What if we had the same valuations as the US?
February 9th, 2021
1 minute read
What if
The US stock market remains best performing in the world. At 31,385, the Dow has overtaken all. The Nikkel was first to break 30,000 in 1989, now it’s 29,500. HongKong’s HSI broke 30,000 in 2017, now its 29,400. Our JCI index is far behind at 6,200. One difference is simply validation, but what if our stocks were valued the same?
ADES
Here’s three examples, using a simple price to sales valuation. In the US, there’s Coca Cola or KO. It owns a similar drinks business in Indonesia, ADES. KO shares are valued at 5.8X the annual sales. If we valued ADES the same way using our sales forecast, then the share should trade at Rp7,340 instead of the current price, Rp1,650.
POWR
Power is becoming a very hot sector. In the US, Next Era Energy or NÉE recently overtook the market value of Exxon XOM. NÉE trades at 7.1X sales. Here in Indonesia we just started coverage of POWR. If POWR traded at the same electric price to sales valuation then the shares world be at Rp3,372 up from the current Rp710.
MAPB
Starbucks is all over the world, but here in Indonesia it’s also a listed company which has much more than just coffee inside. In the US market, SBUX trades at just over 4X annual sales. If MAPB with all it’s other foods traded at the same valuation, the shares would be worth Rp4,582 & not the current level of Rp1,330.
Index
To give you a visual idea of what it would mean if we enjoyed the same valuations here as they do in the US, we made an index of the three stocks with a base of 100 in January 2018. That index is now just 104. If we put the adjusted prices in, the level would jump 4X to 445.
1 minute read
What if
The US stock market remains best performing in the world. At 31,385, the Dow has overtaken all. The Nikkel was first to break 30,000 in 1989, now it’s 29,500. HongKong’s HSI broke 30,000 in 2017, now its 29,400. Our JCI index is far behind at 6,200. One difference is simply validation, but what if our stocks were valued the same?
ADES
Here’s three examples, using a simple price to sales valuation. In the US, there’s Coca Cola or KO. It owns a similar drinks business in Indonesia, ADES. KO shares are valued at 5.8X the annual sales. If we valued ADES the same way using our sales forecast, then the share should trade at Rp7,340 instead of the current price, Rp1,650.
POWR
Power is becoming a very hot sector. In the US, Next Era Energy or NÉE recently overtook the market value of Exxon XOM. NÉE trades at 7.1X sales. Here in Indonesia we just started coverage of POWR. If POWR traded at the same electric price to sales valuation then the shares world be at Rp3,372 up from the current Rp710.
MAPB
Starbucks is all over the world, but here in Indonesia it’s also a listed company which has much more than just coffee inside. In the US market, SBUX trades at just over 4X annual sales. If MAPB with all it’s other foods traded at the same valuation, the shares would be worth Rp4,582 & not the current level of Rp1,330.
Index
To give you a visual idea of what it would mean if we enjoyed the same valuations here as they do in the US, we made an index of the three stocks with a base of 100 in January 2018. That index is now just 104. If we put the adjusted prices in, the level would jump 4X to 445.
