Dr Tee Family 100 Years Investing Strategy (百年树人)

Posted on August 26, 2020 Written by

Parents are our best role models for life including investing. Dr Tee will share in this article, both valuable life principles learned from his father (who passed away recently) and also a lifetime investing strategy with 100% success rate practiced by his parents, applicable in both stock and property markets.

Bonus is Dr Tee Grandparents Crisis Investing Strategy for reader who could patiently read the entire article. This investing strategy is proven over 3 generations of Dr Tee family over the past 100 years.

Many people hope to learn a “sure-win” investing strategy. For most practical considerations, there is a certain probability of success for each stock trading or investing strategy but rarely could achieve 100% success rate.

Dr Tee parents have a remarkable achievement to have 100% winning record in both stock and property investment consistently over the past few decades. This lifetime investing strategy may not be suitable for everyone, requiring alignment of similar personality as Dr Tee parents. Let’s learn the details here.

Some people may change mind easily, even for a good investment (stock or property), if the market prices fall down significantly, some may end up sell low with losses under tremendous fear. Alternatively, some people could hold an investment for long term, even over a lifetime but due to declining businesses, suffering permanent losses over time.

Dr Tee parents’ “Sure-Win” Strategy is simple but only if one could align with similar personality (work hard + take right investment action). Here are the 3 main steps:

1) What to Invest

For stock investment, Dr Tee parents prefer giant stocks from country stock index component, especially those with strong business fundamental stocks with good track record (both capital gains and dividend payout) over the past decades. 

Property (house or land with high quality asset) by default is a giant, therefore also a key option for their investment. Their main source of investment knowledge was through reading local newspaper investment articles and discussion with friends having similar interest.

This “100% winning” strategy requires support of a portfolio of giant stocks (reviewing giant stocks status yearly for possible change in business fundamental). Many giant stocks could be found in a country stock index. For example, these are 30 STI component stocks, could be a possible starting point for lifetime investing for an investor in Singapore:

DBS Bank (SGX: D05), Singtel (SGX: Z74), OCBC Bank (SGX: O39), UOB Bank (SGX: U11), Wilmar International (SGX: F34), Jardine Matheson Holdings JMH (SGX: J36), Jardine Strategic Holdings JSH (SGX: J37), Thai Beverage (SGX: Y92), CapitaLand (SGX: C31), Ascendas Reit (SGX: A17U), Singapore Airlines (SGX: C6L), ST Engineering (SGX: S63), Keppel Corp (SGX: BN4), Singapore Exchange (SGX: S68), Hongkong Land (SGX: H78), Genting Singapore (SGX: G13), Mapletree Logistics Trust (SGX: M44U), Jardine Cycle & Carriage (SGX: C07), Mapletree Industrial Trust (SGX: ME8U), City Development (SGX: C09), CapitaLand Mall Trust (SGX: C38U), CapitaLand Commercial Trust (SGX: C61U), Mapletree Commercial Trust (SGX: N2IU), Dairy Farm International (SGX: D01), UOL (SGX: U14), Venture Corporation (SGX: V03), YZJ Shipbldg SGD (SGX: BS6), Sembcorp Industries (SGX: U96), SATS (SGX: S58), ComfortDelGro (SGX: C52).

For different country, an investor may start with local stock indices with component stocks, eg. 30 KLCI stocks, 50 HSI stocks, 30 Dow Jones stocks, S&P 500 stocks, 50 SSEC stocks, Top 10 largest NASDAQ stocks, etc.  Subsequently, analyze business fundamental and other critical criteria for giant stocks. Here is a list of 30 Malaysia Bursa KLCI Index component stocks which may be considered for Malaysia stock investors:

CIMB (Bursa: 1023) CIMB GROUP HOLDINGS BERHAD, DIALOG (Bursa: 7277) DIALOG GROUP BERHAD, DIGI (Bursa: 6947) DIGI.COM BERHAD, GENM (Bursa: 4715) GENTING MALAYSIA BERHAD, GENTING (Bursa: 3182) GENTING BERHAD, HAPSENG (Bursa: 3034) HAP SENG CONSOLIDATED BERHAD, HARTA (Bursa: 5168) HARTALEGA HOLDINGS BERHAD, HLBANK (Bursa: 5819) HONG LEONG BANK BERHAD, HLFG (Bursa: 1082) HONG LEONG FINANCIAL GROUP BERHAD, IHH (Bursa: 5225) IHH HEALTHCARE BERHAD, IOICORP (1961) IOI CORPORATION BERHAD, KLCC (Bursa: 5235SS) KLCC PROPERTY HOLDINGS BERHAD, KLK (Bursa: 2445) KUALA LUMPUR KEPONG BERHAD, MAXIS (Bursa: 6012) MAXIS BERHAD, MAYBANK (Bursa: 1155) MALAYAN BANKING BERHAD, MISC (Bursa: 3816) MISC BERHAD, NESTLE (Bursa: 4707) NESTLE MALAYSIA BERHAD, PBBANK (Bursa: 1295) PUBLIC BANK BERHAD, PCHEM (Bursa: 5183) PETRONAS CHEMICALS GROUP BERHAD, PETDAG (Bursa: 5681) PETRONAS DAGANGAN BHD, PETGAS (Bursa: 6033) PETRONAS GAS BERHAD, PMETAL (Bursa: 8869) PRESS METAL ALUMINIUM HOLDINGS BERHAD, PPB (Bursa: 4065) PPB GROUP BERHAD, RHBBANK (Bursa: 1066) RHB BANK BERHAD, SIME (Bursa: 4197) SIME DARBY BERHAD, SIMEPLT (Bursa: 5285) SIME DARBY PLANTATION BERHAD, TENAGA (Bursa: 5347) TENAGA NASIONAL BHD, TM (Bursa: 4863) TELEKOM MALAYSIA BERHAD, TOPGLOV (Bursa: 7113) TOP GLOVE CORPORATION BHD.

2) When to Invest

Dr Tee parents only have middle-class income from active jobs, which salary in cash would depreciate over time. When they got married about 60 years ago in Muar (a small town in Johor of Malaysia), both were having little starting capital. Since young, over 4 decades of working hard, they would gradually convert the cash saving into another form of “fixed deposit” through purchases of stocks (both private and public listed companies) and properties (houses and plantations), which could generate passive incomes (eg. stock dividends and property rentals, much higher than bank interest rates) and consistent growth with enormous capital gains. 

Besides regular conversion of cash into saving (spending very little on themselves, saving every dollar possible for family with 4 children), later into stocks or properties, Dr Tee parents would invest more during financial crisis, especially when they observed the stock index (eg. KLCI Index as they live in Malaysia) was at relatively low level or when there was special sales of house or land below the market prices.

Dr Tee parents worked very hard (like a habit) for whole life, even after they have retired, could not rest well for 1 day, must find something to do each day in kampung.  To them, this is their ideal lifestyle to keep busy (but not stressful) each day. Dr Tee wished they could be more relaxed but looking back now, this could be blessing in disguise as some retirees who relaxed too much, may age even faster.

3) When to Sell

Most of the time, Dr Tee parents would not sell stocks or properties, keeping them long term over lifetime, collecting both passive incomes (which can be used for family expenses or reinvest again) and capital gains. Sometimes when stock index or investment is at high optimism level, they would sell but most of the time, they would simply ignore them, keeping as “fixed deposit” which could compound each year for decades through stocks and properties. Apply this simple method of investing (buy stocks as if property for many generations to stay) on giant stocks, naturally the success rate is 100% over the decades, overcoming all the stock “crisis” eventually.

In a certain period of time for about 10 years, due to high cost to support 4 children (Dr Tee and 3 siblings) university education in US (ringgit was weak vs USD), they decided to sell significant private shares of palm oil plantation (with many times of capital gains). This was rare for them to sell properties or stocks to convert back into cash but children (especially education) are their most important goal in life. They strongly believe that knowledge is the best investment to generate more wealth (eg. with a better job) to support a better future life.

Dr Tee parents were working very hard, saving almost every dollar they could during this period, spending very little on themselves, saving and then investing mainly to provide additional financial shield for children. History seems to repeat itself, it is turn for Dr Tee to do similar planning for family with children. However, Dr Tee could still have reasonable spending (disagree with parents who almost did not spent much on themselves) as children should also work hard to enjoy fruits of life with own creation of wealth.  This way, the “shield” contributed by each generation could be compounded to protect against a major future crisis.  If not, wealth could not last through 3 generations with spending alone. 

Financial literacy could be the best gift for any young generation. Dr Tee is amazed that a few Ein55 graduates are as young as 14 years old (learning together with parents), could understand and apply value investing principles. With compounding return of many decades to come, knowing what giant stocks to invest, these young learners main goals would be to work hard and save more for capital to start the first investment of life one day. 

This “Buy Low and Hold” strategy for long term or even lifetime suit Dr Tee parents personalities.  Some people may not have patience to hold or wish to sell earlier for capital gains to enjoy life, therefore missing the natural compounding growth of giant stock or property, hedging against inflation.  To maximize the compounding over lifetime, one has to start investment younger. Assuming 50 years of lifetime investing (eg. 30 to 80 years old) with average of 10% growth rate, capital gains could be as high as 1.1^50 = 117 times.  Even with a minimal 5% growth rate over 20 years (eg. 40 to 60 years old when retiring), capital gains could be 1.05^20 = 2.65 times.

So, this “sure-win” strategy could be very simple (tested over 100 years with 3 generations) but could be very tough as some people may not able to make sacrifice in life (eg. not willing to invest in oneself to enhance knowledge in own profession or investment), simply wait for gift to drop from heaven (most of the time are speculative news, ending up with big losses).  So, heaven is fair, usually reward those who work hard and follow the right path of investing, even if one forgets about making money one day (eg. Buy Stocks / Properties and Forget), hidden fortune would appear naturally one day when needed.

So, the secrets of making money in investment is not to think of making money, just do the right proven actions, eg: investing over a portfolio of 10-20 giant stocks, buying more during financial crisis, holding long term, then the compounded return would come naturally one day.

My Father Story

Similar to investment, life also has its own cycle. My father (Mr Tee Ching Sin, 郑清森) passed away peacefully recently due to natural aging.  Over the past 10 years, this has been my biggest worry to receive unexpected call from parents in Malaysia which could be potential sad news.  The day still comes with expected call when I was halfway conducting a Zoom coaching class, need to hold my tears to complete the program as this is a commitment, a value shared by my father.

When I observed my parents have been getting older each year, I started to slow down the pace of my work or interest in investment education (used to work 365 days a year, 7 days a week, working nearly all the time), visiting them more often in Malaysia over the past few years. Each time when I said farewell to them when returning to Singapore, I was thinking could this be the last time we meet in life.

More importantly, my father has taught me many positive values in life (not just making money with investment), setting an excellent example with his whole life. Despite he has left the world, sometimes I could still “hear” his voices which is embedded in the subconscious mind (similar to Artificial Intelligence, AI). This is how a “spirit” or family value could be transmitted between the generations.

Similarly, I often use “Dr Tee” as third person narration when teaching investment knowledge to students or writing articles (eg. Dr Tee aims for “giant stocks”, investing when giant is falling during crisis, etc), hopefully this could help to form positive habits of investment in a faster way with AI into their minds when they hear “Dr Tee voices” in their subconscious mind one day.

This article is a special tribute to my father, a short summary of his successful life, not only with “sure-win” investing strategy and hardwork over lifetime, but also for his selflessness to think of family first.  It is a regret that there is travelling restriction to Malaysia during pandemic (requires 14 days quarantine), together with 2 other siblings living outside Malaysia, we join the online ceremony to pay the last respect to our father.

My father dedicated his whole life for family but reward little to himself. During his funeral ceremony today, I have shared my feeling remotely in Chinese (you may use google translator if needed) to him:

爸爸，您是我们心目中，敬重的父亲。

您的3个孩子，姐姐，二哥和我，身在海外，因为疫情的情况下，国家限制旅游，不能回来尽孝，我们庆幸过去与您保持密切联系，亲情永在，不限一时。

爸，身为您的儿女与亲友们，舍不得与您告别。

纵然您已离开尘世，浩瀚宇宙中遨游，您不朽的精神，将永远留在我们心里。

爸爸，多谢您一生无私的付出，栽培了我们四个孩子，海外留学，开阔视野。教育是您留给我们最珍贵的资产，我们也继承了您的精神与理念，与后代分享。

年轻时，为了给家庭增强经济后盾，您毅然放下教鞭，从事繁重的经商活动，过度劳累，透支身心。晚年时，纵然行动不便，您意志顽强，坚持独立活动，心灵手巧，甚至到人生最后一刻。

言传不如身教，您是我们的人生楷模。我们从中观察，学习宽容待人，刻苦节俭，不畏失败，活出自我。孩儿东渊记得，曾经问您为何不多花一分钱在自己身上，却慷慨帮助孩子们与他人。您说人生已无遗憾，家人安康就是最大的满足。

爸爸，请您放心，我们会照顾好妈妈。 您的一生是成功的， 无憾无悔，不枉此生。我们衷心感激您为家庭的无偿付出。

爸爸，愿您一路走好，我们爱您，永远怀念您。

Suddenly, I remember this old song by Taiwanese singer (高凌風 – 牽不住你的手, “Could Not Hold Your Hands”), now finally I could understand the meaning as he wrote this song when losing his father many years ago: https://www.youtube.com/watch?v=xQmQllux1bo

I was hoping to hold my father hands for the last time. I tried to appeal to Malaysia High Commission in Singapore by queuing up before 8am (hope to enter Malaysia without quarantine if pass COVID test in 1-2 days) but standard answer was to fill in online form (which has no option of funeral, mainly ask to sign to agree to pay for 14 days quarantine in hotel after entry to Malaysia with on-site test) and wait for reply which response time is not guaranteed. I sadly called ICA of Singapore for help (hoping there is some special agreement between 2 countries on travelling for special case of funeral, not just on businesses), standard answer is entry to Malaysia depends on Malaysia policy. So, the recent bi-lateral “Reciprocal Green Lane” may not have considered hundreds of thousands of citizens with close elderly family members in both countries (Singapore and Malaysia were 1 country before, hard to separate families apart with a political border).  COVID-19 crisis is not only a health and financial crisis, may also be a family crisis.

I am relieved that online technology (Whatsapp Group Video) has helped to lessen this potential biggest regret in my life. My siblings and I who are abroad Malaysia could follow entire funeral ceremony remotely in an interactive way, praying and talking to my father who rest peacefully, knowing all his children would get united again regardless of obstacles. Except I could not hold my father hands anymore.

I remember a unique subject studied in university time in US several decades ago: “On Death & Dying”. The funeral services are not just for the deceased, also for those who are alive to heal their wounds in heart. It is a way to accept and adjust to new norm in life without the loved one (switching connection from physical to spiritual).

Looking back, I believe my father may have special plan in choice of timing to depart us (knowing that I would try different ways to get there to see him for the last time). Perhaps this was his intention not to trouble 3 of children abroad, not to take any risk in travelling. If so, I may need to thank the authority with hard rules for helping my father to achieve his final wish to help family again.

