(28-07-2012, 07:43 PM)Mr Nobody Wrote: [ -> ]I think the recent price rise should worry, rather than excite.
The one reason is the Old Man is buying and people assume that his price will become the new support and start digging out all sort of "facts" why it is a great company. To the Old Man, if price drops back to 15 cents, it is ok, no pain at all. Are we ok, if we buy at 19.5 cents or higher?
What has/have changed? Have business conditions become so conducive? In Malaysia, has the demand for books and stationary gone up by 30% and Popular is gaining market share?
Don't tell me old man is looking for a good exit, to enjoy a good retirement?
Ah... yes, a timely reminder and warning to those who'd not been doing their own due diligence!
I gave a lot of thots to this post and yes, I shamefully admit I'm the main culprit for providing 'misleading' info, especially to any casual readers who'd not bothered to check and do their own analysis.
A Thousand Apologies to All..
Still, let me go thro' the points brought up,
1)
Share Price SUPPORTED by Old Man - I started posting in jest, whenever Old man did any share purchase, using this TA lingo. I was still unable to understand what was driving Popular Hldgs' profit growth for the last couple of years and my thinking at that point in time was that any Buys by Old Man was in fact, helping to support the share price. But, yes, if he were to stop buying, the share price has a very high probability of dropping back.
The last time I used the term 'SUPPORT' was for his buy @ 19.9ct on 29-May. That was before Popular Hldgs released their FY12 results on 29-Jun. With the good set of results, I'd stopped using the term 'SUPPORT' as now, I'd become FEARFUL that Old Man will cause share price to go up too fast as IMO, it was now undervalued.
2)
Start Digging Out All Sort of "Facts" Why it is a Great Company - Hmm... is that so? Most of the time, we were wondering what was driving the profitability growth of the company. We looked at 'Properties' and sad to say, it wasn't the 'culprit'. In fact, there was a humongous write-down some years back which swing them into a loss for FY09. This amount was written back in FY10 and FY11, contributing to some of the so-called growth in profitability. 'orang' kindly shared his figures for OM (removing the Other Income) and hey! something else seems to be driving the profit growth!
We looked at their new concept store 'Prologue' + cafeteria 'Epilogue'. I even looked at 'UrbanWrite'. Go back and read those posts. If anything, I was rather skeptical that it'll make $$. To put it bluntly, chances of losing $$ is very high.
The break through (for me), with good probing questions from 'orang' was the realisation that the profit growth was coming from their Malaysia operations.
So, perhaps that final part is contributing to the opinion that some of us had 'start digging out all sort of "facts" why it is a great company'. Note that at no point in time, I'd used the term that it's a Great Company. Neither do I believe that it is now a Great Company as their NPM is still very very low by my usual yardstick and I do agree that they are in a sunset industry. At most, I do believe that there's one last long puff here to be enjoyed...
3)
"In Malaysia, has the demand for books and stationary gone up by 30% and Popular is gaining market share?" - Ah.. that was the million $$ question I was asking myself after (2). A quick check from AR and their website pointed to the most likely reason that it's due to their opening of more stores in Malaysia. As to whether it's due to growth in demand or market share, that's something for us to confirm (also stated in our posts). However, looking at Malaysia demographics and comparing comservatively with Singapore, my current best guess is likely a gaining of market share by opening new stores and being more organised than a market that's very likely fragmented in nature (my guess only, not verified).
4)
old man is looking for a good exit, to enjoy a good retirement? - That's something we'd spent some time speculating.. Only time will tell. I'd posted quite a bit on this but hidden amongst all those posts is a conclusion I currently think is most likely. Am not going to share that as it's based mainly on my own wild imaginations and perhaps strong vested interest and bias. If and when that do happen, I'll do a more detailed post...
Lastly, I'd put Popular Hldgs in my 'Cold Storage' as per what I'd posted in one of my recent posts. I won't be very active in this thread henceforth unless there're any new developments. At most, post on any new Old Man purchase without any wise-crack comments that may be misconstrued as something else. Main reason is I think I'd done enough homework to be able to sleep soundly with my current stake and I need to focus on some of the new stocks I'd become vested recently.
