Watch the video with Andrew Stotz or read about how to use the Korea Equity FMVR Snapshot below.
Korea in Your Hand—Every Week
Today, we debut our new weekly research tool, the Korea Equity FVMR Snapshot. It uses the same format we first reviewed in our post about the Global Equity FVMR Snapshot.
When you sign up to receive our Korea Equity FVMR Snapshot, you will always be up to date; just one page covers Fundamentals, Valuation, Momentum, and Risk—what we call “FVMR.”
This is the same information used by elite institutional investors and fund managers around the world.
And the best part? You do nothing.
Once you’ve signed up, you will receive a one-page PDF every Monday. Print it out. Put it on your desk. Use it in your analysis of what’s going on in Korea.
In fundamentals, we look at the profitability through return on equity, and then look at the dividend payout ratio to understand what you, as an investor, get.
Let’s look at a few different highlights.
First, we see that Korea’s return on equity is very low, almost half of the global average.
We can also see that health care has performed best, at a rate of 15.7% in 2015 to 16.1% in 2016.
If we look at dividend payout ratio, we can see that telecoms lead the way, as they often do, at 36.5%.
If we look at the next area which is valuation, we can see price to earnings and price to book.
Looking at the consumer discretionary sector, we see they are trading at a 7.5x P/E; compare this to health care, which is trading at a whopping 41.5x P/E. This means that, as a sector, health care is very expensive.
We also see that Korea’s P/E for 2016 is 9.4x. This deep discount to the world’s 13.0x is due to Korea’s relatively low ROE.
Now, for price to book, Korea’s price to book is below one. This is an important level, as this means that people expect Korean companies, on the whole, to destroy value, not create it.
While consumer staples and health care both are exceptions and trade above 1x P/B, all other Korean sectors are below 1x P/B.
Let’s move on to momentum. We look at earnings momentum and price momentum.
We can see that earnings momentum has been up for the materials companies, while it has been down or flat for utilities.
Now, let’s look at price as far as momentum is concerned. Industrials have been reasonably strong recently, and on an a one-year basis, Korea has fared better than the world average, losing just 8.9% as compared to 14.4%.
We can also see that the price of health care stocks, as you would expect given their aforementioned very high P/E of 41.5x, has risen very sharply at 149.3%.
The next thing is risk where we look at gearing or net debt to equity and price risk.
Looking at this, we can see that information technology, due to the profitable businesses, are sitting on a lot of cash and don’t have much debt.
If we look at the price, we can see that Korea’s price volatility is at 14.1%, close to with the world index’s average of 14.6%. Considering a lower level of ROE and a cheaper P/E, it makes sense that volatility is roughly in-line with the global average.
One sector has been very volatile, and as you likely guessed, it’s health care. This is likely due to its very strong P/E, making investors wonder if those stocks have rallied too much.
Korea in Your Hand
With our Korea Equity FVMR Snapshot, you’ll get a weekly update like the one below covering Korean stocks.
You’re going to understand fundamentals, valuation, momentum, and risk, and the way we look at them.
After signing up, YOU will:
Always be up to date: Every week you will receive the updated Korea Equity FVMR Snapshot
Know all the numbers: One page covers Fundamentals, Valuation, Momentum, and Risk (FVMR)
Be professional: Use the same information as institutional investors and fund managers
Not have to do anything else to stay informed: After signing up you will receive a one-page PDF every Monday
The Korea Equity FVMR Snapshot is free for everyone signing up within a limited time period. Sign up now to not miss out on getting it for free.
NOTE: You’ll have to fill in the form below to receive the Korea Equity FVMR Snapshot even if you’re already subscribing to the Global or China Equity FVMR Snapshot and/or a founding member that get our newsletter.
DISCLAIMER: This content is for information purposes only. It is not intended to be investment advice. Readers should not consider statements made by the author(s) as formal recommendations and should consult their financial advisor before making any investment decisions. While the information provided is believed to be accurate, it may include errors or inaccuracies. The author(s) cannot be held liable for any actions taken as a result of reading this article.