Dbs shouting through the roof.
Hi Willisow, I noticed you seemed to like telcos a lot as you have shared about your valuations for the three local telcos, Singtel, Starhub and M1. Maybe you are assessing and comparing them which include coming out with estimated valuations for all three telcos since they operate in the same industry.
On a separate note, for the different margins of safety to buy the shares which you came out for the different types of companies and sectors which they operate in, my own take is that these margins can change as time goes by due to the changing fundamentals of a company and/or sector/ industry. For example, the shipping industry once a lucrative industry decades ago has fallen to its bottom and we do not know when the shipping industry will recover. So the margin of safety for buying shares of shipping companies which once upon a time may be lesser will now require a much higher margin of safety because we do not know when the shipping industry will recover to its former glory days. Currently, we even have companies in the oil and gas industry joining the shipping industry in a bottom play game. Who knows when recovery will come? 1 year? 3 years? 10 years? Beyond 10 years?
An investor could run into a value trap even if he thinks he has invested at a low share price with a sufficient margin of safety. Yes, probably a particular shipping company may not go bankrupt for a long time, but its share price can continue to languish for a very long time (consider SGX listed Cosco Corp) thus causing time opportunity loss which an investor' s capital could have been invested elsewhere which gives better returns over this very long period of waiting. I think the bane of value investing is always to get into a value trap situation. A stock can be a value buy but it can potentially remain forever a value buy having persistently low share price and PE ratio for a very long time (more than a decade) if the industry that the company operates in never recover.
Thus, another crucial skill which any investor needs is portfolio management. No one who is rational will put his eggs (or money) in a single basket (a single stock). That is asking for trouble as there is no single perfect investment in this world.
Also, I see margin of safety as only a reference. If we stick rigidly to this principle, opportunities can also be missed out. For me personally, I have missed out on a few opporunities before as I followed rigidly that I can only buy shares of certain good companies only when their share price hit my comfortable margin of safety. And the thing is that their share price never ever visited my margin of safety zone. And their share price has continued to grow ever since. Of course I could still buy their shares upon the next opportunate time when the share price comes close to my margin of safety again. But sadly, it never came. Maybe there could be another sub-prime crisis in future so that shares of companies will plummet again. But there again, such special one-time event may not come for a very long time. And if such special opportunity comes few decades down the road, there is no more meaning for some people of age as they may have already leave the present living scene (you know what I mean). Haha!
In conclusion, I have learnt that theories are a guiding reference/ principle for an investor. The real world still needs an investor to apply the theories in a flexibile manner according to the dynamic and changing real world situations. That will then come with experience as the investor continue to interact with the real world situations and shape his beliefs and principles to conduct his investment operations in better efficient manner with time. 
Subject: Singtel Valuationannounced its Q2 and 6 months financial results. Both Q2 and 6 months operating earnings fell by 4.4% and 2.5%. My own assessment of its value stand at SGD3.55 and ideal entry price at SGD3.16 or below. Below are anaylsts reference for second opinion.
There was a calculation mistake for my Starhub value and entry price earlier on and I have updated its value at SGD3.08 and ideal entry price at SGD2.91 or below. No change to M1 valuation. Sorry for the stupid mistake on my end. Hence, im also not perfect and human errors are not excluded from me as well.
SGX : SingTel
Last Price
Avg Target Price
Upside/Downside
Price Call3.76
4.29
+0.53 (14.10%)
* Average Target Price, Price Call and Upside/Downside are derived from Price Targets in the past 6 months.
