Monday, March 21, 2011
Transmile, Once Upon A Time in Wa Wa land.....I
Transmile was such a dream stock. If you owned this stock from early 2000 to 2007, Peter Lynch could have hired you as his star analyst, praising you as a stock picker genius. No question will be asked, nobody was going to argue that you are a genius because you have spotted a 10 baggers.
It was such a beautiful growth stock story. How not fall in love with this "wonderful business"?. This was the kind of stock that you would like to buy and hold forever. The stock would have been able to withstand all kind of tribulations by just a word of bond by Robert Kuok. Having a solid and trustworthy owner and run by very frugal board of directors for sure allow you to sleep soundly every night. Seven of non-executive directors received below RM 50 k/year, 100-150 k, one person; 150 -200 k, one person; and 200 - 250 k one person. They have spotless attendance when comes board of directors meetings.
The most valuable part of the business model was the landing rights in all overall the Asia Pacific especially China and USA. These landing rights would not be easily secured, we all suspected Tun Ling Liong Sik did the magical string pulling job. They have wonderful business partners like DHL or Pos Malaysia. So, what is there to complaint?
This was no story of dot com, they are not selling hot air. These guys have real stuffs to sell. They have real sales, they have real nice double digit EPS growth.
Public Mutuals owned them, reputable foreigners owned them, ING owned them, etc .........so why shouldn't I?
But then you noticed something that always made you felt uneasy. Long term debt has gone up from 153 mln(2004) to 492 mln(2005) and they issued 340 mln convertible bond. So they have 832 mln long term debt. Many many times jumped though you were trying console yourself that they still have 260 mln cash. Furthermore if they get into trouble, Robert Kuok would have no trouble at all to bring in more investors. They have been paying dividend every year.
Look at the big picture. Look at the long term future, don't be so gun shy, or else how are you going to be the next billionaire, you reprimand yourself a little bit. Look at the capacity that they have added ..... it's almost 3 times.
If you are a student of Fisher-Buffett, what are you waiting for? Many of you should know the grand episode of this drama. What went wrong with Transmile? ........