Stock Market Updates with Bank Stocks and REITs

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

30 Singapore Banking and Finance Stocks (狮城财神)

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

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

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

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

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

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

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

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

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

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

1) Bank Stocks

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

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

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

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

3 Singapore Bank Stocks DBS OCBC UOB

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

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

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

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

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

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

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

2) Finance Stocks

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

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

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

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

3) Insurance Stocks

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

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

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

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

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

4) Stock Broker Stocks

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

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

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

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

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

5) Pawnbroker Stocks

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

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

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

3 Singapore Pawnbroker Stocks ValueMax Maxi-Cash Money Max Gold

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

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

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

6) Investment and Other Stocks

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

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

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

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.

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

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

Dr Tee Investment Course (Stock, Property, Commodity, Forex, Bond)
Filed Under: Commodity Market, Fundamental Analysis, Macroeconomy, Market Cycle Investing, Market Optimism, Stock Market, Technical Analysis, Value Investing Tagged: , , , , , , , ,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Dr Tee Investment Course (Stock, Property, Commodity, Forex, Bond)
Filed Under: Fundamental Analysis, Market Cycle Investing, Property Market, Stock Market, Value Investing Tagged: , , ,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

3) Long Term Dividend Investing

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

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

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

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

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

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

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

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

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

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

Watching NASDAQ to 10000 Points (旁观者迷)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Dr Tee Investment Course (Stock, Property, Commodity, Forex, Bond)
