Read RHB's target price with earning growth of 30% FYE14 and 40% FYE15. Let's calculate the intrinsic value using Benjamin formula IV= (8.5 + 2(growth rate)) x EPS, let us use 15% growth, half of what RHB's forecast. IV = (8.5 + 30) x 0.13 = RM5.00 x 35% = RM1.75 [please note that there is a lot of limitation to this formula, because it assume long term growth 5-10yrs, ignore risk free interest, liquidity]. So, the purchase cost should be below RM1.75 in order to have a big margin of safety.
The intrinsic value is RM5.00 (on assumption it has a sustainable CAGR of PAT for next 10 years of 15%). At 15% growth, it means its earnings will double every 5 years. At RM1.75, it is only 35% of IV, I believe there is sufficient Margin of Safety, I have used less than half the growth rate. As for the target price, each investor will have their own target.
sosfinance, it means still worth a bet even at this price now, rite? Intrinsic V is Rm5.00 is sufficient safety. This one runs as if a cheetah is chasing it
I believe it is sufficient. Just assumed the EPS doubled in 5 years, the EPS will be 26sen. (I used RHB's report EPS of 13sen, based on the financials in i3investor, it is 16sen FYE2013). At price of RM1.75, we are looking at PE of 6.5x in year FYE2018 (RHB forecast it achieves it in FYE2015) Assume it is traded at perspective PE of 12 times, then the share price will be roughly RM3.00. The formula is not perfect, but it is easy enough for layman investors to understand and useful, and always, put a lot of discount to it. This stock has some similarity with Mudajaya, high growth. Half the growth used by analysts, calculate the IV. Then you will see, Mudajaya, have similar characteristics.
mk88, nope. DCF is applicable more to concessionaire like toll roads, IPPs or water concessions, where it has 15 to 30 years of projected cash flows more predictable.
There are limitations in using Benjamin's IV method as well. For layman investor, it is sufficient, provided we use very conservative figures, at least we know the entry point (a sharp discount of IV) and exit point, can be 60% to 70% of actual IV. The whole idea of this formula, we have a reference point for entry and exit. There is no full prove formula out there, as long as you think and act like a businessman, invest rationally, I believe, in the long run, you will be doing better than the CI. Of course, we have to revisit the assumptions made on and off based on new data or information, to see if we are on or off course. Just like any businessman, they do not look at the share price everyday, they focus on the productivity, efficiency and competence in their business.
Of course, some shares are cornered by the major shareholders, then, there is no way any formula can help to determine the reasonable price.
don't rush, this ctr can experience sell down as it has run low for very long time already, until rhb give it a "push" recently. plenty of ppl waiting to sell now. anyway, yr $ yr choice!
More and more analysts are covering this stocks. K&N, and others. Another positive for the share prices. I know one fund management house recommended this stock for medium term.
Cos protasco is better than yinson in every aspect yet its so much cheaper than yinson. Higher revenue, higher profit, higher dividends. Also in multi industry.
Aiyo....why this ctr move so much ha?......anyone notice the new shareholder cum director background?.......check his background then you will know lor......no need to guess his intention lor......ha ha ha
Aiyo ....ho is Teh Por Yee...new director cum I think 2nd largest shareholder....he is founder of another public listed company...young (age 30+ only if not wrong) and I think handsome person also lor.....also a venture capitalist....what you think this young chap buying into this company.....play play ha.....stepping stone to become richer lor......what Venture Capitalist doing ......guess yrself lor...........ha ha ha
Then Protasco has 3 things positives attributes, one, its fundamental (growth from property development), two, technical analyst said Protasco & Yee Lee is moving upward, and third, a venture capitalist company. So, not bad if the company grow from PE of 9x to 18x, supported by chartist and venture capitalist. If not, this counter will be flat, giving about DY 10%. We have to see if the property development really turn into earning growth. If they allocate their resources better, i.e. the additional cash can attain an ROE of 15-20%, well, it would be a growth company in the making.
Aiyo sos......good wor....added new item into the list.....ha ha ha
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Posted by spec9888 > 2014-03-18 16:17 | Report Abuse
If up like yinson, sure we all become kaya raya. Wakakaka