Divergence Between Pentamaster MY and Pentamaster HK

Read The Edge Weekly – talking about the divergence in valuation between Pentamaster MY and its Hong Kong listed subsidiary Pentamaster International which contributes 99.9% of the Malaysian holding company’s profits. As per the Edge, the HK subsidiary is trading at 12x PE while the Malaysian listed entity is traded at 46x PE.

I did a simple regression analysis to broadly ascertain the quantum of divergence by regressing between Penta MY (share price – “Dependent Variable“) against Penta HK (share price – “Independent Variable) . The study covers from 19 January 2018 till 27 November 2020.

The divergence is apparent as the R-squared is at 71.5% (I would have anticipated close an R-square of close to 90% as its 99% of profits came from the HK subsidiary)

Based on the regression analysis, the following analysis shows that the current share price Penta MY appears to be relatively higher than the forecasted value / range.

As of 27 Nov 2020, the current share price of Penta (MY) of $4.79 is relatively higher than the predicted share price of $3.23 and is above 95%-confidence interval of between $1.95 and $4.50.

DISCLAIMER: THIS IS NOT AN INVESTMENT / TRADING ADVICE OR ENDORSEMENT. PLEASE REFER TO THE GENERAL DISCLAIMER OF THIS BLOG.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s