Blue Whale's Journey to Discover Hidden Value

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Blue Whale's Journey to Discover Hidden Value

Postby Blue Whale » Sun Feb 05, 2017 10:32 pm

After much thought I embark myself to the journey of uncovering hidden value. Know its very tuff but I believe in myself :ymbringiton:
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Re: Blue Whale's Journey to Discover Hidden Value

Postby PAT » Sun Feb 05, 2017 10:36 pm

good move BW......... :-bd
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Re: Blue Whale's Journey to Discover Hidden Value

Postby Investor from 1985 » Sun Feb 05, 2017 11:57 pm

Dont even think to expose the stuff that Im working on ....... ( Until Im done with them) ~x( ~x( ~x(

I hope you guys entertained jokes... ^#(^
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Re: Blue Whale's Journey to Discover Hidden Value

Postby topcat » Mon Feb 06, 2017 6:52 am

BW , What you meant by hidden value?
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Re: Blue Whale's Journey to Discover Hidden Value

Postby Blue Whale » Mon Feb 06, 2017 9:56 am

topcat wrote:BW , What you meant by hidden value?


The value yet to discover me you or anybody else. This is the opportune time to discover those valuable assets as waters are very low or no where. Lets dig deep in the river bases and reservoir bases to get those before the rainy season starts. Now we had almost three years of drought and I suspect monsoons are near. :-w
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Re: Blue Whale's Journey to Discover Hidden Value

Postby Blue Whale » Wed Feb 08, 2017 11:53 am

I were looking at Teejay Lanka's operating performances and look through their strategies. Did a bit of SWOT as well and painted a picture, based on some conservative assumptions, to project the likely future state of the business. My findings indicates that this share is going to be one of blue chips in CSE in the next five years. Also the management is very positive on delivering shareholder wealth not only through capital gains but with an attractive dividend policy.

The main plus points for the company are a) strong international markets b) new opportunities in US post Trump administration c) Revenue is from foreign currency which is a clear chance for enhanced earnings as rupee is always subject to depreciate d) the regaining of GSP + concessions will enhance the new markets in Europe and UK e) major tax concessions from government as this is an export oriented business

Main negative points are that a) the competition in the international markets are so aggressive so that the company doesn't have the luxury of maintaining super margins b) sales are subjective to world economic climate changes c) future expansion plans can be impacted by the ever changing government policies

The company has a very strong balance sheet with low borrowings and high level of cash. The interest risk exposure is negligible. Also company is maintaining an attractive dividend policy.

The recent quarter result shows a decline in profitability mainly due to the company accepting some low margin businesses to gain market share in the business as well as now subject to paying income tax at lower rate of 14% because of the expiry of income tax holiday due to the end of the time period of BOI agreement. Hereafter the company will be similar to DIalog. So the FY 2016/17 is likely to see a drop in profitability in the short term but I can see they are growing from strength to strength from next year onwards. I can safely estimate an annual revenue growth of 15% for TJL for the next 5 year period.

Below is the summary financial snapshot till FY 2017/18.
FY 15/16 (A) Q1 16/17 (A) Q2 16/17 (A) Q3 16/17 (A) FY 16/17 (E) FY 17/18 ( E)
Revenue 17,830 4,776 5,258 6,348 22,684 26,087
GP 3,011 727 881 832 3,266 3,391
Operating Profit 2,154 435 608 557 2,153 2,478
PBT 2,219 443 618 552 2,170 2,496
PAT 2,172 399 590 473 1,940 2,146

Further we can expect a DPS of Rs1.5 for the FY 2017/18 and growing thereafter.

My estimated revenue & PAT for the next four years is as follows.
Revenue PAT
2018/19 28,616Bn 2,575Bn
2019/20 33,767 3,039Bn
2020/21 39,169 3,525Bn
2021/22 45,045 4,054Bn

The above revenue road map resembles the companies mission for 2020, which is becoming a USD 300Mn revenue company by 2020.

