With a change in technology and the way we communicate each other, the power to access any information is very easy. But as every coin has two sides, with easily accessible information we are also exposed to immaterial and unattractive information.
Today, we have 24 hours business channels which keep us up to date with the happenings around the business community and the world. But have you realised on how little quality information is shared compared to their 24 hours commitment.
They always talk about like, what should you buy before Budget? Company XYZ has closed down to lower circuit, will it slide further? , ABC company has hit to 10% upper circuit today on the news of buyback of shares etc.
Have you realised that most of the information they report is related to price!
I am writing this blog to point on opportunity available with Eclerx as previously have shared on Fag Bearings. This company is rated as ‘A2’ by Value Operations and is trading at discount to its March 13 values. E-clerx is a small computer software company which is growing very fast.
Let’s look at the table below that explains about what money was put on the table and what was taken out of the business.
|
E – clerx |
|
2009 |
2010 |
2011 |
|
Reported Profits |
61.78 Crore |
73.54 Crore |
122.43 Crore |
|
|
Dividends Paid |
23.67 Crore |
33.37 Crore |
64.92 |
|
|
Retained Earnings |
32.83 Crore |
34.12 |
28.68 |
|
|
Capital Employed |
132.77 Crore (2008) |
165.66 Crore |
199.88 Crore |
238.38 Crore |
|
Capital Raised |
0.06 Crore |
0.10 Crore |
9.82 Crore |
|
|
Normalised Return on Equity |
41.40% |
40.24% |
55.87% |
|
|
Net operating Cash Flow |
41.59 Crore |
60.54 Crore |
102.02 Crore |
What really attracts me to this business is that they are growing their business revenues at healthy rates and also have improved their profit before tax margin for current year. They also pay healthy dividends from their profits and have managed to grow healthy earnings on their retained profits.
For every one rupee reinvested in this business last year generated Rs 1.27 extra profits. In 2010 on every one rupee extra invested in this business generated Rs 0.34 of extra profits.
Many research reports on this business forecast EPS for 2013 in range of Rs 68 – 75. This translates ROE in range of 52 – 57%. If their estimates for earnings are right then intrinsic value for this business falls in range of Rs 860 – Rs 920.
Eclerx was able to grow its value by 28% in 2012 in compare to its value in 2011. And if 2013 expectations are right then it reflects a growth of 15% -23% in value for future year.
The flip side of this opportunity is to find out a swift spike in its return on equity and also will the company will be able to sustain its high returns. I know majority of you all are working in IT sector and maybe few working for E-clerx. We want you to share with us what do you think is the competitive advantage of this company and can they sustain them in the future.
The other concern I have is with regards to cash flow. They have improved their net operating cash flow but will they maintain their operating cash flow this year too? Well, will get the answer soon when they
reveal their full year financial statements next month.
Lastly, coming to the valuations, we expect intrinsic value of this business for March 2012 will be Rs 751. Currently it is trading at premium to its March 2012 Value. We also expect its intrinsic value for March 2013 to be Rs 920.
If we are right with our expectations then the business value of this company will double in next three years. But let’s not go that far; we need to recognize competitive advantage that will sustain its high
returns. Once we find that then the future looks very predictable.
Looking forward to hear from you in regards to Eclerx.
For the benefit of all those who want to understand the calculation behind “For every one rupee reinvested in this business last year generated Rs 1.27 extra profits.” Refer to the comment section of this post http://valueoperations.com/index.php/entry/value-operations-on-money-control-expert-columns
Thanks Aziz for the analysis.
Cheers
sukhbinder
Dear Mr.Aziz,
I am looking on two stocks with an eagerness to know how you would value them;
1. FDC
2. HINDUJA GLOBAL
Lets evaluate this business in the following points:
1.Good long-term prospects of the company – Yes, Scalability is there.
2.Excellent Return on equity(ROE) with sustainable competitive advantage to sustain those returns – ROE is good, no compitive advantage, any one can compete.
