How to analyze real estate developers

Real estate stocks make up a significant number of companies in Asian stock exchanges and many of them are among the the most volatile stocks. Whether the real estate developer is listed or not, they are influenced by a host of cyclical factors ranging from government policies, interest rates, unemployment rates, affordability, etc. Hence, it is important to understand how real estate companies can be analyzed.

What factors drive the housing prices?

Among the factors are:
1. A dropping interest rate
2. Increasing liquidity in the banking system
3. A growing economy

All the above factors drive the demand for residential and other real estate. This causes the prices of these real estate properties to rise.

Property prices in Malaysia
Are they rising or have real estate prices softened in the Klang Valley?
Are property transactions rising or dropping compared to the previous years?


Asking the right questions

Will property prices in the Klang Valley soften?
Will interest rates rise and adversely affect the demand from the end-users or end-buyers?
Is there a rise in the inventory of unsold property in the real estate sector?
Are builders able to meet their loan repayment liability as well as complete their already started projects?
Are builders turning prudent through cutting prices to sell their units and to generate cash?

Property counters: How are shareholders rewarded? How exciting are property counters in terms of investment returns?


Property counters
1. Land held for development.
2. Land being developed and properties for sale.
3. Investment properties held for rental income.

How are shareholders rewarded?
1. After successful development and realisation of profits from the projects, the property counter may choose to reward the shareholders by paying half their earnings as dividends.
2. The investment income from properties held as investment can also be partially disbursed as dividends.

[How exciting are property counters in terms of investment returns?]

Is it not true, that the really big fortunes from common stocks have been garnered by those
who made a substantial commitment in the early years of a company in whose future they had great confidence and
who held their original shares unwaveringly while they increased 10-fold or 100-fold or more in value?

The answer is "Yes."

Selling is often a harder decision than buying

"If you have bought a good quality stock at bargain or reasonable price, you can often hold forever."

Investing is fun. For every rule, there is always an exception.

The main reasons for selling a stock are:

1. When the fundamental has deteriorated permanently, (Sell urgently)
2. When it is overpriced, whereby the upside gain will be unlikely or very small and the downside loss will be big or certain.

We shall examine reason No. 2 through the property market. The property market is also cyclical. There were periods of booms and dooms.


If you have a good piece of property that is always 100% tenanted and which gives you good consistent return (let's say 2x or 3x risk free FD rates), would you not hold this property forever? The answer is probably yes.

Then, when would you sell this property?

Note that the valuation of property, as with stocks, is both objective and subjective.

Would you sell when someone offered to buy at 500% above your perceived market price? Probably yes, as this is obviously overpriced. You could cash out and probably easily re-employ the money to earn better returns in another property (or properties) or other assets.

Would you sell when someone offered to buy at 50% above your perceived market price? Maybe yes or maybe no. You can offer your many reasons. However, all these will be based on the perceived future returns you can hope to get from this property in the future. This is both objective based on past returns obtained and subjective and speculative on future returns.

However, unlike reason No.1 when you would need to sell urgently to another buyer to prevent sustaining a permanent loss, you need not sell just because someone offered to buy the property at high price. (However, there are also those who "flip properties" for their earnings; they will sell quickly for a quick profit.) You will not suffer a loss but only a diminished return at worse. You can take your time to work out the mathematics. You maybe surprised that you may still achieve a return higher at a time in the near future by rejecting the present immediate gain based on the present high price offered. Also, you would need to price in the lost opportunity cost when the property is sold at this price, even though it is 50% above the perceived normal market price. Could you buy a similar quality property with the same sustainable increasing income or return by offering the same price?

Similarly, the same line of thinking can be applied to your selling of shares. When should you sell your shares? Yes, definitely when the fundamentals have deteoriorated permanently. The business has suffered for various reasons and going forward, the earnings will be permanently impaired and deteriorating. Yes, when the price is very very overpriced. However, you need not sell your shares in good quality companies that you bought at fair or bargain price. As long as the fundamentals are strong and the business is adding value, selling now at a higher price may mean losing the return that you could have obtained in the future years from owning this stock and the opportunity cost of reinvesting the cash into another stock of similar quality and returns. Once again, the importance of sound reasoning and doing the mathematics in making a decision whether to sell or not.

