SerenityBay ~ Indonesia Stock Market Watch, Analysis and Forecast ~

Our Condolences, Jakarta - July 17th, 2009

2009-07-17T11:13:00.004+07:00

Words seem inadequate to express the sadness we feel for the Jakarta Hotel Blasts...
Although no words can really help to ease the victims and their families, just know that you are very close in every thought and prayer...
You have our deepest sympathies.

Theofilus

Undervalued Stocks Vs. Cheap Stocks

2009-03-14T20:27:00.002+07:00

One good tips for investors when looking for a stock to buy is try to find an undervalued stock rather than a cheap stock.

It is hard sometimes to differentiate an undervalued stock and a cheap stock. One thing we should remember is that an undervalued stock is a stock that its price in the market is less than its intrinsic value. On the other side, a cheap stock is a stock that its price is relatively less than the other stocks in the market.

Let's take BTEL as an example. Is it a cheap stock? the price is only 50 though. It's should be cheap right? But is it undervalued stock? Well, according to our valuation model, the intrinsic value of BTEL is around 30. Hence, if it is sold around 50 then it is almost 70% too expensive. Let's take GGRM as a comparison. GGRM last traded price was 5500. It is 110 times BTEL's price. Looks expensive huh?? According to our valuation model, the intrinsic value of GGRM is 8400. It is actually undervalued and if it is sold at 5500 it is quite cheap.

Buying an undervalued stock is less risky than buying a cheap stock. Undervalued stock has so-called margin of safety, which is the positive different between the intrinsic value minus the price. After buying the undervalued stock, what we have to do is sit back and relax until the market realize the true value of the stock. Only after that we could realize our profit. We have provided some sample of undervalued stocks in our StockPicks section. But don't forget to do your homework and master the stock valuation to find the undervalued stocks by yourself.

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Best buy stocks by sectors concerning Business Cycle

2009-03-08T21:51:00.005+07:00

Business cycle is the periodic but irregular up-and-down movement in production and jobs. A business cycle has 2 phases - recession and expansion - and 2 turning points - peak and trough. Calverley (2003, pp. 15-19) classifies business cycle stages and attractive investment opportunities as:

recovery: country's cyclical stocks and commodities.
early expansion: country's stocks and property.
late expansion: country's bonds and interest rate sensitive stocks.
early recession: country's bonds and interest rate sensitive stocks.
recession: country's stocks and commodities.

Considering this short overview, people should know what to buy by now. Everyone has agree that we are in the recession period, right?! So, what are we waiting for?? Go for commodities and government related stocks.

Keep your risk rewarding. Play safe!!

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When to buy... When to sell...

2009-03-01T20:48:00.001+07:00

Determining "when to buy and when to sell" is one of the most popular things that come up in every investor's mind. Logically, we could be filthy rich and extremely prosper if we were right all the time on the exit and the entry point of the market. Lots of methods and formulas were developed in order to determine the right timing for entering and exiting the market. In this blog, we share the Elliott wave principle as our tool in determining the time to buy or the time to sell. Our main reason is to give an insight to investors in Indonesia Stock Market about the possible happening in the market. Hopefully that this free material can help investor in making profit although it was not completed by an information on "what to buy".

In Seruling Capital, we also developed a pricing model that gives us an overview about this exit and entry point based on fundamental data of the company's stock. This pricing model provides information on entry and exit point for individual stock. We use a discounted earning as the backbone of out pricing model that combine with some form of optimization formula. This far, the result is satisfying as we were able to determine the price range of SMGR, for example. According to our model, we should buy SMGR at 1830 and sell it at 4200. In the reality, the pricing for SMGR was 1825 in October 2008 and 4275 in January 2009.

Well, since we cannot publish our pricing model, we can only suggest all investor should do their homework in determining the reasonable price for one stock according to its value. This value can be found through the financial data, business prospect and the corporate governance of the company. Just give some times every three months in evaluating company's performance and watch out the bearish trend at current.

Keep your risk rewarding. Play safe!!

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Bakrie-related stock: why not??

2009-02-22T20:51:00.003+07:00

According to our analysis, not all Bakrie-related stocks are bad. Some have a good management and a good business prospect though. Of course we have to extra care dealing with these kind of stocks since the majority shareholder - Bakrie n Brothers - on most of these stock - seems to have no interest to deploy a good corporate governance. This behavior will time to time gives misfortune to other investor, especially the retail investor.

We have noted that BUMI and UNSP have interesting pricing and good potential gain if there is no fraud in their financial report. Their ROE are more than 31% up to the Q3 financial report. Further, business downturn as in a recession will certainly end, hopefully in the next 2 quarters. In the early time of the recovery period, basic commodity as coal and palm oil are highly demanded. Their price will boost up. So, in this period of recession, accumulation of basic commodity stock is recommended.

ELTY is also interesting since the current price is still far from its intrinsic value according to our pricing model. With a toll road concession in hand, they have control on where and when they would start a property project along side their toll road. As we all now, a piece of property has a really high value if it has a good access to it, ultimately a toll road. Just imagine a toll gate next to every ELTY project. If this could not boost their profit, I do not know what else could.

So, always keep your risk rewarding. Play safe!!

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RP.50,- Stocks - the lowest possible price at Indonesia Stock Exchange: is it worth buying?

2009-02-15T22:22:00.003+07:00

The good thing about this kind of stocks is nothing but going up. Sound good huh?! Well, in a sense it is true but is it worth buying? If you are a good investor then you should only buy stock if the price is less than its value. Same in this penny stocks case, you should only buy the stock if the value worth higher than 50. KIJA is one of the example. According to the our Pricing Model, this stock should be worth 81 - based on 3rd quarter 2008 Financial Report. On the other hand, BTEL worth only 26. The lesson is we as an investor should do our homework in finding the true value of a stock and focus on that value not the price. Keep your risk rewarding. Play safe!!

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