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i4value  |
| Total Cumulative Posts |
576 |
| Joined |
Aug 2020 |
Blogs
| Blog Title | Total Posts | Last Published |
| Investing for Value | 170 | 29 Oct 2024 |
Comments
| | User Comments |
 |  21 Jan 2025, 3:01:36 PM
Systec – has the market given up on its growth?
Over the past 5 years, Systech shifted from being primarily a provider of software and e-business solutions to focusing on AI, IoT, digital transformation, and cybersecurity. It divested its loss making e-business solutions and acquired capabilities in digital transformation and AI
These strategic changes reflect an adaptation to evolving market demands and a drive toward long-term growth. These acquisitions, together with its focus on high-growth areas like IoT, and cybersecurity and operational efficiencies, has help to drive revenue growth in recent quarters as can be seen in the chart.
The strange thing is that the market price has come down since Sep 2023 shown below. Is the market suggesting that these growths cannot be sustained since Systec falls into the high-investment risk, poor business fundamental quadrant on the Fundament Mapper?
Apart from continue revenue and earnings growth, look out for the following in the next few quarters to asses that growth is sustainable
- A diversified customer base
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| 18 Jan 2025, 4:24:29 PM
SKB Shutters – will there be a multiple expansion?
If you stand back and look at SKB performance over the past decade, you can see that its performance post-2021 is very different from that pre-2021. This is well illustrated by the return chart.
Is this a flesh in the pan or a sustainable change? Over the past few years, the company had introduced new products. It cited the the mandatory deployment of Insulated Fire Shutters for compartment walls as one driver for this change driving growth.
There are also operating and efficiency improvements. Its improvements is reflected in its position as a company with one of the better fundamentals on the Fundamental Mapper.
The market price of SKB has been up-trending since Q1 2024. Based on a historical trend projection by the Fundamental Mapper algorithm, it is a borderline investment risk.
But if you think that the performance trend will continue, the future will be much better than the past. In this case, expect growth in earnings. Give market behavior, better earnings can lead to “multiple expansion”. When this happens, the stock today will look cheap. Is this what speculators are looking at?
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| 15 Jan 2025, 12:50:23 PM
Cuscapi – has the market run ahead of its fundamentals?
Over the past 8 years, Cuscapi business direction had evolved from a strong focus on restaurant management solutions, to include advanced technologies, ESG commitments, and digital asset trading. This change in business direction have led to improving performance.
You can see from the middle chart the revenue growth over the past 3 years and the change from losses to profits in 2023. The profit trend will continue in 2024
Cuscapi's Quicksand position suggests that while the company has made strides in improving its revenue and profitability, its fundamentals and investment appeal remain weak.
The move into digital assets, and AI-driven services involves a steep learning curve and significant capital investment. The Quicksand position suggests that the market may have run ahead of its improving fundamentals. What are the signals to look for when considering Cuscapi?
- Clearer evidence of scalability and market acceptance for its new business focus.
- There is a focus on operational inefficiencies to strengthen its fundamental
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| 11 Jan 2025, 4:45:44 PM
AsiaFile – is time running out?
Asia File growth 2 decades ago was driving by the stationery business. But we all know that this sector is facing some digital disruption. The company has long recognized this threat and ventured into the consumer and foodware products in 2017/18 to mitigate this.
From 2018 to 2024, the revenue from the filing segment declined from RM 352 millon to RM 268 million, a RM84 million decline. Based on the 6 months ended for 2025, we will see a continuing decline.
But the revenue from the consumer and foodware products segment has not grown enough to offset the declining filing revenue. I projected that the 2025 revenue contribution from this segment would be at best RM 50 million. At the same time, the segment margin is not as good as that for the filing segment based on 2024 results.
If I want to be positive, I would say that the declining filing segment trend seems to be slowing down looking at the middle chart. But your guess is as good as mine where the bottom will be.
