Investing

Hengyuan comparing with Nestle, Dutch Lady, Panasonic Manufacturing and British American Tobacco

All investors in the stock market are in a dilemma, I included, when we watch Hengyuan shooting up like a missile. It has gone up from Rm 3 to close at Rm 16.50 within 12 months, an increase of 550%. Almost all investors have not seen another stock which performs like Hengyuan except perhaps Supermax before.

This situation reminds me of Supermax during the HINI epidemic about 7 years ago.

Now we are confronting a new situation.

For example, its price went up Rm 1.10 with 4.93 million shares traded yesterday. As the daily volume traded is a few million shares, obviously there must be a lot more buyers than sellers for the price to go up almost every day.

Who is right and who is wrong?

It is most likely this article will be the useful to all investors. After reading the comparison of Hengyuan with these few counters, which are selling more than Rm 30 per share, you should know what to do.

Nestle: Its share price closed at Rm 99.9 per share yesterday. Its EPS for 3 quarters ending September 2017 was 218 sen. Assuming its 4th quarter is similar to the average EPS of the last 3 quarters its full year EPS will be Rm 2.91. Its P/E ratio will be 34.

Dutch Lady: Its share price closed at Rm 59.80 per share yesterday.    Its EPS for 3 quarters was 151 sen. Assuming its 4th quarter EPS as the same as the average of the last 3 quarters, its full year EPS will be Rm 2.00. It is selling at P/E of 30.

Panasonic:  Its share price closed at Rm 39 yesterday. Its first half year EPS was 104 sen. Assuming its 2nd half year is similar as its first half year, its full year EPS will be Rm 2.08. It is selling at 19.

BAT: Its share price closed at Rm 36.30 yesterday. Its 3rd quarter EPS was 144 sen. Assuming its 4th quarter EPS will be the same as its average of the last 3 quarters, its full year EPS will be Rm 2.00. It is selling P/E of 18

Hengyuan: Its price closed at Rm 16.50 yesterday. Its 3rd quarter EPS was 243 sen. Assuming its 4th quarter is the same as its average EPS of the last 3 quarters, its full year EPS will be 324 sen. It is selling at P/E of 5.

You must bear in mind that Hengyuan’s controlling shareholder is a famous China National Petroleum Chemical company called Shandong Hengyuan Petrochemical Company of China.

Can you find another counter with similar quality as Hengyuan which is selling at P/E 5?

In view of the rising prices of crude oil due to demand exceeding supply, Hengyuan should be more profitable in the near future. It should be selling at least at P/E 10. Based on its annual profit of Rm 3.24 it should be selling at Rm 32.40 per share.

Now all readers should know what to do.

 

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