Posted by 3iii > 2017-12-31 08:44 | Report Abuse

A company with earnings of X and has a PE of 5 maybe still the most expensive company.

Why?

Its normalised sustainable earning is actually X/5 and thus, though its PE is 5 based on today's earnings, its actual projected PE is 25x.

Posted by chantp88 > 2017-12-31 11:50 | Report Abuse

you can see that the earning are not consistent every quarter. to annualised based a good quarter can be misleading...

Posted by sunztzhe > 2017-12-31 22:39 | Report Abuse

HengYuan is now a component stock in MSCI Malaysia Small Cap Index. The market has been re-rating HengYuan price upward indicating than HRC deserves a higher PE multiple relative to its historical price.

HengYuan had languished in sideways mode for about 30 years since 1987. It's share price easily broke out of its old high of RM 12.30 ( registered OH since Sept 23, 2005) on Dec 13, 2017. After it broke out of it's old high effortlessly, HRC has continued on its strong uptrend in both big and short time frame. It closed at RM 16.30 last Friday , chalking a impressive gain of +32% since Dec 13, 2017. 

The chart shows HengYuan is a strong uptrending momentum stock.It took HengYuan slightly over 12 years to break out of its old high of RM 12.30. The driver for the strong share price performance is the stellar earnings chalked up during the 3 quarters of 2017. The strong momentum is indicating that upcoming Q4R 2017 due in Feb 2018 will be impressive too. 

Based on its closing price of 16.30 and a prospective EPS 2017 of RM3.6 per share, HRC is commanding a PE of only 4.528. Its regional peers are commanding a PE multiple higher than 10, much higher than HengYuan. An expectation of the market re-rating HRC towards PE8 to PE10 in line with its local n regional peers is reasonable n moreover HRC is now a MSCI Malaysia Small Cap index component. 

As we enter 2018, its risk on for equities meaning PE multiples for equities in general will move higher. Besides crack spread is expected to remain favourable in 2018 and with a slight upside bias of crude oil price in 2018, it will likely translate into higher absolute net profit value for HRC implying higher EPS. High chance we will likely be looking at potentially a future price range of RM 25 to RM 36 for HRC. The recent correction last Friday accords an excellent opportunity for a "risk on trade with HengYuan" due to its relative undemanding valuation vs its peers.

Posted by stockraider > 2018-01-01 21:59 | Report Abuse

THATS WHY U MUST FOLLOW B GRAHAM THEORY OF MR MARKET AND MR VALUE LOH......!!

DO NOT LET MR MARKET INFLUENCE U LOH....!!
IF IN DOUBT THIS, PLS TAKE ADVICE FROM MR VALUE MAH...!!

IF U R AFFECTED....BY MR MARKET, U CANNOT BE A VALUE INVESTOR LOH...!!

HENGYUAN PE 5X COMPARE PETDAG PE 20X...THERE IS A VERY BIG GAP LOH..!!

HENGYUAN PE 5X V NESTLE PE 40X ANOTHER VERY VERY BIG GAP LOH..!!

WHY COMPARING PE HENGYUAN V NESTLE RELEVANT WHEN THEY ARE IN DIFFERENT INDUSTRY LEH ??

RAIDER ALREADY MENTIONED ,THAT U CAN COMPARE ANYTHING BASED ON PE WITH A COMMON PLATFORM WITH SOME ADJUSTMENT LOH...!!

THE OTHER THING COMPARING HENGYUAN V NESTLE IS VERY RELEVANT, BCOS HENGYUAN HAS THE HIGHEST EPS RM 3.10 IN KLSE , WHEREAS NESTLE HAS THE 2ND HIGHEST EPS RM 2.57 IN KLSE LOH..!!

PLEASE BEAR IN MIND , HENGYUAN BESIDE PE 5X V NESTLE PE 40X, HAVE A HIGHER EPS AGAINST NESTLE LOH...!!
THATS WHY RERATING OF HENGYUAN PE TO HIGHER LEVEL IS IMMINENT MAH...!!

HENGYUAN IS THE TRUE CHAMPION MAH....!!