Part 3- Identify Intrinsic value and Validate Financial Health Check

Hello, I'm An Phuong again, Value Investor, so today I would like to share with you how to use my file to cover the two things that I mentioned in my first video, what does it take to become a Value Investor, and in this file I will cover you like how you can get or find the fair value or the intrinsic value of the company you want to invest in, and then the second thing is that like how you can do the financial health check to find the thing that would represent core durable competitive advantage of the company, or in another term that how you can do the fundamental analysis, so and this is what will be covered in my file and I will show you how to use the file to make it, and now we can start, so first before we start, I'm just so sorry for any Vietnamese you are seeing here, I'm trying to translate to the English but somehow it's not work, and if I even remove the Vietnamese from my browser, it also not work, so please ignore it and forgive me, now just back to the topic, now firstly you need to type in the year that you can get the latest financial statement from the company, it's not the current year, it should be the year of the latest one that you can find, the company can give you the full financial statement of the company of that year, so for example now it's 2025 and it's just the beginning of 2025, you cannot get the full financial statement of the company right, that's why you need to get it from 2024 and you put 2024 in here to make the calculation, then you will put the stock symbol of the company you want to check and here is Walmart, and then the payroll, I fix it for 10 years so in the future I will update it for you to put any payroll that you want but now only 10 years, so that means we will look at to the past data from the last 10 years and also we will calculate for the next 10 years, and then you will have something called minimum acceptable rate of return, that means like the minimum return on investment you want to have annually based on your initial investment or your initial starting portfolio value of the year, so 15% in here, maybe you can put 30% that is up to you, and then you will have something called the margin of safety, that means like the price that you want to buy at a cheaper price than the intrinsic value, so how is this look like, you can look at here, so this is the red line, you can calculate the intrinsic value of the company, so if you put the 15% margin minimum acceptable rate on return, you will have something like this, so this is the red line, so for example at the beginning, this is the starting price, and then in the future, this is the future price, so when you calculate the intrinsic value, you check the future price and the starting price, and then in the end, it should like over the time, this increasement will be 15% annually, so that's the M-A-R-R, minimum acceptable rate of return right, and now we're talking about the margin of safety, after you put it, you will figure out this intrinsic value, the fair value, and now you just want to buy it with the cheaper price, so that's why you can like have like, how to say, like the return on investment for the price, so that means you can buy something with the cheaper price, and you can sell it with the higher price, so this is the margin right, so this is, you can say like the actual margin you can get, so that's the margin of safety, so for example, if you calculate the future price is about 100 euro, 100 dollar, then you have the then the target price you should buy that stock is 50 USD, so that is something, and if the price of the market is below than that, it is very good for you to buy, so anyone have the option to buy below the margin of safety, or just simply below the intrinsic value, or even equal the intrinsic value, or even higher than the intrinsic value a bit, but when and why and how, this is really depend on the next step you will do is just like doing the financial health check, I will do it later and show it later with you, but this is the concept of what and why you need to fill in those information, so I, for example here, my minimum acceptable rate of return will be 15%, and if I change it to, look at here, you should look at to this one, and if I change it to like 10%, you will see the price is changing right, and then if you change it to 30%, and the price also changing, so this is how everything works, and then for example if you buy something with the half price is so impossible, so maybe you just want to buy something with 20% discount, you will put it here, and you will see the price here also change, so let me another change, 50%, yeah, you see, and then 50%, you see, it will change, so just as an original one, I will put it like this, right, and now how you can read this table, and this table for this green area is the up-to-date data, and then from this one is for you to do, will automatically, when you do the financial health check for individual company, and we will include here, for example, I did something for here, but we do not cover this now, and from here onward, it is like from this one, it gives you the overview of the future price, the intrinsic value of the company, and then the margin of safety, the price you should buy for the cheap price of 50% discount, and this is the intrinsic value that you can consider, and this is the future price that you can looking at, and based on this, you will have like the average ROI after 10 years, or the annual ROI every year during 10 years, so when