Intrinsic Value Study
Sarine Technologies Ltd stock price on 14 June 2018 is S$0.895. At current price, there is no margin of safety. The above study shows that the intrinsic value is S$0.67.
The earnings of Sarine Technologies will need to improve in the future quarterly/yearly reports to reverse the negative earnings growth trend (and improve the stock’s intrinsic value).
In addition, the above calculation did not factor in the recent 1Q 2018 results (which is a good set of results).
Every so often when I do a new post, people will ask me if I would be buying or selling the shares at the current prices. Actually, on a side note, I don’t really think I should be advising on stock picks (I am not really qualified to do so). The main motive for my posts is for the blog to serve as my personal journal.
I think ultimately one needs to form his/her idea on the intrinsic value of the stock. Doing a calculation above is one method, but I feel for some stocks, it should not be the only method and may not be suitable (esp. for stocks will uncertain historical earnings). Reading about the development of the business and its industry is equally important in forming your own evaluation.
I think the wrong way is to depend on stock prices to form your judgement. Eg. look at the stock price, and try to figure out what is going on. The market is there to serve us not to instruct us.
Well, I’m not as optimistic as other analysts’ reports. Nevertheless, numbers are just one part of the equation.
- Maintain ADD with Unchanged target price of S$1.53 (read here)
- 3Q16 At Low End of Expectations. Still A Buy (S$1.97) (read here)
And I am still long on this company, stock (otherwise I won’t be reading up on it).
Most investors hate uncertainty, and who can blame them. However, businesses are messy by nature. It takes time to study them. And this is one company that is seriously testing my patience.