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28 Singapore and Global Information Technology Stocks (通风报讯)

Posted on September 23, 2020 Written by Dr Tee (Ein55)

Information Technology (IT) is everywhere in modern world, a stock with strong IT related business would have bright future for investment. Therefore, an investor may consider 28 IT stocks in Singapore, especially those defensive growth stocks.

In this article, you will learn from Dr Tee on 4 Singapore IT Giant Stocks which are efficient in making money with economic moat but having mixed impacts during COVID-19 stock crisis. Bonus for readers who could read every words of the entire article: 7 global IT giant stocks.

1) IT Retail Giant Stock

– Challenger Technologies (SGX: 573)

2) Software Giant Stock

– Silverlake Axis (SGX: 5CP)

3) Data Center Giant REITs

– Keppel DC Reit (SGX: AJBU)

– Mapletree Industrial Trust (SGX: ME8U)

Nearly everyone of us needs certain IT services in our daily lives, eg. when reading Dr Tee article here with common online platforms which are also global giant stocks: Google (NASDAQ: NYSE), Facebook (NASDAQ: FB), etc. Most global IT giant stocks are from US but there are still some good local IT giant stocks in Singapore worth consideration for investment.

There are 28 IT Stocks in Singapore, making money with Information Technology (通风报讯):

Alpha Energy Holdings (SGX: 5TS), Alset International (SGX: 40V), Artivision Technologies (SGX: 5NK), Asiatravel.com Holdings (SGX: 5AM), A-Smart Holdings (SGX: BQC), Azeus Systems Holdings (SGX: BBW), Boustead Singapore Limited (SGX: F9D), Captii (SGX: AWV), Challenger Technologies (SGX: 573), CSE Global (SGX: 544), DISA (SGX: 532), International Press Softcom (SGX: 571), ISDN Holdings (SGX: I07), Keppel DC Reit (SGX: AJBU), Koyo International (SGX: 5OC), M Development (SGX: N14), Mapletree Industrial Trust (SGX: ME8U), New Silkroutes Group (SGX: BMT), New Wave Holdings (SGX: 5FX), PEC (SGX: IX2), Plato Capital (SGX: YYN), Procurri Corporation (SGX: BVQ), Rich Capital Holdings (SGX: 5G4), Silverlake Axis (SGX: 5CP), SinoCloud Group (SGX: 5EK), Stratech Group (SGX: BRR), Synagie Corp (SGX: V2Y), YuuZoo Networks Group Corp (SGX: AFC).

These 28 IT stocks are also related in businesses to 53 Electronics Technology Stocks in Singapore:

AEM Holdings (SGX: AWX), Accrelist Limited (SGX: QZG), Acma Limited (SGX: AYV), Adventus Holdings (SGX: 5EF), Allied Technologies Limited (SGX: A13), Amplefield Limited (SGX: AOF), Avi Tech Electronics (SGX: BKY), Ban Leong Technologies (SGX: B26), CDW Holding (SGX: BXE), CFM Holdings (SGX: 5EB), CPH Limited (SGX: 539), Chuan Hup Holdings (SGX: C33), Creative Technology (SGX: C76), Datapulse Technology (SGX: BKW), Dragon Group International (SGX: MT1), Dutech Holdings (SGX: CZ4), Ellipsiz Limited (SGX: BIX), Excelpoint Technology (SGX: BDF), Frencken Group (SGX: E28), Global Invacom Group (SGX: QS9), GP Industries (SGX: G20), Global Testing Corporation (SGX: AYN), Grand Venture Technology (SGX: JLB), HGH Holdings (SGX: 5GZ), Hu An Cable Holdings (SGX: KI3), JEP Holdings (SGX: 1J4), Jadason Enterprises (SGX: J03), Karin Technology Holdings (SGX: K29), Libra Group (SGX: 5TR), Manufacturing Integration Technology (SGX: M11), Maruwa Yen1k (SGX: M12), MeGroup Limited (SGX: SJY), Micro-Mechanics Holdings (SGX: 5DD), Plastoform Holdings (SGX: AYD), Polaris Limited (SGX: 5BI), Powermatic Data Systems (SGX: BCY), Renaissance United (SGX: I11), SEVAK Limited (SGX: BAI), SUTL Enterprise (SGX: BHU), Serial System (SGX: S69), Shinvest Holding (SGX: BJW), Sunright Limited (SGX: S71), Sunrise Shares Holdings (SGX: 581), TT International (SGX: T09), Thakral Corporation (SGX: AWI), The Place Holdings (SGX: E27), Trek 2000 International (SGX: 5AB), Valuetronics Holdings (SGX: BN2), Venture Corporation (SGX: V03), Willas-Array Electronics Holdings (SGX: BDR), World Precision Machinery (SGX: B49).

From the table sorted below for 28 Singapore IT stocks, only half are profitable (17 / 28 stocks were making money in businesses last year). Therefore, careful choices of giant IT stocks are critical, some are at lower optimism share prices due to either stock market fear or actual business is affected during COVID-19 pandemic.

Most Singapore IT stocks don’t pay dividend (only 11 / 28 stocks pay dividend). Even if they do, for example, CSE Global (SGX: 544) and Boustead Singapore (SGX: F9D) with over 4% dividend yield, are not good dividend stocks due to weaker business fundamental.

Only 1/3 of IT stocks (9 / 28) have Price-to-Book ratio ($ / NAV = PB) < 1 with discount over asset but majority do not have high quality asset related to cash or properties.

For most local and global IT stocks, main strategy would be growth investing or momentum trading, therefore business growth is much more important than undervalue price or dividend payment.

No	Name	Code	ROE (%)	Dividend Yield (%)	PB = Price /NAV
1	Alpha Energy Holdings	5TS	–	–	3.64
2	Alset International	40V	–	–	3.78
3	Artivision Technologies	5NK	7.0	–	-0.77
4	Asiatravel.com Holdings	5AM	0.4	–	2.62
5	A-Smart Holdings	BQC	–	–	3.97
6	Azeus Systems Holdings	BBW	–	2.7	2.30
7	Boustead Singapore Limited	F9D	5.1	4.3	0.99
8	Captii	AWV	26.8	3.7	0.27
9	Challenger Technologies	573	–	3.3	1.41
10	CSE Global	544	0.7	5.7	1.30
11	DISA	532	12.4	–	1.11
12	International Press Softcom	571	–	–	0.69
13	ISDN Holdings	I07	–	1.0	1.04
14	Keppel DC Reit	AJBU	12.6	2.5	2.55
15	Koyo International	5OC	5.2	1.3	0.77
16	M Development	N14	–	–	0.87
17	Mapletree Industrial Trust	ME8U	10.3	3.5	1.94
18	New Silkroutes Group	BMT	3.2	–	0.61
19	New Wave Holdings	5FX	13.6	–	0.90
20	PEC	IX2	18.5	1.2	0.58
21	Plato Capital	YYN	17.0	–	0.18
22	Procurri Corporation	BVQ	–	–	1.82
23	Rich Capital Holdings	5G4	–	–	1.36
24	Silverlake Axis	5CP	22.8	2.1	3.18
25	SinoCloud Group	5EK	27.1	–	1.00
26	Stratech Group	BRR	–	–	-0.49
27	Synagie Corp	V2Y	2.2	–	7.24
28	YuuZoo Networks Group Corp	AFC	15.2	–	-3.49

There are only 2 IT related stocks (Mapletree Industrial Trust, following by Keppel DC Reit would be included soon by end of 2020) 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).

An investor has to be selective in investing as many IT stocks in Singapore are weak (buy low may get lower in share price due to weak business, especially in a bearish stock market), despite they belong to a promising IT industry but the competition is too intense, only some IT stocks could be profitable in longer term.

Here, let’s focus on 4 Singapore IT giant stocks over 3 main categories:

1) IT Retail Giant Stock

– Challenger Technologies (SGX: 573)

Challenger Technologies has many IT retail stores in Singapore, business has been growing. In Year 2019, the acquisition offer by major shareholders was not successful due to joint effort of smart minority shareholders with over 10% objection votes. As a result, Singapore can still keep this giant stock, especially the company has strong cash flow, able to pay consistent dividend in the past, suitable for longer term investing.

However, over the past 2 years, Challengers Technologies has reduced on the dividend payment (unsure if this may be a move to discourage longer term investing, especially after the acquisition was not successful). In fact, the company is defensive in both share prices and business, not affect affected during COVID-19 compared with peers.

So, Challenger Technologies is transformed from a dividend stock (defender) in the past to a growth stock (midfielder with moderate dividend and capital gains). Current share price is at lower optimism level but it may not be suitable for traders due to sideways prices (which is better than most bearish Singapore stocks). Since this is not a REIT, major shareholders have the power to change the dividend payout policy each year, making it less attractive to longer term investors for holding, perhaps a higher chance for acquisition again in future if both the capital gains and dividends are limited in medium term.

In Singapore, besides Challenger Technologies, consumers may also go to Harvey Norman IT stores which is listed in Australia stock market (ASX: HVN). Harvey Norman is as strong as Challenger Technologies, another option for global IT giant stock investing. Even during crisis such as COVID-19, their businesses are doing better as there are online sales channel, demand is supported by more IT users.

