Somebody tell me what I’m missing here. This company scores an 8, has a PE ratio of around 6 and a price to asset ratio of just under 1 It has experienced rapid growth since its inception 3 years ago, has an international customer base which is growing, has just completed construction of a new factory and also completed a new recruitment drive (up around 20% of personnel). Growth and expansion. We like this story!
Its business is in designing, manufacturing and installation of automation equipment for computer and semiconductor manufacturers. Its fortunes are hence very much tied to the cycles of the semiconductor industry, which is recovering from a slump. It is also vulnerable to exchange rate movements since its exports are predominantly in US dollars (I personally think that the US dollar will start to appreciate again in 2008 if we get a democratic victory in the upcoming US elections.) but I don’t really put too much weight on this as long as currency movements are broadly stable.
The fact that its price - asset ratio is 1 means that we have a great opportunity to purchase a company for a price that is equivalent to its assets and not at a premium, and from a technical perspective it looks like the company price has bottomed out, and following the surge in the last 2 days, broken out.
I’m going in tomorrow!
Checked the financial results for year ended 2006. Drop in profit and eps even though with higher revenue compared with 2005. Otherwise, the record for the past 5 yrs is really good huh?
just wanna see if there are any errors like the first time I posted a comment here
howdy fellow investor, care to do an analysis on CYMAO using your scoring sheet? thanks alot… hope to hear from the analysis soon.
If I were to score this company I think it would receive a 7 or an 8. However its latest numbers have been boosted somewhat artificially by an acquisition last year, and even then I would say that its earnings are not as high as it should be. If you look before 2006 you will also see that its profits and operating efficiency ratios have actually been falling, so I would also take that into serious consideration. To me this is a family run business which hasn’t shown any evidence of taking over the world yet. The only plus side is that timber companies are enjoying some attention lately so this might go along with that wave.
Ertorque - the only thing that bugs me about this counter is that its share price does not seem to be reflecting its balance sheet. That is the type of divergence that value investors look for, but on the other hand perhaps the sharks know something we don’t. Still, it has a great risk reward ratio.
Regarding CYMAO, I heard the overall trend for the local timber industry is moving south since beginning of 2007.
Regarding PENTA, is it because the major shareholders are holding very high % of shares which discourages speculation on this counter?
I haven’t studied this extensively, but I do not believe that a low public spread will discourage speculation in a counter. What drives speculation is the ability of sharks to spin a story or rumour and then dump it to the lambs at a high price. This can occur regardless of the percentage of shares held by major shareholders vs the public. If you’re interested in this aspect of price behaviour, it is much more interesting to look at insider trading - i.e. the trading activities of major shareholders in the counter itself, and share issuance / buyback activity. This is something I would love to do myself at some point.
What do you guys think about Unisem? It is near to its history-low, should we go in now?
Take a look at the PE ratio and Price to book ratio:
35.48 and
1.25
This means that the company is trading at 125% of its total assets, and 35 times more than it is earning. What does that tell you?
This company is too damn big for the little amount of money it is making. To become cheap enough to be bought out or rescued, it has to drop lower still to around $1.26 (1.68(which is its current market price)*75%), which is where it dropped to on its 3 yr low. If it decides to downsize then that bottom can be taken even lower so that is a risk of buying a company which is trading near its book value. In my opinion the only thing which can save this company is if it can demonstrate growing earnings, which it hasn’t been able to do in the most recent quarters.
In order to make money you have to understand why the market is punishing a stock and to be able to realise that it is wrong to do so. So ask yourself: is the market punishing this company unfairly? I personally cannot find anything redeeming about this counter right now from a fundamental perspective.