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48 Singapore Food & Beverage Stocks (民以食为天)

Posted on September 12, 2020 Written by Dr Tee (Ein55)

During crisis, a consumer may not able to afford luxury products but still need to eat and drink to survive. Therefore, an investor may consider 48 Food & Beverage (F&B) stocks in Singapore, especially those defensive growth stocks.

In this article, you will learn from Dr Tee on 9 Singapore F&B Giant Stocks which are efficient in making money with food as essential products (consumer staples) but having mixed impacts during COVID-19 stock crisis. Bonus for readers who could read the entire article: a strategy to eat and drink for free for lifetime.

1) Supermarket F&B Stocks

– Sheng Siong (SGX: OV8)

– Dairy Farm International (SGX: D01)

2) Restaurant F&B Stocks

– Japan Foods Holding (SGX: 5OI)

– Old Chang Kee (SGX: 5ML)

3) Consumer F&B Stocks

– QAF (SGX: Q01)

– Thai Beverage (SGX: Y92)

4) Mixed Industry F&B Stocks

– Amara Holdings (SGX: A34)

– SATS (SGX: S58)

– Wilmar International (SGX: F34)

There are 48 Food & Beverage Stocks in Singapore, making money from the most essential products of people (民以食为天):

Abterra (SGX: L5I), Acma (SGX: AYV), Amara Holdings (SGX: A34), Bonvests Holdings (SGX: B28), ChasWood Resources (SGX: 5TW), China Fishery (SGX: B0Z), China Kangda Food (SGX: P74), Dairy Farm International (SGX: D01), Del Monte Pacific (SGX: D03), Delfi (SGX: P34), Dukang (SGX: BKV), Envictus (SGX: BQD), Food Empire Holdings (SGX: F03), Fraser and Neave F&N (SGX: F99), Hosen Group (SGX: 5EV), Japan Foods Holding (SGX: 5OI), Japfa (SGX: UD2), JB Foods (SGX: BEW), Jumbo Group (SGX: 42R), Katrina Group (SGX: 1A0), Khong Guan (SGX: K03), Kimly (SGX: 1D0), Koufu (SGX: VL6), Luzhou Bio-Chem (SGX: L46), Mewah International (SGX: MV4), Neo (SGX: 5UJ), No Signboard Holdings (SGX: 1G6), Old Chang Kee (SGX: 5ML), OneApex (SGX: 5SY), Pacific Andes (SGX: P11), Pavillon (SGX: 596), QAF (SGX: Q01), Sakae (SGX: 5DO), SATS (SGX: S58), Sheng Siong (SGX: OV8), Shopper360 (SGX: 1F0), Sino Grandness (SGX: T4B), Soup Restaurant (SGX: 5KI), ST Group Food (SGX: DRX), SunMoon Food (SGX: AAJ), Thai Beverage (SGX: Y92), Tung Lok Restaurants (SGX: 540), United Food (SGX: AZR), Wilmar International (SGX: F34), Yamada Green Resources (SGX: BJV), Yeo Hiap Seng (SGX: Y03), Zhongxin Fruit (SGX: 5EG).

From the table sorted below for 48 Singapore F&B stocks, only 2/3 are profitable (32 / 48 stocks were making money in businesses last year). Therefore, careful choices of giant F&B stocks are critical, many are at lower optimism share prices due to either stock market fear or actual business is affected during COVID-19 pandemic.

Nearly half of F&B stocks (22 / 48) have Price-to-Book ratio ($ / NAV = PB) < 1 with discount over asset but only 1 stock (Amara) has high quality asset related to properties which will be discussed further. Buy undervalue stocks require patience, Buy Low may not able to Sell High in future if there is no alignment with one’s unique personality and other consideration of investment. Buy low-quality asset simply at low price (very low PB << 1) may have high risk of bankruptcy if the company could not be profitable.

No	Stock Name	Code	PB = Price /NAV	ROE (%)
1	ABR Holdings (SGX: 533)	533	1.46	2.1
2	Abterra (SGX: L5I)	L5I	2.81	–
3	Acma (SGX: AYV)	AYV	0.31	–
4	Amara Holdings (SGX: A34)	A34	0.51	7.0
5	Bonvests Holdings (SGX: B28)	B28	0.39	0.4
6	ChasWood Resources (SGX: 5TW)	5TW	-0.11	–
7	China Fishery (SGX: B0Z)	B0Z	0.15	5.1
8	China Kangda Food (SGX: P74)	P74	0.12	0.7
9	Dairy Farm International (SGX: D01)	D01	4.78	26.8
10	Del Monte Pacific (SGX: D03)	D03	0.36	–
11	Delfi (SGX: P34)	P34	1.41	12.4
12	Dukang (SGX: BKV)	BKV	0.04	–
13	Envictus (SGX: BQD)	BQD	0.32	–
14	Food Empire Holdings (SGX: F03)	F03	1.11	12.6
15	Fraser and Neave F&N (SGX: F99)	F99	0.60	5.2
16	Hosen Group (SGX: 5EV)	5EV	0.48	–
17	Japan Foods Holding (SGX: 5OI)	5OI	1.97	3.2
18	Japfa (SGX: UD2)	UD2	0.87	13.6
19	JB Foods (SGX: BEW)	BEW	0.81	18.5
20	Jumbo Group (SGX: 42R)	42R	3.19	17.0
21	Katrina Group (SGX: 1A0)	1A0	10.80	–
22	Khong Guan (SGX: K03)	K03	0.62	–
23	Kimly (SGX: 1D0)	1D0	3.28	22.8
24	Koufu (SGX: VL6)	VL6	3.81	27.1
25	Luzhou Bio-Chem (SGX: L46)	L46	-0.75	–
26	Mewah International (SGX: MV4)	MV4	0.47	2.2
27	Neo (SGX: 5UJ)	5UJ	1.81	15.2
28	No Signboard Holdings (SGX: 1G6)	1G6	1.34	–
29	Old Chang Kee (SGX: 5ML)	5ML	3.15	3.2
30	OneApex (SGX: 5SY)	5SY	1.16	–
31	Pacific Andes (SGX: P11)	P11	0.09	8.5
32	Pavillon (SGX: 596)	596	0.25	1.1
33	QAF (SGX: Q01)	Q01	1.06	5.4
34	Sakae (SGX: 5DO)	5DO	0.17	–
35	SATS (SGX: S58)	S58	2.01	10.4
36	Sheng Siong (SGX: OV8)	OV8	6.39	24.176
37	Shopper360 (SGX: 1F0)	1F0	0.6144	5.642
38	Sino Grandness (SGX: T4B)	T4B	0.04	6.4
39	Soup Restaurant (SGX: 5KI)	5KI	2.92	7.692
40	ST Group Food (SGX: DRX)	DRX	1.13	15.6
41	SunMoon Food (SGX: AAJ)	AAJ	4.55	–
42	Thai Beverage (SGX: Y92)	Y92	2.58	20.087
43	Tung Lok Restaurants (SGX: 540)	540	2.63	–
44	United Food (SGX: AZR)	AZR	0.13	–
45	Wilmar International (SGX: F34)	F34	1.01	7.716
46	Yamada Green Resources (SGX: BJV)	BJV	0.99	2.253
47	Yeo Hiap Seng (SGX: Y03)	Y03	0.75	2.873
48	Zhongxin Fruit (SGX: 5EG)	5EG	1.01	3.926

There are only 3 F&B related stocks (Dairy Farm, Thai Beverage, Wilmar) which are also listed in 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).

F&B stocks may not be defensive as not all the products are popular (eg. taste of food) and some may not have the right marketing (even restaurant with tasty food and/or low prices may not able to last if few people know). Therefore, selection of F&B giant stocks is different from selection of “Best Food” in Singapore or each country. In fact, it is possible for average taste or even “junk” food for some people (eg. fast food McDonald’s, NYSE: MCD) to be a global giant stock.

Here, let’s focus on 9 Singapore F&B giant stocks over 4 main categories:

1) Supermarket F&B Stocks

– Sheng Siong (SGX: OV8)

– Dairy Farm International (SGX: D01)

Both Sheng Siong and Dairy Farm make more profits in supermarket business during COVID-19 pandemic as most people would stay longer at home (cook more often at home) and need more consumer staples (using more essential products in daily life). However, share prices performances of both supermarket giant stocks are distinctly different with Sheng Siong at high optimism and Dairy Farm at low optimism.

Sheng Siong is mainly on supermarket business, therefore it is clear on positive impact of COVID-19 crisis, share prices dropped to low optimism in Mar 2020 during the most fearful time of pandemic, then quickly recovered and speculated to historical high prices, together with other COVID-19 related stocks, eg, glove / healthcare stocks: Medtecs International Corporation (SGX: 546), UG Healthcare Corporation (SGX: 41A), Top Glove Corporation (SGX: BVA), Riverstone Holdings (SGX: AP4). These COVID-19 beneficiary stocks including Sheng Siong have been falling down from high optimism with fading of fear of COVID-19, therefore both stock traders (trend-following) and investors (price over value) have to take note, not to “Buy High Sell Low” eventually. Sheng Siong may be considered when short term momentum is back (depending on the prices) or when there is global financial crisis in future (with low optimism prices again)

Dairy Farm has more diversified businesses within the Asia Pacific, besides Cold Storage, also has 7-Eleven, IKEA, restaurants, etc, which have different impacts during pandemic. Despite overall business is still profitable, the profitability is declining over the past 5 years, even before COVID-19. In addition, Dairy Farm belongs to Jardine Group, bearish share prices at low optimism is aligned for all Jardine related stocks, eg: Jardine Matheson Holding – JMH (SGX: J36), Jardine Strategic Holding – JSH (SGX: J37), Jardine Cycle & Carriage – JCC (SGX: C07), Hongkong Land (SGX: H78), Mandarin Oriental Hotel (SGX: M04), etc. When market sentiment of Jardine Group related stocks is negative, they would take longer time to recover in stock crisis. Dairy Farm may be considered for crisis investing with protection of consistent dividends (about 5% dividend yield) but an investor needs to have longer term holding power and able to control fear with falling prices in short term to medium terms.

