A tale of two HDB flats by Darles Chickens.

Chinese New Year is a time of family bonding, catching up with friends and also gossiping.

What? Gossiping is not a Chinese New Year tradition? Alamak. 

Oh, it is something we do daily? OK lor.

Since this is the Year of the Chicken (What? Not Chicken? Is Rooster? Rooster is not a Chicken meh?), I present to you "A tale of two HDB flats" by Darles Chickens.

Gossip Tale #1

A: Charlie's family sold their 5 room flat. 

B: Aiyoh, why like that? Bad times need money har?

A: They downgraded to a 3 room flat and they no longer have a home loan to worry about. Fully paid.

B: Wah! Quite smart hor?
Gossip Tale #2

X: You know Dickens from our primary school class? I met him recently.

Y: Oh, what happened to him?

X: His family upgraded from 3 room to 5 room flat already, you know?

Y: Wah! Must be doing well!

X: He says now they are stuck with a big loan and he must help to pay.

Y: Why like that?

X: Actually, when they sold their old flat, they could have paid for the new flat in full. Their old flat sold for very good price.

Y: What happened to the money?

X: His parents took a home loan for the new flat and spent the money from selling the old flat.

You think this tale can become classic like Charles Dickens' novel or not?

Alamak! Who threw a shoe at me? Who? Who?

Related post:
How did AK amass so much money?

Good entry price for QAF Limited?

Reader:
"Hi, I found out abt ur blog thru Remove Sabana Mgr fb grp. Thks for sharing CNY video from Gardenia. I din know abt QAF. What is ur ave price? Do u think this $1.41 is gd to enter?"
AK:
"What is my average price for QAF Limited? Is $1.41 a good entry price? Alamak! I am not a guru and I just anyhow do valuation. You have been warned. Er, I anyhow talk to myself in my blog later."

OK, I start talking to myself now.

What is my average price? I don't know. I have never bothered to find out. I could but I just don't bother. AK is lazy. Regular readers know I don't care about average prices.

I do know I have been a QAF shareholder for many years and I first bought some shares at 60+ cents a share donkey years ago because I wanted to eat free bread. Mental? Must be.

Is $1.41 a good price to enter? I don't know about price but I probably can say something about value.

QAF 3Q 2016.

Q2 2016 EPS was 5.1c. 
Q1 2016 EPS was 2.9c.
(Hyperlinked. Click on above links to read quarterly announcements.)

So, for first 9 months of 2016, total EPS was 11.4c. 

To put things in perspective, full year 2015 EPS was 9.4c. 

So, buying more at $1.03 a share in 1H 2016 meant paying a PER of under 11x. Yes, that was the last time I bought more QAF shares.

Now, with only 9 months worth of earnings in 2016 (i.e. 11.4c a share), assuming Q4 does not turn in a loss and we have zero earnings in Q4, 11x PER would give me a price of $1.25 a share or so. 

If Q4 were to turn in pretty decent earnings which I think it would, of course, based on 11x PER, the price should be higher. If Q4 turns in an EPS of 3c, I would get a price of $1.58, for example.

Now, for a dash of excitement, if I remember correctly, when Mr. Market was feeling a bit happier in the past, QAF Limited was valued at about 14x PER which would give us a share price of almost $1.60 a share based on EPS of 11.4c (i.e. with no contribution in Q4). 

What if we were to add EPS from Q4? 3c EPS in Q4 maybe? That would give us $2.02 a share at 14x PER.

OK, I am beginning to talk nonsense. What? Will it happen? Alamak, don't ask me things about the future. I don't know.

I will say that getting in at $1.41 a share with the thought that share price is probably going higher in the next few weeks or months has a strong speculative flavour. There is nothing wrong with a bit of speculation, I always say, if sized properly.

Now, seriously, go read the quarterly reports for yourself and see why earnings went up as much as they did. Don't just eavesdrop. 

AK is mental. Remember?
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Added 7.55PM (31 Jan 17):

Bad AK! Bad AK! 
Related post:
Breadtalk, Old Chang Kee and QAF Limited.

Watch CNY video clip from Gardenia: HERE.