Popular Holdings

Popular renovated some of the shops late year. The affected shops were closed for about a month. I think that accounted for the lower income and high expenses for the passed 2Q. My guess is that this coming 3Q result would be a good one.

Hopefully the management can give guidance on the final dividend for 4Q or pay a surprise interim dividend in 3Q.

(10-03-2013, 01:07 PM)a74henry Wrote: What is the intrinsic value for Popular and how do you calculate it?

Interestingly, Ven Sreenivasan has attempted to answer your question in today's edition of BT:

How Popular stays popular

excerpted:

The company recorded a profit of $36 million from its book sales, publishing and distribution business. Assuming a 7X price-earnings multiple, this would impute a value of $252 million to the company. Adding this to its net cash of $118 million and property holdings of $145 million yields a grand total of $515 million, or 63 cents per share.

[end]

Interesting to note that Popular has three franchised bookstores in Myanmar. This was a tidbit following the lead up in the column where Sreenivasan talks about how Myanmar plays are all the rage nowadays. However, I'm sure that this is relatively small in relation to Popular's core business.

(11-03-2013, 10:40 AM)kazukirai Wrote:

(10-03-2013, 01:07 PM)a74henry Wrote: What is the intrinsic value for Popular and how do you calculate it?

Interestingly, Ven Sreenivasan has attempted to answer your question in today's edition of BT:

How Popular stays popular

excerpted:

The company recorded a profit of $36 million from its book sales, publishing and distribution business. Assuming a 7X price-earnings multiple, this would impute a value of $252 million to the company. Adding this to its net cash of $118 million and property holdings of $145 million yields a grand total of $515 million, or 63 cents per share.

[end]

Interesting to note that Popular has three franchised bookstores in Myanmar. This was a tidbit following the lead up in the column where Sreenivasan talks about how Myanmar plays are all the rage nowadays. However, I'm sure that this is relatively small in relation to Popular's core business.

Thank you for your update and sharing.

(11-03-2013, 10:40 AM)kazukirai Wrote:

(10-03-2013, 01:07 PM)a74henry Wrote: What is the intrinsic value for Popular and how do you calculate it?

Interestingly, Ven Sreenivasan has attempted to answer your question in today's edition of BT:

How Popular stays popular

excerpted:

The company recorded a profit of $36 million from its book sales, publishing and distribution business. Assuming a 7X price-earnings multiple, this would impute a value of $252 million to the company. Adding this to its net cash of $118 million and property holdings of $145 million yields a grand total of $515 million, or 63 cents per share.

[end]

Interesting to note that Popular has three franchised bookstores in Myanmar. This was a tidbit following the lead up in the column where Sreenivasan talks about how Myanmar plays are all the rage nowadays. However, I'm sure that this is relatively small in relation to Popular's core business.

Sorry, I don't agree with this way of valuation. To me this is rather misleading. If we want to price a stock base on PE, then it should be pure PE only and not mixed with the tangible asset. Because PE depends on market sentiment that varies from time to time. Tangible asset is more or less physical asset that backs the share. So depend on which method an investor chose to value a share both should not be exclusive of each other.

(11-03-2013, 11:02 AM)zhangwuji Wrote:

(11-03-2013, 10:40 AM)kazukirai Wrote:

(10-03-2013, 01:07 PM)a74henry Wrote: What is the intrinsic value for Popular and how do you calculate it?

Interestingly, Ven Sreenivasan has attempted to answer your question in today's edition of BT:

How Popular stays popular

excerpted:

The company recorded a profit of $36 million from its book sales, publishing and distribution business. Assuming a 7X price-earnings multiple, this would impute a value of $252 million to the company. Adding this to its net cash of $118 million and property holdings of $145 million yields a grand total of $515 million, or 63 cents per share.

[end]

Interesting to note that Popular has three franchised bookstores in Myanmar. This was a tidbit following the lead up in the column where Sreenivasan talks about how Myanmar plays are all the rage nowadays. However, I'm sure that this is relatively small in relation to Popular's core business.

Sorry, I don't agree with this way of valuation. To me this is rather misleading. If we want to price a stock base on PE, then it should be pure PE only and not mixed with the tangible asset. Because PE depends on market sentiment that varies from time to time. Tangible asset is more or less physical asset that backs the share. So depend on which method an investor chose to value a share both should not be exclusive of each other.

