Fundamental plays? You have to think like how investors think.
ie you need to buy good companies at a cheap price.
Problem now, most aren't cheap.

... which means... you left focusing on companies on a 'new' growth phase...
this is where it's tricky...
it's not easy cos some of these growth aren't sustainable...

A more recent/current example, I have to say is SEAL and GPHAROS.
both 'turnaround' stories....
SEAL had a terrible reputation as a goreng stock.....
nobody dared touch it...
more recent... new owners came in...
and the company was focused in property (but with new twist).....
since thet are small, the company focused more on JVs.
Recent profit showed the fantastic turnaround...
cash flow was incredibly fantastic ....
only risk is.... one might question how sustainable...
stock shot up from 80 sen....

GPharos.... turnaround .... but.... in the timber sector....
Yup... the sustainability issue comes right up.....


2) Follow goreng plays?
Woahhh!!!!

Dangerous hor.......
Very risky....
Not everyone can make money swimming with the sharks.



NO.
Privatization offers is business.
Big mega bucks business.
But the business is from the owner's perspective and NOT the shareholders.
The owners will only make a privatization offer if they can really, really screw the minority shareholders.
Remember not this point.
And NO... they do not and will not offer the public at NTA prices. (how can the owners make money with such offers? )

certain trading platform (such as Kenmoney, Jupiter) allows you to use Equities Tracker.
You can see from there.

Eh?

You see SEAL?

Go see when they report their earnings.

Check the price then and now....


For ULI.
You know the stock was fried previously.
Stock was lifeless for a long time...
Once the fun(d) from the island started buying...
was that a buying catalyst?

SEAL, must do some research mar...

First news: http://www.thestar.com.my/Business/Busines...heds-old-image/

Second: Look at the quarterly profits announced on 30th May.
Learn to see the cash flows.
That sort of verified the quality of the turnaround.

Mix that with the news, one should understand that this is one new company already.
But from a risk management analysis, one HAS to asks if the this success is sustainable or not.
for a property company, I believe you have to address the future projects issue, land bank etc...

ULI?
look very simple.
maybe my england like england football not good.
below average company.
very shoddy past.
we have the cooking of books issue...
then the French MOU thing in 2011 used to goreng the stock high, high.....
Absolute not a fundamental stock for investors.
But from a goreng investor point of view... this stock HAS THE GORENG FACTOR.
this is a stock to watch.

20th June they announce one fun(d) from one small island buying the stock...

this is where you need to ask...

BUY FOR WHAT?
fundamentals ah?
Remember last 5 year track record showed declining profits ( ie Uli's last 5 years profit track record read 21m, 18m, 16m, 17m, 16m. )

So if the stock fundamental is poor...
stock got kena goreng cow cow before using lame execuses....
and now foreign fun(d) from small island come buying.....

what's your conclusion?
mine?
OPEN STORE FOR GORENG SEASON!



See ULI's trading volume on 23th June...
what you see?



Remember...
no volume, no action
no action, no money
no money, no honey!

spring onion

those 2 examples.... past jor.

Asked you the other day about puc.

why would you think the stock is a buy?

is there a catalyst?

spring onion

left out high NTA issue....

see, you need to buang this.....

I give you example on how you can miss out BIG, BIG winners......

If I not remember wrongly...
I only discuss with gark on Inari around Sep last year.

This was the last quarterly available then....

http://www.bursamalaysia.com/market/listed...cements/1389181

How much was Inari's NTA?

0.35 sen.

Price of Inari in sep 2013 was around 70+ sen.

If you see Inari's net asset per share, would you even dare buy?

Today, Inari is trading above 3.30+.

How come so like this one?

Of course, I AGREE.

But for ULI's case, I dunno la....
cos if I add the factors up....
I can see so clearly....
that it was BUKA KEDAI FOR GORENG!!!!!!

so the only question left is....
do you want to jump in and enjoy?

yeah ... enjoy being fried....

correction...

Uncle Google says it was July 2013....

read from post #2341

hehehe.... ok.... you got a point here.

But what I wanted to point out is there exists companies where they can earn more than their net asset.

Ok, give you another reverse example....

How about London Biscuits?