2) Restaurant F&B Stocks

– Japan Foods Holding (SGX: 5OI)

– Old Chang Kee (SGX: 5ML)

Japan Foods and Old Chang Kee behave as if twin, IPO time was also close in years 2009 and 2008 respectively. Both stocks suffered during COVID-19 due to lockdown with less customers come to the food outlets. However, the main issue is even before COVID-19, since year 2013 till now, earnings of both stocks have been dropping, result in bearish share prices with low optimism prices. Therefore, they are lower quality crisis stocks as business is affected (lower profitability for 7 years), hard for the share prices to recover significantly in short to medium terms.

Although operational cashflow have been improving over the past 2 years, this could be due to impact of IFRS-16 (new accounting principle) which categories operational leases (eg. rental of food outlets) as liability (therefore debt has been increasing over the past 2 years), may not be entirely improvement in business cashflow. It is important for an investor review with longer term perspective (over 10 years) and bigger picture (income statement, balance sheet, cashflow statement) with integration with share price performance. When businesses of both stocks have significant breakthrough, the bearish trend in share prices and earnings may be reversed. Until then, they may only be considered for trading with trend-following.

3) Consumer F&B Stocks

– QAF (SGX: Q01)

– Thai Beverage (SGX: Y92)

QAF is famous of bakery brands such as Gardenia and Bonjour breads available in Asia Pacific. The defensive business (eg. breakfast) has doubled during pandemic but share prices are not speculated as high as Sheng Siong, only at mid optimism level but it is a stronger F&B stock relative to peers. QAF may also be considered as dividend stock with consistent dividend payout (about 5% dividend yield). See strategy in later article on how to eat Gardenia bread for free for lifetime (one may upgrade to better free food with improvement in investment).

Thai Beverage is an outstanding F&B giant stock, strong in businesses (eg. beers and spirit drinks in Thailand, Myanmar and regional markets) and low optimism in share prices. The business is not much affected during COVID-19 but share prices dropped to very low optimism due to market fear, which is a higher quality crisis stock. Positioning of Thai Beverage requires alignment with other stocks of Charoen Sirivadhanabhakdi (Top 10 richest person in Thailand), eg. Fraser and Neave – F&N (SGX: F99), Frasers Property (SGX: TQ5), Frasers Centrepoint Trust, FCT (SGX: J69U), Frasers Logistics & Commercial Trust (SGX: BUOU), Frasers Hospitality Trust (SGX: ACV).

4) Mixed Industry F&B Stocks

– Amara Holdings (SGX: A34)

– SATS (SGX: S58)

– Wilmar International (SGX: F34)

Some stocks only have partial F&B businesses, eg. Amara, SATS and Wilmar. Therefore, analysis of these stocks require integration with other sectors with different business segments.

Amara is mainly on hotel related businesses, F&B is only a smaller segment of business (restaurants), businesses are badly affected during COVID-19. SATS has both F&B and airlines gateway businesses, the earnings from F&B has helped the company minimize the negative impact of COVID-19 to airlines sector.

Both Amara and SATS suffer low optimism in share prices but each has its own defense system. Amara has undervalue hotel properties which could still generate cash with fading of COVID-19 but it needs to go through a long winter time until vaccine could be developed for COVID-19. SATS may expand F&B business during the downturn of airlines sector. Therefore, SATS is relatively a better airlines related stock than Singapore Airlines, SIA (SGX: C6L), which has full risk exposure to COVID-19 crisis, even the recent rights and bond issues may not be sufficient, therefore need to reduce the staff size to save cash.

Cash is King for investor, also true for stocks in crisis. SATS has strong sponsor of Temasek with diversification of business in F&B, therefore chances of recovery is higher than the peers in airlines sector. Some companies went bankrupt during global financial crisis mainly due to shortage in cash while making losses, hard to get new loan (high risk of default) with weak sponsor. So, when investing in crisis stock with weaker business fundamental, an investor who wants to take calculated risks, need to consider the cash burning rate of company vs the potential duration of crisis (eg. assuming another 12 months for COVID-19 to last).

Wilmar is a commodity giant stock, mainly in palm oil which products include cooking oil in F&B sector. Subsidiary company of Wilmar, Yihai Kerry Arawana (YKA), is a major producer of cooking oil in China, will be listed in China stock market. The future stock potential of Yihai Kerry Arawana has helped Wilmar to outperform other palm oil stocks, recovering from low to mid optimism level. Palm oil prices have been recovering, combining with positive news of spin-off of Yihai Kerry Arawana, supporting Wilmar share prices. Wilmar is a cyclic giant stock, more suitable to invest during uptrend stock market from lower to mid optimism level. Demand of palm oil would be higher with fading of COVID-19. Possible speculation of IPO (common in China stock market) of Yihai Kerry Arawana may also support the share price of parent stock, Wilmar.

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If one could invest $2000 in QAF stock, would get about $100 dividend with consistent 5% dividend yield (higher if investing during crisis), enough to pay for $2 or 1 loaf of white bread per week (assume eat bread for 50 weeks in 1 year) which have about 14 slices (assuming eating 2 slices per day x 7 days per week), could enjoy free white bread for lifetime if QAF continues the business model this way. An investor may apply this strategy to eat in restaurant (eg. McDonald’s burger) for free for lifetime (if investing in a restaurant stock with consistent dividend or growth in share prices) or enjoy any drink (Coca-Cola – NYSE: KO, Thai Beverage beer, Starbucks coffee – NASDAQ: SBUX, etc), 1 cup per day, free for lifetime. Similarly, a consumer could enjoy free healthcare service (hospital or dental stocks), free handbag or watch (luxury products stocks), free house rental (property stocks but need higher capital), etc.

In fact, most consumers pay for lifetime for the same products (foods & beverages) again and again, contributing to the growth of F&B giant stocks with recurring incomes. When a consumer could reverse the role to an investor (as if a business partner of F&B outlet of interest), a consumer could make profit and enjoy free foods and drinks for life, with condition that it has to be a F&B giant stock, to be certified each year with Dr Tee selection criteria. For investors who are foods or drinks lover, may consider to invest in Top 10 global F&B giant stocks, diversifing investment over 10 different types of low-risk foods and beverages.

F&B giant stocks usually are cash cow with profitable businesses, therefore when share prices are undervalue at low optimism, may become target of acquisition, eg. past Singapore F&B giant stocks of Super Group (SGX: S10) and BreadTalk Group (SGX: CTN). Singapore has less F&B giant stocks but there are some global F&B giant stocks which have strong dominance in certain F&B businesses, able to make money consistently each day for decades.

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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.

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.

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Filed Under: Fundamental Analysis, Macroeconomy, Market Cycle Investing, Market Optimism, Stock Market Tagged: Consumer Stocks, crisis stock, dividend stock, f&b stocks, jardine

11 Singapore Healthcare COVID-19 Stocks (生死关头)

Posted on September 4, 2020 Written by Dr Tee (Ein55)

Between life and money, which is more important? In this article, you will learn from Dr Tee on 11 Singapore Healthcare Giant Stocks which are efficient in making money with life as an economic moat, while some surge in prices during COVID-19 stock crisis.

1) COVID-19 “Crisis as Opportunity” Stocks

Medtecs International Corporation (SGX: 546)

UG Healthcare Corporation (SGX: 41A)

Top Glove Corporation (SGX: BVA)

Riverstone Holdings (SGX: AP4)

2) Medical Services Stocks

Q&M Dental Group (SGX: QC7)

Raffles Medical Group (SGX: BSL)

3) Healthcare Products Stocks

Tianjin Zhong Xin Pharmaceutical Group (SGX: T14)

Haw Par Corporation (SGX: H02)

4) Healthcare REITs

First Reit (SGX: AW9U)

ParkwayLife Reit (SGX: C2PU)

IHH Healthcare (SGX: Q0F)

There are about 37 Healthcare stocks in Singapore, a natural move for medical related businesses to get listed to leverage on capital from stock market for further expansion:

Accrelist Ltd (SGX: QZG), Alliance Healthcare (SGX: MIJ), Aoxin Q & M Dental (SGX: 1D4), Asia Vets Holdings (SGX: 5RE), AsiaMedic (SGX: 505), Asian Healthcare Specialists (SGX: 1J3), Beverly JCG (SGX: VFP), Biolidics (SGX: 8YY), Cordlife (SGX: P8A), First Reit (SGX: AW9U), Haw Par Corporation (SGX: H02), HC Surgical Specialists (SGX: 1B1), Healthway Medical Corporation (SGX: 5NG), Hyphens Pharma International (SGX: 1J5), IHH Healthcare (SGX: Q0F), ISEC Healthcare (SGX: 40T), IX Biopharma (SGX: 42C), Lonza Group (SGX: O6Z), Medinex (SGX: OTX), Medtecs International Corporation (SGX: 546), OUE Lippo Healthcare (SGX: 5WA), ParkwayLife Reit (SGX: C2PU), Pharmesis International (SGX: BFK), Q&M Dental Group (SGX: QC7), QT Vascular (SGX: 5I0), Raffles Medical Group (SGX: BSL), RHT Health Trust (SGX: RF1U), Riverstone Holdings (SGX: AP4), SingMedical Group (SGX: 5OT), Suntar Eco-City (SGX: BKZ), TalkMed (SGX: 5G3), Thomson Medical Group (SGX: A50), Tianjin Zhong Xin Pharmaceutical Group (SGX: T14), Top Glove Corporation (SGX: BVA), Trendlines Group (SGX: 42T), UG Healthcare Corporation (SGX: 41A), Vicplas International (SGX: 569).

