Hi fellow investors,

When screening for value counters on Bursa Malaysia, relying solely on trailing Price-to-Earnings (P/E) or Price-to-Book (P/B) ratios often draws capital into structural value traps. A stock trading at a low multiple may simply reflect permanent margin deterioration or unserviceable balance sheet leverage.

Three quantitative filters applied in institutional valuation to confirm genuine margin of safety:

• EV/EBITDA over Trailing P/E: Evaluate Enterprise Value (EV = Market Cap + Net Debt) to account for off-balance-sheet or bank debt burdens. A low P/E counter with high net debt often carries a elevated EV/EBITDA, masking true capital risks.

• Free Cash Flow (FCF) Yield Persistence: Calculate FCF / Enterprise Value. Ensure the company generates positive FCF after accounting for maintenance capital expenditures, rather than relying on paper accounting gains.

• ROE vs Cost of Capital (ROE > K_e): A value counter creates long-term shareholder value only if its Return on Equity consistently exceeds its Cost of Equity (K_e). Persistent ROE < K_e indicates capital destruction despite low trading multiples.

True value investing requires verifying balance sheet durability before buying low multiples. What fundamental metrics do you prioritize when screening value counters on Bursa?