34% growth rate is unrealistic..At current price, ppl are actually buying it for future earnings. risky and not under valued. btw, good article *thumbs up*
Discount rate using published Bank Negara interest rate is too low. Try compare a plate of chicken rice now compared to one year ago. 3% increase? Immpossible
Exactly. Through this example, I wanted to point out that even with such unrealistically optimistic discount rate and company growth rate, the company still seem overvalued, hence the actual value would be much much lower. On top of that I'm not aware of any other factors that could elevate it's estimate value to that extend.
The DCF Calculation is wrong. You should also include terminal value in the model. In your case, you are assuming the company stop operating at the end of Year-10. You can read about how to caluclate DC on this: http://www.investopedia.com/university/dcf/dcf4.asp
My humble opinion as a Karex shareholder. You need to understand the purpose of growth stock against traditional stable stocks. Growth for the stock is exponential and if you personally look at the output, eventually you will realize that most shareholders are investing on the future growth of the stock. KAREX is a growth stock. Besides it being a growth stock, I am currently getting 2.5 cents yearly. (not counting bonus issues and the growth of the share price)
Thanks for the comment lulhunter. I might be wrong, my concern would be that when it is trading at a price so high leveled up due to optimism on its business nature, I afraid that it might approach/exceed its future value. Anyway it is just my opinion as I have no correct estimation on its future growth and insights in this industry.
once Karek got a karat-quarter, the price will drop like waterfall... I believe yuawei didn't mean to tell Karek was bad, just that to invest Karek at current price might be a bad idea.(which i share exact the same idea though i didn't understand very well your calculation) if with regard to "cold eyes" formation, PE more than 20 is not something he will pursue, a fair PE for growth will be <<20. Personally, when i do stock screening, PE >20 will definitely out from my selection...
for those who think that "growth stocks reserve higher PE(in this case, i meant to say >>20), please try to look at https://sg.finance.yahoo.com/q?s=AAPL
hissyu2 is right about karat-quarter. That's why no one can time the market (or they are billionaires) At such high P/E ratio, Karex is definitely not the best stock to invest in NOW, but it is a good stock to keep when you bought it low, let's say during IPO price.
Mind you if you bought 1000 shares at RM 1850 during IPO: RM 1.85, the share you have now is 2250 after 2 rounds of bonus issue at the price of RM 3.30 which is worth RM 7425 adding RM 37.50 dividend making it worth RM 7462.50 as of today within 2 short years. Another thing to note is that their production capacity is increasing as they continue to setup their factories and acquisition.
Is it overvalued? Yes. Is it not worth investing? Definitely not.
Just accept the truth laa.. all the glove counters now are very overpriced.. will drop hard when the roof is finally hit and when the main players decided to take profit. You dare to hop into the boats now.. just to make a few lucky bucks? Wish you best of luck..
lulhunter, yes.. karex is worth to invest if you entered this counter few years ago :) For a company which continues to grow and does have the prospective(good future), we should hold for long(continuous growing, dividend ++, good cash flow, manageable debt, clean account)
but if you were to ask me to buy karex at current price for "investment"? i rest my case...:)
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
AyamTua
13,598 posts
Posted by AyamTua > 2015-10-01 22:33 | Report Abuse
there are karek...
there are sumatek ..
there are glotec...
tetetekkkkkk kikikiiii