When you compare Carimin ROE over the past decade with my 2 reference Bursa energy services companies – Deluem and Dayang you will find the picture as shown in the chart.
https://i.postimg.cc/J4K9HKq5/Carimin-vs-Deluem-Dayang.png

In the first half of the decade, Carimin ROE was not the best. But in the second half, it had improved and is comparable if not better than the reference companies.
https://i.postimg.cc/Vk62qMZQ/Carimin.png

When you look at Carimin REO vs its share price trend, you may have to think twice before going in. But this is just a quick-and-dirty look. The only way to resolve this is for a detailed fundamental analysis of Carimin and then compare the intrinsic value with the market price.

From a ROE perspective, except for 2023, Barakah ROE was lower than those for my 2 reference Bursa energy services companies – Dayang and Deleum.
The only except was for 2023 where Barakah posted a 40% ROE. This seemed like a turnaround after the negative ROE of 177 % in 2022. https://i.postimg.cc/FzgHw3Jz/Barakah.png

But when I dug deeper, this positive 40% was because it had an after-tax loss of RM 4 million divided by a negative equity. It was a positive 40% due to arithmetic.
Moral of story – when numbers look funny, you better dig deeper

“It’s built into the system that stocks get mispriced,” Warren Buffett said at the 2012 Berkshire Hathaway Annual Meeting.

There are several reasons why mispricing can occur from market inefficiencies to behavioural factors. I don’t really try to analyse the reasons for the mispricing, but rather look for opportunities for this.

I think Armada is a potential mispricing. https://i.postimg.cc/6pdGnTsq/Armada.png

Armada ROE had been trailing those of my 2 reference Bursa energy services companies – Dayang and Deleum for many years since 2012. But over the past 2 years, Armada ROE had overtaken those of Dayang and Deleum https://www.youtube.com/watch?v=quk378SFfCg

At the same time when you look at the trends of the ROE and market price for Armada, you can see that while the ROE has shown improvements over the past 4 years, there has hardly been any improvement in the market price.

I would consider this a mispricing opportunity that warrants a deeper look.

Alam share price has been declining from its 2014 high. You should not be surprised since the last time its ROE was positive was in 2015. If you were hunting for Bursa energy services companies, there are companies with better fundamentals such as Dayang and Deleum.

The marine charter business has caused a lot of headaches for the Bursa oilfield services companies. This is best illustrated by the ROE of Dayang and Deleum. https://i.postimg.cc/Z5kNLQT1/Dayang-vs-Deleum.png

Both are in the topside maintenance services business. The different between them was that Dayang ventured into the marine charter business in the early part of the last decade

You can see that the returns for Dayang were badly affected in 2017 and 2021 by impairments due to poor vessel utilization. https://www.youtube.com/watch?v=quk378SFfCg

Moral of the story? The wrong strategic choice can cause great problems

Dayang is an oilfield services company operating mainly in Malaysia. It initially focussed on topside maintenance services where it is one of the big boys in the offshore hook-up and commissioning business.

The company did very well in the topside maintenance services segment and got into trouble when it expanded its marine charter business in the early part of the last decade with the acquisition of Perdana Petroleum.

Business was good for the Malaysian marine charter scene until crude oil prices dropped to about USD 60 per barrel in 2016/17. The demand for marine charter services declined tremendously and many of the Bursa marine charter companies got into trouble. Dayang faced similar problem with its marine charter segment.

While crude oil prices today are 1/3 higher than the lows in 2016/17, the marine charter business has yet to fully recover. While Dayang topside services business is doing very well, its performance has been pulled down by the marine charter segment. The table below shows the relative performance of the 2 segments for Dayang.


https://i.postimg.cc/8c3fJS0f/Dayang-segment-performance.png

Dayang spent tons of money on the marine charter business. With hindsight shareholders would have been better off if this was paid out as dividends rather than spent it on Perdana Petroleum. Did management do a good job in allocating capital?

For more insights into Dayang, go to Is Dayang one of the better Bursa stocks? https://www.youtube.com/watch?v=quk378SFfCg

Dayang is an oilfield services company operating mainly in Malaysia. It initially focussed on topside maintenance services where it is one of the big boys in the offshore hook-up and commissioning business.

The company did very well in the topside maintenance services segment and got into trouble when it expanded its marine charter business in the early part of the last decade with the acquisition of Perdana Petroleum.

Business was good for the Malaysian marine charter scene until crude oil prices dropped to about USD 60 per barrel in 2016/17. The demand for marine charter services declined tremendously and many of the Bursa marine charter companies got into trouble. Dayang faced similar problem with its marine charter segment.

