Mar 5 2010, 11:56 PM
QUOTE(SKY 1809 @ Mar 5 2010, 09:53 PM)
You should not take the valuations at face values.
On the surface, some stocks may appear to be undervalued bcos of many hidden costs to be written off over a long period of time. I suspect Maybank might adopt this approach. AirAsia could be another ( Analysts expressed some doubts )
Some companies may appear to be overvalued bcos they prefer to write off pre operating expenses even before the commencement of a business. Though under the accounting rule, these expenses could be carried forward to a later date or written off during the year it starts to operate.
So some adjustments or discounting factors may have to be applied.
Not easy to spot them, but just keep in mind of the discrepancies that may arise.
It is an art or skill . Care has to taken if you go for super long term.
For the purpose of sharing only aka do not mean to lecture anyone.
Good point. Can look at how long companies estimate the useful lives of their assets as an indication of the aggresiveness in the selection of accounting policies when making comparisons. But just a minor point la, don't think you can find capitalisation of pre-operating expenses nowadays. The rules on that changed years ago.On the surface, some stocks may appear to be undervalued bcos of many hidden costs to be written off over a long period of time. I suspect Maybank might adopt this approach. AirAsia could be another ( Analysts expressed some doubts )
Some companies may appear to be overvalued bcos they prefer to write off pre operating expenses even before the commencement of a business. Though under the accounting rule, these expenses could be carried forward to a later date or written off during the year it starts to operate.
So some adjustments or discounting factors may have to be applied.
Not easy to spot them, but just keep in mind of the discrepancies that may arise.
It is an art or skill . Care has to taken if you go for super long term.
For the purpose of sharing only aka do not mean to lecture anyone.
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