Father, please Rest in Peace. The best way to repay your kindness in lifelong support is to maximize values of my own life which I promise won’t disappoint you!

Dr Tee’s Grandparents Story

In fact, Dr Tee parents also learned from their parents who have similar personality of working hard, despite low income but knowing how to invest to improve on quality of life. Dr Tee grandparents were very poor (not having any formal education, could only do lower income work) when first came from China to Malaysia nearly 100 years ago.

After many years of working and saving little by little, Dr Tee grandparents grabbed the rare opportunity of Japanese occupation time (1940s) to use life saving in “banana money” to buy a small piece of land with rubber plantations at very low price (a form of crisis investing during World War II), holding for 80 years till today with about 2000 times capital gains. 

Many people lose money in saving cash when Japanese “banana money” became zero value overnight but Dr Tee grandparents converted the cash (paper value) into land (high quality asset), therefore reversing the family poverty destiny, converting crisis into opportunity.  With the first foundation (plantation could generate incomes), they continue to improve family financial condition with more purchases of land with hard earned savings (but similar crisis of low land price was only once a lifetime).

Dr Tee grandparents success (hardwork with special help of crisis investing in property) has changed the future of Tee family (from poor to middle class). This inspired Dr Tee parents to follow similar track of working hard and invest when young (but extending from properties to stocks).  Crisis investing of high quality assets at low price is a high probability of winning if one has holding power.

Similarly, the success of last 2 generations has motivated Dr Tee to study hard (aiming for highest educational level of PhD), then work hard to achieve the career goals (climbing ladder till VP in corporate world, then CEO of own company after becoming financial free) and extending investment from long term investing to short term trading, developing an universal way of “Buy Low Sell High” with Ein55 styles of investing for stocks, properties, bonds, commodities and forex.

Dr Tee owes the current success (both personal life and investment) to contribution of 3 generations of Tee family over the past 100 years.  The same principles of life (work hard with simple life) are not just passed to 4th generation but also shared with over 3000 Dr Tee graduates and over 300,000 public audience over the past 10 years.

Even if you not Tee family member, could you duplicate this simple secret of success in life with “Sure-Win” strategy? Answer is yes but not everyone could do it.  A person must be willing to have a determination of working hard (or study hard in early age) for life, spending little on oneself, converting saving into higher growth investment with a portfolio of giant stocks or properties, investing more during financial crisis time, then holding for high growth over lifetime.

If you could read every word of this article until this here, you have the potential to be the first generation of your family to inspire future generations for another 100 years (百年树人)!

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Drop by Dr Tee free 4hr webinar (learning at comfort of home with Zoom) to learn how to position in global giant stocks during COVID-19 stock crisis with 10 unique stock investing strategies, knowing What to Buy, When to Buy/Sell.

Zoom will be started 30 min before event, bonus talk (Q&A on any investment topics from readers) for early birds. There are many topics we will cover in this 4hr webinar, Dr Tee can have more time for Q&A if you could stay later after the webinar.

Dr Tee will cover over 20 case studies, Singapore giant stocks, eg. CapitaLand Mall Trust (SGX: C38U), Singapore Exchange (SGX: S68), Keppel Corp (SGX: BN4), Top Glove (SGX: BVA), Jardine Matheson Holdings JMH (SGX: J36), Vicom (SGX: WJP) and many others, Malaysia giant stocks, Hong Kong giant stocks and US giant stocks, both long term investing and short term trading.

There are limited tickets left for this 4hr free webinar, please ensure 100% you could join when register: www.ein55.com


Filed Under: Fundamental Analysis, Market Cycle Investing, Personal Analysis, Stock Market Tagged: , ,

Temasek Giant Stocks Corporate Actions (淡马锡股)

Posted on August 18, 2020 Written by

Having a strong sponsor or major shareholder is crucial for stock investment, especially during period of uncertainty such as COVID-19 stock crisis.  In this article, Dr Tee will review these 7 Temasek stocks with 4 major corporate actions:

1) Keppel Corp (SGX: BN4)

– Abandon of Partial Acquisition by Temasek

2) Sembcorp Industries (SGX: U96) & Sembcorp Marine (SGX: S51)

– Successful Demerger under Temasek

3) Singapore Airlines, SIA (SGX: C6L)

– Impact of Rights & Bonds Issues for Survival

4) CapitaLand Mall Trust (SGX: C38U) & CapitaLand Commercial Trust (SGX: C61U)

– Merger of CapitaLand (SGX: C31) Giant REITs with coming change in 30 STI component stock with Keppel DC REIT (SGX: AJBU)

Temasek helps to manage national wealth of Singapore, having over 40 stocks globally with about S$300B investment (淡马锡股). There are at least 26 Temasek / GLC stocks in Singapore, controlling shareholder with 15% or more ownership directly or indirectly:

Singtel (SGX: Z74), DBS Bank (SGX: D05), ST Engineering (SGX: S63), Singapore Airlines (SGX: C6L), SIA Engineering (SGX: S59), Singapore Exchange (SGX: S68), SATS (SGX: S58), Sembcorp Industries (SGX: U96), Sembcorp Marine (SGX: S51), Olam (SGX: O32), CapitaLand (SGX: C31), CapitaLand Mall Trust (SGX: C38U), CapitaLand Commercial Trust (SGX: C61U), Ascendas Reit (SGX: A17U), Ascott Hospitality Trust (SGX: HMN), Ascendas Hospitality Trust (SGX: Q1P), CapitaLand Retail China Trust (SGX: AU8U), Ascendas-iTrust (SGX: CY6U), Keppel Corp (SGX: BN4), Keppel Reit (SGX: K71U), Keppel DC Reit (SGX: AJBU), Keppel Infrastructure Trust (SGX: A7RU), Mapletree Logistics Trust (SGX: M44U), Mapletree Commercial Trust (SGX: N2IU), Mapletree Industrial Trust (SGX: ME8U), Mapletree NAC Trust (SGX: RW0U).

Temasek stocks portfolio also affect about 15% of STI index stocks, which has strong impact on Singapore stock market. Here are 30 STI component stocks:
DBS Bank (SGX: D05), Singtel (SGX: Z74), OCBC Bank (SGX: O39), UOB Bank (SGX: U11), Wilmar International (SGX: F34), Jardine Matheson Holdings JMH (SGX: J36), Jardine Strategic Holdings JSH (SGX: J37), Thai Beverage (SGX: Y92), CapitaLand (SGX: C31), Ascendas Reit (SGX: A17U), Singapore Airlines (SGX: C6L), ST Engineering (SGX: S63), Keppel Corp (SGX: BN4), Singapore Exchange (SGX: S68), HongkongLand (SGX: H78), Genting Singapore (SGX: G13), Mapletree Logistics Trust (SGX: M44U), Jardine Cycle & Carriage (SGX: C07), Mapletree Industrial Trust (SGX: ME8U), City Development (SGX: C09), CapitaLand Mall Trust (SGX: C38U), CapitaLand Commercial Trust (SGX: C61U), Mapletree Commercial Trust (SGX: N2IU), Dairy Farm International (SGX: D01), UOL (SGX: U14), Venture Corporation (SGX: V03), YZJ Shipbldg SGD (SGX: BS6), Sembcorp Industries (SGX: U96), SATS (SGX: S58), ComfortDelGro (SGX: C52).

At the same time, over the past 1 year, there are 4 major corporate actions in these Temasek stocks which worth review here.

1) Keppel Corp (SGX: BN4)

– Abandon of Partial Acquisition by Temasek

The partial acquisition offer by Temasek (increase ownership of Keppel Corp to 51% at price of $7.35/share) was initiated before COVID-19 stock crisis. Under this unprecedented health crisis, global stock market suffers 30-50% correction. Therefore, it does not make sense for Temasek to acquire Keppel Corp at premium price before COVID-19 crisis. 

Keppel Corp was making loss in Q2/2020, providing an option for Temasek to withdraw the acquisition as cash or capital may be more critical for other Temasek stocks during this period of uncertainty. Temasek could also use the money for other better investment, eg. recently increase stake in BlackRock (NYSE: BLK), a giant fund stock with $4.8B which is clearly stronger than Keppel Corp.

Despite it may be a sound decision for Temasek but other Keppel Corp shareholders could be disappointed with share prices falling below critical $5/share support, nearly last 10 years low. Keppel Corp is mainly supported by property segment of business as Oil & Gas segment has been making losses due to low optimism oil prices.

Keppel Corp stock investor may need to align decision making (sell or hold) with own personality. Current share price is low optimism, it would be “Sell Low”. The situation is different from SIA which is also at low optimism share prices but business is making loss. Keppel Corp still has strong property business while oil & gas has strong potential to recover with rising oil prices (higher demand with fading of COVID-19 threat).  It is also an option to copy Temasek action to “Change Horse” (Sell weaker Stock A, Buy stronger Stock B), eg. transferring the capital to invest in stronger giant stocks such as BlackRock.  Afterall, not all could be a patient long term investor for Keppel Corp to regain giant stock title as 10 years ago during bullish Oil & Gas sector.

Although with controlling ownership (over 51% shares), it may be easier to implement potential plan for merging of Keppel O&M with Sembcorp Marine but if outcomes are beneficial to both stocks, a major shareholding (21% of Keppel Corp) may be sufficient to initiate this potential corporate action in future.

2) Sembcorp Industries (SGX: U96) & Sembcorp Marine (SGX: S51)

– Successful Demerger under Temasek

With abstain of voting by Sembcorp Industries and Temasek, the demerger during EGM is still successful, partly because there is no strong second major shareholder (less than 1% shareholding), especially for Sembcorp Marine.

Fundamentally, parent company Sembcorp Industries (with more defensive utilities and growing land development businesses) is much stronger than subsidiary Sembcorp Marine (declining Oil & Gas over the past 5 years) but 1/3 overlapping in accounting (revenue) has dragged down the share prices of Sembcorp Industries which is tied with the same boat under Oil & Gas crisis.

Therefore, after demerger, Sembcorp Industries share prices generally move higher while Sembcorp Marine is still at relative low price position. In medium term, Sembcorp Industries would become a “new company” without 1/3 negative Oil & Gas business.  In longer term, cyclic Oil & Gas sector could help Sembcorp Marine investors to have higher upside but patience is required.  In general, Sembcorp Industries and Sembcorp Marine are 2 very different type of stocks, differences in share prices would be clearer in future.

Again, Sembcorp stocks investors need to make decision (Buy, Hold, Sell, Wait, Shorting), aligning with own unique personality.  The world of stock market is large, over 1600 global giant stocks, there may be no need to “fall in love” with a stock for life.

3) Singapore Airlines, SIA (SGX: C6L)

– Impact of Rights & Bonds Issues for Survival

Airlines sectors has been in very critical condition, some airlines (without strong sponsor) even go bankrupt as passengers drop over 90% compare with before COVID-19, business could sustain more than 6 months. Vaccine development may take another 6-12 months before COVID-19 crisis could be over.

Impact on Singapore Airlines could be more severe during pandemic as it does not have domestic flights (Singapore is too small), therefore the Rights and Bonds issues came in right time to ensure the company could survive through the most critical 12 months period, before Singapore Airlines could fly again proudly.

However, even after the corporate action, SIA share prices continue to decline, about half price since the beginning of COVID-19, about 1/3 of peak prices (after adjustment of rights issues). In fact, Singapore Airlines business fundamental has been declining gradually over the past decade, not just during pandemic (sudden dip).  This is due to competitive airlines sector which need to provide good services (well known for SIA but at the price of higher cost) at lower price, therefore earnings and profit margin would be affected.

A stock investor needs to carefully select the right industry or sector for investment. During pandemic, healthcare and technology (eg. online / software solution) stocks would have higher chances to recover than airlines stocks. “Buy Low” is reasonable with condition a stock business fundamental is not much affected. It would be a rare opportunity if business of a stock is growing but share prices fall due to fear driven sales during global financial crisis.

4) CapitaLand Mall Trust, CMT (SGX: C38U) & CapitaLand Commercial Trust, CCT (SGX: C61U)

– Merger of CapitaLand (SGX: C31) Giant REITs with coming change in 30 STI component stock with Keppel DC REIT (SGX: AJBU)

CapitaLand is under Temasek portfolio, the 2 giant REITs, CMT and CCT will be merged by end of 2020 to become the third largest REIT in Asia (largest Asian REIT is Link Reit, HKEX: 823). A giant stock may not need to be large in size, internal business strength with strong economic moat is even more crucial.

Merging and demerging are neutral corporate actions, impact depends on the long term plans of major shareholders. Both CMT and CCT are defensive REITs which could generate steady passive incomes (about 5-6% dividend yield, depending on the share prices). However, the growth is slow (but steady), therefore an investor may position as a defender while diversifying capital over a portfolio of other giant stocks including mid-fielders (eg. growth stocks) and strikers (eg. cyclic stocks or momentum stocks).

When CMT and CCT are merged, would form a new stock, CICT with only 1 stock. Therefore, 30 STI index component would invite the next reserve stock, Keppel DC Reit (SGX: AJBU) which is also a REIT but much stronger growth.  The best time to buy a growth stock is usually during global stock crisis (eg. COVID-19 pandemic) with great fear in the market but business continues to make money each month.

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A smart investor may carefully design a portfolio of global giant stocks (defenders, mid-fielders, strikers) while an experienced trader may take action following the trend with S.E.T. (Stop Loss, Entry, Target Prices) in trading plan.

Drop by Dr Tee free 4hr webinar (learning at comfort of home with Zoom) to learn how to position in global giant stocks during COVID-19 stock crisis with 10 unique stock investing strategies, knowing What to Buy, When to Buy/Sell.

Zoom will be started 30 min before event, bonus talk (Q&A on any investment topics from readers) for early birds. There are many topics we will cover in this 4hr webinar, Dr Tee can have more time for Q&A if you could stay later after the webinar.

Dr Tee will cover over 20 case studies, Singapore giant stocks, eg. CapitaLand Mall Trust (SGX: C38U), Singapore Exchange (SGX: S68), Keppel Corp (SGX: BN4), Top Glove (SGX: BVA), Jardine Matheson Holdings JMH (SGX: J36), Vicom (SGX: WJP) and many others, Malaysia giant stocks, Hong Kong giant stocks and US giant stocks, both long term investing and short term trading.

There are limited tickets left for this 4hr free webinar, please ensure 100% you could join when register: www.ein55.com


Filed Under: Fundamental Analysis, Market Cycle Investing, Personal Analysis, Stock Market, Value Investing Tagged: , , , , ,

Singapore and Malaysia National Giant Stocks (国庆财股)

Posted on August 9, 2020 Written by
Singapore Stocks DBS OCBC Singtel UOB

Both Singapore and Malaysia celebrate National Day in the month of August. It is timely to share the 4 National Giant Stocks in each country which preserve the national wealth. Learn from Dr Tee on how to position these stocks during COVID-19 stock crisis.