** Price Targets are adjusted for Bonus Issue, Shares Split & Shares Consolidation (where applicable).
Date Open Price Target Price Upside/Downside Price Call Source News 11/11/2016
3.80
4.40
+0.60 (15.79%)
BUY
OCBC
10/11/2016
3.86
4.26
+0.40 (10.36%)
HOLD
OCBC
27/10/2016
3.90
4.26
+0.36 (9.23%)
HOLD
OCBC
07/09/2016
4.03
4.53
+0.50 (12.41%)
BUY
UOB KayHian
02/09/2016
3.90
4.26
+0.36 (9.23%)
HOLD
OCBC
18/08/2016
4.23
4.26
+0.03 (0.71%)
HOLD
OCBC
15/08/2016
4.27
4.00
-0.27 (6.32%)
HOLD
RHB
12/08/2016
4.28
4.26
-0.02 (0.47%)
HOLD
OCBC
11/08/2016
4.22
4.29
+0.07 (1.66%)
HOLD
OCBC
11/08/2016
4.22
4.50
+0.28 (6.64%)
BUY
CIMB
12/07/2016
4.25
4.29
+0.04 (0.94%)
HOLD
OCBC
04/07/2016
4.13
4.55
+0.42 (10.17%)
BUY
Phillip Securities
21/06/2016
3.85
4.50
+0.65 (16.88%)
BUY
CIMB
02/06/2016
3.87
4.09
+0.22 (5.68%)
BUY
OCBC
13/05/2016
3.87
4.36
+0.49 (12.66%)
BUY
BNP Paribas
12/05/2016
3.84
3.96
+0.12 (3.13%)
BUY
OCBC
Subject: City Development Ltd Valuation
announced its Q3 and 9 months financial results. Both Q2 and 9 months operating earnings increased by 16.2% and 6.2% on a year on year basis. My own assessment of CDL value at SGD9.62 and ideal entry price at SGD7.21 or below. Below are analysts reference for second opinion. Thank you 🙂
| SGX : CityDev | CITY DEVELOPMENTS LIMITED |
| Last Price | Avg Target Price | Upside/Downside | Price Call |
| 8.54 | 10.20 | +1.66 (19.44%) |
|
| * Average Target Price, Price Call and Upside/Downside are derived from Price Targets in the past 6 months. |
| ** Price Targets are adjusted for Bonus Issue, Shares Split & Shares Consolidation (where applicable). |
| Date | Open Price | Target Price | Upside/Downside | Price Call | Source | News |
|---|---|---|---|---|---|---|
| 11/11/2016 | 8.59 | 9.89 | +1.30 (15.13%) | BUY | OCBC | |
| 25/10/2016 | 8.86 | 10.36 | +1.50 (16.93%) | BUY | UOB KayHian | |
| 24/10/2016 | 8.81 | 9.90 | +1.09 (12.37%) | BUY | CIMB | |
| 21/10/2016 | 8.82 | 9.42 | +0.60 (6.80%) | HOLD | Maybank Kim Eng | |
| 30/09/2016 | 9.08 | 9.89 | +0.81 (8.92%) | BUY | OCBC | |
| 20/09/2016 | 8.85 | 9.89 | +1.04 (11.75%) | BUY | OCBC | |
| 08/09/2016 | 9.11 | 9.89 | +0.78 (8.56%) | BUY | OCBC | |
| 07/09/2016 | 9.20 | 9.89 | +0.69 (7.50%) | BUY | OCBC | |
| 02/09/2016 | 8.57 | 9.89 | +1.32 (15.40%) | BUY | OCBC | |
| 12/08/2016 | 8.90 | 10.36 | +1.46 (16.40%) | BUY | UOB KayHian | |
| 11/08/2016 | 8.80 | 9.89 | +1.09 (12.39%) | BUY | OCBC | |
| 11/08/2016 | 8.80 | 10.38 | +1.58 (17.95%) | BUY | CIMB | |
| 02/08/2016 | 8.72 | 10.93 | +2.21 (25.34%) | BUY | Daiwa | |
| 08/07/2016 | 8.04 | 11.21 | +3.17 (39.43%) | BUY | Daiwa | |
| 05/07/2016 | 8.15 | 9.89 | +1.74 (21.35%) | BUY | OCBC | |
| 27/06/2016 | 8.15 | 9.04 | +0.89 (10.92%) | BUY | RHB | |
| 16/06/2016 | 8.79 | 10.32 | +1.53 (17.41%) | BUY | CIMB | |
| 30/05/2016 | 8.30 | 11.17 | +2.87 (34.58%) | BUY | Daiwa | |
| 13/05/2016 | 7.97 | 9.60 | +1.63 (20.45%) | BUY | DBS Vickers | |
| 12/05/2016 | 8.00 | 9.89 | +1.89 (23.63%) | BUY | OCBC |
Subject: Singtel Valuation
announced its Q2 and 6 months financial results. Both Q2 and 6 months operating earnings fell by 4.4% and 2.5%. My own assessment of its value stand at SGD3.55 and ideal entry price at SGD3.16 or below. Below are anaylsts reference for second opinion.