Additional notes: Other reasons for selling a stock (or property) are:
To raise cash to reinvest into another asset with better return.
A certain stock (or property sector) may be over-represented in your portfolio due to recent rapid price rises and you need to reduce its weightage to reduce your risk of over-exposure in this single stock (or property sector).
Footnote: This is a true story. A rich man was approached by a buyer to sell his property. A few neighbouring lots were sold for $1.6 m the last 2 years. What offer will ensure that you sell your property to me? Please let me know. The unwilling owner replied, "$5 million". There is a lesson here too.

Depreciation and amortisation is an expense for a business. By depreciating and amortisation an asset slower or faster, earnings can be boosted or shrunk accordingly. Therefore, when comparing the earnings of 2 companies in a same sector, understanding the differences in the depreciation and amortisation policies is valuable too.

Quality of earnings. How much of the reported earnings translated into cash flow from operation or free cash flow? The more cash generated from earnings, the higher the quality of these earnings. Higher earnings that translated into more account receivables or higher working capital, less or negative cash and more borrowings, huge capital expenditures are less favourable compared to those that generated a lot of operating cash flows and free cash flows. Those companies with huge free cash flows (high quality earnings) are most desired. The strong free cash flows, also known as the "owner's earnings", can be used to pay down debt, to grow the company organically or through acquisition, to be distributed as dividends or to buy back company's own shares.

Sudden increase in earnings in a company need to be analysed and studied. Are these from increasing sales of products or services of the company? Growing revenues and profits in this manner is good, indicating strong organic growth. Some companies reported increasing earnings through frequent acquisitions. At times, growth through acquisitions did not work out for various reasons (paying too high a price, a poor quality business was acquired, cultural integration was difficult, incurring too much borrowings, etc), harming the overall profitability of the company, at times permanently. (An example of this was KNM in its formative years, its acquisition of Borsig and the subsequent change in the business environment in its sector).

Very high earnings during times of extremely favourable business environment (eg glove companies during the pandemic) are not sustainable or temporary and often, a low PE is appropriate. Also, a one off sale of an asset leads to high reported earnings for a year or two and the low PE is appropriate, as such earnings are non-recurrent and forecasted future earnings and projected future PE should be adjusted accordingly. Observation over many years has taught us that the chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions (quoting Benjamin Graham).

Summary:

For the above reasons, EPS can be unreliable and you should not rely on PE alone.

Once again, PE has may pitfalls that can give investors a misleading view of how cheap or expensive some shares really are.

The PE ratio's drawbacks are all to do with the "E" or EPS, part of the calculation


1. EPS is easy to manipulate.

Companies can boost EPS by changing accounting policies.

For example, they can extend the useful lives of fixed assets such as plant and machinery, which lowers the depreciation expense and boosts profits.

2. EPS says nothing about the quality of profits.

It doesn't take into account whether profits have changed due to sales of existing products or services - the best source of profits growth - or whether the company has invested heavily in new assets or bought another company (acquisition).

Share buybacks boost EPS by shrinking the number of shares outstanding, even if profits are static or shrinking. Buyback can be done when the shares are expensive. By paying too much, a large chunk of shareholder value is destroyed; the cash spent is wasted.

3. EPS may not resemble true cash profits.

Quite often a company's true cash profits are significantly more or less than its EPS (more often less).

4. EPS may be based on profits that are unsustainably high or temporarily low.

This means that the PE ratio could be misleadingly low or high.

This is a particular problem for cyclical companies.

Don't use the PE ratio

The price to earnings ratio (PE) s the most commonly used valuation yardstick by investors.

It is very easy to calculate.

PE ratio = share price / earnings per share (EPS)


In simple terms, shares with high PE ratios are seen as being expensive whilst those with low ones are seen as being cheaper.

Despite its simplicity, PE ratio has many pitfalls that can give investors a misleading view of how cheap or expensive some share really are.

KSL latest traded share price was Rm 1.53. It is selling at the cheapest price in terms of PE ratio.

Don't use the PE ratio in isolation.

A stock is at a low PE for a reason.

Don't use the PE ratio

The price to earnings ratio (PE) s the most commonly used valuation yardstick by investors.