you look at here, like if you do not depend on this, this is just give you like to do the one of the calculation to find the good price, it based on the RU1 investing, and if you base on this, you will get the value of RU1 investing on the right side, you will see this will include all the calculation and the price that you can look further, so for example, the RU1 investing, so this will affect mostly this price, and then in average, it will affect the price you will see here, so you will have 2 choices, one choice is that you will set the target here, and see whether after average, any company then can give you the annual ROI match this rate or not, or even it can be lower or higher, this is really totally depend, right, so just let quickly check for another company, I will check like for example, Amazon, and let's see what it give to us, that is how you can use, so now you can see, yeah, this is what they give to us, so now you can see like the ROI, this is calculated and it said like the future price is very high, and the average ROI is like this, at annual ROI, you can get a 100%, so it is more than 15%, so maybe something that you want to consider more, right, or even if you want to look at like why it get some calculation like that, you can go to the right and read further, so this is the reference price at the moment, so just for you to know, this is quite advanced, and I think like if you want, you just search for the PE history analysis to calculate the fair price, it is also very helpful, but I do not cover it in here, it is not the purpose of this video, and then mostly we will base on the, we will look at to the future price, and you will have the fair price, that means the price that they calculate for the moment, and then you will see all the information here, so you will see all the trend and different calculation, and in the end, they will give you the average in the future price and in the fair price, and for sure this one, I already considered the outlier, so any outlier in the calculation on the right side here will be excluded, so we will get something is that like quite similar to each other, so that we can get a better view of the future price and fair price, and even if you want to, maybe you will ask like, but I want to know like how those how those price are calculating for those methods, then you can go directly to the quick check, you can go to the very right side, and here you will get the summary table again, and then you can from here, you can see like how I construct the calculation for all the methods here, so you can learn more about it, and you can see how everything works, so this is for you to know, that's the first part of the summary, and then after you quickly check the price of the many companies, and maybe then you will think like, okay for example, Meta, for example Meta, I will check for the Meta, I was thinking like for Amazon, I don't think I like it much, but maybe for the Amazon, for the Meta, I will consider by looking here, I will see like, oh return on investment annually about 26%, it looks more realistic than Amazon, so something I maybe consider, and then if I consider it, I will do like this, like I will go to the quick check, I will duplicate it, and then I will change the tab to the Meta, and then I will put here the stock symbol of Meta here, so that all the information I will get is from here, so that will give me a chance to do further analysis, so you also can do the same for any other stock symbol or stock company that you are looking at, so that will, this is the first check, first you will figure out the price, and then you will make the decision whether you want to dip dive in that company or not, and then you will continue, so then you will duplicate the quick check, or you can simply just go to, for example here, I give you around 80, maximum is 80, so to, for you to calculate, so if this company is not in your preferable list, for example you do not like Coca-Cola, you can go to here, you can change the stock symbol maybe to Amazon, and then you will put here, for example, you can change it to Amazon, and the next thing is that like you just go to here, you put it to the Amazon, and then it let it work, so what is the use case of those ones, back to this one, for the quick check, you do not need to touch anything, and when you duplicate and make it become other stock company, that will give you another thing, so for the quick check, you will get everything from here, for the duplicated and change it to the relevant, like the company you are looking at, then this is where you will have all the information you want, so for example, you just put the name, the stock symbol of the company you already created from this file, this sheet, and this will calculate for you, for example here, I just change my Coca-Cola sheet to Amazon sheet, now I will put it like this, and then it will check for me, and then, you will see, this will give you all the information, and it will, here, for example, the financial check, it will ask you to check the durable competitive advantages, so it means here, so you will go to here, you will yeah, something like that, and it will give you the summary part, but be really careful, the financial check here, if you see, like, it keeps the same, like now, I'm just, you remember, this is 65, around 65%, right, so if I go here, I go back to Coca-Cola, and I will go to here, to change it back to Coca-Cola, and also change it here to Coca-Cola, you will see, here, it's the same, why? The reason is because financial check