4 Singapore National Stocks:

1) DBS (SGX: D05)

2) Singtel (SGX: Z74)

3) OCBC (SGX: O39)

4) UOB (SGX: U11)

4 Malaysia National Stocks:

1) Maybank (Bursa: 1155)

2) Top Glove (Bursa: 7113) / (SGX: BVA)

3) Hartalega (Bursa: 5168)

4) Public Bank (Bursa: 1295)

Stock market is a hidden way to preserve and grow the national wealth. For Singapore SGX, there are 30 large cap stocks in STI Index (^STI), which can be sorted below by size of market cap (share price x number of shares) with ROE (Return on Equity):

No       Name  / Market Cap(M) (ROE, %)

1          DBS Bank (SGX: D05) 52304 (12.3)

2          Singtel (SGX: Z74) 38761 (4.0)

3          OCBC Bank (SGX: O39) 38413 (10.3)

4          UOB Bank (SGX: U11) 32687 (11.0)

5          Wilmar International (SGX: F34) 30509 (7.7)

6          Jardine Matheson Holdings JMH (SGX: J36)  29865 (9.4)

7          Jardine Strategic Holdings JSH (SGX: J37)   22731 ( 6.1)

8          Thai Beverage (SGX: Y92) 15195 (20.1)

9          CapitaLand (SGX: C31) 13844 (8.8)

10        Ascendas Reit (SGX: A17U) 12489 (4.8)

11        Singapore Airlines (SGX: C6L) 10346 (-0.1)

12        ST Engineering (SGX: S63) 10042 (26.0)

13        Keppel Corp (SGX: BN4) 9830 (6.3)

14        Singapore Exchange (SGX: S68) 9236 (37.9)

15        Hongkong Land USD (SGX: H78) 8635 (0.5)

16        Genting Singapore (SGX: G13) 8204 (8.5)

17        Mapletree Logistics Trust (SGX: M44U) 8027 (8.2)

18        Jardine Cycle & Carriage (SGX: C07) 7659 (12.8)

19        Mapletree Industrial Trust (SGX: ME8U) 7490 (10.3)

20        City Development (SGX: C09) 7463 (5.2)

21        CapitaLand Mall Trust (SGX: C38U) 6937 (9.0)

22        CapitaLand Commercial Trust (SGX: C61U) 6294 (6.0)

23        Mapletree Commercial Trust (SGX: N2IU) 6130 (9.4)

24        Dairy Farm International (SGX: D01) 5897 (26.8)

25        UOL (SGX: U14) 5491 (4.8)

26        Venture Corporation (SGX: V03) 5449 (14.5)

27        YZJ Shipbldg SGD (SGX: BS6) 3801 (10.0)

28        Sembcorp Industries (SGX: U96) 3394 (3.1)

29        SATS (SGX: S58) 3017 (10.4)

30        ComfortDelGro (SGX: C52) 2990 (10.2)

It is clear that the Top 4 stocks with the largest market cap in Singapore are DBS (SGX: D05), Singtel (SGX: Z74), OCBC (SGX: O39) and UOB (SGX: U11). Company size may not be the right criteria of a giant stock, therefore an investor has to monitor business fundamental changes (especially during COVID-19 pandemic), eg with ROE and other indicators.

For 30 STI stocks, only Singapore Airlines, SIA (SGX: C6L) records losses in last financial year. For 30 STI stocks, COVID-19 has different degrees of impact on near future business.  There is also on-going crisis, eg. low optimism crude oil price which affects the Oil & Gas sector, including Keppel Corp (SGX: BN4) and Sembcorp Industries (SGX: U96), which may take longer time to recover with strong support of sponsor, Temasek.

3 major bank stocks (DBS, OCBC, UOB) in Singapore have contributed to about 1/3 of Singapore stock market. Bank stocks are sensitive to interest rate changes, therefore current low interest rates globally (driven by nearly 0% interest rate by the Fed of US) have reduced the Net Interest Margin (NIM), resulting in lower interest related income. At the same time, Non-Performing Loan (NPL) is increasing during COVID-19, banks have to increase more provision funds to prepare for possible default in loan payment of some countries, including Oil & Gas sector (eg. Hin Leong which has high debt to 3 major banks).  As a result, it is not surprised to see bank stocks report poorer quarterly results for Q1 and Q2 / 2020.

MAS has requested 3 major banks in Singapore to cap the dividend payment for FY2020 to maximum of 60% of FY2019. This implies for an average dividend yield of 6%, an investor may only receive 6 x 0.6 = 3.6% for the next 1 year. As a result, 3 major bank stocks were under significant price correction recently (which also affect performance of STI). However, a long term bank stock investor should not consider dividend payment as a criteria to decide on investing. In fact, the share price correction of over 3% in 1 week has compensated for the “loss” of dividend (which is kept as retained earnings in balance sheet, a form of saving for investor, similar to many REITs in Q1 and Q2 / 2020 to preserve cash).

Here is a list of 30 Banking & Finance stocks in Singapore, an investor may focus on 3 major bank stocks:
AMTD IB OV (SGX: HKB), B&M Hldg (SGX: CJN), DBS Bank (SGX: D05), Edition (SGX: 5HG), G K Goh (SGX: G41), Global Investment (SGX: B73), Great Eastern (SGX: G07), Hong Leong Finance (SGX: S41), Hotung Investment (SGX: BLS), IFAST Corporation (SGX: AIY), IFS Capital (SGX: I49), Intraco (SGX: I06), Maxi-Cash Finance (SGX: 5UF), MoneyMax Finance (SGX: 5WJ), Net Pacific Finance (SGX: 5QY), OCBC Bank (SGX: O39), Pacific Century (SGX: P15), Prudential USD (SGX: K6S), Singapore Exchange (SGX: S68), SHS (SGX: 566), Sing Investments & Finance (SGX: S35), Singapore Reinsurance (SGX: S49), Singapura Finance (SGX: S23), TIH (SGX: T55), Uni-Asia Group (SGX: CHJ), UOB Bank (SGX: U11), UOB-KAY HIAN HOLDINGS (SGX: U10), UOI (SGX: U13), ValueMax (SGX: T6I), Vibrant Group (SGX: BIP).

Singtel is also a crisis giant stock in bearish Telco sector (started a few years before COVID-19), an investor who “Buy Low” may get Lower in share price, gaining dividend yield (eg. 5%) but making capital loss (lower share price). Telco business is saturated, economic moat is narrow as most Telco services could be easily replaced by other competitors, therefore profit margin is lower with intense competition not only in local market but also in regional market (Singtel has over 50% revenue from overseas markets).

OCBC, UOB and Singtel are relatively at lower optimism region while DBS is at moderate optimism level. Each giant stock requires different strategy (crisis, cyclic, growth, etc) in positioning, either for short term trading or long term investing.

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Malaysia Bursa with 30 KLCI (^KLCI) stocks, top 4 giant stocks by market cap has significant changes recently. Maybank (Bursa: 1155) is still the largest but both Top Glove (Bursa: 7113) / (SGX: BVA) and Hartalega (Bursa: 5168) have surpassed Public Bank (Bursa: 1295), mainly due to speculation in stocks during COVID-19 for glove related stocks.  Top Glove has dual listing in both Malaysia Bursa and Singapore SGX, therefore the wealth of a nation could be shared by global investors, regardless of nationality.

Here is a list of 30 Malaysia Bursa KLCI Index component stocks which may be considered (investor has to focus only on giant stocks for investing):
CIMB (Bursa: 1023) CIMB GROUP HOLDINGS BERHAD, DIALOG (Bursa: 7277) DIALOG GROUP BERHAD, DIGI (Bursa: 6947) DIGI.COM BERHAD, GENM (Bursa: 4715) GENTING MALAYSIA BERHAD, GENTING (Bursa: 3182) GENTING BERHAD, HAPSENG (Bursa: 3034) HAP SENG CONSOLIDATED BERHAD, HARTA (Bursa: 5168) HARTALEGA HOLDINGS BERHAD, HLBANK (Bursa: 5819) HONG LEONG BANK BERHAD, HLFG (Bursa: 1082) HONG LEONG FINANCIAL GROUP BERHAD, IHH (Bursa: 5225) IHH HEALTHCARE BERHAD, IOICORP (1961) IOI CORPORATION BERHAD, KLCC (Bursa: 5235SS) KLCC PROPERTY HOLDINGS BERHAD, KLK (Bursa: 2445) KUALA LUMPUR KEPONG BERHAD, MAXIS (Bursa: 6012) MAXIS BERHAD, MAYBANK (Bursa: 1155) MALAYAN BANKING BERHAD, MISC (Bursa: 3816) MISC BERHAD, NESTLE (Bursa: 4707) NESTLE MALAYSIA BERHAD, PBBANK (Bursa: 1295) PUBLIC BANK BERHAD, PCHEM (Bursa: 5183) PETRONAS CHEMICALS GROUP BERHAD, PETDAG (Bursa: 5681) PETRONAS DAGANGAN BHD, PETGAS (Bursa: 6033) PETRONAS GAS BERHAD, PMETAL (Bursa: 8869) PRESS METAL ALUMINIUM HOLDINGS BERHAD, PPB (Bursa: 4065) PPB GROUP BERHAD, RHBBANK (Bursa: 1066) RHB BANK BERHAD, SIME (Bursa: 4197) SIME DARBY BERHAD, SIMEPLT (Bursa: 5285) SIME DARBY PLANTATION BERHAD, TENAGA (Bursa: 5347) TENAGA NASIONAL BHD, TM (Bursa: 4863) TELEKOM MALAYSIA BERHAD, TOPGLOV (Bursa: 7113) TOP GLOVE CORPORATION BHD.

Strong fundamental stocks (eg. glove business) with market greed usually result in market speculation or bubble.  Each positive news would be used as a reason to buy high for share prices. Despite strong business fundamental, glove stocks are more suitable for short term trading with trend-following strategies, Buy High Sell Higher.  However, due to relative high optimism level, each unexpected correction may incur high losses if a trader does not have a trading plan with S.E.T. (Stop Loss, Entry, Target) prices.

Maybank and Public Bank are aligned with Singapore and global banks at relatively lower optimism levels. Bank stocks are cyclic in nature, therefore investing in national banks (usually supported by local government) during global financial crisis would have higher chances of success for longer term investors who could overcome the market fear, investing with progressive entries of capital (eg. 10 x 10%, 5 x 20%, 2 x 50%, etc). Saving in banks would receive less than 1% return in interest but investing in giant bank stocks could receive over 100% return over a market cycle.

Each country or region has its own national blue chip stock. For example, TSMC (NYSE: TSM) contributed to 1/3 of Taiwan TSEC Stock Index (^TWII). With bullish semiconductor / 5G stocks, TSMC has doubled its share price in 6 months, contributing to higher index value of Taiwan stock market.  TSMC has monopoly of 5 nanometer technology in wafer fab, a crucial pillar for emerging 5G Telco business over the next 10 years.

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Dilemma of investors for global growth stocks (eg. technology, glove, healthcare, etc) are share prices are not cheap when market is not fearful. Therefore, crisis is always an opportunity, especially when a stock price drops significantly during an unexpected crisis (eg. COVID-19 pandemic) but business fundamental is not much affected or even growing.

Drop by Dr Tee free 4hr webinar to learn how to position in global giant stocks during COVID-19 stock crisis with 10 unique stock investing strategies, knowing What to Buy, When to Buy/Sell.

This is the first time, 4hr bonus investment course by Dr Tee is conducted through Webinar (learning at comfort of home with Zoom), a rare opportunity to learn remotely, profiting from Covid-19 stock crisis.

Zoom will be started 30 min before event, bonus talk (Q&A on any investment topics from readers) for early birds. There are many topics we will cover in this 4hr webinar, Dr Tee can have more time for Q&A if you could stay later after the webinar.

Dr Tee will cover over 20 case studies, Singapore giant stocks, eg. CapitaLand Mall Trust (SGX: C38U), Singapore Exchange (SGX: S68), Keppel Corp (SGX: BN4), Top Glove (SGX: BVA), Jardine Matheson Holdings JMH (SGX: J36), Vicom (SGX: WJP) and many others, Malaysia giant stocks, Hong Kong giant stocks and US giant stocks, both long term investing and short term trading.

There are limited tickets left for this 4hr free webinar, please ensure 100% you could join when register: www.ein55.com

Filed Under: Macroeconomy, Market Cycle Investing, Market Outlook, Stock Market, Technical Analysis Tagged: , , , , ,

Stock Market Updates with Bank Stocks and REITs

Posted on July 31, 2020 Written by
Dr Tee Stock Investment Webinar

Global stock markets (S&P500, STI, KLCI, HSI, SSEC, etc) have been bumpy over the past few months. US Covid-19 condition is still critical, affecting the confidence of V-shape recovery of stock market, as well as the coming US presidential election in Nov 2020. Some investors worry of possible double dip, dare not take any action now. Crisis is always opportunity but an investor has to apply the right stock investing strategy.

At the same time, Singapore stock market is lagging, major bank stocks, DBS Bank (SGX: D05), OCBC Bank (SGX: O39), UOB Bank (SGX: U11) are under correction after MAS guidelines to cap the dividend payment of banks to 60% of last year (implying if dividend yield is 6%, would become 6×0.6 = 3.6%), disappointing many passive income investors. However, the impact is temporary, earnings of banks won’t be affected (stability is enhanced with more cash in reserve), the shareholders money are kept within the company first. Bank stocks are cyclic in nature, alignment with market cycle is crucial to maximize the potential gain.

This is similar to REITs withhold some dividends in Q1-Q2 / 2020 to preserve cash during the uncertain pandemic period, eg. CapitaLand Mall Trust (SGX: C38U), Frasers Centrepoint Trust (SGX: J69U), etc. Strong REIT such as First Reit (SGX: AW9U) has fallen to about 1/3 of peak share with price-to-book ratio nearly at 50% discount, mainly due to rental relief to tenant who is also weak sponsor (Lippo Karawaci) which may cut future dividend by half (new agreements with Rupiah exchange rate depreciating by 50%). Crisis is a good time to collect giant dividend stocks but certain risks should not be overlooked.

There are 30 STI index component stocks including most of giant stocks mentioned above (investor has to focus only on giant stocks for investing):
DBS Bank (SGX: D05), Singtel (SGX: Z74), OCBC Bank (SGX: O39), UOB Bank (SGX: U11), Wilmar International (SGX: F34), Jardine Matheson Holdings JMH (SGX: J36), Jardine Strategic Holdings JSH (SGX: J37), Thai Beverage (SGX: Y92), CapitaLand (SGX: C31), Ascendas Reit (SGX: A17U), Singapore Airlines (SGX: C6L), ST Engineering (SGX: S63), Keppel Corp (SGX: BN4), Singapore Exchange (SGX: S68), Hongkong Land (SGX: H78), Genting Singapore (SGX: G13), Mapletree Logistics Trust (SGX: M44U), Jardine Cycle & Carriage (SGX: C07), Mapletree Industrial Trust (SGX: ME8U), City Development (SGX: C09), CapitaLand Mall Trust (SGX: C38U), CapitaLand Commercial Trust (SGX: C61U), Mapletree Commercial Trust (SGX: N2IU), Dairy Farm International (SGX: D01), UOL (SGX: U14), Venture Corporation (SGX: V03), YZJ Shipbldg SGD (SGX: BS6), Sembcorp Industries (SGX: U96), SATS (SGX: S58), ComfortDelGro (SGX: C52).

