Design Studio - exploded!

newbie123
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13 years 11 months ago #3805 by newbie123

Replied by newbie123 on topic Re:Design Studio - exploded!

hi, PKC, Thanks for highlighting several gd points. From the IR mgr\'s perspective, her position also doesn\'t allow her to divulge too much. DS is fundamentally doing well, with strong book orders already secured in 2010. The high net profit margin and also the cash reserve is what attracted me to purchase DS. The key point is can it continue to beat expectations or is it reaching its peak? I often compare Kingsmen Creative with Design Studio. Kingsmen\'s revenue and profit margin are kinda stable (flat and growth now is little). Kingsmen has a slighly lower EPS than DS and slightly fewer cash reserves. Margin in Kingsmen is lower than DS since it is service-based. But one gd bonus abt Kingsmen is its ability to give good and consistent dividends(2 cents from Kingsmen vs 1.25 cents from design studio). If kingsmen can be traded at a higher valuation, i don\'t see why Design Studio can\'t as well. The greatest problem with DS right now is the litigation... Too little info for us to make decisions. And, so far, there is no announcement showing any insider selling... I loaded DS twice at 64.5 cents and 59 cents... Seeing the share price today at 47 cents is indeed a worry... Don\'t know if i shld average down one more time or not.... But indeed, at this moment, it is a huge paper loss for me now... sigh !!! btw, for those whom have been to DS\'s EGM, did anyone mention anything about the litigation? Is there a way whereby we can request SGX to ask Design Studio to release more info abt this litigation?

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neontet
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13 years 11 months ago #3806 by neontet

Replied by neontet on topic Re:Design Studio - exploded!

I would accord Pru fund managers more respect - ie, I am certain they had spoken with Design Studio management before committing to such a major purchase of the stock. In other words, they asked about the litigation case, they asked about short-term fluctuation, long-term prospects, etc before buying a small cap like this. And the risk reward ratio must hv looked fantastic at 60 c -level.

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PKC
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13 years 11 months ago #3807 by PKC

Replied by PKC on topic Re:Design Studio - exploded!

You must distinguish between share price and company\'s value. Share price changes every day, hour, and may be minute, which Mr. Market quotes you. while company\'s value does not normally change so drastically in such a short time. That\'s why you have the terms undervalued / overvalued / fairly valued. So you should be more concerned about the company\'s value than its stock price. A company with increasing value i.e. more competitive, etc. will have its share price reflected eventually. Now, the question is what is your long-term view of DS. If you think the company will do well in years to come, then don\'t be too distracted by its short term share prices, as nobody can predict that (not even Warren Buffet). I know it\'s painful to see the stock price of company you own drops, but that\'s why not many people do well in stock, as they can\'t stomach the short-term volatility for long-term gain. DS\' business is more project based as compared to Kingsmen, hence there is higher volatility in revenue recognition. However, it has higher NPM cocompared to Kingsmen. Both companies have their pros & cons. As for the question of averaging down, you should consider it based on your belief about the company rather than simply to average down your price. Moreover, you should not put all your eggs in 1 or 2 baskets. At minimum, you should have at least 5 stocks (assumed about equal holding). Ideally, you should hold between 8-12 stocks, as nobody can guarantee a company can never collapse (who would have thought 100+ year old Lehman Bros can collapse?)

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mokooi
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13 years 11 months ago - 13 years 11 months ago #3808 by mokooi

Replied by mokooi on topic Re:Design Studio - exploded!

one must understand that not everyone can act and invest like WB.. Do you have deep pockets? more than Temasek? Can you keep on buying until you swallow the whole company, change the CEO and such? The share price represents the value of your \"investment\", that\'s it! Otherwise how do you profit from your \"investment\"? If you think the share price is depress only short term, and the \"value\" will be reflected in the long term, then you need to ask yourself how much of it is pure hope? The behavior of the management shows that they couldn\'t care less about the fluctuation of it\'s share price, this is very decremental to small investors.

Last edit: 13 years 11 months ago by mokooi.

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PKC
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13 years 11 months ago #3809 by PKC

Replied by PKC on topic Re:Design Studio - exploded!

I am not saying price is not important, but unless you can predict short-term price movement accurately. Otherwise, it\'s better to concentrate on something more predictable. Barring unseen circumstances, in long-term, the value of a good company will rise and hence its price will follow. There is limited what a company can do to its stock price. They can for example buying back their shares if they think it\'s undervalued, but there is no guarantee that the price will rise subsequently. What is more important is for mgt to concentrate on the business, as eventually market will realise a good company and reward it with higher share prices.

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Reader!
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13 years 11 months ago #3810 by Reader!

Replied by Reader! on topic Re:Design Studio - exploded!

You should only be concerned about the share price when you wish to buy or sell the stock. Any other time, the share price is meaningless to a shareholder. Shareholders would be more concerned on the company\'s earnings and future growth and how they intend to increase their dividend payouts in the future.

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