Friday, July 24, 2015

The Curious Case of PLENITUDE BERHAD ~ SJ

一篇投稿者对于PLENITUDE的分享,但是属于有一点另类,希望大家会有兴趣。。


PLENITUDE is an unloved stock. How else would you describe a stock with a Price-to-Book ratio of 0.55? Investors are wary about the property market as a whole and many are already waiting for “the bubble” to burst. As a result, the property stocks are punished, and PLENITUDE has seen the value of its stock dropped more than 40% in 10 months from the high of RM3.50 (Aug 2014) to the current level of RM2.10.

With the share price hovering above RM2.00, is the worst over? Or is this just the beginning of a long slide into the oblivion for PLENITUDE? If Benjamin Graham is still alive today, would he give a knowing smile before quickly load up as much PLENITUDE stocks as he can get his hands onto? I’m curious because that would be very close to paying 50 cents for a dollar.

On the quest to solve the mystery above, let’s dig a little deeper and see how PLENTIUDE’s share price has fared against its book value over the past few years, as illustrated in Chart 1 below.
Chart 1
Note: Monthly (instead of daily) share prices are used.

There are a few things we can learn from Chart 1, noticeably the following:
1. The PLENITUDE’s share has never traded above its book value since 2011, and it would be unrealistic to expect it to do so in the near future. While this is not unusual for property stocks, it still feels a bit underwhelming, especially if you compare it to other more popular players such as MATRIX (1.9), TAMBUN (1.6), SPSETIA (1.2) and HUAYANG (1.1).

2. The share price has seemingly gone full cycle, starting from RM2.18 in Jan 2011, hitting the heights of RM3.15 in August 2014, before crashing back down to the current level of RM2.00. If you have bought the shares in early 2011 and held until now, you would be making a small loss.

3. With the share price gyrating, the Net Assets per share, however, continues to grow steadily from RM2.78 in January 2011 to RM3.73 in January 2015. That is a 34% growth in 4 years which translates to a CAGR of 7.63%.

Armed with the information above, what would be the game plan for PLENITUDE?

As illustrated in Table 1 in the Appendix, historically PLENITUDE has been trading at P/B ratio between 53% and 87% since 2011, with the average being 68%. Therefore, I have the following simple hypothesis for the share, i.e.

1. BUY whenever the P/B ratio drops below 60%
2. SELL whenever the P/B ratio hits 80%

Over the past four and a half year, there have been several buying and selling opportunities that meet the conditions above, which are highlighted in Green and Red in Table 1 respectively. For example, if you have bought the stock at RM1.84 in September 2012 and sold at RM3.04 in September 2014, your investment would have returned a CAGR of 28%. Not bad for a boring stock!

Interestingly, we are now heading into another period of buying opportunities. However, before jumping to conclusion, we should look at the recent NOMAD acquisition and see how the book value of PLENITUDE will be affected. Unfortunately, due to the dilution of the new shares, the Net Assets per Share for PLENITUDE will drop from RM3.80 to RM3.64 after the acquisition of the hotel group. Nevertheless, its P/B ratio will remain at a relatively low level of 58% and below the 60% buying threshold.



NOMAD
PLENITU
COMBINED
31.3.2015
31.3.2015
31.3.2015
RM'000
RM'000
RM'000
Total Assets
453,295
1,198,716
1,652,011
Total Liabilities
90,709
171,807
262,516
Total Equity
362,586
1,026,909
1,389,495
NOSH
223,068
270,000
381,534
Net Asset per Share


3.64
Share Price


2.10
P/B ratio


58%

Therefore, we are left with one final question. Do you dare to be a contrarian?