is something you need to do by yourself, and the machine cannot work for you, and how you can make it, so for example, I will get the apple here, give you the example here, so if you go to the, this is, and you open it, you will see, like, we will have all the evaluation, we will have the impact, sorry, let's see it in the widget, so before you duplicate it and make it to other sheet, you will see, like, the table will be look like this, this will give you the impact column, this is based on the impact from my experience, and also from my knowledge, that should be rating at that value, and then, when you, then after you duplicate, your job is that you need to give each the score of your evaluation, I will give it here, just give you, like, the guideline for your rating, and why I am using the very high scale like this, this is called the 509c scale, the reason is that, like, something when you look at it, you will know, like, this is will, if you just want to find, it's not even 1 to 10, it's not give you the really good feeling of the sub, like, for example, something is very, you need to evaluate, and also you set this is really, really good, and 10 maybe is not enough to show the case for you, so that's why you have something here, so if something very extremely good, you will give it 89, but something is just not super extreme, and it's quite miss your general standard, it can be 55, and so on, so this will give you, like, a very good rank, oh, sorry, a very good rank for you to do the evaluation, so that's why I use the 509c scale here, to give me the very good view of my financial analysis, so for those ones, if you click on this plus button, you also can see some criteria for you to check, and this is, I give it, like, two criteria, one criteria is based on the Warren Buffett criteria, one is based on my knowledge from other value investors sharing, and from very other basic foundation analysis, they suggest, so this is my, how to say, like, my consolidation and my integrated knowledge that I put into here to give you the guidance, and also give you a hint to evaluate whether the company is match the rating or not, so you can see here, everything will be here, you can base on this to make your own evaluation, some of the thing has the scale, but it's not relevant, and it's not give a lot of impact, and should not include in my financial health check, so that I would not give it the impact, but if you think this is something you want to include, just feel free to include, and let's take a look at Apple, you will see after I do, I duplicate, I need to fill in those number, and I also give some of the note, the investor note, so that you also can read those company, I already do my own financial analysis, and you can see, like, what is my logic, and maybe it's correct, or maybe it's not correct, it really depends, but this is how and why I put the value like this, for this criteria, I explain so that later on, when I look at to my financial health check, I will know, like, why I'm rating like that, and what is the reason behind, and then that's the financial statement, then you also have the advanced analysis, this is really give you something more information, like, if you like, you can include something more from here, and it also have there are some of the criteria for you to looking at, so just use it if you want, and then POSC score, this is something you also can read more, big five rule for Brunei investing, this is something you can learn more by yourself, and another thing is that, like, those table, so I only use this table in my financial health check, but you also can use this table, like, income statement by revenue in percent, that means I divide, like, every item in the income statement with the revenue, so that I will see, like, how much does it take in the total revenue, how much it costs for the revenue, something like that, and then for the change in income statement, here I give you a chance to see, like, the from this year to next year, how many change in the value, in the absolute value happen for that company, if you like, you also can include it in your financial health check, and change in the percent, so this is something, and also it will give you some of the criteria, if you like, so this is really depend, some people will like it, some people never use it, it depends, and also for the balance sheet ratio, change in balance sheet, change in the balance sheet percentage, so after you rating everything here for all the company here, you will need to ensure, like, they present here, and then when you look at to the sheet here, you will have all the thing here, first you will have the rating for the percentage, and then you will see the ROI, annual ROI, or maybe you will look at to the future price, or the average price, or this price, it will really depend on you, and finally, after you do all the analysis, you need to make the decision what the company you want to include, so for example, when I look at here, I look at to Apple, after I analyze this, I think, like, it is most, in, like, in fair, like, it meet most of the standard requirement, and it take about, ROI about 5% every year, more than the rate of the bank, and for, in, in the way of variable asset, like, this is the equity bond rate, because equity mostly around 3 to 6%, and if you find some good company that give you the rate of return on investment around this, this is very good, because it's not big, or it's not so low, but it's quite stable over time, so if instead of buying a you can buy a stock that