From the table sorted below for 37 Singapore Healthcare stocks, only 2/3 are profitable (25 / 37 stocks were making money in businesses last year). Therefore, careful choices of giant healthcare stocks are critical, not just buying any healthcare stock with rising in share prices which may not be sustainable in longer term.

There are 1/3 stocks (13 / 37) having Price-to-Book ratio ($ / NAV = PB) < 1 with discount over asset but only 2 stocks (First Reit and Haw Par) have high quality asset related to cash or properties which will be discussed further. Buy undervalue stocks require patience, buying low may not able to Sell High in future if there is no alignment with one’s unique personality and other consideration of investment.

No	Ticker	PB = Price /NAV	ROE (%)
1	Accrelist Ltd (SGX: QZG)	0.31	0.0
2	Alliance Healthcare (SGX: MIJ)	1.89	12.6
3	Aoxin Q & M Dental (SGX: 1D4)	1.17	-0.1
4	Asia Vets Holdings (SGX: 5RE)	0.57	3.9
5	AsiaMedic (SGX: 505)	2.53	-0.1
6	Asian Healthcare Specialists (SGX: 1J3)	2.51	12.3
7	Beverly JCG (SGX: VFP)	6.67	-0.7
8	Biolidics (SGX: 8YY)	8.33	-0.4
9	Cordlife (SGX: P8A)	0.74	5.0
10	First Reit (SGX: AW9U)	0.45	5.7
11	Haw Par Corporation (SGX: H02)	0.78	5.8
12	HC Surgical Specialists (SGX: 1B1)	2.78	21.5
13	Healthway Medical Corporation (SGX: 5NG)	0.82	0.0
14	Hyphens Pharma International (SGX: 1J5)	2.72	14.8
15	IHH Healthcare (SGX: Q0F)	2.15	1.9
16	ISEC Healthcare (SGX: 40T)	2.60	11.7
17	IX Biopharma (SGX: 42C)	16.88	-1.0
18	Lonza Group (SGX: O6Z)	0.63	9.9
19	Medinex (SGX: OTX)	2.02	25.5
20	Medtecs International Corporation (SGX: 546)	5.33	1.8
21	OUE Lippo Healthcare (SGX: 5WA)	0.64	1.3
22	ParkwayLife Reit (SGX: C2PU)	1.98	10.4
23	Pharmesis International (SGX: BFK)	0.53	-0.3
24	Q&M Dental Group (SGX: QC7)	3.20	14.7
25	QT Vascular (SGX: 5I0)	4.78	-2.5
26	Raffles Medical Group (SGX: BSL)	1.69	7.2
27	RHT Health Trust (SGX: RF1U)	0.92	-0.1
28	Riverstone Holdings (SGX: AP4)	9.39	16.52
29	SingMedical Group (SGX: 5OT)	0.82	9.4
30	Suntar Eco-City (SGX: BKZ)	2.49	0.0
31	TalkMed (SGX: 5G3)	6.48	43.0
32	Thomson Medical Group (SGX: A50)	2.87	-0.2
33	Tianjin Zhong Xin Pharmaceutical Group (SGX: T14)	0.83	11.6
34	Top Glove Corporation (SGX: BVA)	20.89	15.3
35	Trendlines Group (SGX: 42T)	0.53	0.0
36	UG Healthcare Corporation (SGX: 41A)	6.75	25.7
37	Vicplas International (SGX: 569)	4.36	7.0

Interestingly, none of the 37 Singapore Healthcare stocks are 30 STI component stocks but a few could be related (eg. Haw Par is related to UOB Bank and UOL):

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 healthcare business with strong economic moat, eg. having special knowhow or patents in medical solutions, limited suppliers of critical medical appliances, etc, would naturally be the preferred choice for stock investing. Most people would choice life over money (eg. during COVID-19 health crisis, 生死关头) but if one could integrate both life and money through giant stocks, the probability of success in investing would be high.

Here, let’s focus on 11 Singapore healthcare giant stocks over 4 main categories:

1) COVID-19 “Crisis as Opportunity” Stocks

There are 4 “lucky” stocks helped by COVID-19 crisis as they are crucial medical appliance suppliers, sales and profits surge during pandemic:

– Medtecs International Corporation (SGX: 546) – personal protective apparel

– UG Healthcare Corporation (SGX: 41A) – gloves

– Top Glove Corporation (SGX: BVA) – gloves

– Riverstone Holdings (SGX: AP4) – gloves

Their share prices have been speculated to over 5-10 times during COVID-19 stock “crisis” (which is an opportunity). This is a form of positive speculation (strong business fundamental with share price speculated to very high optimism level), especially for Top Glove and Riverstone which have strong business performances even before COVID-19 crisis. However, for Medtecs and UG Healthcare, both only have moderate good businesses before COVID-19 crisis, the sudden high growth in business would not be sustainable when fear of COVID-19 has subsided in 6-12 months. Stock such as Biolidics (SGX: 8YY) has even weaker business fundamental (losses in the past) but share prices surged due to speculation, traders may suffer huge loss if investing in long term for stock which may not have sustainable business beyond COVID-19.

Therefore, these 4 COVID-19 healthcare stocks are more suitable for shorter term trading as optimism level has been speculated to very high. Trend-following trading strategy may be applied to “Buy High Sell Higher” but when price trend is reversed, a trader would need to exit, even if it is a loss due to sudden correction. If not, do not speculate, even these companies make a lot of money during pandemic. Stock market is forward looking, their strong business fundamental are already considered in rising prices. One day, when they could not perform as strong as now with lower demand (despite still profitable), the share prices would be corrected significantly, especially for Medtecs and UG Healthcare.

2) Medical Services Stocks

These are the 2 “unlucky” stocks which save lives or reduce pains but due to nature of businesses which require interaction with patients (how to cure without seeing the patients), business performances are affected, including share prices at lower optimism levels.

– Raffles Medical Group (SGX: BSL) – Hospitals

– Q&M Dental Group (SGX: QC7) – Dental Clinics

Both stocks have been growing the business through expansion locally and abroad. Raffles Medical has extended businesses to China cities (eg. Shanghai, Chongqing, etc), even before COVID-19 crisis, the share prices have been corrected due to ambitious expansion which would take a few years to breakeven in investment for new hospitals. During pandemic, Raffles Medical loses overseas patients due to international travelling restrictions. Similarly, Q&M Dental has expanded to be the largest dental service provider in Singapore, business has been affected during COVID-19 due to close interaction required between dentists and patients.

However, COVID-19 could only slowdown, not stopping patients from seeking medical help (saving life or tooth pains), therefore when fear of COVID-19 has subsided, both giant stocks would perform normally again, accumulation of demand (non-urgent cases, eg. medical or dental check-up) would surge and balance out in longer term business.

Since both giant stocks are at lower optimism level, they are more suitable for longer term cyclic investors with “Buy Low Sell High” strategy while collecting moderate dividends during the recovery phase (as if fixed deposit investing in a medical bank).

3) Healthcare Products Stocks

These 2 stocks have healthcare products which have no strong correlation to COVID-19. So, they could still perform normally in businesses during pandemic:

– Tianjin Zhong Xin Pharmaceutical Group (SGX: T14) – Traditional Chinese Medicine (TCM)

– Haw Par Corporation (SGX: H02) – Tiger Balm and Others

Tianjin Zhong Xin is a highly cyclic growth stock (dual listing in both Singapore Stock Exchange – T14 and Shanghai Stock Exchange – 600329) with very strong business fundamental. It is more suitable for longer term cyclic investor, optimism is just recovering from low level. Share prices in Singapore and Shanghai stock exchanges are aligned in general direction but sometimes one market could perform better than another (eg. China stock market is relatively more bullish than Singapore in current market condition). Tianjin Zhong Xin is an all-rounded stock, also paying high dividend yield of 5-6% (depending on the share prices, higher if one could investing during crisis). It is not suitable for shorter term trader or investor with weak holding power, buy low may get lower during bearish stock market, despite business fundamental is strong.

Haw Par is not a pure healthcare stock as majority of revenue and income are actually on investment of 2 other stocks of Mr Wee Cho Yeow (Top 10 richest person in Singapore, UOB Chairman) stocks: UOB Bank and UOL. Therefore, investing in Haw Par is an indirect investment of UOB and UOL stocks. With the current lower optimism prices of Haw Par stock with ownership of equivalent values of UOB and UOL shares, the main “business” of Tiger Balm and other products are virtually “free” for undervalue stock investors. However, patience is required for undervalue investing (owning high quality asset of cash from UOB Bank and properties from UOL). Haw Par has strong support of Singapore Giant stocks, UOB and UOL, all under Mr Wee Cho Yeow. If Mr Wee continues to be the Top 10 richest person in Singapore, implying these 3 giant stocks are doing well in both businesses and stock market.

4) Healthcare REITs

These 3 stocks are special integration of healthcare with property sectors as Healthcare REITs:

– First Reit (SGX: AW9U) – Healthcare REIT with hospitals mainly in Indonesia

– ParkwayLife Reit (SGX: C2PU) – Healthcare REIT with hospitals mainly in Singapore

– IHH Healthcare (SGX: Q0F) – Sponsor of ParkwayLife REIT

Both healthcare and property are promising sectors in general for stock investing, therefore healthcare REITs (rental collection from hospitals as tenants) are defensive in nature as they could pay consistent dividend with long term tenant agreement (eg. 15 years), slow growth but steady. Therefore, they may be considered for longer term investing, crisis usually is a good opportunity to own healthcare REITs to generate consistent passive incomes.