Appendix

PLENITUDE’s historical Price-to-Book ratio from Jan 2011 to June 2015


Table 1
Date
Closing Price
Net Assets
P/B ratio
After NOMAD
2.10
3.64
58%
01/06/2015
2.00
3.80
53%
01/05/2015
2.10
3.80
55%
01/04/2015
2.33
3.80
61%
02/03/2015
2.31
3.73
62%
02/02/2015
2.32
3.73
62%
01/01/2015
2.28
3.73
61%
01/12/2014
2.29
3.71
62%
03/11/2014
2.60
3.71
70%
01/10/2014
2.82
3.71
76%
01/09/2014
3.04
3.63
84%
01/08/2014
3.15
3.63
87%
01/07/2014
2.92
3.63
80%
02/06/2014
2.79
3.59
78%
01/05/2014
2.82
3.59
79%
01/04/2014
2.85
3.59
79%
03/03/2014
2.60
3.50
74%
03/02/2014
2.58
3.50
74%
01/01/2014
2.50
3.50
71%
02/12/2013
2.59
3.46
75%
01/11/2013
2.74
3.46
79%
01/10/2013
2.62
3.46
76%
02/09/2013
2.29
3.37
68%
01/08/2013
2.09
3.37
62%
01/07/2013
2.15
3.37
64%
03/06/2013
2.14
3.18
67%
01/05/2013
2.25
3.18
71%
01/04/2013
1.90
3.18
60%
01/03/2013
1.95
3.13
62%
01/02/2013
1.74
3.13
56%
01/01/2013
1.80
3.13
58%
03/12/2012
1.83
3.15
58%
01/11/2012
1.80
3.15
57%
01/10/2012
1.92
3.15
61%
03/09/2012
1.84
3.13
59%
01/08/2012
1.92
3.13
61%
02/07/2012
1.87
3.13
60%
01/06/2012
1.86
3.06
61%
01/05/2012
1.83
3.06
60%
02/04/2012
1.98
3.06
65%
01/03/2012
2.04
3.02
68%
01/02/2012
2.12
3.02
70%
03/01/2012
2.13
3.02
71%
01/12/2011
1.95
2.98
65%
01/11/2011
1.96
2.98
66%
04/10/2011
1.98
2.98
66%
02/09/2011
1.80
2.91
62%
01/08/2011
1.87
2.91
64%
01/07/2011
2.06
2.91
71%
01/06/2011
2.09
2.83
74%
03/05/2011
2.03
2.83
72%
01/04/2011
2.08
2.83
73%
01/03/2011
2.07
2.78
74%
02/02/2011
2.19
2.78
79%
03/01/2011
2.18
2.78
78%

Intrinsic Value of PLENITUDE based on Price-to-Book ratio

Table 2

P/B ratio
Intrinsic Value
MOS
Potential Gain
Min
53%
2.00
-5%
-5%
Max
87%
3.30
36%
57%
Median
67%
2.54
17%
21%
Average
68%
2.58
18%
23%

Date:                        24/6/2015
Share Price:         RM 2.10


作者
SJ
股票的合理价或买入价等都是纯粹投稿者的个人功课,数据或许有所偏差,所以资料仅供参考,并不是买卖的指标,买卖前请自行评估风险,本内容并没有教导或怂恿买卖的建议,请别对号入座。


这个月投稿大赛第6篇,这个月的稿不再局限于投资理财哦,不知道能否吸引到一些好的文章出现呢~。~?如果看到不错,记得多多留言支持哦,这个也是对这位参赛者的一点帮忙和鼓励哦^_^,有兴趣参赛的朋友,也可以把你欲投稿的作品,电邮到windscopo@gmail.com,请先了解奖品与条规。。

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8 comments:

  1. How to calculate P/B ratio and P/B mean???Thank.

    ReplyDelete
    Replies
    1. In other words, Shareholder's Equity = Net Assets.

      Delete
  2. Agree. Now it is a good time to take advantage of this low PB ratio. Can start accumulating this counter as it is near 52-week low.

    ReplyDelete
  3. Thanks for sharing

    ReplyDelete
  4. It's actually Price-to-book ratio.

    P/B = Market Capital / Shareholder's Equity

    where

    Market Capital = Share Price x Number of Outstanding Shares
    Shareholder's Equity = Total Assets - Total Liabilities.

    ReplyDelete
  5. Really hard to see a English vision of sharing appear in Tian Gor Blog. Anyway, nice to share out your homeworks, SJ. Keep it up :)

    ReplyDelete

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