2) Software Giant Stock

– Silverlake Axis (SGX: 5CP)

Silverlake Axis provides software solutions and services to the banking, insurance, payment, retail and logistics industries. It is a leader for backend software to many banks in Southeast Asia (Malaysia, Singapore, Indonesia, etc). Banks usually don’t easily change the supplier of financial software for safety and stability, therefore Silverlake Axis has economic moat in high switching cost.

In Year 2015, there was allegation reported on questionable high profitability of company, even if there is no confirmation, resulting in significant correction of share price from peak of over $1/share, bearish share prices continue in the past few years to about 20% of peak share price during COVID-19 stock crisis, currently at low optimism. Silverlake Axis business is affected during pandemic but this is reasonable compared with peers and clients (most banks have weaker businesses during COVID-19).

Financial reports are key consideration for investors, therefore any doubt (even not confirmed) could create unwanted market fear, resulting in falling of share prices. Another recent example is Best World International (SGX: CGN) which also reported very good financial results, attracting questions on reliability of business performance. Even during the stock suspension period, Best World continues to report expected good financial results.

So, for a giant stock, besides good business fundamental, it is important for management to pay more attention on public communication, be transparent in financial reports, especially on grey areas. Luckin Coffee (NASDAQ: LK, forced to be delisted) was a negative example that a “strong fundamental” company ends up in scandal of deceiving global investors (including GIC of Singapore) with manipulated financial reports. Integrity of management is key for a giant stock but it is very hard to measure as greed could drive a business to different direction. Sometimes under the pressure of investors expectation, some management of companies may choose shortcut to achieve early “success” with creative accounting. So, stock investors have to read between the lines for financial reports, reviewing each potential allegation or rumors if there is any.

Overall, assuming truthful financial reports over the past decade, Silverlake Axis is a reasonable strong fundamental stock at low optimism but it is very cyclical in nature, an investor needs to have holding power when buying at low optimism.

3) Data Center Giant REITs

– Keppel DC Reit (SGX: AJBU)

– Mapletree Industrial Trust (SGX: ME8U)

Both Keppel DC Reit and Mapletree Industrial Trust (MIT) are data center REITs, benefiting from increasing demand in internet era for data storage to keep critical and sensitive information for clients in different countries globally. Data center business has strong economic moat (high switching cost) and predictable in income generation, supported by clients who are financially strong with internet related businesses.

Keppel DC Reit is mainly on data center business, growth in business with strong cash, could double the dividend in about 4 years, much stronger than most dividend stocks and REITs which need 8-10 years to double the dividend payment. However, this strong growth has attracted competition globally, therefore the high growth rate in share prices and businesses would slow down in longer term. The share price was corrected by about 20% during COVID-19 stock crisis but quickly recover to new historical high prices, currently at high optimism. So, the stock is more suitable for momentum trading as the dividend yield is less than 3%, trend-following trading strategy may be applied. Keppel DC Reit would be the next in line for new 30 STI component stock, replacing the empty slot when CapitaLand Mall Trust (SGX: C38U) and CapitaLand Commercial Trust (SGX: C61U) are merged by end of 2020, with new opportunity for higher upside in share prices with more fund managers support.

Mapletree Industrial Trust has acquired 14 more data centers in US, overall business contribution with data center is about 40%, would help to accelerate the future growth of company. The company share price and business performance are similar to Keppel DC Reit, but it is more gradual in growth. After replacing Singapore Press Holding, SPH (SGX T39) as the latest 30 STI component stock in Year 2020, MIT share price is supported further (currently at high optimism) with more institutional investors. MIT may be considered as midfielder with capital gains and moderate 3.7% dividend yield, currently more suitable for trend-following trading or growth investing due to higher optimism prices.

Both Keppel DC Reit and MIT are stronger growth REITs compared with 52 Singapore REITs and Business Trusts which are mainly positioned for dividend investing (investor has to focus only on giant stocks for investing):

AIMS APAC Reit (SGX: O5RU), ARA Hospitality Trust USD (SGX: XZL), ARA LOGOS Logistics Trust (SGX: K2LU), Ascendas Reit (SGX: A17U), Ascendas India Trust (SGX: CY6U), Ascott Trust (SGX: HMN), Asian Pay Tv Trust (SGX: S7OU), BHG Retail Reit (SGX: BMGU), CapitaLand Commercial Trust (SGX: C61U), CapitaLand Mall Trust (SGX: C38U), CapitaLand Retail China Tr (SGX: AU8U), CDL Hospitality Trust (SGX: J85), Cromwell Reit EUR (SGX: CNNU), Cromwell Reit SGD (SGX: CSFU), Dasin Retail Trust (SGX: CEDU), Eagle Hospitality Trust USD (SGX: LIW), EC World Reit (SGX: BWCU), Elite Commercial Reit (SGX: MXNU), ESR-REIT (SGX: J91U), Far East Hospitality Trust (SGX: Q5T), First Reit (SGX: AW9U), Frasers Centrepoint Trust (SGX: J69U), Frasers Hospitality Trust (SGX: ACV), Frasers Logistics & Commercial Trust (SGX: BUOU), FSL Trust (SGX: D8DU), HPH Trust SGD (SGX: P7VU), HPH Trust USD (SGX: NS8U), IREIT Global (SGX: UD1U), Keppel Infrastructure Trust (SGX: A7RU), Keppel Pacific Oak US REIT (SGX: CMOU), Keppel DC Reit (SGX: AJBU), Keppel Reit (SGX: K71U), Lendlease Reit (SGX: JYEU), Lippo Malls Trust (SGX: D5IU), Manulife Reit (SGX: BTOU), Mapletree Commmercial Trust (SGX: N2IU), Mapletree Industrial Trust (SGX: ME8U), Mapletree Logistics Trust (SGX: M44U), Mapletree North Asia Commercial Trust (SGX: RW0U), NetLink NBN Trust (SGX: CJLU), OUE Commercial Reit (SGX: TS0U), ParkwayLife Reit (SGX: C2PU), Prime US Reit (SGX: OXMU), RHT HealthTrust (SGX: RF1U), Sabana Reit (SGX: M1GU), Sasseur Reit (SGX: CRPU), Soilbuild Business Space Reit (SGX: SV3U), SPH Reit (SGX: SK6U), Starhill Global Reit (SGX: P40U), Suntec Reit (SGX: T82U), United Hampshire US Reit (SGX: ODBU).

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In fact, a company does not need to pay dividend to be a giant stock. Warren Buffett Berkshire Hathaway (NYSE: BRK.A / BRK.B) did not pay dividend for the past decades, retained earnings are accumulated, making it the most expensive stock in the world. So, a company value can be evaluated from both past and future earnings and cash flow.

Nearly every company or investor needs IT except for Warren Buffett. Many years ago, Bill Gates (founder of Microsoft, NASDAQ: MSFT, also a global IT giant stock) was trying to persuade his good friend (who supports his charity fund), Warren Buffett, to accept application of computer, at least to manage his stock portfolio. Warren Buffett joked that he only has 1 stock (which is Berkshire Hathaway), therefore no need computer at all. In reality, main contributor of Berkshire revenue now is from world largest IT giant stock, Apple Inc (NASDAQ: AAPL). Warren Buffett regrets of not able to investing in Amazon.com (NASDAQ: AMZN), another US IT giant stock in earlier stage with lower prices. For growth investing, an investor may not need to buy low but need to invest more during stock crisis, leveraging on power of time to compound the share prices with condition the strong growth businesses are sustainable.

Although Warren Buffett is not IT savvy, he could read the financial reports of Apple, understanding his strong economic moat to continue to make money as a market leader, at least for the current decade. Indeed, IT is beneficial to businesses but an investor may not need to be high tech person to invest in high tech stocks. However, since technology sector is very dynamic, especially for information technology, new or disruptive technology could take the lead at the right time. For example, Zoom Video Communications (NASDAQ: ZM) is a promising young IT stock, by right needs another 5-10 more years to become a proven giant stock but the process is shortened to months with unexpected help of COVID-19 crisis with millions of new users including Dr Tee during pandemic.

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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.

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 Optimism, Stock Market, Value Investing Tagged: growth stock, Internet Stocks, technology stock

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:

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.

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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

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

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

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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

5 Genting Group Casino Stocks (神机妙算)

Posted on April 30, 2020 Written by Dr Tee (Ein55)

Genting Gerhad casino stocks Malaysia Singapore Hong Kong Plantation

Genting Group is a famous regional casino with 50 years of history, started in Malaysia (Genting Highland), then extending to whole world, including Singapore, UK and US, currently aiming for Japan casino license. Usually there is no certainty in a business but casino is a unique sector which is almost guaranteed to win due to the “unfair” design of games (神机妙算) in favour of the house if there are positive incoming tourists in the region with supporting local government.

Casino stocks are usually cyclic in nature as business is dependent on economy condition, especially on wealthy gamblers (VIP and premium members) which may have more capital for gambling when stock market is bullish or vice versa.

Read the article further to understand the potential of Genting Group, both risks and opportunities, not learning only 1 but all 5 Genting stocks: Genting Berhad, Genting Malaysia, Genting Singapore, Genting Hong Kong, Genting Plantation.