can have the bond rate, so that is really good, so that is the thing I also love in the way variable asset about equity bond rate, so I want safety, I don't want something very big, I just want something very safe, and very stable, so I think this is quite make sense, then I look at to the Google, oh, financial statement of them is super good, I would like to say to you, like, when I analyze it, I figure out, like, Google is very good, and return on investment after calculation is the annually will give me about 70%, quite potential, I will check it in my portfolio, and then, for example, Meta, when I look at it, it gives me, like, around 30%, and yes, the financial statement of it is also really good, something happened, let me check, variable summary, sorry, yeah, it's all here, something wrong, I don't know, but just ignore it, then I will look at it, and I will see, I will, let me let you know, like, Meta is around it, 160%, and I would say to you, like, it's also very good, but the price, current price is so high to me, wait, current price, the current price is so high to me, I would say to you, like, one year ago, it's just about 300, and at that time, I also analyze it, and I also see the same pattern in Meta, but to me, 300 is so big to invest, but now it goes to 600, and as you can see, the BE is lower than 30, that means the market, the value of the Meta is actually what it is, and if you analyze it, in the next video, I will give you some insight about all the company I analyze it here, it may be really insightful, and why Meta is have, like, BE like that, and have that price, I would say to you, that is really right, and this is something also can be seen as cheap, but if you want to invest in, you invest, but for me, now, like, the last year, 300 is too high to me, now 600 is too high to me, even I see the potential, but somehow I feel like I do not like it, because it's not contribute anything for the human, it's just about the platform for everybody to entertain, but it's not give something like the product that can help food for the human, like Google, so that's why I do not check it, you know, because it's so expensive, I really don't want to just buy one instead of five stocks of Google, yeah, that's my sense, and then I will look at the Tesla, I would say to you, you can see, it's super terrible, and I would say, like, invest in Tesla is really the gambling game, but in my portfolio, I still have the Tesla, because I just love Elon Musk, and I love for his vision, so when I invest in him, I do not thinking more, I just think like I invest for his vision, and I just want to donate, somehow, I think like maybe I will lost all my money, and I just think like maybe it's just my donation for the vision and for the mission that Elon Musk want to achieve for the human, so, you know, you see, even I know this is not good, and this is very bad, but I still invest in, just because of the vision, of the version, or the head of that company, yeah, quite stupid, I would say anyone invest in Tesla is the preemptor, and it's quite stupid in terms of, like, to have the very stable and very secure investment, but if you want to have the adventure, and you want to be in that group with Elon Musk, let's invest in Tesla, and I'm quite sure for you, you never know what should be the good price, for the rim, because no one can test the rim, right, and no one can evaluate the rim, right, you cannot buy the rim, and you cannot evaluate anything related, especially for someone have a big rim like Elon Musk, yes, and then I also look at to the NVIDIA and TSM, Taiwan Semi Conductor Manufacturer, but in the end, I decide to use the, to go for the TSM instead of the NVIDIA, also everything has the reason, so after I select it, you can see, like, you can select or deselect, and after I select it, I will go to the portfolio management, in here, I would suggest you only have six, maximum six stocks in your portfolio, because this gives you the power and the time enough to cover and also to manage the portfolio, do not too much, and that's it, and that will give you, like, in here, I will calculate everything, and I will give you, like, the proportion, like you can see here, how many percent you should put for each stock company that you want to invest based on all the criteria that you already have, so this is a range, like, if you place on the health proportion, you will follow this, if you place on the future potential, you follow this, if you base on the ROI, this one, and then so on, so on, or the combination, or in the average, so this is something on, and I also give you, here, a change, like, for example, if you have the 2,000 now, how many you should give for each company to buy the stock, and I also give you the selection here, and after you base on it, and you give your portfolio, you can make, you can use also my file to do your portfolio management here, like, you give the date that you buy the stock, the price, the share, and the value, and then it will base on, like, the current situation of the market, and it will calculate for you the gain and the loss of your company, of the stock market that you invest in, just for example, right, yeah, and that is the thing I would like to share with you, and to use my file, I think this would be helpful, and another thing is related to the external one, you just install it in the previous one I showed you, and then you just put the simple stock here, and you will get the price and all the information, if this is what you want, you do not need to use my file, just