Oishi, Why Is It So Hot?

[pkspeaker]

this stock has been particularly good to me.. originally bought in 2008 at 25 it's currently 152 .. it kept going up during the financial crises and briefly went down about 7 months ago to 66 shortly after the companies founder left and after a plant closure with the floods it was as low as 5x.. providing an excellent opportunity to buy more of it.. but why would a food stock be so hot.. is this company just too good to be true?

[brit1984]

As you hold the stock, maybe you should tell us...

[pkspeaker]

well as a stockholder (a little bit, wish i had bought more!) I have no idea, i read the news, just they sighed a contract for some manufacturing equipment and are expanding into HK, other than that can't know the secret of a food stock that is 7 times it's previous value after 7 months!

[brit1984]

what P/E and EV/EBITDA is it trading at (2011A, 2012E, 2013E)?

[pkspeaker]

http://www.set.or.th/set/companyhighlight.do?symbol=OISHI&language=en&country=US

[brit1984]

It is trading at 38x P/E

Looks massively overvalued

I suggest you sell

[london]

38x PE ?

Crazy !

[pkspeaker]

maybe some people know something we don't and that's what's inflating it, like what if a foreign conglomerate swooped in and bought the company?

[london]

Could be, but at a PE of x38, its not a bargain.......

[Microwave]

Sounds like you've made an excellent return on your investment. Hold onto some of your shares, but sell most of them. Nobody ever lost money buy taking profits!

Oishi's had a great run and may run further, but I wouldn't get greedy. I'd lock in my profits.

[brit1984]

maybe some people know something we don't and that's what's inflating it, like what if a foreign conglomerate swooped in and bought the company?

more likely the stock started recovering after its dip and some traders got excited and started thinking... "some people know something we don't and that's what's inflating it, like what if a foreign conglomerate swooped in and bought the company"

[brit1984]

Could be, but at a PE of x38, its not a bargain.......

...any hypothetical "foreign conglomerate" would be bonkers to pay that sort of multiple in this industry

[jackinbkk]

market efficiency eh. All information flows out. I'll be interested to see what happens to them in the future.

[london]

Could be, but at a PE of x38, its not a bargain.......

...any hypothetical "foreign conglomerate" would be bonkers to pay that sort of multiple in this industry

exactly !

[brit1984]

market efficiency eh. All information flows out. I'll be interested to see what happens to them in the future.

...it takes a brave "investor" to bet against any particular inefficiency being corrected.

Sent from iPhone; please forgive any typos or violations of forum rules

[pkspeaker]

It says in the news section that oishi is one of the companies not meeting 'free float requirement' ...

"listed firms must have at least 150 minority shareholders holding at least 15% of the companies paid up capital"

could the companies efforts to meet this requirement be pushing the stock artificially high? reason i'm trigger shy is last time i had a stock going up and felt that it was 'overvalued' based on pe, i sold it; and bought a differnt one, well it kept going up and the one i bought went down.. so i'm trying to find a logical reason why this stock is so overvalued but it may simply be what you said-that it's a high profile company with their stores all over the place and people assume it's better than it is, simply the only reason it's high is that there are more buyers than sellers and i should take some profits..

[brit1984]

It says in the news section that oishi is one of the companies not meeting 'free float requirement' ...

"listed firms must have at least 150 minority shareholders holding at least 15% of the companies paid up capital"

could the companies efforts to meet this requirement be pushing the stock artificially high? reason i'm trigger shy is last time i had a stock going up and felt that it was 'overvalued' based on pe, i sold it; and bought a differnt one, well it kept going up and the one i bought went down.. so i'm trying to find a logical reason why this stock is so overvalued but it may simply be what you said-that it's a high profile company with their stores all over the place and people assume it's better than it is, simply the only reason it's high is that there are more buyers than sellers and i should take some profits..

That suggests the stock is not widely held, probably not well covered by the equity research community, and likely to be relatively illiquid. Hence, the high volatility and the current overvaluation.

The price of any stock can go up or down, depending on the market (which is inefficient). However, over time it is wise to assume overvalued stocks will go down and undervalued stocks will go up.

This stock is clearly overvalued so it would be wise to assume that the price will go down in the future. Therefore, you should sell and try to re-invest in something that looks undervalued.

If you haven't already read it, I strongly recommend you read Benjamin Graham's book The Intelligent Investor (1949).

[ExpatJ]

OISHI is one of thai SETs top growth stocks- consistently good EPS, revenue etc- the problem is it has a small daily trade volume so i have avoided buying it.

