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Questionsjardine Matterson
Isabel Im asked 5 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?

Jieren Zheng replied 5 years ago

I think you can use the “sum of all parts” metrics to gauge a conglomerate like them.

Victor Chng replied 5 years ago

Thanks JR

Jieren Zheng replied 5 years ago

Welcome :)

1 Answers
Victor Chng answered 5 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 5 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 5 years ago

Yes just price to book ratio.