Yesterday, Comfort Delgro, Thai Bev and Wilmar closed at $1.25; $0.565 and $3.64 respectively. Personally, they look interesting on several aspects.
At $1.25, Comfort Delgro trades at levels last seen in 2011 and 2009!
At $0.565, Thai Bev sits on a long term uptrend line established since 2009!
At $3.64, Wilmar trades at approximately 2.2x and 3.0x standard deviations below its 10Y average PE and P/BV of around 13.8x and 1.1x respectively!
Read on for more.
I have previously published a write-up on Comfort Delgro. Readers can refer to my write-up HERE for more information and the potential risks.
So what else is new?
a) Trades at 2011 & 2009 lows, coupled with oversold RSI
Comfort Delgro closed at $1.25 yesterday which was the level last seen in 2011 and 2009. Furthermore, RSI closed at an oversold level 16.3. Excluding pandemic times and based on pure manual observation, RSI typically rebounds around the region 15.5.
b) Company seems to have emerged from the pandemic – stronger
With reference to Figure 1 below, Comfort Delgro’s free cash flows and balance sheet have improved markedly (2020- 2023) as compared to pre pandemic. It is arguably one of the few companies whose balance sheet has emerged stronger post Covid.
Figure 1: Comfort Delgro – Free cash flow seems to have improved
Source: Phillip Securities Research; Company
c) Total potential return ~ 45% if the consensus is correct
Based on Figure 2 below, average analyst target is around $1.74. Estimated dividend yield is around 5.4%. Total potential return is around 45% if the consensus is right.
Figure 2: Average analyst target $1.74; estimated div yield 5.4%
Source: Bloomberg 10 Oct 22
–> Please refer to Comfort Delgro’s analyst reports HERE for more information and very importantly, the potential investment risks.
What catches my attention?
a) Extremely oversold; only 2 days since 2008, where RSI trades lower than 14.2
Thai Bev is extremely oversold. RSI closed at 14.2 yesterday. Since 2008, there were only two days (18 & 19 Mar 2020) where Thai Bev’s RSI was lower than 14.2.
b) Testing the long-term uptrend line established since Mar 2009
Based on chart (see Chart 1 below), Thai Bev seems to be testing its long term up trend line (currently around $0.570) established since Mar 2009. A sustained downside break below $0.570 with volume expansion is negative for the chart. However, given the oversold conditions, odds are less likely of a sustained breach below $0.570.
Chart 1: Testing the long term uptrend line
c) Total potential return ~ 52% if the consensus is correct
Based on Figure 3 below, average analyst target is around $0.84. Estimated dividend yield is around 3.8%. Total potential return is around 52% if the consensus is right.
Figure 3: Average analyst target $0.84; estimated div yield 3.8%
Source: Bloomberg 10 Oct 22
–> Please refer to Thai Bev’s analyst reports HERE for more information and very importantly, the potential investment risks.
What is new?
a) Wilmar spent more on share purchases in 3Q2022 compared to the entire 2021
With reference to this link (click HERE), SGX listed stocks bought back shares worth S$1.19b in 2021. This was led by OCBC, CapitaLand Investment, Wilmar International, UOB and SGX. In 2021, Wilmar bought back $130.9m worth of shares.
In 3Q2022 (just one quarter alone), based on SGX compilation (click HERE), Wilmar bought back $140.5m worth, or 34.6m shares at an average price $4.05. This already eclipsed the entire amount bought back last year. Furthermore, Wilmar contributed approximately 24% of the share buyback dollar amount in 3Q alone.
b) Attractive valuations
Based on Bloomberg, Wilmar trades at 6.9x PE and 0.8x P/BV, approximately 2.2x and 3.0x standard deviations below its 10Y average PE and P/BV of around 13.8x and 1.1x respectively.
c) Wilmar should be able to meet consensus FY22F earnings estimates, given strong 1HFY22
Based on Bloomberg consensus earnings FY22F of around US$1.855b, Wilmar’s 1HFY22 already constituted approximately 53% of full year results. Based on a CIMB report dated 5 Aug (click HERE), CIMB mentioned that relying on historical trends, 2H is usually twice as strong as 1H. Given macro headwinds and on a prudent basis, if we assume 2HFY22F matches that of 1HFY22, Wilmar can still comfortably meet consensus estimates.
d) Total potential return ~ 56% if the consensus is correct
Based on Figure 4 below, average analyst target is around $5.50. Estimated dividend yield is around 5.1%. Total potential return is around 56% if the consensus is right.
Figure 4: Average analyst target $5.50; estimated div yield 5.1%
Source: Bloomberg 10 Oct 22
–> Please refer to Wilmar’s analyst reports HERE for more information and very importantly, the potential investment risks.
In summary, Comfort Delgro, Thai Bev and Wilmar look interesting on valuation and chart basis. Due to time constraints, this write-up is brief as I only highlight some pertinent points. Readers are strongly encouraged to refer to the respective company’s analyst reports (see links above) for more information.
Readers have to assess their own % invested, risk profile, investment horizon and make your own informed decisions. Everybody is different hence you need to understand and assess yourself. The above is for general information only. For specific advice catering to your specific situation, do consult your financial advisor or banker for more information
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P.S: I am vested in Wilmar, Thai Bev and Comfort Delgro. Wilmar’s is scheduled to report 3QFY22F results on 28 Oct, after market.
Please refer to the disclaimer HERE