[brit1984]

OISHI is one of thai SETs top growth stocks- consistently good EPS, revenue etc- the problem is it has a small daily trade volume so i have avoided buying it.

Very sensible... unless the price falls by 50%... at 19x P/E it might be interesting

[pkspeaker]

Tx for the help

Posted with Thaivisa App http://apps.thaivisa.com

[yoshiwara]

Japanese food is 'hot' right now. One can see the restaurants and even the stalls opening up. Oishi has had a 'first-mover' brand advantage and what you have seen in the stock price is fast and profitable opening up of new restaurants in major urban centres. There are two questions; firstly whether the growth story is over and secondly whether the profitability of individual branches is good.

[brit1984]

Japanese food is 'hot' right now. One can see the restaurants and even the stalls opening up. Oishi has had a 'first-mover' brand advantage and what you have seen in the stock price is fast and profitable opening up of new restaurants in major urban centres. There are two questions; firstly whether the growth story is over and secondly whether the profitability of individual branches is good.

The real question is whether Oishi's growth prospects are more than twice as good as Google Inc?

That is what the relative P/E ratios of the two stocks currently imply. I find it very hard to believe.

[yoshiwara]

Japanese food is 'hot' right now. One can see the restaurants and even the stalls opening up. Oishi has had a 'first-mover' brand advantage and what you have seen in the stock price is fast and profitable opening up of new restaurants in major urban centres. There are two questions; firstly whether the growth story is over and secondly whether the profitability of individual branches is good.

The real question is whether Oishi's growth prospects are more than twice as good as Google Inc?

That is what the relative P/E ratios of the two stocks currently imply. I find it very hard to believe.

I am not sure of the point of comparing with Google. Different asset classes for portfolio anyway.

My own opinion is that I would be inclined to take profits now as the barriers to competitive entry are low in the restaurant business in Thailand and the growth story may be near its peak.

[brit1984]

Japanese food is 'hot' right now. One can see the restaurants and even the stalls opening up. Oishi has had a 'first-mover' brand advantage and what you have seen in the stock price is fast and profitable opening up of new restaurants in major urban centres. There are two questions; firstly whether the growth story is over and secondly whether the profitability of individual branches is good.

The real question is whether Oishi's growth prospects are more than twice as good as Google Inc?

That is what the relative P/E ratios of the two stocks currently imply. I find it very hard to believe.

I am not sure of the point of comparing with Google. Different asset classes for portfolio anyway.

My own opinion is that I would be inclined to take profits now as the barriers to competitive entry are low in the restaurant business in Thailand and the growth story may be near its peak.

I agree with you (of course) that Google is not directly comparable, and it would be very interesting to see how Oishi's P/E (and EV/EBITDA) compares to its industry comps.

The reason I mentioned Google is because it is such a well known company, which is widely held, very liquid and properly covered by the equity research community. Although Google Inc's growth prospects are well understood and unquestionable, the P/E ratio is less than half of Oishi's (for whom the growth story is less compelling).

If you were to choose between investing $1,000 in Oishi, or investing $1,000 in Google, you would essentially be buying either $26 of Oishi profit or $56 of Google profit (plus their respective profit growth prospects in both cases). Even taking into consideration potential portfolio considerations, that choice looks like a no brainer to me.

[yoshiwara]

If I am not investing in the NYSE then Google is not an option if I am buying individual stocks

Japanese food is 'hot' right now. One can see the restaurants and even the stalls opening up. Oishi has had a 'first-mover' brand advantage and what you have seen in the stock price is fast and profitable opening up of new restaurants in major urban centres. There are two questions; firstly whether the growth story is over and secondly whether the profitability of individual branches is good.

The real question is whether Oishi's growth prospects are more than twice as good as Google Inc?

That is what the relative P/E ratios of the two stocks currently imply. I find it very hard to believe.

I am not sure of the point of comparing with Google. Different asset classes for portfolio anyway.

My own opinion is that I would be inclined to take profits now as the barriers to competitive entry are low in the restaurant business in Thailand and the growth story may be near its peak.

I agree with you (of course) that Google is not directly comparable, and it would be very interesting to see how Oishi's P/E (and EV/EBITDA) compares to its industry comps.

The reason I mentioned Google is because it is such a well known company, which is widely held, very liquid and properly covered by the equity research community. Although Google Inc's growth prospects are well understood and unquestionable, the P/E ratio is less than half of Oishi's (for whom the growth story is less compelling).

