Market Valuation at a “Snap of the fingers ” … Thanos Trump

I cannot help but feel disheartened by the market lately. It is so “emo”, so “volatile”. Its every movement seemed to be controlled at the “snap of Mr Trump’s fingers”. It really feels like Thanos Trump snapping his fingers with his “Infinity Stones” gauntlet.

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By a tweet, Mr Trump could move market by a few percentages and potentially wipe out billions of hard earned dollars or make many people very rich if they are on the “right” side of the market.

Is our markets so irrational? I always believe that the market is bigger than any individual. No one should have the illusion that he/she alone can move the market. But I can only sigh in disbelief by what I saw in the last few weeks.

Well, I cannot control what happens to the market like Mr Trump does.

But I can maximise the opportunities that he has created. I was taught that every crisis will present an opportunity. It boils down to whether we can find that opportunity and then grab it. Having a warchest certainly helps.

In the last one/two weeks, I cracked it open and used some of the “gold coins” to buy small positions in my favourite counters on our local stock market.

In one of my blogs last week, I mentioned about buying Suntec Reit and Capitaland Retail China. Both are still holding up well, so I am waiting for further weakness before accumulating more of them.

Today, on the backdrop of the steep fall in the US markets overnight, I grabbed some shares of Hong Leong Finance – a low profile stock but I like it for its consistency in dividend distribution.

Looking back at its history, except for 2009 (the year of the Lehman Brothers Financial Crisis), for the last 15 years, their dividend distribution have never fallen below 10 cents. Assuming minimum 10 cents dividend and at today’s share price of $2.60, the yield is 3.85%. Last year, they declared 14 cents dividend and that’s 5.38% yield based on $2.60.

And if the trend continues, they may declare a total of 15 cents dividend this year and that will bring the yield even higher. If it happens, that would be wonderful :-)!

Furthermore, according to yahoo finance, its book value is $4.26. At $2.60, it is trading at a Price/Book ratio of only 0.6. Just imagine if someone were to make an offer to take it private, OMG !!!

Yahoo finance also shows that Hong Leong Finance has $1.27 Bln of cash on its balance sheet and that is equivalent to $2.85 per share …. that’s just cash alone!!! Its already more than the share price. So $2.60 for $2.85 cash + a running stable business = not a bad deal in my opinion.

If it continues to drop, I will accumulate more.

May the force of the infinity stones be with you … Good luck folks!

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Regards

Warriortan

 

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