HAIO Updates – 1 Feb 2018

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#HAIO Updates – 1 Feb 2018

Analysis File – HAIO-FY18-Q2

6MFY17 results were very impressive where YoY growth rate of revenue and net profit was 39% and 53% respectively.

As Chinese will be celebrating CNY festival very soon, I expect #HAIO will enjoy very fruitful FY18 closing. As their quarterly report already explained their performance, I have no further comment.

CPI Malaysia rose by 3.5 per cent to 120.9 in Dec 2017, but consumer spending on healthcare products is not declining at all.

In my opinion, at 5.38, valuation of #HAIO is not so attractive because it is almost fully valued.

  1. Baseline scenario – 4.5 – 5.5
  2. Good scenario – 4.8 – 6.0
  3. Bad scenario – 4.1 – 5.0 (unlikely to happen)
  4. Ugly scenario – 3.9 – 4.5 (unlikely to happen)

Its dividend yield is around 3.1%.

As of now, I won’t accumulate #HAIO. I will consider to sell some of the shares to harvest good profits.

At the time of writing, I owned shares of #HAIO.

#KLSE #FBMKLCI #FundamentalAnalysis


CARLSBG Updates – 31 Jan 2018

Analysis file – CARLSBG-FY17-Q3

9MFY17 results were quite impressive even if so many people complaint “no money”. YoY growth rate of revenue and net profit was 7.7% and 8.4% respectively.

As Q4 2017 and Q1 2018 are festival seasons, I expect consumption of alcoholic beverages to be relatively higher. Thus, I expect #CARLSBG will enjoy very fruitful FY17 closing.

In my opinion, at 15.94, valuation of CARLSBG is fully valued where I believe its fair value range from 14.7 to 16.2. Its dividend yield is around 4.8%.

As of now, I won’t accumulate #CARLSBG, but to hold it for extremely high dividend yield as my average cost for #CARLSBG is extremely low.

At the time of writing, I owned shares of #CARLSBG.


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Moving to Facebook Group

Moving forward, I will gradually moving to my Facebook Group in the future – https://www.facebook.com/groups/lcchong/

This blog will cease operation in few months.

WELLCAL Updates – 29 Jan 2018

Analysis file – WELLCAL-FY17-Q4.xlsx

For growth drivers and challenges, you can read Management Discussion and Analysis in Annual Report 2017. I agree with the points made in WELLCAL’s MD&A, so I don’t have additional opinion here.

As at 27 Jan 2018, WELLCAL’s close price was RM1.49. I believe that WELLCAL is still slightly undervalued based on the following scenarios.

  1. Baseline scenario – RM1.65 – 1.84
  2. Good scenario – RM1.74 – 2.01
  3. Bad scenario – RM1.60 – 1.74
  4. Ugly scenario – RM1.48 – 1.64

I will continue to accumulate WELLCAL.

At the time of writing, I owned shares of WELLCAL.

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CIMB and AMMB – Recent Development

AmBank Group to cut jobs via MSS (9 Jan 2018)

AMMB cost / income was 57.40%, which the third highest in Malaysia. The next one – AFFIN or BIMB ? Both having 1st and 2nd highest cost / income.

Compare to other banks, based on my analysis, I think #AMMB is one of poor run banks in Malaysia.

Objectively speaking, this is more towards rationalisation, rather than “bad economy”.

CIMB to sell asset management unit stakes to Principal for RM950m gain (12 Jan 2018)

CIMB: “This exercise will also see our common equity Tier 1 ratio improve by approximately 18 basis points,”

This exercise actually makes sense because CET 1 Capital Ratio of CIMB is probably the lowest among public listed commercial banks in Malaysia. They really have to improve their regulatory capital.

Also, CIMB’s Tangible Common Equity over RWA is also the lowest (around 7%). For you to gauge the severity, the same ratio for BIMB is around 10.7%, and for other banks, more than 12%.

This is an exercise to improve regulatory capital.


Investalks 302 – Advanced Financial Statement Analysis @ Penang

In this workshop, I will be teaching sensitive areas and creative accounting in financial statements. Example of sensitive areas include:Revenue Recognition, Business Combination and Equity Investment, Intangible Assets and Goodwill, Impairment, Financial Instruments, Derivatives and Hedging, Deferred Taxation and Operating Leases.