Then I applied discounted cash flow techniques to figure out what would be the correct market price for this stock based on the following assumptions.
a) Earnings growth to improve to 20% in the year 2018/19 on account of increased efficiencies plus a gradual increase in margins from the new markets in which the company embarked upon in this year and the next year under low margins with the expectation of acquiring new markets. This rate to slow down to 15% by 2021/22 and hereafter I assumed a flat growth rate of 7.5% in earnings.
b) Use 12% as the discounted rate which is slightly higher than the existing average 12month TBill rate
c) Number of shares will remain at current issued level

The below is the financial outcome. I can see an intrinsic value of Rs94 per share for this stock. This will be more than 100% of the current price level. When this happen TJL's market capitalization will reach Rs66Bn which will be 1/3 rd of current JKH market capitalization.

Further with regular and increasing dividends you can assume what kind of return you can expect from this stock in the long run. This is a sure gem of a stock. :ymhug:
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Re: Blue Whale's Journey to Discover Hidden Value

Postby Value » Wed Feb 08, 2017 12:04 pm

Excellent Work BW,

Totally in agreement with your view though 5 year span is quite long. Longer the period, higher the uncertainty.

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Re: Blue Whale's Journey to Discover Hidden Value

Postby Investor from 1985 » Wed Feb 08, 2017 12:15 pm

~x( ~x( ~x( ..... :-bd
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Re: Blue Whale's Journey to Discover Hidden Value

Postby Hawk Eye » Wed Feb 08, 2017 12:20 pm

What i dont like in TJL is all their diversification and expansions are more of like Brandix dumping and way of repatriating money back from overseas operations

6th November 2013
https://cdn.cse.lk/cmt/uploadAnnounceFi ... 34161_.pdf
Company discloses a Technical Service agreement with Ocean India Pvt Ltd, An Indian Fabric manufacturer. Service fee is $780,000 per annum for 2 years. and Directors of that company are Mohamed Ashroff Omar, Feroz Omar, Hasitha Premaratne, Virendra Nath Sudan

in 12th February 2015
https://cdn.cse.lk/cmt/uploadAnnounceFi ... 1_1080.pdf
Disclosing acquisition of Ocean India Pvt Ltd and Quenby Lanka

Quenby Lanka is another Brandix JV subsidiary and was not doing well according to my knowledge.

When the textile Industry started going down with the US spending detracting in 2007, big brands started pulling out from Asian region, and SE region started feeling the pinch. Orders went to China..Big banks started controlling credit for this Industry. Standard chartered and HSBC almost avoided extending any credit lines . on the way we lost GSP ..all these sent the textile industry down the vicious spiral

Ashraf Omar made a smart move to list TJL, and slowly dump certain entities at higher prices and fill his pocket

HE

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Re: Blue Whale's Journey to Discover Hidden Value

Postby Blue Whale » Wed Feb 08, 2017 12:37 pm

Hi HE, What you mean to say is Ashraf use TJL to sell his companies and milked the investments?
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Re: Blue Whale's Journey to Discover Hidden Value

Postby Hawk Eye » Wed Feb 08, 2017 1:16 pm

Blue Whale wrote:Hi HE, What you mean to say is Ashraf use TJL to sell his companies and milked the investments?


No...Asraff also uses TJL to dump some of Brandix subsidiaries in the name of TJL diversification

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Re: Blue Whale's Journey to Discover Hidden Value

Postby Blue Whale » Wed Feb 08, 2017 1:37 pm

hawk eye wrote:
Blue Whale wrote:Hi HE, What you mean to say is Ashraf use TJL to sell his companies and milked the investments?


No...Asraff also uses TJL to dump some of Brandix subsidiaries in the name of TJL diversification


You mean TJL is buying businesses from Brandix paying their money which are termed as unproductive businesses. If that is the case then there is an ethical issue as well as corporate governance issue.
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Re: Blue Whale's Journey to Discover Hidden Value

Postby Hawk Eye » Wed Feb 08, 2017 2:41 pm

Just another angle

http://www.corpasia.net/hongkong/01382/ ... BFdATe.pdf

Check this website: This is the annual Report of Pacific Textured Holding, the company that entered after JV with UK company came to an end in 2008. then they went to list it in 2011, when the garment industry in SL dying and lost GSP + stating they need capacity expansion.

