Low P/E signifies that the market expects future profits to FALL. Sometimes the market is wrong, but usually it is correct. There's always a reason for low/high P/E ratios.
Anyways, here's a fresh report from Maybank. Downgraded the TP. Lowers profit for 2017 and 2018.
I do believe Tambun is a great company, best ROE of all developers in Malaysia. However, it is suffering like every other company, and will buy in once signs of the property market actually having bottomed out start to show (or if Tambun sells at unnecessarily low valuations, like 0.8X P/BV.
I happen to be reading Seth Klarman's "Margin of Safety". He's a legendary investor.
This is what he says of PE ratios:
One simplistic, backward-looking formula employed by some investors is to buy stocks with low P/E ratios. The idea is that by paying a low multiple of earnings, an investor is buying an out-of-favor bargain. In reality investors who follow such a fomula are essentially driving by looking only in the rear-view mirror. Stocks with a low P/E ratio are often depressed because the market price has already discounted the prospect of a sharp in earnings. Investors who buy such stocks may soon find that the P/E ratio has risen because earnings have declined.
KUALA LUMPUR: Maybank Investment Research has maintained its “Hold” call and earnings forecast on Tanbun Indah Land Bhd (TILB) but lowered its RNAV-TP to RM1.39 on a lower P/RNAV peg of 0.45x from 0.5x.
“TILB has been focusing on clearing its unsold units under construction thus far. It also intends to sell the Bumiputra lots released under the Raintree Park 1 & 2. This should lead to better take up rates in Raintree Park 1 & 2 (from the current 61% to 89% take-up rates) as sales should pick up in the coming quarters, we believe. The company has locked in RM36.2mil sales in 1Q2017, or 20% of its 2017 sales target.
“Management is confident of achieving its sales target of MYR180m for 2017 supported by RM171mil worth of new property launches and RM249.8mil worth of unsold stocks as at end March 2017.
“Thus far, it has launched two new projects worth RM122.7m in GDV in 1H2017. Elsewhere, Straits Garden commercial lots are >90% leased; however, investment properties’ contribution remains insignificant to TILB (<10%).”
Maybank Research expects TILB's net profit to decline 29% in 2017 and 44% in 2018 due to slower property sales in the last two years.
“We maintain our earnings forecasts but trim our TP to MYR1.39, which is based on a lower 0.45x P/RNAV in view of rising unsold stocks and stiffer competition in both the Penang island and mainland. The stock is backed by 5.5% net yield (2017). TILB has been paying out 40-50% of its net profit as dividend since 2010,” it says.
iPhone7, i having same feel with you. I miss Padini boat in 2015, sold it too early because of the GST implementation. And Tambun now also similar to Huayang in 2012.
Unlikely better Q2, dwindling unbilled sales + lack of launches...eventually the revenue/profit has to dry up right? Management also is smart, push back new major launches into 2018/2019. Present shareholders may have to suffer (but get decent dividends in the interim)...but prospective shareholders can afford to watch from the sidelines and come in when the stock is even more depressed than it is now.
I think no harm, soon we go to RM1.15, then RM1.08, then RM1.05....at some point I will buy, but not yet, and not today.
I assume annual current year EPS will drop to 15cents, so with dividend policy of 40%, then should be 6cents of dividend. At current price 1.20-1.25 will have div yield of 4.5-5.0%.... buy slowly now no need to worry so much.
Please do not buy at RM1.16. Wait for it to be violated. I do not follow TA, but if you want to use TA, bet AGAINST it. The lower you buy, the higher your future returns.
I love Tambun. What a great balance sheet and ROE. But there is no need to rush.
PS: Actually you can start buying Tambun now, on the condition you save your bullets and buy every 10% it falls to average down, and NEVER sell.
okay i just checked, it's debited directly to investment account on 14/8. check your investment account monthly statement. last time it's always debited to my saving account. :S
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Alex Foo
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Posted by Alex Foo > 2017-08-03 20:36 | Report Abuse
when dividend masuk ah?