Friday, July 20, 2012

For a stock picker so difficult to find value now

Seriously, over the past few months, it has been getting tougher and tougher to find value now. Many good stocks are now at more than 20x PE and sometimes, I am just wondering how fast the growth some of those companies can garner. Most of them only have Malaysia as their market hence they tend to pay higher dividends but little capital investment is made anymore.

I just looked at companies like Carlsberg (at one point of time, because of their non-Syariah stock status), they were not that attractive anymore. Over the last 1 - 2 years, it started to move. So is Guinness Anchor. Ya I know that F&N Singapore suddenly became a hot stock as major breweries are eyeing Asian market. Beer stocks became a sudden war for these companies now. I think they will bypass Malaysia though.

Even the one which I have mentioned, Nestle - it has now gone to 30x PE. Banks in Malaysia are now trading at almost 20x PE and more than 2x NA. Provision for bad debts as well as NPLs are very low. Good if we may think, but as in a country with very low unemployment for how long can this last. Already the personal consumption loan is at its high. Indonesia story again? I am hearing of too much Indonesian story - really.

Properties as you know I have mentioned of my apprehensiveness.

I am quite sure for long term investors, it may not be too difficult as the viewpoint is for a longer period and we do have some good companies although more and more of them bypass Malaysia for their listings.

But finding value is really difficult here.

This is especially so when we look at US markets - not for the ones who do not have patience though. I can give examples of companies like some of the banks are now trading at below 0.5x NA, less than 10x prospective earnings. They are still decent banks despite all the hoo-hah on their actions more recently. Even some very good companies are now trading at around 10x PE.

Any good solid pick for Malaysia still?


Bn911 said...

Tht true also, how about Public Bank?

Sunny said...

Yes. CCK. I value it at RM 1.00.

Investors who like cash dividend, share dividend, and bonus issue can consider. (Anyway, who doesn't like?)

Recently it is into Indonesian market. My speculation is that: Good palm oil price -> Good pay for plantation worker -> High consumption of chicken and eggs. The sales of prawn is quite good also and likely to be sustainable as the "Fukushima" factor will last for years.

What do you think?

Sunny said...

I do hold some of CCK for 1~1.5 years. Average price is 0.695, adjusted for share dividend, exclusive cash dividend. It is close to 10% of my investment now. Total return should be slightly above 30%.

Share price is supported by share buyback.

Recommended to people who like to play safe. If you can't lose, you will be almost certain to win (Buffet's principle).

You see, I don't like to chase after a hen, I would rather pick 20 eggs.

felicity said...

Nice quotes from you, Sunny :)

felicity said...

PBB is a great bank - very well managed, great reach, great employees. Only thing now is that their exposure to the consumer market - a bit too high. But that made them money all these while though

jack-max said...

Sifu, I used to have power root. A few days ago price went very high and I sold all of my shares. One year ago I bought pwroot because it give great dividend and P/E 4x. Now it was 12x and pay lower dividend. I was afraid. Am I making the right decision? bought 0.49; sold 0.58.

Master said...


A homegrown developer. Very decent growth over the past decade. Uninterrupted past 10 year dividend payout. Relatively low gearing. The soon-to-be-completed Gurney Paragon Mall (700k sq ft NLA) will generate very handsome recurrent income to the company. They also already have the next multi-billion project in the pipeline. Everything is well except for its share price and rather low trading volume.

felicity said...

Where is Gurney Paragon Mall - sure at Gurney drive but next to Gurney PLaza?
When is the completion expected?
Penang is one good place for higher end development.

cykoay said...

MNRB is good reinsurance company which is traded currently below its retained earning per share

Bn911 said...

Cypark got potential in my opinion.

Synology said...

Perhaps HS Plantation?

Net Cash position, strong operational CF, professional management, dividend track record.

True though - oversea stock is much more interesting However, currency risk involved with switching to USD or SGD involve another dimension in the asset diversification.

With the fiscal cliff looming, just sitting tight waiting for another round of panic.

Sunny said...

Most of the stocks I am holding now, their prices have shifted from attractive to fair. I must agree that they are more expensive than before and value pick is generally challenging now. However, some of the stocks may become attractive as the they gain value over time if the prices remain stagnant due to the dim market outlook. Scatter the seeds of a few stocks at fair prices, and some of them may blossom and reward you with moderate overall return.

Unknown said...

CCK profit up 14.5% y-o-y. Aggressive expansion. Every time I buy BBQ chicken wing I remind myself to hold the stock. Unfortunately there is no pig farm listed, it must be more exiting to invest!

LochNESS said...

What is your take on the recent bleeding on Parkson and would you recommend a 'buy' at this juncture for a long term investor ?

LochNESS said...

What is your take on the recent bleeding on Parkson and would you recommend a 'buy' for long-term investors ?

felicity said...

I do think Parkson is a good stock, just that it is more of a regional stock than Malaysia. Recently, it is expanding into Indonesia. I do see Parkson as a decent Malaysian based stock for the long run.