Filed Under: Macroeconomy, Market Cycle Investing, Market Outlook, Stock Market Tagged: , , ,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Rights Issue Demerger Sembcorp Marine Sembcorp Industries Temasek

2) Demerger of Sembcorp Industries and Sembcorp Marine

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Posted on June 5, 2020 Written by
Singapore REITs, Business Trusts, Dividend Stocks

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

1) Retail REITs

2) Office REITs

3) Industrial REITs

4) Healthcare REITs

5) Diversified REITs

6) Data Center REIT

7) Hospitality REIT

8) Business Trusts

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

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

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

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

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

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

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

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

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

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

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

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

NoTickerROEDividend Yield (%)PB = Price /NAVTypeStrategy
1BHG Retail Reit (SGX: BMGU)11.46.40.7Retail 
2CapitaLand Mall Trust (SGX: C38U)9.05.71.0RetailDefender
3CapitaLand Retail China Trust (SGX: AU8U)8.87.30.9RetailDefender
4Frasers Centrepoint Trust (SGX: J69U)8.34.71.2RetailDefender
5Lippo Malls Trust (SGX: D5IU)-0.715.40.7Retail 
6Sasseur Reit (SGX: CRPU)11.88.40.8Retail 
7SPH REIT (SGX: SK6U)6.15.90.9Retail 
8Starhill Global Reit (SGX: P40U)3.48.20.6RetailDefender
9United Hampshire US Reit (SGX: ODBU)4.1–0.789Retail 
10CapitaLand Commercial Trust (SGX: C61U)6.05.01.0OfficeDefender
11Elite Commercial REIT GBP (SGX: MXNU)––1.2Office 
12IREIT Global (SGX: UD1U)19.47.70.9OfficeMid-fielder
13Keppel Pacific Oak US REIT (SGX: CMOU)9.38.40.9Office 
14Keppel Reit (SGX: K71U)2.64.80.9OfficeDefender
15ManulifeReit USD (SGX: BTOU)3.87.21.0OfficeMid-fielder
16OUE Commercial Reit (SGX: TS0U)3.58.00.7Office 
17Prime US ReitUSD (SGX: OXMU)4.13.51.0Office 
18AIMS APAC Reit (SGX: O5RU)9.07.60.9Industrial 
19ARA LOGOS Logistics Trust (SGX: K2LU)-2.19.81.0Industrial 
20Ascendas Reit (SGX: A17U)7.44.41.5IndustrialDefender
21EC World Reit (SGX: BWCU)9.58.40.8Industrial 
22ESR-REIT (SGX: J91U)-0.19.71.0Industrial 
23Mapletree Industrial Trust (SGX: ME8U)10.34.61.6IndustrialMid-fielder
24Mapletree Logistics Trust (SGX: M44U)8.24.21.5IndustrialDefender
25Sabana Reit (SGX: M1GU)3.57.80.7Industrial 
26ARA Hospitality Trust USD (SGX: XZL)2.210.10.5Hospitality 
27Ascott Trust (SGX: HMN)5.17.20.8HospitalityStriker
28CDL Hospitality Trust (SGX: J85)6.18.20.7HospitalityStriker
29Eagle Hospitality Trust USD (SGX: LIW)18.225.30.2Hospitality 
30Far East Hospitality Trust (SGX: Q5T)3.67.20.6Hospitality 
31Frasers Hospitality Trust (SGX: ACV)3.48.90.7Hospitalit 
32First Reit (SGX: AW9U)5.712.10.7HealthcareStriker
33ParkwayLife Reit (SGX: C2PU)10.43.81.8HealthcareMid-fielder
34Cromwell Reit EUR (SGX: CNNU)8.38.90.9Diversified 
35Cromwell Reit SGD (SGX: CSFU)8.38.50.9Diversified 
36Frasers Logistics & Commercial Trust (SGX: BUOU)9.83.91.9DiversifiedMid-fielder
37Lendlease Reit (SGX: JYEU)––0.9Diversified 
38Mapletree Commercial Trust (SGX: N2IU)9.43.81.2DiversifiedMid-fielder
39Mapletree North Asia Commercial Trust (SGX: RW0U)2.67.70.7DiversifiedDefender
40Soilbuild Business Space Reit (SGX: SV3U)4.010.20.7Diversified 
41Suntec Reit (SGX: T82U)6.56.00.7Diversified 
42Keppel DC Reit (SGX: AJBU)5.73.12.2Data CenterMid-fielder
43Accordia Golf Trust (SGX: ADQU)-17.06.40.8Business Trust 
44Ascendas India Trust (SGX: CY6U)18.24.61.3Business TrustDefender
45Asian Pay Tv Trust (SGX: S7OU)1.87.40.2Business Trust 
46Dasin Retail Trust (SGX: CEDU)-1.98.20.6Business Trust 
47FSL Trust (SGX: D8DU)5.029.30.5Business Trust 
48HPH Trust SGD (SGX: P7VU)2.011.90.3Business Trust 
49HPH Trust USD (SGX: NS8U)2.012.60.3Business Trust 
50Keppel Infrastructure Trust (SGX: A7RU)2.97.02.1Business Trust 
51NetLink NBN Trust (SGX: CJLU)2.75.01.4Business TrustMid-fielder
52RHT HealthTrust (SGX: RF1U)–145.50.9Business Trust 