From a big picture perspective, the company currently falls into the Goldmine quadrant - low investment risk, good fundamentals. The market price has also declined from the past 3 years high.
So there is still an investment case for investors with a long-term outlook and a focus on undervalued opportunities. But you must believe that the company still has time to meet the digital disruption challenge.
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| 07 Jan 2025, 6:42:53 PM
Eksons Corporation: A Cash Trap Waiting to Break Free?
In October 2023, I noted that Eksons was a classic cash value trap—rich in cash but lacking substantial business operations. Fast forward to today, and not much has changed.
The company still struggles with meaningful operational improvements, which has hindered its ability to achieve sustainable growth. This is why it remains in the "Turnaround" quadrant of the Fundamental Mapper.
However, Eksons' deeply discounted valuation relative to its net assets and cash reserves presents an intriguing opportunity. For investors who believe in the management’s ability to execute a turnaround, this is a classic deep-value play with an asymmetric risk-reward profile.
The charts provide clues on what to watch for as potential catalysts for a re-rating of Eksons' stock:
- Revenue and profit growth: Signals of stabilization or upward trends.
- Stock price breaking resistance levels: Indicative of renewed investor confidence.
- Shifting in the Fundamental Mapper quadrant: Movement toward better operational performance relative to peers.
So why forgo this investment opportunity when the roadmap to its potential re-rating is right in front of you?
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| 04 Jan 2025, 10:03:41 AM
Is ExcelForce poised to unlock hidden value?
Over the past five years, ExcelForce has maintained a consistent focus on its core strategy of providing innovative, high-value software solutions. Its strategy has generally revolved around technological improvement and market adaptation, with sustained efforts to balance innovation with profitability.
There were significant revenue and profit increases, particularly during 2020 and 2021 following this. However, there was some contraction in 2023/24 suggesting a potential market or operational challenge.
The various charts show that there is potential for re-rating if it can address these challenges.
For the fundamental investors, the key is identifying catalysts that can unlock EForce’s intrinsic value over time. Here are some announcements to monitor:
- Development of new software solutions or platforms leveraging emerging technologies like AI, cloud computing, or blockchain.
- Entry into untapped regional markets or sectors beyond financial services (e.g., healthcare IT or government systems).
- Implementation of cost-efficiency programs to enhance operating margins.
These are good indicators of potential growth in the topline and bottomline
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| 02 Jan 2025, 11:19:35 AM
Perstima – don’t wait for signs of a turnaround
Perstima returns over the past decade had been declining. Its 2024 and projected 2025 returns are negative. It falls into the Quicksand quadrant in the Fundamental Mapper.
Looking at this picture, you may think that there is no hope. But the Fundamental Mapper is based on trend projection. It would also not be realistic to simply project continuous declining returns. Management is not going to sit quietly without some turnaround plans.
In the case of Perstima, the performance over the past 2 years were dragged down by the start up of its new plant in Philippines. Furthermore the declining returns was because while there was revenue and profits growth, there was faster growth in capital as funds were needed for the Philippines expansion.
The future is not going to be the same as the past decade. As such I would expect a turnaround and a return to profitability in the not too distant future. Are you going to wait for this to happen before entering, or would it be better to enter now when the market has yet to recognize this turnaround potential?
Moral of the story? If you are prepared to dig into the details, you can find opportunities when all seem lost from an initial look.
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| 22 Dec 2024, 11:33:25 AM
Malayan Flour Mill – a turnaround potential
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.
The current market price is significantly below its estimated intrinsic value. This offers potential for investors who believe in Malayan Flour Mill capacity to enhance operational and capital efficiencies.
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| 17 Dec 2024, 4:27:18 PM
EP Manufacturing – will EV be game changer?
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.
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| 15 Dec 2024, 10:47:00 AM
KLK – one for the contrarian
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.
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
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| 10 Dec 2024, 12:02:39 PM
Khind – not an obvious investment opportunity
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.
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.