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Genting Berhad is the parent stock, owning other 4 subsidiaries Genting companies with 4 distinct businesses:

1) Genting Berhad (Bursa: 3182) – Malaysia Giant Blue Chip Stock

2) Genting Malaysia (Bursa: 4715) – Malaysia Giant Casino Stock

3) Genting Singapore (SGX: G13) – Singapore Giant CasinoStock

4) Genting Hong Kong (HKEx: 678) – Hong Kong Cruise / ResortStock

5) Genting Plantations (Bursa: 2291) – Malaysia Giant Palm Oil / Property Stock

Genting Group main business is related to casino (main focus of this article). It diversifies business into plantation / property (through Genting Plantations, a giant stock but affected by low optimism palm oil prices) and cruise / resort (through Genting Kong Hong, a weak fundamental stock, would get worse during Coronavirus crisis).

Genting casino business depends on licenses issued by local country: monopoly in Malaysia, duopoly in Singapore (another casino is MBS – Marina Bay Sands), competing with many others in UK (the largest casino operator) and US. Despite casino is a “sure win” business, it requires huge capex in building the casino and integrated resort, paying high tax to local government and business is dependent on tourism (eg. casino business is badly affected for at least 2 months without income during global lockdown).

An investor may invest directly in Genting Berhad (parent stock) if requires more diversification of businesses and also casino business over the world (not dependent on certain country). Here, we would focus on 2 casino stocks in 2 countries, Genting Malaysia (which includes casino in Malaysia, UK, US) and Genting Singapore (which includes casino in Singapore and possibly Japan if license is obtained).

2) Genting Malaysia (Bursa: 4715) – Malaysia Giant Casino Stock

The founder of Genting is Mr Lim Goh Tong (林梧桐) who was already a successful businessman before taking high risks in building the first casino in Malaysia without government assistance in 1960s. During the construction of Genting Highland resort (which later becomes a casino), he nearly died 6 times in various unexpected accidents. He is awarded the only casino license (more than 50 years till now), a legend in Malaysia history.

When Dr Tee was still a small kid, I remember my first trip in life was around 9 years old to Genting Highland. Of course, I could not enter casino as a child. After growing up, I have been to casino all over the world: US (Las Vegas, Atlantic City), Malaysia (finally), Macau (a few there, see earlier article in my trip report to Hong Kong / Macau), Australia (Melbourne, Brisbane), etc, except for Singapore (well, there is admission fee for local Singapore people). I like to visit casino but I seldom gamble (similar to windows shopping) because I understand lower probability of winning for most games, only those who are lucky may win eventually (with condition to stop gambling for the rest of life after the win). Instead, I like to watch the reaction of gamblers, 9/10 are not smiling, likely losing money, trying to gamble more to win back the money.

Stock “investing” with stock tips or rumour or “insider news” is similar to gambling. A smart stock investor has to firstly understand the business (both risks and opportunities), sector prospect and stock market outlook for country and even the whole world. Let’s learn step by step here.

Genting Malaysia is a giant casino stock, business has been stable over the past 10 years, growing in revenue but stagnant in net profit, partly due to higher tax and also global expansion plans with more casino. It could generate steady cash flow (due to unlimited greed of gamblers who volunteer to donate or contribute money unknowingly) and having a culture to pay dividend which is growing each year (current dividend yield is 6.3%).

Of course, cash flow of Genting worldwide casino would be reduced by at least 2/12 months during the global lockdown, 20% or even more deduction in Year 2020. The situation would improve gradually when Coronavirus has subsided over the next few months. It is hard to stop an addicted gambler from gambling for 2 months, likely the person may double the capital for gambling next time when Coronavirus fear is over. It is a sad social issue why some people are against gambling as it could destroy a family, although it also brings additional national revenue.

Over the past few years with weaker Malaysia stock market, Genting Malaysia has dropped more than 50% in share prices (low in last few months of global stock crisis is comparable to 11 years low in Year 2009), currently at low optimism < 25%, aligning with bearish KLCI Index in Malaysia (recovering in last few weeks). Both Genting Berhad and Genting Malaysia are 2 of 30 KLCI component stocks in Malaysia. More importantly, casino business has 50 years of history in Malaysia, the monopoly business would continue to be a strong economic moat for Genting Malaysia. When KLCI recovers, both Genting Malaysia and Genting Berhad would get more support in uptrend share prices.

3) Genting Singapore (SGX: G13) – Singapore Giant CasinoStock

Singapore took a long time to finally accept casino operating in the island. Many years ago, Singapore gamblers have to go overseas (nearest is cruise in international sea or Genting Highland) when nature calls. Now, they could gamble within the island (local people has additional restrictions such as admission fee but probably could only stop some people such as Dr Tee from visiting), either in Resort World Sentosa (RWS, belongs to Genting Singapore) or MBS (belongs to Las Vegas Sands, NYSE: LVS, another overseas casino stock with reasonable business fundamental). This way, at least the losses of gamblers could be recycled to help the Singapore needy people (through government tax) and also Singapore investors (who invest in Genting Singapore).

In fact, gamblers of Genting Singapore are mostly from overseas, eg. China, Malaysia and regional countries. So, lockdown in the regional during Coronavirus pandemic would definitely affect the Genting Singapore business. During the last few months of global stock crisis, Genting Singapore share price is corrected by about 40%, low of 51 cent/share is 11 years low since Year 2009 (last Global Financial Crisis). Currently Genting Singapore is still at low optimism < 25%, aligning with bearish STI Index in Singapore (recovering in last few weeks). Genting Singapore is 1 of 30 STI component stocks in Singapore, trends of prices are well aligned with country and global stock market due to better outlook of Coronavirus condition.

Singapore government has granted both Genting Singapore (RWS) and MBS to expand further in future with more investment in non-gaming infrastructures to exchange for exclusive casino licenses till year 2030. Building of integrated resort and other new tourist attractions (capex for casino companies) would help to attract more overseas tourists to Singapore. So, this is a positive long term plan but will take up a lot of cash (capex) from Genting Singapore which may reduce the free cash flow and dividend for the next 10 years. The application of casino license in Japan is both a risk and opportunity for Genting Singapore as the share prices will be up or down, depending on the unpredictable outcome. Regional expansion is a good move, especially in related casino and integrated resort business. For Genting Singapore and most casino, main revenue generator is gaming business (over 70%, especially VIP and premium members). “Integrated resort” is mainly a way of marketing to attract more tourists to come, which some of them would drop by casino during free time, contributing some money to local economy through gambling.

Both Genting Singapore and Genting Malaysia are cyclic in nature for share prices, therefore buying casino stocks at lower optimism prices in bearish economy would have higher upside potential as casino business is more defensive in nature (assuming Coronavirus pandemic would end eventually, gambles coming back again). However, it is more suitable for investors with stronger holding power because what if economic condition is beyond recovery (eg. permanent job loss, lower productivity with negative GDP, etc), stock market may fall to a new low during global financial crisis (of course, gamblers would continue to gamble, especially when they have limited money, thinking casino is the quickest place to make money). Genting Group has good culture of dividend payment over the decades, the same Lim family (Chairman is son of founder, Lim Kok Thay) would help to support the stock investors with 5-6% dividend yield (assuming casino may lose 50% gamblers, still have 3% dividend yield) during the winter time.

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So, gambling in casino is to give money to casino (not acceptable). However, investing in casino stock is to share the profits of gambling with casino and contributing high tax to local government to help the needy people (could be considered). However, not all casino stocks are good, therefore careful selection is important. In fact, there is another casino giant stock (the owner is also the Top 10 richest person in Malaysia, same list as Lim Kok Thay, boss of Genting Group) listed in Hong Kong, even stronger than Genting casino business. I won’t mention here, interested readers may do a google of Top 10 richest person in Malaysia and their related businesses.

There are 30 STI index component stocks including Genting 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).

There are 30 Malaysia Bursa KLCI index component stocks including Genting Berhard and Genting Malaysia (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.

It is better to learn how to fish (investing), instead of waiting for the fishes (stock investing ideas). 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: Fundamental Analysis, Macroeconomy, Market Cycle Investing, Market Optimism, Market Outlook, Stock Market, Value Investing Tagged: Blue Chip Stocks, casino stocks, crisis stock, cyclic investing stock, dividend stock, Genting, Genting Berhad, Genting Malaysia, Genting Plantations, Genting Singapore, Las Vegas Sands, Malaysia Stocks, MBS, RWS

5 Cheung Kong Super Hong Kong Stocks (长江一号)

Posted on April 27, 2020 Written by Dr Tee (Ein55)

Cheung Kong Stock CKH CKI CKA Power Assets Fortune Reit HKEx HPH Trust

Sir Li Ka-Shing (李嘉诚) is the richest person in Hong Kong for decades, earning a nickname of “Superman Li” for his reputation in the business world. He was born in 1928 in Chao Zhou (潮州) of China (Dr Tee visited there several years ago, Li Ka-Shing donated a lot of money to his hometown), therefore 92 years old so far. Technically he has retired but mentally never stop working for 1 day, still an advisor to his children and his beloved Cheung Kong Holdings.