While crude oil prices today are 1/3 higher than the lows in 2016/17, the marine charter business has yet to fully recover. While Dayang topside services business is doing very well, its performance has been pulled down by the marine charter segment. The table below shows the relative performance of the 2 segments for Dayang.


https://i.postimg.cc/8c3fJS0f/Dayang-segment-performance.png

Dayang spent tons of money on the marine charter business. With hindsight shareholders would have been better off if this was paid out as dividends rather than spent it on Perdana Petroleum. Did management do a good job in allocating capital?

For more insights into Dayang, go to Is Dayang one of the better Bursa stocks? https://www.youtube.com/watch?v=quk378SFfCg

The company has yet to generate any positive annual return. From a fundamental perspective, I am sure that there are better hospitality counters

From a ROE perspective, Kim Loong had achieved better returns than my 2 reference Bursa Plantation companies – KLK and BPlant. https://www.youtube.com/watch?v=9KhboTCMdEg
But when you look at the price trend, the current price is about the past decade high. You might have missed the boat.

One of the metrics I used to screen for companies is the ROE. I then compared the ROE trends for the target company with the ROE of one or two reference companies where I have detailed fundamental analysis. If the ROE is better, then I will dig further into the fundamentals. When I did this comparison for Kluang with my 2 Bursa Plantation companies – Bplant and KLK, I did not find it to be good enough to dig further https://www.youtube.com/watch?v=9KhboTCMdEg

The Malaysian oil and gas services companies have had a challenging time over the past few years. They have not benefitted from the high crude prices. The last time Velesto had a positive ROE was in 2014, about 10 years ago

Whenever I hunt for Bursa Plantation companies to invest in, I screen them by comparing their performance with my 2 reference companies – KLK and BPlant. https://ujianehc.blogspot.com/2023/11/bursa-plantation-sector.html
These are companies where I have detailed fundamental analysis. The relative performance will give me a good sense on whether to dig deeper into them.

While often used interchangeably, there are differences between trading and investing. Firstly, they have different goals.
• Traders focus on generating short-term profits by taking advantage of price fluctuations
• Investors aim to build wealth over the long term by investing in fundamentally sound assets.
But there have been successful traders who incorporate fundamentals into their trading analysis
I would like to offer the ROE trend vs the share price trend as one toolkit for the traders.
The example for JTiasa below is one example. https://i.postimg.cc/pdcWr2fH/JTiasa.png

While this is classified as under the Bursa Plantation sector, its ROE is worst than my 2 reference companies – BPlant and KLK. So I would not hunt here to look for long-term investment opportunity from a fundamental perspective. https://www.youtube.com/watch?v=9KhboTCMdEg
But if you are a stock trader, wouldn’t you consider a rising ROE without a corresponding uptrend in price yet a trading opportunity?

Over the past decade, IOI performance in terms of its ROA had been above than the sector upper quartile ROA. This is one of the better Bursa Plantation companies. https://focusmalaysia.my/malaysian-plantation-stocks-a-cyclical-sector-but-not-cyclical-profits/
IOI achieved a 10-years peak in ROA in 2022. There seemed to be a corresponding market price uptrend. The ROA has since declined and so has market prices.
But when you look at the past 10 years ROA vs market price pattern, you can see that the current market price is lower than those from 2017 to 2021. In contrast the current ROA is better than those achieved from 2017 to 2021. https://i.postimg.cc/Pf7QsSDp/IOI.png
Is the market suggesting that the ROA in the coming year will decline? But if the fundamentals don’t suggest this, would this be an investment opportunity?

Over the past few years, the ROE of Innoprise has overtaken that of my 2 Bursa plantation companies – BPlant and KLK. https://ujianehc.blogspot.com/2023/11/bursa-plantation-sector.html
For those hunting for good plantation companies, you might have missed the boat at the company is currently trading around PE 14 whereas a year ago you could have gotten it at PE 6

BPlant – I am accepting the GO offer as it is at a fantastic price. I recently received the Offer Notification for my BPlant shares.
I bought the shares years ago and started selling in middle of the year when the share price started to go up.
At that juncture, I did not have any idea that it was going to be taken over by KLK. Anyway, by the time KLK announced the takeover at RM 1.55 per share, I already had sold off more than 90% of them. Yes, I left lots of money on the table.
Then came the termination of the sale and the subsequent offer by LTAT to buy the shares at the same price of RM 1.55 per share.
I am of course accepting the offer. It is not just because the offer price is above BPlant NTA or that the listing status would not be maintained.
It is because it is a fantastic price given the earnings power of BPlant.
If you look at the history of BPlant, a very significant part of the earnings was from land sale and not the plantation operations.
• From 2013 to 2020, the Group achieved RM 1.1 billion of PAT. Over this period the gain from the disposal of land and securities amounted to RM 1.2 billion. The plantation operations incurred cumulative losses for the period.
• Of the 2022 PBT of RM 729 million, RM 459 million came from asset sale.