It is very easy to calculate.

PE ratio = share price / earnings per share (EPS)


In simple terms, shares with high PE ratios are seen as being expensive whilst those with low ones are seen as being cheaper.

Despite its simplicity, PE ratio has many pitfalls that can give investors a misleading view of how cheap or expensive some share really are.

The PE ratio's drawbacks are all to do with the "E" or EPS, part of the calculation


1. EPS is easy to manipulate.

Companies can boost EPS by changing accounting policies.

For example, they can extend the useful lives of fixed assets such as plant and machinery, which lowers the depreciation expense and boosts profits.

2. EPS says nothing about the quality of profits.

It doesn't take into account whether profits have changed due to sales of existing products or services - the best source of profits growth - or whether the company has invested heavily in new assets or bought another company (acquisition).

Share buybacks boost EPS by shrinking the number of shares outstanding, even if profits are static or shrinking. Buyback can be done when the shares are expensive. By paying too much, a large chunk of shareholder value is destroyed; the cash spent is wasted.

3. EPS may not resemble true cash profits.

Quite often a company's true cash profits are significantly more or less than its EPS (more often less).

4. EPS may be based on profits that are unsustainably high or temporarily low.

This means that the PE ratio could be misleadingly low or high.

This is a particular problem for cyclical companies.



Summary:

For the above reasons, EPS can be unreliable and you should not rely on PE alone.

Once again, PE has may pitfalls that can give investors a misleading view of how cheap or expensive some shares really are.

Behavioural Finance: We are hardwired to be lousy investors.

1. We are hardwired from birth to be lousy investors.

Our survival instincts make us fear loss much more than we enjoy gain. We run from danger first and ask questions later. We panic out of our investments when things look bleakest - we are just trying to survive! We have a herd mentality that makes us feel more comfortable staying with the pack. So buying high when everyone else is buying and selling low when everyone else is selling comes quite naturally - it just makes us feel better!

We use our primitive instincts to make quick decisions based on limited data and we weight most heavily what has just happened. We run from managers who performed poorly most recently and into the arms of last year's winners - that just seems like the right thing to do! We all think we are above average! We consistently overestimate our ability to pick good stocks or to find above-average managers. It is also this outsized ego that likely gives us the confidence to keep trading too much. We keep making the same investing mistakes over and over - we just figure this time we will get it right!

We are busy surviving, herding, fixating on what just happened and being overconfident! Maybe it helps explain why Mr. Market acts crazy at times.



2. So, how do we deal with all these primitive emotions and lousy investing instincts?

The answer is really quite simple: we don't!

Let's admit that we will probably keep making the same investing mistakes no matter how many books on behavioural investing we read.

NAV 3.80
Price 2.81
P/NAV = 0.74

>>>
Posted by Sslee > 7 hours ago | Report Abuse

I leave SAB in year 2001 and former CEO the late Dato' Loh pass away with resulting family members fighting among each other. Since then no new projects was implemented. SAB is now living on what the late Dato' Loh had built.

I had my highest respect and profound memories of SAB founder the late Dato' Loh. So out of this respect I will not comment on internal affair of SAB.
>>>

The late Dato Low Mong Hua

SSLee rightly pointed out the huge loans advanced to its customers and the AR. The company has to impair a lot of the AR.

Not so easy to value this business today. Too difficult a task.

SSLee

Please have a look at SAB, your previous employer in your early part of your long career. :-)
The company's financial accounts are easier to read and comprehend.
They retained so much cash and still paid the same small amount of dividends.
Imagine, if you can play activist to t his stock, it might be worth a lot more today, price wise.
Just tickling.😀

Most important is to focus on its growth in UHP and its recurrent revenues in this segment.

Fast growing company.
Most of the directors had worked in MOX ( a company I used to own, until it was taken private .. depriving Bursa of another great company).
Though it is in a competitive business, due to increase in demand for its UHP segment products, its revenues and profits grew rapidly.
Its balance sheet appears strong. Due to its many fold increase in revenue, its AR too grew accordingly. Its borrowing increased last year due to expansion of its business, the borrowings are mainly short term borrowings. Its long term debt remains low.
The management continues to reward the shareholders with dividends, through it retain most of its earnings for maintainance and future growth capex.

