Monday, March 13, 2006

ROI on Yi-Lai

Firstly... do remember the things not to ass-u-me issue! Ass-u-ming is not only an issue of making the big ass out of u and me but it is simply hazardous to health of your piggy bank!

The majority of earnings has been reported for most stocks. Do you folks take the opportunity to review your investment (ROI)? What are the critical points that you folks are looking for? And if the company fails to meet your minimum set of requirements, what are you going to do? Are you going to forgive and forget?

Let me run the ROI on this stock called, Yi-Lai.

(LOL!...see in the stock market... it's so hard to say 'Never Say I Ass-u-me' ... for I am going to make another huge assumption here! :D )

Anyway the assumption here is one had made an investment in this tile manufacturer. (Yilai has an investment relation website
here )

1. First, we need to review Yi-Lai's financial track record. (click
here )

Earnings since fy 2001: 21.7 mil -> 26.8 mil -> 25.6 mil -> 29 mil

Net profit margin since fy 2001: 20%, 23%, 22%, 22%

Yi-Lai announced its 2005 Q4 earnings recently. It's unaudited net earnings showed a total fiscal 2005 net profit of 27.706 mil, with a sales revenue of 119.733 mil (click
here for Yi-Lai's quarterly earnings tables from Wallstraits) giving it an unaudited net profit margin of over 23% for fiscal year 2005.

How do you rate such performance? Yes, total ytd net profit dropped from 29 mil to 27.8 mil. Is there a concern?

Its profit margins. Did it deliver or not?

Or are you worried about the slump in earnings?

How? Are we satisfied? Or am i singing Mick Jagger's classic, I can't get no Satisfaction, already?

Remember in ROI, there is no point in cheating. If we cheat, we only cheat ourselves. By giving ourselves lame, flimsy excuses to justify our own reasonings to stay invested in the stock, we are simply cheating ourselves and we are only helping the share market make a fool out of our beloved money!

( The full unaudited 4QFY2005 financial results with explanatory notes is available in .pdf file -
4QFY2005Financial Results )

ps.. me stop here first cos I had some comments that I post too much and too fast that they found it difficult to follow.. so... me stop here first... continue tomorrow.. ok
?

8 comments:

hhc1977 said...

nm,

Ah, it's glad you are writing on Yilai again.

It is not definitely in its best financial this time.

But i think it will make more sense if we make apple to apple comparison. If u see what the other tile makers are doing, u will agree that Yilai is the best company to invest in.

Some Pro for Yilai:
1) High N. profit margin ~24~20% (Wthorse from 21% drops to 7& last Q)
2) Revenue is still consistent.
3)Trailing PE is still 7X compared to Wthorse 8X (it suffered huge drop in earning in LASt Q)
4)Cash hoard around 48M (30 sen per share)
5) No ESOS
6) Management is still honest and no funny expansion or diversification.
7)High ROE (~15%)
8)High profit yield ~15%. Meaning that if u buy the company at RM1.2, theoritically it is making around RM0.17 per share in a year. Much better than building your own factory, i think,

Bad things
1) Lembaga tabung haji is selling its share
2) Major shareholder (taiwainese) is selling.
3) COnstruction and property section is not in good shape. (yilai does export to Spore HDB, so not that bad).
4)Cash hoarding is depleting so that cannot expected bumper dividen like last year (~0.21 per share).
5) Not v liquid
6) Low market cap which bar certain fund from investing in it (RM192 M only).

I will leave other to nm since he is the expert here.
Thanks

Moola said...

LOL!!

Wassup dude?

Wah... good comments... most of them very valid issues... :)

Err... me stop here first (ie we tok about YiLai's financial performance first) cos I had some comments that I post too much and too fast that they found it difficult to follow.. so... me stop here first... continue tomorrow.. ok?

Cheers!

hhc1977 said...

nm,

no problem dude. This is the only venue where i can futher improve my skill. AKA learning from you.

It's really hard nowsaday to find investable company in BSKL.

By just using honest management as the criteria, almost 90% of the BSKL comps will fail.

Moola said...

I know what u mean dude!

hmm.. perhaps putting it into a traders perspective might be enlightening ...:p

sometimes certain traders find that nothing seems to fit their 'style' (ie their preferred trading set-up(s))...

so what do they do?

Do they adapt to the situation via switching to a new trading set-up?

Which means the trader will be playing their 'b' game, instead of playing their 'a' game..

Or perhaps the trader are better off waiting patiently for the opportunity to play their 'a' game?

Ngam ka?

:D

hhc1977 said...

nm,

This is kind of my dilema right now. My investment style requires that i participate (buy lah) company which honest management and solid financial performance (like margin, ROE, yield, debt). However, it is v hard to find company which fits this with reasonable price.

So, i setup my 2nd trading portfolio which is basically TA based. With this, i can ignore most of the perception issue ( i can even particapte in syndicate run share as long as it fits my selection).

SADly, this is my best performing port right now and the being allocated 90% of my investable fund. Somehow, i dont feel v right because i holdin some companies with no track record and i m still adding to it (my criteria is that once the first purchase yielded me certain % of return, i will average up.)

But when TA and FA converge ( a v v rare condition), i will chiak banyak banyak. SO far only found 1 stock which in UMW at its RM5.8 time. Digi WAS a good candidate before the 3G thing. SO sad gov had spoilt my party.

Moola said...

LOL!!!

I guess urs is a bigger delima since ur B team is kicking the butt out of A team!

how? how? how?

sorry dude... me in no position to offer u advice... :)


ps.. the Digi issue... errr... the 3G issue..

firstly... 3G was never a part of the business to die for, rite?

secondly.. if u had invested in Digi, 3G was never ever part of the equation.. ur focus was always on the stellar result posted via Digi - esp its bread and butter biz - ze pre-paid. That was where the moola was all the time.

So with ot without 3G... Digi performance should be lebih kurang the same old, same old kind of thingy, rite?

food for thought?

cheers!

hhc1977 said...

nm,

Yes, w/o 3G to drag down its capex, this should be a good cause to celebrate. But....

The market perception is that w/o 3G, digi will be forced to become MNVO (aka subsidy those greenfield player). If this ever happen, u know what will happen.

Another unlikely scenario is that digi will become obsolete due to non 3G network a few year down the road. I wouldn't discard this possibility now.

The major perception is how foreigner will look at Msian investment per se. With 3G gone and facing public spread issue, digi is not in its prime time. Ass-U-Me that digi wont bite into this MVNO,
1)Would gov allows Telenor is keeping 61% of digi? Can bincang.
2)Would Telenor still keen in expanding digi where it was hit by stupid bureacratic measures?
3)Would market accepts that Digi will still function as normal?

Remember stock picking is like a beauty contest, we are not here to pick the most beautiful but to know who the other ppl think is the most beautiful.

Lastly, from TA perspective, the huge drop P-V spike of digi is not a nice pic in techno land. Would observe how digi price fares in comning months.

And i pulled out when the 3G is out. I prefer to take my chick out before my eggs are spoilt.

Smile.

Moola said...

Looks like you have made a pretty rational decision.

:)

Cheers dude!