Assuming a PE of 15, the company would have to generate an EPS of RM 0.10 per share yearly from the operations to justify the price.
Do you think that the company would be able to do so give the poor track record over the past 10 years. They will have to work very hard or find another buyer. I think we shareholders are very lucky to have this offer.
For my insights into BPlant refer to my blog or read this https://focusmalaysia.my/boustead-plantation-is-the-company-really-in-the-plantation-biz/

The company had not delivered any positive return over the past decade. This is company is transitioning from a planation company to a property company. Well the property sector is a cyclical one and is not exactly booming currently. At the same time, it will take time to build up the property business. So I expect a few more tough years. If you are a fundamental investor, there are better Bursa plantation companies to look at. https://ujianehc.blogspot.com/2023/11/bursa-plantation-sector.html There are also better property counters to invest in.

From a ROE perspective, the return of Hap Seng is in between that of KLK and BPant. It is better than BPlant but not as good as KLK. These are my 2 reference Bursa Plantation companies where I have detailed fundamental analysis. https://www.youtube.com/watch?v=9KhboTCMdEg
The comparative ROE trend and share price trend shows a good link. Prices are currently low relative to the ROE. If you are hunting for stocks with price-fundamental discrepancy to invest in, this is one company worth a deeper look. https://i.postimg.cc/CKnbFHHm/Hap-Seng-Plantation.png

From a fundamental perspective, Harn Len ROE is more volatile that that of my 2 Bursa plantation reference companies – Bplant and KLK. https://ujianehc.blogspot.com/2023/11/bursa-plantation-sector.html
Worst still over the past 7 years, there was only 1 year that Harn Len did better than either of them. https://i.postimg.cc/PJkFCzDK/Harn-Len.png
From a share price perspective, I think the market price has run ahead of its ROE. Unless you are a speculator, you should be worried about this pattern.

There are 2 Bursa companies in the service station sector – Petronas Dagangan and Petron Malaysia. https://www.youtube.com/watch?v=YrMdgjFHHaU
The former is about double the size of the latter in terms of revenue. You may think that this may give Petronas Dagangan some advantage https://i.postimg.cc/T3YhWqkC/Chart-5-min.png
But you can see from the chart that Petron Malaysia is no pushover and is able to compete.
So which would you chose to invest from a fundamental perspective?

From a fundamental perspective, the company ROE over the past decade is worse than my reference Bursa plantation company. ( https://www.youtube.com/watch?v=9KhboTCMdEg ) I use BPlant and KLK as the benchmark. Secondly its price trend over the past few years reflected its poor returns. There are better Bursa plantation companies to look at.

In my latest blog article, I covered Petron Malaysia ( https://www.youtube.com/watch?v=YrMdgjFHHaU ) and showed that it is not a value trap. My investment thesis can be summarized as
• As of 30 Oct 2023, Petron Malaysia was trading at about half of its Asset Value and EPV. With the Asset Value about the same as the EPV, I have great confidence in the margin of safety.

• The Group suffered due to the measures taken to control Covid-19. With this behind us, it should deliver better profitability. However, this was impacted by high crude oil prices.

• The Group is financially sound and while there is the threat of the disruption of the petrol station business model, it is not imminent

A comparison between the past decade ROE and share price trend showed a discrepancy. You can see that the market price has yet to reflect the improved ROE. Is this an investment opportunity?
https://i.postimg.cc/5tR4njp0/Petron-M.png

The company has both plantation and property development activities. If you compare its performance with that of the Bursa Planation sector, (https://www.youtube.com/watch?v=9KhboTCMdEg) you will find that Golden Land ROE for the past decade was much lower than that of my reference company – KLK.
Secondly, the Malaysian property sector is not exactly booming currently.
Looking at its share price trend, you can see that it reflects its business performance. Unless you expect a significant improvement in the business performance, I am not sure why the share price will uptrend. https://i.postimg.cc/wx0ZV3rc/Golden-Land.png

The business performance as measured by the ROE has been declining over the past decade. Its share price has followed accordingly and has been trending down over the past decade. So if you are speculating on some price uptrend, is it because you think that the business performance is turning around? Or are you merely listening to rumours

From a fundamental perspective, the ROE of Genting Planation falls below that of my reference Bursa Plantation company – KLK. https://ujianehc.blogspot.com/2023/11/bursa-plantation-sector.html
I would even rate Genting Plantation performance as no better than that of BPlant.
https://i.postimg.cc/J0xkmVPL/Genting-Plantation.png

The interesting think for the punters is that the share price of ROE of Genting Plantation is moving in the opposite direction of the improvement in the ROE. If you believe in the Efficient Market Hypothesis, you would expect the share price to eventually reflect the business performance. Is this a counter to speculate?