Why are we getting so many promotions on plantation stocks for so many months?

How good are these articles from an investment information point of view?

The impression I get is the promoter may think that flooding the forum through his many posts is important for HIM.

Actually, the stocks do not know who own them.

In the long run, the stock market is a weighing machine (quoting Benjamin Graham), though in the short run, it may behave like a voting machine.

Perhaps, the promoter of plantation need reduce his posts to 1% of his present and provide a more intense, objective and balanced analysis.

At present, there are just too much noise, drowing perhaps, the little bit of useful information available in his articles.

Regards

Tunnel vision investor. :-)

Plantation Sector

Milling & Cultivation

We remain cautious on the outlook for Milling and Cultivation. CPO prices have
stabilised around RM3,780/MT currently, compared to the peak of approximately
RM6,500 – RM7,500/MT in 2022.

Looking forward, CPO prices may remain rangebound, impacted by factors such as
production output, the impact of weather conditions, government policies of exporting
countries and global demand, which is highly dependent on economic conditions.

Plantation Sector

Milling & Cultivation

We remain cautious on the outlook for Milling and Cultivation. CPO prices have
stabilised around RM3,780/MT currently, compared to the peak of approximately
RM6,500 – RM7,500/MT in 2022.

Looking forward, CPO prices may remain rangebound, impacted by factors such as
production output, the impact of weather conditions, government policies of exporting
countries and global demand, which is highly dependent on economic conditions.

Plantation Sector

Milling & Cultivation

We remain cautious on the outlook for Milling and Cultivation. CPO prices have
stabilised around RM3,780/MT currently, compared to the peak of approximately
RM6,500 – RM7,500/MT in 2022.

Looking forward, CPO prices may remain rangebound, impacted by factors such as
production output, the impact of weather conditions, government policies of exporting
countries and global demand, which is highly dependent on economic conditions.

VALUE OF AN ASSET

From The Essays of Warren Buffett: “In Theory of Investment Value, written over 50 years ago, John Burr Williams set forth the equation for value, which we condense here: The value of any stock, bond or business today is determined by the cash inflows and outflows—discounted at an appropriate interest rate—that can be expected to occur during the lifetime of the asset.”

My fair value for Inari is RM 1.60 per share!

SCIENTX MR LIM PENG JIN 19-Feb-2024 Acquired 130,000

HLB, PBB and MAYBANK

All announced better quarter results and have declared slight increase in dividends.

calvintaneng likes TSH to trade at a premium and at a multiple to its book value.

But, it is still trading at a discount to its book value. Why is the market valuing TSH thus?

Is it that calvintaneng is right and that the market is wrong?

But then, when has calvintaneng admitted he got it so wrong in NETX and his promoted 10 stocks that were the most undervalued a few years ago.

😀🤣

Nestle and DLady are stocks I have in my portfolio since 1993!

Outlook
Moving forward, we expect Nestlé to improve it GP margin back to prepandemic levels (around 34% whereas latest GP margin in 4QFY24 stood at 32.1%) attribute to the easing in raw materials price and effective cost measures.

Valuation
Upgrade to Hold with unchanged target price of RM132.60/share based on DDM valuation (k: 6.4%; g: 3.0%) due to the recent weakening in share price.

Source: TA Research - 28 Feb 2024

P/NAPS = 0.97x

27-Feb-2024
Qtr ending 31-Dec-2023
Rev 358,885
PBT 79,865
NP 66,684
NPM 18.58%
ROE 2.70%
EPS 0.81
DPS 0.25
NAPS 0.30


Forecast EPS for next 4 qtrs:
0.81 sen x 4 = 3.24 sen

At 29 sen per share, P/E = 9.9x and P?NAPS = 0.97x,

Writers find it useful to picture the reader they seek, and often they are hoping to attract a mass audience. At Berkshire, we have a more limited target: investors who trust Berkshire with their savings without any expectation of resale (resembling in attitude people who save in order to buy a farm or rental property rather than people who prefer using their excess funds to purchase lottery tickets or "hot" stocks).

Over the years, Berkshire has attracted an unusual number of such "lifetime" shareholders and their heirs. We cherish their presence and believe they are entitled to hear every year both the good and bad news, delivered directly from their CEO and not from an investor-relations officer or communications consultant forever serving up optimism and syrupy mush.


