QUANTITATIVE SELF ASSESSMENT TOOL

QUANTITATIVE SELF-ASSESSMENT TOOL 

Assess your performance monthly, quarterly, half-yearly & annually 

Background: 

We need to compare our profit/loss in relation to that of experts of our market. Our mutual funds(basket of different types of shares and bonds) are managed by professional fund managers. They are well trained with education and experience on equity market. They try to maximise profit, and minimise risk. Their overall achievement reflects the profitability of our market. So, you can compare your performance with them and get an idea about your situation.

PROCEDURE:

Take total four mutual funds (2 govt: one recent and one 3 years older, and 2 private- one recent and one older). Take a time frame. For example, NAV of the fund at 1st July and NAV of that fund at 31 st december. Then, calculate ...profit of each fund over last six months. Next, make an average of profit of 4 funds. This is the standard profit possible in our market. If you are achieving it, you did very well..........because your performance is similar to professional managers. 

EXPLANATION:

Reason for choosing different types of funds Govt funds: they are conservative and more aware of risk. Private funds: they are aggressive and take risk for profit. Older: mature and got more IPOs (10% reserved for MF). New: less IPO, Initially takes time to settle. So if we take representative 4 MFs, we will get an standard profit calculation.

LIMITATIONS:

Mutual funds spend 10% of their capital in IPO, their chance is higher to get an IPO. But they have a lot of management expenes, that you dont have. Moreover, their 10% money almost always remain stucked with IPO. So balances each other. 

EXAMPLE:

July 01, 2010: NAV of AIMS, DBH-1, 3rd NRB & ICB AMCL-1 were 5.84; 12.2; 10.55 & 619.98 respectively.

October 01, 2010, NAV of those 6.59,12.65, 12.13, 705.29.

October 31, 2010 NAV of those were 7; 13.78; 12.86 and 786.26.

4 months profit(July 01 to October 31)

were 19.8%; 13.16%; 21.8% and 26.8%.

Average profit= 20.4% over last 4 months.

Last one month (october) profit

were 6.2%, 8.9%, 6% and 11.4%;

average of last month= 8.125%

INTERPRETE YOURSELF:

Last month (october):

Profit below 8%= needs improvement.

8-10%= good.

10-12%=very good.

Above 12%= excellent. Last 4 months (July 1st to October 31st):

below 20%=needs improvement.

20-22%= good.

22-25%= very good.

above 25%= excellent.

(be cautious: before calculating last month's profit, you need to know market value of your share on 1st october and 31st october. suppose, by selling a share you made 30% share on 18th Oct, you cant add complete 30% profit on october, because you might have bought that 3 months ago. October's profit/loss is difference between 1st and 31st october market price).

YOU DONT NEED TO WORRY ABOUT CALCULATION, I WILL POST ABOUT MARKET AVERAGE PROFIT EVERY 2 WEEKS.

So, let us know your last 1 month and 4 months profit.

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BEXIMCO LIMITED : A MID-TERM INVESTMENT SCOPE

BEXIMCO GROUP OF COMPANIES: CONTROVERSIAL OWNERS , STILL SAFE INVESTMENT OPPORTUNITY

LISTED COMPANIES:

1. BEXIMCO LIMITED.

2. BEXIMCO PHARMACEUTICALS.

3. BEXTEX.

4. BEXIMCO SYNTHETICS.

5. SHINEPUKUR CERAMICS.

6. SONALIASH.

SPONSORS: Salman F Rahman and Sohel F Rahman are the present owners and corner stones of Beximco group, the largest business conglomerate of our country. Salman F Rahman is a very suspicious character in our business culture. He is one of the prime suspects of 1996 share scam and was in jail during last caretaker government. He is the most criticised business character also. In spite of these facts, there are some real opportunities to invest in beximco group companies.

AT THIS MOMENT, OUT OF THEIR SIX LISTED COMPANIES, BEXIMCO LIMITED, BXPHARMA, SHINEPUKUR AND BEXTEX ARE REALY GOOD COMPANIES. IN THIS ARTICLE, I WILL TRY TO DISCUSS PROS AND CONS OF BEXIMCO LIMTED.