FGV is a Bursa Plantation company.

For many years, its business performance as measured by its ROE was way behind that of my reference Bursa Plantation company – KLK. But when you looked at the past 2 years performance, FGV ROE seemed to be as good as that for KLK. https://i.postimg.cc/Hnfwz1Hz/FGV.png

The interesting thing is that the market price has yet to reflect the improved performance. Is this a sign of better share prices to come?

Far East is a Bursa Plantation company. From a fundamental perspective, its ROE for the past decade is comparable to that for my reference Bursa plantation companies – KLK. Its ROE last year was a 10-year peak.

But when you look at the ROE vs market price trend, you can see that the share price is around the 10-year peak. If you have not invested, you might have missed the boat https://i.postimg.cc/XvwbZSyg/Far-East.png

For many years the ROE of this company was hovering around the zero. From a fundamental perspective why would you want to invest when you have better Bursa plantation companies https://www.youtube.com/watch?v=9KhboTCMdEg

Of the 4 Bursa stationery companies, UPA had the worst gross profit margins. If you are going to hunt in this sector, I would focus on Pelikan or Asia File. https://focusmalaysia.my/asia-file-will-there-be-time-to-meet-the-digital-disruption-challenge/

The other feature of UPA is that its ROE had dropped by about half, its market price seemed to be holding. Does it meant that it is overpriced? https://i.postimg.cc/MpHddwLc/UPA.png

CWG – a tough stationery sector

The stationery sector is facing potential digital disruption. This is best reflected by the ROE of the 4 players in Bursa. You can see that since 2018, except for Pelikan, they have incurred declining ROE.

CWG is no exception with its ROE declining from 14.5 % for FYE 2016 to 5.8 % for FYE 2023. Not surprisingly, its market price declined from RM 0.71 in Dec 2016 to RM 0.34 currently. https://i.postimg.cc/66RFhGHL/Chart-7.png

It would appear that Asai File is still the better one in the context of ROE. https://www.youtube.com/watch?v=HMlJH6DBmzg

I have quick and dirty formula to estimate the intrinsic value using the ROE and Book Value
Intrinsic value = (ROE/Cost of capital) X Book Value. Its historical ROE is about 5% so that the term ROE/Cost of capital is about 50%. So are you surprised that the market price is about less than the Book Value? The company must improve it returns

Pelikan – have you missed the boat?

Pelikan is a Bursa global stationery company. In terms of revenue, it is about 3 times larger than my reference stationery company – Asia File. However, except for the past 2 years, its ROE was worse than that of Asia File for the past decade. Refer to the following for Asia File https://focusmalaysia.my/asia-file-will-there-be-time-to-meet-the-digital-disruption-challenge/

Pelikan share price has recent over the past 2 years to reflect its better ROE as can be seen from the chart. I am not sure whether you would have missed the boat from a fundamental perspective https://i.postimg.cc/1tMk6dH4/Pelikan.png

As a stationery company, Asia File faces the threat of digital disruption. The Group has recognized this by not expanding into this sector. Instead, it diversified into food wares and consumer wares that in 2023 accounted for 16% of the Group revenue.

Both the stationery and food/consumer wares businesses are profitable and generating good returns.

The challenge is that about 2/3 of its capital is tied up in non-operating assets that generated low returns. This has resulted in overall low returns for the Group. It would have to depend on new ventures to rectify this. The Group is financially strong and this will give it time to deliver these.

My valuation showed that it is not a value trap. There is sufficient margins of safety to invest at the current market price. But you need to have a long-term view.

For details visit https://www.youtube.com/watch?v=HMlJH6DBmzg

Chin Teck – an irrational market?
Over the past decade the market has not always been rational as can been seen from the comparison between the ROE and market price. You can see that in 2018 when the ROE was at its high, the market price continued with its downtrend.
The current ROE is lower than the 2022 peak. While the market price had declined, it has not reached the 2019 lows. https://i.postimg.cc/50NzFvx0/ChinTek.png
From a fundamental perspective, Chin Teck performance lies in between my 2 Bursa plantation references – BPlant and KLK. I would not rate its fundamentals as fantastic.
So, not so fantastic fundamentals and a harder to read market behaviour. Is this an investment opportunity?
For more insights of the Bursa plantation sector go to https://www.youtube.com/watch?v=9KhboTCMdEg

From a fundamental perspective, you should be curious why a logistics company returns (ROE) is down trending when the economy is recovering.

