Recently there has been a few postings on PCCS in i3investor. Yes, this
company have turned around and have been posting good profits in the
past few quarters.
Here, I want to highlight something that really caught my interest in this stock.
It is the FREE CASH FLOW generation!!
It is the FREE CASH FLOW generation!!
|
Cash Flow Statement (RM'000)
|
2014
|
2015
|
2016
|
2017
|
2018
|
9M 2019
|
|
Net Cash Flow from Operations
|
20,550
|
2,429
|
-2,485
|
-2,644
|
22,067
|
36,190
|
|
Purchase Of PPE
|
-4,206
|
-9,998
|
-7,458
|
-3,973
|
-4,353
|
-5,190
|
|
Disposal Of PPE
|
407
|
626
|
964
|
297
|
976
|
1,045
|
|
Free Cash Flow
|
16,751
|
-6,943
|
-8,979
|
-6,320
|
18,690
|
32,045
|
In 9 months FY2019 alone, it has generated 32m of cold hard cash for the company.
Now let's look at the Enterprise Value (EV) of the company.
Below is the formula for calculating EV:
EV = Market Cap + Market Cap of Warrants + Market Value of Minority Interest + Debt - Cash
| Market Cap (RM '000) | 80,865 |
| Market Cap of Warrants (RM '000) | 16,203 |
| Market Value of Minority Interest (RM '000) | 1,112 |
| Cash (RM '000) | 70,367 |
| Debt (RM '000) | 45,847 |
From the table above, we are able to calculate the EV to be RM73.661m.
This means that in theory, all you need is RM73.661m to acquire the
whole company.
Would it be a very good investment if you only need to pay RM73m for
the whole business while the business has the ability to generate RM32m
of cash in just nine months alone.
This means that you will be able to get back all your investment within two years and own the company for no cost at all.
Where else can you find this kind of investment???
Where else can you find this kind of investment???
You tell me.
__________________________________________________________________________________
I am very happy to be invited to give
this investment talk. I am not a professional and after seeing so many
professionals in the audience, I feel so humble. Please do not hesitate
to point out my mistake so that we can discuss logically to reach an
acceptable agreement.
1. to make money from the stock market, you must know how to select good shares to buy.
2. you must know when to sell
3. to maximise your profit you must know how to control your emotion of fear and greed.
Share selection:
Among all the criteria such as NTA,
dividend yield, healthy accounts, cash flow, EPS etc profit growth
prospect is the most powerful catalyst to move share price. When you buy
any stock, you expect to make money from dividend yield and share price
increase. Almost all the Malaysian companies pay out very poor
dividends. As a result, investors always look at the company’s profit
growth.
Koon’s golden rule for share selection:
The company must report 2 consecutive quarters of increasing profit and the share is be selling at below P/E 10. For example
PCCS
PCCS reported EPS of 1.45, 2.17 and 3.57 sen per share in the last 3 quarters and the last traded price was 60 sen.
https://klse.i3investor.com/blogs/kiasutrader/213885.jsp
