Example of Stock Valuation

CLASSIC SCENIC BHD
(CSCENIC)
10/25/2013
Financial Year:
Price:
Board:
Industry:
Ownership:
2012 31/12/2012
1.22
Main Board
CONSUMER PRODUCTS
- Corporate Owned (Local)
Latest Quarter:
Stock Category:
FBMKLCI:
Sub-Sector:
6/30/2013
Fast Grower
NO
HOUSEWARES AND DURABLES
L. C. Chong is NOT an investment advisor nor a financial advisor, and no

information provided here is to be interpreted as a suggestion to buy or sell
securities.
All figures in thousands of Ringgit Malaysia except per share values and ratios
Prepared by:
L. C. Chong
L. C. Chong
Website:
Page 1 of 51
http://lcchong.wordpress.com
USEWARES AND DURABLES
and no
buy or sell
://lcchong.wordpress.com
L. C. Chong
Page 2 of 51
Quality
Profitability
12/31/2004
12/31/2005
12/31/2006
12/31/2007
12/31/2008
12/31/2009
12/31/2010
12/31/2011
12/31/2012
CROIC 15%
5.5%
16.9%
11.0%
11.3%
10.0%
13.7%
17.1%
14.1%
12.8%
ROIC 15%
7.2%
18.7%
12.8%
11.3%
7.2%
8.4%
12.7%
11.6%
15.9%
Net Profit Margin 10%
28.4%
25.6%
18.9%
19.7%
16.5%
19.3%
20.9%
17.8%
21.3%
FCF/Sales 5%
18.9%
20.7%
15.1%
16.6%
17.6%
24.8%
22.5%
20.1%
16.1%
Financial Health
12/31/2004
12/31/2005
12/31/2006
12/31/2007
12/31/2008
12/31/2009
12/31/2010
12/31/2011
12/31/2012
Cash Conversion Cycle
528
177
210
264
334
363
243
275
241
Debt Coverage (FCF) 100%
178.6%
Total Debt/Equity < 80%
3.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
Growth
12/31/2004
12/31/2005
12/31/2006
12/31/2007
12/31/2008
12/31/2009
12/31/2010
12/31/2011
12/31/2012
Revenue
18,882
58,322
59,171
57,327
47,409
42,452
56,777
52,259
62,329
YoY
#VALUE!
208.9%
1.5%
-3.1%
-17.3%
-10.5%
33.7%
-8.0%
19.3%
3-Y Avg.
#VALUE!
#VALUE!
57.1%
-0.9%
-11.1%
-15.0%
9.0%
10.4%
4.7%
5-Y Avg.
#VALUE!
#VALUE!
18.2%
-8.6%
-3.8%
0.0%
7.6%
10-Y Avg.
#VALUE!
#VALUE!
5,370
14,953
11,180
11,310
7,811
8,200
11,855
9,308
13,272
YoY
#VALUE!
178.5%
-25.2%
1.2%
-30.9%
5.0%
44.6%
-21.5%
42.6%
3-Y Avg.
#VALUE!
#VALUE!
36.7%
-14.0%
-17.9%
-16.1%
20.9%
6.3%
5.6%
5-Y Avg.
#VALUE!
#VALUE!
4.7%
-15.6%
-2.0%
0.3%
11.9%
10-Y Avg.
#VALUE!
#VALUE!
7,470
13,961
5,954
9,041
10,833
14,121
14,222
11,010
18,526
YoY
#VALUE!
86.9%
-57.4%
51.8%
19.8%
30.4%
0.7%
-22.6%
68.3%
3-Y Avg.
#VALUE!
#VALUE!
-11.3%
-21.7%
29.9%
22.3%
13.6%
-12.4%
13.2%
5-Y Avg.
#VALUE!
#VALUE!
3.1%
6.2%
21.9%
6.7%
8.2%
10-Y Avg.
#VALUE!
#VALUE!
3,572
12,052
8,956
9,518
8,326
10,547
12,800
10,489
10,044
YoY
#VALUE!
237.4%
-25.7%
6.3%
-12.5%
26.7%
21.4%
-18.1%
-4.2%
3-Y Avg.
#VALUE!
#VALUE!
46.0%
-11.8%
-3.6%
5.1%
21.5%
-0.3%
-12.1%
5-Y Avg.
#VALUE!
#VALUE!
14.6%
-3.4%
8.2%
6.2%
3.7%
10-Y Avg.
#VALUE!
#VALUE!
Net Profit
Net Operating Cash
Owner Earnings
L. C. Chong
Page 3 of 51
3-Y Avg.
5-Y Avg.
14.6%
13.3%
13.3%
10.7%
19.9%
19.1%
19.4%
20.0%
3-Y Avg.
5-Y Avg.
243
275
0.0%
0.0%
Multi-Year Performance
L. C. Chong
Page 4 of 51
Quality (Continued)
Profitability
- Although CROIC is below my benchmark, in the past few years, its average of CROIC is above 13%.
- ROIC is also below my benchmark, but ROIC has been increasing in the past 5 years.
- Net Profit Margin and FCF/Sales are way above my benchmark.
Financial Health
- No debt!
- CSCENIC has very high value of Cash Conversion Cycle (above 200) because CSCENIC maintains ver
high inventory.
- To mitigate the risk of depletion in Sawn timber supply, CSCENIC should maintain high level of
inventory at an average of 6-month.
Growth - Revenue and Net Profit
- In the past five years, CSCENIC maintains 4-5% growth of Revenue and Net Profit.
- The growth is actually slightly slow, but CSCENIC still able to maintain 19% net profit margin
throughout the years.
Growth - Operating Cash and Owner Earnings
- CSCENIC managed to maintain positive growth of net operating cash flow.
- However, due to higher CAPEX in the past two years, its owner earnings dropped about 12%. In five
years, the growth of owner earnings is 6.2%.
- They spent the money in purchasing new land, machineries, forklifts, and motor vehicles.
Risks/Challenges
L. C. Chong
Page 5 of 51
Risk: Minimum wages policy