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

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

1) Retail REITs

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

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

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

2) Office REITs

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

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

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

3) Industrial REITs

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

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

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

4) Healthcare REITs

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

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

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

5) Diversified REITs

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

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

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

6) Data Center REIT

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

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

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

7) Hospitality REIT

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

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

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

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

8) Business Trusts

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

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

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

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

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

There are 140 Property Stocks in Singapore excluding 52 REITs and Business Trusts (investor has to focus only on giant stocks for investing):
3Cnergy (SGX: 502), A-Smart (SGX: BQC), AEI^ (SGX: AWG), AIMS Property (SGX: BVP), APAC Realty (SGX: CLN), Abterra (SGX: L5I), Acromec (SGX: 43F), Amara (SGX: A34), Amcorp Global (SGX: S9B), AnnAik (SGX: A52), Astaka (SGX: 42S), BBR (SGX: KJ5), BRC Asia (SGX: BEC), BlackGoldNatural (SGX: 41H), Boldtek (SGX: 5VI), Bonvests (SGX: B28), Boustead (SGX: F9D), Boustead Projects (SGX: AVM), Bukit Sembawang (SGX: B61), Bund Center (SGX: BTE), CSC (SGX: C06), CapitaLand (SGX: C31), Casa (SGX: C04), Chemical Industries (SGX: C05), China Great Land (SGX: D50), China International (SGX: BEH), China Real Estate (SGX: 5RA), China Yuanbang (SGX: BCD), Chip Eng Seng (SGX: C29), City Development (SGX: C09), DISA (SGX: 532), Debao Property (SGX: BTF), ETC Singapore (SGX: 1C0), Edition (SGX: 5HG), EnGro Corporation (SGX: S44), Fraser and Neave F&N (SGX: F99), Far East Orchard (SGX: O10), Figtree (SGX: 5F4), First Sponsor (SGX: ADN), Fragrance (SGX: F31), Frasers Property (SGX: TQ5), GYP Properties (SGX: AWS), Gallant Venture (SGX: 5IG), Golden Energy (SGX: AUE), Goodland (SGX: 5PC), GuocoLand (SGX: F17), HL Global Enterprises (SGX: AVX), Hatten Land (SGX: PH0), Heeton (SGX: 5DP), Hiap Hoe (SGX: 5JK), Hiap Seng (SGX: 510), Ho Bee Land (SGX: H13), Hock Lian Seng (SGX: J2T), Hong Fok (SGX: H30), Hong Lai Huat (SGX: CTO), Hong Leong Asia (SGX: H22), Hongkong Land USD (SGX: H78), Hor Kew (SGX: BBP), Huationg Global (SGX: 41B), Hwa Hong (SGX: H19), IPC Corp (SGX: AZA), ISOTeam (SGX: 5WF), Imperium Crown (SGX: 5HT), Jasper Investments (SGX: FQ7), KOP (SGX: 5I1), KSH (SGX: ER0), Keong Hong (SGX: 5TT), Keppel Corp (SGX: BN4), Keppel Reit (SGX: K71U), King Wan (SGX: 554), Koh Brothers (SGX: K75), Koon (SGX: 5DL), Kori (SGX: 5VC), LHN (SGX: 41O), Ley Choon (SGX: Q0X), Lian Beng (SGX: L03), Low Keng Huat (SGX: F1E), Lum Chang (SGX: L19), MMP Resources (SGX: F3V), MYP (SGX: F86), Metro (SGX: M01), OIO (SGX: KUX), OKH Global (SGX: S3N), OKP (SGX: 5CF), OneApex (SGX: 5SY), Oxley (SGX: 5UX), PSL (SGX: BLL), Pacific Century (SGX: P15), Pacific Star Development (SGX: 1C5), Pan Hong (SGX: P36), Pavillon (SGX: 596), Perennial Holdings (SGX: 40S), Pollux Properties (SGX: 5AE), PropNex (SGX: OYY), Raffles Infrastructure (SGX: LUY), Regal International (SGX: UV1), Renaissance United (SGX: I11), Rich Capital (SGX: 5G4), Roxy-Pacific (SGX: E8Z), Ryobi Kiso (SGX: BDN), SHS (SGX: 566), SLB Development (SGX: 1J0), SP Corporation (SGX: AWE), Sasseur Reit (SGX: CRPU), Second Chance (SGX: 528), Sin Heng Mach (SGX: BKA), Sinarmas Land (SGX: A26), SingHaiyi (SGX: 5H0), SingHoldings (SGX: 5IC), Singapore-eDev (SGX: 40V), Sinjia Land (SGX: 5HH), Soilbuild Construction Group (SGX: S7P), Starland (SGX: 5UA), Straits Trading (SGX: S20), Swee Hong (SGX: QF6), Sysma (SGX: 5UO), TA (SGX: PA3), TTJ (SGX: K1Q), Tai Sin Electric (SGX: 500), Thakral (SGX: AWI), Thomson Medical Group (SGX: A50), Tiong Seng (SGX: BFI), Top Global (SGX: BHO), Tosei (SGX: S2D), Transcorp (SGX: T19), Tritech (SGX: 5G9), UIC (SGX: U06), UOA (SGX: EH5), UOL (SGX: U14), USP Group (SGX: BRS), Vibrant Group (SGX: BIP), Wee Hur (SGX: E3B), Wing Tai (SGX: W05), Yanlord Land (SGX: Z25), Yeo Hiap Seng (SGX: Y03), Ying Li International (SGX: 5DM), Yoma Strategic (SGX: Z59), Yongmao (SGX: BKX), Yongnam (SGX: AXB), Yorkshine (SGX: MR8).

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

Although there are 21 giant REITs and Business Trusts listed in this article (3 roles of Striker / Mid-fielder / Defender), not all stocks are suitable for everyone. A REIT investor has to further select the right type of giant stock to align with own personality to be successful in short trading, medium term investing or long term investing, knowing What to Buy, When to Buy / Sell.

