Reading annual reports

(27-08-2019, 03:00 PM)weijian Wrote:

(26-08-2019, 10:28 PM)dreamybear Wrote: In our time-starved lifestyle, I wonder why CFA or some finance society/body do not mandate companies to state at least the following information(my humble suggestions below) in ARs :

10 years' worth of data(or whenever since Co is listed if listed < 10 yrs) of :
1. Revenue (Total, and broken down by divisions / geog areas)
2. Gross Profit, Net Profit
3. GPM, NPM
4. Operating Cash Flow, Cash Flow Financing, Cash Flow Investing
5. Cash or Cash Eq, Net Cash or Cash Eq(after debts)
6. Short Term Debt, Long Term Debt
7. Gross Dividends Paid / Dividend Pay Out Ratio
8. EPS, DPS
9. NAV, NTA
10. No. of outstanding shares / No. of treasury shares
11. Significant Co. Action(e.g. rights issue, bonus shares)
12. Share Price High / Low
13. Significant Assets like FH properties, land
14. Board of Directors / Top Mgmt
15. Auditors Rpt Highlights
16. Top 20 Shareholders

I think it is currently super unproductive for investors to search through the various years of AR.
Imagine the man-hours saved for the whole world. I don't think it is that much effort for companies to compile this type of info into their AR. Granted that maybe not everyone is interested in so much info, but for people who are interested, at least mandate that Co has to provide such data to potential investors upon request.   It pays to be prudent with our own hard-earned money.

I think some companies do "go the extra mile" by providing the X years of financial performance (maybe don't include everything you have mentioned) inside their AR.

It seems like the content of ARs is governed by SGX's listing rules: http://rulebook.sgx.com/en/display/displ...80&print=1

In this case, it is probably something that SGX can do. The rules require details that happen in the current financial year, not the priors.

Actually if I were an investor, I will be happy that SGX does not mandate what you are proposing. If everyone can get the same metrics easily (click of a button), then there is little incentive for the value investor to work harder. In fact, all of us have to work even harder now to earn the same keep. As Warren Buffet once mentioned "It doesn't help if all of us tip toe in order to get a better view at the concert - eventually our toes will hurt like crazy and we still can't get a better view. The key is to tiptoe and no one notices".

My understanding is no one reacts to things as they are but to one's own mental images.

Another way of saying it we react to the same info or thing differently as we all have different experiences.

That's why believer believe God is great.

(27-08-2019, 03:00 PM)weijian Wrote:

Actually if I were an investor, I will be happy that SGX does not mandate what you are proposing. If everyone can get the same metrics easily (click of a button), then there is little incentive for the value investor to work harder. In fact, all of us have to work even harder now to earn the same keep. As Warren Buffet once mentioned "It doesn't help if all of us tip toe in order to get a better view at the concert - eventually our toes will hurt like crazy and we still can't get a better view. The key is to tiptoe and no one notices".

Hmmm, I have more items to add whenever I look at the list I created, it just shows I haven't really compiled a "template".     Perhaps valuebuddies can come together to contribute ideas to write an investing book, that wld be cool right ?  


IMHO, quite a number of listed companies are not "investible"(don't flame me - I am not a professional). The 10 years' info will help an investor decide whether a company is worth spending time to research.  I feel the purpose of the stock market shd be to "enrich" the common people via investing(i.e. beneficial to society as a whole), and not so much for the purpose of the rich cashing out at the expense of   the "not-as-blessed". With these data available, hopefully less ordinary folks will lose money in the stock mkt(excluding punters) by avoiding those with less than stellar financials.

I think to spot that great stock as a value investor entails a lot more work than the numbers' aspect, e.g. financial analysis, that 500 pages a day thing, understanding & constantly keeping up with the industry, competitors, company, etc inside-out, waiting for the right entry price, etc etc. Not many people can(or are willing to) endure the kind of torture hardship patiently day-by-day, month-by-month, year-by-year, decade-by-decade, without knowing when the "big break"will come(unlike a regular paycheck). Perhaps like being an entrepreneur where most start-ups fail. It is even worse for people who has to do it alone(like yours truly). On the extreme end, there is a fine line between genius and madness(dreamybear => crazybear).  

At this point, I suddenly wonder .... there is MBBS, B.Eng., BBus, BAcct, etc why is there not a 3yr or 4 yr B.Value Investing, given that investing is as difficult ?  

There is just so much to do in this world with so little time, and things like familly, relationships, etc are more impt, although money brings security. To many, life is already unkind enough ... if certain things can be done for the betterment of mankind, why not make the world a better place ?  

It is probably true that if the steps involved in making a good investment decision are simplified by things such as the provision of useful data, then the objective of making value investments becomes more difficult for everyone. Yet, it is also true that not everyone interpret data the same way. Even a well-written investment thesis will have its detractors. My opinion is that the provision of useful data/analysis does help to make the market more efficient. But its effect varies.

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The best way is to study the numbers is to create your own template. But the data/metric to capture will depend on the business/company that is studied. This means your template will differ from company to company.

Yet, a string of data/metrics can only be useful if the reader is able to use it to tell whether the business is doing well or not. This, again, requires an understanding of how the business and industry works.

