is rather high right now. Thanks in advance!

Posted by kcchongnz > 2013-10-16 18:06 | Report Abuse

Posted by wwwcomment > Oct 16, 2013 01:59 PM | Report Abuse
Hi KC, starting to follow your analysis. Any commet regarding oil and gas stocks like dialog, perisai, etc? Thx

wwwcomment, that is the job of an analyst, not only an analyst, but an analyst specializes in oil and gas.

The non-analyst's opinion here is I don't know much of it, and I am not a follower of hypes. Let's take the O&G SPACs.

Punters have been chasing this O&G SPACs even from their initial IPO, you know they collect money from you even before they have the faintest idea what kind of O&G business they will acquire. They get the smartest or the richest people from the industry, and presume that they will be able to get some good buys for them, some more with good prices. Hey this is a capitalist country. If people got such good assets, why sell? And if sell, why sell to you? and if sell to you, why must sell you at good price?

At the mean time, the listed company go looking for acquisition. They need to pay salary, running costs, investment bankers' fees etc, even though they have no business, none at all to pay for these costs.

So easy to find a good buy ah? If can't find and the ending date is approaching, how? Simply grab one lah. You think they can grab a good company to acquire? You think they can get it for a good price when desperate?

While scouting here and there for acquisition, it is expenses, expenses, expenses; fees fees, fees.

SPACs started in US may be 20 years ago. Without fail, all of them fail. Go goggle.

Yes, you have good Oil and gas companies, dialog is one. Dialog has a fantastic history of growth and shareholder value enhancing. But at 2.82 now, and trailing EPS of 8 sen for a PE of 35, are you willing to pay the price for such a high growth expectation? Not me.

Perisai? I looked at it quite some time ago. Yes people made money, I mean the major shareholder. He sold his assets to the company at handsome price and profit. Company seems to be making money, but when is the cash? Do the shareholders receive any dividend? Why not? I see so many doubts there and hence I don't bother to look at it. I remember my remisier friends keep on telling me to buy last time with the RSI lah, fibo lah but I didn't give a damn.

Any other O&G counters I know of. Yeah lah KencanaSapura lah, Perdana lah, etc. But Iknow nothing about them. As I have said, I don't follow hypes.

Posted by wwwcomment > 2013-10-16 18:19 | Report Abuse

Thnks for the feedback. Aporeciate it.

Posted by jcck79 > 2013-10-16 18:38 | Report Abuse

Hi KC can you analyze for me MBSB counter? i've bought this share at 2.92 is it a good buy or should i dump it becoz the price is dropping due to right issue.

Posted by kcchongnz > 2013-10-16 18:51 | Report Abuse

jcck79, sorry don't know much about this also. I own this share quite a few months ago but have sold it since then. But can I put forward what I think? Can lah.

I think MBBS is a risky investment. Yeah direct debit of government servants through salary deduction seems to be very safe way of doing lending business. But i can tell you that most of this government servant, especially the lower ranking ones borrow too much. Too much that after deduction of car loan, housing loans, cooperative loans etc, they have not much or even none left behind to take home. So how? One of these days even if want to deduct from their salary also no money to deduct. So how?

I don't believe in this kind of business model, for individual, also for the society at large.

Share price performance wise in the future, I really won't know.

Posted by jcck79 > 2013-10-16 20:23 | Report Abuse

OK thanks for your opinion ;)