Jakarta, CNBC Indonesia – The most successful retail stock investor in the country, Lo Kheng Hong, said he was not interested in buying shares from technology companies that will take the floor on the Indonesian stock exchange, including a number of technology companies such as GoTo, Traveloka, Bukalapak, and so on.
In fact, he has not bought shares from the primary market for the last 20 years or when the company listed an initial public offering (IPO) on the Indonesia Stock Exchange (IDX).
“First, I have not bought IPO shares in more than 20 years, because it is impossible for the company owner and the underwriter [underwriter] want to sell shares at that price undervalue [di bawah pasar], the price is cheap, surely they want to sell the highest IPO price, so for over 20 years I have avoided buying IPO shares, “said Lo Kheng Hong in a video uploaded to the Instagram account @lukas_setiaatmaja, quoted on Thursday (20/5/2021).
“Because in my opinion there is nothing wrong with the price, why would the businessman want to sell his Mercy at the Avanza price, if the Avanza is the Mercy price. So I haven’t bought it for 20 years,” said share owners of PT Petrosea Tbk (PTRO) and PT Mitrabahtera Segara Sejati. Tbk (MBSS).
The shareholder of PT Global Mediacom Tbk (BMTR) and PT Gajah Tunggal Tbk (GJTL) also added that he was also ‘clueless’.
“I don’t understand technology, for zoom meeting if my child didn’t help it, maybe it wouldn’t have happened zoom this. Until now I can’t even type on the computer, maybe you are surprised Lo Kheng Hong can’t type on the computer because when I was in college there was no computer, that’s why I don’t want to study because I don’t have a need [saat itu], ‘he said.
On the other hand, most importantly, he explained that he is a conservative investor and still sees the company’s fundamental performance as the basis for investing.
The reason why they are not interested in IPO GoTo and others is because the valuation of technology companies is considered very high, not in line with the company’s performance which is still losing money. The valuation is reflected in price to book value (PBV) and price to earnings ratio (PER).
PBV is a valuation method that compares an issuer’s book value with its market price. The lower the PBV, the company will usually be considered the cheaper it is.
According to the Rule of Thumb, PBV will be considered cheap if the ratio is below the number 1 time. Meanwhile, PER is also a valuation method that compares net earnings per share with the market price.
“How can I buy a technology company whose valuation can be 10 times the book value, the company is still losing money, fortunately it is still negative. Like Bank Jago. [saham ARTO], a digital company, maybe a PBV (price to book value) of 90 times. I didn’t follow it, I still lost, I still had assets of more than Rp. 1 trillion, so it is impossible for me to buy it, “he said.
“I am a conservative investor, I don’t want to see its excessive performance in the future, so I want to see the profit first, show it to me. When the profit is large, the price is cheap, then I will buy it,” he explained.
According to him, the company with a large valuation actually makes the period to reach the break even point (BEP) period even longer.
For example, Tesla’s stock, which currently has a price to earnings (PER) of 1,000 times, means that it will only reach BEP in the next 10 centuries.
“Technology stocks are for fund managers because they manage other people’s money, not their own. If you lose anything, they will still be profitable,” he added.
This statement from the investor, who is usually called LKH, comes after news about the IPO plan that Gojek-Tokopedia will carry out after the two companies announced their business merger under the name GoTo Group.
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