Valuation is not all about the lower the better.
Some value investors now feel Thailand is getting (investor wise) expensive compared to other "lessor" countries, which are clearly less developed in this region. They say they "can sleep better with those", but is that a true and full assessment? P/e's and dividend yields in places like Vietnam surely are "better", but then again, you get what you pay for. (Land in Phuket for example is far more expensive then in Chiang Mai, and has been like this for a long time...yet, land in Phuket just keeps getting more expensive then up North.)
The thing I can add is investing maybe in some ways/comparison like a product or a car. Surely a new Aston Martin is a very expensive car, but then again its a far/far better car then most all else out there. So to some degree its high price is justified. Even while this is an outrageous comparison as I think its way overpriced for just getting from point A to point B. :) You often do get what you paid for, but as we all know, not always. :) Sometimes more and sometimes less. On the SET you pay a bit more for still growing companies, but you also get more, not least a stable/firmer of late Baht currency.
Many investments, like land plots, are far more expensive compared to others but then again the country risk, its location and overall stability and more.. must obviously be considered as well! This is not always easy where even professional people do not agree on it.
I just don't like too far stretched communist/socialist countries where too many odd things still happen -far beyond mis-management. Like Laos for example where some people with even minor dissent, or so perceived, just disappear, again and again. (No freedom of the press is just not for me).
Perhaps its the old back and forth, "chicken and egg" issue on that you get what you paid for. I like to pay a bit more, if I perceive to get more. Its not just a p/e valuation/high dividend number thing to me...its also liquidity of shares as well as broad liquidity driven, currency and country risk -perceived and real. And maybe no least, in vogue. Just now Thailand is more in the global investor vogue radar screen, then some/the other lessor alternatives.
Look at the opposite spectrum, where developed countries are trading at higher p/e ratios while having much lower growth and dividend yields....just because the conventional wisdom calls them more "stable". With all their horrific indebtness besides authotarian nanny states and old aged...Are they? Are their politics really that much better? Anyway I know we can go back and forth on this, but for now Thailand is hot and with the forward p/e of around 13 for this year, not at bubble stage yet in my view. Only time will tell. ***
BTW, Krung Thai Bank here now estimates that DEMCO will earn 1 Baht a share this year so that is still below p/e 10 with an expected yield of nearly 5%, and surely less country risk as viewed by most then some of those exotic other regionals "full of potential" -already for years. Can one call DEMCO as the prominent example here now an expensive investment? I think still not.
Best Regards,
Paul A. Renaud.
www.thaistocks.com