BEXIMCO LIMITED: FOR INVESTMENT , NOT FOR TRADING

FUNDAMENTALS:

Paid-up capital: 165.5 crore , Tradeable portion=67%=110 crore

Lot is 100/10, Available lot= 11 lakh

DENOMINATOR	NAV (Restated)	EPS	YEAR END PE	DIVIDEND	NPAT,crore
2010	81	Q2=21.25X2=42.5	PRESENT 7.5		351x2=702
2009	101 (63)	35	14	60%B	325
2008	72 (43)	19	14	50%B+10%C	104
2007	32 (23)	1.5	24	15%B	5.5

EPS is growing continuously over last 4 years in spite of increasing capital, reflecting potential growth of business. Even this year, Q1 is just 6, Q2 is 21.5……………Q4 may be 50 plus, at least it will be 40……….just EPS justifies its price should be 400 with PE 10……………..AT PRESENT THIS IS AN UNDERVALUED SHARE.

NAV is also increasing…………….present NAV is 81…………year end NAV may be 100 plus…….same as last year……..this is basically 60% increase of NAV as they have given 60%B last year………..

Present PE is 7.45………….for any developing country this is an undervalued state for a share. Moreover, company is exponentially growing…………….still expanding its business in Aviation, Hotel and Ceramic sector.

Dividend amount is also very encouraging……..always bonus…………increasing.

NET PROFIT AFTER TAX (NPAT) is also promising. Last year, NPAT was 325 crore, this year half year NPAT is 351 crore…………….ALMOST 100% growth……

FUTURE NEWS PREDICTABLE:

1.  GMG airlines is scheduled to be listed shortly……..BEXIMCO has more than 50% shares in GMG…..They have invested 35 crore for share and another 70 crore for development. If GMG's 10 tk share price goes to 200tk after listing………..BEXIMCO will be gainer of at least 600 crore……their NAV will increase by 40 tk……..

2. Westin hotel: Beximco bought Westin's 1 crore share of 10 tk with 160 crore tk with a premium of 150 tk. Now, Westin's indicative price is 211 tk……..in IPO it will be at least 225………when trading starts it will be at least 300 plus…………..again with a 160 crore investment, they will be gainer of 160 crore…………….increasing BEXIMCO's NAV another 10 tk………….SEC few days back returned Westin's IPo proposal as they wished to float 30 crore tk, but SEC's requirement was 40 crore……….now SEC relaxed its rule…………hopefully Westin IPo approval will be within short time.

3. Dhaka Shanghai ceramic, newly acquired by Beximco………….in exchange of approx.1 crore beximco limited share(10 crore tk )………….later they invested 25 crore tk more for its growth………….BEXIMCO group is planning to merge it with Shinepukur ceramic…………..they will transfer it to shinepukur with equivalent share of shinepukur……………..if they get 1 crore shinepukur share…………with present price of 75 tk …………..1 crore share will be of 75 crore tk…………..beximco will be gainer of 65 crore tk.

4. They are also planning to enter into oil, gas and energy sector.

5. Awami league in power………..Salman F Rahman is a close fellow of Prime minister……..so he will not face any problem………..when he really deserves……..I dont want to mix business with politics............but this is a reality

TECHNICAL ANALYSIS:

1. You can see from graph, over last 8 months its price is moving around 310-320………….with a spike 345………..probably no other company has PE less than 10 (except banks)………….rest all companies are getting over-valued……………people will look to invest in a company with low PE…………..Beximco LTd will be the choice…………

2. Additionally, you can see and assume from graph, all have bought share with 310 plus………no chance to fall its price below 300………even if market crashes, its price will not be effected much, as present PE is only 7.45………….no space remains to fall price…………..

3. All share's price has already been doubled over last 6 months…………..Beximco limited remais same…………..but earning is good…………just waiting for a spark

DRAWBACKS:

1. Realatively large paid-up capital and 67% public holding.

2. Lack of integrity of Salman F Rahman.

INFERENCE:

1. I do not think that price of BEXIMCO LTD will increase to sky within a short time………But I believe it will start its upward journey from November………………..will follow slow and steady growth upto next April 2011………………hopefully 4-10% increase per month………………ultimately will achieve a 40-60% growth over next 6 months…………….

2. BEXIMCO LTD deserves a minimum price of 21.25 x 2 x 10 = 425 tk. (to do justice with its fundamental)

Expected price is 21.25 x 2 x 12 = 510 tk

RECOMMENDATION: Those who are interested for investment for 6 months and will be satisfied with a 40-60% profit in 6 months ( equivalent to 100% in a year), BEXIMCO LIMITED could be a choice for them…………..

