17 March 2013

A mini review of the stocks that stated by Cold Eyes: Do your homework

I did not go the talk last Saturday because the place is too far from my living place. Luckily, Nanyang newspaper published some information regarding the talk. After making a mini review, I found out that some of them are incorrect. Although I am not sure whether it is reporter's or writer's mistakes (or others), by doing some homework, we do can avoid misleading crisis.
In this post, I am going to state some stocks that appears to be incorrectly stated in the newspaper or some important information one may miss them.

1. L&G, 3174

L&G earned 2.4sen during last quarter ended 31/12/2012. However, most of the profit is due to one-off earning as stated in its quarter report:

"Excluding the said exceptional income, the division posted a revenue and an operating profit of
RM8.1 million (3Q2012: RM8.7 million) and RM2.5 million (3Q2012: RM4.2 million)
compared to the corresponding period of the preceding year. The lower results posted was due
to lower commodity prices and rubber yield.
"The Group’s pre-tax profit amounted to to RM21.8 million, compared to RM4.4 million in the
last quarter due to the following:-
• the write back of provision for redemption of land amounting to RM12.3 million
• share of losses suffered by its jointly controlled entity of RM1 million as compared to
RM2.7 million in the last quarter
• fair value gain of RM29,000 in this quarter as compared to the fair value losses of
RM8.6 million suffered on its quoted investment in the last quarter.
Thus, investors should exclude these one-off (or exceptional income) during valuation.

 2. Fitters, 9318

According to last quarter (ended 31 Dec 2012), loan and borrowings was 33.642million (current liabilities. So, I think we cannot assume it is zero borrowing in this moment.
Besides, even this company has four segments, that are, manufacturing, construction, palm oil and investment, construction contributed more than 90% of total profits. In other words, the company still not able to divide its profit sources.

3. TECNIC, 9741

There are some borrowing as stated in its last quarter. Thus, I do not think we can simply assume it as zero borrowing company, especially when the total amount of borrowing (both long and short term) is more than 50% of its total cash in hand.

4. MSC, 5916

(Source: www.lme.com/)
MSC really a very cyclic company. Plus recent operational changes, more uncertainties exist. Even the price of tin is up around 25% from its lowest price, can this trend sustained in next 1~3 years? Nobody knows, I guess. So, it is the so-called investment that contains both uncertainty + potential potential. If one is very sure about future, then it is not an investment anymore. It is simply sure win game.
Next, I must highlight that even though I have pointed out some weakness of these stocks, it may not have direct relationship with its market price movement. Additionally, I believe Cold eyes only tends to share his opinion about what is the so-called good companies. Besides, due to the limited space in a newspaper, the content has been summarised. But to earn money, investors must still need to buy good companies with a reasonable or undervalued prices.
Lastly, we should always appreciate cold eyes senior's sharing. But too many "speculators" who simply buy what has been mentioned  by senior. Maybe it was just an example of a good company. For example, Dutch Lady is a good company, then with buying price of RM100 or PE >30, do you want to invest it??? Yes, if its earning will be double next year, then PE will be halved. If not, then how?? These are some questions investors should always consider.
One of the ways to nurture a HABIT to be failure in stock market investment is simply buying a stock WITHOUT doing sufficient homework frequently.
That's all for today. More fascinating articles and sharing will be updated from time to time in Xaivier Blog. So, you are welcome to subscribe our feed, look at our sitemap or simply visit our Homepage for latest sharing.

Written by: Xaivier Chia

(P/S: The above sharing is solely based on personal insight. Please do not take it seriously. However, your valuable feedback are very welcome.)

Bursa Malaysia


No comments:

Post a Comment