Fundamental Analysis Archives - Page 6 of 8

First Reit Crisis with Lippo Group Analysis

Posted on March 27, 2019 Written by Dr Tee (Ein55)

Ein55 coaching students just review First Reit (SGX: AW9U), a giant dividend stock in Singapore, which mainly collecting rental income through Reits to Siloam Hospitals (owned by same sponsor of First Reit, Lippo Karawaci Group) in Indonesia with triple-net lease without forex risk (pegged at fixed rate to SGD).

However, investing analysis in stock is never on just 1 business, one has to also consider related parties, eg. sponsor of First Reit, Lippo Karawaci (contributed to over 80% of rental income for First Reit), which has a poor credit rating of CCC+, mainly due to long term negative operating cashflow for many years, which expanding in a mega property project aggressively.

Despite strong fundamentals of First Reit, the fear on Lippo Group has corrected First Reit share price from about $1.50/share to $1/share over the past 1 year, dividend yield has climbed up to an impressive 8.7%, comparable to year 2008 during the last global financial crisis.

Ideally, one should buy dividend giant stocks during a crisis to get lower price with stable growing dividend to maximize the dividend yield for long term investing. However, there are different qualities of crisis stocks. Price correction during Level 4 crisis (global financial crisis) is the highest quality if the business remains intact. For the current situation, First Reit is only under Level 2 crisis (despite strong fundamental of First Reit at Level 1, price falls due to fear of deteriorating fundamental of sponsor, Lippo Group), therefore an average quality of low optimism stock.

OUE of Lippo Group is now the second sponsor of First Reit, creating new variable to future of First Reit on dividend growth as the new Reit component may come from Singapore property of OUE (worst if priced at higher level) which may not have the unfair advantages Siloams Hospitals with triple-net lease, fixed forex rate (highly subsidized by sponsor) with high growth of health care industry in Indonesia. However, the change will not be overnight as average lease expiry is about 8-9 years.

For investor who could take calculated risks (in the same boat as Lippo Group and Riady family, waiting for the revival of mega city project), First Reit may be considered for dividend investing but technical analysis should be considered (eg. investing above $1/share which is a critical support, avoiding possible risk of buy low get lower in prices with more future uncertainties) with risk management through diversification over 10 giant stocks. Alternatively, one has the choice of not to invest in average quality low-optimism dividend stock, there are still other better opportunities which are relatively safer.

Learn from Dr Tee free 4hr course on how to investing in global giant stocks (dividend investing, crisis investing, momentum trading, etc), understanding the risks and opportunities of current stock markets in Singapore, US, Hong Kong and China.

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

Best World Stock – To Invest or to Trade?

Posted on February 27, 2019 Written by Dr Tee (Ein55)

Before Best World stock announces FY 2018 results, Ein55 students could project this positive results many months in advance as the company hassustainable growing business. So, Best World management is smart to announce the corporate news (reply to Business Times) before good 2018 corporate results. When the fear is gone, as long as global stock market is strong, Best World stock has chance to recover again above $3/share as most people are greed & fear driven in stock market.

Valuation of Best World stock is not so much based on asset approach (unlike property or bank stocks), it is more on future earning capability, as well as 10X market potential in China. Currently both China and Taiwan markets contribute to bulk of earning.

Best World stock has recovered in share prices back to above critical support of $2.70, to the level before the trading halt. Temporary, the Level 1 (company) crisis is relieved unless the Business Times could find more negative points.

The main question mark on Best World may be still the “secret” of business model driving the sales, how it could make money in a sustainable way. Although investors may not have full info on direct customers (final users of beauty products), Best World management might know the estimated numbers or trends which could be a trade secret from competitors.

In this beauty industry, Ein55 coaching homework (see sample attached) shows that Best World has the highest profit margin but share price growth is much faster than the earning growth. If one could trust the auditor E&Y, this is a strong growth stock but at speculated high prices (more than 10 times growth in share prices over the past few years).

In conclusion, Best World may be more suitable for trading, not for investing as the stock is at high optimism. When price is recovering well, it could be a momentum stock as well, one could buy high sell higher. When price momentum is lost or there is a higher level (L3 country or L4 world) crisis, one may need to exit as a trader as well.

