F&N: Upside Limited

Base on the chart, F&N uptrend is still intact however upside is limited due to the following two reasons:

  1. Resistance at about $5.80
  2. Current PE of 21.5 is higher than the past 3 years average PEĀ of 20.8 and also the STI PE.

It will be interesting to see whether F&N can hold above the up trend support at about $5.30 to $5.40.

This Post Has 4 Comments

  1. Choong Xinlin

    Dear Marubasu
    I enjoy your blog very much. However there is always the box “Ads by Google” blocking the main text at the left hand side.
    It blocks away some of the text. Is it possible to place the ads away from the main text.
    Thank you

  2. Marubozu

    Xinlin, my screen does not have this problem. You may want to change your screen setting at lower right corner of your IE. Let me know if it is ok.

  3. CH

    Dear Marubozu,

    Based on my FA calculation, F&N is overvalue, but seem like people still will to invest in this counter. Is there any reasons behind (TA?or historical background?) Or does my FA go wrong?
    Hope you can clarify my doubts. Thanks

  4. Marubozu

    Hi CH,
    Both you and me think F&N is overvalue but not necessary other peoples. Different people has different perception on how one company is going to make MORE money in future (depends on the time horizon) and there are definitely a lot of BUSINESS ASSUMPTIONS made in evaluating a company.

    Kirin Holding recently announced acquiring 205,500,000 shares in F&N from Seletar Investments Pte Ltd, which is a wholly-owned subsidiary of Temasek Holdings (Private) Limited for SGD6.50 per share. Some peoples will view F&N is “CHEAP” because Kirin is willing to pay for $6.50 per share. When Kirin pays $6.50 per share for F&N, they probably see some good value in F&N which we cannot see. However, if Kirin makes the wrong assessment or F&N is not able to execute their business plans with proper risk management in place, future earnings will be impacted and the share price will drop. If that is the case, Kirin is overpay for F&N.

    Not sure whether I have answered your questions but in short, “There are only two things to move the share price: News and Earnings”. When there is news, it depends on mass market percepton (without doing a proper calculation). Not many people will read the financial report in detail and study in detail why Kirin bought F&N share. Kirin buy this share to hold for long long term. Kirin may be thinking that this share will worth $10 in 10 years times if their business expansion is successful. Most investors do not understand how long Kirin will hold the shares. They just buy when other people buy, and the traders know very well such human behavoirs to make quick money.


Leave a Reply