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Dr Tee has been very busy since Phase 2 is started, conducting many investment courses, therefore not able to update as frequent as last time (about 200 articles written during past 5 months of Covid-19 pandemic: www.ein55.com/blog)

I start to conduct some online courses which are proven to be effective, especially some students are still not comfortable to meet-up during pandemic. Personally I prefer meet-up workshop as it is more interactive in learning. However, I start to master different ways to engage the students in webinar setting.

This is the first time, 4hr bonus investment course by Dr Tee is conducted through Webinar (learning at comfort of home with Zoom), a rare opportunity to learn remotely, profiting from Covid-19 stock crisis.

Zoom will be started 30 min before event, bonus talk (Q&A on any investment topics from readers) for early birds. There are many topics we will cover in this 4hr webinar, Dr Tee can have more time for Q&A if you could stay later after the webinar.

Dr Tee will cover over 20 case studies, Singapore giant stocks, eg. CapitaLand Mall Trust (SGX: C38U), Singapore Exchange (SGX: S68), Keppel Corp (SGX: BN4), Top Glove (SGX: BVA), Jardine Matheson Holdings JMH (SGX: J36), Vicom (SGX: WJP) and many others, Malaysia giant stocks, Hong Kong giant stocks and US giant stocks, both long term investing and short term trading.

There are limited tickets left for this 4hr free webinar, please ensure 100% you could join when register: www.ein55.com

This image has an empty alt attribute; its file name is Webinar-Registration.jpg
Filed Under: Stock Market, Technical Analysis, Trading Tagged: , , ,

Dr Tee Video Education: Defensive Investing Strategies during Stock Crisis (危机入市的防御性投资策略)

Posted on June 24, 2020 Written by
Defensive Stock Investing Strategies

In this Dr Tee 1-hr video education (Defensive Investing Strategies during Stock Crisis ), you will learn:
1) Bull (Unlimited Quantitative Easing) vs Bear (COVID-19)
2) Value Investing Strategy – Dividend Stock Investing with Singapore Giant REIT as Case Study
3) Value Investing Strategy – Growth Stock Investing with Malaysia Giant Stock as Case Study
4) Investing Personalities: Kiasu vs Kiasi
5) Defensive Investing Strategies during Stock Crisis.

Here is English Version of Dr Tee Video Course (Chinese version is also available as Dr Tee is bilingual). Enjoy and give your comments for improvement. You may subscribe to Dr Tee Youtube channel (Ein Tee) for future Dr Tee video talks. Collect 3 extra bonuses here.

English Video: https://youtu.be/_shZqTa1eEs

在这Dr Tee 60分钟教育视频（危机入市的防御性投资策略），您可学习：
1） 牛市（无限量化宽松）与熊市（新冠病毒）。
2） 价值投资策略 – 高息股（新加坡房地产信托股个例）。
3） 价值投资策略 – 成长股（马来西亚成长强巨股个例）。
4） 投资性格 – 怕输与怕死。
5） 危机入市的防御性投资策略。

这儿是 Dr Tee 华语视频 （英语视频也已完成，Dr Tee 双语皆行）。请欣赏鄙作，留言求进步。您可订阅 Dr Tee Youtube 频道(Ein Tee)，链接未来投资视频。这里得额外三红利。

Chinese Video (华语视频): https://youtu.be/kOZ05rc_XRY

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Defensive investing strategies may be considered for a portfolio of 10-20 global giant stocks with multiple entries, protected by dividend stocks during bearish market with bonus of capital gains with growth stocks during bullish market.

For investors who don’t know how to select individual giant stocks, may consider stock indices ETF of countries with growing economies, eg. Singapore STI, Malaysia KLCI, Hong Kong HSI, US S&P 500 and Nasdaq, Germany DAX, etc. Therefore, some index component stocks may be applied for defensive stock investing strategies.

This defensive investing strategy may be applied to 30 Singapore STI index component stocks (investor has to focus only on giant stocks for investing):
DBS Bank (SGX: D05), Singtel (SGX: Z74), OCBC Bank (SGX: O39), UOB Bank (SGX: U11), Wilmar International (SGX: F34), Jardine Matheson Holdings JMH (SGX: J36), Jardine Strategic Holdings JSH (SGX: J37), Thai Beverage (SGX: Y92), CapitaLand (SGX: C31), Ascendas Reit (SGX: A17U), Singapore Airlines (SGX: C6L), ST Engineering (SGX: S63), Keppel Corp (SGX: BN4), Singapore Exchange (SGX: S68), Hongkong Land (SGX: H78), Genting Singapore (SGX: G13), Mapletree Logistics Trust (SGX: M44U), Jardine Cycle & Carriage (SGX: C07), Mapletree Industrial Trust (SGX: ME8U), City Development (SGX: C09), CapitaLand Mall Trust (SGX: C38U), CapitaLand Commercial Trust (SGX: C61U), Mapletree Commercial Trust (SGX: N2IU), Dairy Farm International (SGX: D01), UOL (SGX: U14), Venture Corporation (SGX: V03), YZJ Shipbldg SGD (SGX: BS6), Sembcorp Industries (SGX: U96), SATS (SGX: S58), ComfortDelGro (SGX: C52).

Below are all the 30 Singapore STI component stocks, sorted by 2 key strategies (Growth vs Dividend) with 2 minimal Fundamental Criteria:
1) ROE (a criteria for growth stock, eg. ROE > 5% to ensure efficient business) + Dr Tee Giant Stock criteria is needed.
2) Dividend Yield, DY (a criteria for dividend stocks, eg. DY > 5%, depending on strategy) + Dr Tee Giant Stock criteria is needed.

NameTickerDiv Yield (%)ROE (%)
Ascendas ReitA17U4.37.4
CapitaLand Commercial TrustC61U5.06.0
CapitaLandC314.18.8
CapitaLand Mall TrustC38U5.99.0
City DevelopmentC090.95.2
ComfortDelGroC526.310.2
DBS BankD055.912.3
DairyFarm USDD014.626.8
Genting SingaporeG135.28.5
HongkongLand USDH785.30.5
JMH USDJ364.19.4
JSH USDJ371.66.1
Jardine C&CC075.612.8
Keppel CorpBN43.36.3
Mapletree Commercial TrustN2IU4.09.4
Mapletree Industrial TrustME8U4.110.3
Mapletree Logistics TrustM44U4.28.2
OCBC BankO395.910.3
SATSS586.215.1
Singapore ExchangeS683.735.9
Singapore AirlinesC6L0.8-9.1
ST EngineeringS634.526.0
Sembcorp IndustriesU962.63.1
SingtelZ744.84.0
Thai BeveragesY923.020.1
UOB BankU115.311.0
UOLU142.54.8
Venture CorporationV034.314.5
Wilmar InternationalF343.07.7
YZJ Shipbuilding SGDBS64.710.0

Not all Singapore STI component stocks are giant stocks, some could be weaker fundamental stocks (eg. making losses or asking investors for reserved passive incomes through rights issues). Even for a giant stock, it requires at least yearly review with Dr Tee criteria to ensure it is still a giant stock or a change in strategy may be required (eg. crisis stock investing if there is any potential high risk). Similarly, those stocks which are not highlighted in this article, some could be marginal giant stocks, may obtain the giant stock title one day, which worth longer term investing or trading.

A smart stock investor has to further select the right type of giant stock to align with own personality to be successful in short trading, medium term investing or long term investing, knowing What to Buy, When to Buy / Sell.

This powerful strategy can be extended to global giant stocks including 30 Malaysia Bursa KLCI Index component stocks (investor has to focus only on giant stocks for investing):
CIMB (Bursa: 1023) CIMB GROUP HOLDINGS BERHAD, DIALOG (Bursa: 7277) DIALOG GROUP BERHAD, DIGI (Bursa: 6947) DIGI.COM BERHAD, GENM (Bursa: 4715) GENTING MALAYSIA BERHAD, GENTING (Bursa: 3182) GENTING BERHAD, HAPSENG (Bursa: 3034) HAP SENG CONSOLIDATED BERHAD, HARTA (Bursa: 5168) HARTALEGA HOLDINGS BERHAD, HLBANK (Bursa: 5819) HONG LEONG BANK BERHAD, HLFG (Bursa: 1082) HONG LEONG FINANCIAL GROUP BERHAD, IHH (Bursa: 5225) IHH HEALTHCARE BERHAD, IOICORP (1961) IOI CORPORATION BERHAD, KLCC (Bursa: 5235SS) KLCC PROPERTY HOLDINGS BERHAD, KLK (Bursa: 2445) KUALA LUMPUR KEPONG BERHAD, MAXIS (Bursa: 6012) MAXIS BERHAD, MAYBANK (Bursa: 1155) MALAYAN BANKING BERHAD, MISC (Bursa: 3816) MISC BERHAD, NESTLE (Bursa: 4707) NESTLE MALAYSIA BERHAD, PBBANK (Bursa: 1295) PUBLIC BANK BERHAD, PCHEM (Bursa: 5183) PETRONAS CHEMICALS GROUP BERHAD, PETDAG (Bursa: 5681) PETRONAS DAGANGAN BHD, PETGAS (Bursa: 6033) PETRONAS GAS BERHAD, PMETAL (Bursa: 8869) PRESS METAL ALUMINIUM HOLDINGS BERHAD, PPB (Bursa: 4065) PPB GROUP BERHAD, RHBBANK (Bursa: 1066) RHB BANK BERHAD, SIME (Bursa: 4197) SIME DARBY BERHAD, SIMEPLT (Bursa: 5285) SIME DARBY PLANTATION BERHAD, TENAGA (Bursa: 5347) TENAGA NASIONAL BHD, TM (Bursa: 4863) TELEKOM MALAYSIA BERHAD, TOPGLOV (7113) TOP GLOVE CORPORATION BHD.

Below are all the 30 Malaysia Bursa KLCI Index component stocks, sorted by 2 key strategies (Growth vs Dividend) with 2 minimal Fundamental Criteria:
1) ROE (a criteria for growth stock, eg. ROE > 5% to ensure efficient business) + Dr Tee Giant Stock criteria is needed.
2) Dividend Yield, DY (a criteria for dividend stocks, eg. DY > 5%, depending on strategy) + Dr Tee Giant Stock criteria is needed.

NoCompanyDiv Yield (%)ROE (%)
1AXIATA (Bursa: 6888) AXIATA GROUP BERHAD3.04.5
2CIMB (Bursa: 1023) CIMB GROUP HOLDINGS BERHAD8.24.7
3DIALOG (Bursa: 7277) DIALOG GROUP BERHAD1.015.2
4DIGI (Bursa: 6947) DIGI.COM BERHAD4.5212.0
5GENM (Bursa: 4715) GENTING MALAYSIA BERHAD9.4-3.5
6GENTING (Bursa: 3182) GENTING BERHAD6.6-0.2
7HAPSENG (Bursa: 3034) HAP SENG CONSOLIDATED BERHAD4.814.8
8HARTA (Bursa: 5168) HARTALEGA HOLDINGS BERHAD0.620.4
9HLBANK (Bursa: 5819) HONG LEONG BANK BERHAD3.48.7
10HLFG (Bursa: 1082) HONG LEONG FINANCIAL GROUP BERHAD2.98.8
11IHH (Bursa: 5225) IHH HEALTHCARE BERHAD0.8-0.8
12IOICORP (1961) IOI CORPORATION BERHAD1.86.5
13KLCC (Bursa: 5235SS) KLCC PROPERTY HOLDINGS BERHAD5.05.6
14KLK (Bursa: 2445) KUALA LUMPUR KEPONG BERHAD2.26.9
15MAXIS (Bursa: 6012) MAXIS BERHAD3.920.1
16MAYBANK (Bursa: 1155) MALAYAN BANKING BERHAD8.99.1
17MISC (Bursa: 3816) MISC BERHAD4.4-1.0
18NESTLE (Bursa: 4707) NESTLE MALAYSIA BERHAD2.090.8
19PBBANK (Bursa: 1295) PUBLIC BANK BERHAD4.611.4
20PCHEM (Bursa: 5183) PETRONAS CHEMICALS GROUP BERHAD3.25.2
21PETDAG (Bursa: 5681) PETRONAS DAGANGAN BHD4.06.2
22PETGAS (Bursa: 6033) PETRONAS GAS BERHAD5.013.9
23PMETAL (Bursa: 8869) PRESS METAL ALUMINIUM HOLDINGS BERHAD1.013.1
24PPB (Bursa: 4065) PPB GROUP BERHAD1.75.7
25RHBBANK (Bursa: 1066) RHB BANK BERHAD6.68.3
26SIME (Bursa: 4197) SIME DARBY BERHAD4.35.5
27SIMEPLT (Bursa: 5285) SIME DARBY PLANTATION BERHAD0.85.4
28TENAGA (Bursa: 5347) TENAGA NASIONAL BHD9.25.9
29TM (Bursa: 4863) TELEKOM MALAYSIA BERHAD2.48.6
30TOPGLOV (Bursa: 7113) TOP GLOVE CORPORATION BHD2.337.5

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There are over 1500 giant stocks in the world based on Dr Tee criteria, choice of 10 Dream Team giant stocks have to align with one’s unique personality, eg. for shorter term trading (eg. momentum or swing trading) or longer term investing (cyclic investing, undervalue investing or growth investing). Readers should not just “copy and paste” any stock (What to Buy, When to Buy/Sell) as successful action taking requires deeper consideration (LOFTP strategies – Level / Optimism / Fundamental / Technical / Personal Analysis) which you could learn further from Dr Tee Free 4-hr Webinar.

Zoom will be started 30 min before event, bonus talk (Q&A on any investment topics from readers) for early birds. There are many topics we will cover in this 4hr webinar, Dr Tee can have more time for Q&A if you could stay later after the webinar.

Dr Tee will cover over 20 case studies, Singapore giant stocks, eg. CapitaLand Mall Trust (SGX: C38U), Singapore Exchange (SGX: S68), Keppel Corp (SGX: BN4), Top Glove (SGX: BVA), Jardine Matheson Holdings JMH (SGX: J36), Vicom (SGX: WJP) and many others, Malaysia giant stocks, Hong Kong giant stocks and US giant stocks, both long term investing and short term trading.

