Remember the LORD for it is he who gives you the ability to produce wealth and so confirms his covenant... Deut. 8:18

Friday, January 8, 2010

Which Rubber Stock Has Best Value - Part 2

Here are the details to my analysis of the rubber stocks best value: Hope this helps in your stock picking.
Ratio Rv = today opening price/fair price

1. Supermax ( Qtrly eps 12.6 sen, fair value RM5.07***). Rv = RM5.39/fair value = 1.06
2. Top Glove (Qtrly eps 21.0 sen, fair value RM7.90). Rv = RM10.40/fair value = 1.32
3a. Latexx (Qtrly eps 6.3, fair value RM2.52). Rv = RM3.40/fair value = 1.35
3b. Harta (Qtrly eps 12.3, fair value RM4.96). Rv = RM6.70/fair value = 1.35
4. Kossan (Qtrly eps 8.7, fair value RM 3.48). Rv = RM5.93/fair value = 1.70
5. Adventa (Qtrly eps 4 sen, fair value 1.60). Rv = RM3.50/fair value = 2.19

Oooops... I din't grabbed the best valued rubber stocks.. Well then, it's time to add Supermax....
Sorry I didn't include IRCB (loss making?) and Rubberex (industrial/household gloves) in my analysis. Rubberex (latest eps 6.8 sen) may follow the path of Adventa (both were at the initial RM1.80 range prior to making their big moves). Oh btw, Adventa will declare dividend (4 sen.???) soon..

*** Psst...
How I assume my fair value is interestingly simple.
Assume annualised PER (price/earnings) = 10 , then quaterly PER (price/quarterly earning) = 40, meaning quaterly PER = 40 sen/ 1 sen.
So I'm willing to pay 40 sen on the price of a stock when it can earn 1 sen per quarter or 4 sen per year. Make sense...?

Take GenM (Resort) as an example
Latest Quaterly eps is 7 sen, so I'm willing to pay 40 x 7 sen = RM2.80 as fair price..
I'll accumulate more of GenM at below RM2.80 for now

3 comments:

David Ng said...

Personally I own some rubbers (Supermx & Kossan) and I like the way you analyze them based on "best value". Just sharing why I took Kossan instead.

Yes, I have kossan and my data shows me that latest quater earnings is 9.61. Bad news from Kossan was because of their forex losses and 2 fire incidents. That probably put off a lot of people.

Kosan's forex loss for the last quarter was Rm 11.271 million or about 7 cents per share. Management says this is the last quater for the forex lost.

I then exclude this forex lost from their last quarter earnings... then their earning should be more than 16 cents per share .

CIMB report also indicates that the foreign funds are not at the top level.

Then using back your calculation
0.16 * 4 * 10
$ans = 6.400000
Last trade 5.90
5.90 / 6.40 = 0.92 (even less than Supermx)

The other company that mentioned with forex loss was Adventa with a loss of Rm 2.4 million or 1.6 cents PS. USing the same formula...
(3.720 + 1.6) * 4 * 10 = 212.80
Last trade 3.69
3.690 / 2.1280
$ans = 1.734023

I am for long term and have entered into Kossan. Short term traders will find it difficult to trade Kossan because of low volume.Hopefully it will not dissapoint.

David Ng said...

On second reading, Kossan's Management say 4QFY09 will be their last forex loss. They are in 4QFY09 now.

Remnant 613 said...

It's rather unfortunate that Kossan's quarterly eps suffers from a recent forex loss and fire mishap.
Otherwise, Kossan may have risen to RM8.30 range, medium term (within 2010).

It was prudent of you to add/hold Kossan to your portfolio on the prospect of improving quarterly EPS.
I know we'll be well rewarded coz I'm buying into it too....!
Thamk you very much.