(09-01-2018, 04:49 PM)holymage Wrote: [ -> ]From my observation of BlueKelah's posts (the user with the sexy girl avatar that changes at times), he is a value investor with Graham's style of cigarbutts approach. Guess he is more comfortable/apt at buying at a discount to book value than predict growth and pay for earnings, which is why the bulk of his portfolio is littered with fundamentally weaker or illiquid companies, or quality companies picked during downturn. That being said, his price estimation seems plucked out of the air.
Back to Spindex. P/E of 38.5 for Spindex just doesn't make sense intuitively... Try doing a reverse discounted cash flow using a market cap of $539 million (at P/E of 38.5 and 2017 earnings of $14 million) and let's see if you will get a reasonable growth rate.
yep value investor hence I am hanging out at this forum for value investors, no surprises here.
However I do not purely adopt Graham's "cigarbutts style approach" but have my own set of criteria which includes management quality/opmi friendliness and other common value things like NAV/RNAV. Also macro view such as where the market is(STI index) and where the sector is are also pretty important. U can PM me if interested to learn more.
Find it pointless to predict growth/earnings, especially for micro/small cap companies as business is fluid and can boom and bust very quickly. Prefer to buy unloved small caps during an industry/sector recovery and those that provide some amount of MOS.
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As for saying Spindex could hit 50c. If you look at historical 10 year prices, after last GFC, Spindex was around 25c-30c range prices, I know coz I was collecting it already back then. ( Spindex was making profits, giving steady dividends and had a boatload of net cash, fundamentally rock solid. Boss was also a member of PAP Hougang GRC, so rock solid no funny business management. )
As the market sentiment got much better after QE1 and QE2 and car industry started recovering in USA, Spindex was making profits but still doing sub 35c prices until around mid 2013 when probably the earnings/dividends/yield became too juicy to ignore and the price started to slowly go up. Now both the earnings and privatisation has driven up the stock price to all times high, in fact more than 3x the price pre-2013.
So lets say STI goes to all times decade high, 3700 or 3800 or maybe even hit 4000, then does a 30% reversal during a crash/correction, and if concurrently US side auto industry hit a snag and downturn, especially if oil price suddenly spike. Spindex may only breakeven or very small profit.
In which case, 50c would be a conservative call. In fact, it might even go to sub 40c level again. Do note that it is very common for unloved small cap stocks to trade at 50% discount to NAV in a market downturn and last time I looked, Spindex NAV was only around 85c.
(you can go read the Penguin thread where I said during downturn it could hit 10c again, based on similar logic and during the last crash in share price, when OnG went into downturn, it went down to that level)
but please, don't let me spoil your Spindex party, as I said might have some 20-30% upside this year 2018!! ;P