If you were to choose between investing $1,000 in Oishi, or investing $1,000 in Google, you would essentially be buying either $26 of Oishi profit or $56 of Google profit (plus their respective profit growth prospects in both cases). Even taking into consideration potential portfolio considerations, that choice looks like a no brainer to me.

I am assuming that Oishi is an SET stock? so would be evaluating that against other SET stocks.

The question is not would I do with $1000 (that amount hardly worth the bother anyway with mature stocks)

The question was what to do with a particular stock that had gained immensely.

Personally I am not interested in tech stocks either on NYSE or NASDAQ.

[brit1984]

I am assuming that Oishi is an SET stock? so would be evaluating that against other SET stocks.

The question is not would I do with $1000 (that amount hardly worth the bother anyway with mature stocks)

The question was what to do with a particular stock that had gained immensely.

Personally I am not interested in tech stocks either on NYSE or NASDAQ.

I think we both agree the OP should sell, unless he is a talented (lucky) momentum trader.

Performing a full-blown valuation analysis for a stock so overvalued would appear a waste of time.

Instead, I am just trying to demonstrate the same point in a way that is easy to comprehend.

Sent from iPhone; please forgive any typos or violations of forum rules

[yoshiwara]

I am assuming that Oishi is an SET stock? so would be evaluating that against other SET stocks.

The question is not would I do with $1000 (that amount hardly worth the bother anyway with mature stocks)

The question was what to do with a particular stock that had gained immensely.

Personally I am not interested in tech stocks either on NYSE or NASDAQ.

I think we both agree the OP should sell, unless he is a talented (lucky) momentum trader.

Performing a full-blown valuation analysis for a stock so overvalued would appear a waste of time.

Instead, I am just trying to demonstrate the same point in a way that is easy to comprehend.

Sent from iPhone; please forgive any typos or violations of forum rules

If I am investing in the Thai SET and interested in the restaurant sector, then would poke around looking for other similar listings and seeing how thay have been getting on plus any performance of the restaurant sector overall or I might look at performance of any Japanese food performance in the HK Hang Seng. The OP might be wary of advice from any of us who wouldn't have invested in this stock or sector in the first place and therefore have a bias towards selling at any point in time.

[brit1984]

I am assuming that Oishi is an SET stock? so would be evaluating that against other SET stocks.

The question is not would I do with $1000 (that amount hardly worth the bother anyway with mature stocks)

The question was what to do with a particular stock that had gained immensely.

Personally I am not interested in tech stocks either on NYSE or NASDAQ.

I think we both agree the OP should sell, unless he is a talented (lucky) momentum trader.

Performing a full-blown valuation analysis for a stock so overvalued would appear a waste of time.

Instead, I am just trying to demonstrate the same point in a way that is easy to comprehend.

Sent from iPhone; please forgive any typos or violations of forum rules

If I am investing in the Thai SET and interested in the restaurant sector, then would poke around looking for other similar listings and seeing how thay have been getting on plus any performance of the restaurant sector overall or I might look at performance of any Japanese food performance in the HK Hang Seng. The OP might be wary of advice from any of us who wouldn't have invested in this stock or sector in the first place and therefore have a bias towards selling at any point in time.

It would be interesting to see the comps (or some equity research).

[yoshiwara]

I am assuming that Oishi is an SET stock? so would be evaluating that against other SET stocks.

The question is not would I do with $1000 (that amount hardly worth the bother anyway with mature stocks)

The question was what to do with a particular stock that had gained immensely.

Personally I am not interested in tech stocks either on NYSE or NASDAQ.

I think we both agree the OP should sell, unless he is a talented (lucky) momentum trader.

Performing a full-blown valuation analysis for a stock so overvalued would appear a waste of time.

Instead, I am just trying to demonstrate the same point in a way that is easy to comprehend.

Sent from iPhone; please forgive any typos or violations of forum rules

If I am investing in the Thai SET and interested in the restaurant sector, then would poke around looking for other similar listings and seeing how thay have been getting on plus any performance of the restaurant sector overall or I might look at performance of any Japanese food performance in the HK Hang Seng. The OP might be wary of advice from any of us who wouldn't have invested in this stock or sector in the first place and therefore have a bias towards selling at any point in time.

It would be interesting to see the comps (or some equity research).

http://www.securities.com/Public/company-profile/TH/Oishi_Group_PCL_en_1701603.html

[brit1984]

http://www.securitie...en_1701603.html

Interesting... EV/EBITDA (2011A) at 10.4x... not crazy

...and no leverage (actually net cash)... could be a PE play

Edited July 9, 2012 by brit1984