However, stock has price component which may give surprises to investors, for example First REIT share prices have been corrected to less than 1/3 of peak prices over the past few years due to various concerns, mainly due to poor sponsor and customers (who owns Siloam Hospitals), Lippo Karawaci group which has cashflow issue due to ambitious property expansion in Indonesia.

This concern of sponsor has resulted instability to other Lippo Group related stocks, eg. OUE Group. Second sponsor of First Reit is OUE Lippo Healthcare, also not a giant stock, could not help much to restore the confidence of investors, worrying potential rights issues (nightmare for dividend investors, paying passive incomes, instead of collecting dividends). Despite First REIT is a giant REIT (even as of today) but this is a supported giant stock, mainly dependent on sponsor, main customer and major shareholder (multiple roles in 1). The immediate risk is cut of dividend payment (rental relief during COVID1-9 requested by sponsor) and also possible future rental payment for new agreements in Rupiah (about 25% of portfolio) in Year 2021, which could reduce overall dividend yield by 1/8 (Rupiah has depreciated more than 50% against SGD over the past 10 years in earlier agreement). Based on current crisis price of $0.44/share (lower than IPO price), dividend yield is nearly 20% but actual payment could be only 10% due to rental relief. Before a stock investor may enjoy 20% dividend yield, First Reit has dropped more than 20% share prices with capital loss in just a few months.

So, First REIT is an indirect crisis stock, not due to the Reit itself (a giant stock) but more dependent on performance of weak sponsor. Current Price-to-Book is less than 0.5, rare for a Reit, even if sponsor goes bankcrupt, First Reit investor could still recover the share prices with selling of Reit properties. The main concern is the REIT likely could operate normally (especially Siloam Hospitals and Lippo Group would perform better after fading of COVID-19 crisis) but short term to midterm bearish share prices could affect the confidence of investors who collect high dividend yield but also suffer huge capital losses.

Parkwaylife Reit is an opposite of First Reit, having a strong sponsor, IHH Healthcare (also a giant stock), therefore enjoying the stability with gradual growth under triple net lease. Parkwaylife owns local properties which rent out to customer (Parkway Pantai) who owns profitable hospitals, eg. Mount Elizabeth Hospital, Gleneagles Hospital, Parkway East Hospital, etc. When sponsor and customer and major shareholder (3 roles in 1) are strong, it provides stability to long term rental payment and therefore, dividend payment to stock investor of Parkwaylife Reit.

Despite Parkwaylife is suitable for longer term or event lifetime investing (if there is no major change in sponsor financial condition), it is crucial to buy below fair price, ideally during stock crisis such as COVID-19. This would help to maximize the dividend yield. So, an investor may apply “Buy Low and Hold” strategy. Value is what you get and Price is what you pay. Integration of value and price are crucial for investing success.

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Choice of 11 healthcare 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.

Filed Under: Fundamental Analysis, Market Cycle Investing, Stock Market Tagged: crisis stock, glove stock, Healthcare Stocks

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

Posted on August 26, 2020 Written by Dr Tee (Ein55)

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.

Filed Under: Fundamental Analysis, Market Cycle Investing, Personal Analysis, Stock Market Tagged: Blue Chip Stocks, crisis stock investing, lifetime investing

Temasek Giant Stocks Corporate Actions (淡马锡股)

Posted on August 18, 2020 Written by Dr Tee (Ein55)

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.

Filed Under: Fundamental Analysis, Market Cycle Investing, Personal Analysis, Stock Market, Value Investing Tagged: crisis stock, keppel corp, sembcorp industries, sembcorp marine, sia, temasek

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 Dr Tee (Ein55)

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): h ttps://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.

Name	Ticker	Div Yield (%)	ROE (%)
Ascendas Reit	A17U	4.3	7.4
CapitaLand Commercial Trust	C61U	5.0	6.0
CapitaLand	C31	4.1	8.8
CapitaLand Mall Trust	C38U	5.9	9.0
City Development	C09	0.9	5.2
ComfortDelGro	C52	6.3	10.2
DBS Bank	D05	5.9	12.3
DairyFarm USD	D01	4.6	26.8
Genting Singapore	G13	5.2	8.5
HongkongLand USD	H78	5.3	0.5
JMH USD	J36	4.1	9.4
JSH USD	J37	1.6	6.1
Jardine C&C	C07	5.6	12.8
Keppel Corp	BN4	3.3	6.3
Mapletree Commercial Trust	N2IU	4.0	9.4
Mapletree Industrial Trust	ME8U	4.1	10.3
Mapletree Logistics Trust	M44U	4.2	8.2
OCBC Bank	O39	5.9	10.3
SATS	S58	6.2	15.1
Singapore Exchange	S68	3.7	35.9
Singapore Airlines	C6L	0.8	-9.1
ST Engineering	S63	4.5	26.0
Sembcorp Industries	U96	2.6	3.1
Singtel	Z74	4.8	4.0
Thai Beverages	Y92	3.0	20.1
UOB Bank	U11	5.3	11.0
UOL	U14	2.5	4.8
Venture Corporation	V03	4.3	14.5
Wilmar International	F34	3.0	7.7
YZJ Shipbuilding SGD	BS6	4.7	10.0

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.

No	Company	Div Yield (%)	ROE (%)
1	AXIATA (Bursa: 6888) AXIATA GROUP BERHAD	3.0	4.5
2	CIMB (Bursa: 1023) CIMB GROUP HOLDINGS BERHAD	8.2	4.7
3	DIALOG (Bursa: 7277) DIALOG GROUP BERHAD	1.0	15.2
4	DIGI (Bursa: 6947) DIGI.COM BERHAD	4.5	212.0
5	GENM (Bursa: 4715) GENTING MALAYSIA BERHAD	9.4	-3.5
6	GENTING (Bursa: 3182) GENTING BERHAD	6.6	-0.2
7	HAPSENG (Bursa: 3034) HAP SENG CONSOLIDATED BERHAD	4.8	14.8
8	HARTA (Bursa: 5168) HARTALEGA HOLDINGS BERHAD	0.6	20.4
9	HLBANK (Bursa: 5819) HONG LEONG BANK BERHAD	3.4	8.7
10	HLFG (Bursa: 1082) HONG LEONG FINANCIAL GROUP BERHAD	2.9	8.8
11	IHH (Bursa: 5225) IHH HEALTHCARE BERHAD	0.8	-0.8
12	IOICORP (1961) IOI CORPORATION BERHAD	1.8	6.5
13	KLCC (Bursa: 5235SS) KLCC PROPERTY HOLDINGS BERHAD	5.0	5.6
14	KLK (Bursa: 2445) KUALA LUMPUR KEPONG BERHAD	2.2	6.9
15	MAXIS (Bursa: 6012) MAXIS BERHAD	3.9	20.1
16	MAYBANK (Bursa: 1155) MALAYAN BANKING BERHAD	8.9	9.1
17	MISC (Bursa: 3816) MISC BERHAD	4.4	-1.0
18	NESTLE (Bursa: 4707) NESTLE MALAYSIA BERHAD	2.0	90.8
19	PBBANK (Bursa: 1295) PUBLIC BANK BERHAD	4.6	11.4
20	PCHEM (Bursa: 5183) PETRONAS CHEMICALS GROUP BERHAD	3.2	5.2
21	PETDAG (Bursa: 5681) PETRONAS DAGANGAN BHD	4.0	6.2
22	PETGAS (Bursa: 6033) PETRONAS GAS BERHAD	5.0	13.9
23	PMETAL (Bursa: 8869) PRESS METAL ALUMINIUM HOLDINGS BERHAD	1.0	13.1
24	PPB (Bursa: 4065) PPB GROUP BERHAD	1.7	5.7
25	RHBBANK (Bursa: 1066) RHB BANK BERHAD	6.6	8.3
26	SIME (Bursa: 4197) SIME DARBY BERHAD	4.3	5.5
27	SIMEPLT (Bursa: 5285) SIME DARBY PLANTATION BERHAD	0.8	5.4
28	TENAGA (Bursa: 5347) TENAGA NASIONAL BHD	9.2	5.9
29	TM (Bursa: 4863) TELEKOM MALAYSIA BERHAD	2.4	8.6
30	TOPGLOV (Bursa: 7113) TOP GLOVE CORPORATION BHD	2.3	37.5

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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: defensive stock, dividend stock, growth stock, stock strategies, value investing, video education

30 Singapore Banking and Finance Stocks (狮城财神)

Posted on June 18, 2020 Written by Dr Tee (Ein55)

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.

No	Name	Ticker	PB = Price /NAV	ROE (%)
1	SGX	S68	8.06	35.9
2	AMTD IB OV	HKB	3.37	13.7
3	DBS	D05	1.12	12.3
4	ValueMax	T6I	0.77	11.7
5	Great Eastern	G07	1.11	11.7
6	TIH	T55	0.48	11.3
7	UOB	U11	0.94	11.0
8	MoneyMax Finance	5WJ	0.74	10.8
9	Maxi-Cash Finance	5UF	0.98	10.7
10	IFAST	AIY	3.33	10.6
11	OCBC Bank	O39	0.88	10.3
12	UOI	U13	1.05	9.7
13	Global Investment	B73	0.71	6.2
14	Hong Leong Finance	S41	0.58	5.4
15	Sing Investments & Finance	S35	0.50	5.4
16	IFS Capital	I49	0.42	5.2
17	Hotung Investment	BLS	0.55	5.0
18	Uni-Asia Group	CHJ	0.24	4.7
19	UOB Kay Hian	U10	0.64	4.6
20	Prudential USD	K6S	2.59	4.0
21	Vibrant Group	BIP	0.34	3.8
22	Singapore Reinsurance	S49	0.65	3.6
23	Pacific Century	P15	0.74	3.0
24	Singapura Finance	S23	0.50	2.9
25	G K Goh	G41	0.62	1.9
26	Intraco	I06	0.31	1.5
27	B&M Hldg	CJN	2.57	-9.0
28	Net Pacific Finance	5QY	0.68	-9.7
29	SHS	566	0.67	-13.6
30	Edition	5HG	0.85	-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.

