ONLINE coaching - Group Premium Student Mahersaham

ONLINE coaching - Group Premium Student Mahersaham

ONLINE coaching - Group Premium Student Mahersaham

ONLINE coaching - Group Premium Student Mahersaham

I am a fundamental investor that relies on historical information to analyse and value companies. Whenever I tell this to investors, they will often cite the well known disclaimer used by all financial advisers – past results does not equal future performance.

When I look at a company’s performance, I know that it is due to the “economic and other resources set-up (strategies, management, funding, etc).” that the company has. So if these result in a good performance in the past, there is a good chance that it will continue to do so in the near future.

Don’t think in terms of a continuation of the past numbers. Think in terms of  the continuation of the past set-up That is the reason why track record is important in my analysis. It gives me confidence that the company has the set-up in place to deliver good performance.

Take the example of Rimbunan Sawit which had negative ROE yearly for the past 8 years. In contrast, here are many plantation companies (eg KFIMA) that had delivered positive ROE yearly for the past 8 years. So it cannot just be an external problem. I would think that unless there is some major change in the setup, the past = the future.

A decade ago, KFIMA manufacturing segment was the key driver for the group due to its supply of travel documents. Unfortunately it lost this lucrative supply contract and the group business suffered so that it did not achieved any revenue growth over the past 12 years.

But the Group had managed to offset this by growing the business in the 3 other segments – Plantation, Food, and Bulking. The returns with the current business profile have yet to reach the levels of that before the loss of the supply contract. But the Group is making progress.

The Group is fundamentally sound. It has managed to deliver returns greater than the cost of capital. At the same time, there is a sufficient margin of safety based on both the Asset Value and Earnings Power Value.

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