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%
|
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。你可能也有兴趣这些
自我提升，终生学习~天地海
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MBSB AGM的个人领悟～静思月
Well written!
回复删除How to calculate P/B ratio and P/B mean???Thank.
回复删除In other words, Shareholder's Equity = Net Assets.
删除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.
回复删除Thanks for sharing
回复删除It's actually Price-to-book ratio.
回复删除P/B = Market Capital / Shareholder's Equity
where
Market Capital = Share Price x Number of Outstanding Shares
Shareholder's Equity = Total Assets - Total Liabilities.
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 :)
回复删除Thanks, J 丰!
删除