Counter Measure: Focusing on the productivity improvement and pass on part of the cost to customer
Risk: Foreign currency exchange risk

Counter Measure: Hedging % is at an average of 60% of total trade receivable, sales orders in hand a
forecasted sales proceeds (hedged up to December 2012)
Risk: Depletion in Sawn timber supply
Counter Measures:
- Sawntimber price fluctuations are mitigated by increase short wood usage and use of alternative
species including import of plantation wood like pine.
- Maintain high level of inventory at an average of 6-month
Risk: Geographical dependency on USA
Counter Measures:
- USA contributes approx. 70% of sales revenue since the business establishment
- Expansion of customer base in US, in particular framers of higher margin, currently contributes 50%
revenue (2011: 44%)
Risk: Garner Chinas market shares as it is hit by escalating costs
- High timber cost, labour cost and overhead
- Selling price is increased by 10% to 15% annually
Garner Spain & Italy market shares
- Difficult to finance their business due to the sovereign debt crisis
- High operating costs
- Some players will be shaken out from the industry in medium term
Counter Measures:
- Increase sales to existing customers by gaining market share from the competitors
- Michaels Stores, Inc
- Hobby Lobby Inc.
- Larson Juhl USA
- CMI
Possible Bear Cases

- Net Profit Margin and FCF/Sales dropped below 10%.
- Market share of CSCENIC is shrinking dramatically.
L. C. Chong
Page 6 of 51
ts average of CROIC is above 13%.

in the past 5 years.
00) because CSCENIC maintains very

should maintain high level of
ue and Net Profit.

intain 19% net profit margin
cash flow.
arnings dropped about 12%. In five
klifts, and motor vehicles.
L. C. Chong
Page 7 of 51
pass on part of the cost to customers
e receivable, sales orders in hand and
ood usage and use of alternative
s establishment
r margin, currently contributes 50% of
rm
m the competitors
L. C. Chong
Page 8 of 51
Economic Moats
Economic Moats: Narrow
Cost Advantage
CSCENIC has been consistently enjoying 20% net profit margin for the past 9 years. Besides,
FCF/Sales is also from 15% to 25% throughout the years.
Switching Costs
Impressive Production Capacity

- Annual capacity of 43 million linear ft per annum and with a workforce of 450 employees.
- Current production utilization is at 100,000 ft per day, approx. 70% of total single-shift capacity with
overtime.
- 6 factories located adjacent to each other with total freehold land area of 12 acres.
- Total 7 acres of freehold lands in Ulu Yam have been acquired at RM2.8m to cater for future growth.
- Total estimated capex for the new plant is approx. RM3m and the capacity is to be increased by
Network Effect
CSCENIC has strong global exported market share: Italy (20%), Spain (15%), Indonesia (15%), China
(20%), Malaysia (15%), Other Countries (15%).
According to Department of Statistics MASKAYU, Malaysia Exported Market Share of CSCENIC is 36%
to 45% over the past 5 years.
Intangible Assets
- Switched to using more plantation wood from natural forest wood and make every effort to ensure
the timbers are from legal and traceable sources.
- Maintain high timber recovery rate of 95% by turning small piece into inner frames (fillet), fingerjointing, horizontal-jointing as well as use of saw dust as fuel to generate energy for kiln-drying
process and compressed into wooden briquette.
Efficient Scale
Not available or no moat found
L. C. Chong
Page 9 of 51
or the past 9 years. Besides,
orkforce of 450 employees.

