SET-IAA Hot Issue ‘Unraveling the mystery of hot stock prices, how should they be valued?’

Bangkok, The Stock Exchange of Thailand (SET) and the Investment Analysts Association (IAA) organized a seminar via the online channel SET-IAA Hot Issue 'Unraveling the mystery of hot stock prices, how will they be valued? good" Mr. Sombat Narawutthichai, Secretary-General and Managing Director Investment Analysts Association He said at the opening of the event: Each year, each period, including now The stock trading atmosphere is both hot and quiet, but we still need to keep an eye on it and it is necessary to bring in experts to explain both theory and practice. Including bringing in case studies both domestic and international to analyze, evaluate and advise on investment strategies. Including being prepared to take risks. This time there is an interesting issue, namely the cycle of rapidly rising stock prices. How to adjust, unusual signals that need to be watched that may end the cycle, how to evaluate the value of hot stocks like this. Business risk points that must be kept an eye on, including the me aning of various symbols and how investors should act during the display of symbols, information sources and investor advice Mr. Sunthorn Thongthip, Assistant Managing Director, Kasikorn Securities Public Company Limited, said that the stock price cycle, according to Wyckoff Logic theory, stock price movement has four conditions. which investors must Analyze carefully what phase the stock is in right now, including: 1. Prepare before going up. (Accumulation) Stocks are accumulated in the side frame, fluctuating up and down for a long time. There is periodic buying and selling, but the price will not change in the frame. Most investors will not be interested in this period. 2. The price soars (mark up). There is a change in the price frame, raising it upwards, creating a trend among investors. That stock will be talked about in the market and have buying power because there is a stimulus such as the release of good news about the operating results. leaping forward Rumors of getting work on a big project, ha ving world-class partners coming in to hold large shares. The goal is to go far. Stock price increases Market Capto 3. Maintain the price level (distribution). The price begins to fluctuate in the sideways range and is traded for a period of time with more support, creating a positive outlook and confidence for investors to buy despite the value. It will be more expensive than the preparation period before the increase. 4. Reduce the level or end the round (mark down). The price starts to change to a lower range but there are still many investors who come in and buy according to the trend and the target that has been adjusted up to the condition. Still, the market will sell off violently. The rotation of stocks may be caused by selling on facts, operating results not being as expected, prices rising beyond the fundamentals, and analysis warnings. and fell from heaven from the calculation in SET50 /SET100 For signs of abnormalities, it is important to keep an eye on stocks whose prices have increased abnorm ally or may end their cycle. In the short term and/or long term, there are profits growing at a slow rate, special transactions being recorded to make profits look good but actual profits look bad, stock prices rising too fast to the point where the P/E or P/BV is very high. Compared to the possible ROE, the stock price rose too strongly to the point where the stock exchange ordered it to take measures to regulate trading from levels 1-3, allowing securities companies to trade in a cash balance account or not, using the margin limit because the stock price increased. It went down so hot that the volatility of stock prices exceeded 100% in the past 1 month , giving out special dividends, splitting pars, giving away dividend stocks, giving away warrants, there was a specific capital increase, throwing big lots to Investor group Transfer of shares of major shareholders and stocks enter the danger signal zone such as Asked to negotiate to extend debt, budget not submitted in time. Auditor gave conditional opinio n. Many executives or independent directors resigned at the same time. The market posted a "C" sign and the auditor changed during the cycle. Hot stocks will be valued based on discount cash flow, P/E and measured by the direction of increasing ROE. Currently, the Stock Exchange Raising the level of securities trading supervision measures to 3 levels, effective since April 4, 2022, and there are currently 2 types of criteria for orders to enter trading supervision measures: 1) daily criteria (3 weeks of CB), where the market will Issue control measures if the company cannot explain the reasons for the stock price rising sharply in 1-3 business days. 2) Weekly criteria (6 weeks of CB) based on P/E exceeding 40x, average trading value exceeding 100 million. baht per day and each turn over ratio is greater than or equal to 40%. The Stock Exchange of Thailand There is a latest measure that is being implemented which is to conduct an auction by opening trading pairs 3 times a day, random matching times like norma l stocks. The 1st and 2nd break periods are not open for sending trading orders. but can update and can cancel orders which the Stock Exchange Currently considering when Auction should be used in trading. Will have to wait for measures to control hot stocks T1-T3 first and then use or will use them in conjunction with normal measures. Which is considered to have an advantage in that it makes it difficult to manipulate stocks. Mr. Sittichai Duangrattanachaya, Senior Director Innovest There will be speculation around. According to the characteristics of each stock market But it's mostly the same that stock prices are hot towards the end of the stock's rising cycle. Both stocks with good and bad fundamentals Including indicating the condition of the stock market as well. The stock cycle is divided into 4 periods: the first period when stocks were still stagnant (smart money), the second period the stock price began to increase. Funds will begin to invest. The third period saw a hot rally. This is the period whe n many small investors will come in. This is the period when the smart money group starts taking profits and the 4th period when stocks will shrink from their peak points. It is a period when investors will be hurt and remain stuck for 1-2 years before returning to fundamentals, which the Thai stock market was at the end of last year. It is considered to be in this range. Abnormal signal of stocks that may expire include: 1) The stock price has increased significantly without any signs of fundamental change. 2) There has been no change in reasonable business practices. 3) It has never been like this in the past before. 4) Stock prices go against trends and industry cycles and significantly go against companies in the same industry. In addition, one must consider whether there is an investment or a news release to do a new business according to the trend without the company having the ability or having never done it before, the Growth Investment Ratio (Capex/CFO) is low and the financial status is weak, the t rend is likely to have The growth rate is slowing down and starting to come out wrong as expected. During periods when the price rose too high, trading volume was thin or decreased compared to the period when it increased. Foeward P/E exceeded 40x-50x. Management Selling shares in high volumes Including looking at the history of the stock exchange's signs such as "C" "P" "H" "SP" or entering cash balance. For the method of valuing hot stocks, consider Valuation metrics from MandA, Peers comparison, if it is an IPO stock, use the valuation framework of peers as a determinant, PEG, if it is a company with high growth from using more than PEG. 1 would indicate that the stock is too expensive, DCF and DDM are still necessary for investors who are confident in the company's outlook to be highly attractive in order to make fundamental decisions. Source: Thai News Agency