Cheap stuff doesn’t mean good stuff
It’s a holding company of 5 subsidiaries | Land/Transport/Communication/Offshore Marine/ Capital | Started in 1968 | Temasek Holding holds 20.43% of its shares
1) Identification of Companies that are undervalued.
- Price to book ratio : 0.861 (Discount of 13.9%)
- Price to earning ratio : 8.12
2) Learn about Their numbers
- Debt To Equity: 77.178 (High reliance on financing for growth)
- Growth Performance : -0.4139 % (Average through 5 years – Negative growth is a bad sign)
- Current Ratio : 1.836 (Average)
- Poor management ability ( Decreasing revenue | With super high payout ratio?! – It means for every $1 they earn they pay 52cents to their shareholders | Decreasing amount in payout dividend)
- Inability in cashflow mangement
This is a straight forward example for me, that cheap doesn’t mean good all the time. Numbers are my determining factors, what are yours???