Reliable company information / understanding company information

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  1. #1

    Join Date
    Feb 2012
    Posts
    10

    Reliable company information / understanding company information

    When screening HK companies, where do you get the information used for the screening, and which factors do you mostly look at?

    Let me start out by saying that I'm very new to investment and haven't bought my first stock yet, and is actually still considering putting my whole investment in ETFs while I learn more about the stock market.

    I have found that google finance and hkex both have some information, but I'm interested in learning if there are other good resources out there (especially a resource which can be used with Joel Greenblatt's Magic Formula).

    Also I have to admit I don't always understand the information that I get from these sites.

    Looking at a stock like 0078.HK (this stock is by no means unique), I can see that google finance for 0078.HK shows a P/E of 0.44 which means that it earned more than twice of what the shares was worth.

    The same can be seen on HKEX for 0078.HK, where the profit is more than twice of the market capitalization.

    There is clearly something that I don't understand here, if this stock truly had a profit of twice it's stock value last year, then why is the stock not trading higher?

    Hope that somebody can enlighten me, or recommend me some good literature that can enlighten me.

    Regards,
    Nissen

  2. #2

    Join Date
    Jan 2008
    Posts
    1,966

    The reason the stated profit is high, is due to accounting practices. Companies have to show any increase in the value of the assets, as a profit. These are just book entries. You have to read the balance sheet, and see what is the net cash flow, before investments in new assets. E PS & PE have no meaning. Please read and try to understand the underlying core business of the company. The figures are distorted by non cash items


  3. #3

    Join Date
    Feb 2012
    Posts
    10

    That was what I thought.

    I clearly need more information before I start investing, any good resources to help me understand these concepts?


  4. #4

    Join Date
    Jan 2008
    Posts
    1,966

    Keep reading the balance sheets, including the notes, and slowly you will find, what is important and what is junk.