Collection: Li Lu - #23 'Hyundai Department Store H&S Part 1; Basic Stock Screening'
[Transcript]
LI LU 00:00
Okay, let's go back to a year and a half ago. Okay, so this is a fall and you know, this thing come from this book. I mean this, you know, it's like a Standard & Poor book. You know, every broker has a book in every country, give you, you know, one page summary of every company.
You know, it's just, you know, S&P has a book for U.S. companies which I used, but I prefer to use Value Line as I said, because U.S. company just give you more information. And for other countries, they don't have Value Line, you go with this.
Okay, so I just flipping on that one at that point, you know, there's one page, you know, jumps out. And so that's the page. So what people can tell you about that page. Yes?
AUDIENCE MEMBER 00:48
Looks like it got really cheap many times in the last 4 years.
LI LU 00:53
Right. What do you mean by cheap?
AUDIENCE MEMBER 00:55
Just that the price per share was very low in relation to the earnings. (Inaudible)
LI LU 01:03
Well, if you really think about you're the owner, don't think about (price) per share okay. So if you just train yourself from now on, don't think about per share numbers. Think yourself as an owner.
So give me what is the market cap?
Come on, it’s simple, come on. And I thought you guys all did homework? Did you? Anybody did homework? Not one hand? Raise your hand if you did your homework.
One hand. (Laughter)
How the hell you’re gonna make in this business. One hand, you did it John?
AUDIENCE MEMBER 01:38
Yeah.
LI LU 01:38
Good. Tell me what is your – what is the market cap? (Laughter)
AUDIENCE MEMBER 01:46
You know, I mean I found that it's very difficult to understand the korean won.
LI LU 01:50
Okay. Anybody else?
It is very simple. What is the ratio between korean won and a dollar? What?
AUDIENCE MEMBER 02:02
Divide it by a 1,000.
LI LU 02:04
Yes, just divide it by a 1,000. So do that right now. What is the market cap?
What?
AUDIENCE MEMBER 02:15
87 million?
LI LU 02:16
87 million?
Roughly about 12 dollar, roughly about what 5 and a half million shares, how much is that? Don't use that one. Don't use – You know, use your kind of – you know, get used to – if you want to read a lot of company, you know there's a lot of companies in this one (book), okay?
Each page you should take no more than five minutes and the only way to do that is you don't use those calculator. Just get yourself into more of a mental. Little things – you can really look at these things and then immediately within five minutes, you get a pretty good summary of the basic financial data. So don't use all of that. Tell me the numbers.
12 (dollar) and 5 and a half million (shares) okay? So 60 some million dollars (market cap), give or take 5-10 million doesn't kill you. What is their earnings last year? Give me the kind of pre-tax number.
Come on you guys, you’re the Columbia Business School. Class, you’re the elite, you expect to make 150,000 dollars as base. What do we people pay you for? What?
AUDIENCE MEMBER 03:39
(Inaudible).
LI LU 03:42
How much is that? Give me the pre-tax earnings, how much is that?
AUDIENCE MEMBER 03:45
(Inaudible).
LI LU 03:47
Pre-tax earnings? Just read a few lines before, it's called...
What is the net income? 12 and 6 months, double that and the year before is what? 24 million (net income), pre-tax 31 million. You are trading at a 60 million dollars of market cap. Roughly about 2 times.
What is your working capital? What is your book value?
What is the book value? Come on. Come on, you guys have work to do.
This is not good, Bruce. (Laughs) I don't know what you are teaching them.
BRUCE GREENWALD 04:36
I think they're still dividing by a 1,000, right? (Laughter)
LI LU 04:42
Come on, divide it by a 1,000, its 230 million. It's simple.
230 million dollars in book, 60 million in market cap, 25 million net earnings, 31 million pre tax earnings. How much is – what is the constitution of the book value?
How do you really go about to do this? We have to probably go to the basics. Okay, who can tell me how do you really do those things quickly? Just as an analyst, you know. What do you see about – when people ask you (BROKEN AUDIO). How do you really – within 5 minutes – tell me the basics sort of structure financially about this company?
How do you go about this, Chase, tell me.
AUDIENCE MEMBER 05:50
(Inaudible).
LI LU 05:57
And?
AUDIENCE MEMBER 05:57
(Inaudible).
LI LU 06:06
How much is it roughly?
AUDIENCE MEMBER 06:07
(Inaudible).
LI LU 06:14
Perfect. Simple. What do you use in businesses? Use some fix assets, some working capital, that's it. And the goodwill, you can really not account on that. But that's it. That's what you need to do to operate a business. That's what you mean by owner, if you are an owner, you look at something like that, you should be able to tell right away.
And if you can't do this, well that’s Bruce’s fault. (Laughs) I shouldn't really taught you. I mean, that's the basic you will learn, right?
(Source: https://youtu.be/y3c2PKupiu8)
[YAPSS Takeaway]
Don't look at price per share, look at the entire business using market cap.
Do not rely on calculator for quick stock screening.