As value investors, you have been told that the market is not always efficient. You look for underprice companies to invest in anticipation that the market would eventually be rational and re-rate them.

Unfortunately, my 20 years’ experience is that my average holding period is 6 to 8 years. I was told that to shorten the waiting period, I should look for catalysts.

One of the catalysts I now look for is the price vs ROE trend discrepancy. This is exemplified by Cepatwawasan, a Bursa Malaysia plantation company. Its past 10 years ROE lie in between my 2 reference Bursa plantation companies – BPlant and KLK.

But look at the price vs ROE trend. Historically prices seem to move in tandem with the ROE but recently the price has been flat while the ROE dropped.

https://i.postimg.cc/VkxgYYLT/Cepat.png

So, if a fundamental analysis shows that the drop in ROE is temporary, it would be an investment opportunity. But this fundamental analysis is a story for another day.

For more insights of the Bursa plantation sector go to https://focusmalaysia.my/malaysian-plantation-stocks-a-cyclical-sector-but-not-cyclical-profits/

For a value investing fund, its ROE has been declining over the past 10 years. I used to own it but sold it when I found that it seemed to be resting on its past performance

BLD Plantation – peak price that is not reflected in the ROE
I have concerns from both a fundamental perspective and share price perspective.
The company share price has been on an uptrend to reach a 10-year peak. But while its ROE was increasing from 2018, there was a decline last year. Is the market thinking that its ROE will eventually turnaround? Or have prices peaked? Refer to the chart at https://i.postimg.cc/Bnrd5Ptw/BLD-Plantation.png
From a fundamental angle, the company ROE is not as good as my 2 reference Bursa plantation companies – Boustead Plantation and KLK. This is not my pick from a fundamental perspective.
For more insight into the Bursa plantation companies go to https://www.youtube.com/watch?v=9KhboTCMdEg

I am very wary about companies with volatile ROE

I have 2 reference companies when looking at Bursa plantation companies – BPlant and KLK. Astral ROE relative to these 2 were very low. https://www.youtube.com/watch?v=9KhboTCMdEg
So it is not a company I would dig further from a fundamental perspective. But if you are a punter, the comparison of its ROE and share price may present some ideas. https://i.postimg.cc/bwj00p8R/Astral-Asia.png

But look at its discrepancy between its ROE and share price. Would you consider that this is a catalyst for re-rating? https://i.postimg.cc/63XZ4JNK/UMW.png

Prices may be going up. But although it has a good auto segment, its Group ROE has been struggling to be above 10% for many years. From an auto perspective, there are better Bursa auto companies to look at when considering the ROE. https://focusmalaysia.my/are-there-investment-opportunities-in-the-bursa-auto-sector/

From a ROE perspective, the ROE is 2023 is about the same as that in 2019. When you look at the stock price, it peaked in Aug 2019 at about RM 1.33 but today its stock price is only half of that of the peak. If you are a speculator, would you think that history will repeat itself?

The performance of TChong has deteriorated over the past decade so that today you would not consider it one of the better auto company from a ROE perspective. Companies like BAUTO or HLInd have better ROE as per my analysis "Are there opportunities in the Bursa auto sector?" in my blog

From a fundamental perspective, the company has not generated any positive ROE over the past few years. This is despite the high oil prices. Surely you are expecting crude oil prices to go higher so that it has a chance to make profits?

If you are hunting for good fundamental performaners in the auto sector, I would not look at Solid. Based on my analysis of the Bursa auto sector, there are companies like BAUTO or HLInd where you have better chance of finding consistently good ROE. Refer to https://focusmalaysia.my/are-there-investment-opportunities-in-the-bursa-auto-sector/

If you are looking for auto companies to invest in, would you consider Sime? Looking at the overall performance of the Bursa auto companies, I would say that it does not stand out. The best performer in terms of the past 10 years ROE is BAUTO

From a fundamental perspective, there are companies with better ROE.

For a car company, its performance is terrible when compared to other Bursa auto companies. Refer to https://focusmalaysia.my/are-there-investment-opportunities-in-the-bursa-auto-sector/

For most of the time over the past decade, its ROE has been around 5%. You can get similar returns from your EPF. If you want to hunt for Bursa auto companies, there are better choices in BAUTO and HLInd. Go to "Are there opportunities in the Bursa auto sector" in my blog