Keppel Corporation Limited – What really matters in a Stock

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)Screen Shot 2016-09-21 at 2.34.23 pm.jpg
  • Inability in cashflow mangementScreen Shot 2016-09-21 at 2.37.26 pm.jpg

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???

+1 knowledge point


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