Jonathan Lo's Playbook: Valuation Ratios and the Moat Behind the Business
Speaker: Jonathan Lo, Investment Representative at Tiger Brokers Singapore, on P/E, ROE, dividend yield, and why the quality of a business can matter more than the quality of its management.
[About the Speaker] Jonathan Lo is an Investment Representative at Tiger Brokers (Singapore). With nearly 20 years of practical trading and investment experience, he interprets markets through multi-asset, macro-directed long-short strategies expressed through equities and options.
[The Hook] Is management more important, or the enterprise itself? The speaker leaned on Buffett: a structurally disadvantaged company is hard to turn into a consistently profitable one, even for a good management team.
[The Popular Valuation Ratios]
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P/E ratio comes in two kinds. Trailing 12-month P/E is backward-looking, "like looking in the rearview mirror." Forward P/E is based on analysts' projected earnings, like looking through the windshield.
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Return on equity (ROE) = net income ÷ shareholders' equity × 100. A high ROE suggests the company uses capital productively. But ask how it got there: it could come from taking on a lot of debt to open stores or run subsidised campaigns to win market share.
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Return on assets (ROA) measures income against the assets a company holds. The speaker noted it can be more useful for businesses like banks.
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Dividend yield = dividend ÷ share price × 100. Pair it with the payout ratio, the share of earnings paid out as dividends. You don't want it too high, so the payout stays sustainable. The speaker's own emphasis: consistency, year after year.
[Using the Tiger App's Valuation Track]
In the Tiger app, under the Analysis tab, the valuation track shows today's P/E against its historical range, for both trailing and forward P/E. Green means below one standard deviation, red means above. It gives a sense of how optimistic or pessimistic investors currently are about a company. The forward version is based on analyst consensus, so it shows how bullish expectations are.
One subtle point: the same share price can mean different valuations at different times, because earnings change. A stock at $100 today may look different from the same $100 five years ago.
You can mix and match these ratios into your own screening process.
[Quality of the Business]
A company's problems sometimes surface only over time. The speaker's case study: a CEO celebrated as a superstar in his era, whose record looked different after he retired and the financial crisis hit. His point was not whether the man was good or bad, but that this is worth studying.
The Buffett lesson: the enterprise matters more than the person steering it. The speaker contrasted Coca-Cola, still held and still performing, with another company investors backed hoping for growth, which kept needing fresh capital.
[The Economic Moat]
A moat is a company's competitive advantage. The slide lists five:
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Switching costs: obstacles that keep customers from changing products (e.g. Apple ecosystem)
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Network effects: value rises as more people join (e.g. Facebook, TikTok)
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Intangible assets: patents, licenses, brand identity (e.g. Coca-Cola brand)
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Cost advantage: producing at lower cost (e.g. Costco)
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Efficient scale: a market that supports only one or a few players (e.g. National Grid)
The slide's reminder: if a competitive advantage doesn't exist or may prove fleeting, there's no moat.
[Key Takeaways]
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Know what a ratio measures before you trust it. A high ROE can come from debt.
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Compare P/E with its own history, not just with other stocks.
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Look for dividend consistency, and check the payout ratio.
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Moats protect profits. Ask which kind a company has.
[Call to Action 🎯]
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Open the valuation track for a stock you follow, trailing and forward.
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Write down which of the five moats it has, if any.
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Drop a comment: which company do you think has the strongest moat, and why?
Markets are always moving - and sometimes, the best move is knowing what works for you.
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What makes Costco special is not simply its low prices, but its membership business model. Customers pay an annual fee for access, giving Costco a recurring revenue stream while encouraging repeat purchases. This creates a powerful combination of customer loyalty, economies of scale and cost advantages.
The numbers support this argument. In FY2025, Costco generated $5.32 billion in membership fee revenue, up 10% year over year. Its renewal rate reached 92.3% in the US and Canada. That is not just customer satisfaction; it is evidence of a business model customers are willing to keep paying for.
However, even an excellent business can become a poor investment if purchased at an excessive valuation.
My takeaway: A strong moat protects future earnings, but the purchase price determines our potential returns. Quality matters, but valuation still matters.
@TigerClub [龇牙]
首先，要学会看三个重要指标：
1. 市盈率（PE）： 判断股票贵不贵。除了看目前市盈率，也要比较公司过去的历史估值，避免在市场过度乐观时买入。
2. 股本回报率（ROE）： 衡量公司运用股东资金赚钱的能力。但ROE高不一定好，也可能是因为公司负债太高。
3. 股息收益率： 衡量股息相对于股价的回报。除了股息高低，还要检查派息率及过去是否持续稳定派息。
其次，我非常认同巴菲特的投资理念：企业质量比管理层更重要。
一家好公司必须拥有竞争优势，也就是所谓的经济护城河。主要有五种：
- 转换成本：客户不容易转用其他产品，例如苹果。
- 网络效应：用户越多，产品价值越高，例如Facebook。
- 品牌优势：拥有强大的品牌，例如可口可乐。
- 成本优势：能够以较低成本经营，例如Costco。
- 有效规模：市场规模有限，不容易容纳太多竞争者。
我的投资观点是，选股不能只看PE低、ROE高或股息高，而要综合分析公司的财务状况、估值和竞争优势。
总结：真正值得长期持有的企业，应该具备稳定盈利能力、持续派息能力、合理估值和强大的经济护城河。买股票不是买一个管理者，而是买一家能够长期创造价值的好企业。
微软的核心优势不仅是技术，更是**极高的客户转换成本和庞大的企业生态系统**。
Office、Windows、Azure以及企业安全服务深度融入客户的日常运营。对于大型企业而言，更换供应商不仅涉及软件费用，还需要承担数据迁移、员工培训和系统兼容成本。
这种护城河能够带来持续性收入，也为微软发展AI业务提供了客户基础。
不过，**好公司不一定等于好股票，关键还要看买入价格。**
我会结合历史及远期市盈率、ROE、自由现金流和AI资本开支回报率进行判断。尤其要警惕高估值已经提前反映未来增长的情况。
**我的投资逻辑是：护城河决定企业能否长期赚钱，现金流验证盈利质量，而估值决定投资回报空间。**
相比追逐短期热门概念，我更愿意以合理价格持有竞争优势能够持续十年以上的优质企业！🐯
One thing I have learnt from investing is that a cheap-looking stock is not necessarily a good investment. I need to understand what I am paying for and whether the company has a sustainable competitive advantage.
📈 1. Financial Ratios Matter
I look at ROE, P/E and dividend payout ratios. A high ROE looks attractive, but I also need to check whether the company is using excessive debt to generate those returns. For P/E, I prefer comparing the valuation against its own historical range rather than simply comparing it with competitors.
💰 2. Dividend Consistency
I like companies that can consistently reward shareholders. However, a high dividend yield alone is not enough. I need to examine earnings, cash flow and payout ratios to determine whether the dividend is sustainable.
🏰 3. Economic Moats
My favourite businesses