Berkshire Hathaway Inc. 2023 Shareholder Letter

28.2.2024

TONGHER Financial Information

Revenue (TTM) ... Net Profit (TTM) ... Net Margin (TTM)
598.03M ... 6.42M ... 1.10%

EPS (TTM) ... P/E Ratio ...ROE
4.08 ... 58.58 ... 1.13%

P/B Ratio ... NTA
0.66 ... 3.61

5y CAGR - Revenue .... 5y CAGR - Profit
2.50% .... -

Dividend (cent) .... Dividend Yield ....PRICE
20.000 ^ .... 8.37% .... 2.39

Tongher is well managed and profitable. It delivers dividends regularly and due to its low share prices (most of the time), the dividend yields are quite high (6% - 8%).

It is a cyclical stock. Those who bought this stock when its price was at a cyclical low should enjoy very good reward. This coincides with period when the EPS is low, the PE is obviously high and DY is high, compared to its historical trends. Those who bought when the price was at its cyclical high would have great difficulty recovering their losses or will take a long term to break even, even with the regular dividends received.

2022-04-07 17:47


The above was what I posted 2 years ago. The statement remains true. Keep it simple. Keep it safe.

Performance of Current Year Against the Financial Year Ended 31 December 2022 (“corresponding period”) (cont'd.)

Analysis of segmental performance against the corresponding year are as follows:

Drilling Services Segment
Drilling Services segment recorded RM316.4 million increase in revenue to RM799.5 million in the current year, mainly due to higher jack-up rig utilisation of 83% (corresponding year: 62%) and higher average daily charter rates of USD94k/day (corresponding year: USD77k/day).

The segment registered a profit before tax of RM159.8 million compared to a loss before tax of RM26.1 million in the corresponding year, in line with higher revenue.

Integrated Project Management
The Integrated Project Management segment recorded higher revenue of RM401.8 million in the current year as compared to RM86.7 million in the corresponding year, mainly due to higher utilisation of hydraulic workover units and progress of i-RDC project.

The segment recorded a profit before tax of RM22.5 million compared to a loss before tax of RM16.0 million in the corresponding year, in line with higher revenue.

Oilfield Services Segment
The Oilfield Services segment recorded higher revenue of RM12.0 million in the current year as compared to RM10.1 million in the corresponding year, mainly due to higher activities from operation in Tianjin.

The segment recorded profit before tax of RM3.0 million in the current year with marginal increase against corresponding year.

Others Segment (include corporate expenses)
Others segment which include corporate expenses recorded higher loss before tax of RM64.0 million in the current year against RM42.4 million loss in the corresponding year mainly due to higher IT related expenses, depreciation charge and other corporate costs.

Current Prospect
Drilling Services Segment
Integrated Project Management Segment
Oilfield Services Segment Group

The positive outlook in the global oil and gas industry augurs well for the Group's financial performance. Barring any unforeseen circumstances, the Group is optimistic that the financial performance for the financial year 2024 will be as promising as 2023. The group’s utilisation is expected to remain high in 2024, with some rigs contracted up to 2026.
Geopolitical risk that may result in uncertainty to oil supply and markets remains high. The oil and gas outlook fundamentals remain strong. The benchmark Brent oil price has remained around USD80 per barrel in recent months due to both improving economic prospects as well as lower inflation.
Currently, all six of the Group's jack-up drilling rigs are contracted. The Group is actively bidding for new tenders for local and international contracts scheduled to be performed in 2025 and beyond.
The i-RDC project is progressing and GAIT 6 is currently contracted with ExxonMobil. The Group is participating in tendering activities for 2024 and 2025.
Global competition for assets such as jack-up rigs remain heightened. Jack-up marketed utilisation in Southeast Asia and Malaysia remained at 100% and charter rates for the latest fixtures continues to be on an uptrend.
The improved industry outlook is expected to support stable performance of the oilfield services operation in China. Nevertheless, global and regional upstream oil and gas activities including in Southeast Asia continue its upward trend, with more exploration and development projects being evaluated, re-visited and sanctioned.
Major oil producers continue to increase their CAPEX in response to prolonged lack of investment in the past. In Southeast Asia, particularly Malaysia, a number of new contracts have been awarded with more being tendered out.
The International Monetary Fund ("IMF") increased its projected global Gross Domestic Product ("GDP") growth rate for 2024 from 2.9% to 3.1%. U.S. Energy Information Administration ("EIA") is forecasting for global oil demand to increase by 1.4 million barrels per day to 102.4 million barrels per day in 2024.
On the supply side, OPEC+ and Saudi Arabia have increased their production cuts, offset by increasing supply from non-OPEC countries. As such, inventory changes and oil markets are expected to remain balanced.

