Dapai International Intrinsic Value

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Discounted Cash Flow Model

  • FY2009 Net Operating Cash Flow = S$75.82 Million
  • Discount Rate = 6%
  • Number of Shares Outstanding = 992.3 Million
  • Intrinsic Value
    • Best Case @15% Annual Growth Rate = $1.23
    • Median Case @ 10% Moderate Growth Rate = $0.94
    • Worst Case @ 0% Growth for the next 10 years = $0.56

Discounted EPS Model

  • Rolling EPS = S$0.06459
  • Discount Rate = 6%
  • Intrinsic Value
    • Best Case @15% Annual Growth Rate = $1.04
    • Median Case @ 10% Moderate Growth Rate = $0.80
    • Worst Case @ 0% Growth for the next 10 years = $0.48

 

PE Model

  • Use PE @ 15 as fair value
  • Intrinsic Value = $0.97

 

PEG Ratio

  • Current Price = $0.245
  • Current Rolling PE = 3.79
  • PEG Ratio @ 15% Growth = 0.25 (<< 1) Super Under Value
  • PEG Ratio @ 10% Growth = 0.38 (<< 1) Super Under Value

 

Summary

  • Using MOST CONSERVATIVE Intrinsic Value calculation (ie. 0% Growth for the next 10 years), IV = $0.48 (49% Discount to current price of $0.245)
  • Using a more reasonable 10% Growth Rate for the next 10 years, IV = $0.80 (70% Discount to current price of $0.245)

A potential Multibagger penny stock? You decide……

Continue ReadingDapai International Intrinsic Value

If You Get Burnt on Genting Singapore and Genting HK …..

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Sad to see that so many peoples are slaughtered by the professional traders on Genting Singapore and Genting HK.  The professional traders are making money both ways when Genting SP & HK moves up and comes down (they are short selling the stocks!). I decide to write this post so that everyone can learn from this Genting mistakes and make it as lesson learnts. I welcome everyone to post their stories here, either a success story why and how you make money on Genting, or why and how you lose money trading these two Genting stocks. I hope all the sharing here will benefits everyone so that we don’t make the similar mistakes in future.

For those who get burnts on Genting Singapore & Genting HK. You need to find out WHY and HOW you are getting burnt. If you know the WHY and HOW, you can minimise the same mistakes in future. Please take note that I use the phrase of “minimise the mistake” but not “eliminate the mistakes”. As human being, you definitely will make the same mistakes again although you know them. I must confess here “I do make the same stupid mistakes twice” in my trading and thus lose money.

You may ask yourself the following questions on your Genting Singapore or Genting HK stock trading:

  1. Are you buying the stock at high or low? What is your trading rules? Buy Low Sell High, or Buy High Sell Higher?
  2. Are you listening to other “experts” or reading the analyst reports to make your BUY decision? Do you know those experts already set the whole thing up (they have already bought the shares long long time ago) and waiting for you to push the share price up so that they can sell high and make all the profit?
  3. Do you know that Genting is still losing money as a whole?
  4. Do you know how long Genting will take to finally breakeven their original investment?
  5. Why the President & COO of Genting Singapore selling his shares recently, if everything is so rosy?
  6. Did you see everyone is chasing the stock and cause the stock chart pattern become a parabolic curve?
  7. Do you know what will happen next after the parabolic curve chart pattern?
  8. You only hear people boosting how much money they make on Genting, do you know how many peoples out there losing money but they keep quiet? Stock market is ZERO SUM game, someone makes the money from  someone lose. Most of the cases, professional traders make tons of money from the retail investors like you and me.
  9. Do you know how frequent the analysts change BUY/SELL/HOLD recommendation and target price  in just these few months? The Genting business model and fundamental cannot change in overnight but the analyst recommendation and target price changes just in a split of seconds. They modified their assumptions and change target price to justify their assumption. Do you know what does the “assumptions” mean? Assumption means “Using Personal Opinion with some numbers”.  You can become your own analyst too if you know how to make assumptions.
  10. What mentality you have when you buy these stocks? Are you telling yourself “I sure make money because Genting will go up to $3.00 because X analysts said that”, or asking yourself “When should I cut loss if Genting falls?” Will the result be different when you change your mindset and the way you ask the questions to yourself? You need to know that there are two different mindsets in stock trading, ie. defensive and offensive.

