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20-08-2023, 01:47 PM
Over the past couple of months, the Bursa bank stocks seems to up-trending. Refer to Chart 1.
![[Image: Chart-1-Bursa-Bank-stock-price.png]](https://i.postimg.cc/tTdym5Sj/Chart-1-Bursa-Bank-stock-price.png)
Chart 1: Banks Price trends
But when I compared the LTM PBV or PE for the same period (Refer to Charts 2 and 3) I do not so see the uptrend pattern. One way to interpret this is that the asset value and earnings have also increased in tandem with the stock price.
![[Image: Chart-2-Bursa-Bank-PBV.png]](https://i.postimg.cc/Jn8CJX1d/Chart-2-Bursa-Bank-PBV.png)
Chart 2: Banks PBV
![[Image: Chart-3-Bursa-Bank-PE.png]](https://i.postimg.cc/xjtVJqBt/Chart-3-Bursa-Bank-PE.png)
Chart 3: Banks PE
I happen to have confidence in Bank Negara oversight of our banks and believe that the Book Value represents a reasonable value. So for banks to be trading below its Book Value looks like undervaluation to me.
If you look at Chart 2, you can see that there are 4 banks with PBV < 1. Now if prices are moving up and we still have a “steady” PBV, this looks like and investment opportunity.
I am a value investor and I am merely suggesting that these are the companies that I would focus my detailed analysis on. I am confident that I can find value investing opportunities here and weed out the value traps.
I am of course merely demonstrating one way to screen for value companies. If you want to know more about screening for value traps to go An Effective Way to Screen for Value Traps
Chart 1: Banks Price trends
But when I compared the LTM PBV or PE for the same period (Refer to Charts 2 and 3) I do not so see the uptrend pattern. One way to interpret this is that the asset value and earnings have also increased in tandem with the stock price.
Chart 2: Banks PBV
Chart 3: Banks PE
I happen to have confidence in Bank Negara oversight of our banks and believe that the Book Value represents a reasonable value. So for banks to be trading below its Book Value looks like undervaluation to me.
If you look at Chart 2, you can see that there are 4 banks with PBV < 1. Now if prices are moving up and we still have a “steady” PBV, this looks like and investment opportunity.
I am a value investor and I am merely suggesting that these are the companies that I would focus my detailed analysis on. I am confident that I can find value investing opportunities here and weed out the value traps.
I am of course merely demonstrating one way to screen for value companies. If you want to know more about screening for value traps to go An Effective Way to Screen for Value Traps