5 Singapore Semiconductor 5G Stocks (力争上游)

Posted on May 27, 2020 Written by
Semiconductor 5G stocks, AEM, UMS, Frencken, Micro-Mechanics, Avi-Tech Electronics, Telco

In this article, you will learn 5 Singapore semiconductor supplier stocks which could benefit from emerging 5G technology, requiring 5 different stock strategies for investing or trading.

1) Micro-Mechanics Holdings (SGX: 5DD) – Singapore Semiconductor Giant Stock

2) UMS Holdings (SGX: 558) – Singapore Semiconductor Giant Stock

3) AEM Holdings (SGX: AWX) – Singapore Semiconductor Stock

4) Frencken Group (SGX: E28) – Singapore Semiconductor Stock

5) Avi-Tech Electronics (SGX: BKY) – Singapore Semiconductor Stock

Over the past few decades, semiconductor sector is driven mainly by telecommunication (eg. smart phones and related products) and consumer electronics (eg. PC, portable devices, etc). Telco sector introduces new Generation of technology about every 10 years (1980s = 1G with analog voice, 1990s = 2G with digital voice, 2000s = 3G with mobile data, 2010s = 4G with mobile broadband, 2020s = 5G with much faster system to maximize Internet of Things – IoT). Current development of 5G, would help to support growth in global semiconductor value chain over the next decade.

Semiconductor (front-end / back-end) technology development milestones are driven by Moore’s Law which predicted IC capacity or density would double itself about every 18 months.  So, telco technology Generation of every 10 years is related to Moore’s Law 2X cycle of every 18 months (1.5 year):

Telco / Semiconductor = (10 / 1.5) = 6.67 times of doubling

So, telco capacity in every Generation of 10 years = 2^(6.67) = 102 times difference. Indeed, 5G technology speed and capacity is about 100X faster or more than current 4G technology, supported by Moore’s Law (力争上游).

Gordon Moore only did a rough extrapolation of future technology a few decades ago. However, it serves as a roadmap for smart scientists to challenge the technology limit at each junction, motivating giant semiconductor and telco companies to invest billions of dollars in R&D to achieve these goals which Moore’s Law is still valid today.

Unique technology knowhow (could be in the form of technical patents or trade secrets with amazing powerful new products) is a strong economic moat for a technology company, especially with a stock.  Every good news in leadership in new technology (eg. from 4G to 5G, from 7nm to 5nm semiconductor technology, etc) would help to grow the share prices. In fact, the semiconductor or telco company investor earn much more from stock market than from the actual business.  The business is simply a driver (if positive growing results) to drive the stock prices. So, it is important for a stock investor to differentiate among business investment (pure fundamental), stock investment (long term) and stock trading (short term).

There are several ways to invest in 5G related companies, for example through major mobile phone manufacturers (eg. Apple – NASDAQ: AAPL, Xiaomi – HKEx: 1810, etc), global and local Telco companies (eg. AT&T – NYSE: T, Singtel – SGX: Z74, etc), leading semiconductor companies (eg. TSMC – NYSE: TSM, Intel – NASDAQ: INTC, AMD – NASDAQ: AMD, Nvidia – NASDAQ: NVDA, Qualcomm – NASDAQ: QCOM, etc) or other related supplier businesses.

There are 53 Electronics stocks and 28 IT stocks, total 81 Technology Stocks in Singapore which have connections with semiconductor industry:

AEM Holdings (SGX: AWX), Accrelist Limited (SGX: QZG), Acma Limited (SGX: AYV), Adventus Holdings (SGX: 5EF), Allied Technologies Limited (SGX: A13), Amplefield Limited (SGX: AOF), Avi Tech Electronics (SGX: BKY), Ban Leong Technologies (SGX: B26), CDW Holding (SGX: BXE), CFM Holdings (SGX: 5EB), CPH Limited (SGX: 539), Chuan Hup Holdings (SGX: C33), Creative Technology (SGX: C76), Datapulse Technology (SGX: BKW), Dragon Group International (SGX: MT1), Dutech Holdings (SGX: CZ4), Ellipsiz Limited (SGX: BIX), Excelpoint Technology (SGX: BDF), Frencken Group (SGX: E28), Global Invacom Group (SGX: QS9), GP Industries (SGX: G20), Global Testing Corporation (SGX: AYN), Grand Venture Technology (SGX: JLB), HGH Holdings (SGX: 5GZ), Hu An Cable Holdings (SGX: KI3), JEP Holdings (SGX: 1J4), Jadason Enterprises (SGX: J03), Karin Technology Holdings (SGX: K29), Libra Group (SGX: 5TR), Manufacturing Integration Technology (SGX: M11), Maruwa Yen1k (SGX: M12), MeGroup Limited (SGX: SJY), Micro-Mechanics Holdings (SGX: 5DD), Plastoform Holdings (SGX: AYD), Polaris Limited (SGX: 5BI), Powermatic Data Systems  (SGX: BCY), Renaissance United (SGX: I11), SEVAK Limited (SGX: BAI), SUTL Enterprise (SGX: BHU), Serial System (SGX: S69), Shinvest Holding (SGX: BJW), Sunright Limited (SGX: S71), Sunrise Shares Holdings (SGX: 581), TT International (SGX: T09), Thakral Corporation (SGX: AWI), The Place Holdings (SGX: E27), Trek 2000 International (SGX: 5AB), Valuetronics Holdings (SGX: BN2), Venture Corporation (SGX: V03), Willas-Array Electronics Holdings (SGX: BDR), World Precision Machinery (SGX: B49), Alpha Energy Holdings (SGX: 5TS), Alset International (SGX: 40V), Artivision Technologies (SGX: 5NK), Asiatravel.com Holdings (SGX: 5AM), A-Smart Holdings (SGX: BQC), Azeus Systems Holdings (SGX: BBW), Boustead Singapore Limited (SGX: F9D), Captii (SGX: AWV), Challenger Technologies (SGX: 573), CSE Global (SGX: 544), DISA (SGX: 532), International Press Softcom (SGX: 571), ISDN Holdings (SGX: I07), Keppel DC Reit (SGX: AJBU), Koyo International (SGX: 5OC), M Development (SGX: N14), Mapletree Industrial Trust (SGX: ME8U), New Silkroutes Group (SGX: BMT), New Wave Holdings (SGX: 5FX), PEC (SGX: IX2), Plato Capital (SGX: YYN), Procurri Corporation (SGX: BVQ), Rich Capital Holdings (SGX: 5G4), Silverlake Axis (SGX: 5CP), SinoCloud Group (SGX: 5EK), Stratech Group (SGX: BRR), Synagie Corp (SGX: V2Y), YuuZoo Networks Group Corp (SGX: AFC).

Global and local semiconductor stocks are mostly cyclic in nature, following the economic cycles (affecting consumer’s demand with purchasing power, usually stronger business during bullish economy). US NASDAQ stock exchange has many technology stocks, including semiconductor sector, therefore its stock index also behaves in cyclical way, suitable with “Buy Low Sell High” Optimism Strategy.  Few technology stocks could be the leader for long term (a few decades) due to the competitive technology development (including possible mastering of knowhow by competitors with time or by chance). Therefore, a smart investor needs to monitor a technology stock (could be semiconductor, telco, etc), ensuring it is a giant stock (applying Dr Tee criteria) each year before continuing long term investing, otherwise safer to position only in short term or medium term trading during bullish cycle of semiconductor sector.

In Singapore, 5G related stocks are mainly semiconductor suppliers (eg. process/testing equipment, precision engineering, printed circuit board, etc), smaller players but at least 2 are giant stocks (based on Dr Tee giant criteria). Semiconductor sector is considered essential business during Covid-19 pandemic, manufacturing could still continue in Singapore and some other countries.

Here, 5 Singapore semiconductor supplier stocks with reasonably good fundamental (growing business with low debt) are selected for review, potentially could benefit from 5G business (driven by clients’ demand).  However, each 5G stock requires different positioning of stock strategy, either for long term investor or short term trading. Only Micro-Mechanics and UMS are giant stocks for investing but other stocks may be considered for trading.