There was a calculation mistake for my Starhub value and entry price earlier on and I have updated its value at SGD3.08 and ideal entry price at SGD2.91 or below. No change to M1 valuation. Sorry for the stupid mistake on my end. Hence, im also not perfect and human errors are not excluded from me as well.
| SGX : SingTel | SINGTEL |
| Last Price | Avg Target Price | Upside/Downside | Price Call |
| 3.76 | 4.29 | +0.53 (14.10%) |
|
| * Average Target Price, Price Call and Upside/Downside are derived from Price Targets in the past 6 months. |
| ** Price Targets are adjusted for Bonus Issue, Shares Split & Shares Consolidation (where applicable). |
| Date | Open Price | Target Price | Upside/Downside | Price Call | Source | News |
|---|---|---|---|---|---|---|
| 11/11/2016 | 3.80 | 4.40 | +0.60 (15.79%) | BUY | OCBC | |
| 10/11/2016 | 3.86 | 4.26 | +0.40 (10.36%) | HOLD | OCBC | |
| 27/10/2016 | 3.90 | 4.26 | +0.36 (9.23%) | HOLD | OCBC | |
| 07/09/2016 | 4.03 | 4.53 | +0.50 (12.41%) | BUY | UOB KayHian | |
| 02/09/2016 | 3.90 | 4.26 | +0.36 (9.23%) | HOLD | OCBC | |
| 18/08/2016 | 4.23 | 4.26 | +0.03 (0.71%) | HOLD | OCBC | |
| 15/08/2016 | 4.27 | 4.00 | -0.27 (6.32%) | HOLD | RHB | |
| 12/08/2016 | 4.28 | 4.26 | -0.02 (0.47%) | HOLD | OCBC | |
| 11/08/2016 | 4.22 | 4.29 | +0.07 (1.66%) | HOLD | OCBC | |
| 11/08/2016 | 4.22 | 4.50 | +0.28 (6.64%) | BUY | CIMB | |
| 12/07/2016 | 4.25 | 4.29 | +0.04 (0.94%) | HOLD | OCBC | |
| 04/07/2016 | 4.13 | 4.55 | +0.42 (10.17%) | BUY | Phillip Securities | |
| 21/06/2016 | 3.85 | 4.50 | +0.65 (16.88%) | BUY | CIMB | |
| 02/06/2016 | 3.87 | 4.09 | +0.22 (5.68%) | BUY | OCBC | |
| 13/05/2016 | 3.87 | 4.36 | +0.49 (12.66%) | BUY | BNP Paribas | |
| 12/05/2016 | 3.84 | 3.96 | +0.12 (3.13%) | BUY | OCBC |
|
Noted with thanks. Thanks for the great explanation.
Pls ignore Croesus. Dun think it has 10 years of history. =)
No pal,The purpose of the margin of safety is to buffer for a possible decline of earnings when companies go through their business cycle. Hence the degree of buffer depend on individual company or industry. Example, a 10% for local telco, 20% for transportation companies, 30% for local banks, 40% for property developers, 50% for casino n etc.
Companies of same industry but operate in different countries also can have different safety margin. Example, 20% for prc telcos, 40-50% for prc banks, 60% for standard chartered bank n etc. thus a minimum 10 years period to analyse a company is a must bcos without it we will not b able to fully understand a company operating history n the degree of business risk involved in every business cycle. Thank you 🙂
Thanks, Wilisow for the detailed explanation. So can I clarify that your initial discount is always around 50%, to give you that good buffer for any business cycles fluctuations? Thanks.
No pal,
The purpose of the margin of safety is to buffer for a possible decline of earnings when companies go through their business cycle. Hence the degree of buffer depend on individual company or industry. Example, a 10% for local telco, 20% for transportation companies, 30% for local banks, 40% for property developers, 50% for casino n etc.
Companies of same industry but operate in different countries also can have different safety margin. Example, 20% for prc telcos, 40-50% for prc banks, 60% for standard chartered bank n etc. thus a minimum 10 years period to analyse a company is a must bcos without it we will not b able to fully understand a company operating history n the degree of business risk involved in every business cycle. Thank you 🙂
Thanks, Wilisow for the detailed explanation. So can I clarify that your initial discount is always around 50%, to give you that good buffer for any business cycles fluctuations? Thanks.
Good morning Pinkowl 🙂Very observant n raised a very good question.
