Two days ago, I have compiled Company listed in BURSA with ROE > 20% and Low Debt.There are a total of 14 companies in the list. And, this list is a subset of company listed in bursa with ROE > 20%. which consists of 72 companies.
As explained in the said article, a company able to achieve high ROE from 3 appraoches as introduced by DuPont Analysis:-
- Higher Net Profit Margin
- Higher Asset Turn Over
- Increase Financial Leverage
There is no doubt that the companies that show in my previous list which achive high ROE by high net profit margin \ asset turn over and low fiancial leverage are definitely a candidate for a good companies. So, should we invest in those good companies? But, wait a minute. This might not be a good investment options.
A good company has to be a good investment, doesn't it? After all, Warren Buffett focuses on good companies and he's a billionaire. So it follows that good companies have to be good investments.
Or do they?
Buffett has become a billionaire not because he is just buying good companies, but because he is buying good companies at a discount to intrinsic value. That is, it all depends on what price one pays. There is valuation risk no matter what kind of investment one makes.
Or do they?
Buffett has become a billionaire not because he is just buying good companies, but because he is buying good companies at a discount to intrinsic value. That is, it all depends on what price one pays. There is valuation risk no matter what kind of investment one makes.
Mr Chong did mentioned in his article that Investment success doesn’t come from “buying good things,” but rather from “buying things well.” A simple metric used to carry out “buying things well” is to compute the
price-earnings ratio (PE) of a stock. A low PE say at less than 10 may
signify that the stock is cheap.
Owing to this, I further fine tune my list to find a good companies which is relatively cheap (P/E < = 15).
Code
|
Name
|
ROE%
|
ROTA%
|
Leverage
|
P/E
|
Close Price
|
F.Y.
|
|
1
|
7231
|
WELLCAL
|
29.67
|
25.17
|
1.18
|
1.67
|
1.5
|
30/09/13
|
2
|
5204
|
PRESBHD
|
43.39
|
35.81
|
1.22
|
2.23
|
1.8
|
31/12/13
|
3
|
5168
|
HARTA
|
30.55
|
24.82
|
1.23
|
2.93
|
5.92
|
31/03/13
|
4
|
0008
|
WILLOW
|
22.55
|
18.52
|
1.22
|
3.17
|
0.81
|
31/12/13
|
5
|
7100
|
UCHITEC
|
20.47
|
17.87
|
1.15
|
6.66
|
1.44
|
31/12/13
|
6
|
0099
|
SCICOM
|
21.06
|
19.13
|
1.10
|
8.55
|
1.04
|
30/06/13
|
7
|
5131
|
ZHULIAN
|
24
|
21.71
|
1.11
|
9.58
|
2.71
|
30/11/13
|
8
|
0113
|
MMSV
|
22.24
|
18.77
|
1.19
|
12.96
|
0.21
|
31/12/13
|
9
|
6769
|
KELADI
|
21.74
|
19.92
|
1.06
|
15.20
|
0.33
|
31/01/13
|
And,
please don't get me wrong. This is not the final list yet as a thorough
analysis need to be carried out to further examine the companies in the
list.
"An
investment operation is one which, upon thorough analysis, promises
safety of principal and a satisfactory return. Operations not meeting
these requirements are speculative." - Benjamin Graham
References:-
Wednesday, 28 May 2014
Company listed in BURSA with ROE > 20% and Low Debt
Two days ago, I have filtered out company listed in bursa with ROE > 20%. And, it have a total of 72 companies that met my criteria.
From DuPont Analysis, a company able to achieve high ROE from 3 appraoches:-
- Higher Net Profit Margin
- Higher Asset Turn Over
- Increase Financial Leverage
In my opinion (1) and (2) is a more desirable way to achieve a
higher ROE compare to (3). There is no doubt leverage amplifies
ROE in good time, but in bad times, it can hurt ROE badly. And, too much leverage can
make a company becoming risky in time of economic downturn and financial
crisis.
So, I am more keen to look for company with high ROE and low debt. And, I manage to find out 14 companies that suite my taste.
Code
|
Name
|
ROE%
|
ROTA%
|
Debt Ratio
|
Leverage
|
Close Price
|
F.Y.
|
|
1
|
5182
|
GWPLAST
|
50.15
|
49.97
|
0
|
1.00
|
0.63
|
31/12/13
|
2
|
5204
|
PRESBHD
|
43.39
|
35.81
|
0.18
|
1.22
|
1.8
|
31/12/13
|
3
|
5229
|
CAP
|
33.41
|
28.14
|
0.16
|
1.19
|
0.31
|
31/12/12
|
4
|
5031
|
TIMECOM
|
32.01
|
27.27
|
0.15
|
1.18
|
4.3
|
31/12/13
|
5
|
5168
|
HARTA
|
30.55
|
24.82
|
0.19
|
1.23
|
5.92
|
31/03/13
|
6
|
7231
|
WELLCAL
|
29.67
|
25.17
|
0.15
|
1.18
|
1.5
|
30/09/13
|
7
|
0058
|
JOBST
|
24.63
|
19.48
|
0.2
|
1.25
|
2.44
|
31/12/13
|
8
|
5131
|
ZHULIAN
|
24
|
21.71
|
0.1
|
1.11
|
2.71
|
30/11/13
|
9
|
0008
|
WILLOW
|
22.55
|
18.52
|
0.18
|
1.22
|
0.81
|
31/12/13
|
10
|
0113
|
MMSV
|
22.24
|
18.77
|
0.16
|
1.19
|
0.21
|
31/12/13
|
11
|
6769
|
KELADI
|
21.74
|
19.92
|
0.06
|
1.06
|
0.33
|
31/01/13
|
12
|
0099
|
SCICOM
|
21.06
|
19.13
|
0.09
|
1.10
|
1.04
|
30/06/13
|
13
|
5189
|
MAXWELL
|
20.48
|
17.09
|
0.17
|
1.20
|
0.26
|
31/12/12
|
14
|
7100
|
UCHITEC
|
20.47
|
17.87
|
0.13
|
1.15
|
1.44
|
31/12/13
|
What to do next?
- To check if there is any pitfall and issues on the ROE
- To perform valuation on selected companies. Jae Jun top 10 stock valuation ratio is a good start for me.
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