70% of total single-shift capacity with
nd area of 12 acres.
t RM2.8m to cater for future growth.
he capacity is to be increased by
Spain (15%), Indonesia (15%), China
ed Market Share of CSCENIC is 36%
od and make every effort to ensure
ce into inner frames (fillet), fingergenerate energy for kiln-drying
L. C. Chong
Page 10 of 51
Valuation
Discounted Cash Flows Valuation
Refer Appendix 1
3-Y
5-Y
Good 8%
Base 4%
Bad 0%
Ugly -4%
Good 8%
Base 4%
Bad 0%
Ugly -4%
Good 8%
Fair Value
2.09
1.90
1.72
1.56
2.15
1.89
1.65
1.45
2.23
Buy Under
Actual M.O.S.
Growth rate applied in Reverse DCF to reach the current stock price (1.22):
-11%
Refer Appendix 2
Excess Return Valuation (5-Y) (Banks Only)
EY% Valuation
Refer Appendix 3
Refer Appendix 4
Good
Fair Value
Buy Under
Actual M.O.S.
Base
2.09
#VALUE!
#VALUE!
Bad
0.95
#VALUE!
#VALUE!
Ugly
0.71
#VALUE!
#VALUE!
0.53
#VALUE!
#VALUE!
EY% High
EY% Low
Buffer
13.81%
9.01%
10%
Buy Under
Sell Above
Katsenelson Absolute PE
Refer Appendix 5
Fair P/E
Fair Value
Buy Under
Actual M.O.S.
Comments
L. C. Chong
Page 11 of 51
- For CSCENIC, I will look into 5 years time frame for valuation purposes.
- DCF suggest that CSCENIC is undervalued. The fair value can range from 1.89 to 2.15. Even if CSCENIC is not performing well in the next five years,
the fair value will range from 1.45 to 1.65.
- RDCF also suggests that to reach 1.22, CSCENIC just have to achieve -11% growth rate.
- Absolute PE indicates that the fair value is 1.99.
- EY% valuation indicates that CSCENIC is fully valued which is contradict with other valuation methods. In my opinion, this is logical because CSCENIC
has been bullish since 2012. We need to wait for correction.
L. C. Chong
Page 12 of 51
10-Y
Base 4%
Bad 0%
1.84
Ugly -4%
1.53
1.28
R4Q-EPS
FY13-EPS*
FY14-EPS*
0.10
0.12
0.12
0.73
0.87
0.90
1.02
1.22
1.26
L. C. Chong
Page 13 of 51
L. C. Chong
Page 14 of 51
Strategy
Portfolio Strategy:
Lump Sum + Top Up
Portfolio Execution:
- Buy and Monitor
Averaging Down
Method:
- Dollar Cost/Value Avera

- Sum of Digits Ladderin
Buying Basis:
EPS QoQ Growth > 15%

Price is below Intrinsic Value
Price is below or around the fair price derived from EY% High
Stock price breaks out of consolidation/dip on an uptrend.
Company owner/directors, and major fund institutions heavily buying
Selling Basis:
Quarterly EPS drop for 3 consecutive months.

Has the stock risen too far from its intrinsic value?
Long term trend changed from bullish to bearish
Company owner/directors, and major fund institutions heavily selling
Price is above or around the price derived from EY% Low
Fundamental of business turns unattractive or bad (bear cases)
The current price is 30% away from my average holding price.
Other good reasons stated in MorningStar's article.
Comments:
- Excellent consistent Dividend Yield;
- CSCENIC has a minimum Dividend Policy Payout of 50%
- Since 2009, the Dividend Payout range was between 91% and 115%
- Since FYE 2010, CSCENIC has started paying dividends bi-annually
- In FY2012, CSCENIC paid Net Dividends 12.3 sen per share or 111% of its Net Profit in the
financial year; while in FY11, it paid Net Dividends of 9 sen per share or 116% of its Net Profit.
- CSCENIC is a very interesting stocks, and I am keen to buy this stock too.
- I will accumulate CSCENIC when there is a technical correction or consolidation.
L. C. Chong
Page 15 of 51
Dollar Cost/Value Averaging

Sum of Digits Laddering
1;2;3;4;5
10;11;12;6;7;8;9
of its Net Profit in the

16% of its Net Profit.
o.
idation.
L. C. Chong
Page 16 of 51
Important News & Reports

Created Date
Details
L. C. Chong
Type
Page 17 of 51
Source Type
Appendix 1 - Discounted Cash Flows Valuation

Discount Rate
Avg. Risk
Premium
Margin of Safety
Avg. Risk
Free Rate
Unadj.
Discount
0.98
7.60%
3.99%
Est.
Dividend
Earnings
Unadjusted Risk-Based
Initial RRR Yield
Growth
MOS
MOS
35%
8.00%
#VALUE!
#VALUE!
#VALUE!
External Risk
Discount %
Business Risk Factor
Financial Risk Factor
0.90
1.00
10.22%
11.59%
Growth Estimation
Financial Figures
Decay Rate Extra Decay

OE GR.
Terminal % (Y4-Y7)
(Y8-Y10)
#VALUE!
3%
15%
20%
4%
Intangibles
Intangibles % Add to
Shares Out. 2012 OE
Excess Cash Assets
DCF
120.50
14.13
21.72
0%
0.88
50.00%
8%
0%
-4%
Projection of Present Value and Fair Value