Do you know what's the risk in using London Biscuit's NTA (I believe it's over 2.00) ?

Err... London Biscuit is unique.

problem was highlighted in cgmalaysia blog, in it, there's this link: http://www.whereiszemoola.blogspot.sg/2010...uits-again.html

There's this table drawn...

http://4.bp.blogspot.com/_nDt1odcHv2g/TIHi...1600/lonbis.JPG

That indicated London Biscuit is buying and selling its property, plant and equipment (PPE - short form) (this figure boosts up Net Asset) actively!!!!!

Back to cgmalaysia posting last year:
http://cgmalaysia.blogspot.com/2013/11/lon...eems-wrong.html

Ah Wind, highlighted a 10 year comparison.

in 2003, PPE was only 80 million.
in 2013, PPE is worth 517 million. !!!!!

an increase of 6.5 times!!!!

Latetst: http://klse.i3investor.com/servlets/staticfile/241460.jsp

In the cash flow statement, there is this note from London Biscuit. It says...

"Property, plant and equipment at aggregate cost of RM24,745,000 (2013-RM33,570,000) was acquired
during the financial period of which RM15,422,000 (2013-RM9,579,000 ) was acquired by means of hire
purchase and term loan."

London Biscuit is still buying PPE!
24.7 million during the financial period!
the last few words.... "acquired by means of hire purchase and term loan."

What does this tell you?
LonBis used loans to keep buying and selling PPE!!!



Do what cow business do until like this one?

See if you want to use fundamentals, sometimes you must look and see why the stock not laku.

For example, as pointed out, if compared to Apollo Food, LonBis share price is really like heaven and earth....
LOW PE somemore...
why not laku.

Yup, whenever if I see a company with low PE, sometimes I ask myself, why all the more clever investors not interested in the stock?

So when you look deeper, esp in the cash flow statement, you can straight see.

for example, the statement ...

""Property, plant and equipment at aggregate cost of RM24,745,000 (2013-RM33,570,000) was acquired
during the financial period of which RM15,422,000 (2013-RM9,579,000 ) was acquired by means of hire
purchase and term loan."

was mentioned in the cash flow statement.

Then you straight think... why a company like this buy what PPE for 33.5 million last year and this year buy another 24.7 million?

Straight away you want to avoid.................

Well done!

See you do do some research.

Yes, the company is not quite the same and the sundaily article explains why the huge jump in profits.

Yes, LonBis has a lot of loans.
Sometimes it's not the issue of how much loan a company has ....
it's more the issue how the company is building up the total loans.

First you can compare simple yardsticks... (see no need complicated ROIC or whatsoever)

I curi tulang and borrow cgmalaysia data.

in 2003, LonBis makes PAT (profit after tax) of 9 million. Total borrowings 36 million
current TTM PAT is about 16 mil. Total borrowings about 260 million.

So in a ten year span, PAT increases 7 million. (from 9 to 16million)
An increase of 77%.
However to increase 77%, the company's loans increase from 36m to 260m!!!!!
Loans increased 7.2x!!!!!!

Straightaway we know something not right.

Then we need to find out why....

We see the company buying and selling property, plant and equipment.

Straightaway.....we go face palm!!!!

latest annual report: http://www.bursamalaysia.com/market/listed...cements/1484433

page 49:
Gain on disposal of property, plant and equipment = (1,153,311)

LonBis lost 1.1 million from disposal of PPE!

Face palm !!!!!!!

Mind you LonBis borrows money one to buy PPE!

Do what cow business do until like this one?



How would you evaluate such a company?
Loans build up so much and then you find out the company loan build up is due to the constant purchase of PPE...
then only to discover company is also active selling those PPE they had purchased!!!

My face also pain.....

So many butts for what?

Search uncle google..
This old story avtually..
Can see article from 2010?
Red Media around for sometime already.

cannot ask me boleh or no boleh one.

this is where you the porridge or rice time ma....

you see the chart...
looks nice, no?
if got run, it's not impossible to see stock hit maybe 27 sen and even run past 30 sen.

but when you see fundamentals, you not so sure.
New company, RTO...
the company is listed on London AIM...
proposal was actually made years ago... 2010 article
and if you look at puc track record, puc track record is lousy....
This article calls it win-win: http://www.thestar.com.my/Business/Busines...ompleted-today/
puc used to be making 1 million per year only...
with Red Media, if annualised, one could see maybe 12 million or more profits....