Before I explain, let me illustrate with an example. Assuming 3 years ago a company earned $1 per share n it' s fair value was $10. We further assume based on its historical business performance, it' s margin of safety was derived at 50%, thus we will only buy at $5.
3 years later, it' s earning fell to $0.60 n it' s faire value is reduced to $6,. Due to over pessimism, it' s share price fell to lowest at $4 n we picked up as initially estimated at $5 (50% safety margin). Thus, a current fair value of $6 versus an ideal entry of $5 indicate a discount of slightly more than 15%. However, in reality our safety margin was 50% n not 15% n it' s current fair value of $6 actually fallen 40% from its peak fair value but still within the 50% safety margin which we buffered.
Using genting as a real life example, I quoted its fair value based on current earning was sgd0.82 n ideal entry at sgd0.75 or below. This two number show a less than 10% discount but in reality the ideal entry price was estimated based on a 50% discount off it' s earnings few years back.
Thus, few years ago I already knew if I were to buy genting I will only buy at sgd0.75 or below. There again, this is not a prediction, there is no way I can predict a price a few year later, moreover I also wouldn' t know that genting price will or will not fall to its ideal entry n what is the timeline for it to fall. What the ideal entry price mean, if genting prices were to fall to sgd0.75 or below, it is cheap n safe to buy in historical term, that' s all, no other meaning.
There will b business cycle in every business we invest. Some of the business cycles are isolate by itself n some are in line with the overall economic cycle. Most company earnings peaked between 2006-2007 n thereafter trough between 2008-2009. Thus a safety margin is to protect our capital so that we don' t get caught by these business cycles.
As mentioned previously, it is more common to see stock prices falling Hand in hand with earnings n if stock prices fall more than earnings, it presented an opportunity for short term contrarian profit just like genting current fair value at sgd0.82. For good companies, once a trough business cycle emerge, we expect it' s earning to recover as time goes by. Hence it' s fair value based on future projected earnings are certainly higher than its current beaten down earning, this is y I will only sell genting at sgd1.03 or above.
Cases like capitaland, earning continue to climb but it' s share price is subdued due to low participation by speculator bcos of poor sentiment derived from property curb by the government. Thus earnings are moving up but share prices are languish. Once a catalyst set in, example lifting of the property curb measures, it' s price will rocket. U see a larger discount in capitaland bcos its safety margin is based on current record earning, which mean to say the company is moving up its business cycle, when will it peaked nobody knows.
The most favorable scenario but rarely happened is DBS, earning keep increasing but share price keep falling due to oil n gas provision which dampened speculators mood on its shares. I see bright future in DBS, that' s y I written many posts to remind all sj peers not to sell their DBS shares for peanut price. If I have a chance to interview its CEO, I would like to know how DBS can maintain a strong operating earning growth when most banks are experiencing a declining growth currently. If it earning continue to climb next year which I strongly believe it will happen, it' s valuation is going to increase further, no doubt about it.
Those who procrastinate n did not buy DBS or have bought but sold at a peanut price are likely to miss the opportunity to buy back at sgd15 or below. I can' t predict the price movement, if DBS still can fall back to sgd15 or below, those who are not in position now must really really buy a big roasted pig n thanks heaven for once again giving them the chance to catch dropping gold bar from heaven.
However, if DBS prices do not look back to sgd15, those who are not in position will have to buy at a higher price with lower margin of safety as compared to those who bought at or below the ideal entry price. A good company don' t always trade below its fair value, once it started to rocket, it will b very fast. This is y trading can' t fetch good return, thank you 🙂
Thanks, Wilisow for the detailed explanation. So can I clarify that your initial discount is always around 50%, to give you that good buffer for any business cycles fluctuations? Thanks.
Good morning Pinkowl 🙂Very observant n raised a very good question.
Before I explain, let me illustrate with an example. Assuming 3 years ago a company earned $1 per share n it' s fair value was $10. We further assume based on its historical business performance, it' s margin of safety was derived at 50%, thus we will only buy at $5.
3 years later, it' s earning fell to $0.60 n it' s faire value is reduced to $6,. Due to over pessimism, it' s share price fell to lowest at $4 n we picked up as initially estimated at $5 (50% safety margin). Thus, a current fair value of $6 versus an ideal entry of $5 indicate a discount of slightly more than 15%. However, in reality our safety margin was 50% n not 15% n it' s current fair value of $6 actually fallen 40% from its peak fair value but still within the 50% safety margin which we buffered.
