Sakae – What really matters in a Stock

Ever wonder what happen to all the Sakae Sushi Restaurants?

Sakae Holdings have over 18 brands / Start in 1996 / With 200 Outlets worldwide

Sounds like an achievement doesn’t it? but would you still buy after you know the numbers?

Comparison will be done with ChasWood Resources Holding (5TW)

1)  IDENTIFICATION OF COMPANIES THAT ARE UNDERVALUED.

  • Price to book ratio : 1.264 (26.4% Above fair value) 5TW – 1.472
  • Price to earning ratio : Not given ( Above industry standard – 86.67) 

2)  LEARN ABOUT THEIR NUMBERS

  • Debt To Equity : 160% [Exponential increase in financing] | 517%
  • Growth Performance :  not given 
  • Dividend Yield : 1.74% [5 Years] | Doesn’t pay –
  • Current Ratio : 0.419 [Poor ratio within 5 years] |0.4719 [Poor ratio within 5 years]
  • Book Value per share : 0.2216 | 0.0109
  • Cash Flow per share : -0.047 [Due to high financing/Drop of business]| -0.0037
  • Bad management ability (Dividend payout was stop 2 years ago| Negative profit margin | Negative cash flow ).Screen Shot 2017-06-10 at 10.25.15 amScreen Shot 2017-06-10 at 10.25.08 am

3) TECHNICAL ANALYSIS

Screen Shot 2017-06-10 at 10.44.43 am.jpg

Currently, stock is trading at 2013’s price level with a bearish momentum after a strong Head and Shoulder pattern was formed in late 2015. Market tend to find strong supply of suppliers at $0.350, as you can see two strong rejection on that price level. A current entry will have a  1:3.373 RR with a super low winning probability.

4) Would I be vested into it?

NO! No wonder you see lesser and lesser Sakae restaurants around.

Fundamentally:

  • Overvalued with no justification
  • Poor cashflow / high financing/ negative margin / poor management

Technically:

  • A high RR ratio with a poor Winning probability makes it a gambling entry

“+1 Knowledge point”

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