1) Micro-Mechanics (SGX: 5DD) – Singapore Semiconductor Giant Stock

Micro-Mechanics designs and manufactures high precision parts and tools used in applications for the wafer-fabrication (front-end) and assembly processes (back-end) of the semiconductor industry. The company operates in 5 countries: Singapore, Malaysia, Philippines, USA, and China.

Micro-mechanics is a multi-role giant stock, suitable for different personalities of investors. It could be a long term growth stock (supported by growing businesses with strong cash flow and little debt). It is also ideal for medium term cyclic trading with “Buy Low Sell High” optimism strategy. It may be considered as a defender for dividend stock investor with about 6% dividend yield currently. Each of the 3 stock strategies require different entry and exit plans.

2) UMS (SGX: 558) – Singapore Semiconductor Giant Stock

UMS provides high precision front-end semiconductor components, and electromechanical assembly and final testing services. Semiconductor is main business. It operates manly in Singapore, Malaysia, Taiwan, US, South Korea and China.

UMS is a highly cyclic giant stock (despite fundamentally strong), currently at moderate high optimism, therefore not suitable for consideration for long term investing (requiring a global financial crisis with bearish semiconductor cycle before the next entry with condition business fundamental will still be strong). UMS is ideal for medium term cyclic trading with “Buy Low Sell High” optimism strategy, recovering well from nearly 50% price correction in recent global stock crisis due to Covid-19 pandemic. It may be considered as a mid-fielder for mid-term investing with about 4% dividend yield while waiting for capital gains.

3) AEM (SGX: AWX) – Singapore Semiconductor Stock

AEM provides system testing and handling solutions for semiconductor and electronics companies in Asia and globally. It operates through Equipment Systems Solutions, System Level Test & Inspection, Micro-Electro-Mechanical Systems, and Test and Measurement Solutions segments

AEM is a very cyclic stock in long term (partly due to cyclic business of semiconductor cycle), currently at high optimism, therefore not suitable for consideration for long term investing (requiring a global financial crisis with bearish semiconductor cycle before the next entry with condition business fundamental will still be strong). AEM is suitable for medium term momentum trading with “Buy Low & Hold” position trading strategy, supported by strong business performance over the past 5 years due to bullish semiconductor cycle. It may also be considered as a striker for very short term momentum trading with “Buy High Sell Higher” strategy but requiring strict compliance with S.E.T. (Stop Loss / Entry / Target Prices) trading plan.

4) Frencken (SGX: E28) – Singapore Semiconductor Stock

Frencken operates as a capital and consumer equipment service provider worldwide. It has 2 segments, Mechatronics and Integrated Manufacturing Services (IMS). It only has partial business related to semiconductor, therefore closer to a technology stock with diversified sectors.

Frencken is a cyclic stock in long term (despite reasonably strong business fundamental over the past 5 years, following economic cycle), currently at high optimism, therefore not suitable for consideration for long term investing (requiring a global financial crisis with low optimism before the next entry with condition business fundamental will still be strong). Frencken is ideal for medium term cyclic trading with “Buy Low Sell High” optimism strategy, recovering well from nearly 50% price correction in recent global stock crisis due to Covid-19 pandemic. It may also be considered as a striker for very short term momentum trading with “Buy High Sell Higher” strategy but requiring strict compliance with S.E.T. (Stop Loss / Entry / Target Prices) trading plan. It has particularly strong business fundamental in 2019, supporting the rising prices then, careful monitoring of future quarterly financial performance is required for short term trading.

5) Avi-Tech Electronics (SGX: BKY) – Singapore Semiconductor Stock

Avi-Tech Electronics provides burn-in, manufacturing and printed circuit board assembly, and engineering services for the semiconductor, electronics, life sciences, aviation, and other industries. It only has partial business related to semiconductor, therefore closer to a technology stock with diversified sectors. It serves customers in Singapore, US, Malaysia, Germany, Philippines, Thailand, Taiwan, and China.

