Experienced Investor Lo Kheng Hong Reveals Reasons Why He Didn't Choose Unilever Stocks

Lo Kheng Hong. (Photo: Doc. IDX)

JAKARTA - Longtime investor Lo Kheng Hong revealed the reason why he did not choose PT Unilever Indonesia Tbk (UNVR) shares to be collected. According to the man who is nicknamed the Indonesian Warren Buffet, it is difficult to find a wonderful company at a price that is neither too cheap nor too expensive.

"There are wonderful companies like Unilever but the valuation is very expensive, in terms of price to book (PB) or price per earning ratio (PE) it is very expensive, I have not dared to buy it," said Lo Kheng Hong in a talk show entitled The Art of Value Investing quoted Monday 19 July

Based on RTI data, consumer goods issuer PT Unilever Indonesia Tbk (UNVR) recorded a Price Book Value Ratio (PBVR) of 29.95 times, while the Price Earnings Ratio (PER) reached 28.93 times.

At the close of trading on Friday, July 16, UNVR's shares were at the level of Rp5,150. The price is down 29.93 percent so far for the year.

Therefore, Lo Kheng Hong said that he prefers to buy shares of large banks with assets reaching trillions, but have a low PBVR.

"It's better if I buy a large bank company whose assets are more than Rp200 trillion, there is still a lot of price to the book which is 0.5," he added.

Lo Kheng Hong explained that banks can become one of the wonderful companies because banks with assets of Rp200 trillion can earn profits of up to Rp2 trillion. One company that has assets of more than Rp200 trillion and earned a profit of up to Rp2 trillion with a PBVR of 0.5 times is PT Bank CIMB Niaga Tbk (BNGA).