[caption id="attachment_4188" align="alignright" width="150" caption="Photo by lepiaf.geo"][/caption] The reason that I bought it is because someone told me that that this stock is going to rise soon. That was over a year ago and I believe 'soon' will never arrive, at least not this year. As some may know, I'm a avid fan of Peter Lynch and I am going to do a quick take on Lian Beng. Lian Beng is a cyclical stock - pretty obvious given that it moves in sync with construction demand. I bought the stock in May 2008 at $0.380 which is at the downward cycle. For cyclical stocks, it is important to identify and buy it when the cycle is just about to begin or at the very least when the cycle is still at its infant stage. The latest financial report is pretty decent - profits are better than the previous quarter. However the business times reported that construction projects are easing and there's a high chance that the number of projects will dip even further in 2011 - 2012. I believe it is true - with the completion of IR and related projects, I can't think of any that can spur the construction industry. At it's last close of $0.330, is it a good time to offload this stock and invest in others? The PE ratio is very erratic. We know that the price peak at the end of 2007 and the EPS for FY2008 was 1.36 cents. FY2009 posted even better results - a EPS of 3.21 cents and a growth rate of over 50% but the price of the stock started to tumble after Jan 2008. Why? Two possible reasons. The first is the financial crisis and the second is that the stock is priced way too high. I looked at the half year financial statement published in 2008 and although the EPS has increased to 1.72 cents, at its peak price of $0.795, it represent a whopping PE ratio of 45. Well in that case, if I were to buy at $0.380, the PE ratio will only be 22. Surely a good buy since FY2007 PE was 24. The latest half year statement shows that EPS has increased again by another 28% but the growth rate only increased by 4.4%. This is pretty strange. On closer inspection, it is mainly due to lower finance cost and taxation. If revenue don't pick up in the later half of the year, even with lower expenses, Lian Beng will experience a negative growth rate for FY2010. Using the latest half year statement, I compared Lian Beng's PE ratio against two of its competitors Chip Eng Seng and Hiap Hoe. Their current PE ratio for 9months is 6.13 and 6.42 respectively. Since Lian Beng's  statement is only for half year, I'll assume that EPS stays constant and the PE ratio now works out to 11.89. Is Lian Beng full priced, over-priced or under-priced? I would think it is fully priced but if a PE ratio of 11.89 is fully priced, what about Chip Eng Seng and Hip Hoe with a low PE of only 6?