3.Less or no debts – Yes no debt
4.Surplus cash flow – Yes
5.Quality Management – yes, Lehman brothers was a client and came out of it during 2008 crisis, consisstent dividends distribution. Reputed Fund houses have invested in this eg:HDFC.
The main concern is their 80% of revenue depends on TOP 5 clients & they dont disclose the client names because of business confidentiality.
DIscloser: I have small exposure to this stock.
Hi Appa Rao,
Value Operations rate FDC as A2 business and its fair value for March 12 year is expected Rs 56. We expect its earnings for 2013 inrange of Rs 7.20 – 7.30. If you have read any research paper, share with me their expectations and I will let you know fair value to expect for 2013.
Hinduja Global is rated as A3 by Value Operations and its Fair value for 2012 is Rs 254. We expect its 2013 Earnings to be in range of Rs 56.75 – Rs 57.
Hope this helps
Dear Mr.Aziz,
Please go through my views on the two stocks and correct me if possible.
Stock analysis : FDC ltd
About
FDC is an Indian Pharmaceuticals company with an operating history of more than 50 years. The company is into formulations, synthetics, nutraceuticals and bio-tech with a focus on therapeutic groups of ORS, opthalmologicals, dermatologicals, Anti-biotics, Cardio and diabetes. The company has several well known brands such as electral, enerzal etc.
Financials
The company has maintained an ROE in excess of 20% for the last 10 years. In addition the company is conservatively financed with zero debt and excess cash position during the same period.
The company has maintained fixed asset turns (sales/ fixed asset) at the same levels by investing in fixed assets in line with the topline growth. The working capital turns (sales/ working capital) have improved from around 5 to 9+ levels in the last 10 years. This improvement has been driven mainly by an improvement in receivable turns (sales/ account receivables).
The net margins have improved from the 15% levels to 20% levels mainly due to drop in raw material prices.
Positives
The company has maintained a high ROE with a very conservative balance sheet. The company has maintained excess cash and financed growth with the free cash flow generated from operations.
The company has also been able to maintain a topline and bottom-line growth in excess of 15% in spite of high competition and change in the operating environment (changes in patent laws in 2005).The company announced a buy-back in 2008 and has been able to use the excess cash to reduce the number of outstanding shares.
The company has a consistent track record of introducing several new products every year and currently spends almost 3% of sales on R&D which is a crucial investment in the pharma business.
The company is conservative in other aspects of the business such as foreign acquisitions (none) or expanding in the foreign markets (exports are 10% of total turnover).
Risks
The company operates in a business characterized by a high level of competition from domestic and deep pocketed global pharma companies. Although company spends a substantial amount on R&D, global players such as JNJ spend in excess of 10% on R&D. As a result the R&D spend of the company is small by most standards and can be utilized only to develop the off patent molecules in the form of generics for the local and export market.
This is a very competitive business with low to moderate profitability and several other domestic pharma companies such as a CIPLA or Dr reddy’s have a major head start in the space (they are almost 10 times the size of FDC)
In addition the company is also into the consumer health space which is closer to FMCG than pharma products and requires a different set of skills and focus.
Competitive analysis
The industry is characterized by a large number of domestic and foreign competitors. India, China and other BRIC countries are the major growth areas now and all the major companies are now targeting India for growth. The market is already experiencing a high level of competition and activity. One indicator is the number of new product launches and corresponding marketing and sales cost.
The generics opportunity in the export markets of US, Europe and Japan is big with thin margins and high levels of competition.
In case of a drug coming off patent, the pricing typically drops off by more than 60% in the first year and by almost 80% by the third year of patent expiration. As a result these are high risk – high return, limited duration type of opportunities.
Management quality checklist
– Management compensation – Management compensation seems reasonable at less than 3% of net profit.
– Capital allocation record – Fairly good till date. The management has kept the ROE high, inspite of high cash levels. In addition the management has also used the excess capital to buy-back shares which is a sensible decision.