FV - Future Value; DPV - Discounted Perpetuity Value; PV - Present Value
Yearly GR.
FV
DPV
2013
4%
14.69
190.10
2014
4%
15.28
179.37
2015
4%
15.89
169.25
2016
3%
16.15
156.04
2017
3%
16.70
146.38
2018
3%
17.27
137.32
2019
3%
17.85
128.82
2020
3%
17.51
114.63
2021
3%
17.99
106.83
2022
3%
18.48
99.56
PV
225.60
227.44
229.18
226.92
227.52
228.09
228.62
222.48
222.16
221.87
Fair Value
Yearly GR.
FV
DPV
8%
15.26
197.41
3-Y:
8%
16.48
193.43
1.90
8%
17.80
189.53
5-Y:
7%
18.38
177.60
1.89
7%
19.63
172.08
7%
20.97
166.74
7%
22.39
161.56
5%
21.58
141.29
10-Y:
5%
22.76
135.16
1.84
5%
24.00
129.30
PV
233.42
243.00
252.39
252.91
259.46
265.81
271.96
261.60
264.94
268.15
Fair Value
Yearly GR.
FV
DPV
0%
14.13
182.79
3-Y:
0%
14.13
165.84
2.09
0%
14.13
150.46
5-Y:
0%
14.13
136.50
2.15
0%
14.13
123.84
0%
14.13
112.36
0%
14.13
101.94
0%
14.13
92.48
10-Y:
0%
14.13
83.91
2.23
0%
14.13
76.13
PV
217.77
212.45
207.62
203.24
199.26
195.65
192.38
189.41
186.72
184.27
Fair Value
Yearly GR.
FV
DPV
-4%
13.56
175.48
3-Y:
-4%
13.02
152.84
1.72
-4%
12.50
133.12
5-Y:
-3%
12.30
118.87
1.65
-3%
11.88
104.17
-3%
11.48
91.30
-3%
11.09
80.02
-3%
11.33
74.17
10-Y:
-3%
11.02
65.47
1.53
-3%
10.72
57.78
PV
209.95
198.02
187.63
181.72
174.33
167.86
162.19
161.55
157.43
153.79
3-Y:
1.56
5-Y:
1.45
10-Y:
1.28
U
g
ly
-4
B
ad
G
o
od
B
as
e
4%
Senario
Fair Value
L. C. Chong
Page 18 of 51
Appendix 2 - Reverse Discounted Cash Flows

Discount Rate
Margin of Safety
Avg. Risk
Avg. Risk
Unadj.
Business
Financial
External Risk
Premium
Free Rate
Discount
Discount %
Risk Factor
Risk Factor
Factor
7.60%
3.99%
11.59%
0.98
0.90
1.00
10.22%
Est.
Dividend
Earnings
Initial RRR Yield
Growth
35%
8.00%
#VALUE!
Growth Estimation
Financial Figures
Decay Rate Extra Decay

OE GR.
Terminal % (Y4-Y7)
(Y8-Y10)
#VALUE!
-11%
3%
15%
20%
Shares Out. 2012 OE

Excess Cash
14.13
120.50
21.72
Projection of Present Value (GR. -11%)

FV - Future Value; DPV - Discounted Perpetuity Value; PV - Present Value
Yearly GR.
FV
DPV
2013
-11%
12.57
162.68
2014
-11%
11.19
131.36
2015
-11%
9.96
106.07
2016
-9%
10.14
98.01
2017
-9%
9.34
81.86
2018
-9%
8.60
68.36
2019
-9%
7.91
57.09
2020
-7%
9.30
60.91
2021
-7%
8.83
52.45
2022
-7%
8.38
45.17
PV
196.26
174.14
156.29
155.11
144.69
135.99
128.72
136.81
132.03
127.91
3-Y:
1.30
5-Y:
1.20
10-Y:
1.06
Fair Value
L. C. Chong
Page 19 of 51
MOS
MOS
#VALUE!
#VALUE!
Intangibles
Intangibles % Add to
Assets
DCF
0.88
L. C. Chong
50%
Page 20 of 51
Appendix 3 - Excess Return Valuation

Discount Rate
Avg. Risk
Premium
Margin of Safety
Avg. Risk
Free Rate
7.60%
Discount %
11.59%
Initial RRR
35%
Est.
Earnings
Growth
MOS
MOS
#VALUE!
#VALUE!
8.00%
10%
#VALUE!
Dividend
Yield
3.99%
Financial Figures
ROE
2012 Book Dividend

Shares Out. Value
Payout %
Terminal %
13%
120.50
97.93
50%
3%
ROE Growth/Decay Rate

Good Scenario
Bad Scenario
Ugly Scenario
Start ROE
End ROE
Growth Rate
0%
10%
34%
11%
15%
21%
16%
20%
13%
21%
25%
8%
26%
30%
5%
31%
100%
3%
Start ROE
End ROE
Decay Rate
0%
10%
-3%
11%
15%
-5%
16%
20%
-8%
21%
25%
-13%
26%
30%
-21%
31%
100%
-34%
Start ROE
End ROE
0%
10%
11%
15%
16%
20%
21%
25%
26%
30%
31%
100%
Projection of Present Value and Fair Value