There are limited tickets left for this 4hr free webinar, please ensure 100% you could join when register: www.ein55.com

Filed Under: Fundamental Analysis, Market Cycle Investing, Stock Market, Value Investing Tagged: , , , , ,

30 Singapore Banking and Finance Stocks (狮城财神)

Posted on June 18, 2020 Written by
30 Singapore Banking and Finance Stocks DBS OCBC UOB SGX

The best way to make money is to let money make more money. In this article, you will learn 30 Singapore Banking & Finance Stocks which are efficient in making money with money for investors, focusing in 6 groups of stocks (with strategies for 3 major bank stocks: DBS, OCBC and UOB):

1) Bank Stocks
2) Finance Stocks
3) Insurance Stocks
4) Stock Broker Stocks
5) Pawnbroker Stocks
6) Investment and Other Stocks

There are only 30 Banking & Finance stocks in Singapore, relatively less than other sectors as Singapore has tighter regulation in finance sector for services such as lending money (limited licenses available):

AMTD IB OV (SGX: HKB), B&M Hldg (SGX: CJN), DBS Bank (SGX: D05), Edition (SGX: 5HG), G K Goh (SGX: G41), Global Investment (SGX: B73), Great Eastern (SGX: G07), Hong Leong Finance (SGX: S41), Hotung Investment (SGX: BLS), IFAST Corporation (SGX: AIY), IFS Capital (SGX: I49), Intraco (SGX: I06), Maxi-Cash Finance (SGX: 5UF), MoneyMax Finance (SGX: 5WJ), Net Pacific Finance (SGX: 5QY), OCBC Bank (SGX: O39), Pacific Century (SGX: P15), Prudential USD (SGX: K6S), Singapore Exchange (SGX: S68), SHS (SGX: 566), Sing Investments & Finance (SGX: S35), Singapore Reinsurance (SGX: S49), Singapura Finance (SGX: S23), TIH (SGX: T55), Uni-Asia Group (SGX: CHJ), UOB Bank (SGX: U11), UOB-KAY HIAN HOLDINGS (SGX: U10), UOI (SGX: U13), ValueMax (SGX: T6I), Vibrant Group (SGX: BIP).

From the table sorted for 30 Singapore banking & finance stocks, mostly are profitable (26 / 30 stocks were making money in businesses last year) but still undervalue (22 / 30 stocks have Price to Book ratio, PB < 1, some have higher quality asset such as cash, properties and equities, potential target for future acquisition).

There are 7 stocks having PB < 0.5 with 50% discount over asset but an investor must double check on quality of assets and whether the business could be sustainable to make money. If not, undervalue stock may continue to be undervalue for a long period of time, may not suitable for long term stock investing nor short term stock trading.

NoNameTickerPB = Price /NAVROE (%)
1SGXS688.0635.9
2AMTD IB OVHKB3.3713.7
3DBSD051.1212.3
4ValueMaxT6I0.7711.7
5Great EasternG071.1111.7
6TIHT550.4811.3
7UOBU110.9411.0
8MoneyMax Finance5WJ0.7410.8
9Maxi-Cash Finance5UF0.9810.7
10IFASTAIY3.3310.6
11OCBC BankO390.8810.3
12UOIU131.059.7
13Global InvestmentB730.716.2
14Hong Leong FinanceS410.585.4
15Sing Investments & FinanceS350.505.4
16IFS CapitalI490.425.2
17Hotung InvestmentBLS0.555.0
18Uni-Asia GroupCHJ0.244.7
19UOB Kay HianU100.644.6
20Prudential USDK6S2.594.0
21Vibrant GroupBIP0.343.8
22Singapore ReinsuranceS490.653.6
23Pacific CenturyP150.743.0
24Singapura FinanceS230.502.9
25G K GohG410.621.9
26IntracoI060.311.5
27B&M HldgCJN2.57-9.0
28Net Pacific Finance5QY0.68-9.7
29SHS5660.67-13.6
30Edition5HG0.85-33.7

Based on Dr Tee criteria, from the 30 Singapore Banking & Finance stocks above, only 8 are giant stocks, some are marginal giant stocks (despite business fundamentals are reasonably good). A few Banking & Finance giant stocks were discussed with more details in Dr Tee earlier articles (see www.ein55.com/blog), eg. DBS (SGX: D05) and Singapore Exchange (SGX: S68).

Focus of this article is discussion on 6 main groups of Banking & Finance stocks in Singapore, understanding the risks and opportunities:

1) Bank Stocks

After decades of merging and acquisition, there are only 3 major local banks in Singapore: DBS (SGX: D05), OCBC (SGX: O39), UOB (SGX: U11), all are STI component stocks. Naturally, these 3 blue chip stocks become the first choice for investment in bank stocks. DBS, OCBC and UOB contribute in total to 1/3 of STI Index weightage, therefore could easily move up or down the entire Singapore stock market whenever there is major move in bank sector.

Here is a list of 30 STI component stocks sorted by size of market cap (significant contribution by 3 major bank stocks):
DBS Bank (SGX: D05), Singtel (SGX: Z74), OCBC Bank (SGX: O39), UOB Bank (SGX: U11), Wilmar International (SGX: F34), Jardine Matheson Holdings JMH (SGX: J36), Jardine Strategic Holdings JSH (SGX: J37), Thai Beverage (SGX: Y92), CapitaLand (SGX: C31), Ascendas Reit (SGX: A17U), Singapore Airlines (SGX: C6L), ST Engineering (SGX: S63), Keppel Corp (SGX: BN4), Singapore Exchange (SGX: S68), Hongkong Land (SGX: H78), Genting Singapore (SGX: G13), Mapletree Logistics Trust (SGX: M44U), Jardine Cycle & Carriage (SGX: C07), Mapletree Industrial Trust (SGX: ME8U), City Development (SGX: C09), CapitaLand Mall Trust (SGX: C38U), CapitaLand Commercial Trust (SGX: C61U), Mapletree Commercial Trust (SGX: N2IU), Dairy Farm International (SGX: D01), UOL (SGX: U14), Venture Corporation (SGX: V03), YZJ Shipbldg SGD (SGX: BS6), Sembcorp Industries (SGX: U96), SATS (SGX: S58), ComfortDelGro (SGX: C52).

Most bank stocks are cyclic in nature, including Singapore and global bank stocks in US, Malaysia, Hong Kong, etc. Therefore, market cycle investing strategy is required with alignment to Optimism Strategies to Buy Low Sell High, as well as good understanding the global stock market and economic cycle.  Bank sector is the key pillar of economy (business needs money to operate), therefore investment in giant bank stocks in a country with growing economy would enjoy the capital gains of prosperity (狮城财神).

So, which of the 3 major Singapore bank stocks are better? Well, the choice is dependent on stock trading or investment strategy which is personality dependent. The historical stock price chart of DBS, OCBC and UOB with STI (could be considered with STI ETF) shows that these 4 counters are aligned in general directions in longer term.

3 Singapore Bank Stocks DBS OCBC UOB

In longer term, the differences of DBS, OCBC and UOB are mainly on pattern of stocks.  DBS is the largest Singapore bank, also the most cyclic among 3 bank stocks, usually correcting more than STI during global financial crisis (eg. Year 2008-2009, falling below $10/share) and outperforming STI, OCBC and UOB during the bullish phase of economy. DBS is more suitable for cycling investing (Buy Low Sell High) and possibly momentum trading (Buy High Sell Higher) when stock market is bullish.

OCBC is the second largest Singapore bank, more defensive with less volatility in prices. OCBC is more suitable for dividend stock investor who prefers to Buy Low and Hold for a long term. So, each global stock crisis (following optimism strategies) could be an opportunity to add more position.

UOB is the smallest bank in Singapore, performance is also in between DBS and OCBC. In general, an investor may choose between DBS and OCBC and their business sizes are larger than UOB. In fact, for short term to mid term trading (months), differences of 3 major bank stocks are limited, any of the 3 bank stocks may be considered but trading rules should be followed (eg. setting S.E.T. in trading plan with Stop Loss / Entry / Target Prices) for Swing Trading or Momentum Trading.

There is no need to invest in all the 3 major bank stocks for diversification as in general, they are all relatively safer than most of the banks in the world due to tight MAS regulations for Singapore banks. Investing in a particular bank stock could be better than investing in STI ETF because bank stocks could have higher dividend yield (5-6%, depending on entry share prices) and growth are stronger than STI (which are diversified over 30 stocks, which some are weaker than DBS, OCBC and UOB).

In general, being a bank has a strong economic moat, especially in Singapore as there are limited licenses issued by government. A smart investor could become a “banker” through investing in any of these 3 major Singapore banks.  Each of them has strong sponsor with decades of history in businesses, eg. DBS by Temasek, OCBC by Lee Family, UOB by Wee Cho Yaw.

So, it is possible to invest for lifetime (Buy Low & Hold for life) or even pass to next generation (eg. OCBC has nearly 100 years of history for several generations).  Disruptive technology (eg. online payment or virtual bank) would have less impact on traditional bank stocks as bank sector is tightly regulated by local government due to sensitive asset of money. Bank stocks usually are more suitable as positioning as defender in a stock portfolio, more gradual growth with consistent passive income.

Due to low global bank interest rates (nearly 0 for US), the interest income would be less with lower Net Interest Margin (NIM). However, banks could still be profitable with interest income, just the return would be lower.  Banks also have other businesses such as investment, credit card, insurance, wealth management, etc, which could provide non-interest income but usually would also be affected in a bearish economy.  Therefore, entry with low-optimism stock price far below the fair value (following Dr Tee Optimism Strategies) is key for success in bank stocks investing.

2) Finance Stocks

Finance companies could provide similar services as banks (eg. loan & deposit) but with much smaller scale. There are a few Finance Stocks in Singapore: Singapura Finance (SGX: S23), Sing Investments & Finance (SGX: S35) and Hong Leong Finance (SGX: S41). These 3 finance stocks have reasonably good business fundamental but these 3 Singapore Finance Stocks may not be in the same grade for investing as 3 major Singapore bank stocks.

Finance stocks have relatively weaker business fundamental than bank stocks. Stock investment is always relative comparison, looking for the best, not just good or acceptable. In addition, Singapura Finance, Sing Investments & Finance and Hong Leong Finance are less well known, therefore lower confidence by customers (to deposit money) and investors (to invest in finance stocks). 

Hong Leong Finance has a strong sponsor of Kwek Leng Beng (Hong Leong Group Singapore / City Development – SGX: C09). However, its cousin (Kwek Leng Chan of Hong Leng Group Malaysia) stock of Hong Leong Bank (Bursa: 5819) would be a much better choice between 2 stocks as 1 is finance stock, 1 is bank stock with strong business fundamental. Details of Quek / Kwek family of stocks are described by Dr Tee in earlier article (https://www.ein55.com/2020/05/15-hong-leong-group-and-kwek-family-stocks/).

In short, a stock investor may ignore weaker Finance Stocks, aiming for stronger Bank Stocks directly, considering both the stock and business performance, especially for lifetime investing. For shorter term trading, it is possible to consider Finance Stocks if there are positive signals in this group.

3) Insurance Stocks

There are a few Insurance Stocks in Singapore: Great Eastern (SGX: G07), Prudential (SGX: K6S), UOI (SGX: U13), Singapore Reinsurance (SGX: S49) and other stocks which provide partial services on insurance.  These 4 Singapore insurance stocks have good business fundamental but only 2 are considered giant stocks (based on Dr Tee criteria) worth longer term investing.

Usually insurance companies are also suitable partner for banks, eg. Great Eastern is under OCBC, UOI is with UOB, LPI (Bursa: 8621) is with Public Bank (Bursa: 1295), etc. This way, similar pool of clients in both banks and insurance groups may be approached with higher chance of success.  A stock investor may choose to invest directly in subsidiary (insurance stock) or indirectly through parent stock (bank which has partial business in insurance), if both are giant stocks, the choice is dependent on own personality and pattern of stock.

Confidence in business stability is important for an insurance client (to ensure compensation would be received if any misfortune based on agreement). Therefore, a reputable insurance brand with decades of business history (supported by strong sponsor) is crucial.

There are only 2 business sectors almost guaranteed to make money in long term: Insurance and Casino (eg. Genting Singapore, SGX: G13) as they apply probability in business to make money. It is possible for unexpected hurricanes to destroy houses, US insurance companies (including Warren Buffett’s Berkshire, NYSE: BRK) could suffer losses in 1 particular year. However, past statistics (eg. accident rates in driving, Covid-19 risks, etc) would help to naturally adjust the future premium.  If there is a need, resinsurance company could help to share the risks of primary insurance company. Similarly, a stock investor should apply probability investing in making decision of What Stocks to Buy, When to Buy / Sell.

However, insurance business requires customer interactions, eg. meet-up before a policy may be eventually signed. During Covid-19 with global lockdown, both banks (eg. wealth management) and insurance companies suffer due to less chances to meet-up with customers. Due to less income from Great Eastern (subsidiary), parent company OCBC reported 40% less income in Q1/2020.  However, insurance sector could recover with restart of economy which allows social interaction for businesses.

4) Stock Broker Stocks

There are a few Stock Brokerage related Stocks in Singapore: Singapore Exchange, SGX (SGX: S68), UOB Kay Hian (SGX: U10) and IFAST (SGX: AIY) are listed in SGX. CGS-CIMB is a joint venture with 2 overseas parent stocks from China and Malaysia: China Galaxy Securities, CGS (HKEx: 6881) and CIMB (Bursa: 1023). Maybank Kim Eng has a parent company in Malaysia, Maybank (Bursa: 1155).

These 6 Stock Brokerage related stocks and parent stocks have good business fundamental but only 3 of them are giant stocks (including Singapore Exchange, SGX, details were given in earlier Dr Tee article: https://www.ein55.com/2020/05/5-global-stock-exchanges-stocks/).

Due to relatively low stock volume in Singapore stock market (except during bullish market or stock crisis time), stock broker stocks with only stock trading business has limited profits when stock market is “quiet” with little price volatility (eg. STI has been ranging around 3000 +/- 300 points over the past 10 years). Only when stock market is very bullish (eg. crazy bull in Years 2000 and 2007) or during global stock crisis (eg. dumping of stocks in Years 2008-2009 and Mar 2020), then stock volume would be relatively higher.

At the same time, Singapore Exchange has more products (stocks and derivatives) for local and overseas customers with profitable monopoly business (unless stock brokers have to compete for similar business of stock trading, lowering commission to gain business but lower profit margin). Singapore has relatively smaller market with less number of traders and investors with more stable (“quiet” market), therefore stock brokerage could become part of a parent company business, may not be the main business to remain profitable. For example, UOB Kay Hian is with UOB group, could also be integrated with UOI (insurance) business with sharing of similar pool of potential clients.  So, an investor may invest directly in more profitable parent stock if subsidiary stock (eg. stock brokerage) is playing supporting role with less income.

IFAST is a relatively young stock with strong business fundamental. In fact, stock brokerage business is considered bonus for IFAST as its main business is on fund management which itself could grow naturally (high recurring incomes) yearly with compounding effect. Similarly, the integrated business of fund, stock, insurance, bond, etc, giving an edge to IFAST business.  IFAST has high potential with overseas business expansion and even bidding for virtual bank license in Singapore (but intense competition). The main weakness of IFAST is that it is a younger player, therefore relatively less well known among the investors, resulting in “undervalue” share prices, not aligned with its business performance.

5) Pawnbroker Stocks

Interestingly, there are only 3 stocks in Singapore having the name “Max” and all are Pawnbroker Stocks: ValueMax (SGX: T6I), Maxi-Cash Finance (SGX: 5UF), MoneyMax Finance (SGX: 5WJ).  Pawnbroker is a special “Finance” stock as it provides easy way of loan, especially to needy people who may not get the loan easily from banks.