We will also discuss cases such as “Increase in bank debt in the balance sheet without an increase in finance costs”.


This course aims to provide participants with a thorough understanding of how to perform advanced analysis on financial statement. This course brings together the key elements of financial statement analysis to help participants develop their skills in this area and enable them to ask the right questions to really get under the skin and see the real risks facing businesses and investors in these challenging times. The reference reporting framework used will be IFRS.

During the course, participants also gain an insight into how to interpret warning signals in financial statement and identify many of the creative accounting techniques used by companies.

Duration: Two days

Date: 6-7 Jan 2018, 9am to 5pm

Course Fee:

  1. Investalks Student: RM838.00
  2. Public: RM888.00


  1. Bank in
    • Bank: Maybank
    • Account No.: 514383562062
    • Account Name: Ivestalks Enterprise
  2. Send the payment receipt to investalksacademy@gmail.com or Whatsapp to +6016-773 9114

Location: Kalyx Boardroom, Icon City, Penang https://goo.gl/maps/Cz9wZGfayZU2

Program Level

Program Level: Advanced

Prerequisites: As an “advanced” course, a reasonable grounding in the fundamental concepts of financial accounting and some experience of having carried out or reviewed financial analysis will be assumed. Participants are expected to understand concepts such how the key financial statements (Profit and Loss, Balance Sheet and Cash Flow Statement) link together, how they are structured, how to analyse financial statements using simple ratios and accounting principles such as accruals and provisions.

This training assumes a sound grasp of fundamental finance concepts and analysis. Although the analysis will be structured around key aspects such as “Liquidity” and “Gearing”, these principles are assumed to be familiar to participants, thereby enabling this session to focus on analysis and interpretation rather than definition and calculation.

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Effect of Forex Rates Changes on Cash Balance

Sometimes you will see this item at the end of a Cash Flow Statement: “Effect of exchange rate changes on the balance of cash held in foreign currencies” or “Currency Translation Differences” or “Effects of exchange rate fluctuations on cash and cash equivalents” or other similar terms. The following is a snapshot of OLDTOWN’s Cash Flow Statement (AR 2017). For simplicity, I will call this line item as “FX Rate Effects on Cash Balance” in this post.

What exactly does this line item mean?

FX Rate Effects on Cash Balance” doesn’t impact Income Statement, so it won’t show up there. To be more precise, this item is not taxable.

Let’s take OLDTOWN as example. OLDTOWN sells products in other countries (as following). So OLDTOWN is selling products in Renminbi, Indonesian Rupiah, Singapore Dollar, and others. Since OLDTOWN is a Malaysia based company, so OLDTOWN will report all their revenue and expenses in MYR.

OLDTOWN Geographical Segment

In reality, OLDTOWN has actually sold some of their products in other currencies, and OLDTOWN has paid out some of their expenses in other currencies as well. In a very short time period, it doesn’t really matter; you can just convert it to MYR and that’s all there is to it.

The problem is that over the course of a year, the exchange rates on those currencies are going to change in some way. So, maybe the Renminbi becomes more valuable, the Indonesian Rupiah falls in value versus the MYR. When that happens, what ends up happening here is that even though OLDTOWN recorded their revenue in MYR, the actual Cash Flows will not match up because the value of some of those currencies has changed during this time period. (Remember Accrual Accounting?)

This is recorded in the “FX Rate Effects on Cash Balance” line item, normally shown on the Cash Flow Statement at the bottom.

This line item just corresponds to these exchange rate changing over time and the fact that these exchange rates may have changed in between the time when something was sold and then when the company actually even recorded it as revenue or paid out as an expense.

Don’t worry too much about the specifics of how this actually happens. Just remember the following:

  1. Income Statement – No impact because all revenue are reported in the company’s local currency.
  2. Cash Flow Statement – Net Income hasn’t changed, but “FX Rate Effects on Cash Balance” increasing mean that the company has increased its cash flow as a result of how other currencies have changed.
  3. Balance Sheet – Cash balance will be increased accordingly.

If “FX Rate Effects on Cash Balance” is a negative, it works exactly the same way.

How does this line item impact your analysis? Well, just trust the company’s accountants and auditors. Don’t ever forecast this number as this involves “rocket science”…