Tag Archives: p/e

Building a Core China Portfolio – Part 2, The Shortlist

25 Aug

The table below contains the top one-hundred companies shortlisted according to the criteria outlined in part 1 of my “Building a Core China Portfolio” series, ranked by best return over a ten year period.  (Find part 1 at – https://ravendragon.wordpress.com/2010/08/22/building-a-core-china-portfolio-part-1/)

Before I explain some of the details, I know that the table is too small to read. All you need to do is click on it and it will open as a stand alone table in your browser. Next simply enlarge the table (clicking on the table itself is one way to zoom in) to a readable size. Alternatively you can right click on the table to open it in a new tab or window and similarly enlarge.  Either way, I am happy to be contacted and email you the table in excel format.  Send requests to raven.jonathan@gmail.com

It will take me a little time to clean up, but I am planning to set up the table for users to be able to open a dynamic excel spreadsheet with their bloomberg terminal. If you would like a copy of the dynamic table when I’ve fixed it up, please contact me at the same email address.

Anyway, back to the table itself.  The table contains the top 100 companies ranked by 10-year returns. In addition, I excluded all companies with a maket cap below 5bn in local currency in order to reduce and element of trading-liquidity risk a this stage.

The table contains the following data points:

1. Company name

2. Bloomberg Company ticker

3. Market Cap in local currency (HK$s or CNS)

4. p/e for current and next year (so we can see whether we are getting a good price for the quality we’ve identified in the company’s returns – a lot more on this in coming blog entries).

5. Capital employed (i.e. increase in common equity and net debt), increase in net income, and return over 5, 10, and 15 years.

So what comes next?

Remember, I’ve said that this is a live investigation, and I’ve no idea where is will lead or end. Well next I simply plan to work my way through the list from the top to bottom, choosing which companies are worth expending my time on a thorough investigation.  Time is afterall our most precious commodity.

Let’s look at the top three companies to begin with. Clearly Vtech Holdings is the place to start an investigation.  Not only does it have a 15 year record, but it also had very strong returns over all three periods. In addition, the p/e of 9.4x 2011e bloomberg consensus earnings is a good price for a company with such strong returns.

So, in part 3 of this series I will take a closer look at Vtech. The discussion on Vtech will also present an opportunity to talk about some methodology.

Zai Jian – Jon

再见 -乔恩

Vindicated! Shanghai loses 5%

29 Jul

Allow me this brief moment to rest on my laurels (I assure you I will only do so for a few minutes!).

Yesterday I asked whether at 26x p/e Shanghai was getting too expensive (see below) .  Today Shanghai closed 5% down at 3226.43 – its biggest drop in 8 months as investors began worrying whether the market rally had outpaced growth in earnings.

Shanghai – Getting expensive?

28 Jul

The market is at 26x p/e, and up 100% since November lows?

What do you think it means?

china2

Another bubble in the making? What do you think?

Another bubble in the making? What do you think?