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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Filed Under: Commodity Market, Fundamental Analysis, Macroeconomy, Market Cycle Investing, Market Optimism, Stock Market, Technical Analysis, Value Investing Tagged: bank stock, cyclic investing stock, dbs, dividend stock, Finance Stock, insurance stock, ocbc, undervalue stock, uob

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

Posted on June 13, 2020 Written by Dr Tee (Ein55)

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).

No	Name	Ticker	PB = Price/NAV	ROE (%)
1	Huationg Global	41B	0.13	5.3
2	Hor Kew	BBP	0.16	1.0
3	Top Global	BHO	0.18	0.2
4	Casa	C04	0.18	4.5
5	ETC Singapore	1C0	0.22	5.8
6	Hong Lai Huat	CTO	0.23	1.4
7	Hong Fok	H30	0.24	5.6
8	Koh Bros	K75	0.24	1.9
9	SP Corp	AWE	0.24	4.5
10	Pavillon	596	0.24	1.1
11	HongkongLand	H78	0.25	0.5
12	Heeton	5DP	0.25	3.0
13	HL Global Ent	AVX	0.27	1.1
14	Tiong Seng	BFI	0.28	4.0
15	Lian Beng	L03	0.28	4.7
16	China Intl	BEH	0.30	5.6
17	Sinarmas Land	A26	0.30	15.1
18	AnnAik	A52	0.31	3.3
19	TTJ	K1Q	0.34	2.3
20	Vibrant Group	BIP	0.34	3.8
21	Keong Hong	5TT	0.36	7.3
22	Far East Orchard	O10	0.37	2.1
23	Chemical Ind	C05	0.38	8.8
24	Pan Hong	P36	0.38	15.4
25	Ho Bee Land	H13	0.39	9.4
26	Hiap Hoe	5JK	0.39	2.9
27	King Wan	554	0.40	1.6
28	LHN	41O	0.40	8.3
29	Thakral	AWI	0.41	6.7
30	Metro	M01	0.41	5.6
31	Yanlord Land	Z25	0.41	11.9
32	Wing Tai	W05	0.42	1.3
33	EnGro	S44	0.42	4.7
34	Bonvests	B28	0.43	0.4
35	Kori	5VC	0.43	0.2
36	GuocoLand	F17	0.43	6.1
37	Perennial Hldgs	40S	0.44	0.1
38	Low Keng Huat	F1E	0.44	1.9
39	Straits Trading	S20	0.44	5.6
40	UIC	U06	0.44	8.3
41	Pollux Prop	5AE	0.44	2.5
42	SingHaiyi	5H0	0.44	0.1
43	Wee Hur	E3B	0.44	8.8
44	SingHoldings	5IC	0.45	15.4
45	Lum Chang	L19	0.45	9.1
46	Chip Eng Seng	C29	0.48	3.6
47	Hong Leong Asia	H22	0.50	4.5

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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Filed Under: Fundamental Analysis, Market Cycle Investing, Property Market, Stock Market, Value Investing Tagged: acquisition, Perennial, Property Stocks, undervalue stock

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

Posted on June 8, 2020 Written by Dr Tee (Ein55)

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

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.

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).

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).

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.

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.

Filed Under: Commodity Market, Fundamental Analysis, Personal Analysis, Stock Market, Value Investing Tagged: crisis stock, keppel corp, sembcorp industries, sembcorp marine, singapore airlines, temasek

42 Singapore REITs & 16 Business Trusts (稳如泰山)

Posted on June 5, 2020 Written by Dr Tee (Ein55)

Singapore REITs, Business Trusts, Dividend Stocks

Singapore REITs are popular investment for passive income through stable dividend stocks. In this article, you will learn on how to invest in 21 giant stocks from 42 Singapore REITs and 16 Business Trusts with 3 key strategies (Striker / Mid-fielder / Defender) in 8 categories:

1) Retail REITs

2) Office REITs

3) Industrial REITs

4) Healthcare REITs

5) Diversified REITs

6) Data Center REIT

7) Hospitality REIT

8) Business Trusts

There are 6 Singapore REITs which are also Business Trusts, so total there are 42 + 16 – 6 = 52 Singapore REITs and Business Trusts as of current stock market. Currently, out of 30 STI Index stocks, 5 are REITs. Soon, SPH (SGX: T39) with declining trading market capitalization (lower share price and/or lower trading volume) will be replaced by Mapletree Industrial Trust (SGX: ME8U) as 6th REIT of STI. CapitaMall Trust (SGX: C38U) will be merged with CapitaCom Trust (SGX: C61U) to form new CapitaLand Integrated Commercial Trust (CICT) Reit, therefore free up 1 seat in 30 STI. In near future, 5 reserve list of STI are all REITs or Business Trust:

Keppel DC Reit (SGX: AJBU), Suntec Reit (SGX: T82U), NetLink NBN Trust (SGX: CJLU), Frasers Logistics & Industrial Trust (SGX: BUOU) and Keppel Reit (SGX: K71U).

It implies at least 10 out of future 30 STI components would be from REITs and Business Trust. Future STI ETF (SGX: ES3)/(SGX: G3B) would be a more defensive investing tool, more dividend income but growth could be limited due to nature of Singapore REITs.

Diversification through REITs ETF (SGX: FSTAS8670) may not be a good strategy as not all stocks selected by index or fund manager are considered giant REITs (based on Dr Tee criteria) and systematic risk such as global financial crisis could potentially correct the REITs prices by more than 50% (eg. 70% price drop in 2008-2009 subprime crisis and about 40% correction in 2020 Covid-19 crisis) if an investor simply buys and hold for long term.

By law, REITs have to redistribute 90% taxable income (from property rental income) back to shareholders in the form of dividend. Therefore, a retail investor could play the role of landlord of giant property (shopping malls, commercial buildings, hospitals, hotels, etc) with minimal capital (could be less than $1000), saving the hassle to buy/sell property (REIT manager would help), no need to deal with tenants or operations (property manager would help). Singapore REITs are exempted from corporate tax, therefore an Singapore investor could gain extra 1-2% rental or dividend yield compared with overseas REITs.

Business Trust is not limited to property rental, could be any form of business and even a company has good track record of dividend payment, it is not a legal obligation to do pay dividend in future, especially when there is a potential business crisis (eg. Covid-19) which needs more cash reserve. Therefore, from the perspective of a dividend stock investor, Singapore REITs are more preferred than Business Trusts for passive income generation.

However, a REIT investor has to buy the right REIT which could grow in rental business (most important action), aligning own personality with 3 possible strategies:

1) Striker – trading or crisis investing (Buy Low Sell High), mainly for capital gains

2) Mid-fielder – medium term investing, mainly for capital gains (dividend income as bonus)

3) Defender – long term investing, mainly for dividend income (capital gains as bonus)

After confirming a REIT / Business Trust is a giant, then investor has to master the investment clock (When to Buy / Sell), depending on type of REITs. The best time to invest in a defensive REIT is usually during global stock crisis (with condition that the rental business is not significantly affected) which could maximize both the dividend yield and also higher upside for capital gains.

Below are all the 52 Singapore REITs and Business Trusts based on the last price traded (4 June 2020), sorted by type of REITs with details of 3 key strategies (Striker / Mid-fielder / Defender) and 3 critical Fundamental Criteria:
1) ROE (a basic criteria for REIT, eg. ROE > 0% to ensure business not losing money),
2) Dividend Yield, DY (a criteria for dividend stocks, eg. DY > 3 – 5%, depending on strategy),
3) Price-to-Book (PB) ratio, Price/NAV (a bonus for REIT is undervalue, eg. PB < 1).

