hantam these 5 for fun

QSR
Drbhcom
Ci holdings
bkawan
axiata

QL for one more , but must give a good timeframe for it lah.


But for value investors , the biggest setback/mistake is to set a short timeframe or having too high an expectation.

This post has been edited by SKY 1809: Nov 6 2010, 09:06 PM

thanx for sharing sharesa

First & foremost, even though I talk theory of buy high, sell higher. I do give recommendations for US stocks
Now, this forum is for sharing & I DO NOT need ur spoon feeding!
But if you are going to talk theory. Do have BALLS, be a MAN & DON'T sidestep the issue by giving EXCUSES
Its for the other forumers to judge theory talk & compare it against actual peformance
Nothing to hide unless you have

In Malaysia, you still can get some haha corporate information every now and then ( some pieces and not completely ) , but it does not mean you should share it openly with everyone you know of .

This post has been edited by SKY 1809: Nov 6 2010, 07:57 PM

When this thread is open, apparently it is talking about how to value a company and theories are involved along the discussions. It is not a tips giving thread.

I don't see you contribute any in the discussion instead you straight away asking for 5 counters. It then gave me an impression that you either don't know/don't bother to know and only care about the outcome. To be successful in investment, it's not always outcome but the ultimate goal is to go through the process, and discussion of how to find the fair value is the "process" we are talking about. So what's the point we tell which 5 counters we choose base on our on assumption that you don't know? Again, I said no spoon feeding, unless you know the "process" we are talking about and apply your own understanding of the process to get the 5 counters to show us what you have been working before asking us to show you the 5 counters. If you talk something with input and contribute something interactively in the discussion rather than arrogantly blame the "process" is bullshit, it would be quite a pleasure for me to talk more over here.

When you are criticising someone by finger pointing, please remember there would be 4 fingers pointing back to yourself. Your words just reflect who you are who only like to talk cock sing song since you might not have BALL to show the "process".

How do u guys judge management of company ??

sky1809, well we can keep a list of 30 or so list of counter in watchlist, giving 5 is no big deal, anyway this discussion goes nowhere
reminds me of mlm thread, going around & expanding into irrelevant topics

talk so much theory & giv excuses! writing 5 counters is only 1 line
no point furthering this as u go jus go round in circle & giving excuse after excuse

You are also keep whining around and around of begging others to spoon feed you

Well,

I find the discussions are rather fruitful, only you are the one who spoils the soup.



P/s . I thought the 5 are requested by you, and our forumers obliged by our Malaysian friendly Culture.

This post has been edited by SKY 1809: Nov 6 2010, 09:11 PM

Ya, we are talking about the "process" but someone still doesn't get it. That's why I'm saying when one is more on the "outcome" who tells others no shit how these outcomes derive. We are just from the different world.

Maybe I can claim I make millions of $ from 5 counters based on fair valuation method. But anyone of you can verify how I make millions on that? Or you are too stupid to look through how I can make million with the 5 counters but you cant? If you can't understand then why I bother to tell you which 5 counters? You might claim I'm BS but it's the bad side of telling the outcome without knowing how prove it works. It is an internet world man, I can even BS I'm top 5 most sucesssful FM here who claim to make big bucks from the 5 counters in bursa as stated below:-
SATANG
OILCORP
KENMARK
LCL
AMVEST

Can you verify/prove how I make millions or you think it is a a wasting time to read the 5 counters since you know no shit out of these?

This post has been edited by kinwing: Nov 6 2010, 09:30 PM

I wont even bother to buy airasia, I don't see the fair value goes anywhere where in future 10 years. The price can go like crazy times 3++ but eventually will follow it true value in future.I dunno about short term..zero knowledge about it.
It is simple,it is because those analyst don't focus on business in perspective of owner . their estimate are useful, but if they apply in rubbish business, so rubbish outcome too
heard of margin of safety??

As a long tern value investor:
1)buy GOOD business ( AA is a superb company, world class CEO ...but in wrong industry.. capital intensive industry..)
2)buy business that intrinsic value at increasing sufficient rate
3)Buy at great discount
I have been investing for 5 years ++ in oversea market..not so long for some of you, I only watch my portfolio once for few weeks.
all along these years, my portfolio generate compound return around 20%++(after affected by GFC)...