Dividend declared. Turnaround stock.

Between Mah Sing and Scientex, I vote for the latter.

Y-o-Y.

Revenue increased 7.7%.
Operating profit incread 77%.

Due to softening of dairy product cost.

Generated about 200 m net operating cash flow.

Cape was about 180 m.

New manufacturing facility will be opened in 2024.

😀

Mr. XYZ owns a company that has plantations (planted and not planted), and other assets. In the early years, due to growth and expansion, the company borrowed and has sizeable debts. In fact, the total debt = total equity. The company generated consistent ROE of 5%. Its interest payments yearly was a certain amount.

It was then decided at the BOD that the company should pare down its debts. To do so, it will sell off a portion of the plantation (some unplanted and some unplanted). Doing so will realise a certain gain as these assets were acquired sometime ago and are now more valuable.

They sold off this asset and the cash was duly put to settle all the debts or a significant of their debts. This saved the company on the interest payments. Also, the company lost the income of the planted plantations which were sold. The company also plans to use some of the raised cash for capex involved in planting the raw plantation lands. At the same time, it too gave a portion of the cash to the shareholders who had been patiently waiting for some dividends for many years, though they did receive very meagre dividends almost every year.

Now, how do you value this company before and after the sale of some of the planted and unplanted plantations?
Will its revenues be higher, the same or lower, going forward? Will its earnings be higher, the same or lower, going forward? The latest "windfall" dividend, will this be sustainable or will it revert back to its meagre previous dividends? Will the company suddenly transform into a great company because it sold off some plantations, paid off its debts and raised some cash? Will its ROE changed significantly: for the better, the same or for the worse?

How do you price this company before and after the sale of some of its plantations?

Of course, Mr. XYZ realises the value of its land base. Should you project your value based on its future land value or based on its present ROE?

>>>
CynicalCyan

High dividend yield is not the only criteria we should look at, before investing in any stock. Most investors who got seduced by high dividend palm oil stocks last year, he or she would realise, the dividends last year can't cover the paper loss from the fall in share price until this year.

2023-07-10 22:51
>>>

Exactly. Just ask calvintaneng a very simple question and wait for his answer.

calvintaneng asked everyone to buy TSH when it was RM 1.78, citing the big dividends that this company was going to distribute. Yes, they did receive their dividends, but alas, the share price dropped to RM 1.05. Did they make money? Ask calvintaneng.

😀

>>>>

calvintaneng

Dear all sincere i3 forumers who visit here,

Please do your own due diligence before buying or selling any stocks

It is your hard earned money and in these very uncertain times better keep safe. If not sure just hold cash until you have clarity

Do not forget that Calvin has been in i3 for almost 10 years now and posted many stocks

>>>>


Far too many stocks recommended. Probably, every stock in BURSA. 😀

Should you take the dividends or reinvest your dividends through the DRIP scheme?

I opine the better option is to reinvest your dividends through DRIP as Maybank's ROE was 9.6%, which is more than 2x that of the risk free interest rate.

Investing should be simple but not simpler. :-) 😀😀😀

ht tps://myinvestingnotes.blogspot.com/2024/02/maybank-at-glance_25.html

10 Year from 2013 to 2022

Its revenues and PBT grew about 2% per year over this period.

Its average PBT margins was 22.5%.

Its average ROE was 10.7% and showing a downward trend. Its ROE in 2022 was 9.6%.

Its DPO was 80.5%. Thus, it retained only about 20% of its earnings.

Its DY in 2022 was 6.63%.

Over this period, it retained a total of RM 1.18 of its earnings and its share price rose RM 1.79 for the same period. Thus, $1 of retained earning is reflected fully in the rise of its share price.