No	Ticker	ROE	Dividend Yield (%)	PB = Price /NAV	Type	Strategy
1	BHG Retail Reit (SGX: BMGU)	11.4	6.4	0.7	Retail
2	CapitaLand Mall Trust (SGX: C38U)	9.0	5.7	1.0	Retail	Defender
3	CapitaLand Retail China Trust (SGX: AU8U)	8.8	7.3	0.9	Retail	Defender
4	Frasers Centrepoint Trust (SGX: J69U)	8.3	4.7	1.2	Retail	Defender
5	Lippo Malls Trust (SGX: D5IU)	-0.7	15.4	0.7	Retail
6	Sasseur Reit (SGX: CRPU)	11.8	8.4	0.8	Retail
7	SPH REIT (SGX: SK6U)	6.1	5.9	0.9	Retail
8	Starhill Global Reit (SGX: P40U)	3.4	8.2	0.6	Retail	Defender
9	United Hampshire US Reit (SGX: ODBU)	4.1	–	0.789	Retail
10	CapitaLand Commercial Trust (SGX: C61U)	6.0	5.0	1.0	Office	Defender
11	Elite Commercial REIT GBP (SGX: MXNU)	–	–	1.2	Office
12	IREIT Global (SGX: UD1U)	19.4	7.7	0.9	Office	Mid-fielder
13	Keppel Pacific Oak US REIT (SGX: CMOU)	9.3	8.4	0.9	Office
14	Keppel Reit (SGX: K71U)	2.6	4.8	0.9	Office	Defender
15	ManulifeReit USD (SGX: BTOU)	3.8	7.2	1.0	Office	Mid-fielder
16	OUE Commercial Reit (SGX: TS0U)	3.5	8.0	0.7	Office
17	Prime US ReitUSD (SGX: OXMU)	4.1	3.5	1.0	Office
18	AIMS APAC Reit (SGX: O5RU)	9.0	7.6	0.9	Industrial
19	ARA LOGOS Logistics Trust (SGX: K2LU)	-2.1	9.8	1.0	Industrial
20	Ascendas Reit (SGX: A17U)	7.4	4.4	1.5	Industrial	Defender
21	EC World Reit (SGX: BWCU)	9.5	8.4	0.8	Industrial
22	ESR-REIT (SGX: J91U)	-0.1	9.7	1.0	Industrial
23	Mapletree Industrial Trust (SGX: ME8U)	10.3	4.6	1.6	Industrial	Mid-fielder
24	Mapletree Logistics Trust (SGX: M44U)	8.2	4.2	1.5	Industrial	Defender
25	Sabana Reit (SGX: M1GU)	3.5	7.8	0.7	Industrial
26	ARA Hospitality Trust USD (SGX: XZL)	2.2	10.1	0.5	Hospitality
27	Ascott Trust (SGX: HMN)	5.1	7.2	0.8	Hospitality	Striker
28	CDL Hospitality Trust (SGX: J85)	6.1	8.2	0.7	Hospitality	Striker
29	Eagle Hospitality Trust USD (SGX: LIW)	18.2	25.3	0.2	Hospitality
30	Far East Hospitality Trust (SGX: Q5T)	3.6	7.2	0.6	Hospitality
31	Frasers Hospitality Trust (SGX: ACV)	3.4	8.9	0.7	Hospitalit
32	First Reit (SGX: AW9U)	5.7	12.1	0.7	Healthcare	Striker
33	ParkwayLife Reit (SGX: C2PU)	10.4	3.8	1.8	Healthcare	Mid-fielder
34	Cromwell Reit EUR (SGX: CNNU)	8.3	8.9	0.9	Diversified
35	Cromwell Reit SGD (SGX: CSFU)	8.3	8.5	0.9	Diversified
36	Frasers Logistics & Commercial Trust (SGX: BUOU)	9.8	3.9	1.9	Diversified	Mid-fielder
37	Lendlease Reit (SGX: JYEU)	–	–	0.9	Diversified
38	Mapletree Commercial Trust (SGX: N2IU)	9.4	3.8	1.2	Diversified	Mid-fielder
39	Mapletree North Asia Commercial Trust (SGX: RW0U)	2.6	7.7	0.7	Diversified	Defender
40	Soilbuild Business Space Reit (SGX: SV3U)	4.0	10.2	0.7	Diversified
41	Suntec Reit (SGX: T82U)	6.5	6.0	0.7	Diversified
42	Keppel DC Reit (SGX: AJBU)	5.7	3.1	2.2	Data Center	Mid-fielder
43	Accordia Golf Trust (SGX: ADQU)	-17.0	6.4	0.8	Business Trust
44	Ascendas India Trust (SGX: CY6U)	18.2	4.6	1.3	Business Trust	Defender
45	Asian Pay Tv Trust (SGX: S7OU)	1.8	7.4	0.2	Business Trust
46	Dasin Retail Trust (SGX: CEDU)	-1.9	8.2	0.6	Business Trust
47	FSL Trust (SGX: D8DU)	5.0	29.3	0.5	Business Trust
48	HPH Trust SGD (SGX: P7VU)	2.0	11.9	0.3	Business Trust
49	HPH Trust USD (SGX: NS8U)	2.0	12.6	0.3	Business Trust
50	Keppel Infrastructure Trust (SGX: A7RU)	2.9	7.0	2.1	Business Trust
51	NetLink NBN Trust (SGX: CJLU)	2.7	5.0	1.4	Business Trust	Mid-fielder
52	RHT HealthTrust (SGX: RF1U)	–	145.5	0.9	Business Trust

The risk (and also opportunity) of REITs are cyclic stock prices, therefore each global stock crisis could be good opportunity to Buy Low for giant Defender REITs, maximizing dividend yields with multiple entries if diversification is needed during uncertain Global Financial Crisis. For Mid-fielder stocks, alignment with price trends are important for trading (momentum and cyclic / swing trading). Covid-19 pandemic would disrupt the stable distribution of rental income for some REITs (eg. Retail, Office, Industrial, Hospitality) with reduced or delayed dividend for 6-12 months but it has less impact on longer term investors who could hold longer than 1 year.

We may group 52 Singapore REITs and Business Trusts in the following 8 categories with 21 selected giant stocks in 3 main roles (Striker / Mid-fielder / Defender).

1) Retail REITs

There are 9 Retail REITs listed in Singapore (some with overseas business, eg. in China, Hong Kong and US):

BHG Retail Reit (SGX: BMGU), CapitaLand Mall Trust (SGX: C38U), CapitaLand Retail China Trust (SGX: AU8U), Frasers Centrepoint Trust (SGX: J69U), Lippo Malls Trust (SGX: D5IU), Sasseur Reit (SGX: CRPU), SPHREIT (SGX: SK6U), Starhill Global Reit (SGX: P40U), United Hampshire US Reit (SGX: ODBU).

Retail REITs are usually cyclic in nature, tenants occupancy rate and rental rate mainly follow economic cycles and strength of local economy. 4 Giant Retail REITs are good choices as Defenders to collect dividend income: CapitaLand Mall Trust (SGX: C38U), CapitaLand Retail China (SGX: AU8U), Frasers Centrepoint Trust (SGX: J69U), Starhill Global Reit (SGX: P40U).

2) Office REITs

There are 8 Office or Commercial REITs listed in Singapore (some with overseas business, eg. in US, UK and Europe):

CapitaLand Commercial Trust (SGX: C61U), Elite Commercial REIT (SGX: MXNU), IREIT Global (SGX: UD1U), Keppel Pacific Oak US REIT (SGX: CMOU), Keppel Reit (SGX: K71U), Manulife Reit (SGX: BTOU), OUE Commercial Reit (SGX: TS0U), Prime US Reit (SGX: OXMU).

Office REITs are usually cyclic in nature, tenants occupancy rate and rental rate mainly follow economic cycles and strength of local economy. 4 Giant Office REITs are good choices, 2 as Defenders to collect dividend income: CapitaLand Commercial Trust (SGX: C61U) and Keppel Reit (SGX: K71U) and 2 as Mid-fielders (both capital gains and dividend income in medium term trading): Manulife Reit (SGX: BTOU) and IREIT Global (SGX: UD1U).

3) Industrial REITs

There are 8 Industrial REITs listed in Singapore (some with overseas business, eg. in China and Asia Pacific):

AIMS APAC Reit (SGX: O5RU), ARA LOGOS Logistics Trust (SGX: K2LU), Ascendas Reit (SGX: A17U), EC World Reit (SGX: BWCU), ESR-REIT (SGX: J91U), Mapletree Industrial Trust (SGX: ME8U), Mapletree Logistics Trust (SGX: M44U), Sabana Reit (SGX: M1GU).

Industrial REITs are usually cyclic in nature, tenants occupancy rate and rental rate mainly follow economic cycles and strength of local economy. 3 Giant Industrial REITs are good choices, 2 as Defenders to collect dividend income: Ascendas Reit (SGX: A17U) and Mapletree Logistics Trust (SGX: M44U) and 1 as Mid-fielder (both capital gains and dividend income in medium term): Mapletree Industrial Trust (SGX: ME8U).

4) Healthcare REITs

There are only 2 Healthcare REITs listed in Singapore (with local and overseas business, eg. in Indonesia, South Korea, Malaysia, Japan and), both are giant stocks:

First Reit (SGX: AW9U) as striker and ParkwayLife Reit (SGX: C2PU) as Mid-fielder.

Healthcare REITs are usually more defensive in rental business due to very long term agreement signed with tenants (hospitals which need stability in operation). First Reit used to be a Mid-fielder with strong growth but investors confidence are affected with bearish outlook of sponsor, Lippo Group, therefore new role as a Striker could be more suitable for crisis stock investing. Parkwaylife REIT is much more stable with support of strong sponsor, IHH Healthcare (SGX: Q0F) but dividend yield is limited, therefore more suitable as a Mid-fielder.

5) Diversified REITs

There are 8 Diversified REITs listed in Singapore (some with overseas business, eg. in China, Asia Pacific and Europe):

Cromwell Reit EUR (SGX: CNNU) / Cromwell Reit SGD (SGX: CSFU), Frasers Logistics & Commercial Trust (SGX: BUOU), Lendlease Reit (SGX: JYEU), Mapletree Commercial Trust (SGX: N2IU), Mapletree North Asia Commercial Trust (SGX: RW0U), Soilbuild Business Space REIT (SGX: SV3U), Suntec Reit (SGX: T82U).

Diversified REITs have different types of REITs within the REIT portfolio (eg. Office / industrial / retail, some are integrated of smaller REITs, eg. Frasers REITs, through Merging & Acquisition), therefore usually cyclic in nature, tenants occupancy rate and rental rate mainly follow economic cycles and strength of local economy. 3 Giant Industrial REITs are good choices, 1 as defender to collect dividend income: Mapletree NAC Trust (SGX: RW0U) and 2 as Mid-fielders (both capital gains and dividend income in medium term): Frasers L&C Trust (SGX: BUOU) and Mapletree Commercial Trust (SGX: N2IU.

6) Data Center REIT

There is only 1 Data Center REIT in Singapore (with business locally and globally), also a Mid-fielder Giant Stock: Keppel DC Reit (SGX: AJBU).