The workings of the business/industry cannot be understated. The financial numbers, on its own, will not tell you whether a business' prospects are good or not. Compared to number crunching, which is probably the easiest task in investing, understanding a business/industry is probably considerably tougher. Mainly because such things are usually not openly discussed by the company, even in its prospectuses. And so, this aspect is where those who master it (and the rest of the competencies) may find that edge to be able to outperform the rest. While everyone may tip-toe, you will tip-toe on a platform.

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The other required competency is temperament, which is waiting for the right time to buy and sell. If you're waiting to buy, it could be a long wait before it gets cheap. If you're waiting to sell, it could be a long wait before the price goes up.

And between the buying and selling, you may be distracted with all sorts of news and/or personal events, which could cause you to make wrong decisions.

WB sat out the dotcom bubble. If you believed the markets are in a bubble, will you allow yourself to sit on your hands or 1, maybe 2 years? If you like putting your money to work, this will be tough, because you can't do anything but wait. And an idle mind is the devil's workshop.

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The high-conviction long-term investing style is probably quite like how entrepreneurs feel about their start-ups; confident but uncertain until the big break arrives.

There is probably no formal tertiary training available for 'value investing,' because well, the finance discipline itself leans towards an efficient market assumption. So therefore, no need to try to beat the market. But I imagine such courses are probably quite difficult to assess. Things like temperament, how do you grade that? It is far easier to assess things which can be controlled in a sandbox.

I suppose this could also be the reason why there are no degrees in entrepreneurship. Though there are programmes to learn related skills.

Yes, I know, I OT again.
But I couldn't help sharing something which I found in investnote:


It's a piece of arts.

1. I think the financial numbers has multiple dimensions.
    A quick look at the latest Q and FY will gives you a idea whether this company is worth looking at.
    Of course, we will missed out a lot of opportunities which you passed (especially turn-around play).
    Who cares?
    We don't need to buy all the turn-around play.
    We just need a few solid one will do.

2. After #1, then the 2-D view by looking into the history is warrant.
   In particular, look out for the result during global or asia financial crisis.
   If it's not too bad, then we probably found a gem.
   If it's bad, then we will need to do more DD.

3. After #2, then we are quite sure that we got a financially strong candidate.
   It's balance sheet and profits are (and were in 2D view) pristine.
   Next step will be less academic and more instinct (or experience, expertise or some say edge).
   We have to do a projection into future.
   Whether the industry is trending up in mid or long term.
   aka the demand for it's services will be growing or sunset?
   Will our GEM able to take advantage of the global trends or facing stiffer competitions?
   Expanding into (especially) US market?  [IF U ARE WONDERING WHY THIS IS IMPORTANT, THINK AGAIN.]

4. After #3, we have a fundamentally strong company smacked in a growing industry, taking advantage of global trends.
   We must examine how friendly our founder (typically the founder is the key man in driving seat) is to OPMI.
   How do you know? Think.

Last but not least, will be the patient to wait for our GEM to fall into a nice price with sufficient MOS.
If you're the patient type, just wait.
If you're the impatient type, just do a FCF, Expected return or what ever valuation technique and buy at the current price.
Why I says current price?
Because you're impatient and any formula/model will gives you the current price as entry price.
Take it - that's my advise.
Because it's very difficult to find a company that exhibit #1, #2, #3 and #4.
Given time, you'll be sure that the price will go up and that automatically become your MOS.

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You're not gg to asked me what's this company, right?
感恩

God bless your Micro-mac. Hope it survive the tradewar

Historical result doesn't count for electronics sector. it's like woman.
Say change, then change.

Ya, who can be so patient enough, sitting on the dock of the bay watching the ships pass by - ten years or more has gone by already, just watching without fail daily?

Meanwhile just nimble on breadcrumbs on the bottom of the table whenever there are some for consolation but at times some meat may drop to the bottom of the table too.

(26-08-2019, 10:28 PM)dreamybear Wrote: In our time-starved lifestyle, I wonder why CFA or some finance society/body do not mandate companies to state at least the following information(my humble suggestions below) in ARs :

10 years' worth of data(or whenever since Co is listed if listed < 10 yrs) of :
1. Revenue (Total, and broken down by divisions / geog areas)
2. Gross Profit, Net Profit
3. GPM, NPM
4. Operating Cash Flow, Cash Flow Financing, Cash Flow Investing
5. Cash or Cash Eq, Net Cash or Cash Eq(after debts)
6. Short Term Debt, Long Term Debt
7. Gross Dividends Paid / Dividend Pay Out Ratio
8. EPS, DPS
9. NAV, NTA
10. No. of outstanding shares / No. of treasury shares
11. Significant Co. Action(e.g. rights issue, bonus shares)
12. Share Price High / Low
13. Significant Assets like FH properties, land
14. Board of Directors / Top Mgmt
15. Auditors Rpt Highlights
16. Top 20 Shareholders

I think it is currently super unproductive for investors to search through the various years of AR.
Imagine the man-hours saved for the whole world. I don't think it is that much effort for companies to compile this type of info into their AR. Granted that maybe not everyone is interested in so much info, but for people who are interested, at least mandate that Co has to provide such data to potential investors upon request.   It pays to be prudent with our own hard-earned money.

I think you can write to klse.i3investor.com... they have a website for SGX as well
Request them to add those SGX counters that worth our time.

The data they presented is quite high in quality. Similar to those PAID websites like shareinvestor.com
Example,

https://klse.i3investor.com/servlets/stk...e=last10fy