Case Study on Specific Industries based on current situation (Sep 2016)

This is a continuation of the “Fundamental Analysis ofMalaysia’s Stocks Market” blog post and this is also the 3^rd part of it. Please read the 1^st post before proceed with this post for better big picture understanding. Each industry has it’s own unique analysis however, the analysis strategy is still the same as written in the previous “A Summary of the Fundamental Analysis Strategy” post with a little tweaks which will be covered in this post.

Oil & Gas

Business or Industry Analysis

• Which company can still maintained it’s profit even after their stock price had dropped?
  
• Do you expect the industry to recover?
  
• Do you expect the profit to increase?
  

Financial Statement Analysis

Does the company have stable profit for the past 5 to 10 years?

Pricing Analysis

• PE < 10
  
• PB < 1
  

Risk Analysis

• Current ratio > 1
  
• Debt to Equity ratio < 2
  
• Interest coverage ratio > 3
  

Finance

Business or Industry Analysis

• It’s a value stocks
  
• Buy only when it is cheap
  

Financial Statement Analysis

Is the income consistently stable for the past 5 to 10 years?

Pricing Analysis

• PB < 1
  
• DY > 4 %
  

Risk Analysis

The 3 risk analysis ratio does not work for banking stocks. Use capital adequacy ration instead.

Plantation

Business or Industry Analysis

What are the directions of commodity prices?

Financial Statement Analysis

Does the company have stable profit for the past 5 to 10 years?

Pricing Analysis

• PE < 20
  
• PB < 1
  
• Expect the DY is not consistent.
  

Risk Analysis

• Current ratio > 1
  
• Debt to Equity ratio < 2
  
• Interest coverage ratio > 3
  

Consumer Goods

Business or Industry Analysis

• Can be divided into 2 types of stocks
  
  • Dividend play
    
  • Dividend and capital gain
    

Financial Statement Analysis

• Dividend play: Income must be stable for the past 5 to 10 years.
  
• Dividend & capital gain: The growth story is important. Look at the annual report for a growth story and growth plan.
  

Pricing Analysis

• Dividend play
  
  • DY > 4%
    
• Dividend & capital gain
  
  • PE < 20
    
  • DY > 3%
    

Risk Analysis

• Current ratio > 1
  
• Debt to Equity ratio < 2
  
• Interest coverage ratio > 3
  

Properties

Business or Industry Analysis

• How is the property market trend right now?
  
• Is the stock potential undervalued?
  

Financial Statement Analysis

Stable profit pattern for the past 5 to 10 years.

Pricing Analysis

PB < 1

Risk Analysis

• Current ratio > 1
  
• Debt to Equity ratio < 2
  
• Interest coverage ratio > 3
  

Disclaimer

I am not a guru in stock investment and I am still learning how to get a good returns from my investment. This write up is my sharing of what I have learned. I cannot guarantee that this strategy works for all time and situations. Nevertheless, I would like to hear from you on any suggestions or critic. I could learn something from you, visitor. Thank you for reading.