– Shareholder communication – Very sketchy. The mandatory disclosure in terms of the balance sheet, P&L and other schedules are as per the standards. However the company, like other mid cap companies, is very sketchy and does not provide enough discussion on the subjective parts of the business. It gives a very generic overview of the business and has not discussed the plans for the future in detail. If you compare with the annual reports of other pharma companies like Dr reddy’s, the differences are glaring. I can live without too much detail for a steel or a cement company as the numbers give a good picture, but for a pharma or IT company the subjective details are important to evaluate the future of the company. This is a big negative for me.
– Accounting practice – Seems ok. Nothing out of the ordinary
– Conflict of interest – Related party transactions seem fine. I could not find anything out of the ordinary.
Competitor analysis (top 2-3 competitors)
The main competitors for FDC are the domestic pharma companies such as Dr reddy’s, Cipla, Sun pharma and Ranbaxy. These companies are much larger than FDC and are not strictly comparable. At the same time, competition in the pharma industry is by segment. The term pharma is too broad for comparison. If one has to compare competitors, it would be by therapeutic groups such as anti-bioitics, cardio-vasculars, opthalmologicals etc.
FDC has a leading position in some segments such ORS and a few leading brands such as ZIPANT-D SR, 1-AL etc.
The net margins for FDC are comparable to the other top companies and the ROE is also in the same range of 20%+. The overall business risk to FDC is much lesser as the company has not expanded aggressively in the foreign markets. Conversely the returns and growth have been lower too compared to the other aggressive competitors such as Dr reddys, SUN pharma etc.
Valuation
A DCF calculation with a net margins of around 16-18% and 10-12% growth (both assumptions are conservative based on past history), gives a fair value of 120-140 per share. The company would be a good value below a price of 70 per share or if the company started doing far better than the assumptions in the above valuation.
Conclusion
FDC has been a conservatively managed company which has done fairly well in the past 10 years. The company has expanded mainly in the domestic markets and is now expanding slowly into exports via new ANDA filings. The company is likely to maintain a 10-15% growth in line with the market growth with some additional growth coming from exports.
As an investor, I would expect the company to give me moderate returns at low risk. I don’t think the company can be a multi-bagger in the short to medium term.
Disclosure :Since it is trading at low levels, I have position in the stock. The above analysis is not to recommend the stock.
Coming to the next stock;
I analysed Hinduja Global Solutions Ltd (HGSL) and share it below:
One of the pillars of successful investing is buying share in a good business when current market price is at a large discount to its underlying business worth. HGSL combines investment case for both value and growth prospects.
Business:
1. HGSL operates in the BPO space. It is a leading provider of Outsourcing Solutions that include Back Office Processing, Contact Center services and customized ITES solutions to established companies including many Fortune 500 companies.
2. It serves industry verticals like BFSI, telecommunications, pharmaceuticals, life sciences, consumer electronics/products, media and entertainment, energy and utilities, transportation and logistics.
3. HGSL is headquartered in Bangalore and has over 30 delivery centers in the US, Canada, U.K., Mauritius, Philippines and India.
4. Bharti is among the top clients of HGSL.
5. About 73% of HGSL’s revenues are generated from voice-based services based on FY10 financials.
6. The Company employs 18,730 people worldwide. As per press reports, company is increasing the hiring in this fiscal by another 2000 or so.
Industry outlook:
India continues to be the leader in global sourcing with a 55% market share in 2010 as compared to 51% in 2009. The Indian IT/BPO industry grew by 19% in last year as revenues were approximately USD 76 billion. BPO exports increased 14% to USD 14.1 billion.
Management:
1. HGSL is part of the Hinduja Group which is a conglomerate having diversified business interests.
2. High promoter’s holding 68% gives it stability.
3. Top management team of HGSL has strong academic background, industry experience & performance trackrecord in the area of its operations.
.
