My 5 simple steps will lead me to simple but effective value investing. My way to minimise the risk and maximise the gain.
Step 1: Check the PNL. Profit? Potential turnaround to profit?
Aim the bull: Yes, 2015 profit mainly from sale of land. The rest of businesses so so only.
But, new sales pipeline is coming like affordable housing project but still in early stage.
Step 2: Check the cash flow. Where is the money generate? Where is the money go?
Aim the bull: After cash received from land sale, pay to the mother company for the borrowing, it is still in net cash. Good news is dividend will be given.
Step 3: Check the Balance Sheet. Is it only left the shit (e.g debt)? Cash status? Retained earnings for potential bonus issue? NTA vs price? Fair value vs price vs NTA?
Aim the bull: Book value still undervalue as assets still in historical price. NTA 1.13 vs price 0.30. Damp, too cheap. But this is normal property stock trading below NTA. Therefore, need more land sale for book value update. So, risk to buy at 0.30 is damp low, safe and save.
Step 4: Check the price status? Which wave? Uptrend? Downtrend? Consolidation? At peak? Measurement of margin of safety?
Aim the bull: Mega sale discounted price! Margin of safety is best.
Step 5: How is the outlook of the existing business and any potential sales pipeline?
Aim the bull: Green tech business, Movie Animation Theme Park might use MJPERAK to list in Bursa. This is purely my outlook only, not an insider information.
If score 1 or 2 points...forget it
If score 3 points...monitor closely
If score 4 points...collect slowly
If score 5 points...full force...sai lang
Overall 4 points...the risk is no sustainable and profitable business as is now except land sale business.
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