Many companies become prominent because of its founder. In fact confidence from someone important in a company may make people buy the company shares and treat it as a blue-chip counter. Think Air Asia… Think Public Bank… Think Top Glove and from the property developers, we can think of Eco World. Of course the results are also important else the stock price cannot keep itself up. One particular stock saw its price going up by double digits after its chairman mentioned that 2019 may just be its best year yet. The company is Eco World. the chairman is none other than Tan Sri Liew Kee Sin.
Article in edgemarkets.com Eco World Development Group Bhd (EcoWorld)’s shares leaped as much 12.4% or eight sen to 72.5 sen in afternoon trade after its chairman Tan Sri Liew Kee Sin said he expects the group to close its current financial year ended Oct 31, 2019 (FY19) on a record high note.
Yesterday, The Edge Financial Daily quoted Liew as saying: “Despite the so-called downturn [in the property market], this year is the best year for EcoWorld and EWI.” EcoWorld will release its results on 12th December 2019. As of July 31 2019, EcoWorld’s net profit for first 9 months was RM121.97 million and this was up from RM80.69 million in the corresponding period. Revenue grew by 2.1% to RM1.56 billion versus RM1.52 billion previously. Please refer to full Article in edgemarkets.com
Image source: https://ecoworld.my/collections/
Please refer to the image above. If we look at it’s current price of RM0.74 sen, this gives it a market capitalisation of RM2.19 Billion. The P/E ratio if 11.52 and I think the current price is fair for current market or considered low when the market is more bullish. Very briefly, what this ratio tell you is that if you buy the stock at current price, its profits will be enough to cover the price of the stock after 11.52 years.
As a comparison, if you put your money into the bank for Fixed Deposit at 4 percent per annum, your money will double in 18 years. So, Eco World stock at current price is considered a better investment than the FD. Therefore, if we bought into the stock at current price and we assume they will return similar profit numbers every year, it meant that the profits will be giving us a return of 6.25% per annum. (simple calculation)
Note, historical results are not a good measurement for future results yeah. I do not own a single unit of Eco World stock and has no plans to buy any at the moment. Happy following.
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