1. Stock Analysis: Technical and Fundamental AnalysisBy
Jiroj Buranasiri, CFA

2. I. Technical analysis
II. Fundamental analysis

3. I. Technical analysis: outline
A. What is it about?
B. Analysis
C. Sources of information
E. For further study
Usually it for short-term trading

4. A. What is it about?
Technical analysis focuses on demand & supply by studying the movement of price and volume.
Its objective is to find market trend and how long the trend will continue to make investment decision – Buy, Hold, or Sell.

5. A. What is it about? Trends: up-trend, down-trend,
or sideway (sideway-up, sideway-down)

6. B. Analysis
Graphs:
Bar
Line
Candle

7. B. Analysis Graphs: bar, line, candle Techniques: Moving Average (MA)
Exponential Moving Average (EMA)
Moving Average Convergence/Divergence (MACD)
Money Flow Index (MFI)
Rate of Change (ROC)

8. B. Analysis Techniques: Relative Strength Index (RSI) Stochastic
Volume
Volume +MA
William % R
Parabolic
Bollinger bands

9. B. Analysis
Techniques
Fibonacci
Dow theory
Elliot wave

10. Remarks Price moves in trend. History repeats itself.
Volume normally goes with trend.
Volume typically leads price during bull move.
Rising price with falling volume is abnormal.

11. C. Sources of information
Efinancethai,
Reuters,
Bloomberg,
Etc.

12. C. For further study Book
Technical Analysis: The Complete Resource for Financial Market Technicians by Charles D. Kirkpatrick and Julie R. Dahlquist, FT Press,
The Investor's Guide to Technical Analysis by Curt Renz and Curt Renz, McGraw-Hill,
Etc.
Website:

13. II. Fundamental analysis: outline
A. What is it about?
B. Analysis
C. Sources of information
D. For further study
Usually for value investor, for long-term investing

14. A. What is it about? Finding fair value of stocks.
Objective is to check if market price is cheap, fair, expensive for investment – Buy, Hold, or Sell or to explain the change of market price.

15. B. Analysis: stock valuation process
1. Understand firm and stock’s nature
2. Forecast
3. Choose valuation method
4. Make decision

16. 1.Understand firm and its stock’s nature
From company itself
Financial statements, IR
From other sources
Research paper,
Firm’s competitors
Etc.

17. 2. Forecast
Make assumptions
Information, information, information

18. Information’s issues
What information is relevant? News concerning risk and return
When will it come out?

19. Getting start (use consolidated)
Restate statements and work from restated statements.
Analyze relevant data and forecast: revenue break-down, cost break-down

20. Analysis:
Top down
Bottom up
Top down and bottom up

21. Top down / Bottom up Top down: Bottom up Top down and bottom up:
Economy -> industry -> firm -> stock
Globalization – impact.
Bottom up
Firm -> industry -> economy
Top down and bottom up:
Economy <-> industry <-> firm <-> stock
Economy is not good, industry is not good, firm is not good.
Top down. Start from economy-situation effect to industry and company -> industry condition effect to company -> company
Bottom up, Firm details (financial health, etc.) move up to broad details state of industry (impact to company) , health of company and economy ( impact to company)
In practice – both ways

22. Economy Economic variables: GDP growth rate, unemployment rate, etc.
Economic life cycle: changing
Domestic & international: globalization impact

23. Industry Porter’s 5 forces
Boston matrix: star, dog, cash cow, question mark
Change in external factors: social, regulations, consumer’s taste, etc.
Industry life cycle: sun-rise, sun-set

24. Company Management quality Accounting – clean, dirty
Business nature - income, cost, margin’s volatility, key success factors, position, strength, weakness etc.
Financing
Growth opportunity

25. Company
Dream & do

26. Remarks If the success (failure) is consistent or temporary.
Past success doesn’t guarantee future success.

27. Understand the stock’s nature
Major investors
Sensitive to foreign fund flows
Defensive or cyclical
Etc.

28. 3. Choose valuation methods
Choosing criteria:
Characteristics of firm
Data: availability, quality
Valuation methods
Discount cash flows
Price multiples

29. Discount cash flows Discount rate Cash flows Growth rate CAPM, APT
Dividends, Free cash flow for firm (FCFF), Free cash flow for equity (FCFE), Residual income (RI)
Growth rate
= ROE x b
Div: policy, accounting manipulation, BV + PV(RIs)

30. Price multiples Price Multiples Link to competitors, industry, past
Link to company’s fundamentals – discount cash flows
Average, median, band.

31. Price multiples: PE multiple
Trialing PE (Current PE)
Po/E1 = (D1/E1)/(r-g) = (1-b)/(r-g)
Leading PE (Forward PE or Prospect PE)
Po/Eo = {[Do(1+g)]/Eo)}/(r-g) = [(1-b)(1+g)]/(r-g)

32. Price multiples: PBV multiple
Book Value is unlikely to be negative.
Compared to earnings, book Value is less manipulated.
PBV = (ROE-g)/(r-g)

33. Price multiples: P adj BV multiple
Adjusted BV = BV – (NPV – Acc. Provision)

34. Price multiples: PS multiple
No negative sales
Sales is less likely to be manipulated.
Po/So =(Eo/So)(1-b)(1+g)/(r-g)
But sales might not mean profit. (No information on cost structure)

35. Price multiples: PCF Cash flow Less manipulation EPS + non-cash charge
CFO
FCFE
EBITDA
Less manipulation

36. 4. Make decision Buy (undervalued, buy, trading buy, strong buy) Sell
Hold

37. Some technical terms in fundamental analysis
ARPU
GRM
Baglog
BDI
NIM
L/D ratio
CAR
CASA
CAPEX
OPEX
P&L
B.E.1.1

38. C. Sources of information
Anything affecting company’s earnings
(growth, volatility)
Newspaper: local (Bangkok Post, The Nation, Bangkokbiznews, etc.) and international (The New York Times, Financial times, etc.)
Internet: etc.

39. C. Sources of information
Reuter, Bloomberg, Setsmarts, E-financethai
Analyst meeting, opportunity day
Company presentation

40. For novice
What data?
To under stand a company’s nature, start with form, company’s
presentation, investment analysis paper, opportunity day meeting and
company’s annual report
Where to find?
When it will be release?

41. Financial data (SEC, SET)
Why SEC, SET?
To be fair to public, companies should not provide financial data to a particular investor (or group) before public.

42. SEC_ financial statements

43. SET_ latest news

45. Opportunity day_ meet company’s management team

46. Company’s presentation
From company’s website.

47. Investment research paper

48. Where to find research paper?
Brokers

49. Where to find research paper?
Free?
Free?
Free?
Free?
Free?

51. For further study Books: Research paper Websites:
Security analysis, Benjamin Graham and David L. Dodd, McGraw-Hill,
The intelligent investor, Benjamin Graham, HarperCollins Publishers,
Analysis of equity investments: valuation, John D. Stowe, Thomas R. Robison, Dennis W. McLeavey, Association for Investment and Research, etc.
Research paper
Websites:
etc.

52. Q & A

53. Thank you