Multi-baggers stocks in KLSE

In my last article on this subject, I have mentioned that there have been a few hundred 100-
Baggers stocks in the American Stock Exchange in the last 60 years as expounded in Christopher
Mayer’s book, “100-BAGGERS, STOCKS THAT RETURNS 100-TO-1 AND HOW TO FIND
THEM”.
A 100-baggers in the stock market is a stock which becomes 100 times its initial value. The
cumulative return of a 100-Bagger is 9900%. As the average number of years for those stocks to
become a 100-bagger was 26, it is equivalent to an average compounded annual return (CAR) of
19.4%. This CAR is about twice the return of the broad market.
$10,000 invested in a 100-Bagger above became $1.0m, close to 10 times the cumulative return
of investing in the broad market during the same period. Hence if one can find a few 100-
Baggers to invest in during his lifetime, he will gain financial freedom very fast and become rich.
Do we have some 100-baggers from our Kuala Lumpur Stock Exchange (KLSE)?
The Kuala Lumpur Composite Index (KLCI) was started on 2 January 1977 with a base of 100
points. After 43 and a half years and at the time of writing, the index appreciated less than 16
times to close at 1577 points, or for a total CAR of about 9%. KLSE is a much smaller market
compared to the American Stock Exchange, having less than a quarter of the number of stocks
traded. Moreover, the longest price data I could find from gurufocus website is only 20.5 years,
with data available only from January 2000. Many high growth companies were listed after year
2000, and hence the data available, and included in the finding, is even shorter than 20 years.
Hence, instead of trying to look for 100-baggers, we will try to find those 10-baggers of stocks
from KLSE for the last 20 years. The aim is to examine their characteristics as a guide for the
scouting of future multi-10-baggers stocks in KLSE.
A stock which became a 10-bagger within the 20 years period from 1 January 2000 to the present
on 17 July 2020 produced a CAR of more than 20%, which is very good return over a long
period of time. It is more than 3 times that of the return of the broad KLCI of only about 6%
during the same period.
Table 1 in the Appendix shows the list of 20 multi-10-baggers stocks from KLSE with original
price started on 1 January 2000, or later when they were first public listed as available in
gurufocus.
We do have some 100-baggers during this period; they are three of them, two are the glove
companies, TopGlove (575-baggers) and Hartalega (107-baggers), thanks to the recent surge of
their stock prices due to Covid-19. One other stock is from Technology sector, Pentamaster,
which is a 206-Baggers.
Top Glove, a company with a great management, became a 100-bagger two and a half years ago
in 2017, way before the Covid-19 debacle, and the other two became 100-baggers just recently.
A few other stocks would have been 100-baggers too if they were bought at their low prices:
ViTrox, Kossan, Supermax, Press Metal and Scientex, also companies with great management.
That shows the timing of buying those stocks which had been beaten down for some reasons is
also important. The rest of the multi-10-baggers are made up of stocks from various industries.
Datasonic (Technology, Digital Services), a company with close relationship with the
government in power (another one is MyEg) then was the fastest 10-baggers in 1.6 years,
followed by Inari Amertron (Technology, semiconductor), a 22-bagger in 9 years.
All these stocks, except for Padini, a traditional retail business and high dividend stock, stay as
multi-10-baggers as at today even after the sharp drop in share price recently due to the fear of
economic crisis as a result of Covid-19. The share price of Padini has dropped to a third of its
value from its peak.
The PE ratio of Top Glove was below 5 for the years before 2012 when it expanded abruptly.
Still, the PE stayed below 20 for most of the years until 2017 when PE expanded to about 25,
despite its high double-digit growth in revenue and earnings over the years. That was the year
Top Glove attained its 100-Baggers status. Based on the trailing twelve-month (ttm) earnings for
2020, its PE ratio is at three digits now! The same revenue and earnings growth and expansion of
PE ratios happened to other glove companies such as Hartalega, Kossan and Supermax, and in
fact, for all other companies in the list.