During the 10 Yr, its BV per share grew from RM 1.721 to RM 7.127, as the company allowed its shareholders to increase their equity through DRIP (Dividend Reinvestment Program). Its NOSH grew from 8,645 million in 2013 to 12,054 in 2022.

Its P/B or P/NAPS fell from 1.9 in 2013 to 1.2 in 2022.

From 2013 to 2022, its capital appreciation in share price was RM 1.79 and it distributed RM 4.907 in dividends, increasing the value of the initial investment by RM 6.70. Given its initial price was RM 6.96 per share, this translated into a simple total gain of 96.3% for the period or a CAGR of 7%.

ht tps://myinvestingnotes.blogspot.com/2024/02/pbb-at-glance.html

Market Capital (RM) 86.960b
Number of Share 19.411b
Revenue (TTM) 24.930B
Net Profit (TTM) 6.748B
Net Margin (TTM) 27.1%
EPS (TTM) 34.76
P/E Ratio 12.89
ROE 12.68%
P/B Ratio 1.63
NTA 2.741

5y CAGR - Revenue 0.5%
5y CAGR - Profit 2.3%
Dividend (cent) 17.000 ^
Dividend Yield 3.79%

2014 - 2023 (10 years)

Its revenues, PBT and EPS grew consistently consistently but at a very slow rate.

PBTMs were maintained around 34.4%. Its PBT in 2022 and 2023 grew faster due to higher PBT margins in these years.

ROEs averaged 14.3% over the last 10 years. The 10 year trend showed a downward slope and its latest ROE in 2023 was 12.2%.

Its DPO ratio was 47.9%.

It retained RM 1.53 per share of its earnings (for maintainance or for future growth) and it increased its EPS by 10.59 sen over the 10 years, giving a return on retained earnings RORE of 6.9%.

Its share price in 2013 was RM 3.44 per share and in 2022 was RM 4.15, a positive change of RM 0.71 per share.

Quoting Warren Buffett, for every $1 retained by the company, this should be reflected in its share price. In the case for PBBank, it retained RM 1.53 over the 10 years and its share price had risen RM 0.71 per share.

For those who bought this share in 2013 at RM 3.44 per share, they would have gained RM 0.71 per share in capital appreciation and received total dividends of RM 1.28: a 58% gain over 10 years ( approximately CAGR of 4.68%).

Retaining about 52.1% of its earnings and having a ROE of 12.2% are still very encouraging for the owners of this stock.

At P/BV of 1.6, it is priced at a premium to most banking stocks. With its ROE trending downwards, we can expect its P/BV to remain at present level or to decline further but slightly.

😀

Contrast HLBank with Elsoft.

HLBank is a bank. Its business enjoys a stronger economic moat than that of Elsoft. The number of banks in a country is regulated.

Today's price 19.56
ROE 10.69%
P/B 1.17
NTA 16.680

5yr CAGR Revenue 3.3%
5yr CAGR Profit 7.7%
DY 3.02%

Its price is in the fair price range.

2014 - 2023

Its revenues, PBT and EPS have grown consistently.

PBTMs were maintained.

ROEs averaged 10.9%.

Its DPO ratio was 35.4%.

It retained RM 8.98 of its earnings (for maintainance or for growth) and increased its EPS by 79.16 sen over the 10 years, giving a return on retained earnings RORE of 8.8%.

Its share price in 2014 was RM 11.37 per share and in 2023 was RM 20.00, a positive change of RM 8.63 per share.

Quoting Warren Buffett, for every $1 retained by the company, this should be reflected in its share price. This was the case for HLBank. It retained RM 8.98 over the 10 years and its share price had risen RM 8.63 per share.

For those who bought this share in 2014 at RM 11.37 per share, they would have gained RM 8.63 per share in capital appreciation and received total dividends of RM 4.27: a 100% gain over 10 years ( approximately CAGR of 7%).

Retaining about 65% of its earnings and having a ROE of 10.9% are encouraging for the owners of this stock.

Keep this stock in your radar and when it is available at a bargain, you might like to add to your investment portfolio.

ht tps://myinvestingnotes.blogspot.com/2024/02/hlbank-at-glance.html