Avi-Tech is an average performance technology stock in long term (despite reasonably good business fundamental over the past 5 years, following economic cycle), currently at moderate high optimism, therefore not suitable for consideration for long term investing. Avi-Tech is also not a good choice for trading due to lack of price strength. It may be considered as a mid-term defender for dividend stock investor with about 6% dividend yield currently. However, since there are so many better choices of 5G stocks (even Micro-Mechanics or Singtel also has 6% dividend yield, supported by stronger businesses), Avi-Tech is clearly a choice from the bottom of the list, reviewed for the sake of comparison with other 5G stocks.

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Technology stocks (including semiconductor) could be exciting experience for an investor, especially with cyclic investing. Sometimes, a strong momentum technology stock could surge more than 100% in price in less than 1 year.  A stock trader could be in dilemma, whether to sell (potential “risk” is may miss further upside in prices) or to hold (potential risk is huge price correction during stock crisis, eg. price may cut by half in recent Covid-19 pandemic).

A simple and powerful stock strategy is to apply “50/50” method, i.e. whenever stock price of a giant stock is doubled, just sell half of the stocks, since capital is recovered (with 2X price, selling 50% stocks), an investor has stronger holding power for the remaining 50% position as the worst could happen in future would be 0% gain, not losing money at all (assuming remaining 50% stocks drop to $0, possible worst case). However, for technology or semiconductor stocks which are cyclic at high optimism, it is relatively safer to sell 100% of stock first, buying back the same giant stocks at lower optimism in the next opportunity.

Micro-Mechanics, UMS and AEM are not 30 STI index component stocks but they are much stronger than most of these blue chip 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).

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, Stock Market, Technical Analysis, Trading, Value Investing Tagged: , , , , , , , , ,

5 Global Stock Exchanges Stocks (独占鳌头)

Posted on May 22, 2020 Written by
Singapore Exchange Stock HKEx ICE NASDAQ Bursa Malaysia

In this article, you will learn 5 global stock exchanges which are also giant stocks in respective countries with applications of 5 unique stock investing strategies.

1) Singapore Exchange (SGX: S68) – Singapore Stock Exchange Giant Stock

2) Intercontinental Exchange (NYSE: ICE) – US NYSE Stock Exchange Giant Stock

3) Nasdaq Inc (NASDAQ: NDAQ) – US NASDAQ Stock Exchange Giant Stock

4) Hong Kong Exchanges and Clearing (HKEx: 388) – Hong Kong Stock Exchange Giant Stock

5) Bursa Malaysia (Bursa: 1818) – Malaysia Stock Exchange Giant Stock

All stock trading activities (buy or sell) have to go through stock exchange, sometimes there is only 1 stock exchange, especially for smaller country such as Singapore, therefore having monopoly advantage (独占鳌头) as an economic moat for the stock exchange business. There is also low risk for a stock exchange to go bankrupt as it is too important to fail without support. Therefore, stock of a stock exchange in a country with growing economy may be considered for longer term investing.  However, stock performance of each stock exchange can be different, therefore requiring different strategies, eg. growth, cyclic, dividend, momentum, etc.

Business of stock exchanges are not limited to listing and trading of stocks (equities), may be extended to derivatives (eg. commodities / forex / indices – futures, options, etc), ETFs, bonds (fixed income) and other services.  Even a country (eg. US) may have a few stock exchanges but most global stocks only have 1 primary stock exchange for listing (eg. choosing between NYSE or NASDAQ stock exchanges), therefore it is still monopoly in nature (similar to certain show is only available in certain TV channel, no other choice for consumers).

Here, we will focus on 5 common global and local stock exchanges, ranked by market capitalization: No 1 (NYSE / ICE), No 2 (NASDAQ), No 6 (HKEx), No 21 (SGX) and No 25 (Bursa). US NYSE and NASDAQ alone, have already contributed to about 50% of the world stock value, usually are the first choice for global investors and institution in trading, as well as top 2 choices for potential IPO companies, having easy access to global capital to expand the businesses.