Even in the worst situation, if its price does not increase satisfactorily, after next dividend's record date you will get the stock free because a stock with EPS of more than 40, will not remain at 300 tk for long time………………..

IN ANY CASE AT LEAST 40-60% profit will come over 6 months.

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FUNDAMENTAL ANALYSIS TO IDENTIFY SAFE PRICE

FUNDAMENTAL ANALYSIS AND PRICE DISCOVERY

PURPOSE:

Main purpose of fundamental analysis is to determine what should be the market price of a share or securities. Therefore, buying a share at this price will not put my capital at risk. Anyway if price falls for any reason, it will regain. For example, to build a thousand square feet flat in Uttara, it costs at least 40 lakh taka (including price of land and minimum 10% profit of builder). So this is a very safe investment. If its price falls below 40 lakh, it will rise again because no one is going to sell in loss for long time.

BASIC FACTORS:

Net asset value, last revaluation and growth of NAV

Earning per share and growth of EPS

Price earning ratio and year end PE over last 3 years

Paid-up capital and share division

Director's profile

Market demand of company's product

Associated business

Assessment of similar companies

NET ASSET VALUE:

It is little bit tricky………..

Mutual fund: straight forward……..price should be very close to disclosed NAV

Banks, NBFI and general insurance: Disclosed NAV and also look when last revaluation was done. You can make a general assumption that 50% of its asset is liquid. Remaining 50% is investment in land, securities, bonds and other strategic investment. From any investment, it is expected that at least 10% return will come. So overall, from its NAV 5% return is usual in a developing economy. If its asset revaluation is done 5 years back, you can add 5 x 5%=25% with its NAV to get actual asset. It is true that devaluation also occurs to certain assets (like motor vehicle, furniture) and all company has to consider that during financial auditing (to maintain standardisation set buy financial auditing rule of Bangladesh). But revaluation cant be done without a assessor and approval from regulators.

Production companies: They usually maintain less cash and almost 90% of their asset remain invested. So, we can add 10% for each year after last evaluation year with NAV.

Example: Square pharma has not reevaluated its asset in last 10 years. Its present disclosed NAV=700. We can easily assume its actual NAV would be at least 700+ 100%=1400. In reality, it has increased much more and increase is compounding. If a revaluation is done, it is possible that square pharma NAV would close to 2000tk.

On the other hand, confidence cement has revaluated its asset this year, so its NAV would be 745 as disclosed.

Inference: a company's market price should be above its NAV and it is usual to be at 1.7 times of NAV in case of any good company.

So, square pharma's present NAV= 660tk, no revaluation done in last 10 years (at least).

So, actual NAV would be at least 1320 at least.

Market price would be 1320 x 1.7= 2224.

On the basis of NAV only square pharma's price upto 2224 tk is safe to buy.

EARNING PER SHARE and PE RATIO:

Earning per share multiplied by 15 is a very safe price for any share.

We should also consider similar types of companies status.

Growth of EPS is crucialy important.

Year end PE ratio is critical. (last 3 years)

Example, Lanka Bangla's last years EPS was 16, this year it could be 31, in 2008 it was 9.8………..almost exponential growth even after stock dividents………………..In last December its price was 288…………on the basis of EPS growth only,.in coming december its price would be(274x31/16= 530)…………….on the basis of absolute value of EPS, price could be 15 x 31=465…………………on the basis of expected year end PE ratio of 20, price could be 20 x 31= 620………………we can make an average (530+465+620)/3=538.

Therefore, Considering EPS factor only, Lanka Bangla's safe price is 538

Inference: considering present trend of EPS increase, we can hope that if we invest in LBF now, in 2011 December we may be able to make our money nearly double…………….just invest , don't worry and wait for a year.

PAID UP CAPITAL

Price of share is dependent on supply and demand theory= simple economic rule.

Two company's with similar fundamental may have different price only due to different paid up capital.

Example, EPS of GP is half of Marico, both are renowned multinational company, so GP's market price should be half of marico= 650/2=325……………in reality price is 250………….because GP has huge paid up capital.

The more important part is tradeable portion of share.

These are basics of fundamental analysis………….other factors are self explanatory

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Simple mistake we always do!

