Figuring true worth of a stock

City talk | Siu Sai-wo 21 Oct 2020

The price of HSBC shares has hit a new low this year, and people are debating whether the stock is worth buying any longer.

So property investor Jacinto Tong Man-leung and professor Chan Yan-chong - columnists who have made noteworthy comments on the bank's shares - were invited by Headline Daily to offer thoughts on the subject.

Tong's view can be summarized by the saying zhi dang hou shu, meaning those with HSBC shares might continue to hold them "to outlast the doldrums."

But those who don't already have the shares should not buy as the bank's suspension of dividend payments has seriously shaken investor confidence.

Chan, meanwhile, has held HSBC shares for years. He revealed that he took profits last year when HSBC rallied with its yield falling to 5 percent.

I had a casual chat with the two when they arrived at the Sing Tao office.

Chan remarked that the most important thing about investment is returns - dividends for stocks and rental revenue for properties. This, however, appeared to be the yardsticks of old-economy stocks. Would he not buy new-economy ones?

In response, he said the principles are just the same for new-economy stocks. For example, investors may hold Tencent for long-term dividend payments.

He acquired Tencent at the last share split when the price was just over HK$100. Now it has increased to nearly HK$500.

While the company is already a behemoth with a market value in the trillion-dollar range, judging by its development, it is still growing.

So he thinks Tencent is still bullish and investors may consider buying at the right juncture.

HSBC and Tencent have both worn the crown of "king of stocks."

Many have considered HSBC an investment for dividends and Tencent for price growth.

But look closely at figures and you will see Tencent's profit has been undergoing rapid growth, which has made its dividend-to-profit ratio appear relatively low.

Taking into account the surge in its share price year after year, however, its yield is in fact very high against the price investors bought the shares for a few years back.

Siu Sai-wo is publisher of Sing Tao Daily

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