It's almost a No-Brainer to Buy Poh Kong Now!

 

I have been mystified throughout 2025 about why the price of jeweler, goldsmith & merchant Poh Kong has not tracked the price of the soaring yellow metal. Quarterly net profit has increased 6-fold since 2020 & 3-fold since 2012, yet the stock has barely doubled since 5 years & 13 years ago. Revenue outpaced this price growth somewhat by more than doubling since those two years, & dividend quantum per share has doubled since 2012 so these measures are more understandable in explaining this lack of animal spirits in the shares. However, book value, which includes the company's inventories of gold and silver, which are both rocketing in US$ terms, has soared $1.11 since 2020 & $1.57 since 2012 while the stock has only added 53c & 69c since those years respectively.

In local $ terms, the bafflement is even more stark with the gold price per ounce at around $18,500 now versus an average of $7,606 in '20 & $5,713 in '12. Silver has of course rocketed 163% since its '20 peak & is 59% above its late '11 zenith. Probabilistically, both shiny metals look like they are near a steeple top formation that was seen in 1980 & 2011 given the magnitude & stunning speed of the recent rises and this is perhaps why the two remaining local listed jewelers' prices have barely registered these appreciations in '25 [the most recent high was $1.35 in May '24 when gold was around US$2,300 an ounce]. In '12, Poh Kong belatedly rose 68% the year after gold peaked, so perhaps one can expect a more sparkling share price next year! 

On the technical chart, the MACD crossovers [ indicated in green diamonds] have a 90% accuracy in predicting price rises & bolstered by the intactness of the major uptrend line, points to a target of at least $1.60 by 1Q '26. The major downtrend line in place since its record high of $1.80 in Aug '20 seems to have been broken & minor ones seem to be pointing to at least $1.28-1.35 in the near term. 

The 2026 dividend yield is currently at a decent 2.5%, slightly inferior to the risk-free rate.