A pawnbroker stock has pawnshops that offer secured loans to people, with valuables (eg. gold, silver, jewelry, coins, luxury handbags, etc) used as collateral. If an item is pawned for a loan, within a certain contractual period of time, the pawner may redeem it for the amount of the loan plus some agreed-upon amount for interest. If the loan is not paid (or extended, if applicable) within the time period, the pawned item will be offered for sale to other customers by the pawnbroker.

Since gold or related jewelry is a common valuable as collateral for loan, the “value” of pawnbroker stock would partly related to gold prices.  After reaching high optimism, gold market started to from about US$1900/oz in Year 2012 to US$1000+/oz in Year 2016, then recovering gradually to current price of US$1700+/oz in Year 2020.  The chart below shows the correlation of falling in gold price and stock prices of ValueMax, Maxi-Cash and MoneyMax which has weaker business fundamental during this period of time (clients or pawners may choose not to redeem the gold as prices have been falling in these 4 years from 2012 o 2016), holding to assets which are declining in values.

3 Singapore Pawnbroker Stocks ValueMax Maxi-Cash Money Max Gold

However, gold started to become bullish from Years 2016 to 2020, business fundamentals of all 3 pawnbrokers (ValueMax, Maxi-Cash and MoneyMax) have improved significantly. However, the rising of gold price with strong business fundamental do not help much on their share prices, simply changing from downtrend to sideways.  In fact, all 3 pawnbroker stocks also pay dividend like bank stocks, having high dividend yield now: 5% for ValueMax, 10% for Maxi-Cash and 65 for MoneyMax.  However, the catch is an investor would suffer high capital losses due to “undervalue” or downtrend prices (correcting over 50% since IPO, even continue to underperform after business fundamental is improving). Despite the business fundamental is good, pawnbrokers stocks are not suitable for dividend investing due to inconsistent share prices.

The divergence between business and pawnbroker stocks prices may partly due to uncertain gold prices (which crashed before in the past) and also there are better choices for investment in Singapore bank stocks which are more predictable and “safer”. Lack of confidence and little knowledge in pawnshop business may deter potential investors from supporting their share prices.

So, these 3 pawnbroker stocks may not be suitable for investing due to misalignment between business and stock performance. Even during the bullish period of gold, pawners may choose to redeem the collateral (if containing gold), then pawnbrokers would just gain the interests. The 3 pawnbrokers stocks have many branches with relatively high level of debt over asset (a form of leveraging), therefore this business model is not as safe as bank or even traditional finance stocks.

6) Investment and Other Stocks

The remaining Singapore Banking and Finance stocks are mostly related to investment holding, fund management or other diversified businesses.  These are some of the investment holding stocks: Hotung Investment (SGX: BLS), G K Goh (SGX: G41), Global Investment (SGX: B73), TIH (SGX: T55) and IFS Capital (SGX: I49).  However, most of these stocks have weaker business fundamental, especially if the investment portfolio of companies may not perform during global stock crisis.

Hotung is an undervalue stock (Price-to-Book ratio, PB = 0.55) with stable profitable business (venture capital). It may be considered mainly for medium term dividend investing (about 7% dividend yield) but growth is limited if holding for long term. The company has no debt but undervalue business behave as those undervalue property stocks, safe but slow.

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If you feel there are too few Banking & Finance Stocks in Singapore (only 8 are giant stocks), then you may consider over 1500 global giant stocks in the world, some are much stronger bank stocks than DBS, OCBC and UOB. Learn to form a Dream Team stock portfolio with 10-20 global giant stocks from over 3 sectors and 3 countries, aligning the strategies with own personalities.

Drop by Dr Tee free 4hr investment course to learn how to position in global giant stocks with 10 unique stock investing strategies, knowing What to Buy, When to Buy/Sell.

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You are invited to join Dr Tee private investment forum (educational platform, no commercial is allowed) to learn more investment knowledge, interacting with over 9000 members.

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Filed Under: Commodity Market, Fundamental Analysis, Macroeconomy, Market Cycle Investing, Market Optimism, Stock Market, Technical Analysis, Value Investing Tagged: , , , , , , , ,

47 Undervalue SG Property Stocks for Privatization including Perennial (弱肉强食)

Posted on June 13, 2020 Written by
Singapore Undervalue Property Stocks Perennial Privatization

Perennial Real Estate Holdings (SGX: 40S) becomes the next target for privatization. However, not all the acquisition news is good for retail investors. In this article, Dr Tee will share the considerations by Big Boys or major shareholders to acquire or privatize a stock with Perennial as an example, with sharing of Reverse Takeover (RTO) stocks. You will learn the 47 undervalue Singapore property stocks which are profitable with over 50% price discount in asset value.

Interestingly, Perennial started its property business in year 2014 through Reverse Takeover (RTO) of St. James Holdings (entertainment business) which IPO in 2008. RTO is a quick way of “IPO” by acquiring an existing company which could be different business nature. A more famous example would be RTO of Berkshire Hathaway (NYSE: BRK) by Warren Buffett in year 1965, transforming an original textile manufacturing company into an insurance company.

There are quite a few property related stocks also get listed indirectly through RTO, eg. Hatten (SGX: PH0) and Centurion (SGX: OU8) / (HKEx: 6090). Therefore, a stock investor has to be careful in analysis of stock prices and business fundamental, viewing the RTO company as new IPO company, especially if the business is totally different with new management. So, the past performance (share prices and businesses) would not be meaningful references after RTO.

Perennial original IPO (under St. James) price was $12.95/share which shareholder would “lose” 95% if compare with price of $0.69/share before the privatization offer of $0.95/share. However, Years 2008-2014 was reflection of St James share prices and businesses. Perennial actual stock record should be from Years 2014-2020, share prices vary from about $1 to about $0.30 during the recent Covid-19 crisis.  Perennial is not a giant stock but it is also not a junk stock. The bearish stock prices over the past 6 years are aligned with other Singapore property stocks (quite many are corrected by over 50% in share prices).

However, Perennial is relatively weaker than other Singapore property stocks. Therefore, the recent offer $0.95/share (despite lower than RTO price when Perennial first started in 2014) is considered attractive to investors after RTO. It is getting harder to delist or privatize a company in Singapore, therefore the offer must be significantly higher (38% for this case) to extend the current 82% shareholding to over 90% for mandatory takeover.

Perennial major shareholders include Wilmar (SGX: F34), together with other “big boys”, although 38% premium in offer price seems attractive but this amount (about $277M) will be paid by the new investor, Hopu Fund of China. Perennial has many good quality properties in both Singapore and China, last 1 year has significant cash from investing (sales of property), currently having $120M cash in the company which will be unlocked after privatization. More importantly, the company is undervalue, Price-to-Book (PB) ratio is 0.44 with 56% discount.  This implies that the offer to 18% minority shareholders is technically “free” to major shareholders as Net Asset Value (NAV) is $1.58/share. Assuming PB of only 0.75 (25% discount) as market price (if were to sell the properties today), then the value gained from privatization would be $390M, more than enough to cover $277M cash. 

Nevertheless, it is unlikely for Perennial to sell properties cheaply after privatization. With both high-quality commercial buildings and promising healthcare services, there is always an option for the company to get listed again (could be in other stock exchange) in future with higher valuation after another IPO or even RTO.

A few years ago, Wheelock Properties (SGX: M35) with over 50% discount in PB was acquired by parent company in Hong Kong, Wheelock Co (HKEx: 20), cash unlocked after acquisition was more than cash offered.  Therefore, some cash rich companies have also tried to delist the company but not all the Big Boys are lucky. Previously, Challenger Technologies (SGX: 573) could not pass this barrier due to objection by minority shareholders as the company is fundamentally strong with cash rich. Breadtalk (SGX: CTN) acquisition offer was attractive partly due to severe stock crisis during Covid-10.

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There are 140 property & construction stocks in Singapore (REITs are excluded, see earlier articles by Dr Tee if interested: www.ein55.com/blog), many are undervalue but also losing money, “Buy Low” may simply get lower in share price.

3Cnergy (SGX: 502), A-Smart (SGX: BQC), AEI^ (SGX: AWG), AIMS Property (SGX: BVP), APAC Realty (SGX: CLN), Abterra (SGX: L5I), Acromec (SGX: 43F), Amara (SGX: A34), Amcorp Global (SGX: S9B), AnnAik (SGX: A52), Astaka (SGX: 42S), BBR (SGX: KJ5), BRC Asia (SGX: BEC), BlackGoldNatural (SGX: 41H), Boldtek (SGX: 5VI), Bonvests (SGX: B28), Boustead (SGX: F9D), Boustead Projects (SGX: AVM), Bukit Sembawang (SGX: B61), Bund Center (SGX: BTE), CSC (SGX: C06), CapitaLand (SGX: C31), Casa (SGX: C04), Chemical Industries (SGX: C05), China Great Land (SGX: D50), China International (SGX: BEH), China Real Estate (SGX: 5RA), China Yuanbang (SGX: BCD), Chip Eng Seng (SGX: C29), City Development (SGX: C09), DISA (SGX: 532), Debao Property (SGX: BTF), ETC Singapore (SGX: 1C0), Edition (SGX: 5HG), EnGro Corporation (SGX: S44), Fraser and Neave F&N (SGX: F99), Far East Orchard (SGX: O10), Figtree (SGX: 5F4), First Sponsor (SGX: ADN), Fragrance (SGX: F31), Frasers Property (SGX: TQ5), GYP Properties (SGX: AWS), Gallant Venture (SGX: 5IG), Golden Energy (SGX: AUE), Goodland (SGX: 5PC), GuocoLand (SGX: F17), HL Global Enterprises (SGX: AVX), Hatten Land (SGX: PH0), Heeton (SGX: 5DP), Hiap Hoe (SGX: 5JK), Hiap Seng (SGX: 510), Ho Bee Land (SGX: H13), Hock Lian Seng (SGX: J2T), Hong Fok (SGX: H30), Hong Lai Huat (SGX: CTO), Hong Leong Asia (SGX: H22), Hongkong Land USD (SGX: H78), Hor Kew (SGX: BBP), Huationg Global (SGX: 41B), Hwa Hong (SGX: H19), IPC Corp (SGX: AZA), ISOTeam (SGX: 5WF), Imperium Crown (SGX: 5HT), Jasper Investments (SGX: FQ7), KOP (SGX: 5I1), KSH (SGX: ER0), Keong Hong (SGX: 5TT), Keppel Corp (SGX: BN4), Keppel Reit (SGX: K71U), King Wan (SGX: 554), Koh Brothers (SGX: K75), Koon (SGX: 5DL), Kori (SGX: 5VC), LHN (SGX: 41O), Ley Choon (SGX: Q0X), Lian Beng (SGX: L03), Low Keng Huat (SGX: F1E), Lum Chang (SGX: L19), MMP Resources (SGX: F3V), MYP (SGX: F86), Metro (SGX: M01), OIO (SGX: KUX), OKH Global (SGX: S3N), OKP (SGX: 5CF), OneApex (SGX: 5SY), Oxley (SGX: 5UX), PSL (SGX: BLL), Pacific Century (SGX: P15), Pacific Star Development (SGX: 1C5), Pan Hong (SGX: P36), Pavillon (SGX: 596), Perennial Holdings (SGX: 40S), Pollux Properties (SGX: 5AE), PropNex (SGX: OYY), Raffles Infrastructure (SGX: LUY), Regal International (SGX: UV1), Renaissance United (SGX: I11), Rich Capital (SGX: 5G4), Roxy-Pacific (SGX: E8Z), Ryobi Kiso (SGX: BDN), SHS (SGX: 566), SLB Development (SGX: 1J0), SP Corporation (SGX: AWE), Sasseur Reit (SGX: CRPU), Second Chance (SGX: 528), Sin Heng Mach (SGX: BKA), Sinarmas Land (SGX: A26), SingHaiyi (SGX: 5H0), SingHoldings (SGX: 5IC), Singapore-eDev (SGX: 40V), Sinjia Land (SGX: 5HH), Soilbuild Construction Group (SGX: S7P), Starland (SGX: 5UA), Straits Trading (SGX: S20), Swee Hong (SGX: QF6), Sysma (SGX: 5UO), TA (SGX: PA3), TTJ (SGX: K1Q), Tai Sin Electric (SGX: 500), Thakral (SGX: AWI), Thomson Medical Group (SGX: A50), Tiong Seng (SGX: BFI), Top Global (SGX: BHO), Tosei (SGX: S2D), Transcorp (SGX: T19), Tritech (SGX: 5G9), UIC (SGX: U06), UOA (SGX: EH5), UOL (SGX: U14), USP Group (SGX: BRS), Vibrant Group (SGX: BIP), Wee Hur (SGX: E3B), Wing Tai (SGX: W05), Yanlord Land (SGX: Z25), Yeo Hiap Seng (SGX: Y03), Ying Li International (SGX: 5DM), Yoma Strategic (SGX: Z59), Yongmao (SGX: BKX), Yongnam (SGX: AXB), Yorkshine (SGX: MR8).

There are only 47 undervalue (PB < 0.5) Singapore property stocks are profitable in the last 1 year, including Perennial.

From table below, we could see property stocks with PB = $/NAV from 0.13 to 0.5. Despite over 50% discount in share prices over NAV with profitable business, majority of stocks are not giant stocks. An undervalue stock may remain undervalue for a long term, sometimes may be even acquired by Big Boys at low optimism price in a bearish stock market (弱肉强食).

NoNameTickerPB = Price/NAVROE (%)
1Huationg Global41B0.135.3
2Hor KewBBP0.161.0
3Top GlobalBHO0.180.2
4CasaC040.184.5
5ETC Singapore1C00.225.8
6Hong Lai HuatCTO0.231.4
7Hong FokH300.245.6
8Koh BrosK750.241.9
9SP CorpAWE0.244.5
10Pavillon5960.241.1
11HongkongLandH780.250.5
12Heeton5DP0.253.0
13HL Global EntAVX0.271.1
14Tiong SengBFI0.284.0
15Lian BengL030.284.7
16China IntlBEH0.305.6
17Sinarmas LandA260.3015.1
18AnnAikA520.313.3
19TTJK1Q0.342.3
20Vibrant GroupBIP0.343.8
21Keong Hong5TT0.367.3
22Far East OrchardO100.372.1
23Chemical IndC050.388.8
24Pan HongP360.3815.4
25Ho Bee LandH130.399.4
26Hiap Hoe5JK0.392.9
27King Wan5540.401.6
28LHN41O0.408.3
29ThakralAWI0.416.7
30MetroM010.415.6
31Yanlord LandZ250.4111.9
32Wing TaiW050.421.3
33EnGroS440.424.7
34BonvestsB280.430.4
35Kori5VC0.430.2
36GuocoLandF170.436.1
37Perennial Hldgs40S0.440.1
38Low Keng HuatF1E0.441.9
39Straits TradingS200.445.6
40UICU060.448.3
41Pollux Prop5AE0.442.5
42SingHaiyi5H00.440.1
43Wee HurE3B0.448.8
44SingHoldings5IC0.4515.4
45Lum ChangL190.459.1
46Chip Eng SengC290.483.6
47Hong Leong AsiaH220.504.5

Based on Dr Tee criteria, from the 47 shortlisted Singapore property stocks above, only 8 are giant stocks. A few undervalue property giant stocks were mentioned in earlier articles (see https://www.ein55.com/tag/property-stocks/), eg. GuocoLand (SGX: F17) and Hongkong Land (SGX: H78). However, not all major shareholders are interested of delisting the undervalue property stocks because some are family owned for decades, value of shares may recover to NAV only when they are ready to sell one day.  It may be hard for Big Boys or external funds to acquire. For example, Li Ka-shing was hoping to acquire Hongkong Land in 1980s but was rejected with tighter control by parent stock from Jardine Group, Jardine Matheson Holdings JMH (SGX: J36) and Jardine Strategic Holdings JSH (SGX: J37).

