Chin Yih Kam's comment on D&O. All Comments

Chin Yih Kam
3 Like · Reply
Q 0.69-0.62-0.56
cheng
strange. May I ask why such queue order?
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Chin Yih Kam
如果他這樣掉的話我這樣建倉、最低0.56、之後再看
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cheng
Ok thanks. I think I get the meaning. translated the Chinese wordings :( its kinda like pivot points and you are splitting your purchase.
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Chin Yih Kam
☺️ OK、我不知道什麼pivot points 、只遵守一定要拆開資金投資。
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cheng
Ok thank you.
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cheng
Waiting for its annual report (apr) and followed by qr (may).
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Chin Yih Kam
Ok me too☺️
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eng hock ooi
Guys, what is your target of this D&O
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cheng
thanks for sharing, phooi. eng, best is to do your own due diligence after getting inputs from everyone.
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cheng
in my opinion, I prefer to keep this counter for a longer term due to its potential growth. Hence, I am using its cash flow statement to perform valuations. if you look at its 2017 annual report, the operation cash flow increased from approx. 45M in 2016 to 64M in 2017. it invested big chunk of its cash flow for capital investment.
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cheng
based on this, I assumed that d&O has the capability to generate 60M cash flow yearly after major capital spending, constant growth of 5%, global growth rate at 3% (perpetuity growth rate), and discount rate of 9%, existing outstanding share of 1106M, the per value share is valued at $1.03; using discounted cash flow analysis.
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cheng
at current price of 0.69 versus valuation of $1.03 (with the assumptions above), it offers a 33% margin of safety. My personal opinion is that it is quite attractive. hope it helps.
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cheng
please do your own due diligence as no one here knows your investment objective or targets :)
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Ken Tang
Hi, where to obtain the model for DCf valuation. I am interested to learn.
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cheng
hi Ken, you can try to buy books on corporate finance that covers equity markets, stocks valuations, risks and etc; can also try google it. probably you can find some sharing in YouTube as well.
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Ken Tang
alright thanks
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eng hock ooi
Phooi and Goh, Thanks for the advise.
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eng hock ooi
first quarter Should be MAY.
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Muniandy Krishnan
still waiting to confirm results. if ok, baru tambah.
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cheng
hi joseph, try search discounted cash flow (dcf). in laymen's term - the value of a stock is equal to the present value of its future cash flow. hope it helps.
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joseph law
Buy inari la trend just coming , phooi , every qr out even if good result the price also fall
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cheng
yw, Joseph. thanks, phooi.
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cheng
nice phooi. as long as you have the holding power until confirmation of its growth via its upcoming report, it's ok.
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cheng
thanks for the sharing, phooi. indeed the market breadth is still weak. the only dim prospect for now is the market testing the support at 1611 heading towards earnings reporting season in May.
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cheng
I added today as well, phooi. Will reserve some fund to add after analyzing its report. expectation is single digit growth and bonus will be double digit. My preference is the sales growth.
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cheng
Let's monitor its upcoming report as macroeconomic in China is improving from the latest industrial production, retail sales and gdp. automotive players is looking to China to revive the industry as I read.
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KH Chai
thanks for sharing
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Alex Loong
my guess on coming result won't as good as preceding qtr although inventory highest ever. Anyway, it's good time to collect now since the preference share conversion at 0.61
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cheng
thanks Alex. overall automotive lighting industry is expected to grow at cagr of 7%. D&O sales growth is at the high side of single digit yearly since streamlining its business in 2015. the days of inventory and inventory turnover for D&O remains at approx. 120 and 3 yearly. definitely agreed with you that it's a good time to collect and ride the growth with it. I am in for a longer time until it is showing signs of stagnant growth.
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cheng
so far, the sales growth and profitability is growing steadily and that's something that attracts me personally. :)
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Alex Loong
yup, roe double digit at 11% now. expect to go higher with profit margin increasing on smart rgb ya.
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cheng
sounds good. looks like you are also following closely on its growth and performance via its report :)
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Alex Loong
yes, haha. hope we can exchange more opinion and info in future
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cheng
sure, Alex. thanks for the sharing too.
