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Check Lo Kheng Hong's Stock, Really Cheap Or Cheap?

Check Lo Kheng Hong's Stock, Really Cheap Or Cheap?

andrianus.my.id - Indonesia's veteran investor Drs Lo Kheng Hong (LKH) carried out several maneuvers in the domestic stock market throughout 2022.

The last selling action carried out by LKH was to sell all of its share ownership in a mining company, namely PT Petrosea Tbk (PTRO), which was previously a subsidiary of PT Indika Energy Tbk (INDY).

Just so you know, previously LKH was reported to hold 151,422,200 PTRO shares, equivalent to 15.01% at the beginning of 2022.

However, LKH chose to exit from PTRO by selling all of its shares through a Mandatory Tender Offer (MTO) as a result of the acquisition of PTRO by PT Caraka Reksa Optima from INDY.

The selling price of PTRO's shares was recorded at Rp 3,118/unit, so LKH managed to pocket funds of Rp 472 billion.

In addition to the exit from PTRO shares, the latest investor, who is also dubbed the Warren Buffett of Indonesia, also took stock purchases.

As of August 16, 2022, LKH was reported to have purchased shares of property issuer PT Intiland Development Tbk (DILD) for Rp 453,100,000 at an average price of Rp 147/unit.

In this shopping action, LKH spent Rp 66.6 billion. After the purchase action, the name of LKH appears in the Register of Shareholders (DPS) with ownership of more than 5%.

As of October 28, 2022, LKH is recorded to have 651,416,700 or equivalent to 6.28% of the total outstanding shares.

Using the closing price of DILD shares at Rp 188/unit, the total value of LKH's investment in DILD shares reached almost Rp 122.5 billion.

Besides DILD, there are actually 3 other shares owned by LKH with a portion of more than 5%. The first is the issuer of media holding conglomerate Harry Tanoesoedibjo, namely PT Global Mediacom Tbk (BMTR).

At the beginning of the year, on January 3, 2022, LKH was recorded to own 1,055,530,700 shares of BMTR, equivalent to 6.36%. At that time, BMTR's share price was Rp. 262/unit. This means that the investment value of LKH reaches Rp 276.5 billion in BMTR shares.

However, as of October 28, 2022, LKH was recorded to own 1,058,274,000 shares of BMTR, equivalent to 6.38%. This means that LKH will increase its share ownership in BMTR by 0.02%. LKH's investment value in BMTR shares was recorded at Rp 319.6 billion, an increase of Rp 43 billion compared to the beginning of the year.

The increase in investment value was not only due to the addition of investment value but also the increase in BMTR's share price. As of October 28, 2022, BMTR shares closed at Rp 302/unit, up 15.3% compared to the beginning of the year.

The appreciation of BMTR's share price occurred when Harry Tanoesoedibjo revealed his plan to merge BMTR with a subsidiary, namely PT Media Nusantara Citra Tbk (MNCN).

LKH is also listed as a shareholder of a leasing issuer belonging to the Panin Group, namely PT Clipan Finance Indonesia Tbk (CFIN). At the beginning of the year LKH owned 205,726,800 CFIN shares or equivalent to 5.16% ownership. The investment value in CFIN was recorded at Rp 51.8 billion at the beginning of the year.

Check Lo Kheng Hong's Stock, Really Cheap Or Cheap?

However, as of October 28, 2022, LKH's ownership in CFIN has shrunk to 203,944,700 or equivalent to 5.12%. It's just that the investment value rose to Rp 84.03 billion.

The increase in investment value was due to the significant increase in CFIN's share price, mainly due to rumors that its parent issuer, PT Bank Pan Indonesia Tbk (PNBN), was being approached by two Japanese financial giants for acquisition.

It seems that LKH also took advantage of the momentum of the increase in CFIN's share price to realize some of its profits, resulting in a decrease in the share of ownership.

Finally, there is a tire manufacturing issuer, namely PT Gajah Tunggal Tbk (GJTL). At the beginning of the year LKH was listed as a shareholder with 5.11% ownership or 178,012,400.

However, as of September 30, LKH was recorded as having 180,0001,000 GJTL shares, equivalent to 5.17% of the total outstanding shares. LKH's ownership in GJTL shares recorded an increase throughout 2022.

If you look closely, actually LKH stocks with large investment values ​​are stocks that fall into the third liner category with a market capitalization value of under Rp 10 trillion.

But interestingly, these stocks have relatively cheap valuations because the four stocks above are traded at less than half their book value or in other words, the Price to Book Value (PBV) valuation ratio is below 0.5x.

Although the valuation looks cheap, the four stocks above have historically fluctuating fundamental performances.

In fact, the four stock issuers above recorded deteriorating financial performance throughout the first half of this year. For BMTR and CFIN, the net profit decreased drastically. Meanwhile, for GJTL, the profit turns to loss, while in the DILD case, the loss is swollen.

So, although it can be said that LKH shares are cheap on a PBV basis, in terms of PER valuation, LKH shares are arguably not attractive at this time. Investors who invest in stocks like this usually expect a turnaround business that causes its performance to rise rapidly so that it raises the price.

It should be noted that the only LKH company with an attractive PER valuation is BMTR, although it should be remembered that BMTR is only  a holding company so that although it recorded a profit, there was no  jumbo cashflow  that entered the company's treasury because profits were only recorded on a consolidated basis. The new cash will enter the company when its subsidiary distributes dividends.

If you see an investment strategy like this, investors will certainly remember Warren Buffett's old-school investment style, namely  cigarbutt investing,  which is looking for stocks with very, very cheap valuations so that because they are so cheap, stock prices can rise even though their performance is just like that.

This strategy is very different from Buffett's investment style nowadays, namely looking for very good or wonderful companies  , with reasonable valuations, and not very cheap.

So, are you interested in following the LKH?

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