Using genting as a real life example, I quoted its fair value based on current earning was sgd0.82 n ideal entry at sgd0.75 or below. This two number show a less than 10% discount but in reality the ideal entry price was estimated based on a 50% discount off it' s earnings few years back.
Thus, few years ago I already knew if I were to buy genting I will only buy at sgd0.75 or below. There again, this is not a prediction, there is no way I can predict a price a few year later, moreover I also wouldn' t know that genting price will or will not fall to its ideal entry n what is the timeline for it to fall. What the ideal entry price mean, if genting prices were to fall to sgd0.75 or below, it is cheap n safe to buy in historical term, that' s all, no other meaning.
There will b business cycle in every business we invest. Some of the business cycles are isolate by itself n some are in line with the overall economic cycle. Most company earnings peaked between 2006-2007 n thereafter trough between 2008-2009. Thus a safety margin is to protect our capital so that we don' t get caught by these business cycles.
As mentioned previously, it is more common to see stock prices falling Hand in hand with earnings n if stock prices fall more than earnings, it presented an opportunity for short term contrarian profit just like genting current fair value at sgd0.82. For good companies, once a trough business cycle emerge, we expect it' s earning to recover as time goes by. Hence it' s fair value based on future projected earnings are certainly higher than its current beaten down earning, this is y I will only sell genting at sgd1.03 or above.
Cases like capitaland, earning continue to climb but it' s share price is subdued due to low participation by speculator bcos of poor sentiment derived from property curb by the government. Thus earnings are moving up but share prices are languish. Once a catalyst set in, example lifting of the property curb measures, it' s price will rocket. U see a larger discount in capitaland bcos its safety margin is based on current record earning, which mean to say the company is moving up its business cycle, when will it peaked nobody knows.
The most favorable scenario but rarely happened is DBS, earning keep increasing but share price keep falling due to oil n gas provision which dampened speculators mood on its shares. I see bright future in DBS, that' s y I written many posts to remind all sj peers not to sell their DBS shares for peanut price. If I have a chance to interview its CEO, I would like to know how DBS can maintain a strong operating earning growth when most banks are experiencing a declining growth currently. If it earning continue to climb next year which I strongly believe it will happen, it' s valuation is going to increase further, no doubt about it.
Those who procrastinate n did not buy DBS or have bought but sold at a peanut price are likely to miss the opportunity to buy back at sgd15 or below. I can' t predict the price movement, if DBS still can fall back to sgd15 or below, those who are not in position now must really really buy a big roasted pig n thanks heaven for once again giving them the chance to catch dropping gold bar from heaven.
However, if DBS prices do not look back to sgd15, those who are not in position will have to buy at a higher price with lower margin of safety as compared to those who bought at or below the ideal entry price. A good company don' t always trade below its fair value, once it started to rocket, it will b very fast. This is y trading can' t fetch good return, thank you 🙂
Thanks. Can I ask why the ideal entry price is 35% discount? Understand you normally discount about 20% off valuation. Thanks.
Hi WillisowI am one of the silent reader and admier of your posts. I truly believe your guidance is genuine. Thank you for taking your valuable time and posting detail explanation. It surely helps.
I alos think pinkowl and you both for discussing in open forum instead of in private message. It really helps to newbie like me.
I am still not able to get why die you recommend entry price of Capitaland so low $2.44?
Thank you and keep doing great job. Not many people like you are present in this site.
Cheers
Good morning Pinkowl 🙂Very observant n raised a very good question.
Before I explain, let me illustrate with an example. Assuming 3 years ago a company earned $1 per share n it' s fair value was $10. We further assume based on its historical business performance, it' s margin of safety was derived at 50%, thus we will only buy at $5.
3 years later, it' s earning fell to $0.60 n it' s faire value is reduced to $6,. Due to over pessimism, it' s share price fell to lowest at $4 n we picked up as initially estimated at $5 (50% safety margin). Thus, a current fair value of $6 versus an ideal entry of $5 indicate a discount of slightly more than 15%. However, in reality our safety margin was 50% n not 15% n it' s current fair value of $6 actually fallen 40% from its peak fair value but still within the 50% safety margin which we buffered.