use the extension, and if you keep using my extension, not my extension, I do not, I am not the one who created the extension, this is the SysFinance, so, so, for example, if you want to just get the price target for many company, analysis company like this, you can use, this is also, this is also in the, this is the extension, in SysFinance, you can go to here, and you can get a lot of advice to use them, so this is where you can get the price of the company you want to looking at, like the price target for other financial statement, oh, no, sorry, the financial institution, they also do the analysis, and they also give the prediction on the price, so that you can looking at, so, for example, now, if I look at to Google, let's see what happen, yeah, so, that is everything they will give you and they will evaluate for you, so you can also pay for this to make your decision, and another thing is quite good about this extension is that if you go to here, you go to extension, you go to the SysFinance, you will see like the template library, and then you can select any template that you want, so that like later on, you will have something like this, right, for you to use, so this is, oh, so sorry, this is just an example to let you know like how you can use my file and also the extension that I installed in my file for your analysis, hope this video is helpful for you, and I would like to share with you more about the insight I have for the company that I listed here, and also I would like to give you something very insightful that like to explain to you like why the portfolio of WorldBank page trend from 99 until now, and it looks like this, it has the reason and I understand why he do that, like, and I will explain more in my next video, and also, I will show you like, for example, if you do not have a lot of money and you just like monthly invest like a part of, from a part of your salary, so what should be the good strategy to invest in, I also explain to you in the next video, so that like you will understand more some of the strategy that you can apply for yourself even you don't have a lot of money, but it's really helpful, so I hope this video and other video in my series will helpful for you, so just in summary, I would like to summarize like what you need to do to use my file in very short way, so first, fill in the year of the latest financial statement the company can give to you, so this is 2025, you cannot get it from any company, so you should put it 2024, and then you will put the stock symbol of the market you want to check weekly before you go in deep dive, like here, like, for example, Mark, Meta, or Amazon, right, and then you put your minimum acceptable rate of return, your margin of safety to have the calculation, and after you have a week check on the company and you have in your mind like some of the company you want to deep dive on the analysis, then you can use this one, you can fill in all the stock symbol that you want, so like, for example, Amazon, and then you know like because Amazon is not here yet, so everything is blank like this, so then you can do is that like you will go to the seed, here, for example, you replace the Coca-Cola, you go to here, you will replace it with Amazon, then you will replace here with Amazon, and then you will have all the information at least for the price here, and for the financial check, you need to do it again, you need to go to here, you need to delete all of the rating here, so that you can start to analyze it again to give your own rating for Amazon, and then finally, you will get, after you analyze it, all the company here, you will come to the decision like based on the financial check, based on the all the information here, you would like to put it in your portfolio to invest or not, if yes, you click on, if no, you just unclick it, and this is how everything works, and after you have it on your site, then like, for example, like like this, so then you need to go to the portfolio management, you will see like here is the suggestion, the proportion, how many percent you should put for each company when you want to invest, and here, if you have like a certain amount, for example, 500, you can put it here, and it will advise you how many you should put for each company, and you can make the decision, and you also can use this one to calculate for yourself, you can, to manage your portfolio, like you give the day you buy, you give the stock here, the price here, the share you buy, and then let everything automatically calculate, and give you like the total gain or loss for the portfolio, so that's it, hope it will help you to do the two things that the value investor can do, first, figure out the price of the company that you want to looking at, the intrinsic value of that company, second is that you can get the financial health check by doing your homework, reading the financial statement based on the criteria of them, and make the evaluating, and then you will have the summary table where you get everything in here for yourself, and that's it about this video, it is quite so long, so sorry for that, but I hope that also give you the helpful tip to use my file, and thanks a lot, and see you in the next video, if you have any comment, please comment and let me know, and if you think that video is really helpful, and can help also other investors as well, please feel free to share with others, and I am really happy to exchange the knowledge with any value investor around the world, yeah, thank you a lot, and see you in the next video.