I still remember when I was just getting started investing in Stock Market in Bursa Malaysia, I read a couple of books about how to evaluate a company or business. The most important thing is to ensure the financial report that used for evaluation is audited. Thus, I was quite frustrated when I found difficulty to find an Annual Audited Report of some companies in Bursa Malaysia.
After struggling few days, finally, I realised that, in Bursa Malaysia, all the financial statements or reports in annual report have been audited. Consequently, some companies only publish annual report in Bursa Malaysia.
Audited financial statements
In fact, you can easily find a sentence of "The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended" in an annual report that published in Bursa Malaysia.
In addition, my senior also told me that we should read the opinion of External (or independent) Auditor before using the financial report for evaluation. A typical healthy Opinion should be: "In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as at XXX (date) and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia."
After ensuring the information of financial report of a company is reliable, we can proceed to the next step to evaluate the intrinsic value of the company. The next step should be to figure out whether this company is worthy for us to spend time for evaluation (unless you have plenty of time to evaluate each company comprehensively). That's all for today. More fascinating articles and sharing will be updated weekly in Xaivier Blog. So, you are welcome to subscribe our feed to receive our latest sharings.
Written by: Xaivier Chia
P/S: The above sharing is solely based on personal insight and information that believed to be reliable. Your valuable feedback are very welcome.