How to evaluate finance sector?

Q & AHow to evaluate finance sector?
JC CHENG asked 5 years ago

Hi Peter and KC,
I have went through the Bursa Method learning and wonder if you have video or study case to evaluate finance sector and net debt business. Example, AeonCR. It’s ROE is consistently more than 15% for the past 10 year and meeting all the good business criteria. However I have questions below.

  1. During valuation, do we need to deduct of the net debt?
  2. Interest / Loan < 4%, Debt/Equity ratio < 0.5, however I have concern with the Interest expense / Operating Income. It is about 30%. How to quantify if the business is safe to invest?
  3. The major shareholders is AEON Finance service but not the directors. Company earnings has proven the director is in similar interest with investor even though they are not the major shareholders. What is your opinion?