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

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

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

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

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

Dr Tee Investment Course (Stock, Property, Commodity, Forex, Bond)
Filed Under: Forex, Fundamental Analysis, Macroeconomy, Market Cycle Investing, Market Outlook, Stock Market, Technical Analysis, Trading, Value Investing Tagged: , , , ,

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

Posted on June 1, 2020 Written by
Crisis glove stocks Top Glove Hartalega Kossan Supermax Riverstone Covid-19

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Strong Fundamental + Market Greed = Positive Speculation

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Top Glove and Riverstone are not 30 STI index component stocks but they are much stronger than most of these blue chip stocks in Singapore (investor has to focus only on giant stocks for investing):
DBS Bank (SGX: D05), Singtel (SGX: Z74), OCBC Bank (SGX: O39), UOB Bank (SGX: U11), Wilmar International (SGX: F34), Jardine Matheson Holdings JMH (SGX: J36), Jardine Strategic Holdings JSH (SGX: J37), Thai Beverage (SGX: Y92), CapitaLand (SGX: C31), Ascendas Reit (SGX: A17U), Singapore Airlines (SGX: C6L), ST Engineering (SGX: S63), Keppel Corp (SGX: BN4), Singapore Exchange (SGX: S68), Hongkong Land (SGX: H78), Genting Singapore (SGX: G13), Mapletree Logistics Trust (SGX: M44U), Jardine Cycle & Carriage (SGX: C07), Mapletree Industrial Trust (SGX: ME8U), City Development (SGX: C09), CapitaLand Mall Trust (SGX: C38U), CapitaLand Commercial Trust (SGX: C61U), Mapletree Commercial Trust (SGX: N2IU), Dairy Farm International (SGX: D01), UOL (SGX: U14), Venture Corporation (SGX: V03), YZJ Shipbldg SGD (SGX: BS6), Sembcorp Industries (SGX: U96), SATS (SGX: S58), ComfortDelGro (SGX: C52).

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Dr Tee Investment Course (Stock, Property, Commodity, Forex, Bond)
Filed Under: Fundamental Analysis, Market Outlook, Stock Market, Technical Analysis, Trading, Value Investing Tagged: , , , , , , , ,

25 MSCI Singapore & 30 STI Stocks (仙人指路)

Posted on May 30, 2020 Written by
30 STI Index Component Stocks New MSCI Singapore

Both MSCI Singapore Index (SiMSCI, 25 stocks) and Straits Times Index (STI, 30 stocks) are important guidance for Singapore stock investors on “Good” stocks for investing. In this article, you will learn on how to invest in index stocks in a right way. MSCI Singapore Index has recently removed 4 blue chip stocks (which are also 30 STI component stocks) from the list:

1) ComfortDelGro (SGX: C52)

2) SATS (SGX: S58)

3) Sembcorp Industries (SGX: U96)

4) Singapore Press Holdings, SPH (SGX: T39)

and adding only 1 stock as replacement: Mapletree Logistics Trust, MLT (SGX: M44U), a giant Singapore REIT, which is also 30 STI component stock.

MSCI Singapore Index component stock selection criteria is stricter than STI index (only based on trading market capitalization, a weaker blue chip stock with high trading volume may still stay) although most of the component stocks of both indices are similar.

Comfortdelgro (taxi business) and SATS (airlines sector) are affected by recent Covid-19 crisis, having good chance to come back again to MSCI Singapore when sector crisis is over, business could recover to support reversal of share prices with higher trading volume.

Sembcorp Industries (utility sector) has weaker business, especially in Oil & Gas sector with subsidiary stock, Sembcorp Marine (SGX: S51) which has losing business due to bearish crude oil market. Similarly, SPH (newspaper/media & property businesses) has declining press business over the past decade, supported mainly by property business (including subsidiary SPH Reit, SGX: SK6U). For both Sembcorp Industries and SPH, they are harder to come back again to MSCI Singapore Index as it would take a long term for overall business to recover again.

These 4 blue chip stocks delisted from MSCI Singapore Index may not be delisted from 30 STI in near future as they still have high trading volume, despite bearish share prices.  CapitaCom Trust – CCT (SGX: C61U) will be the next to be delisted from 30 STI when it is merged with CapitaMall Trust – CMT (SGX: C38U) around June 2020. If so, the 5 reserve stocks of STI in waiting list are:

1) Mapletree Industrial Trust (SGX: ME8U)

2) Suntec REIT (SGX: T82U)

3) Keppel REIT (SGX: K71U)

4) Keppel DC REIT (SGX: AJBU)

5) Netlink NBN Trust (SGX: CJLU)

These 5 emerging STI stocks (dividend-based stocks, all are REITs / Business Trust) are selected purely based on trading market capitalization (trading price x trading volume). Therefore, not all are giant REITs (based on Dr Tee giant criteria). Stock investors who follow either 30 STI or 25 MSCI Singapore Index component stocks may not invest in high quality stocks.