Global stock market has turned bullish over the past few months. Readers may learn from Dr Tee free 4hr stock investment course to learn various global giant stocks for long term investing or short term momentum trading. Register Here: www.ein55.com

Filed Under: Fundamental Analysis, Stock Market, Stocks A-Z

Key Learning Summary of Ein55 Business Analysis Course: Business Valuation

Posted on February 17, 2019 Written by Dr Tee (Ein55)

Ein55 Business Analysis Course - Business Valuation

The Ein55 students have learned the details of Business Analysis Course #2 (Business Valuation) from Ein55 Mentor Kean Lim, understanding how to evaluate values of a company with stock, as well as avoiding accounting traps. Here is the key summary:

1) Check what is the Auditor’s Opinion

– Unqualified / Qualified / Adverse / Unable to give an opinion (Disclaimer)

2) Know why ROE is rising or falling, high or low

– Net profit margin, Asset turnover, Financial leverage

3) Check whether a company uses Aggressive Accounting

– Aggressive revenue recognition

– Days Sales Outstanding

– Days Inventory

– Large changes in operating expenses

– Over-dependence on acquisition

– Quality of earnings

4) Derive the intrinsic values based on

– asset value

– earning value

– growth value

5) Combine various valuation methods with Optimism Strategies

– buy at price below the value, selling at price above the value.

6) Investor can purchase the best stock in the world, but if one buys it at a high premium, it can be a bad investment.

– Valuation is important and is a huge part of the game.

Investing in a company is akin to being in partnership with its business. It is therefore crucial for investors to possess the ability to analyse and make sense of the businesses of interest. The beauty of investment is that one can be selective to only invest in businesses that are profitable and therefore can bring about considerable capital gains in future.

Dr Tee provides free high-quality investment education regularly to the general public, including Business Analysis (BA), Fundamental Analysis (FA), Technical Analysis (TA), Optimism Analysis (OA) and Personal Analysis (PA). The knowledge could help a person for a lifetime, after mastering the right skills of stock investment. Register Here.

Filed Under: Fundamental Analysis, Stock Market Tagged: Business Analysis Course

Key Learning Summary of Ein55 Fundamental Analysis Course #1

Posted on October 16, 2018 Written by Dr Tee (Ein55)

The Ein55 students have learned the details of Fundamental Analysis Course #1 from Ein55 Mentor Kee Min, understanding how to analyse for giant stocks with strong business fundamental.

I have reviewed the course feedback which are very positive, including sharing by Boon Sim: “This course clearly explains the critical information in financial statements and illustrates with recent real life examples on how to use fundamental analysis integrating with Ein55 styles to invest successfully. The strategies and experience on successful cases/ pitfalls shared during the course is valuable.”

Here is the key summary of Fundamental Analysis Course #1:

7 Steps Analysis Method

1) Company Overview

– Company Structure, Main Products / Services, Management, Competitors, etc.

2) Historical Profitability

– Positive uptrends of earning, cashflow, profit margin, etc.

3) Dividend Analysis

– Free Cashflow > Dividend

4) Leverage Analysis

– Debt/Equity < 1, Cash, etc.

5) Business Analysis

– SWOT (Strength / Weakness / Opportunities / Threat), Economic moat, etc.

6) Present Valuation

– Optimism + TA (Technical Analysis)

7) Exit and Entry plan

– PA (Personal Analysis) with systematic trading plan

Warren Buffett mentioned “It is better to buy a wonderful company at fair price than a fair company at a wonderful price”. We can sieve out wonderful companies through studying the fundamentals of a company. In combination with EIN55 optimism method, we will be able to create a strategy that will guide us in buying wonderful companies at wonderful prices.

Filed Under: Fundamental Analysis Tagged: Fundamental Analysis Course

Key Learning Summary of Ein55 Business Analysis Course

Posted on September 22, 2018 Written by Dr Tee (Ein55)

Business Analysis Course

The Ein55 students have learned the details of Business Analysis Course #1 from Ein55 Mentor Kean Lim, understanding how to choose a giant stock with strong business fundamental with sound management. Here is the key summary:

Master 4 Steps of Business Analysis Course:

Step 1: Know the company core business:

Business model
Business history
Business diversification
Geographical presence

Step 2: Check whether the business has a durable competitive edge (economic moats)

Intangible Assets – Brands, Patents or Licenses
Consumers’ Switching Costs
Cost Advantage – Process, Location or Unique Asset
Efficient Scale
Network Effect

Step 3: Know the business risk and investment bear case

Company Factors
Industry Factors
Valuation Factors
Market Factors

Step 4: Know the company future growth drivers

(Price x Volume) – Costs = Operating Profit

Higher Price
Higher Volume
Lower Cost

Filed Under: Fundamental Analysis, Stock Market Tagged: Business Analysis Course

Leveraging on 3 Key Buyers in Stocks (2 Case Studies on DBS & Venture)

Posted on September 4, 2018 Written by Dr Tee (Ein55)

In a practical investment world, sometimes a stock with strong business may stay undervalue for many years, while another stock with little fundamental but exciting rumors or corporate news, could double in share prices over a few days.