Property stocks (both Singapore and regional stock markets in Malaysia and Hong Kong, etc) are cyclic in nature. Therefore, market cycle investing strategy is required with alignment to Optimism Strategies to Buy Low Sell High, as well as good understanding the local property market cycle.  Property stocks is an integration of stock and property markets, knowledge in both markets are required to enhance the chances of success in investing.

Undervalue stocks are bonus for additional safety (huge discount in price below value with high quality asset of property), especially for property stocks but mainly suitable for patient long term investors.  A smart investor may integrate undervalue stocks with dividend strategies. This is suitable for passive income investing, similar to property investment, an alternative to REITs but an investor of property stock (non-REIT) could also enjoy the capital gains (or suffer the losses) of property valuations, not just the rental income. For example, many property stocks (including Hongkong Land) are lower in valuation (affecting earnings) in Hong Kong but cash flow is not much affected.

So, reading between the lines for 3 financial reports (Income Statement, Balance Sheet, Cash Flow statement) are important to fully understand the property stocks, especially property development company has different project cycles which may last a few years, resulting in cyclic property business results and stock prices. So, Level Analysis of Level 1 (individual stock), Level 2 (Property Sector), Level 3 (local country) and Level 4 (world economy and global stock market) are required.

There are hundreds of global property giant stocks (may not need to be undervalue), an investor just needs to select 1 of Top 10 property stocks, adding to a dream team stock portfolio of 10-20 giant stocks (eg. best stock in each sector, min 3 sectors: REIT, Healthcare, F&B, Oil & Gas, Bank, Commodity, Insurance, etc). Value investors may own these 10-20 companies at undervalue price to work for us through shareholding, generating incomes (capital gains of higher share prices and dividend payment) over a lifetime (even beyond own retirement) with yearly review of giant stock status to continue the holding. So, every stock crisis is an opportunity to Buy Low with condition that it must be a giant stock.

There are 30 STI index component stocks including property stocks: CapitaLand, Hongkong Land, City Development and UOL (investor has to focus only on giant stocks for investing):
DBS Bank (SGX: D05), Singtel (SGX: Z74), OCBC Bank (SGX: O39), UOB Bank (SGX: U11), Wilmar International (SGX: F34), Jardine Matheson Holdings JMH (SGX: J36), Jardine Strategic Holdings JSH (SGX: J37), Thai Beverage (SGX: Y92), CapitaLand (SGX: C31), Ascendas Reit (SGX: A17U), Singapore Airlines (SGX: C6L), ST Engineering (SGX: S63), Keppel Corp (SGX: BN4), Singapore Exchange (SGX: S68), Hongkong Land (SGX: H78), Genting Singapore (SGX: G13), Mapletree Logistics Trust (SGX: M44U), Jardine Cycle & Carriage (SGX: C07), Mapletree Industrial Trust (SGX: ME8U), City Development (SGX: C09), CapitaLand Mall Trust (SGX: C38U), CapitaLand Commercial Trust (SGX: C61U), Mapletree Commercial Trust (SGX: N2IU), Dairy Farm International (SGX: D01), UOL (SGX: U14), Venture Corporation (SGX: V03), YZJ Shipbldg SGD (SGX: BS6), Sembcorp Industries (SGX: U96), SATS (SGX: S58), ComfortDelGro (SGX: C52).

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Drop by Dr Tee free 4hr investment course to learn how to position in global giant stocks with 10 unique stock investing strategies, knowing What to Buy, When to Buy/Sell.

Learn further from Dr Tee valuable 7hr Online Course, both English (How to Discover Giant Stocks) and Chinese (价值投资法: 探测强巨股) options, specially for learners who prefer to master stock investment strategies of over 100 global giant stocks at the comfort of home.

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Filed Under: Fundamental Analysis, Market Cycle Investing, Property Market, Stock Market, Value Investing Tagged: , , ,

3 Strategies for Double Top Stock Market (峰回路转)

Posted on June 12, 2020 Written by
Double Top Stock Market Strategies

US stock markets (both S&P 500 and Nasdaq indices) start to form potential “Double Top” at high optimism levels, after last few days of correction, indices are approaching / below 20 days moving average. At the same time, Asian stock markets (Singapore, Hong Kong, China, Malaysia, etc) are still struggling to recover gradually at moderate low optimism level but may need to follow the footstep of US.

In this article, Dr Tee will share 3 main strategies with 3 unique personalities for the current global stock markets, either short term trading or long term investing, both follow-trend and counter-trend.  Before that, let’s understand the main driver of stock and economic crisis: Covid-19 conditions locally and globally.

US has reported a few positive economic signals (eg. job market is not as bad as expected) but recovery phase would take longer time while stock market is back to high optimism level before Covid-19 crisis again.  Covid-19 condition in US shows very gradual drop in number of infected cases as social distancing may not be strictly enforced while many people could not wait to restart the economy. Based on projection, Covid-19 in US may need to wait until end of summer (around Aug 2020) to fade away. The positive signal is the number of new daily death cases are dropped to only about 1/3 of the peak, although number of new daily infected cases are still about 2/3 of peak cases. This implies the strain of Covid-19 is getting weaker after 5 months of pandemic.

At the same time, world number of infected Covid-19 cases are still increasing (7.5M cases), mainly due to high increment in a few high population countries such as Brazil and India which may be hard to balance between lockdown (minimize health crisis) and continuation of economy (minimize financial crisis). Some more healthy people may not mind take the risk to work as no income may be higher “risk” to the family. Again, positive signal is number of death cases are in declining mode globally.

For Singapore, most of the Covid-19 cases are within worker dormitories which are under control (few cases in the community) and very few death cases. Therefore, Singapore government has restarted economy in phases. There are even plans to start travel within the regions with countries having mild condition (eg. China). Malaysia has also restarted the economy, similar to many other global countries.

In short, Covid-19 condition is improving in many countries (at least within major economies: US, China, Japan, Europe), may fade away by end of summer. With restart of economy, the worst of monthly economic performance could be over (during last few months of global lockdown). However, each of the global government has to work hard to avoid Covid-19 induced short term economic crisis is extended into a longer term and bigger scale global financial crisis.

The most direct method would be economic stimulus plan, different names in each country, eg: Quantitative Easing (QE) in US which is unlimited in scale. As a result, there is a divergence between stock market (V-shape recovery) and economy (sluggish). When US stock markets are recovering back to the level before Covid-19 crisis (Nasdaq has even achieved new historical high of 10000 points), market starts to show correction.

Stock correction is healthy for longer term growth, similar to a person climbs up a hill, need some rests or slowing down in bumpy path to preserve the energy (峰回路转). However, potential “Double Top” pattern for US stock market at high optimism is still a big threat as no one would know the possible scales of correction: minor correction (less than 10%), major correction (10-20%), stock crisis (eg. 20-30% during Covid-19) or even global financial crisis (over 50%).

Therefore, it is important for a stock trader or investor to take action (Buy / Hold / Sell / Wait / Shorting) aligning with own personality. Here are 3 potential strategies for 3 unique personalities when there are potential signals of stock market correction (different levels):

1) Short Term Momentum / Cyclic Trading (trend-following)
A short term trader would exit progressively or reduce position with S.E.T. (Stop Loss / Entry / Target Prices) trading plan. When stock market is back to bullish again for short term, can always re-enter the trading (acceptable even the price could be higher than the selling price). Selling a stock is taking an insurance for a trader to reduce the risk, especially when uptrend price is corrected below own risk tolerance level.

Friend of a trader is always the clear price trends and bonus is strong fundamental business (just in case a retail trader could not follow the trading, if forced to become a long term investor, at least the giant stock would give the protection). Of course, it is possible to apply reversed strategy to do shorting, same requirement of following trading plan but in a reversed way (eg. downtrend price with weak fundamental business, best with negative market news).

2) Long Term Growth Investing
A long term growth investor would either reduce position (if trend-following but price is corrected more than own risk level) to protect the capital gain or possible to hold (regardless of potential stock crisis) but need to ensure stock portfolio is well diversified, based on 10-20 growth giant stocks with strong business fundamental. When stock is back to bullish again, may consider to “Average Up” with multiple entries for longer term investor. 

For investor who could also trade, there is also an option for hedging (shorting for short term while holding to position for long term if not selling).

3) Long Term Dividend Investing

A long term dividend investor, if applying contrarian strategy (counter-trend to buy low in bearish stock market), possible to apply multiple entries to enter while stocks are falling, 10-25% (or X% defined by individual) price gap between each entry to maximize the dividend yield (especially for Asian stock market at lower optimism) but need to ensure stock portfolio is well diversified, based on 10-20 giant dividend/growth stocks with strong business fundamental.

This is “Average Down” method, suitable for unknown scale of stock crisis (minor correction or global financial crisis), no need to guess the bottom as consistent averaging in prices would help but an investor needs to follow the discipline to continue to buy low (only for giant stocks) while others are fearful. 

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It is possible for 3 strategies above to be integrated, eg. trend-following dividend investing or growth + dividend investing, etc. There are over 10 different stock trading or investing strategies but one has to adjust to fit own personality. For example, for market cycle investor, needs to follow market optimism closely as US is back to high optimism level (>75%).  Commodity stock investor (eg. oil & gas stock) needs to integrate different market cycles of stock market and commodity market.

Of course, the last possible option is do nothing all the time, regardless up or down in stock market: zero risk, zero reward.  A stock trader or investor has to learn to take action (Buy / Hold / Sell / Wait / Shorting) unless “Do Nothing” (Wait or Hold) is part of strategy.

Drop by Dr Tee free 4hr investment course to learn how to position in global giant stocks with 10 unique stock investing strategies, knowing What to Buy, When to Buy/Sell.

Learn further from Dr Tee valuable 7hr Online Course, both English (How to Discover Giant Stocks) and Chinese (价值投资法: 探测强巨股) options, specially for learners who prefer to master stock investment strategies of over 100 global giant stocks at the comfort of home.

You are invited to join Dr Tee private investment forum (educational platform, no commercial is allowed) to learn more investment knowledge, interacting with over 9000 members.

Dr Tee Investment Course (Stock, Property, Commodity, Forex, Bond)

Filed Under: Macroeconomy, Market Cycle Investing, Market Outlook, Stock Market, Technical Analysis, Value Investing Tagged: , , ,

Watching NASDAQ to 10000 Points (旁观者迷)

Posted on June 11, 2020 Written by
NASDAQ 10000 Points US Stock Market

10000 points tonight is an important milestone for Nasdaq (mainly technology stocks) as in Year 2000 Dotcom Bubble, it also fell down from “new” peak of 5000 points to about 1/3 of value. After 20 years later, the key difference is this time the driver is V-shape recovery after over 30% major correction which shows the power of “unlimited QE”.

US is more suitable for shorter term trading, especially momentum trading with support of greedy mass market. Trend-following may be required for some traders as optimism is back to high level for both NYSE and NASDAQ stock markets in US. Global stock markets (STI, KLCI, HSI, SSEC, DAX, etc) also recover well but not as bullish as US.

It may be hard to compare Apple (eg. US stock market) with Orange (eg. Asian stock market) but they are still connected as both are fruits (global stock market), therefore when demand for Apple is higher, likely demand for Orange may be higher as well.

At the same time, within each fruit, an investor should look for better Apple or better Orange as it may be confusing to apply the Orange criteria (eg. sweatness) on selection of Apple (eg. crunchy).

In short, you don’t have to like Apple or Orange but need to ensure their prices would be higher in future based on the timeframe of your interest.

Trading may not be suitable for everyone. Those who prefer to buy and forget may be more suitable for investing. There are a few who could invest and trade at the same time but applying 2 different strategies, even if the stock is the same.

When there is a reversal (eg. bear to bull), some would be happy (those who take actions to buy), some may feel sad (those who wait but now uncertain whether decision is right).

In fact, there is no need to worry as there is no right nor wrong in stock market. A trader or investor needs to have a trading plan or investing strategy as an “anchor” to position oneself (aligned with own personality), else will be drifted each day by the wave of stock market, confused with up or down until giddy, may make a “wrong” decision by following others who shout louder.

Covid-19 conditions (both # daily infected cases and death cases) are getting much better for major economies (US, China, Japan, Europe) and also in Singapore. If you follow Dr Tee articles and video education (www.ein55.com/blog) over the past 4 months since the pandemic started in Feb 2020, summer 2020 was a key factor and global Covid-19 trends have been reported to fade away by then.

With restart of economies in most global countries from June 2020, economy starts to show V-shape recovery. Oil price at low optimism starts to recover strongly after the negative oil price a few weeks ago, preparing for higher demand by the world after lockdown is over.

US job market is improving for May 2020, S&P 500 rises to another high of nearly 3200 points, could break historical high of 3300+ points if this momentum continues in June. Asia stock markets also recover gradually with less fear.

Warren Buffett is not wrong (selling Airlines stocks and bank stocks) as his actions are aligned with his own personality (sell when outlook is uncertain or beyond his knowledge) and this is only his partial stock portfolio, still holding lots of other stocks. So, even if stock market is truly recovering, Warren Buffett and Berkshire would benefit (rising in stock prices is a proof).

Those investors who follow Warren Buffett blindly (copy his actions and even extend to sell all stocks) are wrong as they don’t align the strategies with their own personalities, some even greedy to wait to buy all stocks at the lowest point (which no one knows), may end up missing the opportunity boat or given option to buy at much higher prices (旁观者迷).

There are 2 ways of analysis: relative and absolute way. Therefore, even for a bearish stock market or economy, some may view “less negative” as positive. This is similar to a weak business which should lose $1M yearly but when losing “only” $100k, it is considered positive.

Ideally economy should be strong to support stock market. However, during Covid-19 crisis, relative method may be applied.

Stock market is forward looking, therefore some traders prefer to look at price alone which could reflect most of the key market factors including emotions. A smart investor may combine business fundamental and trading together. The biggest enemy is usually ourselves, whether we are comfortable with the strategy, either short term trading or long term investing.

Analysts who have been bearish would keep quiet for a few weeks, then more posts will come out when there is correction over 10% again. Now, there will be more posts on bullish stock market. Readers would hear different views each time, eventually not able to take action at all if simply follow others.

There are always 2 views of market: bull or bear, that’s why for each transaction, there is always a pair of buyer and seller. Don’t follow analysts blindly. Instead, leverage on the views, do additional filtering, aligning with own personality.

