Know Your Stocks - How Expensive is CEB fundamentally based from their Dec 2016 Annual Report?

Cebu Air, Inc. (CEB), which is an airline company that operates under the trade name "Cebu Pacific Air," was incorporated on August 26, 1988. The Company was granted a 40-year legislative franchise to operate international and domestic air transport services in 1991. CEB commenced its scheduled passenger operations in 1996 with its first domestic flight from Manila to Cebu. International operations began in 2001 with flights from Manila to Hong Kong.

CEB pioneered the "low fare, great value" strategy in the local aviation industry. In 2005, the Company adopted the low-cost carrier (LCC) business model, whose strategy is to offer affordable air service to passengers.

On March 20, 2014, CEB acquired 100% ownership of Tiger Airways Philippines, including a 40% stake in Roar Aviation II Pte. Ltd., a wholly-owned subsidiary of Tiger Airways Holdings Limited.

CEB currently operates a fleet of 55 aircraft which comprises of eight Airbus A319, 33 Airbus A320, eight ATR 72-500, and six Airbus A330 aircrafts. It operates its Airbus aircraft on both domestic and international routes.

As of December 31, 2015, the Group operates an extensive route network serving 56 domestic routes and 41 international routes with a total of 2,685 scheduled weekly flights. It operates from
seven hubs located in Pasay City, Metro Manila; Lapu-Lapu City, Cebu; Clark, Pampanga; Davao City, Davao del Sur; Ilo-ilo City, regional center of western Visayas region; and Kalibo, Aklan.

As of May 02, 2017, CEB was last traded price at PHP 109.90, this is just 1.99 times higher compare to their recorded book last December 2016, not expensive yet for most value investor since a PBV of more than 3 is considered expensive.

In terms of P/E, the company recorded a trailing P/E of 6.83 meaning, for every 1PHP earning last 2016, investors of this company are willing or is paying 6.83Php only. With an 6.83 P/E and with growth rate of 122.38% from 2015 to 2016, the company trailing PEG ratio would only be 0.06 which means, investors of this company are paying 6.83Php for every 1Php income last 2016 for a 122.38% growth rate from 2015 to 2016. A fair valued stock usually has PEG ratio of 1 meaning, what you are paying for that earning- the P/E is equivalent to the growth rate- increase in EPS.

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