Below are the 30 STI component stocks based on the last price traded (29 May 2020), sorted by trading market cap (share price x volume) from low to high (selection criteria for 30 STI is the Top 30 stocks with the highest values).

Despite DairyFarm and ThaiBev have stronger business fundamental than most 30 STI stocks, they have the lowest trading market cap, therefore having higher risk of being delisted in future.  The earlier 4 blue chip stocks which are delisted from MSCI Singapore Index are relatively “safe” in 30 STI due to high trading volume, despite weaker business with bearish share prices. From stock investing perspective, it does not make sense at all but this is the rule of the game.

NoNameTickerLast $VolumeTrading Market Cap
1Dairy Farm International(SGX: D01)4.221,9638,282
2Thai Beverage(SGX: Y92)0.6318,77411,827
3Hongkong Land(SGX: H78)3.765,77021,694
4Jardine Strategic Holdings JSH(SGX: J37)19.951,08921,730
5UOL(SGX: U14)6.844,21828,850
6Venture Corporation(SGX: V03)15.31,96830,105
7Genting Singapore(SGX: G13)0.78541,44132,531
8City Development(SGX: C09)7.694,42434,018
9Jardine Cycle & Carriage(SGX: C07)21.861,57534,427
10YZJ Shipbldg SGD(SGX: BS6)0.9439,56037,187
11ST Engineering(SGX: S63)3.1912,02938,373
12Wilmar International(SGX: F34)3.9812,23148,681
13CapitaLand Commercial Trust(SGX: C61U)1.7528,11349,197
14CapitaLand(SGX: C31)2.8917,75151,301
15Keppel Corp(SGX: BN4)5.9110,23160,466
16Singapore Airlines(SGX: C6L)3.8216,55163,225
17Jardine Matheson Holdings JMH(SGX: J36)40.151,58663,697
18Mapletree Commercial Trust(SGX: N2IU)243,28386,567
19CapitaLand Mall Trust(SGX: C38U)2.0355,627112,924
20OCBC Bank(SGX: O39)8.5513,772117,751
21Ascendas Reit(SGX: A17U)3.1338,228119,653
22Singapore Exchange(SGX: S68)8.2815,306126,734
23DBS Bank(SGX: D05)19.477,941154,613
24Sembcorp Industries(SGX: U96)1.36115,462157,028
25Singtel(SGX: Z74)2.4971,375177,724
26SPH(SGX: T39)1.28205,814263,442
27UOB Bank(SGX: U11)19.513,724267,622
28SATS(SGX: S58)2.66102,907273,732
29ComfortDelGro(SGX: C52)1.44255,744368,272
30Mapletree Logistics Trust(SGX: M44U)2.05314,294644,303

Since trading market capitalization is insufficient, a stock investor should include minimum 3 key Fundamental Criteria for 3 types of stocks: Growth / Dividend / Undervalue:
1) ROE (a criteria for growth stocks, eg. ROE > 5%),
2) Dividend Yield, DY (a criteria for dividend stocks, eg. DY > 5%),
3) Price-to-Book (PB) ratio, Price/NAV (a criteria for undervalue stocks, eg. PB < 1).

In each of the category, additional stock criteria has to be included to ensure they are giant stocks (based on Dr Tee criteria). For example, SPH has 8.6% dividend yield, it does not mean it is a good dividend stock as this high yield is generated with declining dividend and low share prices, driven by weaker business fundamental which is a value trap.