Cheung Kong Group is famous initially as a property company, then expanding over the decades, becoming a multinational conglomerate with diversified businesses. CK parent stock is assigned #1 stock ticker in HKEx stock exchange (长江一号), showing its strength as a Hong Kong blue chip giant stock. In Year 2015, there is a major restructuring of Cheung Kong, merging with Hutchison Whampoa, forming a new company Cheung Kong Holdings (registered in Bermuda, could be due to long term planning) with 2 main companies with 2 stocks:

CK Hutchison (CKH) – (HKEx: 1) – For non-property related business

CK Assets (CKA) – (HKEx: 1113) – For proper related business

This way, it is clearer to investors on choices of investment based on these 2 divisions. However, the reorganization has affected the long term analysis of Cheung Kong as there are significant relocation of assets between 2 divisions of companies. Therefore, it is a born of 2 “new” companies with 5 years of history in integrated business reporting but share price of CKH is much longer due to its extension of former parent stock, providing additional references on share prices. It is important for a smart investor to analyze each segment of business for both CK companies before making decision of which stock to invest.

In fact, CK Holdings have at least 11 stocks listed within the group (only 5 highlighted ones are giant stocks):

1) CK Hutchison (CKH) – (HKEx: 1) – CK Parent Giant Stock (Non-property Division)

2) CK Infrastructure (CKI) – (HKEx: 1038) – Utility Parent Giant Stock

3) Power Assets (PA) – (HKEx: 6) – Utility Subsidiary Giant Stock

4) CK Life Sciences – (HKEx: 775) – Biotechnology Stock

5) Tom Group – (HKEx: 2383) – Chinese language media stock

6) HPH Trust – (SGX: P7VU) – Port Trust Stock

7) Husky Energy – (TSE: HSE) – Energy stock listed in Canada

8) CK Assets (CKA) – (HKEx: 1113) – CK Parent Giant Stock (Property Division)

9) Fortune Reit – (HKEx: 778) – CK Giant Reit

10) Hui Xian REIT – (HKEx: 87001) – CK Reit

11) Prosperity REIT – (HKEx: 808) – CK Reit

Out of 10 CK stocks, there are 4 giant stocks included in 50 Hang Seng Index component stocks: CKH, CKA, CKI and PA. So, technically Superman Li could move Hong Kong stock market (about 4%). This is similar to “rival” Jardine Group, could move Singapore Straits Times Index (about 15%) with 5 component stocks. In 1980s, Li Ka-shing was aiming to “invest” more in Hongkong Land of Jardine Group but was defeated by cross-shareholding structure of Jardine (another long story, read Dr Tee earlier article on Jardine Group of 7 giant stocks).

Not all the 10 CK stocks are strong based on Dr Tee giant stock criteria. There is only 1 more giant CK subsidiary stock, Fortune Reit is a giant Reit (formerly dual listing, after delisting from SGX, now only listed in HKEx).

So, additional comments will be given below on these 5 giant CK stocks from different businesses. An investor may select either the parent group (CKH or CKA) if want to consider average of entire group business (non-property vs property) as if a fund, or focusing on smaller individual stock of subsidiaries (CKI, PA, Fortune Reit) on specific business segment.

1) CK Hutchison (CKH) – (HKEx: 1) – CK Parent Giant Stock (Non-property Division)

CK Hutchison has 5 main business segments in non-property division. Investing in CKH stock means investing in all business segments.

1.1) Port

The port businesses are relatively stable in the past but Coronavirus crisis in Year 2020 would affect the results for Year 2020. HPH trust (not a giant stock with limited business potential) is only a small part of CK port business.

1.2) Retail

Major business is Watson for health and beauty (15794 stores with 12 brands worldwide). Business growth in China and Asia are faster than in western world. This is consumer related business, therefore Coronavirus would seriously affect the business for a few quarters. Temasek is also a shareholder for Watson, was planning to sell it.

1.3) Infrastructure / Utilities

This is main passive income generator for CKH. More details later under discussions of subsidiary giant stocks CK Infrastructure and Power Assets.

1.4) Telecommunication

This segment of business is growing in general, having mixed performance in different countries. It is a more defensive business.

1.5) Energy / Investment / Others

Energy segment is making losses while other remaining business is less significant to contributing to entire group.

CKH business (non-property) is not as defensive as CKA (property), therefore over the past 5 years since the group reorganization, share price has been dropping to nearly to 1/3 from peak of $120 to $45. Despite the Price to Book (PB) ratio is 0.5 but the asset is non-property, not as high quality. The main investing advantage for CKH is low optimism level < 25%, aligning to global stock crisis (following economic cycles) but it could suffer in business during Coronavirus crisis due to global lockdown.

Dividend yield of 5.7% is attractive but investors may need to prepare for potential 50% cut as the worst case scenario (despite CKH has good track record of consistent dividend payment) during the winter time of CKH business, implying 3% yield which is still better than holding cash with 1% interest for cash deposit in bank. CKH has significant business in Europe, when economy is restarted, CKH quarterly business performance would improve gradually.

2) CK Infrastructure (CKI) – (HKEx: 1038) – Utility Parent Giant Stock

3) Power Assets (PA) – (HKEx: 6) – Utility Subsidiary Giant Stock

Both CKI and PA stocks may be studied together as CKH owns CKI, then CKI owns PA, all inter-related, just different ways of grouping. So, an investor may decide investing in parent company or subsidiary business specifically in utilities.

CKI has many global businesses of infrastructures and utilities (electricity, water, gas), holding strategic asset of certain countries and cities (eg. main electricity supplier of London). Power Assets invests mainly in electricity, eg. providing partial electricity supply to Hong Kong, duopoly with another giant electricity stock, China Light and Power, CLP (HKEx: 2). Readers may guess if CKH could get HKEx stock ticker #1, CLP could get stock ticker #2, implying it is another blue chip stock with proven history (if there is a chance, we may share further on CLP or other monopoly stocks in future).

Utilities business are defensive as people may not need to shop during Coronavirus pandemic or global financial crisis but they still need basic usages of electricity, water and gas. So, utilities or infrastructure related stocks usually show their strength during economic crisis as defensive stocks which could still pay dividend with steady cash flow generated, then gradual capital gains in longer term with recovery and subsequent growth of economy.

In general, both CKI and PA are having close performance in stocks, prices have dropped by half over the past 5 years (more defensive than parent stock CKH which dropped to nearly 1/3 from the peak price), dividend payment has been stable due to defensive industry, current dividend yield is over 5%. The main “risk” of both stocks is bearish price trend over the past few years (despite at lower optimism level, buy low may still get lower in prices), not so much on business risks (minimal), therefore investors who are reluctant to catch the falling knife in prices, may wait for uptrend in prices, sacrificing passive income (dividend yield) with higher price to exchange for confirmation in price reversal to bullish range.

4) CK Assets (CKA) – (HKEx: 1113) – CK Parent Giant Stock (Property Division)

CK Assets are property-based businesses, listed as a new stock, therefore only having 5 years of share price history so far which are more defensive than CKH (dropping to 1/3), but price is cyclic in nature, dropping to half price. Price to Book (PB) ratio is also coming to a new low of 0.5, having 50% safety margin for high quality asset of property.

However, Hong Kong property market (about 20 years for 1 market cycle) has been at high optimism after the average prices gone up by 4 times over the past 2 decades. Therefore, property stocks in Hong Kong in longer term, may suffer “loss” in valuation due to lower property prices if there are any crisis related to China or Hong Kong property bubble. CKA at current price is 50% discount but “rival” property stock, Hongkong Land has 75% discount with PB around 0.25. So, after relative comparison with peers, CKA 50% discount in price may not be excellent. In fact, there are many other property giant stocks in Hong Kong which are “cheap and good”, readers may learn from Dr Tee to explore more in future.

5) Fortune Reit – (HKEx: 778) – CK Giant Reit

There are 3 REITs listed from CKA parent group: Prosperity Reit and Hui Xian Reit are relatively weaker, so we focus only in Fortune Reit. Previously, Fortune Reit has dual listing in both HKEx and SGX but now only left HKEx. There is little difference to Singapore investors as there is no capital gain tax nor dividend withholding tax for Hong Kong stocks, except HKD/SGD is currently at high optimism (HKD is pegged to USD, similar trend for USD/SGD), future potential forex loss (when USD or HKD is depreciated vs SGD) could be compensated by dividend and capital gains of Hong Kong or US stock.

Fortune Reit drops over 40% in share price over the past 2 months of global stock crisis, resulting in high dividend yield of 7.4% with consistent dividend payout of its REIT portfolio. Risks of Coronavirus is minimized as China / Hong Kong conditions are much better than the rest of the world. Social unrest (eg. Hong Kong protesters last year) is also a lower risk now. The REIT is protected by Price-to-Book (PB) ratio of 0.4, rare for a strong REIT with 60% discount, implying under the worst case scenario, even if the company goes bankrupt, investors could still get back the capital (unlike other investors would suffer permanent loss buying stocks with low quality assets). Usually PB is not a strong criteria for REIT, consistent rental collection from tenants is more important which Fortune Reit has a good track record. The REIT manager is also another familiar name: ARA Asset Management, used to be a giant stock with good reputation in Singapore but delisted several years ago (not surprise as this company is too good to share in long term with the public).

