Malaysia's stock exchange looks cheap based on historical earnings, lets look further.
You can't buy it with Interactive Brokers, I trade KLSE stocks with a Singapore broker.
TLDR: Everything depends on KLSE trading volume, which is unpredictable, I think this stock is too expensive now.
Business and Revenue Breakdown
Most of their revenue is from trading:
And most of the trading revenue is from Securities trading:
Financials
Good financials. All stock exchanges seem to follow the same pattern. As of Sep 2022:
- Large net cash position (plus some Investment Securities), no debt
- CFO is basically PBT plus small depreciation and small working capital.
- 40% profit margin (after all expenses, including tax) in 9M 2022.
- Minimal Capex with high dividends:
- The dividends are too high:
- They are paying part of the dividend out of accumulated "cash and investment securities". As of 3Q22, "cash and investment securities" is worth RM 565m, or roughly 9% of their market cap (@ 6.40 per share).
Conclusion
This stock exchange is a cash generating machine. The only question is how much you'd pay for it.
If I had to catch a falling knife, I'd probably be willing to pay 12-15X normal earnings. Based on 2017 to 2019 earnings, the price would need to drop significantly, to around RM 3.70 to 4.00. Not buying it now.
Can you recommend some broker please?
ReplyDeleteSince you're in Europe, can try Saxo to trade KLSE stocks. I haven't tried them.
ReplyDeleteBut I'm a little wary of a brokerage thats part of an investment bank, so I wouldn't put all my money with them.
I would have liked some local broker, possibly also active in Thailand and Vietnam
ReplyDeleteTheres a good article here: https://www.asiancenturystocks.com/p/the-best-asian-retail-broker
ReplyDeleteI use UOB Kay Hian. I think all 3 SG banks are the same.