Financial summary (consolidated):
Particulars
FY2008
FY2009
FY2010
FY2011E
FY2012E
Revenue(Rs crore)
637.05
797.57
892.34
1076.70
1189.43
EBIDTA (Rs crore)
94.06
132.82
162.80
193.80
209.87
PAT (Rs crore)
87.42
93.77
130.11
118.43
143.75
EPS (Rs)
42.50
45.50
63.20
57.50
69.80
NPM (%)
13.72
11.75
14.58
10.99
12.08
ROE (%)
12.20
10.00
14.00
11.70
13.00
ROCE (%)
8.00
9.50
11.50
11.20
13.00
Investment Rationale:
1. HGSL’s business is repetitive and spread across verticals; total client count is on the up at over 80. The company has demonstrated high stickiness with clients due to its delivery and capability.
2. No reason why the cost advantage will not sustain, it’s kind of a non-discretionary spend for the large clients.
3. Can see some acquisitions in coming year which will be earnings accretive.
4. Strategy to have operational centers in Tier III cities like Durgapur in West Bengal, Guntur in Andhra Pradesh and another at Siliguri will improve cost efficiency of the company in next phase of its expansion.
5. Free Cash Flow positive as can be expected from such a business. Operating margins at 17-18% are good. Strong revenue & earnings visibility backed by comfort of valuations.
6. Net Cash per share is about Rs 238 per share. (not a big positive at the moment since they are sitting on cash for quite some time now, and it majorly depresses ROE, ROCE).
7. High dividend yield (above 5%) with DPS of Rs 20 for FY2010 limits the downside.
Concerns:
1. Company has not been able to deploy cash in any meaningful way like business acquisitions for far too long now.
2. It is not into high end high value-add businesses.
3. Stock is illiquid, so problems associated with entry/exit of low volume stocks.
Stock parameters:
CMP: Rs 318 (FV Rs 10); Market cap: Rs. 779 crore; 200DMA: Rs.392; 52-wk Hi/Low: Rs.434/285; Free Float: 31.80%
Valuation parameters:
PE: 6.54; P/BV: 0.75; Div. yld: 5.31%; EV/EBIDTA: 1.82 (based on FY11 estimates).
Valuation looks comforting with good margin of safety.
Outlook:
1. It is a steady dividend payer. DPS of Rs 20 for FY 2010 was impressive. I expect it will maintain, and increase, dividend pay-out for FY 2011.
2. Any developments with regard to potential acquisitions will re-rate the stock.
3. Around 50% capital appreciation with a time horizon of 16-18 months looks reasonable expectation.
Please do consider my analysis and correct me if mistaken.
THANK YOU
Hussain,
Thanks for sharing your view.
As there is no competitive advantage are you still comfortable to hold shares?
My experience with investments tells me that if a company reports hight ROE without any debt then there is something for sure that they do their business differently then its peers. This difference is their competitive advantage. So I am of view that it has competitive advantage.
Hi Appa Rao,
Lets keep it simple:
FDC:
1. Long term prospects : Last three quarters have dented its sales revenue. To come to any conclusion I think you will need to investigate the reaons behind it.
2. ROE & Competitive Advantage: 21%
Because of lack in revenue growth ROE for this year has fallen down to 21% from 26% last year. It is very crucial to identify competitive advantage before investing in this stock.
3. Less or no debt: As of March 2011 their net debt/Equity ratio was -2.14%, which is very healthy.
4. Surplus Cash Flow: They have surplus cash flow.
5. Mangement quality: I have not seen management track record.
Hinduja Global Solutions:
1. Long Term Prospects: In my view they do have good long term prospects.
2. ROE & Competitive advantage: 11%
I do not think this company has competitive advantage. (I can say that by just looking at ROE)
3. Less or no Debt: The Net debt to Equity ratio in March 2011 was -28.92% which means they are sitting on cash.
4. Surplus Cash Flow: Because they are sitting on healthy cash they have enough to out spend on their investment activity, which they are doing. Last year they had negative cash flow but I won’t take that as negatively.