Technically, Mapletree Industrial Trust, MIT (SGX: ME8U) has partial business in Data Center as MIT has 40% ownership (another 60% by parent company, Mapletree Investment) of Mapletree Redwood Data Centre Trust (MRDCT) which has 14 data centers in US since 2017. So far, Mapletree group (Temasek as sponsor) has 4 REITs listed sequentially over the past decade. So, there is no surprise if MRDCT may be listed in future when business is more stable one day. Currently, an investor may invest indirectly through MIT, which is an Industrial REIT including partial business in Data Centers.

Data Center REITs are usually more defensive due to longer term agreement signed with tenants (could be local government and big companies with confidential customer identities due to sensitive nature of database) which may view stability and security as more important factors than cost of rental. With popularity in internet (driven further by 5G) and tremendous growth in database required globally, demand for data centers at safer locations / countries would be increasing. Both Keppel DC Reit and MIT are younger REITs, more suitable to position as Mid-fielders, aiming mainly for capital gains (dividend is only a bonus), may evolve into growth investing in future.

7) Hospitality REIT

There are 6 Hospitality REITs (some with business overseas, eg. global hotels chain) which also have Business Trust to form Stapled Securities due to requirement of business model:

ARA Hospitality Trust USD (SGX: XZL), Ascott Trust (SGX: HMN), CDL Hospitality Trust (SGX: J85), Eagle Hospitality Trust USD (SGX: LIW), Far East Hospitality Trust (SGX: Q5T), Frasers Hospitality Trust (SGX: ACV)

Hospitality REITs are mostly considered as crisis sector (especially for hotel / resort business) due to Covid-19 pandemic, few international visitors during this period. Without strong sponsor, a REIT could be in trouble. Eagle HTrust is a good example, stock is suspended after less than 1 year of IPO (about 80% capital loss for a stock investor), with big losses in business, default of loan and additional sell down during Covid-19 crisis as last straw which breaks the camel’s back. Usually for a young IPO stock without stable business record, there is always a risk that business may not be sustainable. So, a proven REIT with higher price could be more valuable than a young REIT with lower price.

2 Giant Hospitality REITs may be considered, both as Strikers (crisis investing stocks) as they are supported by strong sponsors despite weak business during Covid-19: Ascott Trust (SGX: HMN) is supported by CapitaLand (SGX: C31), while CDL HTrust (SGX: J85) is supported by City Development (SGX: C09). An investor may need to wait for quarterly or semi-annual financial report to understand the real impact of Covid-19 during Q1-Q2/2020 on Hospitality REITs. There are other non-crisis REITs (or limited impact of Covid-19) which an investor may consider, there is no need to take risk on Striker stocks if it goes against the personality of investors who may aim for defensive investing with stable dividend income.

8) Business Trusts

There are 10 pure Business Trusts listed in Singapore which dividend payments are not protected by law:

Accordia Golf Trust (SGX: ADQU), Ascendas India Trust (SGX: CY6U), Asian Pay Tv Trust (SGX: S7OU), Dasin Retail Trust (SGX: CEDU), FSL Trust (SGX: D8DU), HPH Trust SGD (SGX: P7VU), HPH Trust USD (SGX: NS8U), Keppel Infrastructure Trust (SGX: A7RU), NetLink NBN Trust (SGX: CJLU), RHT Health Trust (SGX: RF1U).

There are a few weak Business Trusts with very high dividend yield which are potential value traps, eg. FSL Trust (29% dividend yield). Dividend yield is always computed based on past dividend record and a high number could be derived due to weak business with very bearish share price. Buy Low may not able to Sell High for a junk stock as share prices would become lower. So, high dividend yield has to combine with a giant dividend stock or giant REIT (either Mid-fielder or Defender strategy), following Dr Tee criteria.

2 Giant Business Trusts with strong sponsors may be considered: Ascendas India Trust (SGX: CY6U) as a Defender (property trust in India) is supported by CapitaLand (SGX: C31), while NetLink NBN Trust (SGX: CJLU) as a Mid-fielder is supported by Singtel (SGX: Z74). Ascendas-iTrust is still property related, therefore even it is a Business Trust, asset quality is high. However for NetLink Trust, it is based on owner and operator of Singapore Fiber Network (prices regulated by authority, a form of monopoly) which technology may evolve in future, eg, towards 5G. So, close review of future technology and monitoring of financial performance are required. Therefore, young technology Business Trust of NetLink Trust, is more suitable for role as a Mid-fielder.

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There are 140 Property Stocks in Singapore excluding 52 REITs and Business Trusts (investor has to focus only on giant stocks for investing):
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).

Not all Singapore REITs or Business Trusts are giant stocks, some could be junk 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 with Striker role 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.

Although there are 21 giant REITs and Business Trusts listed in this article (3 roles of Striker / Mid-fielder / Defender), not all stocks are suitable for everyone. A REIT 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.

Ideally, a smart investor should form a dream team stock portfolio (striker / mid-fielder / defender) with 10-20 giant stocks from over 3 sectors and 3 countries. REIT sector may contribute 1-2 stocks while it is important to diversify with more sectors (eg. Healthcare, Banking & Finance, F&B, Technology, Oil & Gas, Property / non-REIT, etc).

Since some REITs have overseas business, knowledge of Forex (eg. USD/SGD, SGD/IDR, etc) would be critical. A qualified REIT investor should also understand property market cycle, macroeconomy behavior, integrating with dividend investing or growth investing or cyclic / momentum trading.

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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Filed Under: Forex, Fundamental Analysis, Macroeconomy, Market Cycle Investing, Market Outlook, Stock Market, Technical Analysis, Trading, Value Investing Tagged: Business Trusts, dividend stock, passive income, reit, Singapore REITs

8 Glove Stocks & 6 Sectors Profit in COVID-19 (易如反掌)

Posted on June 1, 2020 Written by Dr Tee (Ein55)

Crisis glove stocks Top Glove Hartalega Kossan Supermax Riverstone Covid-19

In this article, you will learn 8 glove manufacturer stocks in Singapore and Malaysia and 6 other sectors which could profit from Covid-19 crisis, each requiring unique stock strategies for investing or trading.

1) Top Glove (SGX: BVA) / (Bursa: 7113) – Singapore / Malaysia Giant Glove Stock

2) Hartalega (Bursa: 5168) – Malaysia Giant Glove Stock

3) Kossan (Bursa: 7153) – Malaysia Giant Glove Stock

4) SuperMax (Bursa: 7106) – Malaysia Giant Glove Stock

5) Riverstone (SGX: AP4) – Singapore Giant Glove Stock

6) Comfort Gloves (Bursa: 2127) – Malaysia Glove Stock

7) Careplus (Bursa: 0163) – Malaysia Glove Stock

8) Rubberex (Bursa: 7803) – Malaysia Glove Stock

Crisis is opportunity for stock investing, especially true for glove manufacturers during Covid-19 crisis as demand for gloves are surging. In the past 1 decade, glove stocks are in the best time of era, strong growing business supported by 4 main factors:

1) Growing economy – higher manufacturing needs, especially glove is consumable (cheap but frequently used / replaced), recurring income.

2) Pandemic – higher healthcare needs, including Covid-19, H1N1 and other virus outbreaks.

3) Lower cost – especially for latex glove as rubber price has been low optimism due to bearish global commodity market. Thailand and Malaysia are rubber main producers, supplying to factories of these glove manufacturers within the same countries, saving more cost.

4) Stronger USD – forex becomes advantage for glove manufacturers as local expenses are mostly paid in ringgit but customers are based from overseas (world), therefore collecting payment (incomes) in USD which is stronger relative to ringgit. Of course, this advantage may become a weakness in future when USD becomes weaker.

Fundamentally, Covid-19 crisis helps to improve the business of these glove stocks, Q1/2020 financial results are even stronger than previous year. A strong fundamental business when encounter high demand due to market greed (which may be due to fear), the share price could be speculated higher.

Strong Fundamental + Market Greed = Positive Speculation

[Higher Sales + Stronger (USD/MYR) – Lower Cost] + Higher Greed (Pandemic Fear) = Higher Share Price

Indeed, all of these 8 glove stocks have surged more than 2 times in share prices over the past few months of Covid-19 pandemic. However, the current prices are at high optimism, mainly suitable for very short term momentum trading (Buy High Sell Higher).

Top Glove (listed in both Singapore and Malaysia), Hartalega, Kossan and SuperMax are considered the Big Four of glove manufacturers in Malaysia, all are giant stocks (based on Dr Tee criteria), will be discussed in further. Riverstone is a smaller player (listed in Singapore) but having strong business fundamental, will have more comments as well later. As for other 3 glove stocks (Comfort Gloves, Careplus, Rubberex) which are smaller in size, only have stronger business over the past 5 years (likely due to leftover demand, competing with lower prices or niche market), mainly suitable for short term trading, not a giant stock.

So, we will elaborate here mainly on 5 giant glove stocks (Top Glove, Hartalega, Kossan, SuperMax, Riverstone) which may be considered for both longer term investing (when correcting below a fair price with holding power) and short term trading (following S.E.T. trading rule – Stop Loss / Entry / Target Prices).

1) Top Glove (SGX: BVA) / (Bursa: 7113) – Singapore / Malaysia Giant Glove Stock

Top Glove is the world’s largest rubber glove manufacturer with many types of latex and nitrile gloves from manufacturing facilities in Malaysia, Thailand and China. Founder and major shareholder is Lim Wee Chai (27% ownership), also the No 14 richest person in Malaysia (Forbes’ List), supported mainly by rising share prices over the 2 past decades (share price goes up over 500 times since IPO till now). Top Glove has become 1 of 30 KLCI component stock, showing its business strength.