Senario
B
as
e
ROE
Book Value
Retained
Earnings
Excess
Return
PV
G
oo
Fair Value
ROE
Book Value
Retained
Earnings
Excess
Return
PV
B
ad
Fair Value
ROE
Book Value
Retained
Earnings
Excess
Return
PV
U
g
ly
Fair Value
ROE
Book Value
Retained
Earnings
Excess
Return
PV
Fair Value
L. C. Chong
2012
13%
97.93
2013
13%
104.19
2014
13%
110.85
2015
13%
117.93
2016
13%
125.47
2017
13%
133.49
6.26
6.66
7.08
7.54
8.02
8.53
1.22
1.30
1.38
1.47
1.56
19.33
1.22
1.16
1.11
1.06
1.01
11.17
#VALUE!
5-Y:
22%
134.11
0.95
24%
149.07
#VALUE!
13%
97.93
16%
104.19
114.648237
18%
20%
112.25
122.06
6.26
8.06
9.81
12.05
14.96
17.96
1.22
4.10
6.69
10.06
14.51
218.82
1.22
3.68
5.37
7.24
9.35
126.46
#VALUE!
2.09
10%
129.72
#VALUE!
13%
97.93
12%
104.19
251.248467
12%
11%
110.52
116.89
5-Y:
10%
123.30
6.26
6.33
6.37
6.41
6.42
1.22
0.63
(0.01)
(0.69)
(1.40)
(21.90)
1.22
0.56
(0.01)
(0.49)
(0.90)
(12.66)
#VALUE!
5-Y:
9%
121.41
0.71
8%
126.73
#VALUE!
10%
110.18
85.647892
10%
115.89
13%
97.93
12%
104.19
6.55
6.26
5.99
5.70
5.52
5.32
1.22
(0.04)
(1.32)
(2.35)
(3.39)
(51.57)
1.22
(0.04)
(1.06)
(1.69)
(2.19)
(29.80)
#VALUE!
64.3777141
5-Y:
0.53
#VALUE!
Page 21 of 51
5.11
Decay Rate
-8%
-10%
-13%
-18%
-26%
-39%
L. C. Chong
Page 22 of 51
Appenfix 4 - EY% Valuation

EY% High
EY% Low
13.81%
Buffer
9.01%
R4Q-EPS
FY13-EPS*
FY14-EPS*
10%
0.097
0.116
0.119
Buy Under
Sell Above
0.73
1.02
0.87
1.22
0.90
1.26
* Estimations from Reuters or local analysts' reports

EY%
High
Green Zone EY%
13.81%
Trading Range
Red Zone EY%
Green Zone Price($)
R4Q
FY13
0.70
0.84
13.33%
Buy Under
0.73
0.87
9.49%
Sell Above
1.02
1.22
1.08
1.29
4.80%
9.01%
Red Zone Price($)
Low
L. C. Chong
Page 23 of 51
Price
Low
FY14
0.86
0.90
10%
1.26
10%
1.33
High
L. C. Chong
Page 24 of 51
Appendix 5 - Katsenelson Absolute PE Valuation

(For Non-Bank Stocks Only)
Discount Rate
Avg. Risk
Avg. Risk
Unadj.
Business Risk Financial
External Risk
Discount %
Premium
Free Rate
Discount
Factor
Risk Factor
Factor
7.60%
3.99%
11.59%
0.98
0.90
1.00
10.22%
Margin of Safety
P/E for No Growth
Est.
Dividend
Earnings
Unadjusted
Risk-Based
Initial RRR Yield
Growth
MOS
MOS
35%
8.00%
#VALUE!
#VALUE!
#VALUE!
Initial P/E
Absolute PE
Earnings Growth
Dividend Yield
PE Points Lookup Tables

Given
P/E Adj.
#VALUE!
#VALUE!
+
8.00%
8.00

Earnings Predictability
1%
7.65
2%
8.30
3%
8.95
#VALUE!
4%
9.60
0.98 [1 + (1 - 0.98)]
0.90 [1 + (1 - 0.9)]
0.98 [1 + (1 - 0.98)]
5%
10.25
6%
10.90
7%
11.55
8%
12.20
9%
12.85
10%
13.50
11%
14.15
12%
14.80
13%
15.45
14%
16.10
15%
16.75
16%
17.40
17%
17.90
18%
18.40
19%
18.90
20%
19.40
21%
19.90
22%
20.40
23%
20.90
24%
21.40
25%
21.90
Fair Value P/E

R-4Q EPS
0.097
Fair Value
Risk-Based MOS
Buy Under
L. C. Chong
Earnings Growth P/E

0%
Baisc P/E
#VALUE!
Page 25 of 51
DY%
Add's P/E
0.0%
0.1%
0.5
0.5%
0.5
1.0%
1.5%
1.5
2.0%
2.5%
2.5
3.0%
3.5%
3.5
4.0%
4.5%
4.5
5.0%
5.5%
5.5
6.0%
6.5%
6.5
10.0%
10
L. C. Chong
Page 26 of 51
Appendix 6 - Insider Trading

Last 3 months or last 30 insider transactions
Transaction Date
Securities Holder
Type of transaction
10/21/2013 LIM CHEE KHOON
Disposed
Disposed
Disposed
Disposed
Disposed
Disposed
Disposed
Disposed
L. C. Chong
Page 27 of 51
No of securities
Price Transacted
100,000
0.00
31,300
0.00
168,740
0.00
100,000
0.00
100,000
0.00
173,000
0.00
103,200
0.00
369,600
0.00
L. C. Chong
Page 28 of 51
Appendix 7 - Risk Factors