The valuation is base on SOTP method, which is one of the formal valuation method used.

For popular with different segments of business, a SOTP valuation is most appropriate IMO

(11-03-2013, 11:17 AM)CityFarmer Wrote:

(11-03-2013, 11:02 AM)zhangwuji Wrote:

(11-03-2013, 10:40 AM)kazukirai Wrote:

(10-03-2013, 01:07 PM)a74henry Wrote: What is the intrinsic value for Popular and how do you calculate it?

Interestingly, Ven Sreenivasan has attempted to answer your question in today's edition of BT:

How Popular stays popular

excerpted:

The company recorded a profit of $36 million from its book sales, publishing and distribution business. Assuming a 7X price-earnings multiple, this would impute a value of $252 million to the company. Adding this to its net cash of $118 million and property holdings of $145 million yields a grand total of $515 million, or 63 cents per share.

[end]

Interesting to note that Popular has three franchised bookstores in Myanmar. This was a tidbit following the lead up in the column where Sreenivasan talks about how Myanmar plays are all the rage nowadays. However, I'm sure that this is relatively small in relation to Popular's core business.

Sorry, I don't agree with this way of valuation. To me this is rather misleading. If we want to price a stock base on PE, then it should be pure PE only and not mixed with the tangible asset. Because PE depends on market sentiment that varies from time to time. Tangible asset is more or less physical asset that backs the share. So depend on which method an investor chose to value a share both should not be exclusive of each other.

The valuation is base on SOTP method, which is one of the formal valuation method used.

For popular with different segments of business, a SOTP valuation is most appropriate IMO

SOTP valuation for Popular is correct. Tangible asset itself is already SOTP. It is made up of various physical properties, inventories, cash and even the brand from all the business segments. But it should never add in the PE to the sum.

For example, let's say if you are thinking of buying a business. You will work out the number of years your investment will be paid back. This is equivalent to the PE. So your initial investment dollar should include everything the business owned. You're don't add this sum to the physical asset again.

(11-03-2013, 11:50 AM)zhangwuji Wrote: SOTP valuation for Popular is correct. Tangible asset itself is already SOTP. It is made up of various physical properties, inventories, cash and even the brand from all the business segments. But it should never add in the PE to the sum.

For example, let's say if you are thinking of buying a business. You will work out the number of years your investment will be paid back. This is equivalent to the PE. So your initial investment dollar should include everything the business owned. You're don't add this sum to the physical asset again.

Not sure we are talking on the same SOTP

SOTP applies to business with diverse segments (parts), in this case, book related business as one part, property related is another part, net cash reserve is next part. Inventory/brand name are valued together with the book related business.

In this case, book related business is valued at PE 7, other parts valued at face value, which bring the overall PE of Popular to 16+ with share price of 63 cents

Having said so, I agree with its method, but doesn't mean i agree with the valuation of 63 cents.

(11-03-2013, 12:29 PM)CityFarmer Wrote:

(11-03-2013, 11:50 AM)zhangwuji Wrote: SOTP valuation for Popular is correct. Tangible asset itself is already SOTP. It is made up of various physical properties, inventories, cash and even the brand from all the business segments. But it should never add in the PE to the sum.

For example, let's say if you are thinking of buying a business. You will work out the number of years your investment will be paid back. This is equivalent to the PE. So your initial investment dollar should include everything the business owned. You're don't add this sum to the physical asset again.

Not sure we are talking on the same SOTP

SOTP applies to business with diverse segments (parts), in this case, book related business as one part, property related is another part, net cash reserve is next part. Inventory/brand name are valued together with the book related business.

In this case, book related business is valued at PE 7, other parts valued at face value, which bring the overall PE for Popular of 16+ with share price of 63 cents

Having said so, I agree with its method, but doesn't mean i agree with the valuation of 63 cents.

Pai Say Pai Say, I am not trained in finance and miss understood SOTP

Anyway, 63 cts valuation is too optimistic. I hope no one is pushing the share price up just to unload them.

Oops! Back to where it belongs. There goes a fraction of my capital gain.