HK Chairman says in 2016
The Group’s revenue decreased by 19.7% to HK$3,026.9 million for the six months ended 30 September 2016 (2015: HK$3,767.6 million). The sales volume of six months decreased by 19.2% to 78.9 million pounds (2015: 97.7 million pounds), while the Group’s average selling price (“ASP”) decreased by 0.5% to HK$38.4 per pound (2015: HK$38.6 per pound)

TJL.PNG


Check how SL division performed compared to last year.

Also i note that they are focusing more on Vietnam now

And also check when could have the BOI tax holiday for TJL could have come to an end
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Re: Blue Whale's Journey to Discover Hidden Value

Postby SHARK » Wed Feb 08, 2017 3:38 pm

Excellent thread BW and hats off to HE for adding informative substance to the discussion.
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Re: Blue Whale's Journey to Discover Hidden Value

Postby topcat » Wed Feb 08, 2017 5:33 pm

Great BW and HE. What a knowledge. .. We all are benifiting with these kind of conversations.. ^:)^
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Re: Blue Whale's Journey to Discover Hidden Value

Postby Blue Whale » Wed Feb 08, 2017 6:11 pm

Diverting the discussion. In 2013 the CSE recorded a gain of 4.8%. In 2014 the gain galloped to 23.4%. In 2015 the fortunes were changed to record a loss of 5.5%. Then in 2016 the market was further boomeranged by another loss of 9.7%.

Were all the stocks recorded gains in 2013 or 2014? Or were all the stocks recorded losses in 2015 and 2016?. The answers are 'No'. When majority of stocks recorded gains in 2013 & 2014, a few gained by a whopping percentages. Similarly when majority of stocks suffered in 2015 & 2016 yet another few number of stocks delivered extraordinary gains. Are all these stocks who recorded superior gains represent the same group of stocks or different stocks? Why those stocks outperform the market trends?

My battle is to discover the answers for these. I want to know which factors influenced the investors to invest in a stock that behave differently than the broder market. And then I want to know who are the similar horses that will be into the race in 2017 and beyond. My effort is to discover these horses.

Are you ready guys? If you are brave enough join with me to go for a journey similar to the journey initiated by Vasco da Gama. :ymbringiton: :ymbringiton: :ymbringiton:
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Re: Blue Whale's Journey to Discover Hidden Value

Postby NC+ » Wed Feb 08, 2017 6:26 pm

Yes, yes we are ready sail with Blue Whale..

https://www.youtube.com/watch?v=Ozi7lcyatt0
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Re: Blue Whale's Journey to Discover Hidden Value

Postby Shadow walker » Wed Feb 08, 2017 6:47 pm

Blue Whale wrote:Diverting the discussion. In 2013 the CSE recorded a gain of 4.8%. In 2014 the gain galloped to 23.4%. In 2015 the fortunes were changed to record a loss of 5.5%. Then in 2016 the market was further boomeranged by another loss of 9.7%.

Were all the stocks recorded gains in 2013 or 2014? Or were all the stocks recorded losses in 2015 and 2016?. The answers are 'No'. When majority of stocks recorded gains in 2013 & 2014, a few gained by a whopping percentages. Similarly when majority of stocks suffered in 2015 & 2016 yet another few number of stocks delivered extraordinary gains. Are all these stocks who recorded superior gains represent the same group of stocks or different stocks? Why those stocks outperform the market trends?

My battle is to discover the answers for these. I want to know which factors influenced the investors to invest in a stock that behave differently than the broder market. And then I want to know who are the similar horses that will be into the race in 2017 and beyond. My effort is to discover these horses.