Top Glove has dual listing in Malaysia Bursa (longer history) and Singapore SGX. The relative stock performance are aligned but due to different group of investors, short term share price in SGX (BVA) is even more bullish than in Bursa (7113). Fundamentally, each share (SGX or Bursa) is the same but short term share price may not be due to difference of forex (SGD/MYR) alone.

Top Glove is a strong growth stock (supported by growing businesses with strong cash flow) but highly leveraged (high debt) to expand its capability further, strengthening its position as world’s largest glove manufacturer. Scale of economy is also a form of economic moat, position as bigger player could help to lower down the unit cost, therefore increase the profit margin.

Due to high optimism in share price, Top Glove may be considered as a mid-fielder stock (aiming for high capital gains with little dividend yield as bonus). It may also be considered for very short term momentum trading despite share price is speculated (Buy High Sell Higher strategy).

2) Hartalega (Bursa: 5168) – Malaysia Giant Glove Stock

Hartalega is the world’s largest nitrile glove manufacturer. Founder and major shareholder is Kuan Kam Hon (about 50% ownership with family), also the No 9 richest person in Malaysia (Forbes’ List), supported mainly by rising share prices over the past decade (share price goes up nearly 100 times since IPO till now). Hartalega has become 1 of 30 KLCI component stock, showing its business strength.

Hartalega main product of nitrile glove has higher profit margin compared to latex (rubber) glove. However, this profitable product segment also attracts many competitors, therefore the high growth of Hartalega is getting slower, now is more aligned (sustainable rate) with other major competitors, sharing the big pie of glove industries.

Hartalega is a strong growth stock (supported by growing businesses with strong cash flow) with lower debt level (having potential to expand further with more leveraging if needed). Scale of economy is also a form of economic moat, position as bigger player (nitrile glove) could help to lower down the unit cost, therefore increase the profit margin.

Due to high optimism in share price, Hartalega may be considered as a mid-fielder stock (aiming for high capital gains with little dividend yield as bonus). It may also be considered for very short term momentum trading despite share price is speculated (Buy High Sell Higher strategy).

3) Kossan (Bursa: 7153) – Malaysia Giant Glove Stock

Kossan is the world’s second largest glove manufacturer (technical rubber products, medical gloves, cleanroom products, etc). Founder and major shareholder is Lim Kuang Sia (about 50% ownership), was in 2017 Forbes’ List for Malaysia No 30 richest person, supported mainly by rising share prices over the past 2 decades (share price goes up about 60 times since IPO till now).

Kossan is a strong growth stock (supported by growing businesses with strong cash flow), performance is comparable with the main competitor, Top Glove. Kossan has moderate debt level, having potential to expand further with more leveraging if needed. The glove industry is big enough for major players to share the big global pie of growing demand for gloves in manufacturing and healthcare sectors.

Due to moderate high optimism in share price (compared to other 4 giant glove stocks at high optimism), Kossan has more upside potential, may be considered as a mid-fielder stock (aiming for high capital gains). It may also be considered for very short term momentum trading despite share price is speculated (Buy High Sell Higher strategy).

4) SuperMax (Bursa: 7106) – Malaysia Giant Glove Stock

SuperMax is a leading medical / latex gloves manufacturer. Founder and major shareholder is Thai Kim Sim (about 40% ownership together with wife) who was charged with insider trading in Year 2017. However, this negative news does not stop investors from supporting SuperMax, share price goes up about 60 times over the past 2 decades. During Covid-19 pandemic, SuperMax share price is the most bullish among 5 giant stocks, surging over 5 times in a few months time.

Among 5 giant glove stocks, SuperMax has relatively weaker business (but still a giant stock), earning has been declining despite growing revenue, indicating weaker profit margin which is not comparable with other competitors. Due to very high optimism in share price, SuperMax is more speculative in short term. For longer term investing, other 4 giant stocks are relatively safer for consideration.

5) Riverstone (SGX: AP4) – Singapore Giant Glove Stock

Among 5 giant glove stocks, Riverstone is the smallest player but it has its niche market. Riverstone manufactures cleanroom glove (eg. hard disk drive and semiconductor) and healthcare gloves. Founder and major shareholder is Wong Teek Son (about 50% ownership), also the No 44 richest person in Malaysia (Forbes’ List), supported mainly by rising share prices over the past decade (share price goes up nearly 20 times since IPO till now).

Riverstone is a Malaysia company but stock is listed in Singapore, therefore the share price potential is also partially affected by Singapore stock market. Choice of stock exchange for listing does not affect the company fundamental (same share ownership) but due to different characteristic of global investors in each stock exchange (eg. US, Hong Kong, Singapore, Malaysia), etc, would make a big difference in share prices which is the ultimate goal for a company to be listed. As a result, certain stock exchange is more popular of IPO stocks but may not be fundamentally strong. So, a stock investor has to consider a stock or even stock exchange, aligning with own personality and strategy, either on long term investing or short term trading.

Riverstone is a strong growth stock (supported by growing businesses with strong cash flow), a small player with potential to expand further with more leveraging if needed (current debt level is very low). A giant stock is not determined by its business size, if Riverstone could remain highly profitable within its niche market (also a form of economic moat), it can be a good stock investment.

Due to high optimism in share price, Riverstone may be considered as a mid-fielder stock (aiming for high capital gains with little dividend yield as bonus). It may also be considered for very short term momentum trading despite share price is speculated (Buy High Sell Higher strategy).

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Top Glove and Riverstone are not 30 STI index component stocks but they are much stronger than most of these blue chip stocks in Singapore (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).

Some investors may be envy of owners of these 5 giant stocks which most founders are Top 50 richest persons in Malaysia. In fact, the easiest way to get very rich may not be through a business. Rather, it is through stock market with a growing business to support the rising share prices which could be over 10-100 times in wealth after IPO (易如反掌). This is the reason why for successful businesses, most of the founders plan to list the stock at certain point of time.

Since all 5 glove giant stocks are mostly controlled (over 50% shares ownership) by founders and families, a key consideration for long term investing is on succession plan to either second generation or capable professionals. A smart retail stock investor has to review a giant stock yearly or even quarterly to ensure it is still a giant stock before continuing the long term support. A sector may not be bullish all the time, including glove industry as profitable business usually would attract many potential competitors which would reduce the profit margins with lower price, lower sales or higher cost.

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.

Covid-19 could be a crisis for most sectors but there are still few sectors could remain profitable or having less impact than overall economy. Besides glove stocks, there are 6 other sectors which may be considered for stock investing during pandemic:

1) Supermarket stocks – eg. Sheng Siong (SGX: OV8), Dairy Farm International (SGX: D01), Wal-Mart (NYSE: WMT), Costco (NASDAQ: COST). etc. NTUC Fairprice is not publicly listed but it has limited private shares for members of NTUC Fairprice, paying about 6% yearly dividend yield. Those supermarket stocks with online business would have more advantages during pandemic.

2) Telco / 5G stocks – eg. Singtel (SGX: Z74), Apple (NASDAQ: AAPL), Xiaomi (HKEx: 1810), AT&T (NYSE: T), Verizon (NYSE: VZ), etc.

3) Semiconductor / Technology stocks – eg. Micro-mechanics (SGX: 5DD), UMS Holdings (SGX: 558), AEM (SGX: AWX), Frencken (SGX: E28), TSMC (NYSE: TSM), Intel (NASDAQ: INTC), AMD (NASDAQ: AMD), Nvidia (NASDAQ: NVDA), Qualcomm (NASDAQ: QCOM), Broadcom (NASDAQ: AVGO), etc.

4) Online / Software stocks – eg. BAT-FAANG stocks: Baidu (NASDAQ: BIDU), Alibaba (NYSE: BABA) / (HKEx: 9988), Tencent (HKEx: 0700), Facebook (NASDAQ: FB), Amazon (NASDAQ: AMZN), Apple (NASDAQ: AAPL), Netflix (NASDAQ: NFLX), Google / Alphabet (NASDAQ: GOOGL), etc.

5) Healthcare stocks – eg. 3M (NYSE: MMM), Gilead Sciences (NASDAQ: GILD), Raffles Medical Group (SGX: BSL), Q&M Dental Group (SGX: QC7), IHH Healthcare (SGX: Q0F), etc.

6) Stock Index ETF or stocks – eg. stronger defenders of major stock indices (STI, KLCI, DJI, S&P 500, MSCI, etc). STI ETF (SGX: ES3) / (SGX: G3B) or STI index component stocks with stronger businesses: DBS Bank (SGX: D05), OCBC Bank (SGX: O39), UOB Bank (SGX: U11), Singapore Exchange (SGX: S68), ST Engineering (SGX: S63), CapitaLand Mall Trust (SGX, C38U), Mapletree Commercial Trust (SGX: N2IU), Mapletree Logistics Trust (SGX: M44U), Jardine Matheson Holdings JMH (SGX: J36), Jardine Strategic Holdings JSH (SGX: J37), etc.

A stock investor may study Q1-Q2 / 2020 financial reports to compare the global giant stocks relatively to understand impact of Covid-19 for 3 group of stocks during pandemic with 3 unique stock strategies:

1) Profitable stocks – trading at higher prices with momentum trading (similar to glove stocks, Buy High Sell Higher strategy).

2) Defensive stocks – stable business with some price correction, collecting higher dividend yield or gradual growth in share prices (Buy Low and Hold strategy).

3) Crisis stocks – business disrupted by Covid-19 but no major risk (eg. bankruptcy), buying at low optimism price with cyclic investing or trading (Buy Low Sell High 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.

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.

Filed Under: Fundamental Analysis, Market Outlook, Stock Market, Technical Analysis, Trading, Value Investing Tagged: Bursa Malaysia, coronavirus, crisis stock, glove stock, growth stock, hartalega, Riverstone, supermax, top glove

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