It is very common for you seeing people are busy with trading stuffs even no time to have a cup of tea! All are busy with just one thing in mind "I have to buy this or sell this". A prior hypothesis bias works in mind and people are always getting anxious "shit, the broker isn't listening to me. I am finished." So what's the hurry? Are you sure you are absolutely right? Can I ask you (who is reading this article) why are you such kind of share business? Is it the only thing that you believe you can make money or you are seeing and believing it is time to make money. So what you are going to do do when when the market is severely down, something like a big crash! You are scared? or thinking this article a bullshit. Well, then I am obviously saying with 100% confidence, the market will crash at some point. This is damn sure. Now come to the point why do I think something like this is going to happen. Actually it looks very simple to me. Almost all the sectors are highly overvalued (yes, I have my sector valuation numbers) and the relative strength of news flow is higher than money flow. Still market is like a syndicate of big traders. All move in the same way and no matter what other believes they make a disciplined entry without letting other know that kind of thing. So this is like a great nonsense understanding the market macro thing since it is contaminated. Well have you seen Salman F. Rahman asking you "what's the price of BEXIMCO" when both you are in a serious meeting? Or can you recall the lines of Shakil Rizvi "our country is getting ahead like the market is going up! Actually he is right but we often misinterpret the message. So what I am trying say is go as all go'' is very wrong kind of thing. Shake your head and use your judgment. Why ABBANK is not rising? Is it the right time to sell TITASGAS? and so many questions like these. Definitely you will get the answer.

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No more Netting facility for the following companies

As per new margin rule, Company does not allowed to getting netting facilities which is P/E above 40. New loan calculation formula = (Market Price + NAV)/2. I have already  prepared a list which company does not get any loan or no more netting facility due to 40+ P/E. So you look in the list , before buying/selling any items.

List: Netting facility has stop for the following companies because P/E is above 40

#          Trading Code        YCP         P/E 1*     P/E 2*         P/E 3*           P/E 5*     P/E 6             

                                                             (Basic)  (Diluted)                            (Basic) 

1            ACI                        391.4         83.63                                             12.77        n/a

2            ACIFORMULA      169.2         54.58                                             31.92        n/a

3            AFTABAUTO         550.7        74.29                       27.52            241.54       56.48

4            AGRANINS           486.75      32.54        35.79                           44.21        n/a

5            AL-HAJTEX           80.4                                                                   n/a           n/a

6            ALPHATOBA         26               n/a                                                 n/a           n/a

7            AMBEEPHA          332.7         193.43                                           96.43        n/a

8            ANLIMAYARN       222             272.95                                           462.5        n/a

9            ANWARGALV       444.25        n/a                                                  n/a           n/a

10          APEXFOODS        1104.75      56.6                                               n/a           n/a

11          APEXSPINN          833.25       46.09                                             53.35        n/a

12          APEXWEAV          172.75        n/a                                                 n/a           n/a

13          AZIZPIPES            493.5         47.45                                             79.6          n/a

14          BANGAS              1905.5        72.58                                             111.96      n/a

15          BANGLAPRO        1097                                                                442.34      n/a

16          BDAUTOCA          505.5         117.74                                           81.93        n/a

17          BDCOM                61.3           41.05                                              71.28        n/a

18          BDLAMPS            2785          43.35                                              34.31        n/a

19          BDWELDING       164.8        80.78        92.58                            163.17      n/a

20          BLTC                    259              n/a                                                   n/a           n/a

21          BSC                      3490            n/a                                                   n/a           n/a