5. Management quality: I have not looked into it.
Hope this information will guide you to do further research.
Overall this business does not attracts me because of its performance. The resources that are available to management are not utilised to its full.
Sukhbinder,
Any views on Eclerx competitive advantage? You are working in same sector, would love to hear your opinion…
Sorry Aziz, no competency in accessing Eclerx’s competitive advantage. This isnt the secor i work in. I am more into engineering services sector. 🙂 Exlerx’s pure play BPO firm.
For analyzing competitive advantage, I give high rating to barrier of entry. If the barrier of entry is high, the company is able to sustain its margin and has healthy demand of its products.
Since for Eclerx case ROE is high, is it purely because of internal efficient operations or is the business has some hidden and not so obvious entry barrier. Can someone throw light on this.
Aziz/Sukhbinder
Agree with Sukhbinder its only management efficiency they have high ROE. No moat, any big Software company can enter in this and the client can also squeeze from pricing point of view.
If u guys wanna have complete insight on this business u can visit another website Theequitydesk.com, wher they r tracking this from last 3 years, will get lot of info.
Regards
Hi Sukhbinder,
High barrier of entry could be one of the parameter to judge competitive advantage of any company. It is hard to replicate ONGC and Reliance. For both business Investors need lots of cash and clearance from government to start fresh business. But to replicate Jubilant foodworks, Fag Bearings Lakshmi Machine works and Gandhi Spl tube you don’t need lot of equity. What people can’t replicate is the colaboration of Gandhi Spl with Gamons (German company) to share research or Fag Bearing India’s parent company FAG’s resources… Even these are competitive advantage.
If eclerx knows how to do its work efficiently and at high margins, then it gives them edge on its competitior. Try to find which are those drivers in their efficiency. Try to compare eclerx with its competitors.
If you ask me to share one competitive advantage of this company then I would say that the concentration of their client portfolio gives them edge on their rivals. Privacy policy signed between Eclerx and its clients safeguards that edge.
Market looks this competitive advantage as a threat but I am on the other side of this transaction.
Dear Mr Aziz,
could you please share your thoughts on the following;
The Economic Times Investor’s Guide has identified 10 fast growth stocks with high ROE and low debt which can become the next multibagger like Titan & Infosys.
(1) Ester Industries
Ester Industries did very well in FY11 because there was huge demand for polyester film (BOPET film) in products such as mobile touch screens, LED televisions and solar panels. As the demand and prices for BOPET film soared, Ester Industries, Uflex and other made huge profits. However, prices dropped as supply increased. Ester Industries‘ June 2011 quarter net profit tumbled 81% y-o-y. So, though Ester Industries grew at a scorchng pace in FY 2011, Ester Industries may not grow at the same pace in FY 2012.
(2) Zydus Wellness
Zydus Wellness, is a part of the Zydus Cadila group. Zydus Wellness has a strong product portfolio based on the health theme. Zydus Wellness’ has powerful brands such as Sugar Free, Nutralite and EverYuth.
Zydus Wellness had a subdued performance in the June 2011 & September 2011 quarter. However, Zydus Wellness’ underlying theme of strong growth has not changed. Zydus Wellness‘ star product Sugar Free is India’s largest-selling low-calorie sweetener with a market share of 86%.
Zydus Wellness other product “EverYuth” range of skin-care products has a leadership position in the scrubs and peel-offs category. Zydus Wellness‘ revenues of Rs. 350 crores are expected to grow at over 20%, and reach the targetted turnover of Rs 500 crore revenue by 2013-14.
(3) National Peroxide
National Peroxide did well in FY 2011 owing to the improvement in the prices of chemical hydrogen peroxide. National Peroxide‘s revenues and net profits increased 49% and 255% espectively while National Peroxide‘s production improved 11.4% to 71,826 tonnes. National Peroxide increased its hydrogen peroxide capacity by 24%. National Peroxide‘s commercial production is expected to begin from September 2011 onwards and so the benefits of the expansion will be seen in the second half of FY12.