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Henry Chan
waited for almost a year, finally managed to grab big on yesterday's dip, lets see how it goes as the prospect for 19Q1 is pessimistic. it's good to see an equivalent of 9mil or higher. all the best mates
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KH Chai
just continue buy can d
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cheng
thanks guys. looks like many of you have been observing D&O. Let's share our review soon and ride the growth together. :)
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Henry Chan
the boss just said in The Edge that first half top line will be weak. I think with the improving gross margin, hopefully net profit wouldn't be much affected...
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Muniandy Krishnan
up up up. managed to sell other shares and park here. top up slowly.
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cheng
in due time, the valuations of this company will surface. the performance will determine whether the growth is sustainable or unsustainable. as long as the sales growth continues to grow, the profitability will continue to grow as well.
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Alex Loong
guys, did you all have any idea of total outstanding share number include icps and esos?
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cheng
right now its 1107 mil. not sure whether this is what you need but you can refer to the additional listing announcement documents each time - it reports total shares after the issuance. secondly, you can also refer to its qtr report. go to the last page and it will show you the breakdown of esos, conversion of icps, and etc in dollar. hope it helps.
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Chee Teren
if esos and icps converted the share pool will be big and dilute EPS alot right?
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cheng
it will dilute if earnings shrink. The last 3 years sales growth and profitability is still growing. waiting for 2018 annual report to see whether it is still growing as shared earlier. the automotive lighting business itself is expected to grow at cagr of 7%. D&O sales growth in 2017 was at 7.73%, ROE 11%. Let's see whether 2018 sales growth and ROE will be at high single digit or entering double digit.
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Chee Teren
thanks Mr Cheng, lets wait for the Annual Report
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cheng
yw, Chee. I am also waiting before deciding to add. will add if it is still growing.
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Henry Chan
Goh, how do you see the relatively flat growth in revenue over the years? might it be the transition to higher margin automotive segment?
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cheng
hi henry, the revenue or sales wasn't really flat. after the business streamlining in 2015, the sales growth in 2015 was 2.80% yoy and 7.73% yoy in 2017. ROE was at 6.4% in 2015 and 10.8% in 2017. pre 2015 performance where it has general and tv lighting as well was really volatile (swinging high and low). the net margin currently is also growing nicely. from a low of 0.17% in 2014 and 4.8% in 2017.
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Alex Loong
thanks goh for your clear explanation. let's wait for the annual report, cheers
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Henry Chan
single digit growth is not as attractive as other double digit growth technology stock, however the significant improvement in gross margin offset that. revenue still needs to grow to be healthy!
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cheng
that's right, henry. that's where the 2018 annual report will tell us whether is the revenue or sales growing again. I am hoping the revenue growth will go beyond 7.73% yoy entering double digit. then, we will have a baseline for 2019 :)
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cheng
you are welcome, Alex.
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cheng
trailing twelve months ROE pointing to slightly more than 20% but best to wait for its report.
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cheng
good to have more eyes looking at it, exchanging opinions to prevent biasness and protecting our capital.
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Henry Chan
FYI Goh, FY18 revenue has increased by 5.9% and net profit increased by 60.7%. ROE stood at 10.35%.
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Henry Chan
R&D expenses has increased by 46.2%, I love this.
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cheng
thanks Henry. wow, did you compute it manually?
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Henry Chan
yup, u can refer to FY18Q4 report, also available at malaysiastockbiz
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cheng
will have a look at it. thanks for the sharing, Henry.
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cheng
My average is 0.69. I am not worried about the fluctuation as at this price, it has slightly above 30% margin of safety. :)
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Henry Chan
holding this stock is quite frustrating haha
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cheng
henry, sales grew by 5.9% yoy under pinned by forex. removing the forex impact, it's 11% yoy. It's pretty good. R&D spent increased as you mentioned which is also good :)
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Henry Chan
I'm concerned about the slowdown in China
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cheng
China latest mfg PMI data in Mar showing recovery actually. https://tradingeconomics.com/china/manufacturing-pmi
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Jensen Lam
annual report out any advice?
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cheng
hi jensen, in my opinion, the company is growing. I was hoping for a double digit sales growth in 2018 for continuous growth and in this case, the company reported 5.9% at the back of 6% and 4% usd and rmb forex impact. minus the impact, the company sales grew by 11% which is really good.