(For Non-Bank Stocks Only)

ROE
12/31/2007
13.00%
12/31/2008
8.76%
0
9.99%
0
7.21%
0
0.99%
12/31/2009
8.75%
0
13.71%
1
8.44%
1
0.94%
12/31/2010
12.83%
1
17.14%
1
12.73%
1
0.95%
12/31/2011
10.24%
0
14.10%
0
11.57%
0
0.97%
12/31/2008
521.20%
1
0.00%
1
0.00%
1
12/31/2009
970.65%
1
0.00%
1
0.00%
1
12/31/2010
644.39%
1
0.00%
1
0.00%
1
12/31/2011
727.27%
1
0.00%
1
0.00%
1
12/31/2008
47,409
0
7,811
0
16.48%
0
10,833
12/31/2009
42,452
0
8,200
1
19.32%
1
14,121
12/31/2010
56,777
1
11,855
1
20.88%
1
14,222
12/31/2011
52,259
0
9,308
0
17.81%
0
11,010
Consistency/Quality Check
ROIC
11.26%
CROIC
11.31%
Intangible % Book Value
1.01%

Quick Ratio
Total Debt/Equity
Short Term Debt/Equity
Debt Coverage (FCF)
2% Factor:
0.98
12/31/2007
386.76%
0.00%
0.00%
Revenue
10% Factor:
12/31/2007
57,327
Net Profit
11,310
Net Profit Margin
Operating Cash
19.73%
9,041
L. C. Chong
2% Factor:
0.90
0.98
Page 29 of 51
0
12/31/2012 Benchmark
13.55%
15%
1
2
12.78%
15%
0
2
15.91%
15%
1
3
0.90%
10%
1
5
12
542.13%
100%
1
5
0.00%
80%
1
5
0.00%
50%
1
5
100%
1
5
20
62,329
1
2
13,272
1
3
21.29%
10%
1
3
18,526
1
4
12
L. C. Chong
Page 30 of 51
Appendix 8 - Year-End Financial Data

This worksheet shows the figures that I capture from P/L, Balance Sheet and Cash Flow statement in annual report. I only take the figures that required for my analysis.
So, the total figures shown here do not actually add up. Please refer the annual report for full figures.
Profit & Loss
12/31/2004
12/31/2005
12/31/2006
12/31/2007
12/31/2008
12/31/2009
12/31/2010
12/31/2011
Revenue
18,882
58,322
59,171
57,327
47,409
42,452
56,777
52,259
Cost of Goods Sold
-10,048
-33,743
-37,171
-36,780
-31,433
-27,118
-38,413
-34,933
Operating Income
6,462
18,532
14,467
13,094
8,122
8,652
12,672
11,473
Net P/L To Shareholders
5,370
14,953
11,180
11,310
7,811
8,200
11,855
9,308
Balance Sheet
12/31/2004
12/31/2005
12/31/2006
12/31/2007
12/31/2008
12/31/2009
12/31/2010
12/31/2011
Total Current Assets
26,024
31,452
33,530
41,805
43,090
50,112
52,950
51,435
Cash and Equivalents
4,512
6,233
3,025
5,744
8,715
19,650
20,504
19,127
Inventory
13,611
16,742
22,038
25,886
26,938
23,885
24,036
26,126
Accounts Receivable
7,901
8,477
8,467
10,175
7,437
6,577
8,410
6,182
5,408
4,315
3,013
4,116
3,099
2,702
4,487
3,480
Short-Term Debt
2,000
Accounts Payable
3,291
3,802
2,807
3,918
3,091
2,702
4,256
3,068
Total Long-Term Assets
48,475
50,514
54,835
53,460
52,942
50,027
47,596
46,415
Intangible Assets
1,222
878
878
878
878
878
3,495
4,027
4,352
4,124
3,806
3,716
3,684
3,489
Cash Flow
12/31/2004
12/31/2005
12/31/2006
12/31/2007
12/31/2008
12/31/2009
12/31/2010
12/31/2011
Net Cash From Operations
7,470
13,961
5,954
9,041
10,833
14,121
14,222
11,010
Capital Expenditure
2,292
4,449
4,615
4,385
2,235
520
2,340
1,600
Sales From LT Assets
17
193
166
171
88
154
715
14
Other Non Cash Charges
Depreciation
-873
-2,350
-2,268
-2,464
-2,685
-2,749
-2,749
-2,770
Amortization
392
941
-4
-4
-3
Total Current Liabilities
Total Long-Term Liabilities

Long-Term Debt
L. C. Chong
Page 31 of 51
12/31/2012
62,329
-38,977
16,670
13,272
12/31/2012
52,794
21,724
25,156
5,914
5,098
0
4,316
53,513
878
3,277
0
12/31/2012
18,526
5,983
126
0
-2,660
0
L. C. Chong
Page 32 of 51
Appendix 9 - Quarterly Financial Data