In short, investing in Fortune Reit could receive the protection from sponsor, CK Group, in addition to 60% safety margin in share price to property asset value. REIT (rental payment) could be more predictable than property-based business (eg. parent company CKA) which may suffer when property value declines. For a reit, even property value may decline, rental won’t fall as much, especially if located in strategic places with higher populations.

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If you could read until this line, it means that you are a serious investor as Dr Tee has spend half a day to write this article, you only need less than 30 min to read but need a few more days to digest to align the right CK stocks (1 of the 5 giant stocks) to your own personality. Each of the 5 CK giant stocks has its own pros and cons, may not be suitable for everyone. Overall, they all are at low optimism < 25%, implying higher potential for longer term investors. Their main “risks” may not be on business (Coronavirus could affect for Year 2020 but may not for long term), but more on bearish stock price trends since the group reorganization in 2015 till now. Global investors still try to find a sweet spot of balance between price and value for the “new” CK group of stocks.

Cheung Kong has been blue chip stocks for decades in Hong Kong, paying consistent dividend despite bearish stock prices or fluctuation in businesses. The main intangible “asset” of CK Group could be Li Ka-Shing, a trusted icon of CK for decades. Despite Mr Li has retired, he has transferred his business and investment knowledge to his 2 sons, Victor Li (taking over his empire of CK business) and Richard Li (inheriting most of his cash to start own business beyond CK Group). This way, 2 “tigers” won’t be in same jungle (only 1 main decision maker), smart move by a father with far vision to minimize potential family conflicts in the same business.

So, if readers may not have the same wisdom as Li Ka-Shing on investing, we may leverage on him through investing in CK group of giant stocks at lower optimism prices. Li family are unlikely to sell their stocks, therefore they would work day and night for you to grow the business as they are major shareholders (interest is aligned). Better still, readers may contribute no effort except just capital for investment at the right price (ability to press the button when seeing the signal with strategy aligning to own personality), Li family could then work for you for another generation until Victor Li may retire one day as well or passing to the third generation. Of course, you may then sell the stocks for capital gains one day or transfer the stock to your own second generation to keep.

If readers worry Li Ka-Shing may go bankrupt during global financial crisis (he went through at least 9 times over his 92 years of life experience), then smart investor may look for Top 10 richest persons in the world (Li Ka-Shing is only the 30th richest in the world), investing in their best stocks with stronger business than CK Group, forming a portfolio of Top 10 richest person’s giant stocks as a dream team portfolio. Of course, you may not get a good discount in share prices when their businesses are very strong now, therefore stock “crisis” is usually a good opportunity to own some of these giant stocks with growing businesses.

Li Ka-shing stocks are stronger than many 50 Hang Seng HSI index component stocks or 30 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).

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Filed Under: Market Cycle Investing, Market Optimism, Stock Market Tagged: Cheung Kong, CKA, CKH, CKI, defensive stock, dividend stock, Fortune Reit, growth stock, HKEx, Hong Kong Market, li ka-shing portfolio, Power Assets, Property, Property Stocks, reit, telco stocks, undervalue stock, utility stocks, Watson

10 Key Notes Before Investing in Oil (十年寒窗)

Posted on April 22, 2020 Written by Dr Tee (Ein55)

oil investing commodity stocks negative price

With oil price drops to negative recently (as if Singapore car COE drops to $1), some investors may be interested in investing in oil to buy at extremely low for tremendous potential capital gains. Before any action, readers may read through these 10 key notes carefully to identify the suitable way of investing in oil aligning to own unique personality.

1) Oil Commodity

Crude oil (WTI or Brent) is a pure commodity trading, based on buy low sell high to make money. Unlike stock, there is no business supporting the commodity prices. The hidden fundamental is with demand vs supply of economic cycles and black swans (eg. oversupply with price war of oil producers countries and low demand during Coronavirus pandemic).

2) Oil Investing

There is no simple way to invest or trade oil commodity directly, usually could be done in 3 ways, each has own limitation:

– buy physical oil (not practical as need to store the oil which incurs additional cost)

– trade oil futures (more suitable for seasoned traders for short term trading, could be speculative)

– investing oil ETF (more suitable for short-term to mid-term investors without leveraging)

3) Oil ETF

For oil ETF, investment is through oil futures contracts, rollover in each month to track either WTI (US oil) or Brent (world oil outside US). The alignment of oil ETF and oil price is acceptable within a few years (short term to mid term). For longer term oil investing, oil ETF usually would underperform actual oil market due to rollover cost (holding cost) during contango which happened about 60-70% over the past 1 decade.

For oil ETF, there are 2 stages to take note: Contango (negative rollover yield) vs Backwardation (positive rollover yield).

4) Contango for Oil ETF (Rollover Cost – loss in holding)

This is when oil futures contacts prices of later months are higher than nearby month. It happens usually in lower level of oil prices (lower optimism) with outlook of higher prices in future. There is rollover cost each month for swapping the futures contacts, could be a few % higher prices each month. Contango effect is getting more serious over the past few months during Coronavirus period, over 10% from month to month.

Investors could make money when the potential capital gains from volatile oil prices (eg. 20-50% within 1 year) is much higher than Contango rollover cost. In longer term, if oil price remains at lower prices with Contango stage, the high rollover cost would offset the capital gains from appreciation of oil price. So, an investor has to weight between these 2 conflicting factors, potential high capital gains at lower optimism vs rollover cost (holding cost).

A compromised way is to buy only when there is clear reversal of low optimism oil price (eg. applying technical analysis) when price is more bullish (with uptrend). This way, potential capital gains could offset the rollover cost of Contango. Alternatively, avoid investing during period of high Contango (much higher prices for futures contracts in later months), although usually the oil price is usually having more discount during this time. Of course, investors have the choice to wait for Backwardation period to get positive gain from rollover for holding the oil ETF.

5) Backwardation for Oil ETF (Rollover Yield – gain in holding)

This is when oil futures contacts prices of later months are lower than nearby month. It happens usually in higher level of oil prices (higher optimism) with outlook of lower prices in future. There is rollover gain each month for swapping the futures contacts, could be a few % lower prices each new month (saving cost when rollover to cheaper contracts). Examples of Backwardation were in years 2012-2013, 2019, about 1/3 of the time.

Investors could make money when capital gains in oil prices is moderate (eg. less than 10-20% within 1 year) but combined additional positive gain in rollover yield (as if passive income as dividend stock), will be reasonable. Backwardation may not stay for long term, even if it does, the potential capital loss (oil price at higher level, more potential to fall in long term) is higher if hold long term. So, an investor has to weight between these 2 conflicting factors, capital gain / loss and rollover yield.

A compromised way for Backwardation is to buy only when oil price is still uptrend (despite higher level). This way, potential capital gains from trading (despite lower potential at higher price level) is reasonable as there is some rollover yield (at least no rollover cost as in Contango).

6) Negative Oil Price

Technically, it is possible for oil investors to apply multiple entries during low optimism (balance potential high capital gains with high rollover cost during Contango), eg

$20, $15, $10, $5, $1 per barrel. This way, there is no need to predict the bottom of oil price.

This is true with assumption that oil would not drop to $0 which is true for physical oil (similar to petrol in gas station, could be lower price but never could be $0). However, due to human greed (political economy with price wars in oil producer company) and fear (Coronavirus with over 50% people in the world staying at home during lockdown with low energy consumption), together with nearly full storage of oil capacity, oil price dropped to negative $40/barrel. This is as if a buyer could get a barrel of oil, not only free, but additional $40 reward for buying.

This is against human nature but negative oil price actually happened on 20 Apr 2020 as Apr-May 2020 are likely the peak of Coronavrus pandemic in the world (especially US with which US oil consumption would be the lowest during this period). The negative oil price may happen again for June 2020 oil futures contract if there is no significant improvement in oil market sentiment.

Negative oil price is as if a complex number (i) in mathematics which is not real but could have its effect. So, for very conservative oil investors, instead of $0, need to consider negative $40 as new bottom in multiple entries:

$20, $0, negative $20, negative $40 per barrel.

In addition, the investors at such crisis time also need to suffer the potential high Contango (over 10-30% monthly rollover cost). Therefore, oil investing is more speculative than it should (if one could go to gas station to buy 1 barrel of oil at $1, selling back at $10 after 1 year later). In the physical world, buying oil requires transportation, storage and other costs, not as simple as buying 1 ounce of gold (another commodity but different condition as crude oil) which can be kept safely at home for long term investing.

7) USO ETF (WTI)

USO ETF is a way to invest WTI (US Oil) which one has to consider al the points 4-6 above with Contango, Backwardation and even negative oil price. Since an investor could not buy oil directly, the multiple entries have to be based on USO prices, eg:

Assuming the USO price is $/unit, multiple entries could be around:

$4, $3, $2, $1, $0.10 per unit of USO

Which is corresponding to oil prices of

$20, $15, $10, $5, $1 per barrel

Since oil price could fall into negative, therefore prices targets based on USO is more exact than based on oil price (especially when it falls momentarily to negative, no reference in USO price). With time, USO would approach similar scale as above (eg. USO $2 when oil price is around $10/barrel, USO $4 when oil price is around $20/barrel) with exception of sudden drop to negative price (which would recover the next few days).