Using genting as a real life example, I quoted its fair value based on current earning was sgd0.82 n ideal entry at sgd0.75 or below. This two number show a less than 10% discount but in reality the ideal entry price was estimated based on a 50% discount off it' s earnings few years back.
Thus, few years ago I already knew if I were to buy genting I will only buy at sgd0.75 or below. There again, this is not a prediction, there is no way I can predict a price a few year later, moreover I also wouldn' t know that genting price will or will not fall to its ideal entry n what is the timeline for it to fall. What the ideal entry price mean, if genting prices were to fall to sgd0.75 or below, it is cheap n safe to buy in historical term, that' s all, no other meaning.
There will b business cycle in every business we invest. Some of the business cycles are isolate by itself n some are in line with the overall economic cycle. Most company earnings peaked between 2006-2007 n thereafter trough between 2008-2009. Thus a safety margin is to protect our capital so that we don' t get caught by these business cycles.
As mentioned previously, it is more common to see stock prices falling Hand in hand with earnings n if stock prices fall more than earnings, it presented an opportunity for short term contrarian profit just like genting current fair value at sgd0.82. For good companies, once a trough business cycle emerge, we expect it' s earning to recover as time goes by. Hence it' s fair value based on future projected earnings are certainly higher than its current beaten down earning, this is y I will only sell genting at sgd1.03 or above.
Cases like capitaland, earning continue to climb but it' s share price is subdued due to low participation by speculator bcos of poor sentiment derived from property curb by the government. Thus earnings are moving up but share prices are languish. Once a catalyst set in, example lifting of the property curb measures, it' s price will rocket. U see a larger discount in capitaland bcos its safety margin is based on current record earning, which mean to say the company is moving up its business cycle, when will it peaked nobody knows.
The most favorable scenario but rarely happened is DBS, earning keep increasing but share price keep falling due to oil n gas provision which dampened speculators mood on its shares. I see bright future in DBS, that' s y I written many posts to remind all sj peers not to sell their DBS shares for peanut price. If I have a chance to interview its CEO, I would like to know how DBS can maintain a strong operating earning growth when most banks are experiencing a declining growth currently. If it earning continue to climb next year which I strongly believe it will happen, it' s valuation is going to increase further, no doubt about it.
Those who procrastinate n did not buy DBS or have bought but sold at a peanut price are likely to miss the opportunity to buy back at sgd15 or below. I can' t predict the price movement, if DBS still can fall back to sgd15 or below, those who are not in position now must really really buy a big roasted pig n thanks heaven for once again giving them the chance to catch dropping gold bar from heaven.
However, if DBS prices do not look back to sgd15, those who are not in position will have to buy at a higher price with lower margin of safety as compared to those who bought at or below the ideal entry price. A good company don' t always trade below its fair value, once it started to rocket, it will b very fast. This is y trading can' t fetch good return, thank you 🙂
Hi Willisow
I am one of the silent reader and admier of your posts. I truly believe your guidance is genuine. Thank you for taking your valuable time and posting detail explanation. It surely helps.
I alos think pinkowl and you both for discussing in open forum instead of in private message. It really helps to newbie like me.
I am still not able to get why die you recommend entry price of Capitaland so low $2.44?
Thank you and keep doing great job. Not many people like you are present in this site.
Cheers
Good morning Pinkowl 🙂Very observant n raised a very good question.
Before I explain, let me illustrate with an example. Assuming 3 years ago a company earned $1 per share n it' s fair value was $10. We further assume based on its historical business performance, it' s margin of safety was derived at 50%, thus we will only buy at $5.
3 years later, it' s earning fell to $0.60 n it' s faire value is reduced to $6,. Due to over pessimism, it' s share price fell to lowest at $4 n we picked up as initially estimated at $5 (50% safety margin). Thus, a current fair value of $6 versus an ideal entry of $5 indicate a discount of slightly more than 15%. However, in reality our safety margin was 50% n not 15% n it' s current fair value of $6 actually fallen 40% from its peak fair value but still within the 50% safety margin which we buffered.
Using genting as a real life example, I quoted its fair value based on current earning was sgd0.82 n ideal entry at sgd0.75 or below. This two number show a less than 10% discount but in reality the ideal entry price was estimated based on a 50% discount off it' s earnings few years back.