I welcome to see different comments from everyone. Together we learn!

Marubozu

Continue ReadingIf You Get Burnt on Genting Singapore and Genting HK …..

From Winning Trade to Losing Trade

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Original Posting Date: Feb 25, 2010.

I traded Goldman Sachs (GS) recently and made some significant mistakes to cause a winning trade to become a losing trade. I feel that I need to document these mistakes to prevent it from happening again. At the same time, I can learn from every one of you how I can further improve my trade. Welcome to leave your comment here. 

  • I spotted a Bearish Engulfing which is a reversal to down trend pattern on Jan 22, 2010. I entered a trade @$156.22 buying a GS MAR 155 PUT option. This is considered a nice entry point because I entered the next day when the pattern is seen. My original plan is to watch the chart closely before deciding my exit point. I was looking at when GS stock price started to off hook the lower Bollinger Band because that was a sign the price would be moving up.  However I did not monitor the chart daily as I was on business trip on the subsequent week (Lesson Learnt #1).
  • After my business trip, I had a chance to get out of the trade when I spotted GS off hooked the lower Bollinger Band. If I exited the trade at this point (1st exit point), I would be making a 30% profit handsomely. Due to the greed (Lesson Learnt #2) because I was hoping GS would go lower, I did not close my position because the whole market was bearish generally.
  • The next day a Bullish Harami pattern was formed. This is a trend reversal pattern and the stock may move up or move sideway; and I would be losing money regardless which way the stock price moved. If the stock moved sideway, I lost money due to time decay. If the stock moved up, I lost even more. After seeing this pattern, the next day was my 2nd exit point opportunity but I still hope GS would come down again (Lesson Learnt #3).  If I had exit at this point, I would be breaking even on my trade.
  • I was happy to see a shooting star was on the subsequent trading day because this is a trend reversal pattern (going down). This was my 3rd opportunity to exit the trade but I did not take action because I did not want to lose money (Lesson Learnt #4). At this moment, I was losing a little money due to the time decay of the option.
  • GS traded sideway for a few days and suddenly had a gap up and crossed the 20D MA. This was a bullish signal and if I exit here (4th exit point) I would lose 30% of my capital. At this juncture, the option price dropped very fast due to the time decay and significant dropped in the implied volatility (IV). This IV indicated by how wide the Bollinger Band. IV is high when the Bollinger Band is wide and vice versa.
  • When GS started to touch the upper Bollinger Band, I started to wake up. If I still did not make up my mind to cut loss, I would be losing 100% of my capital in this trade as option will expire worthless. The PUT option was losing its value due to the strike price, reduced in implied volatility and time decay.
  • I exit the trade at $155.87 and suffered a 50% lose in this trade. 

 

Summary of the Lesson Learnt

  • Did not spend time monitor the chart every day.
  • Emotion takes over plan. (Greed takes over when making money, Fear takes over when losing money)
  • Refuse to cut loss.
  • Believe in hope rather believe in the chart.
  • I have a trading plan in place. My entry point was good but exit point was extremely bad. This is an execution failure!

 

Improvement made for my future option trading (A reminder to myself)

  • Have a trading plan (Entry, Exit, Time Frame, Profit Target, Stop Loss target)
  • Close the position within 3 days
  • Monitor the chart everyday
  • Set auto-triggered Stop Loss target after enter a trade. Let the machines takes over on the execution!
  • Exit the trade immediately when the chart is not right. (Respect the chart and don’t doubt the chart!) 

Feel free to comment if any improvement needed in my plan.

Thanks!

Continue ReadingFrom Winning Trade to Losing Trade