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cheng
additionally, R&D spent increased and there was also a patent acquisition. innovation is key to the sustaining of the growth as we are seeing higher and tightened regulations in this industry.
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cheng
the company generated 65.5M after tax cash flow from it's operation in 2018 versus 64M in 2017 despite the slow down in 2018
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cheng
the ROE is at approx 12% (39/323) which is also growing. net income attributable to the owners of the company divided by equity attributable to the owners of the company.
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Muniandy Krishnan
aiyo. all numbers and pening. I see the graphs in the report going up yoy. I take it as good. haha. I will keep this and tambah when I have money. thank Cheng for sharing
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cheng
Lol. I just extract the numbers from the annual report.
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Henry Chan
the price trend indicates bad qr ahead
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cheng
I am holding it for a longer period based on its fundamentals and valuations. as for price trend, current price would have priced in the possibility since it came down from the high of 1.0.
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Alex Loong
anyone know d&o use which company tester for their LED, elsoft ?
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cheng
hi Alex, you are looking at elsoft? my opinion is that the price is on the high side now. I am waiting.
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Alex Loong
thanks goh, will take note on that
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cheng
yw. it's just my opinion and hope it helps. my preference is to have at least 30% margin of safety before entering. with that, the elsoft target entry for me would be at 0.805/0.81.
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cheng
hi Shi No, just ignore the price movements as long as you know your entry and exit target. :)
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Henry Chan
its gonna be worse if it breaks 0.675
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cheng
opportunity to add on :) do watch for April Mfg PMI data that will be released this week on 2nd of May. Mar'19 was 50.8, consensus and forecast for Apr is at 51.0.
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cheng
hi phooi, it's a measure of the health/trend of the economy in the manufacturing sectors. business leaders uses the data to set/determine future business directions as well. D&O were hit last year by the slow down in China, hence, it's good to monitor the trend as well.
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cheng
mar'19 data of 50.8 beat market expectation of 50.1, and was the first increase in the last 4 months and highest since jul'18. apr'19 consensus and forecast at 51.0. there's also car sales and production indicators as well.
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cheng
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cheng
hope this helps
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eng hock ooi
Ho seh liao, I am on the boat also.... :-)
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Henry Chan
Chinese PMI below forecast
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cheng
it's still above the critical 50 levels with US China trade agreements to watch. additionally, new energy vehicles sales jumped 85.4% percent. Alex mentioned something about EV :)
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Muniandy Krishnan
you guys is amazing. all points discussed right on the dot. have a look at the latest article by the edge - LED, car sales, even TP also there. I like the last paragraph best :)
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Muniandy Krishnan
from the article above:

From an investment perspective, two-thirds of research firms covering the stock have a “buy” call, with target prices ranging from 86 sen to 96 sen, an upside of 30% to 45% to D&O’s closing price of 66 sen last Thursday.  The group is valued at RM731 million
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cheng
if it is for long term, don't have to rush it. can still wait for upcoming quarter report. bound to have some volatility before qr and after qr.
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joseph law
better dont buy now , china pmi slow down , usd drop , and us index correction better buy after QR out
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Nick Chung
No rush... PE 20... plenty of time to wait...
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cheng
all is good and hopefully D&O will work hard and not disappoint its share holders. in my opinion, current share price offers slightly more than 30% margin safety. at 0.60 cents, it offers 40% and at 0.50 cents, 50% margin of safety. will be looking forward to the opportunity to add those levels if it happens :)
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1 Like · 5 years · translate
cheng
hi Shi No, you don't have to calculate margin of safety. it's like insurance in case the target price or valuations done is wrong or the market behaves differently. for a good company with strong fundamentals - low debt/equity, strong mgmt, consistent performance, strong products line up, a 30% margin of safety is good enough. you can take the target price by valuations and minus 30% from it. that will be your entry. example: if a company is valued at $10, 30% off is $7.0. that's your entry.
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cheng
for companies with erratic performance, sometimes good sometimes bad, you can apply higher margin of safety (50 to 60%).
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cheng
by applying margin of safety, you may missed the upside but you limit the risk of losing. risk cost versus opportunity cost.
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cheng
yw Shi No. hope it helps.
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Chin Yih Kam
Time to sell all
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