For investors who could take higher risk of high contango during Coronavirus crisis need to take note that negative oil price may not mean super low price for USO ETF as the physical world could not take negative fund which means bankruptcy. An investor may wait until oil price to stabilize first (over Coronavirus period), even if oil price could be higher, safer for positioning.

Of course, one has the option to totally ignore oil investing through future contracts or oil ETF (see other options in later points). Oil could drop to negative number or near to $0 but oil ETF could not stay at near $0 for too long as there is rollover cost. To minimize high volatility in nearby month futures contract, USO ETF may need to rollover to 2 months later, not just on nearby month, to minimize the risk of negative price. However, it means USO and oil price will not be so closely correlated during those blind spots of time.

8) Potential of Oil Market

Similar to global stock market, oil market also depends on black swan, Coronavirus, whether it could end on time by summer, in US and also for the whole world. If so, people could step out from the home, could travel (cars, trains, cruise, flights, etc), could work (manufacturing plants) and many other activities that need more energy. Based on the Coronavirus analysis so far, there is a high possibility that the pandemic may end or fade away by summer. However,

Oil produces may not let the oil market (the largest commodity market in the world) to fall to low for a long period of time as it means these countries would suffer losses at national level.

US – largest oil producer (production cost is about $50/barrel), mainly shale oil companies would go bankrupt if oil is below $20/barrel, not to mention at negative price or near to $0. Trump may use the low oil price to top up the national oil reserves and support US oil price at the same time but it subjects to congress approval. If shale oil companies go bankrupt, US economy would be serious affected.

Saudi (with OPEC) – second largest oil producer (production cost is about $5/barrel), despite it is the only country which could last the longest with lower price, high national expenses with high dependency on oil revenue, the oil price could not stay at low level below $20 for a few years. Currently lower oil price is partially supported by high US dollar strength (higher revenue when converted to local currency) but when USD is weaker, it would become double blows to Saudi and also entire OPEC.

Russia (with OPEC+) – third largest oil producer (production cost is about $20/barrel), it is already a loss for current oil price, when Russia economy remains weak, this will be a high pressure. This is also true for all other oil producers countries.

These top 3 oil producers countries control about half of the world oil production and having influence over other smaller oil producers countries. The production cut starting in May 2020 is below market expectation, therefore more cut may be required to fight against the immediate risk of storage capacity issue (which will be full in May 2020 for most places in the world, no place to keep for new oil produced).

Price is moved by demand vs supply. Oil producers countries could control the supply but another 50% is dependent on demand which mainly depends on Coronavirus. Therefore, commodity has a natural market cycle of low and high, only uncertainty is duration and timing of low and high is a variable.

So, oil commodity investing may not be suitable for those without holding power, not to mention there is no suitable investing tool as oil ETF would incur high rollover cost during Contango period. A safer compromise is not to buy oil at the lowest point with the most uncertain period with the highest rollover cost. Instead, wait for some light at the end of tunnel with higher oil price, lower rollover cost, higher uptrend price which is an insurance premium for extra safety.

9) XLE (Energy ETF)

An alternative to oil commodity investing is to investing in a portfolio of oil & gas stocks through XLE (SPDR Energy ETF) or similar energy ETF with energy related stocks. Many of the composition stocks are oil & gas companies (integrated, upstream, midstream, downstream) which has certain correlation to oil prices. The up and down in oil prices would affect the businesses of these XLE sector companies, therefore an investor could benefit indirectly the low oil price when investing these oil & gas companies through XLE.

XLE ETF provides diversification, suitable for lower capital investor for crisis sector investing. Even it is possible for a few companies may eventually go bankrupt (eg. if oil price below $10/barrel for a few years), energy fund is based on business, unlike USO ETF which has high rollover cost, XLE is more suitable for holding longer term. When oil price is at higher optimism level or just moderate optimism one day (assuming Coronavirus disappear), XLE would also benefit with capital gains in share prices, which are reflected in sector ETF. However, it is more suitable for longer term investors when investing at low optimism level (十年寒窗).

The bonus for XLE investor is to collect 3-10% dividend yield (which may not be stable, depending on the entry prices), as if Backwardation period USO oil ETF with positive rollover yield. Contango is as if negative dividend yield, more holding cost with longer term investing.

XLE investing requires alignment with optimism (entry at low optimism, exit at high optimism, collecting 5-10% dividend yield during waiting period). Management cost is relatively lower than USO but it won’t benefit from sudden surge in oil prices for short term, instead, profiting through the businesses with stocks in oil sector which benefits from higher oil price over mid to long term.

10) Oil & Gas Giant Stocks

For smart oil investor, one may not just invest in oil through ETF (rollover cost) or XLE (stable but requires holding power). One could become own fund manager to invest in oil & gas giant stocks (44 global giants based on Dr Tee giant criteria). Even when oil prices have been at lower optimism over the past 5 years of crisis, these giant stocks are strong in business fundamental, still can make money each year with consistent growth.

Some of these companies, for example, are in midstream segment of oil storage or delivery business, not affected much by oil prices. When oil is full storage capacity due to low demand, these companies could charge a higher price. They are also good candidates for longer term investing, investing at lower optimism, collecting dividend (over 5-10% yield) as passive income while holding during winter time, eventually better with growth investing with higher optimism when oil and share prices appreciate one day. At higher optimism, an investor has a choice to either sell for profits or even hold for longer term investing (if the stock is defensive in nature).

Crisis investing is not easy as it is not simply Buy Low or “Be Greedy when Others are Fearful”. It requires understanding the risks and opportunities of each option, then an investor may choose the right tool (eg. oil ETF, XLE energy ETF or oil & gas giant stock) with strategy aligned with own personality, either for short term trading or long term investing.

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Drop by Dr Tee free 4hr investment course to learn how to position in global giant stocks of growing sectors with 3 value investing strategies (undervalue, growth, dividend stocks), 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, Market Optimism, Market Outlook, Stock Market Tagged: coronavirus, crude oil, global stock crisis, negative oil price, oil & gas

VICOM Monopoly Cash Cow Stock (车运亨通)

Posted on April 14, 2020 Written by Dr Tee (Ein55)

Vicom (SGX: V01) is an authorized vehicle inspection company in Singapore. Based on LTA (Land Transport Authority) regulation, all vehicles / cars in Singapore have to go for inspection every 1-2 years. Due to this legal requirement, yearly or even monthly cash flow of Vicom is stable and predictable (车运亨通) as number of cars in Singapore is also regulated.

It is a strong economic moat to own this car inspection license because there are only 2 companies (duopoly) in Singapore: 7 centers operated by Vicom (including 2 by JIC which is also owned by Vicom) and 3 centers owned by STA. So, Vicom has 70% monopoly of vehicle inspection business in Singapore. Inspection fee is regulated by LTA, so no difference which company to go, therefore the company has more locations would have more businesses as most drivers would choose the nearest center from home.

Despite LTA announced 0% car growth rate since Year 2018, due to high level of car COE (Certificate of Entitlement to own a car in Singapore) price, more car owners choose to renew the car COE, therefore more old cars which need annual car inspection, helping to compensate for the difference in 0% car growth. As a result, Vicom earning and cashflow are growing gradually or stable (flat), aligning to vehicle growth in Singapore.

During the 10 minutes car inspection (very efficient flow, saving time for drivers and also quick cash generator for Vicom), from one end to another end (retest may be required if fail the test), $64.20 would flow from car owner’s pocket to Vicom financial account. When this number is multiplied with 70% of all vehicles in Singapore due for inspection, it is tremendous amount of cash. The Capex (difference of Operating Cashflow and Free Cash flow) is limited, only in Year 2018, due to investment in new Bukit Batok inspection center, there was less free cash flow in that year. Vicom also has non-vehicle testing division (SETSCO) but business is not as predictable as vehicle inspection business.

Vicom has been very generous in dividend payment, even it is not a REIT but having similar policy to pay 90% of profits as dividend back to shareholders (only difference is Vicom has the right to change this policy as dividend amount is not regulated by law as for a REIT). In fact, since Year 2017 to 2019, Vicom has “over” paid 120% of its profits as dividend (possible as having retained earnings from the past few decades of business). Current dividend yield of Vicom is about 5%.

Parent company, Comfortdelgro (SGX: C52), has about 2/3 ownership of Vicom, therefore could enjoy 2/3 of stable cash generated by Vicom through dividend payment. Despite taxi business of Comfortdelgro has been in crisis for several years with new challenger of Grab Taxi (disruptive technology) and also during Coronavirus infection period in year 2020 (less passengers), Vicom has been serving as cash cow for Comfortdelgro, providing stability to its business.

Due to consistent dividend payment with a very stable business (protected by LTA car inspection requirement), Vicom has been a favourite for some dividend stock investors. Due to more demand than supply (for the cash cow with stable dividend payment), Vicom share price has been growing for decades, after share price adjustment, growing from about $0.40/share to $8/share over the past 20 years, going up by 20 times! It means if initial investment capital was $1000, it would become $20,000 (excluding 4-6% yearly dividend yield for 20 years).