But then.... you know la..... China....
and then we have some x factors....
http://www.theedgemalaysia.com/business-ne...off-market.html
51 million shares sold off market at an extremely cheap price....
and then you got this.....
http://www.theedgemalaysia.com/in-the-edge...venture-fd.html
rights issue... maybe at 18.5 sen (solar venture? really meh? )
and then there is the 1 for 7 bonus issue with free warrants.....

total BS? or something gonna be cooked? the stock or the punters?

Let me ask you....
you see porridge or you see rice?




( going to play ping pong now..... reply later)

These are the exact exercise I run myself thru all the time.
I weigh out the pro and cons.....
most important I shut out the noises from the market itself, yes, I do not want to know who, what, when and how (many would disagree but inside noise tends to distort my own personal judgement) ....

play with examples like this.....
see if you can develop some own personal skills in judging what's tradeable and most important what's not tradeable.

repeat same process over and over again.....

find your edge.

Missed your post.

Ah Hong, these are the stuff I do whenever I want to consider I buying a stock.

But end of the day, I am different and you are different.
What is important issue for me, might not be for you.

And to make matters worse, stock markets are full of cliches.
And it can really confuse the hell out...

Good stocks sometimes seems to be in coma for ages...
Lousy stocks seems to be able defy gravity....

... and the stocks we deemed questionable and risky flies up, up and away....

yup it happens....
and many a times it's confusing.....

The nice story....

http://www.thestar.com.my/Business/Investi...ovid-FV-46-sen/

The fine line....

They say 46 sen because "RHB Research ascribed a 17.0 times fully diluted calendar year 2015 earnings per share, at a discount to the 18.9 times average of its peers."

Sounds innocent.

The finer line....

CAGR is not something like you dump into the wok and start frying....

It's compounded annual growth...

and in this case ... compounded annual growth for TWO CONSECUTIVE years....

which means HOVID profits must fly from 20 mil to 32.7 mil or an increase of 63.5% over 2 years.

LOL!

This is where they get away with it...

when they RHB write CAGR of 18.5%, ordinary folks thinks 'ok what' , not a bloody fei kei target...

but when it's translated it means a bloody 63.5% increase in profits!!!!

Now put it a much better context when you relate to current prices...

price of Hovid this morning is 41 sen.
RHB says fair value is 46 sen or a 12.2% upside potential....

BUT to achieve this 12.2% upside, HOVID profits must increase 63.5% over the next 2 years!!!

face palm!



Hovid's current numbers?

2011 - lose money
2012 - 15.6 million profit
2013 - 20.3 million profit
ttm - 19.4 million profit -- huh? decrease wor! (current 9 months profit only 13.7 million - decrease 5%!)

come 2016 - can reach 32 million???

LOL!!!

come 2015 -- do you even remember what RHB wrote about Hovid today???



This post has been edited by Boon3: Jul 16 2014, 08:51 AM

Hehe...ya this is how research houses play with target prices.

Most of the time, they use a fly sky eps estimate to set their fly sky target prices.

Then you did not note of HLIB comments on KNM?

KNM's eps is 1.8 sen. ( only 1.8 sen only)

When HLIB wrote, KNM at that time price was 90.5 sen, which meant that KNM is already trading at a pe of 65x!!


No problem so susah to fix.
All HLIB needed to do was to project KNM's eps to be 8.4 sen.

They gave this reason, that reason, this reason...
Which by alone, sounds reasonable....

But then...
when we compare the finer point...
what HLIB was actually saying was....
KNM eps would jump from 1.8 sen to 8.4 sen.

Cow jumped over the moon.

EPS is supposedly will increase 4.66 times!!!!

And because KNM's eps can jump so high...
they think a PE multiple of 16x is FAIR....

So 16 x 8.4 = 1.35 TP.

Now everyone can jump over the moon.



.... and yes...
this is where it's confusing for the average players.....
they be arguing how come if KNM so lousy...
why can KNM fly so high?