Saturday, August 25, 2007

Mieco Chipboard: VIII

Here's an update to a series of old postings:

First posting:

  • Does a tumbling share represent an investment opportunity?

    Take an investment grade share. The share price tumbles. Does this equate to an investment opportunity? Without a shadow of doubt that whenever a share displays some weakness in their fundamentals, which in returns causes its share price to fall, it does provides the investor with an opportunity... but in the case of investment, this (opportunity) should be examined in great detail because this investment is only deemed valid provided if the weakness or subdued financial performance is only a temporary situation. Well, if the subdued performance should drag on or continue for a longer time, this would then render the stock unattractive as the temporary weakness had caused a serious deterioration in the company’s fundamentals.

Remember, what used to be good might not be good in the future!

  • Yes, Mieco used to be an investment grade stock.

    It was a stock which had a very impressive balance sheet, net cash and no debts (at it’s peak it had a net cash of 180+ million and no debts) and it had a pretty decent net profit margins.


    The first chart of Mieco showed the 3 year chart of Mieco. It used to trade around the low 1.00 region. As the market rose during 2000 to 2004, Mieco’s investors were rewarded handsomely with the stock peaking around the 3.00 mark....

Dec 28th 2005, Mieco: Part II - Ze Buy Recommendation!

  • The Issue of Ze Buy Recommendation made by iCapital.

    A lot has been said about iCapital buy recommendation on Mieco Chipboard.


    The investment manager had a buy recommendation made on Mieco last Aug 2004. Mieco price then was 2.36.....

Feb 2006, Mieco: Part III, Mieco: Part IV, Mieco: Part V, More on learning from a Trader.

Aug 28th 2006, Mieco: Part VI

Nov 18th 2006, Mieco: Part VI

Meico announced its earnings last night. The supposed turnaround just did not materialise.

Quarterly rpt on consolidated results for the financial period ended 30/6/2007

This was what the company said:

  • Group revenue decreased from RM86.1 million to RM78.0 million in the quarter under review due to lower selling prices and sales volume of particleboard and related products.

    The Group registered a loss before tax of RM7.7 million against profit before tax of RM4.5 million in the corresponding quarter under review due mainly to lower sales, increased raw material cost and production stoppage for plant preventive servicing and maintenance.

For me, Mieco is another great investing learning example.

  1. What used to be good, might not be good in the future.
  2. Overly ambitious capital expenditure is a reason for concern.
  3. No matter who and no matter how good the person giving the recommendation, following buy recommendation(s) never guarantees one success!


Bean Chun Toi said...

I am not a fan of TTB but I think the writer's comments are bit overdone.

I guess all fund managers make mistakes in their ivestment choices, some huge and small.

Even W Buffet lost US1 billion in an oil stock last year.

If, we you expect iCapital or TTB to make all the right investment, iCapital shares would have hit the roof at RM10 to RM20, and W Buffet's company shares would also reach sky high like Googgle shares.

I guess all of them are human and will continue to make few poor investment from time to time.

As long as more than 60% of their investment give reasonable returns, they are considered ok.