15 restaurants | Since 1991 | Famous for ginger chicken & Herbal Soups
Comparison will be done with Tung Lok Restaurants (540)
1) IDENTIFICATION OF COMPANIES THAT ARE UNDERVALUED.
- Price to book ratio : 5.635 (463.5% Above fair value) 540 – 1.874
- Price to earning ratio : 81.826 ( Above industry standard – 86.29) 540 – 78.667
2) LEARN ABOUT THEIR NUMBERS
- Debt To Equity : 0.27% | 22.4%
- Growth Performance : -8.55 | Not given
- Dividend Yield : 2.77% [ 5 years] | 0% [ Doesn’t pay]
- Current Ratio : 2.27 |1.44
- Book Value per share : 0.0337 | 0.0577
- Cash Flow per share : 0.0078 [Having negative cashflow for past 4 years]| 0.0208 (540) [3/5 years of positive cash flow]
- Weak management ability (No progressive Dividend Growth | Low net income/gross profit margin growth | Negative cash flow – price of stock is 25 times of its cashflow).
3) TECHNICAL ANALYSIS
Weekly chart price action shows that stock is in a bearish trend as market continues to make lower low and lower high. Stock has just entered into key price level, if broken, market has a higher probability of trend lower for a long time. A purchase order will put you in a 1:1 RR ratio.
4) Would I be vested ?
- Overvalued without any justification (Probably people bought it cause of the brand)
- 4 years of debt/equity numbers not filed in
- Poor growth rate
- Cashflow is so poor probably due to the reinvestment rate (to reduce financing)
- No dividend
- Market in bearish trend
- Weak RR ratio
- Price got legroom to 0.118