However, past success records in both business and share prices do not guarantee future performance as stock market is forward looking. Therefore, even an investor may be interested in Vicom for investing from now, has to learn to “inspect” giant stock, only a giant stock (applying Dr Tee’s giant stock criteria) in certified after yearly review, then an investor could continue to hold, even may not need to sell in future stock crisis. In short, Vicom inspects Singapore cars to make money and investor has to inspect global giant stocks to remain profitable.

So, despite slower growth in business but due to it stability and predictability, Vicom is also a growth stock, suitable for long term investing. A smart investor would apply Dr Tee’s Optimism Strategies to acquire Vicom at low optimism < 25% (currently is about 15% Optimism), suitable for both dividend investing (moderate 4-6% dividend yield record over the past decade, a strong consideration during crisis time) and growth investing (buy low optimism & hold long term for capital gains).

Assuming the worst case scenario that Coronavirus may affect the world / Singapore for more than 1 year (before a vaccine is developed), with over 50% people lockdown at home for over 1 year, resulting in Great Depression for a few years, number of cars in Singapore are unlikely to drop even by 10% base on natural demand and supply (unless it is required by LTA). However, during global financial crisis, it is possible for Singapore car COE price to drop (historical low was $1, could be as high as nearly $100,000) to support the current number of cars. A smart investor may also apply Optimism Strategies to buy Singapore car with low optimism COE during global financial crisis (current COE price of about S$30,000 is only moderate optimism level, not yet a good time for car shopper but $1 historical low COE price may not happen again due to open bidding system).

So, some readers may be tempted to invest in Vicom right away (sharing in this article is for educational purpose, please make your own analysis, in case anyone may think Vicom could go bankrupt one day if LTA may announce that Singapore vehicles no longer need inspection anymore). During the recent global stock crisis in Mar 2020, Vicom share price fell by about 20% (more defensive compared to 30 STI blue chip stocks fell by about 30%), currently recovering more than half of the correction. An investor has to consider both risks and rewards with strategies aligned to own unique personality, not simply a buy after reading this article.

If a smart investor wants to have a complete 100% monopoly of car inspection business (buy a stock means in partnership with company doing business together), then may also consider STA which controls remaining 30% of car inspection in Singapore. STA could be invested partially through parent company, ST Engineering (SGX: S63), another dividend giant stock in Singapore. Comparing with Vicom, ST Engineering is equally strong for dividend investing but much slower for growth investing (car inspection is not the only business nor main business for ST Engineering).

Similarly, parent company of Vicom, Comfortdelgro, is also a giant dividend stock (dividend yield is 6.5% but a question mark if this is sustainable this year when fewer people take taxi for 6-12 months) but slower growth than Vicom. Comfortdelgro has another subsidiary, SBS Transit (SGX: S61), which is only a marginal dividend giant stock with bus and MRT businesses, not as strong as Vicom. Vicom has the characteristic of midfielder with 2 main investing goals of passive incomes (dividend) and capital gains.

Vicom is a small size stock, but it is a giant, much better than most 30 STI index component stocks including Comfortdelgro (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).

“Crisis is Opportunity” if a company business is stable or growing while the share prices fall significantly due to market fear. Monopoly stock in a stable or growing sector with empowerment by local authority would give unfair advantage to a business. There are over 1500 global giant stocks, some are stronger growth than Vicom and/or better dividend yield than Vicom. “What to Buy” does not mean “Now to Buy”, positioning on a giant stock requires comprehensive LOFTP (Levels 1-4, Optimism 0-100%, Fundamental, Technical and Personal Analysis) strategies.

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: Market Optimism, Stock Market Tagged: Comfortdelgro, monopoly, SBS Transit, SGX, ST Engineering, Transportation, Vicom

Kiasu & Kiasi Crisis Stock Strategy (鱼与熊掌)

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

There are 2 distinct fearful personalities in each person (depending on condition): Kiasu (怕输) and Kiasi (怕死). Kiasu is “Fear of Missing Out” (FOMO), eg. commonly seen in Great Singapore Sales (long queue overnight for certain special offer), afraid of missing the opportunity. Kiasi means “Fear of Death”, safety first in most actions with low risk. Of course, it is possible to have Kiasu and Kiasi together, eg. long queue in supermarket, afraid the food supply may be limited during Coronavirus crisis.

It is not a shame to be Kiasu and/or Kiasi as it is human nature. A smart investor may align one’s unique fearful personality with opportunities in global stock market crisis. This way, the inner potential could be fully maximized to profit from giant stocks at low optimism. Let’s study in more details on both crisis stock strategies.

1) Kiasu Crisis Stock Strategy

This is suitable for contrarian investor with counter-trend investing strategy during bearish stock market, especially when stock prices are far below the intrinsic value, dropping below low optimism <25%. Warren Buffett could be the best example of this type of investor, usually show hands when market is crashed, “be greedy when others are fearful”.

Similar to Great Singapore Sales, when a shopper has only $100 budget, seeing a handbag with 50% discount at $50, may buy 1 first due to fear of missing out (Kiasu) as the opportunity may be on available on that day. It is crucial to reserve the capital as there be another better offer elsewhere or another day with 70% discount.

Contrarian investor is similar to smart shopper, would invest in giant stocks with strong business fundamental with multiple entries. For stock capital of $10k, one may split into several investments, eg (10 x 10%) or (5 x 20%) or (2 x 50%), etc, diversifying over different prices, each entry could be X% apart, eg 5-10% lower each time to justify further investment. This way of average down at low optimism prices would help to get as close to bottom price as possible, even no one would know what will be the lowest price.

Assuming the crisis (buy low get lower) may last for 1-2 years, investing with giant dividend stocks (including giant REITs) with overt 5% dividend yield would help to strengthen the holding power as during this period, one could enjoy 5% passive income (assuming worst crisis may even cut 50% of dividend, left only 2.5%, still higher than bank interest rate of 1+%). When crisis is over (no need to time the market), naturally the investor would enjoy the capital gains when stock prices start to soar, supporting by growing business of giant stocks. Then, contrarian investor may need to plan for when to sell or how long to hold (similar to last few years when global stock markets were in high optimism >75%).

Common failure of this strategy by beginner is to buy weak fundamental stocks at “historical low” price or last 10 years low, which may become lower in future, company may go bankrupt during crisis (eg. certain weak airlines or F&B stocks in Coronavirus crisis), may not have chance to wait for share price or business recovery.

For this strategy to work, contrarian investor requires to invest in a portfolio of giant stocks at low optimism (ideally <25%) with strong business fundamental (following Dr Tee criteria, there are over 1500 global giant stocks). If capital is limited, one may invest in major stock index ETF at low optimism (eg. Hong Kong Hang Seng Index ETF, Singapore STI ETF, China SSEC ETF, etc) which indirectly has diversification over a portfolio of blue chip stocks (although not all are giant stocks).

2) Kiasi Crisis Stock Strategy

This is suitable for trend-following investor or traders, waiting for reversal of share prices from bottom (paying premium of higher prices similar to insurance to ensure price is back to uptrend), still buying at low optimism <25% (but in uptrend price direction). This is integration of trading (trend-following) into investing (waiting for price below intrinsic value of giant stocks).

Safety is important for kiasi traders who could not let the capital stuck in the stock market as regular income (capital gains within weeks or months) is important for short term to mid term trading. Therefore, a stronger uptrend over weeks or months need to be established first (reg. higher highs and higher lows price pattern) before entry.

In case the uptrend or reversal could be a technical rebound, a trader needs to do further deeper market analysis to understand the competing forces of greed (eg. unlimited QE, less cases in Coronavirus, etc) and fear (eg. serious Coronavirus condition, weaker economy and business). For risk management, a trader may apply S.E.T. (Stop Loss, Entry, Target Prices) trading plan, following strictly. When direction is correct, a trader may add more position in the same direction (eg. uptrend prices).

For trend-following investors or traders, the risk of stuck in long winter (low optimism period such as global stock crisis, Global Financial Crisis or even Great Depression) is lower than counter-trend investors, therefore possible to consider growth stocks (little dividend) or some midfielder stocks (mix of growth and dividend stocks), focusing more on capital gains in a more bullish stock market.

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There are about 100 global giant dividend stocks (suitable for Kiasu contrarian investors) and 300+ global giant growth stocks (suitable for Kiasi trend-following investors or traders). It is possible for a smart investor to integrate both kiasu and kiasi strategies together, investing with multiple entries in both bearish and when reversal to bullish stock market with growth dividend giant stocks at low optimism, having the best of 2 investing worlds (鱼与熊掌、实可兼得).

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

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 member.

Filed Under: Market Cycle Investing, Market Optimism, Personal Analysis, Stock Market, Technical Analysis, Value Investing Tagged: crisis stock investing, global financial crisis, global stock crisis, investment strategies, kiasi, kiasu, stock strategies

World Cup of Global Stock Crisis （危机重组）

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

In a football game, we need a balanced team with 11 strong players (defenders, midfielders, strikers, goalkeeper), coach, opponent team, referee and audience. Each of them is playing a key role for a successful world cup, highest level of stock investing. Similar for stock investing, the highest level of investing is positioning during global stock crisis, let’s learn how to apply 3 main strategies of dream team.

