Investalks 302 – Advanced Financial Statement Analysis @ KL

Early bird discount: 10% discount if paid and register before 30 Nov 2017 – RM799.20

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: 9-10 Dec 2017, 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 or Whatsapp to +6016-773 9114

Location: Somewhere in Petaling Jaya

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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PADINI Updates – 11 Nov 2017

PADINI Analysis File –

For growth drivers and risks, you can refer to MD&A (Management Discussion and Analysis) in their Annual Report 2017. As I agree with their disclosure, so I have no further comment.

My main concern is their increase in cost of sales due to the increase of inventories written off, inventories written down and inventory losses (collectively known as inventories losses) of approximately RM32 million. This is an initiative to embark on a more stringent inventory policy with the use of stricter write off/down estimates. I wonder how this policy impact PADINI’s gross margin in the future. This is a question need to be asked in their coming AGM, but I won’t be able to attend the AGM. Hopefully, someone can ask and share their response with me.

At RM5.10 (9 Nov 2017), in my opinion, PADINI almost fully valued where range of its fair value is from RM4.5 to RM 5.5. I will continue to hold and won’t accumulate PADINI for the time being.

Join my FB group: for more collaboration.

EBITDA Multiples Analysis for Telco

All of us should know business challenges of all Telco in the world, so I won’t list them here (2 seconds Googling).

I was very curious about where will our local Telco (#DIGI#MAXIS, etc…) be heading to, from valuation perspective (#EBITDA Multiples – EV/EBITDA)?

Thus, to get the trend, I have spent 11-12 crazy working hours in the past 2 weeks to collect past 5 years historical EV/EBITDA of 107 Telco (> USD 1,000 mil market cap).

In the past five years, in average, EV/EBITDA was in the range from 5.3 to 9.1. Compare to our local telco (latest financial year),
1. MAXIS – 14.02
2. DIGI – 13.3
3. #AXIATA – 7.66
4. #TM – 7.03

There are only 23 companies (of course, including DIGI and MAXIS) having EV/EBITDA more than 10. The obvious trend is EBITDA Multiples of 16 companies (out of 23) are gradually declining.

On one hand, we may argue that MAXIS and DIGI deserve higher valuation because of high dividend payout. On the other hand, both are facing the same challenges like others, and we can see stagnant (perhaps declining) growth in their top-line and bottom-line. High dividend payout must be supported by top-line and bottom-line too.

I believe in long term (I don’t know how far away), EBITDA multiple of DIGI and MAXIS will be converging below 10.

For DIGI, if we use 5.3-9.1 as guidance, its fair value is 2.3-3.5. This is very different from my previous valuation.

La Niña and FCPO

On 26 Oct 2017, MIDF released one report: “La Niña by year end?” I am not here to argue whether their forecast is reasonable or not. No one knows what will happen in the future.

Here, I want to share whether there is any strong correlation between La Niña and FCPO prices.

The hypothesis is strong La Niña will cause low production of CPO, thus FCPO prices will increase, and vise versa.

Let check the history…

From 1987 to 2006

There are three La Niña recorded. During three incidents of La Niña, FCPO prices dropped significantly. On the other hand, FCPO prices surged during and after El Niño (the green line above 0.5).

La Nina FCPO 1987-2006

From 2006 to 2017

La Nina FCPO 2006-2017

  1. Strong La Niña (2007-2008) – FCPO was very bullish, but is it due to La Niña? I think it was the weak USD contributed to the bullish price movement of FCPO, not La Niña.FCPO USD 2007-2008
  2. Strong La Niña (2010-2011) – FCPO was very bullish 5-6 months only, after that, FCPO went south. Weak USD was the one pushing up FCPO in that 5-6 months.
    FCPO USD 2010-2011

In addition, let’s have a look of the following chart. Is there any obvious and clear correlation between La Niña and CPO stock level?

So now, make your own judgment…

Crude Oil Update (22 Oct 2017)

As a follow up to Crude Oil Update (19 Mar 2017), after 7 months, my view is remain the same. As long as Crude Oil prices remain at current range, many oil producers can sustain and make money.

I advise that don’t be overwhelming with those articles that promoting positive outlook of crude oil.

Correction to PETGAS Updates (18 Oct 2017)

As a follow up to “PETGAS Updates – 18 Oct 2017“, I have uploaded a corrected analysis file. The corrections addressed the following mistakes:

  1. Finance Lease Liabilities – I overlooked footnote of Finance Lease Liabilities (Annual Report 2016, page 73-74). I over-estimated principal and interests of Finance Lease Liabilities for the coming years. After the correction, borrowings and interest expenses is reduced accordingly. This implies a slight increase in fair value estimation: 19.80-23.00.
  2. I have updated the “Key Ratios” worksheet to be “Utilities – Regulated Gas” specific.

PETGAS Updates – 18 Oct 2017

PETGAS Analysis File –

In the foreseeable future, I think PETGAS is expected to remain stable. You won’t find any WOW factor in short term though.

However, with existing Gas Processing Agreement, Gas Transportation Agreements and Regasification Service Agreement signed with PETRONAS, I believe that PETGAS income is sustainable. Besides, PETGAS will allocate around RM4.5 billion capex to cater for the growth projects, such as the LNG Regasification Terminal (RGT) and the Air Separation Unit (ASU) project, both of which are located in Pengerang.

The RGT project is now at 25% progress on ground and the first storage tank should be commissioned before the end of 2017 while the second tank, which will complete the whole project, will be commissioned by the first quarter of 2018. Its Pengerang Gas Pipeline Project is also on track and expected to be completed this year, which will enable the initial supply of gas from the existing Peninsular Gas Utilisation (PGU) pipeline network to Pengerang and vice versa.

Thus, with the above catalysts, I believe PETGAS will continue to grow in long term.

In my opinion, its fair value is range 19.5-22.31 (base scenario), and 17.98-20.68 (bad scenario). At 18.50, PETGAS is undervalued. Because my average price of PETGAS was 8.9, I have accumulated some PETGAS shares recently.