22          BXPHARMA          150.8         29.92                                             42.01        n/a

23          BXSYNTH             396.5         185.28                                           202.3        n/a

24          CTGVEG               1608           n/a                                                 n/a           n/a

25          DACCADYE          66              126.92                                           104.76      n/a

26          DAFODILCOM       45.2          102.73                                           145.81      n/a

27          DEBBXFISH          835                                                                   n/a           n/a

28          DSHGARME         442            258.98                                           249.72      n/a

29          DULAMIACOT       241.75        n/a                                                 n/a           n/a

30          EASTRNLUB         787.6        140.98                                           160.41      n/a

31          ECABLES             739.25       609.27                                           947.76      n/a

32          EHL                      1686           141.92                                            92.23        n/a

33          ENGINEER           101            n/a                                                  1.23          n/a

34          FEDERALINS        130.7         83.78                                            112.67      n/a

35          FINEFOODS         109.4         46.89                                             108.32      124.32

36          FUWANGCER       433.5         57.75                                             562.99      n/a

37          FUWANGFOOD    71.6           55.36                                             66.92        n/a

38          GULFOODS          162.5         n/a                                                  n/a           n/a

39          HAKKANIPUL        65.8           189.81                                           39.88        n/a

40          HRTEX                  495.5          49.48                                              39.51        n/a

41          ICBIBANK             18.9             n/a            n/a                                 n/a           n/a

42          IMAMBUTTON       376             n/a                                                  118.99      n/a

43          INTECH                 41.7           69.5          77.22                             115.83      n/a

44          IPDC                     538.25       118.04                                           41.92        n/a

45          ISLAMIINS            498.25        41.45                                             66.34        n/a

46          ISNLTD                 45.6             50.67                                             42.62        n/a

47          JANATAINS           1373           65.19        73.03                           123.36      n/a

48          JUTESPINN           1492.75     48.97                                             68.22        n/a

49          KAY&QUE            421.75                                                                162.84      n/a

50          KEYACOSMET     124.7          50.01                             18.78       41.43        n/a

51          KPCL                    140.9           53.78                                             57.98        n/a

52          LAFSURCEML      725.5         89.35                                             42.33        n/a

53          LIBRAINFU            2689.5       69.68                                             77            n/a

54          MEGCONMILK      53.6           89.33                                             97.45        n/a

55          MEGHNAPET        25.1            n/a                                                 n/a           n/a

56          MIDASFIN             1888.75     44.61                                             94.34        108.55

57          MIRACLEIND         47              n/a                                                 n/a           n/a

58          MITHUNKNIT         676.5         41.32                                             38.03        n/a

59          MODERNDYE       529.75       138.92                                           131.45      n/a

60          MODERNIND         137            n/a                                                 19.94        n/a

61          MONNOCERA       610.5         508.75                                           803.29      n/a

62          MONNOFABR       109              n/a                                                 n/a           n/a

63          MONNOJTX           2346.25      287.06                                           82.88        n/a

64          MONNOSTAF        1263.5       48.6                                               32.55        n/a

65          NILOYCEM           339.5         184.51                                           1886.11    n/a

66          NORTHERN          39.5           n/a                                                 n/a           n/a

67          NPOLYMAR          1062           47.98                                             33.99        n/a

68          NTC                      3761.25       n/a                                                 23.99        n/a

69          NTLTUBES            1796.75    91.17                                             31.58        n/a

70          OCL                      159.4           54.59                                             47.02        n/a

71          ORIONINFU           768.5                                                              59.71        n/a

72          PADMACEM         22                n/a                                                 n/a           n/a

73          PADMAOIL           1003.5        75.11                                             65.33        n/a

74          PRAGATIINS         1580.5      47.41                                             60.51        n/a

75          PURABIGEN         1766        162.32                           14.83       46.28        n/a

76          QSMDRYCELL      75             40.47                                             52.08        n/a

77          QSMSILK              13                n/a                                                  n/a           n/a

78          RAHIMAFOOD      572.5         103.22                                           188.94      n/a

79          RAHIMTEXT          1465          110.87                                           29.05        n/a

80          RAKCERAMIC       209.4         68.43                                             119.66      n/a

81          RANFOUNDRY      138.1                                                              63.06        n/a

82          RENWICKJA         1373.25     95.01                                             38.61        n/a

83          SAIHAMTEX          892.25       80.62                                             77.45        n/a

84          SALAMCRST        843.25       54.43                                             57.88        n/a

85          SAMATALETH       230.5         n/a                                                  n/a           n/a

86          SAPORTL             237.7         169.79                           10.31      64.77        n/a

87          SAVAREFR          1020          347.73                                           115.25      n/a

88          SHYAMPSUG       22.9           n/a                                                  n/a           n/a

89          SINGERBD           7685.25    42.31                                             67.2          43.46

90          SINOBANGLA       53.2           66.5                                               95            n/a

91          STANCERAM        435.25       51.49                                             n/a           n/a

92          TALLUSPIN           245            n/a                                                  n/a           n/a

93          TBL                      451               n/a                                                   n/a           n/a

94          ULC                      1920           71.32                             20.13      62.52        n/a

95          UNITEDAIR           449            71.65                                             203.17      n/a

96          USMANIAGL         2305.25     92.85                                             26.19        n/a

97          ZEALBANGLA       23.2            n/a                                                 n/a           n/a

N.B: P/E has not any effect on Mutual Fund and Life Insurance. For Mutual Fund loan has calculated based on its NAV. A details NAV of Mutual Fund has been posted in last Monday, so you can see. For Life insurance does not have any P/E.

Source: DSE website, date: 15.09.2010

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