For the bold statement,Good strategy for those who dunno the intrinsic value at least better than those who buy and hold the wrong business...

---

Added on November 6, 2010, 11:34 pmPBB, NESTLE, JOBST ..
The first two every one knows it is a great company and business
PBB - trading at 15% premium to my value
NESTLE - trading at 25% premium to my value
JOBST -(edited..just realised JOBST is RM2.8 now..my fair value last month see is RM2.3 in JOBST thread)..too bad ..i just thought i want to buy it when coming back Malaysia.

will disclose more company in future.

cheers

This post has been edited by foofoosasa: Nov 6 2010, 11:58 PM

similar with what i have read in the book - Business Cycles (History, Theory and Investment Reality) by Lars Tvede

Great stuff there kinwing as well as other forumers who contributed. Yes, process is extremely important. Most people thought when the price of the share they long go up, then, their process is correct, this is a wrong way to view investments. Sometimes, a good process may still lead to bad result. But, if your process is sound, you should do well over the long run.

Some of us here may not be comfortable in revealing our position because whenever you make your position public, you feel a certain obligation to stick to that position and you can't think independently.

For those who like to read message board for tips, read this piece of research paper : Confirmation Bias and Investment Performance : Evidence from Stock Message Board

As for criticism on DCF model, actually, all the PE ratios and stuff can link back to DCF model. DCF is good because it can allow you to look at what drives the company as well as stimulate various conditions. As long as your cash flow forecast is consistent and your inputs are logical and consistent, then, the valuation derived should be a good guide. Do a sensitivity analysis on your inputs. With excel, it is rather easy to do all this stuff. Stress test the company and try to kill it, if the company still survive, then, most likely you got a bargain in your hands. As for some common errors on DCF, I have share this piece in the Value Investing thread before but I am going to share it again on this thread. Download the attachment below.

On air asia, please take a look at SIA performance since its stock listing. SIA is the most profitable airline in the world. If Air Asia turn out well, it would probably be like SIA and that's a big IF. But, if you look at SIA financials, you will know why Air Asia is not a good idea especially at such a price. It may go up, but, it doesn't means it is a good company.


Attached File(s)
 CommonErrors.pdf ( 106.4k ) Number of downloads: 23

I do not know who invented the theory of " Discounted Cash Flow".

For me , at best it should be called " Assumed Income Flow"

In today world, incomes could not as easily classified as CASH. The Dubai crisis and even bank mini bonds went bust. Perhaps , QE 2 may bring back Incomes closer to CASH, but still not very right to assume Incomes = Cash.

IF you are the traditional Chinese businessmen, DCF is nonsense because it has nothing to do with CASH, at best a promise to receive CASH sometimes in future dates.

To the laymen, the word DCF is grossly misleading . Otherwise incomes in IOU could be termed as CASH.

In Malaysia, you can easily find construction contracts to do, but the chances of not receiving payments or so called HARD CASH is very high or a long delay is highly possible. You may have a good DCF model here, but ..........looks good on papers only. No HARD CASH is coming in.

BTW, Cashflow is neither profit as well. " Discounted" sounds confusing to Accountants too.

Using DCF, Malaysia could build another 10 100th floor Towers perhaps, but where is the real cash to come from ?

And there would not be any Dubai Crisis at all.


Just my view.

---------------------------

Discounted cash flow models are powerful, but they do have shortcomings. DCF is merely a mechanical valuation tool, which makes it subject to the axiom "garbage in, garbage out". Small changes in inputs can result in large changes in the value of a company. Instead of trying to project the cash flows to infinity, terminal value techniques are often used. A simple annuity is used to estimate the terminal value past 10 years, for example. This is done because it is harder to come to a realistic estimate of the cash flows as time goes on.

http://www.investopedia.com/terms/d/dcf.asp

This post has been edited by SKY 1809: Nov 7 2010, 09:20 AM

I trust my hunch to determine fair value then i flip the coin

All these DCF, PE and all sorts of methods are Greek to me so I will take the easy way out.