Defender stocks usually are positioned for passive income (dividend) regardless rain or shine, suitable for all investing at all time but higher yield during crisis. Midfielder stocks usually aim for growth with capital gains and some bonus dividend. Striker stocks may have higher risks but potential return in shorter time is higher when one could take calculated risks.

Goalkeeper is the cash or capital available for stock investing, careful allocation is important. If a team is too defensive, all 11 players would shield around the goal pole (100% cash), then risk is zero but the potential return is also zero (this strategy is possible during high optimism market, take profits by selling stocks and stay risk free, eg over the last 2 years of high optimism market > 75%). In a low optimism market, goalkeeper could be more aggressive, even a goalkeeper may play the role as defender (0% cash, all invested) when opponent (stock market) is very weak (eg. 0% Optimism with global financial crisis).

Coach is in fact each of the investors who is like a fund manager, making the strategic moves for all 11 players, adjusting their roles (more aggressive, more defensive, balanced, 100% cash, etc) based on the condition of stock market (opponent team) which could be different at various timeframes (short term, mid term, long term).

Referee is the investing results, sometimes may declare win or lose, depending on the time of the game (eg. full game or extended investing game in day, week, month, year or never ending game of a lifetime). Some players who violate the rules of stock game (eg. insider trading or fake financial report) would get caught, may be given a yellow / red card or banned permanently from the investing game.

Audience are all the readers of investing article here, who may feel excited, worried, sad or no emotion when reading about stock market. After the exciting investing game is over, audience would be back to normal life, working for others to gain active income. If an audience (reader or learner) is motivated, also taking action (Buy, Hold, Sell, Wait, Shorting) in investing, then the effort of learning will be paid off. If an audience is still an audience (reading hundreds of posts or video daily) without action aligned with own personality, life still goes on, continue the same way. So, to have a positive change in life, one may need to start a positive action.

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So much about the football team, main goal is to motivate beginners to start investing, especially using time (compounding effect) with global stock crisis (buy low for global giant stocks) to change your current life.

There are 3 main strategies during global stock crisis (which falls about 30% over the last 1 month):

1) Dividend Giant Stocks (Defender)

This strategy is more suitable for contrarian investor (investing during bearish stock market, eg in current market). Main objective is to collect high dividend yield >5-10% (acceptable even if dividend is cut by 50%, eg for REITs, still much better than holding to cash with only 1% bank interest rate) through investing in strong fundamental businesses, supported by strong holding power of 1-3 years to face the uncertain crisis.

This method requires multiple entries (for every crisis, eg 10-20% lower prices each time, see my past articles for examples) to average down the price and diversify into 10-20 global giant stocks with at least 3 sectors from 3 countries. For 20 giant stocks (with min 5% dividend yield), assuming 1 giant stock may even go bankrupt (eg. DBS or OCBC, unlikely but assume it happens), this is max 5% permanent loss, which could be compensated easily by holding 1 year with 5% dividend yield.

For value investing, the “cost” of missing the opportunity boat may be higher than buying in falling price because of greedy to buy at the lowest price, eventually untrained investor may either need to pay higher price or totally miss again, buying at just fair price when marketing is recovering.

2) Growth Giant Stocks (Midfielder)

This strategy is more suitable for trend-following investor (possible for counter-trend investor but need to have min 2-3% dividend yield as mid-fielder). The high growth stocks are hard to get low optimism, this requires more patience, when opportunity comes, one may take action, despite the correction in global stock crisis may not be a lot (eg. 20-30%), unlike over 50% price correction in cyclic stocks, but these growth stocks are planned for buy low and hold long term for potential multi bagger (3X – 10X capital gains). Growth stocks investors have option not to sell during the next global financial crisis because the stocks are too good, will be the final 1% stocks to sell unless it is the end of the world (if so, stock market is no longer important to human, therefore no risk at all then).

3) Cyclic Giant stocks (Striker)

This strategy may be considered for shorter term trading or crisis investing (eg oil & gas stocks or crude oil itself, airlines stocks, F&B stocks, etc) with severe price correction during crisis, or for cyclical sectors such as bank, property and technology stocks which follows economic cycles (will fall badly during global economic crisis). Cyclic stocks do not need dividend, therefore risks are higher, more suitable for trend-following, wait for reversal in prices. For counter-trend investing, it is only possible if it is <10% of portfolio or 1 of multiple entries (easy new entry may wait for extra 20% dip before entering again). Crisis investing stocks would suffer real damage in business but should be at sector level, not only on individual stock.

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A smart investor who hopes to enter the bearish stock market right away with less risks through dividend stock, may also combine different Ein55 dividend stock investing strategies developed by Dr Tee, eg:

1) Growth Dividend Stocks

– collect dividend during low optimism, then enjoy capital gains when crisis is over.

2) Cyclic Dividend Stocks

– crisis giant stocks with great price correction and high dividend yield

3) Defensive Dividend stocks

– Dividend stocks with defensive business and stable stock prices

4) Undervalue Dividend Stocks

– dividend stocks with strong assets in property and cash but share price is less than 50% of value with regular dividend payment

5) Lifetime / Long Term Dividend Stocks

– Some may compromise dividend for higher and more stable growth, especially when planning for longer term investing or even lifetime investing (buy low and hold for life).

There are over 1500 global giant stocks, including 100 global dividend giant stocks based on Dr Tee criteria. An investor (coach) just needs to choose 10-20 of them to form a football team (own stock portfolio) to join the current world cup of stock crisis. Winner would gain the highest title of stock investing with potential high return. However, it requires practices and training to achieve this level, eg. playing in a state investing game first (minor stock correction) or country investing game (major stock correction).

Don’t continue to be an audience to cheer for your favourite team or do nothing throughout the game of investing. Instead, join the game as a coach now to form your own stock investing dream team, crisis is usually the best timing to recruit the best stock players who may be discounted by more than 50% in market prices.

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 member.

Filed Under: Market Optimism, Personal Analysis, Stock Market, Value Investing Tagged: dbs, dbs bank, global financial crisis, global stock crisis, investing strategies, ocbc, world cup

Wait for Durian to Drop in Stock Crisis 榴莲忘返

Posted on April 2, 2020 Written by Dr Tee (Ein55)

Investing in global stock crisis is similar to wait for durian to fall (best if other people’s durian tree). It is fine to wait for durians to drop, eg. DBS Bank (SGX: D05) below $10/share or giant stocks below low optimism level, but if there is a small durian (eg. DBS below $15/share) comfortable to oneself along the way (so low that everyone could reach), may take one first, no need to wait for the biggest durian in the world as luck may not be there all the time (eg. buying at the lowest price).

This way, at least when the durian waiting game is over (Coronavirus fear), each investor has a gift from heaven for investment during crisis.

DBS Bank (SGX: D05) below $10/share or OCBC Bank (SGX: O39) below $5/share is as if durian drops down, some “abnormal” contrarian investors would start to enter. Every 10+ years, this DBS durian only has chance to drop, currently not ripe yet. Other giant stocks fruits (may not as tasty as durian) start to ripe already, hanging low, waiting for investors to pluck with a low price. But some worry the price of future durians may drop further, so still waiting for lower price. Question is durian may stop to drop one day, no one know when is the day, so need to take calculated risk at certain point, otherwise need to accept possibility of missing the opportunity boat one day.

Usually summer time around Jun-Aug is durian season here, perhaps implying more opportunities then. Coronavirus may end by summer for stock market to recover or pandemic may continue longer to cause global financial crisis. Stock investment is similar to wait for durian, must eventually take action (Buy, Hold, Sell, Wait, Shorting), otherwise one may be still empty handed after the season is over (榴莲忘返).

Cash is king when used at the right time. The key is to define the “right time” for everyone, aligned to own personality.

1) Counter-trend investors (buy low sell high) may start to take action in bearish stock market below low optimism < 25%.

2) Life-time investors (buy low & hold for life time) may want to wait for Level 3-4 (eg US) to fall to low optimism or even until global financial crisis happens (eg GDP declines over 10% in many countries).

3) Trend-follower traders or investors may wait until the durian feast is over, there will be still leftover due to over supply, not in a hurry to join the bearish stock market, wait for the trend to reverse first before long the market. Some traders who could not wait till summer, may want to collect “junk” durian by selling to others (shorting at junk stocks in bear market) to make profit.

Despite many global giant stocks are at low optimism (not yet for DBS), but Levels 3 (country, eg. US) and Level 4 (world) stock market are not yet at low optimism (but trending down again this week), so it is prudent to save silver bullets but need to have a plan to trigger it, so that will get something when stock hunting game is over.

Remember to ensure durian tree will not fall first (business fundamental is strong, won’t go bankrupt easily) during the thunder storm (economic crisis), otherwise no more durian in future, investor may also get injure as buy low for weak fundamental stock may get lower or get zero eventually.

So, which type of durian are you waiting to drop? D24 (DBS) or Mao Shan Wang or any global giant durian?

There are 30 Banking & Finance Stocks in Singapore including DBS Bank (investor has to focus only on giant stocks for investing):
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).

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: Macroeconomy, Market Optimism, Stock Market Tagged: bank stock, crisis stock investing, dbs, dbs bank, durian, global financial crisis, stock market crisis, stock strategies

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