Thus, few years ago I already knew if I were to buy genting I will only buy at sgd0.75 or below. There again, this is not a prediction, there is no way I can predict a price a few year later, moreover I also wouldn' t know that genting price will or will not fall to its ideal entry n what is the timeline for it to fall. What the ideal entry price mean, if genting prices were to fall to sgd0.75 or below, it is cheap n safe to buy in historical term, that' s all, no other meaning.
There will b business cycle in every business we invest. Some of the business cycles are isolate by itself n some are in line with the overall economic cycle. Most company earnings peaked between 2006-2007 n thereafter trough between 2008-2009. Thus a safety margin is to protect our capital so that we don' t get caught by these business cycles.
As mentioned previously, it is more common to see stock prices falling Hand in hand with earnings n if stock prices fall more than earnings, it presented an opportunity for short term contrarian profit just like genting current fair value at sgd0.82. For good companies, once a trough business cycle emerge, we expect it' s earning to recover as time goes by. Hence it' s fair value based on future projected earnings are certainly higher than its current beaten down earning, this is y I will only sell genting at sgd1.03 or above.
Cases like capitaland, earning continue to climb but it' s share price is subdued due to low participation by speculator bcos of poor sentiment derived from property curb by the government. Thus earnings are moving up but share prices are languish. Once a catalyst set in, example lifting of the property curb measures, it' s price will rocket. U see a larger discount in capitaland bcos its safety margin is based on current record earning, which mean to say the company is moving up its business cycle, when will it peaked nobody knows.
The most favorable scenario but rarely happened is DBS, earning keep increasing but share price keep falling due to oil n gas provision which dampened speculators mood on its shares. I see bright future in DBS, that' s y I written many posts to remind all sj peers not to sell their DBS shares for peanut price. If I have a chance to interview its CEO, I would like to know how DBS can maintain a strong operating earning growth when most banks are experiencing a declining growth currently. If it earning continue to climb next year which I strongly believe it will happen, it' s valuation is going to increase further, no doubt about it.
Those who procrastinate n did not buy DBS or have bought but sold at a peanut price are likely to miss the opportunity to buy back at sgd15 or below. I can' t predict the price movement, if DBS still can fall back to sgd15 or below, those who are not in position now must really really buy a big roasted pig n thanks heaven for once again giving them the chance to catch dropping gold bar from heaven.
However, if DBS prices do not look back to sgd15, those who are not in position will have to buy at a higher price with lower margin of safety as compared to those who bought at or below the ideal entry price. A good company don' t always trade below its fair value, once it started to rocket, it will b very fast. This is y trading can' t fetch good return, thank you 🙂
Thanks. Can I ask why the ideal entry price is 35% discount? Understand you normally discount about 20% off valuation. Thanks.
Thanks for informing me this prospect, I will review it once Im available 🙂
Hi Wilisow, if you free, you may want to look at Croesus Trust. Seems quite a stable dividend stock.
Thanks. Can I ask why the ideal entry price is 35% discount? Understand you normally discount about 20% off valuation. Thanks.
Subject: Capitaland Valuationannounced its Q3 and 9 months financial results. Both Q3 and 9 months operating earnings increased by 22% and 14% on a year on year basis. My own assessment of CL value at SGD3.78 and ideal entry price at SGD2.44 or below. Below are analysts reference for second opinion. Thank you 🙂
SGX :CapitaLand
Last Price
Avg Target Price
Upside/Downside
Price Call3.08
3.87
* Average Target Price, Price Call and Upside/Downside are derived from Price Targets in the past 6 months.