(4) Mayur Uniquoters
Mayur Uniquoters is a leading manufacturer of artificial leather and supplies to automakers such as Maruti, Tata Motors, Hero MotoCorp, M&M, etc, and footwear makers such as Bata, Liberty, Action, etc.
Mayur Uniquoters has grown very well over the past few years without incurring high debt. Mayur Uniquoters has also started supplying to overseas automakers such as Ford and Chrysler. Mayur Uniquoters is expected to supply to marquee names like GM, Toyota, BMW and Mercedes Benz.
Mayur Uniquoters has maintained its position in the 100 Fastest Growing Small Companies list for second consecutive year and has been a multibagger in last one year.
(5) Sandur Manganese & Iron Ore
Sandur Manganese is India’s second largest manganese ore miner (after MOIL) and also operates a ferro-alloys plant. Sandur Manganese benefited from the improved pricing scenario in FY11 although its sales volumes dipped on export ban in Karnataka, high freight costs and 20% export duty imposed on iron ore. Sandur Manganese June 2011 quarter numbers were hit by the Supreme Court’s blanket ban on mining activity in Karnataka. However, once the overhang of the ban is resolved, Sandur Manganese is likely to resume the growth path.
(6) Lumax Auto Technologies
Lumax Auto Technologies is an auto-component maker supplying transmission and steering components, body and chassis and electrical components. Lumax Auto Technologies has benefitted in the recent past owing to the burgeoning demand for auto components.
Lumax Auto Technologies is a debt-free and cash rich company. Lumax Auto Technologies is planning to add two more plants to the existing six facilities in Maharashtra. Lumax Auto Technologies‘ entry into infrastructure lighting, although small at present, could safeguard it from cyclicality of the auto industry in the future.
(7) WABCO India
WABCO India is a 75% subsidiary of WABCO Holdings, US. WABCO India is a supplier of auto components to commercial vehicles industry. WABCO India has enjoyed significant revenue growth owing to the revival in the Indian commercial vehicles industry.
WABCO India‘s future growth trajectory appears to be strong owing to the strong demand in the market for commercial vehicles.
(8) eClerx
eClerx is a KPO operator which has benefited from the high demand from the global financial markets. eClerx offers critical back-end services to the financial sector and is exoected to prosper in the coming years as well. eClerx has reported a strong sequential growth of over 6% in the five out of the six quarters ended September 2011. eClerx‘s PBDIT margin is quite high at 33%.
(9) Hawkins Cookers
Hawkins Cookers is financially sound with high return ratios, strong cash flows and low debt. Hawkins Cookers has been growing at a scorching pace though the recent labour issues have put a spanner in its ability to meet the huge demand for its products. Hawkins Cookers‘ net sales grew 17% though the profit declined due to higher raw material prices. Hawkins Cookers has been able to resolve its labour issues and the input prices have also dropped. Hawkins Cookers will be able to run its plants more efficiently and higher growth can be expected.
(10) Everonn Education
Everonn Education is an education services provider. Everonn Education has reported strong buoyancy over the past three years backed by sound return and liquidity ratios. Everonn Education got into trouble recently after its MD got arrested and the Everonn Education stock plummeted 44%. Everonn Education‘s business model remains intact. Also Everonn Education has new management in place. Everonn Education can be expected to resume its growth trajectory once the overhang of the judicial proceedings diminish.
Hi Appa Rao,
Will be able to share their quality ratings and their fair values as per Value Operations.
1. Ester Industries:
Quality & Performance Rating : A4
Fair value expected for March 2012 : Rs 38
We need clarity on earnings for 2013 from management before calculating them. A ban of plastic on Gutka packaging has dented its profitability and competitive advantage.
