HOMERITZ ROE and ROCE is 60% and 51% respectively and this is a very high number. Do check why it drop to 42.85 and 31.98 on year 2010 and further drop to 21.85 and 16.46 on year 2013. Do a DuPont analysis to check out where the number come from. And, check out who is the culprit.
For EPS and FCF per share, I think there is no point to compare both of them as they have different NOSH. I prefer to compare Net Profit or FCF as a whole, or alternately we can compare P/E or P/FCF to check which company is a cheaper buy. In my view, I prefer the EV\EBIT instead.
"HOMERITZ ROE and ROCE is 60% and 51% respectively and this is a very high number. Do check why it drop to 42.85 and 31.98 on year 2010 and further drop to 21.85 and 16.46 on year 2013. Do a DuPont analysis to check out where the number come from. And, check out who is the culprit."
Good point! Previously, its ROE was so high as it was highly geared.
screwdriver, first of all you gotta define what kinda businesses that both companies run. Hevea is involved in wood-related furniture products but Homeritz is primarily engaged in upholstered furniture products and mainly in the export market. They're actually different business models, although they're in the same industry/sector. So better don't compare it like this.
As for the manufacturing business, you've to keep an eye on the cash conversion cycle (DIO + DSO - DPO), CAPEX, staff costs, gearing and margins.
Give me your email, I send you a book to learn financial ratios. You must make sure that you gotta finish reading up it and directly apply.
Note: NOSH = Number of shareholding, in case that you do not understand Intelligent Investor's word.
Intelligent Investor, I interpreted your message wrongly. Yup 2009's ROE one was damn high due to the component of the leverage (from DuPont analysis).
It's good to use DuPont ROE to find the culprit as you mentioned.
For your information, basically 1st year of listing those ratios are weird if you notice on it.
Anyway, I see you share a lot of your hardwork through i3 if possible, we can exchange knowledge and information to stick with the principles of being a fundamentalist.
The ROE I obtained it directly from bursamarketplace, I think they are using average equity in their calculation. Thanks for highlighting their differences in businesses and the drop of ROE.
Intelligent, in your view, are P/E and P/FCF the most suitable metrics to compare their prices? Since if one is having better valuation and it has better growth prospect, people may consider to pay more, hence giving them a higher P/E and P/FCF. This is what had puzzled me all this while.
GenghisHoe, thanks for showing me cash conversion cycle, and other aspects for comparison, does the book u recommends include them? My email is screwdriver168@gmail.com, thank you very very much.
Every ratio's formula, you need to keep in mind and do not try to go shortcut because that if you're unable to master the ratios properly then you will interpret wrongly as the ratios could be manipulated easily. If you directly plug from those websites provided, then how can you 'feel' the overall company's operations?
hi GengHisHoe, i'm appreciate if you could offer me the chance to learn the skills by sending me the book as well. Thank you. email: cjiejack@gmail.com
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....
Intelligent Investor
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Posted by Intelligent Investor > 2014-06-26 15:36 | Report Abuse
HOMERITZ ROE and ROCE is 60% and 51% respectively and this is a very high number. Do check why it drop to 42.85 and 31.98 on year 2010 and further drop to 21.85 and 16.46 on year 2013. Do a DuPont analysis to check out where the number come from. And, check out who is the culprit.
For EPS and FCF per share, I think there is no point to compare both of them as they have different NOSH. I prefer to compare Net Profit or FCF as a whole, or alternately we can compare P/E or P/FCF to check which company is a cheaper buy. In my view, I prefer the EV\EBIT instead.
You can refer to my writeup on http://intelligentinvestor8.blogspot.com/2014/06/financial-statement-analysts-template.html