** Price Targets are adjusted for Bonus Issue, Shares Split & Shares Consolidation (where applicable).
Date Open Price Target Price Upside/Downside Price Call Source News 10/11/2016
3.08
4.05
+0.97 (31.49%)
BUY
UOB KayHian
10/11/2016
3.08
3.68
+0.60 (19.48%)
BUY
OCBC
09/11/2016
3.08
3.68
+0.60 (19.48%)
BUY
OCBC
30/09/2016
3.17
3.68
+0.51 (16.09%)
BUY
OCBC
27/09/2016
3.13
3.68
+0.55 (17.57%)
BUY
OCBC
26/09/2016
3.16
3.68
+0.52 (16.46%)
BUY
OCBC
20/09/2016
3.13
3.68
+0.55 (17.57%)
BUY
OCBC
02/09/2016
3.09
3.68
+0.59 (19.09%)
BUY
OCBC
05/08/2016
3.19
4.10
+0.91 (28.53%)
BUY
UBS
05/08/2016
3.19
3.15
-0.04 (1.25%)
HOLD
RHB
05/08/2016
3.19
3.68
+0.49 (15.36%)
BUY
OCBC
05/08/2016
3.19
3.60
+0.41 (12.85%)
BUY
DBS Vickers
05/08/2016
3.19
4.17
+0.98 (30.72%)
BUY
CIMB
04/08/2016
3.16
3.68
+0.52 (16.46%)
BUY
OCBC
05/07/2016
3.04
3.68
+0.64 (21.05%)
BUY
OCBC
16/06/2016
2.99
4.07
+1.08 (36.12%)
BUY
CIMB
15/06/2016
2.96
3.68
+0.72 (24.32%)
BUY
OCBC
13/06/2016
3.02
3.68
+0.66 (21.85%)
BUY
OCBC
07/06/2016
3.05
3.96
+0.91 (29.84%)
BUY
Daiwa
26/05/2016
2.97
4.08
+1.11 (37.37%)
BUY
UOB KayHian
Hi Wilisow, if you free, you may want to look at Croesus Trust. Seems quite a stable dividend stock.
Thanks. Can I ask why the ideal entry price is 35% discount? Understand you normally discount about 20% off valuation. Thanks.
Subject: Capitaland Valuationannounced its Q3 and 9 months financial results. Both Q3 and 9 months operating earnings increased by 22% and 14% on a year on year basis. My own assessment of CL value at SGD3.78 and ideal entry price at SGD2.44 or below. Below are analysts reference for second opinion. Thank you 🙂
SGX :CapitaLand
Last Price
Avg Target Price
Upside/Downside
Price Call3.08
3.87
* Average Target Price, Price Call and Upside/Downside are derived from Price Targets in the past 6 months.
** Price Targets are adjusted for Bonus Issue, Shares Split & Shares Consolidation (where applicable).
Date Open Price Target Price Upside/Downside Price Call Source News 10/11/2016
3.08
4.05
+0.97 (31.49%)
BUY
UOB KayHian
10/11/2016
3.08
3.68
+0.60 (19.48%)
BUY
OCBC
09/11/2016
3.08
3.68
+0.60 (19.48%)
BUY
OCBC
30/09/2016
3.17
3.68
+0.51 (16.09%)
BUY
OCBC
27/09/2016
3.13
3.68
+0.55 (17.57%)
BUY
OCBC
26/09/2016
3.16
3.68
+0.52 (16.46%)
BUY
OCBC
20/09/2016
3.13
3.68
+0.55 (17.57%)
BUY
OCBC
02/09/2016
3.09
3.68
+0.59 (19.09%)
BUY
OCBC
05/08/2016
3.19
4.10
+0.91 (28.53%)
BUY
UBS
05/08/2016
3.19
3.15
-0.04 (1.25%)
HOLD
RHB
05/08/2016
3.19
3.68
+0.49 (15.36%)
BUY
OCBC
05/08/2016
3.19
3.60
+0.41 (12.85%)
BUY
DBS Vickers
05/08/2016
3.19
4.17
+0.98 (30.72%)
BUY
CIMB
04/08/2016
3.16
3.68
+0.52 (16.46%)
BUY
OCBC
05/07/2016
3.04
3.68
+0.64 (21.05%)
BUY
OCBC
16/06/2016
2.99
4.07
+1.08 (36.12%)
BUY
CIMB
15/06/2016
2.96
3.68
+0.72 (24.32%)
BUY
OCBC
13/06/2016
3.02
3.68
+0.66 (21.85%)
BUY
OCBC
07/06/2016
3.05
3.96
+0.91 (29.84%)
BUY
Daiwa
26/05/2016
2.97
4.08
+1.11 (37.37%)
BUY
UOB KayHian
Ha Ha Ha. Your doggie has got character. Very you3 xin2 (got style).
Haha..drumstick hard to earn.Every day when is about time to go out, she will quickly bite her bag n sit in front of me. Telling me is time to go out. If too demanding I think she will leave home herself with her bag 离 家 出 走 🙂
Must make her work for her lunch. Next time, ask her to make predictions in stocks. Like the octopus or dunno what monkey. If she pick wrongly, can only eat chicken feet. ?
