Wednesday, August 20, 2008

Analytical Review 101 - Part XVI

A Circle has no End

Overall Summary on Analytical Review of Nestle's Financial Statements
If you look at this series of posts, you will have realized that we have spent a substantial amount of time analyzing the Nestle’s financial statements. Perhaps more importantly, it would have struck you that it’s a LOT OF WORK! Yes, it is. Then again, perhaps it would be wise to reflect on how much time it took for you to earn RM10K before deciding to invest in a company? It may have took you perhaps two or three months of your life to save this much money. Then why are you so eager to invest in shares without spending, say one or two days researching the company you intend to invest?

My overall perception of Nestle is that it is a sound company to invest in. Cash flows are managed well and it has an attractive dividend policy. However, due to its’ strong brand name and excellent cash flows, the share price of Nestle is too high compared to its’ earnings. It is an excellent blue chip share to invest in, as a hedge against inflation. You may ask me, so at what price should I decide to buy shares in this company?

My answer is simple: Reread my series of posts and look at the latest quarterly financial results of Nestle in the link below. Then, make up your own mind and you decide at what price it is worth investing!

An End of a Long Journey
We have journeyed long through this Analytical Review 101 series. For those of you that have been diligently reading it, this series of posts may raise more questions than answers. Trust me, this is a good thing. The world of investing is fraught with perils and dangers. A little knowledge is a dangerous thing. I hope though, I have highlighted the dangers such ventures to your attention. Forearmed with such knowledge, an intelligent investor may yet profit from his investments.

For those readers that are interested in downloading Nestle (Malaysia) Berhad’s 2007 Annual Report, you can find it via the link below.

If you that are interested in constructing your own financial dashboards, I will be sending out my Nestle Financial Dashboard and all the relevant workings in an excel file. If you wish to receive it, kindly subscribe for my blog via the Feedburner Email subscription on the upper-right hand side. Your email will not be divulged nor will you be spammed.

Alternatively, kindly drop a comment in my blog with your e-mail address so that I can send the spreadsheet to you. I’ll be sending out the worksheet on the 30 August 2008 to all my subscribers or interested commentators.

A New Beginning
A circle has no end! Similarly, there is no end to our journey in the world of investing. One must learn, unlearn and re-learn about the stock market and our opinions of the companies we invest in. In my future posts, we will look at the more advanced aspects of investing. We will also look at the more noteworthy companies in Bursa Malaysia and perform detailed financial analysis to evaluate whether they are worth investing.

Two Intriguing Questions?
It is surprising to me that none of my readers have yet to pose me these two rather intriguing question. Some of you know me well, though for others, I am a totally anonymous figure. I do not wish to disclose my identity merely because I wish to remain low profile. However, if I were a reader, I would surely ask the blog author this:

‘Why should I listen to you?’
I ask you not to listen to me. Rather, I ask you to merely listen to what I have to say. As with all things, it is your judgment and discernment that will serve you best. If you agree with what I say, then act accordingly. Otherwise, let it pass. Comment, if you have any doubts or questions and I shall endeavor to answer any questions you may have.

‘Why the PriceLess advice?’
At this time and age, if you do not raise such a question, I would indeed be worried. Truthfully, this blog serves as both a personal motivational and disciplinary tool to ensure that my journey into the world of investing is both well reasoned and carefully planned. I have gained much from those that were willing to share their knowledge and wisdom with me, so why should I be miserly with my own? Remember, what is valuable is sometimes free, but not all those who read can profit from it.

I would appreciate if you could revert with any comments or feedback you may have on this series of posts. Further, if you wish to me to explore certain investing topics in greater detail, please do let me know.


Just Talk only

Did you where we can find the financial report something like we can get through morningstar service for bursa??

Usually we can find the most is 5yrs back something like businessweek or reuters but how about 10 yrs back?


Dear Just Talk Only,

You seem to be a veteran. To the best of my knowledge, I don't think there are any services providing such information so far back.

However, it might not be that good an idea to go so far back. 5 years is good enough for one to gauge the track record of the company already unless you are analyzing such companies for corporate exercises such as M&A etc.


Ah Keong

People will not give a damn unless you show something like... I made how many $$$$ within how long. hah like dat, they all baru buka mata mah. Don't you think so?

Well past historical track records only works for certain companies.


Dear Ah Keong,

You are correct. Most people just want *experts* to tell them to buy XX shares at RMYY price. This blog is not catered for such a crowd.

If a person is too busy to research and analyze their investment, they should just be investing in unit trusts. However, they shouldn't complain if they get negative or low returns.

Historical track records are sometimes detrimental as the economy is now very fluid and past records count for very little. Think about Google and Facebook, for instance.

Marketing Deviant

That's why I love blogs, you get to learn and question the author. Nestle is a good brand. I think is wise to invest companies you are familiar with and like :)


Dear Avatar,

Could you send me the Nestle Financial Dashboard's spreadsheet.



Dear Payaikan2006,

Sure, no problems. Thinking about investing in Nestle? Good company but currently still at too high a price, in my humble opinion. Then again, I could be wrong.



Dear Avatar,

Could you send me the Nestle Financial Dashboard's spreadsheet.



I need help analysing the 2008 Finalcial report for Demerara Disteers Limited using the four investor ratios

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