No expert would know what may happen for tomorrow’s share price but in longer term, business with sustainable growth would have higher chance to make profits in business to support the rising price.

Since no one could see the future, a stock investor may need to apply probability investing during this uncertain period: position in 10-20 giant stocks (strikers / mid-fielders / defenders) with strategies (eg. momentum / growth / dividend / undervalue, etc) aligned with own personalities (eg. short term trading or long term / life investing), minimizing risks with multiple entries / exits.

It is fun to “watch” and cheer in the football game but at the end, observers may waste the time and money if not able to take even the first action nor having a clear strategy.

Running out of ideas of What Stocks to Buy? Read hundreds of articles by Dr Tee over the past few months of global stock crisis.

Drop by Dr Tee free 4hr investment course to learn how to position in global giant stocks with 10 unique stock investing strategies, knowing What to Buy, When to Buy/Sell.

Learn further from Dr Tee valuable 7hr Online Course, both English (How to Discover Giant Stocks) and Chinese (价值投资法: 探测强巨股) options, specially for learners who prefer to master stock investment strategies of over 100 global giant stocks at the comfort of home.

You are invited to join Dr Tee private investment forum (educational platform, no commercial is allowed) to learn more investment knowledge, interacting with over 9000 members.

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Filed Under: Macroeconomy, Market Cycle Investing, Market Outlook, Stock Market Tagged: , , ,

Rights Issue and Demerger of Sembcorp Marine from Sembcorp Industries (难兄难弟)

Posted on June 8, 2020 Written by
Rights Issue Demerger Sembcorp Marine Sembcorp Industries Temasek Keppel Corp

Temasek stocks of Sembcorp Industries SGX: U96, parent stock) and Sembcorp Marine (SGX: S51, subsidiary stock) just announce 2 bundled corporate actions of rights issue for Sembcorp Marine and then demerger from Sembcorp Industries. In this article, Dr Tee will compare both Sembcorp stocks and share the possible causes and effects of such actions with deeper analysis.

Recently, Temasek stock of Singapore Airlines, SIA (SGX: C6L) just completed the rights and mandatory convertible bonds (MCB) issues to inject extra capital to save the company from Covid-19 crisis encountered in airlines sector with over 90% drop in number of flights. Temasek would become the sponsor to take up additional rights and bonds if not taken up by other shareholders.

Temasek may have modified the “rescue” recipe for another company (Sembcorp) which need helps under both Covid-19 and Crude Oil Crises.  Temasek owns 49.3% of Sembcorp Industries, a parent stock which subsequently owns 61% of Sembcorp Marine from oil & gas sector (see diagram).

The proposed corporate actions are bundle of 2 actions (see diagram), requiring both to pass together to be effective. Sharing here are for educational purpose, please make your own decision in investment.

Rights Issue Demerger Sembcorp Marine Sembcorp Industries Temasek
Rights Issue Demerger Sembcorp Marine Sembcorp Industries Temasek

1) 5-for-1 Rights Issue for Sembcorp Marine

There are a few ways to “borrow money” for a business, eg. borrowing from banks or issue bonds but this would increase the debt level (both Sembcorp Industries and Sembcorp Marine have relatively high level of debt over asset) and additional cost to business with interest of loans. Therefore, an alternative way is to “borrow” money from shareholders through rights issue as this strategy would not increase the debt level and no interest is required. However, if shareholders don’t welcome this move (may be under pressure to invest with new capital), they may reflect the negative sentiment with lower share prices which affect the market cap of company or hidden wealth of shareholders.

Sembcorp Marine hopes to raise S$2.1 billion under 5-for-1 renounceable rights issue at an issue price of $0.20 per share. Based on recent average price of $0.74 for Sembcorp Marine, the theoretical ex-rights price (TERP) is

TERP = [($0.20 x 5) + ($0.74 x 1)] / 6 = $0.29/share

Since the rights are renounceable (similar to previous SIA rights), current shareholders of Sembcorp Marine may either accept the rights (requires extra cash to invest more on this stock) or they could simply sell the rights in stock market at later stage if action is approved. 

Action of rights issue is a neutral corporate action, there is no right or wrong, decision partly depends on how the new capital is used (eg. paying debt, saving company or expanding the business, etc) and also whether a stock has strong business fundamental or strong sponsor.  Similar to SIA, Sembcorp Marine needs additional capital to cope with the current crisis which is even worse, not limited to shorter term Covid-19 crisis (affecting most sectors) but also longer term oil & gas crisis with bearish crude oil price (affecting most oil & gas companies, including Sembcorp Marine and Keppel Corp, SGX: BN4).

When crude oil market was bullish 10 years ago, Sembcorp Marine and Keppel Corp were still giant stocks, doing well with growing businesses. However, when crude oil price dropped from over US$100/barrel since Year 2015 to less than US$50/barrel over the past few years, businesses of Sembcorp Marine and Keppel Corp (business segment of Keppel O&M) turn to negative, becoming losses.

Sembcorp Marine revenue size is about 1/3 of Sembcorp Industries, seriously affecting the earnings of parent company, which could still remain profitable with support of other business segments (energy/utilities and urban) but it has been weaker over the past 5 years.  Keppel O&M (not listed) also contributes to most losses of Keppel Corp which is mainly supported by property segment. Due to prolonged oil & gas crisis over the past 5 years, these 3 Temasek stocks have lost the titles of giant stock (based on Dr Tee criteria): Sembcorp Industries, Sembcorp Marine and Keppel Corp.

Therefore, as a stock investor, decision of whether to take up rights issue is similar to additional investment, whether Sembcorp Marine worth investing. Currently crude oil market is still at low optimism but it is on recovery phase. It might take a few years for customers (oil producers) of Sembcorp Marine and also Keppel Corp (Keppel O&M) to become profitable and increase the capital investment. So, the cold winter of business might be much longer for Sembcorp Marine and Keppel O&M which could be a stopper for recovery of share prices despite at low optimism level.

Besides accepting / selling rights issue, current shareholders also have the option to sell the stock before corporate actions (but price may correct down if mass market views the action negatively).  If the action is “Sell”, a shareholder may not suffer permanent loss if knowing how to “Change Horse”, use the remaining capital (after selling) to “Buy” an oil & gas giant stock or even a non-crisis giant stock on the same day. During oil & gas crisis period of last few years, a few oil & gas companies actually profit from the crisis, eg. those related to oil storage.

Rights Issue Demerger Sembcorp Marine Sembcorp Industries Temasek

2) Demerger of Sembcorp Industries and Sembcorp Marine

Although Sembcorp Marine is only a subsidiary of Sembcorp Industries with 1/3 revenue but it contributed to most of the losses of parent company. From the chart below, it is shown that over the past 14 years (since 2006), both Sembcorp Industries and Sembcorp Marine behave more like siblings (难兄难弟), instead of parent-subsidiary relationship, having very close long term stock price trends (key difference is Sembcorp Marine is more volatile than Sembcorp Industries).

This implies 1/3 business connection of 2 Sembcorp stocks have contributed to nearly 90% strong correlation in share prices. Therefore, the proposal of demerger of 2 stocks would help Sembcorp Industries more in longer term. Sembcorp Industries shareholders would get compensation through dividend stocks of between 427 and 491 Sembcorp Marine shares for every 100 Sembcorp Industries shares owned. After demerging, since there is no connection in business, Sembcorp Industries would become more profitable (growing earnings contributed by energy/utilities and urban business segments) without affected by possible losses of Sembcorp Marine. Currently, Sembcorp Marine is as if a negative asset (contributing to losses) to Sembcorp Industries, therefore if parent company could sell away with some compensation, this would help Sembcorp Industries become a giant stock again.

After demerger, Temasek would become direct sponsors (major shareholder) for both companies which would become siblings or even cousins in Temasek family of stocks. The future losses of Sembcorp Marine would be sustained partially by Temasek, not by Sembcorp Industries anymore. In fact, energy/utilities (gas / power / water / waste / renewable energy) business of Sembcorp Industries are defensive in nature, would support the future share prices of “new” Sembcorp stock without “Marine” business segment. The smaller “Urban” segment (land and property development) is only 3% of company revenue but contributes to about 25% of company profits, a highly potential segment to grow further when “burden” of Marine is put aside.

To be fair to Sembcorp Marine, it is a stock with high potential but currently more suitable as crisis stock investing, implying if the potential losses in next few years could be sustainable (partly with help of rights issue), when crude oil price may be back to high optimism as 10 years ago, then Sembcorp Marine could outperform Sembcorp Industries. 

Therefore, after demerging, both Sembcorp stocks would be clearer in personalities with more unique businesses. Sembcorp Industries would be mainly suitable for gradual growth, defensive investor. Sembcorp would be more for crisis stock investor who view high volatility (both potential high losses and high gains) as main driver for capital gains. Of course, a stock investor also has the option not to consider either Sembcorp stocks by selling them or not considering at all.

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Current Sembcorp Industries and Sembcorp Marine shareholders have to make a few decisions in the next few months. With support of Sembcorp Industry as major shareholder, likely the rights issue of Sembcorp Marine could be approved. However, this action is conditional based on the approval by both Sembcorp Marine and Sembcorp Industries for the other action, acceptance of demerger of 2 companies, which both Sembcorp Industries and Temasek would abstain from voting.

In short, the bundled corporation actions ultimately depend on minority shareholders for approval, therefore it is fair from democracy point of view. After excluding Temasek and Sembcorp Industries which are 50-60% ownership in both stocks, remaining minority shareholders are scattered (some are big funds), a simple majority >50% votes is required for both companies to approve the entire package.

Therefore, it may be similar to an election process, hard to predict the outcome unless there is alliance or rally among the minority shareholders.  When 1 “party” feels in disadvantaged position, it may not approve, then whole deal would fail.

There are at least 26 Temasek / GLC stocks in Singapore including Sembcorp Industries and Sembcorp Marine, controlling shareholder with 15% or more ownership directly or indirectly:

Singtel (SGX: Z74), DBS Bank (SGX: D05), ST Engineering (SGX: S63), SIA (SGX: C6L), SIA Engineering (SGX: S59), SGX (SGX: S68), SATS (SGX: S58), Sembcorp Industries (SGX: U96), Sembcorp Marine (SGX: S51), Olam (SGX: O32), CapitaLand (SGX: C31), CapitaLand Mall Trust (SGX: C38U), CapitaLand Commercial Trust (SGX: C61U), Ascendas Reit (SGX: A17U), Ascott HTrust (SGX: HMN), Ascendas-hTrust (SGX: Q1P), CapitaR China Trust (SGX: Au8U), Ascendas-iTrust (SGX: CY6U), Keppel Corp (SGX: BN4), Keppel Reit (SGX: K71U), Keppel DC Reit (SGX: AJBU), Keppel Infrastructure Trust (SGX: A7RU), Mapletree Logistics Trust (SGX: M44U), Mapletree Commercial Trust (SGX: N2IU), Mapletree Industrial Trust (SGX: ME8U), Mapletree NAC Trust (SGX: RW0U).

Temasek stocks portfolio also affect about 15% of STI index stocks, which has strong impact on Singapore stock market. Here are 30 STI component stocks:
DBS Bank (SGX: D05), Singtel (SGX: Z74), OCBC Bank (SGX: O39), UOB Bank (SGX: U11), Wilmar International (SGX: F34), Jardine Matheson Holdings JMH (SGX: J36), Jardine Strategic Holdings JSH (SGX: J37), Thai Beverage (SGX: Y92), CapitaLand (SGX: C31), Ascendas Reit (SGX: A17U), Singapore Airlines (SGX: C6L), ST Engineering (SGX: S63), Keppel Corp (SGX: BN4), Singapore Exchange (SGX: S68), HongkongLand (SGX: H78), Genting Singapore (SGX: G13), Mapletree Logistics Trust (SGX: M44U), Jardine Cycle & Carriage (SGX: C07), Mapletree Industrial Trust (SGX: ME8U), City Development (SGX: C09), CapitaLand Mall Trust (SGX: C38U), CapitaLand Commercial Trust (SGX: C61U), Mapletree Commercial Trust (SGX: N2IU), Dairy Farm International (SGX: D01), UOL (SGX: U14), Venture Corporation (SGX: V03), YZJ Shipbldg SGD (SGX: BS6), Sembcorp Industries (SGX: U96), SATS (SGX: S58), ComfortDelGro (SGX: C52).

The results of SIA rights issue and subsequently the Sembcorp resolutions, could give some direction of what possible actions to take for other Temasek stocks which may need help in business. Among the 30 STI component stocks with Temasek control (over 15% share ownership), these 4 Temasek stocks would need more help: Singapore Airlines, Sembcorp Industries (linked to Sembcorp Marine which was STI component stock before) and Keppel Corp.

So, regardless the outcome of Sembcorp actions, Temasek may also consider other options in future, eg. demerger of Keppel O&M from Keppel Corp, merging with Sembcorp Marine for cost saving of 2 oil & gas companies.  For all the actions, there is a positive common point, which they all have a strong sponsor, Temasek.  It is a bonus to have a strong sponsor but a business still needs good management with right strategies for each of the business sector. These performances would be reflected in both yearly financial reports and daily stock prices, especially for longer term trends. So, it may not be difficult for a stock investor to make a sound decision (Buy, Hold, Sell, Wait, Shorting), aligning the right Temasek stock with own personality, supported by growing business.

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On surface, this topic seems to be just on corporate actions of 2 Sembcorp stocks. When understanding further, it requires understanding of 2 current financial crisis, Crude Oil crisis and Covid-19 crisis, when they may end or fade away. When going to another deeper level, it may also involve political economy and global stock market, especially potential impact of US-China trade war. So, a stock investor should master at least 5 key LO-FTP strategies (Levels 1-4, Optimism, Fundamental, Technical, Personal Analysis).

There are 30 STI index component stocks including Sembcorp Industries (investor has to focus only on giant stocks for investing):
DBS Bank (SGX: D05), Singtel (SGX: Z74), OCBC Bank (SGX: O39), UOB Bank (SGX: U11), Wilmar International (SGX: F34), Jardine Matheson Holdings JMH (SGX: J36), Jardine Strategic Holdings JSH (SGX: J37), Thai Beverage (SGX: Y92), CapitaLand (SGX: C31), Ascendas Reit (SGX: A17U), Singapore Airlines (SGX: C6L), ST Engineering (SGX: S63), Keppel Corp (SGX: BN4), Singapore Exchange (SGX: S68), Hongkong Land (SGX: H78), Genting Singapore (SGX: G13), Mapletree Logistics Trust (SGX: M44U), Jardine Cycle & Carriage (SGX: C07), Mapletree Industrial Trust (SGX: ME8U), City Development (SGX: C09), CapitaLand Mall Trust (SGX: C38U), CapitaLand Commercial Trust (SGX: C61U), Mapletree Commercial Trust (SGX: N2IU), Dairy Farm International (SGX: D01), UOL (SGX: U14), Venture Corporation (SGX: V03), YZJ Shipbldg SGD (SGX: BS6), Sembcorp Industries (SGX: U96), SATS (SGX: S58), ComfortDelGro (SGX: C52).

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