Keep INVESTING Simple and Safe (KISS)
****Investment Philosophy, Strategy and various Valuation Methods****
The same forces that bring risk into investing in the stock market also make possible the large gains many investors enjoy. It’s true that the fluctuations in the market make for losses as well as gains but if you have a proven strategy and stick with it over the long term you will be a winner!****Warren Buffett: Rule No. 1 - Never lose money. Rule No. 2 - Never forget Rule No. 1.
Fundamentals of this company have deteriorated significantly.
Studying the 10 years financials from 2014 to 2023: 1. Its revenues and profits before tax grew from 2014 to 2018 (in the first 5 years), shrunk from 2019 to 2020 (the next 2 years) and stabilised at lower levels from 2021 to 2013 (the next 3 years). 2. The decline in revenues and profit before tax occurred in 2019 and this was not related to the pandemic which started to bite in end of 2019 and 2020. 3. Though its revenues and profits before tax dropped significantly in 2019, the PBT margin in 2019 was still at 54.6%. The PBT margin dropped precipitously in 2020 to 5.5%. Perhaps, studying the quarterly PBT might spot this red flag earlier. 4. Its ROEs were high 927% to 46%) from 2014 to 2018. This dropped to 15.95% in 2019 and in 2014, it was 5.6%. 5. Its share price rose from RM 0.47 in 2014 to RM 1.16 in 2018. Its price dropped since then to RM 0.55 in 2023. 6. It paid increasing DPS in the first 5 years and its DPS shrunk the last 5 years.
What lessons can we learn from this company that will benefit our investing knowledge?
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Fundamentals of this company have deteriorated significantly.
Studying the 10 years financials from 2014 to 2023:
1. Its revenues and profits before tax grew from 2014 to 2018 (in the first 5 years), shrunk from 2019 to 2020 (the next 2 years) and stabilised at lower levels from 2021 to 2013 (the next 3 years).
2. The decline in revenues and profit before tax occurred in 2019 and this was not related to the pandemic which started to bite in end of 2019 and 2020.
3. Though its revenues and profits before tax dropped significantly in 2019, the PBT margin in 2019 was still at 54.6%. The PBT margin dropped precipitously in 2020 to 5.5%. Perhaps, studying the quarterly PBT might spot this red flag earlier.
4. Its ROEs were high 927% to 46%) from 2014 to 2018. This dropped to 15.95% in 2019 and in 2014, it was 5.6%.
5. Its share price rose from RM 0.47 in 2014 to RM 1.16 in 2018. Its price dropped since then to RM 0.55 in 2023.
6. It paid increasing DPS in the first 5 years and its DPS shrunk the last 5 years.
What lessons can we learn from this company that will benefit our investing knowledge?
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