Basically is because of the investors are paying high PE for the stocks they purchased! But how high is high that warrants the market to be considered as expensive or over valued??
The utmost important factor an investor should consider is the growth rate of the company he intends to invest.
China GDP is growing at the pace of around 10% pa. You can notice that a lot of China companies listed in mainland or Hong Kong are growing at the rate of 50 to 100 pct or even higher!
Let's do a case study:
Y company's 06 EPS is 10 sen. You buy Y at 50X of 06EPS. You pay $5.00
Y's net profit is estimated to grow at the rate of 50-100% for the next few years.
EPS for 07 will be 15sen(min) to 20 sen,
EPS for 08 will be 22.5 sen(min) to max 40 sen.
EPS for 09 will be 33.75 sen(min) to max 80 sen
That means you are buying the Y company at the prospective 07PE of 25X to 33X
That means you are buying the Y company at the prospective 08PE of 12.5X to 22.2X
That means you are buying the Y company at the prospective 09PE of 6.25X to 14.8X
Today is 31 May 2007.
Do you think is expensive to buy Y shares at 08PE of 12.5X to 22.2X and 09PE of 6.25X to 14.8X ???? Is it expensive??
You can hardly find companies with such a strong growth, but there are plenty in China and Hong Kong, especially the RED CHIPS and H Shares listed in HONG KONG. Furthermore, the PE is unbelievable low!! You don't believe? You can check it out PetroChina, CNOOC, ANHUI EXPRESSWAY, and so on.......Don't be lazy, do some study! you will be rewarded accordingly.HAHA!
DON"T MISS this golden opportunity. We are the witnesses of the history. The history of "AWAKENING of a GIANT"!
The utmost important factor an investor should consider is the growth rate of the company he intends to invest.
China GDP is growing at the pace of around 10% pa. You can notice that a lot of China companies listed in mainland or Hong Kong are growing at the rate of 50 to 100 pct or even higher!
Let's do a case study:
Y company's 06 EPS is 10 sen. You buy Y at 50X of 06EPS. You pay $5.00
Y's net profit is estimated to grow at the rate of 50-100% for the next few years.
EPS for 07 will be 15sen(min) to 20 sen,
EPS for 08 will be 22.5 sen(min) to max 40 sen.
EPS for 09 will be 33.75 sen(min) to max 80 sen
That means you are buying the Y company at the prospective 07PE of 25X to 33X
That means you are buying the Y company at the prospective 08PE of 12.5X to 22.2X
That means you are buying the Y company at the prospective 09PE of 6.25X to 14.8X
Today is 31 May 2007.
Do you think is expensive to buy Y shares at 08PE of 12.5X to 22.2X and 09PE of 6.25X to 14.8X ???? Is it expensive??
You can hardly find companies with such a strong growth, but there are plenty in China and Hong Kong, especially the RED CHIPS and H Shares listed in HONG KONG. Furthermore, the PE is unbelievable low!! You don't believe? You can check it out PetroChina, CNOOC, ANHUI EXPRESSWAY, and so on.......Don't be lazy, do some study! you will be rewarded accordingly.HAHA!
DON"T MISS this golden opportunity. We are the witnesses of the history. The history of "AWAKENING of a GIANT"!
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