For high probability stock investing, a smart investor or trader would align the decisions (Buy, Hold, Sell, Wait, Shorting) with 3 key buyers in stocks: investor, traders and speculators.

1) Investors (Smart Money)

Smart investors, regardless big funds or retail investors, usually apply Fundamental Analysis to select stocks with strong business (eg. company with wide economic moats with strong and consistent growth in earning, assets, cashflow, dividend, etc), then wait patiently for a reasonable market correction to buy low. Patience is required for this strategy alone. Diversification over a portfolio of stocks is another strategy. Within a short term (weeks) or medium term (months), a strong fundamental stock price may not move up but over a longer term (years), it is more predictable, especially when entry is based on reasonable low price below the value (many types of valuation models are available), protected by a portfolio of stocks, not just 1 stock.

Many investors who have holding power, even buy a stock at sky high price, could still be a winner eventually because the investment is protected by a strong business, time will shows its true strength.

2) Traders (Mass Market)

Smart traders, either professional or amateur, learning to follow the stream of stock prices to move up or down, not only knowing the entry or exit, also know when to cut loss when the market is going against the original setup. Strong emotional control is required within the timeframe of trading (eg. days, weeks, months) to manage the expected gains and potential risks, surrounded by daily market noises (rumors and news). Successful traders also apply position sizing to reduce risk with smaller size, increase potential gain with larger capital when trend is aligned with initial setup.

A smart investor who could integrate trend-following trading into investing, the entry and exit will be smoother, having the best of 2 worlds (fundamental and technical). The probability of success would be higher with leveraging in both investing and trading strategies which form the backbone of stock market.

3) Speculators (Losers / Inconsistent Winners)

We should not be a speculator (eg. follow rumor to buy a stock based on “insider news” with 100% life saving) in stocks but we do need their help to push up the price. A speculator may not be a loser all the time, sometimes they could make some quick money as well but they are inconsistent winner, the actions are similar to gambling because a speculator could throw all the capital with past profits into the next speculative stock without any risk management, potentially could lose everything, similar to a gambler who stay in casino for long term.

A smart investor not only leverages on traders for entry/exit but also making use of speculators to maximize the return with speculation in stock prices, integrating all 3 key buyers in stocks. For example, an investor or trader may sell high to speculators but trend has started to turn bearish with declining volume at peak prices. In fact, speculation is a key contributor to form low optimism (<25% in a bearish market or stock) and high optimism (>75% in a bullish market or stock). For example, China stock market is relatively more volatile and speculative than other global stock markets, therefore even a strong fundamental stock (eg. national banks) could be speculated with cyclic stock prices. At the same time, when a rumor with negative news comes, a stock price could surge 2 times or drop to less than half of the prices within 1 day.

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Integration of Investing, Trading & Speculating

====================================

To maximize the return in a stock with consideration of safety, one may integrate all the 3 key forces in stocks

Investors could help to support a share prices 10% yearly in a gradual way (buy low & hold) while traders could push up another 50% in a few months (Buy High Sell Higher) but speculators could help to multiply any share price (including Bitcoin) by a few times within a few weeks (Buy High & Hope).

When DBS (SGX: D05) or Venture (SGX: V03) was less than $15/share, investors start to Buy & Hold. Traders would consider to buy the same 2 stocks, riding the uptrends from $15 to $30/share with support of bullish stock market (STI) last year. Speculators who collected some tips from free investment seminars or listen to some rumors, also start to enter these stocks from more than $25/share, making peanut return of 10%, when trend is reversed since early 2018, still hold on to the same stocks with falling knifes in prices based on “investing” mindset (enter as a trader for small profit, exit as a long term investor to keep paper loss). In fact, a smart investor and trader, regardless buying at less than $15/share with undervalue price or following from $15 to $25/share with uptrend momentum, they could leverage on speculators to sell high after confirmation of ending in momentum after falling down more than 10-20% from the peak prices.

Are you investing, trading or speculating? Learn from Dr Tee free 4hr stock investing/trading course to integrate these 3 strategies of 3 key buyers in stocks to maximize the return with high probability of winning in stocks, aligned with one personality. Register Below.