This worksheet shows the figures that I capture from quarterly financial report.
I only take the figures that required for my analysis.
Jun-12
Sep-12
Dec-12
17,316
18,558
13,094
Net Profit
3,813
3,963
2,808
EPS
0.032
0.033
0.023
R-4Q EPS
0.000
0.000
0.000
Revenue
Outstanding Shares
L. C. Chong
Page 33 of 51
Mar-13
Jun-13
13,651
14,019
2,469
2,448
0.021
0.020
0.000
0.097
120,500
L. C. Chong
Page 34 of 51
Year-End Financial Raw Data

Year End Date
Financial Year Stock Code
12/31/2004
2004 CSCENIC
12/31/2005
2005 CSCENIC
12/31/2006
2006 CSCENIC
12/31/2007
2007 CSCENIC
12/31/2008
2008 CSCENIC
12/31/2009
2009 CSCENIC
12/31/2010
2010 CSCENIC
12/31/2011
2011 CSCENIC
12/31/2012
2012 CSCENIC
1
Total Revenue
Net Cash From Operations
18,882
7,470
58,322
13,961
59,171
5,954
57,327
9,041
47,409
10,833
42,452
14,121
56,777
14,222
52,259
11,010
62,329
18,526
4
5
Cash and Equivalents Accounts Receivable

Total Current Assets
Accounts Payable
4,512
7,901
26,024
3,291
6,233
8,477
31,452
3,802
3,025
8,467
33,530
2,807
5,744
10,175
41,805
3,918
8,715
7,437
43,090
3,091
19,650
6,577
50,112
2,702
20,504
8,410
52,950
4,256
19,127
6,182
51,435
3,068
21,724
5,914
52,794
4,316
6
7
8
9
Total Current Liabilities

Operating Income
Inventory Short-Term Debt
5,408
6,462
13,611
2,000
4,315
18,532
16,742
0
3,013
14,467
22,038
0
4,116
13,094
25,886
0
3,099
8,122
26,938
0
2,702
8,652
23,885
0
4,487
12,672
24,036
0
3,480
11,473
26,126
0
5,098
16,670
25,156
0
10
11
12
13
Long Term Debt

0
0
0
0
0
0
0
0
0
14
TOTAL SHAREHOLDERS' FUND

TOTAL LONG-TERM LIABILITIES
65,596
3,495
73,624
4,027
81,000
4,352
87,025
4,124
89,121
3,806
93,721
3,716
92,375
3,684
90,881
3,489
97,932
3,277
15
16
TOTAL LONG-TERM ASSETS

Intangible Assets Capital Expenditure
48,475
0
2,292
50,514
0
4,449
54,835
1,222
4,615
53,460
878
4,385
52,942
878
2,235
50,027
878
520
47,596
878
2,340
46,415
878
1,600
53,513
878
5,983
17
18
19
FinancialYearKey
2004 31/12/2004
2005 31/12/2005
2006 31/12/2006
2007 31/12/2007
2008 31/12/2008
2009 31/12/2009
2010 31/12/2010
2011 31/12/2011
2012 31/12/2012
20
Depreciation Tax Rate Sales From LT Assets

NET PROFIT/LOSS TO SHAREHOLDERS
-873 28.00%
17
5,370
-2,350 28.00%
193
14,953
-2,268 28.00%
166
11,180
-2,464 27.00%
171
11,310
-2,685 26.00%
88
7,811
-2,749 25.00%
154
8,200
-2,749 25.00%
715
11,855
-2,770 25.00%
14
9,308
-2,660 25.00%
126
13,272
21
23
24
Cost of Goods Sold Dividend Payout Ratio

Amortization
Other Non Cash Charges
10,048
18.50%
392
0
33,743
50.20%
941
0
37,171
48.40%
-4
0
36,780
47.90%
-4
0
31,433
46.20%
0
0
27,118
102.50%
-3
0
38,413
91.10%
0
0
34,933
116.00%
0
0
38,977
111.40%
0
0
25
50.20%
27
28
Net Interest Margin
Cost to income ratio
29
Net Impaired Loans
30
31
Risk-weighted capital ratio
Loan loss coverage
32
33
Net loans to deposit ratio
DY% High
2.05%
5.86%
5.06%
6.62%
8.82%
23.33%
20.00%
13.43%
16.97%
34
DY% Low DY% CLS Total Debt NOPAT

Total Equity Excess Cash Invested Capital
1.71%
1.79%
2,000
4,653
65,596
4,512
64,579
4.52%
5.68%
0
13,343
73,624
6,233
71,418
2.94%
4.84%
0
10,416
81,000
3,025
81,105
3.78%
6.52%
0
9,559
87,025
5,744
84,527
3.95%
8.00%
0
6,010
89,127
8,715
83,340
13.73% 15.56%
0
6,489
93,721
19,650
76,909
11.69% 12.68%
0
9,504
92,375
20,504
74,677
10.84% 12.41%
0
8,605
90,881
19,127
74,365
9.92% 11.83%
0
12,503
97,932
21,724
78,607
41
ROIC
Net CAPEX FCF/Sales Net Profit Margin
Total Liabilities Total Assets CROIC
7.20%
2,279
18.92%
28.44%
8,903
74,499
6%
18.68%
4,310
20.67%
25.64%
8,342
81,966
17%
12.84%
4,495
15.14%
18.89%
7,365
88,365
11%
11.31%
4,260
16.60%
19.73%
8,240
95,265
11%
7.21%
2,170
17.56%
16.48%
6,905
96,032
10%
8.44%
405
24.85%
19.32%
6,418
100,139
14%
12.73%
1,804
22.54%
20.88%
8,171
100,546
17%
11.57%
1,589
20.07%
17.81%
6,969
97,850
14%
15.91%
5,888
16.11%
21.29%
8,375
106,307
13%
43
44
45
46
49
Debt Coverage (FCF) Accounts Receivable Turnover

