NPC's main business segments include oil palm plantations, transportation services, property letting and operation of hotel.
Its earning performance has been overall unstable in last five years, whereby its earning per share overall fluctuated from -41.26 sen to 42.25sen. NPC reported loss net of tax increased to RM64.104 million in 2018 as compared to profit net of tax in last fnancial year of RM13.965 million was mainly due to lower average crude palm oil (CPO) and palm kernel (PK) realised price from plantation segment.
I am a fundamental investor so I look for mismatch between market price and the intrinsic value of a company. This will require time and effort to carry out a fundamental analysis and valuation of the company.
In practice I would take about a week to carry out such an analysis for a new company. This is because I go through the past 10 years of annual reports reading the management discussions and analysis as well as look at industry reports and annual reports of its competitors
In order to ensure that my time is spent well, I will screen for potential companies. One quick and dirty screen is to compare the ROE trend with the share price trend as shown in the example below for NPC, a Bursa Plantation company. https://i.postimg.cc/t40dysMC/NPC.png You can see that while NPC’s ROE was volatile and had improved over the past few years, the market price was relatively stable. Better still, it did not go up over the past few years despite the better ROE.
I am not a trader but I do know that some traders combine technical analysis with fundamental analysis to get better insights. If I was trader, I would think this ROE vs share price trend can provide some food for thought. For example, does the chart mean that it time to go in and wait for the crowd to realize that there is better performance?
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....
michaelwong
3,072 posts
Posted by michaelwong > 2017-02-21 16:09 | Report Abuse
Vow ! What's heck going on ? From zero volume shoot up to millions shares traded suddenly