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SCB Estimated Fair Value - Willis Ow Post Reply Rate topic
willisow Master	03-Mar-2017 14:44        willisow About Contact  Quote this Post!
x 0   x 0  Alert Admin	Following the announcement of Standard Chartered Bank 2016 full year result, SJ members are advised not to follow the existing data of this thread becos it will not be updated with the latest interim statistic. This thread will be closed with immediate effect and once again investors are advised not to follow the past stipulated entry price and fair value indicated by myself. Thank you. CLOSED....
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willisow Master	19-Nov-2016 21:43        willisow About Contact  Quote this Post!
x 0   x 0  Alert Admin	2006 2007 2008 2009 2010 2011 2012 2013 2014 2015   OPERATING PROFIT $4,203 $5,312 $6,563 $6,536 $8,324 $9,598 $9,272 $10,185 $8,705 $5,426 IN MILLION OPERATING PROFIT MARGIN 48.76% 48.00% 46.99% 43.05% 51.82% 54.42% 49.36% 54.24% 47.48% 35.49%   RETURN ON ASSETS 1.58% 1.61% 1.51% 1.50% 1.61% 1.60% 1.47% 1.51% 1.20% 0.85%   LOAN PROVISION RATIO 2.39% 2.85% 3.49% 3.05% 3.47% 2.81% 2.79% 2.92% 2.69% 4.00%   SHARE BASE 1,384 1,410 1,896 2,025 2,348 2,384 2,413 2,427 2,473 3,278 IN MILLION DIVIDEND PAID $872 $1,019 $1,157 $1,226 $1,385 $1,675 $1,866 $2,062 $2,095 $1,778 IN MILLION DIVIDEND PER SHARE $0.63 $0.72 $0.61 $0.61 $0.59 $0.70 $0.77 $0.85 $0.85 $0.54   PE RATIO 75.67 74.91 26.61 60.32 59.74 42.20 51.01 41.32 32.98 39.51     For the past 3 months, there were many discussions about the oil and gas bad debts and its negative impact to our local banks. However, not many investors are aware what our local banks experiencing is only at kindergarden level. The above 10 years consolidation are from Standard Chartered Bank (SCB) and I will share with every reader what is meant by RISK. SCB, an European bank owned partly by Temasek, operate globally with operation concentrated mainly in middle east and asia was worst hit by the slumping oil price in 2015. To make the woes worst, it was also hit by a slowdown in the South Korean economy, as a result of oversupply in banks, SCB and its peers closed down many korean operations which were making losses and sold off a number of subsidiaries.  From the above consolidation, we can see the different between SCB and DBS. SCB consistently maintained high loan provision ratio which at times can be 1-3 times more than DBS. Not only that it had a higher loan provision ratio, its provision also fluctuate in a wider band than DBS and this is what i meant by volatile and not stable. Banks are leveage business, meaning if it want to increase its operating earning, it just need to increase its capital base by borrowing or raising equity. Thereafter with a higher capital base, it will be able to take in more deposit and thus able to lend out more money and its interest income will rise. As a result of substantial increased in provision which hurt its tier 1 and 2 capital, thus the opposite effect set in. With a shrinkage of capital base, it is not able to have a larger deposit base and thus it had to reduce its loan assets. As a result, its operating earning slump by 58% from a peak of USD10.2 billion in 2013 to an estimated of USD4.2 billion in 2016. From its operating profit margin, we can also see that it had a wider fluctuation band as compared to DBS which mean that its management is less cost controlling as compared to our sg pride. i had mentioned before, if we want to improve ourselves in investment, the best is through reading of financial reports. The more companies reports we read, the more we will know the different between and good and not so good company. Good companies tend to have the same characteristics and likewise for a not so good company. Thus, reading will enhance our investment knowledge and researching companies out of sg markets will also give us a more comprehensive understanding about what is going on around us. My own assessment of SCB based on its 2016 Q3 result stand at HKD58.31 and ideal entry price at HKD52 or below. A gentle reminder to all investors, the ideal entry price is derived from a historical safety margin off its fair value and it is not a price prediction.Investors are advised to buy in batches to give ourselves additional safety net to hedge against volatility and safeguard our own capital. The estimated fair value is derived from a long term investment horizon and I have no timeline to realise its value. Investors who have a short term investment horizon are advised not to follow. SCB is a volatile and risky bank in historical nature, it is not suitable for conservative investors, be careful and assess your own individual risk profile before taking a position in it. All readers please note. Do not reply or post your comments here, this thread is strictly for VIEWING ONLY. Readers are welcome to direct your comments or queries to my discussion thread  " Feel Free to Share Anything About Investment"   Thank you :)
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