It is noted that Hartalega, which has a better efficiency with higher ROE than Top Glove was
trading at a much higher PE of 30 or above most of the time. Its ttm PE now at 145, is still higher
than the 103 of Top Glove. However, its price appreciation is not as impressive as that of Top
Glove.
Another clear winner in expansion of market valuation is QL Resources, a company with a great
management. Although its revenue and earnings growth have not been that impressive at less
than 10% CAGR, its share price shot up from RM1.70 from mid-2013 to RM9.60 now, for a
gain of 465%, or a CAR of 28%. That was due to the expansion of PE more than 3 times from 20
to 67 now.
Notably absence from these multi-10-baggers stocks are those stocks from Plantation, Properties,
REITS, Construction, Telecommunication and Media, Transportation and Logistics, Hospitality,
Travel and Leisure Industries, and finance companies except for LPI which is involves in
Insurance.
Scientex was once just a property development company. After diversified into the packaging
industries and some acquisitions of similar business, it becomes one of the largest packaging
companies in the region as well as in the world. It is a multi-10-Baggers. It could have been a
100-Baggers if one had bought it at its lowest and sold at the highest price. But that is not
possible.
Also absent from the list are some of the high-quality companies such as Carlsberg Brewery,
Heineken Malaysia, Nestle Malaysia etc. which have less re-investment opportunity and hence
pay out most of their earnings as dividends. With the inclusion of the dividends, they are
probably 10-Baggers too.
This shows scouting from the right sectors determines the probability of finding multi-10-
baggers in the future.
Here are some of the characteristics of past multi-10-baggers stocks in KLSE as guides to
scouting for future multi-baggers in KLSE.

1. Stocks in some business sectors such as healthcare and technology have a higher
probability of finding multi-10-baggers.
2. Most if not all multi-10-baggers stocks are of companies run by great management.
3. The companies are mostly owner-operators with substantial skin in the business.
4. Most started small and obscure companies with little or none interest from analysts and
institutional investors.
5. They were thinly traded initially before discovered by analysts and institutional
investors.
6. They were traded at extremely low valuation as a result of (4) and (5) above.
7. Many of them were penny stocks immediately after the two major crisis during the
period: the internet bubble in 2000, and the US subprime housing crisis in 2008.
8. The extreme situations above provide excellent opportunities for investing at bargain
prices for extra-ordinary return in subsequent years.
9. They were remarkably high growth companies with long runways.
10. Many are export orientated with a larger addressable market.
11. Stocks of companies having very close with the Government in power helps.
12. They have high return on capitals and good cash flows.
13. They have good reinvestment opportunities.
14. They have had rising sales and profitability.
15. Combined (12), (13) and (14) above with market valuation expansion after gaining the
interest from analysts and institutional investors, these companies provide outsized returns
for investors.
16. All the above stocks became multi-10-baggers at least after 10 years, except for
Datasonic and Inari, which became multi-10-baggers in less than 10 years.
It must be noted besides the quality and quantitative characteristics of multi-10-baggers,
investors must also have the following attributes:
1. Good knowledge in evaluating business
2. Hard working and doing their own homework in stock analysis.
3. Conviction in their ideas
4. Contrarian, and the right one.
5. Extreme patience.
6. Good exit strategy especially for the cyclical and politically connected stocks
7. Luck
This book by Christopher Meyer will provide you with useful framework and guidelines in more
detail on how to go about finding some multi-Baggers stocks from KLSE, and even for the stock
markets all over the world to invest for building long-term wealth in a more predictable manner.
If you are interested to book a hard copy now, please click on the following link,
https://acepremier.com/100baggers/
Your orders will complete once you have filled up the required particulars in the link above, and
appended copy of payment made according to the instructions.
Alternatively, you may email me to order the book at,
ckcbookorder@gmail.com
The book on 100-Baggers, with the consent of the author, is in the process of printing now in
Malaysia. It will be printed by mid-August 2020 and sent to you as soon as possible if you have
made a pre-order.
Happy reading and investing.
KC Chong
25 July 2020
Appendix
Table 1: Some multi-10-baggers from KLSE from year 2000 to 2020 as on 17 July 2020