Are you ready guys? If you are brave enough join with me to go for a journey similar to the journey initiated by Vasco da Gama. :ymbringiton: :ymbringiton: :ymbringiton:


Yep.. im coming with you BW .. lets discover some good companies.. :-bd

Lets go captain .. :ar! :ar!
Successful Investing takes time, discipline and patience. No matter how great the talent or effort, some things just take time .. ;)


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Re: Blue Whale's Journey to Discover Hidden Value

Postby Hawk Eye » Wed Feb 08, 2017 8:46 pm

I just gave a Hawk Eye view of Blue Whales Journey

Keep on the Good Work BW..

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Re: Blue Whale's Journey to Discover Hidden Value

Postby PAT » Wed Feb 08, 2017 9:48 pm

Thanks BW and HW.......
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Without compromising your ability to Live Tomorrow……… :)

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Re: Blue Whale's Journey to Discover Hidden Value

Postby SHARK » Wed Feb 08, 2017 11:12 pm

Brin,
This is the article :)
Price is what you pay. Value is what you get.”

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Re: Blue Whale's Journey to Discover Hidden Value

Postby Fair investor » Mon Feb 13, 2017 1:11 am

Blue Whale wrote:
hawk eye wrote:
Blue Whale wrote:Hi HE, What you mean to say is Ashraf use TJL to sell his companies and milked the investments?


No...Asraff also uses TJL to dump some of Brandix subsidiaries in the name of TJL diversification


You mean TJL is buying businesses from Brandix paying their money which are termed as unproductive businesses. If that is the case then there is an ethical issue as well as corporate governance issue.


Hey Guys..

Brandix owned 75% of Ocean Mauritius -Parent company of Ocean India which was the company acquired by TJL
If the Ocean India was unproductive, Brandix would not sell it to TJL due to following reasons...

Brandix owns 30% of TJL therefore if any loss incurred due to this transaction Brandix will share 30% of the part of loss.

TJL paid 50% cash & balance 50% by the issue of shares in TJL to owners of Ocean India.Therefore any disadvantage seller would not accept share of TJL as a part of payment.

Brandix was own 75% Ocean India ,If any disadvantage to TJL they would not accept shares of TJL because they would receive majority of shares of TJL as part of payment.

Review following quater results of TJL after this transaction..
EPS jumped from .57 to 1.02 rupees and net profit jumped to 376 to 672 millon which was the remarkable achievement of their history.
Do you think still Ocean India is unproductive??... :D :D

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Re: Blue Whale's Journey to Discover Hidden Value

Postby Blue Whale » Thu Feb 16, 2017 7:14 pm

Here is another dish for you. Below I produces the facts of Sampath Bank PLC. Just taste how they have grown over the past 3 years under a very difficult economic climate for finance industry in Sri Lanka. Just get a feel of how they grew their income and especially how they grew their EPS.
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Re: Blue Whale's Journey to Discover Hidden Value

Postby Blue Whale » Thu Feb 16, 2017 7:29 pm

Adding few more.

SAMP share price grew by an annual rate of 5% in 2015 and 2016 where as their EPS grew by 25.8% and 39.6% respectively. But what has happened to the stock's PE, coming down from 7.7x in 2014 to 4.9x in 2016.

Is this logical in any economic situation? This stock has increased the dividend distribution YoY to shareholders. Look at how they have distributed in this month. If we assume this year they are going to grow their EPS by an average 20% then what is the PE we are looking at. At CMP it is 4.3.

I think this has to be rectified. This mis match should be adjusted immediately. And more over I think that should happen in this year. So what could be the price we can look at? I think the market has sense that now. Why @ CMP the share price has already gained by 7.5%. We are just in the second month of 2017.

So my expectation is that SAMP will trade close to Rs400/- by the end of this year. Also I feel that they may come up with some kind of share split because they have been practicing the scrip dividend for several years by now. So you are also invited to evaluate and invest wisely.
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Re: Blue Whale's Journey to Discover Hidden Value

Postby topcat » Thu Feb 16, 2017 8:32 pm

Thanks BW for the analysis. RSI is heated in daily charts of samp. We may get some pullbacks and those will be good chances to enter.
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