Filed Under: Fundamental Analysis, Stock Market Tagged: dbs, dbs bank, Key Buyers in Stocks, venture

Stock Fair Value – Growth Stock & Undervalue Stock

Posted on August 10, 2018 Written by Dr Tee (Ein55)

There are many ways (eg. FA, TA, PA, Optimism) to define a stock fair value or price, depending on the strategies. From only FA (Fundamental Analysis) perspective, there are 2 main strategies:

1) Asset Approach (Undervalue Stocks)

– Buy a stock at price below the good asset value (eg. cash and property), waiting patiently for the recovery of share price, sell when price is above the asset value.

Recent acquisition of Wheelock Properties is a good example. The offer of acquisition requires major shareholder to pay about $600 millions cash. If successful, the company has about $900 millions cash of asset (excluding other assets such as properties), therefore the buyer actually would get $900M – $600M = $300M in return. This is similar to shopping in stock market, paying $6 cash and getting $9 cash in return.

There are 3 major constraints for this strategy:

– Assets should be high quality, in the form of cash or property

– The investor should be patient as the asset owners are usually for longer term investing, could hold the assets for years or even decades at undervalue share price.

– The company should make money with increasing asset value, otherwise the undervalue asset (eg. Price to Book ratio, PB<1) could become a value trap, buy cheap and get cheaper due to declining business.

2) Cashflow Approach (Growth Stocks)

– Buy a stock with business which assets could generate consistent cashflow each year. If the future total cash value, discounted to current value is more than the current stock price, it is a good buy. The Discounted Cashflow (DCF) model is frequently used to evaluate growth stocks.

There are 2 major constraints for this strategy:

– Cashflow generation should be consistent in future for years or even decades, therefore the economic moat should be wide.

– The company could have different growth rates, eg during IPO high-growth stategy, then slower growth, matured business or even declining one day. So, assumption of single growth rate in DCF model may not be reliable.

Optimism strategy is easier to evaluate a stock fair value or price, buying at unfair price, selling when overprice. The Optimism Strategies could be integrated with Fundamental Analysis (FA), Technical Analysis (TA) and Personal Analysis (PA) with Level 1-4 integration (business, sector, country, world) for short term / medium term / long term positioning.

Readers in Singapore may attend 4hr free stock investment course by Dr Tee, learning integrated strategies of Optimism + FA + TA + PA to evaluate a stock fair value.

Filed Under: Fundamental Analysis, Stock Market Tagged: stock fair value

YangZiJiang Stock Review – Sample Ein55 Analysis

Posted on June 29, 2018 Written by Dr Tee (Ein55)

All Ein55 graduates are trained for a simple trading/investing system of Optimism + FA + TA. Here is a sample application on YangZiJiang stock review based on a request by a forum member, sharing for pure educational purpose, not a personal financial advice.

Stock = YangZiJiang (SGX: BS6.SI)

Current Price = S$0.90 (28 Jun 2018)

Optimism (long term) = 39% (below Ein55 “intrinsic value” of $1.13 but still above buying zone of 25% Optimism).

Optimism (mid term) = 22%.

FA (Fundamental Analysis) = 4.5 point (out of max 8 points for a super giant), average performance.

TA (Technical Analysis) = Down-Down-Down (sharp falling knife from short term to mid term to long term), potential for short term shorting but must know how to setup with entry/exit signal.

Strategy = Do not qualify Ein55 “giant stock” criteria, may not consider for long term investing. A cyclic stock in nature, moderate dividend, possible to buy low sell high, applying mid-term trading strategies but probability of success may be limited. For short term trading, possible to short (strong bearish trend) but need to wait for right entry signal.

Possible actions = wait for investor (till 25% Optimism is reached) and trader (till trend is reversed from bearish to bullish). Decision making is personality based, it is possible for investor to ignore, mid-term trader to wait to buy while short-term trader to wait til short, all are valid actions if aligned to individual.

This is the most simplified Ein55 investing/trading system, Ein55 graduates are trained to make a decision (Buy / Hold / Sell / Wait / Shorting) with quick glance of Optimism + FA + TA.

For more in-depth YangZiJiang stock review, one may need to integrate with L2 (sector – shipping for YangZiJiang, Baltic Dry Index, etc), L3 (country – Singapore / China indices for comparison with YangZiJiang) and L4 (world – economy / stock) indicators, understanding the interactions of all investment market: stock, property, bond, forex, commodity and economy, aligning with own unique personality (from short term trading to long term investing) and investment goals with strategies (investing for income or capital gains or both), consideration of political economy, PA (Personal Analysis), etc, through 55 Ein55 investing styles.

For general public, if you are from Singapore, feel free to sign up for free 4 hours investment course by Dr Tee to learn Optimism + FA + TA + PA. Register in www.ein55.com.