2. Zydus wellness:
Q&P ratings: A2 (Makes it investment quality)
Fair value to be expect for March 2013 : Rs 197
3. National Peroxide
Does not trade on NSE.
4. Mayur Uniquoter
Does not trade on NSE
5. Sandur Magnese & Iron ore
Does not trade on NSE
6. Lumax Auto technologies
Q&P Ratings : B1 (Investment quality)
Fair value for March 2013: Rs 570 – 690 range.
It is trading at big discount and worth investigating further. If you can find competitive advantage that can sustain its return and convince with all other variables then it is worth investing.
7. Wabco India
Q&P Rating : A2 (Investment quality)
Fair value for March 2013: Rs 1,374
8. Eclerx
We have talked about it a lot in the post.
9. Hawkins Cooker
Does not trade on NSE. But I feel personally it is way expensive to buy at current levels.
10. Everonn Education
Q&P Rating : A3
Very hard to value this company as it is trading in loss overall. We valued this business in 2011 for Rs 260. So definatley it will be valued for less than Rs 260 for 2012.
Hope this information helps.
Dear Mr.Aziz,
With all your importance attached to value, I would like to post something humorous
An Awesome reply from the CEO of JP MORGAN !!!
A young and pretty lady posted this on a popular forum:
Title: What should I do to marry a rich guy?
I’m going to be honest of what I’m going to say here. I’m 25 this year. I’m very pretty, have style and good taste. I wish to marry a guy with $500k annual salary or above.
You might say that I’m greedy, but an annual salary of $1M is considered only as middle class in New York.
My requirement is not high. Is there anyone in this forum who has an income of $500k annual salary? Are you all married?
I wanted to ask: what should I do to marry rich persons like you?
Among those I’ve dated, the richest is $250k annual income, and it seems that this is my upper limit.
If someone is going to move into high cost residential area on the west of New York City Garden (?), $250k annual income is not enough.
I’m here humbly to ask a few questions:
1) Where do most rich bachelors hang out? (Please list down the names and addresses of bars, restaurant, and gym)
2) Which age group should I target?
3) Why most wives of the riches are only average-looking? I’ve met a few girls who don’t have looks and are not interesting, but they are able to marry rich guys.
4) How do you decide who can be your wife, and who can only be your girlfriend? (My target now is to get married)
Ms. Pretty
NOW ON THIS COMES
A philosophical reply from CEO of J.P. Morgan:
Dear Ms. Pretty,
I have read your post with great interest. Guess there are lots of girls out there who have similar questions like yours. Please allow me to analyze your situation as a professional investor.
My annual income is more than $500k, which meets your requirement, so I hope everyone believes that I’m not wasting time here.
From the standpoint of a business person, it is a bad decision to marry you. The answer is very simple, so let me explain.
Put the details aside, what you’re trying to do is an exchange of “beauty” and “money”: Person A provides beauty, and Person B pays for it, fair and square.
However, there’s a deadly problem here, your beauty will fade, but my money will not be gone without any good reason. The fact is, my income might increase from year to year, but you can’t be prettier year after year.
Hence from the viewpoint of economics, I am an appreciation asset, and you are a depreciation asset. It’s not just normal depreciation, but exponential depreciation. If that is your only asset, your value will be much worse 10 years later.
By the terms we use in Wall Street, every trading has a position, dating with you is also a “trading position”.
If the trade value dropped we will sell it and it is not a good idea to keep it for long term – same goes with the marriage that you wanted. It might be cruel to say this, but in order to make a wiser decision any assets with great depreciation value will be sold or “leased”.
Anyone with over $500k annual income is not a fool; we would only date you, but will not marry you. I would advice that you forget looking for any clues to marry a rich guy. And by the way, you could make yourself to become a rich person with $500k annual income. This has better chance than finding a rich fool.
Hope this reply helps. If you are interested in “leasing” services, do contact me.
Signed,
J.P. Morgan CEO