While recent years have seen a decline in profit margins, KHIND’s focus on improving operational efficiencies could lead to margin recovery. There is also a good margin of safety.
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| 08 Dec 2024, 8:50:54 AM
Bursa Plantation INNO – Analysts are going the way of the dinosaurs
I provided the following picture of INNO to ChatGPT and this is what ChatGPT said:
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
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| 04 Dec 2024, 7:22:14 PM
Opensys – has the market has over-reacted
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.
So any expectation that Opensys will go the way of the media sector in the next year or so is probably overblown.
The company is still one of the better performers in the software and IT services sector. And there is also a good margin of safety. I would have thought that this is a goldmine for the value investor.
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| 02 Dec 2024, 2:52:25 PM
KESM – will it swim or sink?
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.
Can KESM can successfully pivot towards the automotive semiconductor market and restore its former glory
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| 02 Dec 2024, 2:52:24 PM
KESM – will it swim or sink?
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.
Can KESM can successfully pivot towards the automotive semiconductor market and restore its former glory
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| 30 Nov 2024, 4:26:19 PM
LEESK – will it benefit from Trump’s MAGA policy?
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?
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| 28 Nov 2024, 5:35:43 PM
UOA Dev – a Goldmine quadrant company
If you are a risk averse fundamental investor, you would be looking for companies with strong fundamentals trading at prices lower than the business value. The Fundamental Mapper by Xifu shows UOA Dev falling into this category.
The Fundamental Mapper has 4 quadrant with the Goldmine quadrant in the bottom right section denoting companies with strong busienss performance relative to the sector. At the same time this quadrant are for those whose business value is much higher than the market price suggesting lower risk.
Given UOA track record, you should not be surprised by its strong fundamentals. But why has the market not recognized this?
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| 15 Nov 2024, 9:49:32 AM
Jaya Tiasa – tough to be profitable when firing on one cylinder
Jaya Tiasa has undergone a significant transformation since its inception as a timber company in the 1980s. The diversification into oil palm has shifted the Group's primary revenue source.
But without this shift, the company would be in trouble today. Currently, the oil palm operation is the main profit driver. The timber segment faces declining production volumes due to policy shifts toward sustainable practices. The Group's reliance on oil palm highlights the critical need for a turnaround in the timber operations.
Looking ahead, the focus must be on improving operational efficiencies. This hinges on the readiness of the forest plantations to contribute to log supply. While the company has 2 business segments, only one is contributing to its bottom line. It is tough to be profitable when running one one cylinder with a 2 cylinder engine.
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| 12 Nov 2024, 12:30:49 PM
TDM – bigger does not mean better
TDM has 2 business segments – Plantation and Healthcare. In 2007, TDM expanded its plantation business to Kalimantan Barat, Indonesia and touted “…that the growth of the plantation operations will be in Kalimantan.”
By 2016, the Group’s Indonesian assets amounted to RM 532 million. But then things began to go wrong with the company having to incurr impairments from 2016. It got so bad that the Group decided to sell of the Indonesia assets in 2019. By this time, after all the write downs, its Indonesia assets was reported to be RM 106 million.
Without the Indonesian operations, the Plantation segment is a profitable one. The Healthcare segment, although a small player in the Malaysian healtcare sector, has always been profitable. Let us hope that maybe the company will start making money by just running its operation better rather than try to be bigger
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| 05 Nov 2024, 10:27:49 AM
Hap Seng – land sales could not sustain its performance
Although it is a diversified group, I would consider Hap Seng predominantly a property company as about 70% of its net assets were deployed for the property segment.
The past decade has been tough for Hap Seng. For many years, it had to rely on sales of land and/or other assets to maintain the contribution from the property segment. Despite this its ROE had declined from an average of 19% in 2014/15 to an average of 11% in 2022/23.
I would like to think that things would improve moving forward as there were no longer any need for land sales in 2023. I also think that we have reached the bottom of the property cycle. The challenge is whether the market has already priced in all these better prospects?
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