Friday, May 12, 2017

Petronm: It's Time for a Math Class

http://klse.i3investor.com/blogs/sumato88/122720.jsp
Wow, I am so surprised that many ppl don't get my logic and my calculations for Petronm's 1Q17 profit. Let me put things in order and hopefully you can see it now.
1) Malaysia operations (listed co + 2 non-listed co in Malaysia owned by Petron Corp) reported Peso 1.5bn net profit in 1Q17, +335% yoy. So, 1Q16 net profit from Malaysia operation = Peso 345m
     Workings
       a) (1Q17 profit /1Q16 profit) - 1 = yoy growth
       B) (1500/345) - 1 = 335%  (In case you are still confuse, ask yourself, what's the yoy growth rate if your profit increase from 100 in     1Q16 to 150 in 1Q17? The answer is 50% right? Pls apply the same formula.)
2) Peso 345m net profit in 1Q16 equal to RM30m. This was the profit from Malaysia operation in 1Q16, including 2 non-listed co. So what's the profit belong to non-listed co? Petronm (listed co) reported RM16.6m net profit in 1Q16, so
       A) Petronm's 1Q16 profit + 2 non-listed co 1Q16 profit = RM30m
       B) RM16.6m + 2 non-listed co 1Q16 profit = RM30m
       C) 2 non-listed co 1Q16 profit = RM30m - RM16.6m = RM13.4m

3) Given that 2 non-listed co is involved in fuel marketing and retailing (basically means petrol stations la), the profit growth should be steady due to fixed margin, so it should grow in tandem with sales volume growth. Petron Corp mentioned Malaysia sales volume + 6% yoy in 1Q17, so we can safely assume 2 non-listed co profit grow 10% yoy in 1Q17, from RM13.4m to about RM15m.

4) So how much of RM130m or Peso 1.5bn 1Q17 profit attributes to Petronm?
   RM130m - RM15m (2 non-listed co estimated profit) = RM115m (42.6 EPS)

My final advise, if you still don't understand, please don't buy any stocks anymore as stock investment could be way too complicated for you.

Value Investing? Boring! Sien ah! kcchongnz

In my last article in i3investor, I discussed about how I used a value investing strategy of dividend yield and invested in a portfolio of 5 high dividend yield stocks as in the link below,
http://klse.i3investor.com/blogs/kcchongnz/122285.jsp
I got another comment from my regular critic as below,
[Posted by stockmanmy > May 7, 2017 07:47 PM | Report Abuse http://cdn1.i3investor.com/cm/icon/trans16.gif
Value investors did not do well this year.
kc also no business.
I hope things will change for the better for him.
in the meantime, I stick to X factor
.]
Thank you again, no criticism no fun. And thanks for your “hope that things will change for the better for him”, but no thanks for your “hope”. As you know, I do not depend on hope to do well in investing. For your information, I have written many articles in i3investor and provided with ample evidences that basing on value investing which I have been propagating, I have been doing very well in the long-term, as well as the short-term.

Let’s just put aside what he means by his frequent uttering of “X factor”, whatever it means. It makes me “one head full of dew water”. We don’t need to get stressed on what he means.
But what makes him think that “Value investors did not do well this year”? Is he using value investing, that he has been doing badly this year?
If you read my article above, with a portfolio of 5 Bursa dividend stocks selected and published at the end of 2015 for investing in 2016 and beyond, with detail analysis published in i3investor, based solely on the principles of value investing, gained an average of 67.4%, with approximately the same median return, for the last one-and-a-half-year period as on 30th April 2017 as summarized in link below,
http://klse.i3investor.com/blogs/kcchongnz/122285.jsp
The broad market returned just 3.8% during the same period.

One year short-term return of value investing in Bursa

Exactly one year ago, I started a stock pick service in Bursa for my past course participants. This was discussed in i3investor in the link below,
http://klse.i3investor.com/blogs/kcchongnz/101036.jsp
As all stocks were picked due to their stable earnings and cash flows, and healthy balance sheets and good dividend yields, and picked when they were generally selling at cheap or reasonable prices, the very essence of value investing, the risk involved is naturally very low.
The portfolio of 14 stocks selected progressively over the year made an average return of 16.9% compared to the gain of 3.0% of the broad KLCI index, and the gain of 5.9% of the broader FBMEMAS Index during the same period. The excess return of the portfolio is hence a whopping +13.9%.
The earlier participants of this service who invested in Bursa made an average return of 30% over the past one year as on 30th April 2017, compared to the gain of the market of 3% during the same one year period.  The excess return, or alpha, is 27%. The highest return was closed to 40%.

Nine months’ return investing in SGX and HKSE as on 30th April 2017

We also started a foreign stock pick service in SGX and HKSE about nine months ago, again using our value investing strategy which we have discussed in this link below,
http://klse.i3investor.com/blogs/kcchongnz/102200.jsp
The reasons we did that was to assist my course participants to diversify investment regionally, plus at that time, the SGX and HKSE was at much lower valuations than KLSE. The intention was to obtain satisfactory results over a long-term period, and not chasing fast gain over the short period.
For the last nine months since 27th August 2016, a total of 8 stocks were selected progressively by our “Chief Investment Officer” who had been my value investing course participant, and practice his value investing strategies to pick stocks.  We also have a couple more past participants of my value investing course contributing to the service.
After 9 months have passed as on 30th April 2017, the average return of the portfolio of 8 stocks selected progressively returned 34.0% in nine months, with a substantial higher median return of 52%. These returns out-performed the 10.4% and 7.4% of the broad index of SGX and HKSE respectively during the same period by miles ahead.
There were a few high return stocks; Sungningdale at +63.5% in 8 months, Avitech +76.4% in 7 months, Fischer Tech at +69% in 3 months, and Valuetronics +52.3% in 6 months.
Most interestingly, there is not a single loser in the stocks selected. This fit very well in our principle of,
“Take care of the downside; the upside will take care of itself”
This return on investing in the stocks above has not taken into consideration gain in foreign exchange over the period.
A few participants early in this service made 40% to 60% total return in the nine months’ period, beating the return of the broad market of 8.9% by a wide margin. The later participants also made more than 20% in less than 6 months.
Thanks to the Chief analyst cum Investment Officer of this service, a fervent follower of value investing.
So how can you say, “Value investors did not do well this year.” What evidence do you have?
I have written many articles in i3investor using value investing strategy, until many people already fed up of reading them. Sien Ahh!
But why should one feel “sien” about value investing?
I have shown value investing works very well in the long-term with my latest article here,
http://klse.i3investor.com/blogs/kcchongnz/120190.jsp
http://klse.i3investor.com/blogs/kcchongnz/119863.jsp
I have also just shown you value investing also works extremely well in the short-term in this article.
Apa lagi lu mau?
To me, value investing is not "sien", but very interesting indeed. I never feel sien in propagating value investing, although at times it can be a little frustrating.
Value investing is, either you get it, or don't get it at all.
If you are convinced about the usefulness of value investing, which I have shown you again and again that it works and works very well, and wish to learn about value investing to make extra-ordinary return for the long term in more predictable way, or if you wish to get some help to invest in Bursa right now while learning, please contact me at,
ckc14invest@gmail.com

K C Chong