A journey of thousand miles begins with a single step 千里之行,始于足下。

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The most important question raised recently was the sustainability of MM business.

Given that MM did not have any IP, Patents or proprietary material science, it is pretty clear that MM does not have concrete/visible moat.

And, of course, if MM does not have moat, then given times, it's competitor(s) will catch up and hence erode it's business.

This is a really important question to decide whether to hold MM long term or take profit - since it's valuation seems expensive and of course, there is nothing wrong in taking profit.


With such a wonderful cool weather, enjoy:

Stay home and stay safe, everyone.
Jan 2021 Howard Mark

Page 9
the most important intention of this memo is to explore the mindset that I think will prove most successful for value investors over the coming decades, regardless of what the market does in the years just ahead.

It's important to note that
(a) the potential range of outcomes for many of today's companies is very wide; and
(b) there are considerations with enormous implciations for the ultimate value of many companies that do not show up in readily available quantitative metrics.  They include superior technology, competitive advantage, latent earning power, the value of human capital as opposed to capital equipment, and the potential option value of future growth opportunities. 

In another words, determining the appropriateness of the market price of companies today requires deep micro-understanding, and that makes it virtually impossible to opine on the valuation of a rapidly growing company from 30,000 feet or by applying traditional value parameters to superficial projections.

The key, as always, is to understand how today's market price relates to the company's broadly defined intrinsic value, including its prospects.

I couldn't felt more appreciative by waking to today to a cool weather with such an excellent memo from fellow valuebuddies.

Thank you, really appreciate.

As we plow thru all the literature of MM, it is clear that there is not know IP, Patents, proprietary material science which allow it to keep its moat.

However, it's breakthru in biz segments,  financial results, increasing cash flow, coupled with growing dividend and management acumen, had given us sufficient comfort that this is a company that build to last.

Is it?

Stay home and stay safe, everyone.
the (singapore) intelligentinvestor
[Image: Screenshot%2B2021-01-03%2Bat%2B2.36.35%2BPM.png]

One of our valuebuddies starting to buy MM since 2017.
For those who following him will know that he did a lot of study on those stocks before he vested.

For those who did not, you could simply digest his posts by reading his annual report (instead of blogs):

In his last week FY2020 report, I find that his assessment of current market relevant and it's a good gauge for us, moving forward.

The current market is very peculiar. We have some sectors in the negative as expected as we are in a serious pandemics situation. But there are some sectors performing as if we are in a bull market! Earnings don’t seem to be important for companies in the technology sector with products in AI, cloud computing, e-commerce, medical protection products or block chain technology etc. 

Speculation in the stock market is trading with the aim of making profit by stock prices actions which is driven by market sentiment. The key is not the company earnings but is that someone else to buy from them at a higher price. Some of them actually think that they are value investors when they applied some fundamentals mixed with some technical indicators before buying. I feel this group is at a higher risk than those who know they are speculating.

When I first studied the book Security Analysis by Benjamin Graham, one of his advice was never to overpay for any securities, the highest PE he suggested was 25. But in the current environment, hardly any attention is paid to the earnings. Some have PE ratio in the hundreds and even in the thousands, and some are losing money for years but yet their stock prices keep soaring even when the economy is stalling. 

waking up to another fantastic cooling day, I wish all valuebuddies an excellent catch.
Enjoy The Weekend - Blinding Light:

Stay home and stay healthy, everyone.
Good morning, valuebuddies.
Such a wonderful feeling, waking up to another bird chirping cool morning.
Wish everyone had a good day ahead.

Today, Penguin halted.

So many privatisation/boardroom events, my first thought is whether it could happen for Micro-Mechanics.

I thought otherwise as part of the reason why MM remains my core is because I gauge that MM is OPMI friendly and willing to share their fruits with us.

Eg. I read Chris donation of his shares to Chris Foundations as a gesture to continuously pay out dividend, in good and in bad time.  This of course could be double edge sword and could get back fire too.  