Days In Receivables
178.59%
238.98%
152.73
712.20%
51.25
698.43%
52.26
615.03%
59.35
538.37%
67.80
605.85%
60.25
757.68%
48.17
716.27%
50.96
1030.57%
35.42
50
Days In Inventory Days Payable Outstanding

Cash Conversion Cycle ROE
494.44
119.55
527.62
8.19%
164.17
38.36
177.05
20.31%
190.40
32.45
210.21
13.80%
237.80
33.37
263.77
13.00%
306.70
40.69
333.80
8.76%
342.03
38.99
363.29
8.75%
227.67
33.06
242.79
12.83%
262.06
38.26
274.75
10.24%
240.11
34.57
240.96
13.55%
55
56
Owner Earnings Debt/Equity

Intangible % Book Value
Short Term Debt/Equity
3,572
3.05%
0.00%
3.05%
12,052
0.00%
0.00%
0.00%
8,956
0.00%
1.51%
0.00%
9,518
0.00%
1.01%
0.00%
8,326
0.00%
0.99%
0.00%
10,547
0.00%
0.94%
0.00%
12,800
0.00%
0.95%
0.00%
10,489
0.00%
0.97%
0.00%
10,044
0.00%
0.90%
0.00%
57
58
59
60
Quick Ratio
229.53%
340.90%
381.41%
386.76%
521.20%
970.65%
644.39%
727.27%
542.13%
61
Quarterly Financial Raw Data

Quarter
Jun-12
Sep-12
Dec-12
Mar-13
Jun-13
EPS
Turnover Net Profit
R-4Q EPS Quarter Date CU EY CU DY R-4Q EY
3.18
17,316
3,813
6/30/2012
3.29
18,558
3,963
9/30/2012
2.33
13,094
2,808
12/31/2012
2.05
13,651
2,469
3/31/2013
2.03
14,019
2,448
9.7
6/30/2013
8.74
9.76
7.69
R-4Q DY
9.37
Shares Outstanding
EY% High EY% Low

0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
120,499,740
13.81%
9.01%

Example of Stock Valuation

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CLASSIC SCENIC BHD

L. C. Chong is NOT an investment advisor nor a financial advisor, and no

USEWARES AND DURABLES

Net Profit Margin 10%

Cash Conversion Cycle

Debt Coverage (FCF) 100%

Total Debt/Equity < 80%

Net Operating Cash

Risk: Minimum wages policy

Risk: Foreign currency exchange risk

Possible Bear Cases

ts average of CROIC is above 13%.

00) because CSCENIC maintains very

ue and Net Profit.

klifts, and motor vehicles.

pass on part of the cost to customers

e receivable, sales orders in hand and

ood usage and use of alternative

Impressive Production Capacity

or the past 9 years. Besides,

orkforce of 450 employees.

Spain (15%), Indonesia (15%), China

ed Market Share of CSCENIC is 36%

od and make every effort to ensure

ce into inner frames (fillet), fingergenerate energy for kiln-drying

Excess Return Valuation (5-Y) (Banks Only)

Lump Sum + Top Up

- Buy and Monitor

- Dollar Cost/Value Avera

EPS QoQ Growth > 15%

Quarterly EPS drop for 3 consecutive months.

Dollar Cost/Value Averaging

of its Net Profit in the

Important News & Reports

Appendix 1 - Discounted Cash Flows Valuation

Decay Rate Extra Decay

Projection of Present Value and Fair Value

Appendix 2 - Reverse Discounted Cash Flows

Decay Rate Extra Decay

Shares Out. 2012 OE

Projection of Present Value (GR. -11%)

Appendix 3 - Excess Return Valuation

2012 Book Dividend

ROE Growth/Decay Rate

Projection of Present Value and Fair Value

Appenfix 4 - EY% Valuation

* Estimations from Reuters or local analysts' reports

Red Zone EY%

Green Zone Price($)

Red Zone Price($)

Appendix 5 - Katsenelson Absolute PE Valuation

P/E for No Growth

PE Points Lookup Tables

Financial Risk Factor

Fair Value P/E

Earnings Growth P/E

Appendix 6 - Insider Trading

10/21/2013 LIM CHEE KHOON

7/3/2013 LIM CHEE KHOON

7/1/2013 LIM CHEE KHOON

4/12/2013 LIM CHEE KHOON

4/10/2013 LIM CHEE KHOON

4/9/2013 LIM CHEE KHOON