Forward P/E : 9.66 - Pass
3.08 X [(Q1 2014~8.5, Q2 2014~7.44) X 2 (annualized it by X2)]
Dividend per share : 0.0235 (2011 0, 2012 0, 2013 0, 2014 0.235)
Dividend Yield : 0.763% - Fail
Quick Ratio : 0.89 – Neutral
Debt/Equity Ratio : 1.61 – Neutral
Interest Coverage Ratio: 3.45 - Pass
(Note: To gauge on our Risk appetite on Liquidity Ratios and Solvency Ratios, please refer to our Investment Book Guidelines: Create a Secondary Income Stream by Chua I-MIN, CFA (page 53 ~ 58).
Some good ones able to drill with the cost of USD65 and the bad ones at USD90. The best drillers in the world do it around USD50. What’s next: I DO NOT KNOW. How about business analysis on SKPetro? The price has dropped from the high of 4.96 to 3.08. A whole 38% dropped even before market crashed. A lot of retailers out there is buying now. Base on fundamental valuations it looks acceptable. How the price will perform next? Up or down, I DO NOT KNOW.
Buy at price 3.08 (Forward PE 10) is REASONABLE but not cheap, to deploy 20% of my intended funds for SK Petro at 3.08.
To deploy another 20% at PE 9 +- : Price around 2.87
To deploy another 20% at PE 8 +- : Price around 2.55
To deploy another 20% at PE 7 +-: Price around 2.23
To deploy my last 20% at PE 6 +- : Price around 1.91 (near to lowest post IPO on 2012)
To consider average down below 3.
Break your cash into 5 stages and starts accumulating around PE 9 +- and below.
Be prepared to hold long term WITHOUT DIVIDENDS. If you are not able to tolerate for LONG TERM INVESTMENTS and NO DIVIDENDS, DO NOT AVERAGE DOWN.
i: monitor the OIL PRICE – price will stabilize at one point of time. You may see the price trading few dollars in range with no further drops and good news starts being reported. From there only starts to deploy your funds in if your bullets is not much.
Ii: try not to guess the lowest point for OIL and SKPetro price. Most of the time, we are wrong
and the market is correct.
Iii: do not go ‘ALL IN’ aka ‘SHOW HAND’ in 1 counter at 1 go. You will not be able to sleep well at
night. Effective Portfolio Management is part of the game.
I am in no hurry to accumulate SK Petro by letting the big boys do their ‘Institutional Portfolio Restructuring’. If SK Petro is not being designated as Non Syariah Compliant and OIL Price recovers, I can always do average up and do my ‘Portfolio Restructuring’.
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