May 16-20, FA/TA for OCBC

FA for OCBC,

FA - Quantitative Analysis,

• NAV - 5.66 (Graham's recommendation - 66% of NAV)
• Yield - 3.2% (Yield on par with inflation 2.8%)
• PE - 14.1 (Graham's recommendation - 8x) 

Using Benjamin Graham's Intrinsic Value investment,

• Original formula, Intrinsic Value - SGD 10.07
• Conservative formula, Intrinsic Value - SGD 8.28. 

FA - DDM Intrinsic Value,

Using beta as 1.2, and Kr (expected return) of 7.5%, 7.6% and 7.7%. The intrinsic Value is 11.15, 10.26, 8.45 respectively. In the last one month, there are 9 analysts house recommended OCBC at 11.05 range. OCBC has a stable earning yield and you can use Gordon Dividend Discount Model to find the intrinsic Value.


FA - Qualitative Analysis,

Articles to read,
1- http://www.cnbc.com/id/42983891 (Why Singapore Banks Underperformed despite strong balance sheets).

May 16-20, TA for OCBC

Trend, (3 indicators confirmed side trending)

• - Side Trending along 100DMA and 200DMA. 
• - Pricing entering Ichimuko's cloud.  
• - MACD at 0 range

Momentum,

• RSI - Flat at 50%
• Stochastic - trending toward 80%. 

Support - 9.1 and 8.83

Resistance - 9.6

Candlestick - Hammer at resistance (indicates bearish reversal)

Chart Pattern - Possible Cup with Handler Formation. (this is a bullish chart if break resistance of 9.6)

General Comments,

Looking from FA prospective, 

If you are looking for a stable stock with stable earning yield, OCBC is the only bank that has constant growth rate. Personally, I like to invest stock I understand and also able to validate some basic FA valuation - at least, the intrinsic value can be computed. Analysts have recommended a buy at SGD 11 which aligned with its constant earning valuation of 7.5% constant growth rate. Theoretically, it's present price is below Intrinsic Value - indicates a Value Stock to Hold. 

Looking from TA prospective, 

On the chart pattern formation, I see a "Cup with Handler" formation. This is a bullish chart with a breakout strategy at resistance 9.6. However, overall trend indicators indicate Side Trending, which will weaken "Cup with Handler" formation. So I would personally watch the support at 8.8 if it hits and it is still a side trend.