No) Stock (Ticker): ROE (Div Yield %) PB = Price/NAV
1) Ascendas Reit (SGX: A17U) 7.4% (4.4%) 1.5
2) CapitaLand Commercial Trust (SGX: C61U) 6.0% (5.1%) 1.0
3) CapitaLand (SGX: C31) 8.8% (4.1%) 0.6
4) CapitaLand Mall Trust (SGX: C38U) 9.0% (5.9%) 1.0
5) City Development (SGX: C09) 5.2% (1.0%) 0.7
6) ComfortDelGro (SGX: C52) 10.2% (6.8%) 1.2
7) Dairy Farm International (SGX: D01) 26.8% (5.0%) 4.7
8) DBS Bank (SGX: D05) 12.3% (6.4%) 1.0
9) Genting Singapore (SGX: G13) 8.5% (5.1%) 1.2
10) Hongkong Land (SGX: H78) 0.5% (5.9%) 0.2
11) Jardine Cycle & Carriage (SGX: C07) 12.8% (5.4%) 0.9
12) Jardine Matheson Holdings JMH (SGX: J36) 9.4% (4.3%) 1.0
13) Jardine Strategic Holdings JSH (SGX: J37) 6.1% (1.8%) 0.6
14) Keppel Corp (SGX: BN4) 6.3% (3.4%) 1.0
15) Mapletree Commercial Trust (SGX: N2IU) 9.4% (4.0%) 1.1
16) Mapletree Logistics Trust (SGX: M44U) 8.2% (4.0%) 1.6
17) OCBC Bank (SGX: O39) 10.3% (6.2%) 0.8
18) SATS (SGX: S58) 15.1% (7.1%) 1.8
19) Sembcorp Industries (SGX: U96) 3.1% (3.7%) 0.4
20) Singapore Exchange (SGX: S68) 35.9% (3.6%) 8.2
21) Singapore Airlines (SGX: C6L) -1.4% (0.8%) 0.8
22) Singtel (SGX: Z74) 4.0% (4.9%) 1.5
23) SPH (SGX: T39) 5.8% (8.6%) 0.6
24) ST Engineering (SGX: S63) 26.0% (4.7%) 4.5
25) Thai Beverage (SGX: Y92) 20.1% (3.4%) 2.7
26) UOB Bank (SGX: U11) 11.0% (5.6%) 0.9
27) UOL (SGX: U14) 4.8% (2.6%) 0.6
28) Venture Corporation (SGX: V03) 14.5% (4.6%) 1.8
29) Wilmar International (SGX: F34) 7.7% (3.1%) 1.1
30) Yangzijiang (SGX: BS6) 10.0% (4.8%) 0.6

For a stock to be listed in 30 STI or even 25 MSCI Singapore Index (to be reviewed quarterly), it implies more support from global investors, especially for institutional investors who view index as key guidance (仙人指路). However, the stock selection criteria based on trading market cap is insufficient, therefore a smart investor should select 10-20 global giant stocks over 3 sectors and 3 countries (eg. Singapore, US, Hong Kong or any country with growing economy), forming own fund (no management fee is needed).

Choice of global stock market is important on type of giant stocks (Defenders / Mid-fielders / Strikers), as well as personality of investor (eg. long term investing or short term trading). Defender stocks aim for dividend collection, Striker stocks are more for quicker return (eg. trading momentum stocks) while Mid-fielder stocks is a well-balance between capital gains and moderate dividends.

1) Singapore stock market is more suitable for dividend stocks (eg. Singapore REITs) but growth is limited with defensive strategy alone. Global stock crisis is a good opportunity to pick up some strong giant dividend stocks with high dividend yield. High dividend yield

2) US stock market is more suitable for growth stocks (investing) or momentum stocks (trading) but minimal dividend to protect investors during correction. An investor may focus on stocks with strong business fundamental as a form of protection. A trader may need to monitor the price trends, following S.E.T. (Stop Loss / Entry / Target Prices) trading plan.

3) Hong Kong stock market has a good mix of dividend and growth stocks but become center of political power fighting between US and China, therefore prices are more volatile which may be suitable for those higher risk tolerance investors and traders.

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

“Sell in May and Go Away” happen again for Singapore (STI Index) and Hong Kong (HSI) Index stock markets for Year 2020. A reason for month of May (Q2) to be bearish could be due to final dividend given in Q2, some investors start to sell after the harvest or the share prices drop after significant dividends are given out, especially when there are news of uncertain financial markets.

Singapore and Hong Kong have many good dividend giant stocks. Price correction after Ex-Dividend is common, especially when combine with this psychological barrier in May. Dividend is just a bonus, more important is Capital Gains for a giant dividend stock.

For US and other global stock markets (eg. Malaysia, Germany, Japan, Taiwan, etc.), mostly have positive gains in May 2020. In fact, US S&P 500 Index is recovering above critical resistance of 3000 points again, an important milestone to support short term trading, especially with Buy High Sell Higher trading strategy. US Nasdaq Index is above 9000 points, challenging the new historical of 10000 points, supported by bullish technology sector of stocks.

Therefore, a stock investor or trader needs to equip with more skills to profit in current global stock market. Start learning 5 essential LOFTP Strategies (Level / Optimism / Fundamental / Technical / Personal Analysis).

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

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

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

Dr Tee Investment Course (Stock, Property, Commodity, Forex, Bond)
Filed Under: Fundamental Analysis, Market Outlook, Stock Market, Technical Analysis, Value Investing Tagged: , , , , , ,
« Previous Page
Next Page »