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that's right Xian Chua. based on its 2018 annual report, it generated 66M operating cash flow and spent 20M for capex. that gives it a 46M free cash flow. while there is risk that material and Labour cost may impact the earnings, I am in the opinion that it's worth looking into. what's your target in long term?
sounds good and almost the same. I am looking at 3.20; using the assumptions from its latest annual cash flow, 3% growth rate, discount rate of 12%. chose higher discount rates due to the risk from the labour and raw mat. cheers...
good. as long as you know your entry and exit plan, it's worth the wait. the sales for 2018 at 801M versus 717M represents a 11.7% growth. it is still maintaining its double digit growth. let us now wait for its q1 report. 2018 quarterly sales ranging from 190M to 200M. it's been growing since the last 10 years.
hi Nick, maybe you can switch your daily chart view to weekly and monthly if you are looking at trends instead of its financials. you may have different view then. hope it helps.
agreed with Wilson. all is good. everyone is earning. there will be optimism and pessimism along the way. your entry has approx. 30% margin of safety from it's valuations. plus its small cap. enjoy the ride.
No rush, Jun. can still wait for its QR end of May. if operation cash flow at the range of 190 to 200, can buy then. it's still far from it's per share value.
hi andeline, I am looking at 3.20. I am using very conservative variables to perform valuations using dcf method. projected free cash flow of 46M, global growth rate at the min of 3%, and discount rates of 12%. chose a higher discount rates due to the risk of raw mat price and labour cost. if I use a lower discount rates of 11%, that will make its valuations at 3.61.
normally, I will buy when it offers at least 30% margin of safety. from the high of 3.61, 30% below it is 2.53. but the weekly chart for liihen has 200 days MA at 2.57. it's a strong support there, hence I initiate a first entry at 2.58. hope this helps.
hi andeline, indeed discount rate is not easy. in fact, there is no right or wrong answer. to keep it simple, you can think of it as your rate of returns. the higher the discount rates, the lower the per share value. I am using a range of 9 to 12% depending on the risk/complexity that may affect its future cash flow.
there is also a possibility of errors in the valuations exercise, or market pricing the per share value differently. hence, you can apply margin of safety to cushion the impact. it's like insurance. it's the difference from your calculated per share value. a 30% margin of safety is good for companies with consistent performance. higher margin of safety for companies with erratic performance (50 to 60%)
you are right, eng. once your are in, there is no control of market behavior. hence, always good to have some buffer if you will. you are also right that not many counters offer such price. but if it does and with strong cash flow, I think it's good to initiate position and wait.
End of May another interim dividends, so Jun onward will be 2 dividends in play.
Estimate interim dividends Rm 20 plus Final dividend Rm 30.... double dividends
Cheng, can I ask you opinion on Aturmaju (ARBB)? I buy last month avg 0.32 and sell it at 0.39. Now 0.54 cents. the company just reported more than 800% profit. I think want to buy again.
congrats Muniandy, that's a good gain. ARBB is a hot stock now with the latest QR. the euphoria will carry on for a while until the qr is fully digested. you can trade its technical if it is short term. Please do your own due diligence as hot stocks tends to have emotions involved. I am just sharing what I can see from it's financial report.
the company generated approx. 1M free cash flow in 2018. q1 results is indeed good though it's negative cash flow. spent 8.5M for capex and there is 11M receivables which makes it negative cash flow. the receivables of 11M has payment term of 90 to 120 days with extension of another 90 days.
if these receivables can be collected before its next qr, that will help to boost its bottom line. the company is transforming to IT business as well mainly in the ERP field. the beauty of ERP business is the recurring sustaining cost to maintain/update/upgrade the system. that's good for the company.
if you are planning to buy for long term, do watch is qoq cash flow performance. if the company can generate more than 3M free cash flow for 2019, I believed the share price can go higher. using bank negara's min GDP of 4.3%, 108M shares, 4M free cash flow and 10% discount rates, per share value is at 68 cents. same variables with 3M free cash flow, per share value is at 0.51 cents.
ok ok. look like i should not sell my ARBB at the first place. I can average up and keep it below 0.40 cents. if I use 0.51 cents minus 30% as you do, it's 0.36 cents and a safe price. aiyo. wrong decision.
I guessed so. ARBB is coming down again. I may have chance to buy again. Cheng, using your calculations above, it look like difference of $1M in cash flow changes the per share value by 0.17 cents. if the company can generate $5M cash flow, can I say the per share value should be 0.68+0.17=0.85 cents?
that's right, muniandy; provided the number of shares remains the same. if the number of shares increases, it will dilute the value unless greater free cash flow is generated to offset it. hope it helps.
the gov has announced reduced levy for foreign workers beginning Apr 30 applicable for one year period. definitely a good news for Liihen as the company production overheads increased by $3M in 2018 due to the increased levy. with the change, it will increase its profitability for 2019 :)
hehe, I was really sad when I sold ARBB too early. but I went in yesterday again at 0.465 and set 0.51 per your calculations and it was sold. thanks again, Cheng. I will use the calculations and trade it. tq tq
omg. Cheng, DUFU kaput today. 20 days ago you shared in Dufu comments that it's possible of head and shoulder top formations. it crashed today. unbelievable. thinking to ask your opinions again :)
Cheng, here is the comments I copied from your sharing. Can share your opinions what's next?
nice and thanks for the sharing. expanding the time frame horizon all the way to July last year will give you a different perspective as well from technical perspective. do consider the possibility of complex head and shoulder top formations.
Today announce result for quarter report, estimate drop, so boss clear stock on hand first, some more bus will issue 20:1 this month, better buy back after bonus issue
as for Dufu, just saw the price and its down a lot today. Need to understand why it was down. the sharing was based on technical. still requires confirmation of the patterns formation which will be at low of $1.50.
from fundamentals perspective, just my opinion and please do your own due diligence - if Dufu can generate $33M free cash flow this year, then its per share value should be at $2.20. I am using a global growth rate of 3% and discount rate of 9.5%. chose a slightly higher discount rates due to the competition from ssd. and with the assumption that total share outstanding is 263M. last year Dufu spent a big chunk for capital in investment, resulted in lower free cash flow of $15M.
I will prefer to enter at 30% margin of safety which will then bring it to $1.54. you can adjust the margin of safety higher if you think there is higher risk. it will bring your target entry lower. overall, I believed dufu management is still strong and they are fully aware of their business situations. hope it helps.
hi muniandy, as shared before, please do your due diligence as ARBB is a hot stock and there are emotions involved. I will comment based on solar business in general ok?
solar business is renewable energy. the return of investment (ROI) is very long. usually its more to environmental friendly and why companies pursuing. it is not so much for profits.
in malaysia, there is a strong push for renewable energy driven by Minister Yeo Bee Yin ministry. to promote renewable energy, MIDA is offering tax incentives. hence, in my opinion, companies pursuing this is looking to benefit in this area on top of giving back to the community. hope this helps.
ooh. I dint know that. I thought its good news for ARBB. I understand why you mention emotions involved as I was too emotional also. hehe. no worry Cheng. it's my own decision. thank you banyak banyak.
hehe. Cheng, I set same level like yesterday and gain again for arbb. I keep your calculation and if next qr cantik, I go in again. thank you, bro. you help me earned back for selling too early.