For those who are from overseas (outside Singapore) or too busy to attend the free course, you may sign up for Ein55 video course by Dr Tee (different content from free 4hr course, focus more on giant stocks with Fundamental Analysis). Register Here: https://www.investingnote.com/store/products/discover-giant-stocks-value-investing-strategies

Filed Under: Fundamental Analysis, Market Optimism, Stock Market, Stocks A-Z, Technical Analysis Tagged: yangzijiang, YangZiJiang Stock Review

Ein55 Law of Stock Market Motion

Posted on March 12, 2018 Written by Dr Tee (Ein55)

Share price is a 3-dimensional movement, governed by Ein55 Law of Stock Market Motion:

Optimism = PA = TA – FA, [gap between price and value]
TA = FA + PA
z = f (FA, PA), function of FA and PA

where PA = Personal Analysis, TA = Technical Analysis, FA = Fundamental Analysis

It means share price (TA) which is the vertical Z-axis, is a function of X-axis which is business Fundamental Analysis (FA: strong or weak) and Y-axis (depth direction of roller coaster) which is market emotions with Personal Analysis (PA: greed or fear). Both the FA and PA could contribute to up and down in share prices (TA), main contributors to the Law of Stock Market Motion.

Ein55 Law of Stock Market Motion simply means that both market emotions and macroeconomy / business strength contribute to movement in stock market. Based on probability, a company which has consistent good performance in business will likely to perform well in stock prices over a longer term. Similarly, when there is an unexpected bad news or unpredictable outcome which results in stock market fear, the share price is likely to fall down. In the real world of stock market, both fundamental (FA) and emotions (PA) will be combined to form an unique condition of stock market on different day, therefore creating different share prices each day, hour or even minute.

When we buy a stock at low optimism, it means we buy when the gap between share price and value is the large, an undervalue stock with price below value. When we sell a stock at high optimism, it means the share price is much more than value, an overpriced stock.

Learn the Law of Stock Market Motion from Dr Tee FREE stock investment course to understand how the share prices could move up and down in the stock market.

Filed Under: Fundamental Analysis, Market Optimism, Personal Analysis, Stock Market, Technical Analysis Tagged: Law of Stock Market

Global Bank Stocks Investing Strategies

Posted on February 27, 2018 Written by Dr Tee (Ein55)

3 major local bank stocks in Singapore: DBS Bank (SGX: D05), OCBC Bank (SGX: O39), UOB Bank (SGX: U11) have already achieved historical high peak prices, supported by the bullish global economy. With the rising bank interest rate, Net Interest Margin (NIM) would be larger, banks would have higher profits from this traditional business, not to mention other divisions such as credit card, insurance, wealth management would also make more profits.

3 major banks in Singapore contribute to about 30% of STI stock index. Trend of STI does not reflect all the sectors in Singapore, it is important for trader and investor to study the respective sector index, instead of using STI alone to compare with individual Level 1 stock.

Bank stocks can be multi-role players in an investment dream team, can be a defender (passive income generation) or can be a striker (short term trading for quick capital gains). Currently Ein55 coaching students (Jan-May 2018 batch) are working on a special project on global bank stocks, shortlisting 28 excellent bank stocks from over 500 good bank stocks globally. Under the guidance of Mentors Isabel & Chye Tin, The students will use the next few months to study the financial reports in details with bank stocks unique performance indicators, choosing the best bank stocks for various categories of investing from these 28 excellent bank stocks:

– Growth stock (mainly capital gains),

– Defensive stock (low risk, life time investing),

– Defender stock (investing for income with dividend)

– Midfielder stock (capital gains + dividend)

– Striker stock (cyclic / momentum trading for short term capital gains)

In Ein55 coaching this week, we have reviewed several short term global & local momentum stocks with potential, just nice riding this recovery wave. The Level 1 individual stocks are aligned with Level 3 global stock market performance: corrected by about 10%, hitting low optimism for short term, then recovering well above intermediate support. A nice entry signal for short term trader after breaking the intermediate price resistance.

The last few weeks of 10% correction of global stock market is an alarm, after the recovery, when it is forming twin peaks (double top) or head & shoulder next time at high optimism, the risk is even higher. Remember we are walking on layer of thin ice now, safer to position as a short term trader but having investor mindset (eg. considering only giant stocks). In short, be a short term investor = Buy stock as an investor + buy/sell as a short term trader.

For general public, you may start learning how to invest in global bank stocks and other blue chip stocks through free 4 hours investment courses by Dr Tee, sign up today.

Filed Under: Fundamental Analysis, Stock Market, Trading Tagged: bank stock, dbs, ocbc, uob

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