I also felt that MM wanted to be listed as this gives certain assurance to it's customers and business partners. I could be wrong but I felt that MM wanted to maintain it's listing status as a differentiation to it's competitor (who is not listed).

Whether PIL will issues another holding statement or a price, let's see.
In any case, I hope that nothing happens and PIL could continue it's normal charter.

Stay home and stay safe, everyone.
This morning, woke up to fluffy cotton candy clouds.
What a fantastic feeling and I do hope our valuebuddies had a good memory too.

[Image: uc?id=1TvpmgAobki_PNd6JwOEHZJKJZ59bI_d_]

Based on wiki, we should expects a big storm but the after fact is only a light rain today.
So, not only the stock market is un-predictable, Singapore weather is equally un-predictable too.

Moving forward, there will be more result announcements, and those with good result (rev, GP, NP, cash and dividend growth) will be heavily sought after.

Exactly opposite, those company/business that could not make it will be under a lot of pressure.   

Having says that, we also spotted a few Tao Kay who took advantage of temporary dip to do SOA.  It's  clear that these Tao Kay had the upper hand and OPMI is at their mercy (offer price).

I'm quite adverse to these type of management takeover.  After I experience a few takeover event (especially Adampak), I am very sad that such a fantastic company gotten taken private. Unfortunately, that's what happened and moving forward, with the pro-longed C19, we should be expecting more privatisation to happen.

Digressed.  Moving forward, there are a lots of factors which we do not have control. We will leave it to who ever to make it right.

What we should focus is to identify a great company that has a (visible or invisible) moat.  Hopefully?

Enjoy - the Hidden side of MBS infinity pool with Witty Naomi:

Stay home and stay healthy, everyone.
MM @ $3.89

Good afternoon valuebuddies.
I could not recall when was the last time that I post something during lunch break.
Probably this is the one and only one time I did this.

MM had been trading above 4 and it's price ranging from 380+ to 400+ all within the same day.

This is extremely un-usual.

Let me share the following for our valuebuddies info.
I hope this will gives you some idea before you formulate your next move on MM.

1. The buyer for MM are from everywhere (aka local broker house): iFast/FSM, UOBKH, LimTan, POEMs, DBSV, KimEng, CIMB.

2. The lots are generally quite small.

3. The buying initiately is very aggressive, as the day progress, the buying slow down tremendrously.

4. Seller come in big and small.

5. Likely, brokerage house had impose selling limit.

The question is not whether to sell or not to sell.

The question is actually how much should you sell.

The reason to me is very simple. 

What had happen which caused MM to go up $1 within such a short timeline?

What is the different between MM one week ago and today?

Your guess is as good as mine.

Stay home and stay safe, everyone.

Watch this piece of music and let me know what you feel:

Stay home and stay healthy, everyone.

Good morning, valuebuddies.
It's wonderful to wake up to a chilled morning with birds and insects chattering in the wood.

I am very happy to saw Donmihaihai back to VB.com.

I always says I'm forever in debt to our valuebuddies and Don is one that touched my heart.

Thank you.

This is what he wrote more than 10 years ago.
My decision to hold MM as a major core (beyond 30%) came from the excellent assessment by Don.
His analysis is so insightful that it's 100% relevant even today.
Of course, one could argue the other way that it's actually MM's business and practice does not change all these years. (I had to agree).
The same business, same customer, same process - works!
I called it "Build to last!"

29 July 2007 Relative cheaper doesn't mean it will deliver positive returns for investor in short to middle term.
Micro Mech is trading at a valuation relatively cheaper than the market.
Micro Mech at $0.66, PE: 11.3x, P/B: 2.6X and ROE of 22%.
Micro Mech has a decent future with decent growth.
Micro Mech are having surplus cash at the momment or all the while.
Micro Mech is generating free cashflow yearly which amount to about half of their cashflow and these free cashflow are being distribute to shareholders as dividends at the same time while they are investing for future.
Looking at the number alone and what the future of their industries and businesses alone is not enough.
Management and employees are of main concern as they drive the train forward.
Micro Mech is one that I regard highly.
Micro Mech being relatively more expensive at this moment when standard ratio are being apply, I think it present the best investing candidate.