1. Call up dealer which company are worth investing. They have so many in-house reports so it will be a piece of cake to them. You want how many counter, they can give you how many.

2. See how much money I am willing to tie up long term.

3. Use Technical Analysis to determine my entry point and exit point.

Life so much easier this way for my ignorant brain.

Just keep an opened minded that there are such things around, and meanwhile you can still stick to your own methods that you are comfortable with.

IF you think it is good , you may adopt some of the ideas ( added on ) to your own practices.

This is just a round table type of discussion.

Do not take it too seriously.

This post has been edited by SKY 1809: Nov 7 2010, 08:52 AM

Folks,

Let me throw in my 2 cents...

"Fair Value"??

1) Looking at the industry that GUARANTEED to make money. -> Bank, Unit Trust, and Insurance

2) Look for the Best Managed company in that industry. --> PBBank

3) How do they LOSE MONEY?? --> Political Loan

4) What price to buy?? When the Dividend Yield is high enough as compare to FD. 2 x to 3 X FD. 6% to 8% will be a good number..

5) When to sell??

A) Dividend stop growing.

C) Condition (1) to (3) changes...

This is probably dividend based investing...

Dreamer

I think you may have misunderstood the difference between Discounted Cash Flow and Discounted Residual Income. I think the DCF model you talk about is actually a discounted residual income model. Yes, I agree with you on the discounted residual income model. Discounted residual income model is a bunch of BS created by accountants who thought that accounting numbers is good representation of actual economic condition.

Discouted Cash Flow model is basically a model which discount the expected CASH FLOW, that's hard solid cash. It takes into account of capital expenditure and working capital requirement. Underlying the model is a simple assumption that a business is worth only as much as the cash that it can generate, which is very sensible.

As we are buying equities without control, as Kinwing have mentioned previously, we can adjust that using a discounted dividend model (a subset of discounted cash flow) instead. But, that would probably undervalue the company. But, you can compensate that by doing a discounted cash flow to equity model. The fair value, should be within the range of two values.

There are complications involve when using DCF to value young and high growth firms because cash flow projection is difficult. But, even if you use multiples such as PE and you whack an industry PE into the high growth firm, you are implicitly assuming that the company, will become like the mature players in the industry in the long run and earn that sort of cash flow that a mature player earns. So, you are basically doing some forward looking assumption without realising it. If you use historical PE, you may be assuming that the past performance can repeat itself. It is just that when you use multiples, these assumption are implicit. In DCF, the assumption is explicit.

There are various shortcomings in DCF model assumption. The problem is not the model itself but the problem lies in the inconsistencies in applying the assumption. For example, the capital expenditure assumption must tie back with the growth assumption. You can't assume that the growth is 30% a year with minimal CAPEX. Another possible error is the terminal value growth rate, some analyst whack a very high growth rate into their terminal value. What's their justification? Cause the industry grow at 5% for 30 years, so, I think a 4% growth rate is possible for terminal value. But, terminal value is a valuation to an infinite years. What is 30 years when compared to infinite amount of years. By whacking a 4% growth, the company theoritically at one point of time will be bigger than the entire output of the world because the world do not grow so fast.

There are flaws in every valuation model, be it multiples or dcf, I think the best way is to use a combination of both. Check with various technique.

Plus, for those who like to read analyst report for TP, always find out how they come up with it. Even some big foreign banks TP have some real inconsistency problem which result in an above average target price.

Just my two cents.

This post has been edited by the snowball: Nov 7 2010, 12:07 PM

able to apply theory into practice & sharing with us

1duit is a lot of construction activities, I looking at this



got a spike in its volume, but its not available in the above graph. look at its accelerating eps
http://biz.thestar.com.my/marketwatch/fin_...?searchstr=5703

Fiscal Year 12/31/2006 12/31/2007 12/31/2008
Net Turnover/Net Sales 1,086,414 1,411,533 2,033,535
Net Profit 33,800 70,180 21,800

sky1809, thanks for the compliment. for every pov, there r the supporters & those anti I am fine with arguments as it allows a neutral viewing. do keep up the flame war