Chow Sang Sang (0116.HK)

Thread Rating:
  • 0 Vote(s) - 0 Average
  • 1
  • 2
  • 3
  • 4
  • 5
#21
Whether a stock is undervalued or not is always a function of the company's future performance.

Hence, a stock which trades several SDs away from its average p/b (or whichever valuation metric) may or may not be an indication of over or undervaluation.

To cite CSS, it does not necessarily follow its p/b of 0.6 will somehow 'magically' return to its average of say, 1.1-1.5. The factors which caused CSS to be priced at p/b of 0.6 will need to be reversed, or perhaps supplanted by other more positive factors, for the p/b to return to the average.

If CSS is mismanaged, or if gold is no longer seen to be a valuable commodity, then its current valuation may be considered expensive. There are a lot more events which can cause CSS to be worth less (or more) in the future, than in the present.

And so investors have to determine whether future events will be positive or negative for any asset they are prospecting.
Reply
#21
Whether a stock is undervalued or not is always a function of the company's future performance.

Hence, a stock which trades several SDs away from its average p/b (or whichever valuation metric) may or may not be an indication of over or undervaluation.

To cite CSS, it does not necessarily follow its p/b of 0.6 will somehow 'magically' return to its average of say, 1.1-1.5. The factors which caused CSS to be priced at p/b of 0.6 will need to be reversed, or perhaps supplanted by other more positive factors, for the p/b to return to the average.

If CSS is mismanaged, or if gold is no longer seen to be a valuable commodity, then its current valuation may be considered expensive. There are a lot more events which can cause CSS to be worth less (or more) in the future, than in the present.

And so investors have to determine whether future events will be positive or negative for any asset they are prospecting.
Reply
#22
CSS took a HK$450m impairment on their loans to margin accounts, for their securities broking business. This is almost half of their total loans to margin accounts.

I'm not sure if they are doing this to manage their profits/dividends, or they actually provided margin facilities for (a lot of) stocks which went bust.

Without the impairment, CSS' FY19 results would have been similar to its FY18 results. Given the HK protests and trade war that occurred during FY19, the results are considerably satisfactory.

https://www1.hkexnews.hk/listedco/listco...600874.pdf
Reply
#22
CSS took a HK$450m impairment on their loans to margin accounts, for their securities broking business. This is almost half of their total loans to margin accounts.

I'm not sure if they are doing this to manage their profits/dividends, or they actually provided margin facilities for (a lot of) stocks which went bust.

Without the impairment, CSS' FY19 results would have been similar to its FY18 results. Given the HK protests and trade war that occurred during FY19, the results are considerably satisfactory.

https://www1.hkexnews.hk/listedco/listco...600874.pdf
Reply
#23
(27-03-2020, 09:15 AM)karlmarx Wrote: CSS took a HK$450m impairment on their loans to margin accounts, for their securities broking business. This is almost half of their total loans to margin accounts.

I'm not sure if they are doing this to manage their profits/dividends, or they actually provided margin facilities for (a lot of) stocks which went bust.

Without the impairment, CSS' FY19 results would have been similar to its FY18 results. Given the HK protests and trade war that occurred during FY19, the results are considerably satisfactory.

https://www1.hkexnews.hk/listedco/listco...600874.pdf

The stock market did reasonably well from jul 2019 to dec 2019, so if there's any impairment to margin accounts, it is hard to understand.
Reply
#23
(27-03-2020, 09:15 AM)karlmarx Wrote: CSS took a HK$450m impairment on their loans to margin accounts, for their securities broking business. This is almost half of their total loans to margin accounts.

I'm not sure if they are doing this to manage their profits/dividends, or they actually provided margin facilities for (a lot of) stocks which went bust.

Without the impairment, CSS' FY19 results would have been similar to its FY18 results. Given the HK protests and trade war that occurred during FY19, the results are considerably satisfactory.

https://www1.hkexnews.hk/listedco/listco...600874.pdf

The stock market did reasonably well from jul 2019 to dec 2019, so if there's any impairment to margin accounts, it is hard to understand.
Reply
#24
(27-03-2020, 11:40 AM)money Wrote: The stock market did reasonably well from jul 2019 to dec 2019, so if there's any impairment to margin accounts, it is hard to understand.

An asset is 'tested' for impairment by the accountant working on the reporting. If I am correct, the accountant must incorporate all he/she knows about the asset in the calculation of the impairment loss. So, also events happening after the reporting period, like the recent market crash, affect the impairment loss calculation.

That being said, it's still hard to understand that a broker would not liquidate the clients' positions sooner.
Reply
#24
(27-03-2020, 11:40 AM)money Wrote: The stock market did reasonably well from jul 2019 to dec 2019, so if there's any impairment to margin accounts, it is hard to understand.

An asset is 'tested' for impairment by the accountant working on the reporting. If I am correct, the accountant must incorporate all he/she knows about the asset in the calculation of the impairment loss. So, also events happening after the reporting period, like the recent market crash, affect the impairment loss calculation.

That being said, it's still hard to understand that a broker would not liquidate the clients' positions sooner.
Reply


Forum Jump:


Users browsing this thread: 1 Guest(s)