Our cheapest stocks
October 15th, 2020
⏰ 1 minute read
⏰ 1 minute read
AAPL valuation is 275x more than our cheapest...
Assets
The stock market can be a very humbling place. Imagine if you held a Rp100,000 note & someone told you it was only worth Rp75,000. Imagine if you built a house for Rp1bn & then someone told you it was worth only Rp500m. Imagine if you built a Rp1tn business the market values at just Rp250bn! That’s not possible, right?
0.09x
The construction stocks we wrote about last time are an average 0.25x assets. That’s cheap but it’s not the cheapest. A few weeks ago we updated our research on MEDC. At that time the company was worth USD584m (Rp8.58tn). As the assets are worth USD6.5bn, that’s an only 0.09x (491/6148) valuation! Since then the shares jumped +13% in 10 days.
0.06x
But the title of ‘cheapest stock we cover’ did not last for very long. Just a couple of days later, we updated our research on WSKT. At that time the share price was Rp535 & that means a value of Rp7.26tn. The total assets are Rp113.9tn meaning the valuation was only 0.06x (7.26/113.9)! Since then the share price has jumped +29%!
0.02x
Surely, we thought, there can’t be anything less that 0.06x... but we were wrong. Yesterday we initiated coverage on UNSP... This is a company which has cut its assets in half to try to solve debts. The value of the assets is now Rp8.3tn, the shares are worth Rp147bn. That’s just 0.02x...a new record for us. Will it jump too?
50X?
This is a very simple valuation & it’s not how we value the companies, but it does give you an idea of just how cheap stocks here in Indonesia are. A whole sector at 0.25x & several stocks below 0.1X. A stock valued at 0.02x its (depreciated) assets could potentially increase by 50x if the assets ever become valued again....
The stock market can be a very humbling place. Imagine if you held a Rp100,000 note & someone told you it was only worth Rp75,000. Imagine if you built a house for Rp1bn & then someone told you it was worth only Rp500m. Imagine if you built a Rp1tn business the market values at just Rp250bn! That’s not possible, right?
0.09x
The construction stocks we wrote about last time are an average 0.25x assets. That’s cheap but it’s not the cheapest. A few weeks ago we updated our research on MEDC. At that time the company was worth USD584m (Rp8.58tn). As the assets are worth USD6.5bn, that’s an only 0.09x (491/6148) valuation! Since then the shares jumped +13% in 10 days.
0.06x
But the title of ‘cheapest stock we cover’ did not last for very long. Just a couple of days later, we updated our research on WSKT. At that time the share price was Rp535 & that means a value of Rp7.26tn. The total assets are Rp113.9tn meaning the valuation was only 0.06x (7.26/113.9)! Since then the share price has jumped +29%!
0.02x
Surely, we thought, there can’t be anything less that 0.06x... but we were wrong. Yesterday we initiated coverage on UNSP... This is a company which has cut its assets in half to try to solve debts. The value of the assets is now Rp8.3tn, the shares are worth Rp147bn. That’s just 0.02x...a new record for us. Will it jump too?
50X?
This is a very simple valuation & it’s not how we value the companies, but it does give you an idea of just how cheap stocks here in Indonesia are. A whole sector at 0.25x & several stocks below 0.1X. A stock valued at 0.02x its (depreciated) assets could potentially increase by 50x if the assets ever become valued again....
