Isabel Im asked 4 years ago
Hi Victor/Rusmin,
For complext company like JMH, it would seem ‘impossible’ to dissect each of their sectors. How then would be a reasonalbe valuation we could employ?
Is 52-week low a good help in any way to guage good entry price? if not, what will be?
Victor Chng answered 4 years ago
Hi Isabel,
Like what jieren had mentioned you can do sum of parts valuation for JMH which means you value each of their business and add the value together.
An alternative way is just using PB, treating it as an investment company which is much easier. Do note that conglomerate don;t trade at their full value because of their complexity, Hence, there is always a conglomerate discount of 10-20% to their real value. Hence, the best is to buy than with more than 30% discount to their value
Isabel Im
replied 4 years ago Thanks! I thought sum of parts will be a daunting task too given the numerous business entities :-(
PB will be just the price to book? Thanks for the guidance.
Victor Chng
replied 4 years ago Yes just price to book ratio.
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I think you can use the “sum of all parts” metrics to gauge a conglomerate like them.
Thanks JR
Welcome :)