And, of course, forever in debt to Ben too:

I love to ask valuebuddies for their input on MM, especially highlighting MM's risks.
On a fateful day, I had a chance to tap Ben's brain.

First, he asked me what's so special about MM.
After I shared about what I read, he gives me a go.

I really learn a lot from you, although you might not realised it.
Gratitude and thank you for teaching me.

Stay safe and stay healthy, everyone.
If nothing goes wrong, FY2015 will easily be the best year for Micro Mechanics.

Buying a growing industry(Semicon) without a need to choose the winner. Average ROE of 16% for past 15 years(FY2000 to FY2014) or 25% on cashflow basis. All the while the company is having excess cash and will be better if not for trying to grow another business CMA.

Pretty good chance that the future will be the same for Micro Mechanics – up and down but above average return on over a longer period. And this is for semiconductor tooling business.

For CMA, it is tough. Not my first time saying it and won’t be my last time. Management sound positive on it on the most recent AGM minutes which make me think that it is turning. But let face it, in order for it to produce the same kind of return as semiconductor tooling, it need more volumes, which mean Assets turnover need to be higher. No trick. 24/7 got to work very well. Which is why the management is keen on it. Bigger market.

But just like semiconductor tooling, the harder it is, the more competitive advantages it will enjoy when the company is able to break the code and do well. Can Micro Mechanics breaks that code?

The next 10 years look better than the last 10 years. Better if they broke the code of CMA.

Tooling generates more than 50% Gross Profit Margin, consistently.
MMUS (aka CMA) was generating -ve returns, consistently too.

Thou we had to agree that MMUS was a small value purchase (less than 5m), it was a losing $$$ business.

It's only with Chris commitment to be responsible to run MMUS that the board agrees to the purchase (even thou the dollar value is small).

Chris didn't have a good time after the acquisition.

His initial idea of using MMUS to expand into different industry failed miserably.
The only breakthru, if you could says, is MM's forte aka Semicon.

Retreated back to MM's comfort zone means 2 things:
1. Need to start small 
2. Need to polish up the process and technology

Unfortunately, the 24x7 vision proved more complex and tedious than expected.
Chris spend all his energy working with the engineers, partners and OEM trying to perfect the technique and it's very very challenging.

The light at the end of the tunnel, should be near
- according to the last AGM.

Feeling lucky today?

Enjoy an old video on the 24x7 machine:

Stay home and stay healthy, everyone.
Good morning valuebuddies,
Another cool morning, another great opportunities unleashed.


Stay home and stay healthy, everyone.

I'll be your dream, I'll be your wish, I'll be your fantasy
I'll be your hope, I'll be your love, be everything that you need
I love you more with every breath truly, madly, deeply do
I will be strong, I will be faithful 'cause I'm counting on
A new beginnin'
A reason for livin'
A deeper meaning, yeah
I wanna stand with you on a mountain
I wanna bathe with you in the sea
I wanna lay like this forever
Until the sky falls down on me
And when the stars are shining brightly in the velvet sky
I'll make a wish, send it to heaven and make you want to cry
The tears of joy for all the pleasure and the certainty
That we're surrounded by the comfort and protection
Of the highest powers
In lonely hours
The tears devour you
An' I wanna stand with you on a mountain
I wanna…
Good morning, valuebuddies.
Again, waking up to another cooling day and I couldn't feel more appreciative.
Once I was completely irritated by one of our valuebuddies K, who keeps on giving critical views to challenge fellows valuebuddies investment ideas.

Then, someone asked a questions on what stock K wrote favorably?
And, then someone else mentioned APO.

Since then, I took an interest with APO but did not do anything until recently.

I won't says it's an un-loved stocks but there are no coverage.
Nobody seems to be interested in APO.

With that, I begin collecting APO.

Wish me luck! 

Stay home and stay healthy, everyone.

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