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Hong Chew Eu
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Retired Group CEO of i-Bhd. Now a full time blogger
Bursa Malayan Flour Mill returns over the past 12 years showed a declining trend. The company also falls into the Turnaround quadrant in the Fundamental Mapper.
You could be forgiven in thinking that this is not a company to consider. But a detailed fundamental analysis showed that it can be considered fundamentally sound given its solid foundation and a strong market presence.
While there are profitability and operational efficiency challenges, it has demonstrated the ability to generate consistent positive cash flows, indicating underlying business stability.
EP Manufacturing (EPMB) has being in the news recently with the production and launch of its Malaysian assembled electric vehicles (EV). This auto parts and components manufacturer has adopted a new business direction by going into the EV market.
We all know the interest Tesla has generated over the years for investor. Certainly, EVs are hot items and rather than guess the impact on EPMB, I decided to ask the AI for an opinion
I fed the charts below from Xifu to my free version of ChatGPT.
I won’t go into its details of what the AI said, but its conclusion is summarized as
“EPMB shows signs of turnaround potential with improving profitability and revenue recovery. At a PE of 8.2, it could be undervalued to its fundamentals. However, given the moderate risk and historical price decline, investors should approach cautiously, ensuring continuous improvement in financial performance. It may appeal to value investors with a higher risk tolerance.”
It is close enough to my own fundamental analysis. I think the analysts are going the way of the Dodo. You can try it yourself with other charts from Xifu.
Bursa plantation company, KL Kepong (KLK) returns over the past decade has shown a declining trend. And it currently falls into the Turnaround quadrant in the Fundamental Mapper. The Fundamental Mapper gives you a first-cut picture. You probably would not consider KLK looking at just the Fundamental Mapper. https://i.postimg.cc/kGJSrjGB/FM-KLK.png
But digging deeper, the main reason for the declining return is because KLK has been expanding into the manufacturing sector (oleo and related chemicals).This expansion enabled KLK to capture additional value but with lower returns. So while it got bigger, the returns declined.
I suspect that as the Group improves its efficiencies, we will see a turnaround in its return. The current market price of KLK reflects a significant discount compared to estimated intrinsic values. That is why I think this picture is good for the contrarian investor https://www.i4value.asia/2024/12/is-klk-investment-opportunity.html#more
The problem social investing sites is that every one has the same information. As such I am not so sure it is easy to make money. That is why I prefer to take a contrarian view and hunt where the crowd avoids. https://i.postimg.cc/zDdywbfx/FM-Khind.jpg
A good example is Khind. You probably would not consider Khind looking at just the Fundamental Mapper. But following a detailed analysis, I found that it is financially sound with a history of returning capital to shareholders through dividends.
From the provided image, INNO is positioned on a Fundamental Mapper, a tool that evaluates investments based on Business Fundamentals (x-axis) and Investment Risk (y-axis). Here's a quick assessment:
Position Analysis:
• INNO appears in the Goldmine quadrant (lower right), which suggests strong business fundamentals and low investment risk.
• This quadrant generally indicates companies with solid profitability, stable cash flows, and good management practices.
Investment Perspective:
• The placement implies INNO might be a relatively safe investment with good potential for returns.
• If the plantation industry aligns with your investment goals, INNO seems promising, especially in a long-term, fundamental investing strategy.
Next Steps for Due Diligence:
• Analyze Financial Metrics: Check ROE, ROA, EBIT margin, and free cash flow to confirm its business strength.
• Industry Comparison: Compare INNO with its peers in the plantation sector to see if it consistently outperforms.
• Valuation: Ensure that INNO's current valuation is reasonable (P/E, P/B ratios).
• Market Trends: Monitor external factors like palm oil prices, regulations, or climate impact.
Would you like me to analyze specific metrics for INNO or provide insights into its industry?
If analysts do not provide in-depth insight about a company, they will be replaced by the AI much faster than the taxi drivers being replaced by the Grab drivers
Opensys share price has come down from its past 3 years high. Is the market thinking that that the company no longer has business prospects?
Opensys is an IT solutions provider that derive the bulk of its revenue serving banks with its cash and cheque processing equipment. With the growth digital banking, would might think that it is in sunset sector. But while growth may be challenging, cash and cheques processing will not disappear overnight.
The analogy is like thinking that retail outlets will not longer be relevant given the advent of digital commerce. But as the mall and shopping centres are still with us.
In a shocking turn of events, KESM, the world’s largest independent provider of burn-in and test services for integrated circuits, has encountered severe financial turbulence.
Once a revenue heavyweight, the company’s earnings plummeted since 2018, primarily due to global supply chain disruptions and geopolitical tensions.
Despite holding a robust cash reserve of RM 247 million, its capital allocation strategies have raised eyebrows, as most cash flow is funneled into capital expenditures rather than returned to shareholders.
Yes, the business value depends on a company's performance. But unless you think that the company is a sunset sector, a valuation over the long term will indicate its business value. So don't be mesmerized by just the current performance. Secondly, companies don't operate in a vacuum. A sector comparison will give you a picture of how well a company performs. In a soft market all companies will do badly. If a company stands out, it must be doing something well.
The Malaysian furniture sector, especially those with exports to the US, may see better light when Trump takes office. His MAGA stance will make life difficult for the exporters from China, reducing competition for Malaysian exporters.
The Fundamental Mapper on Xifu shows LEESK is currently in a good position being in the good fundamental - low investment risk quadrant.
Will this be one of the beneficiaries of the coming "export tailwind" thereby enhancing its an investment opportunity?
Warren Buffett makes money by being a long term investor. If you buy fundamentally strong stocks trading at a significant discount, you will make big money when the market re-rates. But you must know where to look