Singapore only contributes to about 1% of world stock value.  Therefore, Singapore stocks could not affect the US, but US stocks could affect Singapore and the whole world. So, even readers may be interested in 100% Singapore stocks, it is important to pay attention to US stocks and also US economy (also contributing to half of world economy).  Hong Kong & China (Shanghai and Shenzhen Stock Exchanges) contribute to about 10% of world stock value, not comparable with size of China as No 2 world economy.

Stock exchanges when listed as stocks, price movement is aligned with local economy and stock market index performance.  However, stock exchanges could make money in both bullish and bearish stock market as its business in equity is dependent on trading volume, not high or low of stock prices. Therefore, in recent global stock crisis with fear of Covid-19, trading volume surges to a high (initiated by fearful sellers who hope to sell stocks to minimize downside risk), contributing to strong earnings to exchanges stocks, even during pandemic period of Q1 2020.

1) Singapore Exchange (SGX: S68) – Singapore Stock Exchange Giant Stock

Singapore Exchange was formed in Year 1999 with merging of Stock Exchange of Singapore (SES), Singapore International Monetary Exchange (SIMEX) and Securities Clearing and Computer Services Pte Ltd (SCCS). Since listed in Year 2000, Singapore Exchange has initiated a series of expansion with acquisition, including Singapore Commodity Exchange (futures) and Baltic Exchange (freight indices). Temasek is the largest shareholder (23.3%) of Singapore Exchange, providing additional protection as a strong sponsor.  Japan Exchange is the second largest shareholder (3.4%) but investing Singapore Exchange with high share prices in bullish Year 2007.

Singapore Exchange reports improving business results over the past few years (under new CEO, Loh Boon Chye, since Year 2015), supporting its share prices to a new high over the past 10 years. Main earnings contributor is derivatives trading (eg. futures of commodity / forex / indices) which is about half of company net income, following by about 1/3 from equities (stocks), remaining are fixed income (eg. bonds) and other services. In addition, there are increasing customers outside Singapore / Asia, contributing to growing revenue, despite Singapore stock market may not be so active. There are about 800 stocks listed in SGX, an important source of income for Singapore Exchange through stock trading and clearing fees.

Singapore Exchange is the only stock in 30 STI component stocks not affected by recent global stock crisis with Covid-19. In fact, its current share price is even higher than before Covid-19, exceeding $10/share resistance before. Singapore Exchange is a strong fundamental stock with over 30% ROE over the past decade (no debt most of the time), setting a good example to share over 80% net income as dividend with shareholders (average about 3% dividend yield). It can be positioned as a “fixed deposit” stock (with 3% interest) as share prices have been within low optimism of $6-$8/share most of the time in the past decade.

With breakout of $8/share resistance over the past 1 year, Singapore Exchange has become a momentum stock for trading in short term to medium term. Breaking of each resistance (eg. $10/share, $11, etc) would become a signal for short term traders to Buy High Sell Higher (which requires strict S.E.T. trading plan: Stop Loss / Entry / Target Prices). Singapore Exchange stock price is not aligned to STI index, diverging in short term, mainly due to different business performance during pandemic.  Some Singapore investors like to trade “safer” stocks with business supported by Covid-19, including trading business of SGX, some healthcare and supermarket stocks (eg. Sheng Siong, SGX: OV8), etc.

2) Intercontinental Exchange (NYSE: ICE) – US NYSE Stock Exchange Giant Stock

Intercontinental Exchange (ICE) has 12 global exchanges, including New York Stock Exchange (NYSE), the largest stock exchange in the world which has about 2800 stocks listed, many are big companies with global giant stocks could be found. Performance of ICE stock price is much better than US stock market index (eg. S&P 500), mainly contributed by its strong business growth with acquisition of other global and local exchanges.

Dr Tee has been to NYSE (11 Wall Street) stock exchange in New York, twice over the past 3 decades. The famous Charging Bull sculpture is nearby, remembering the 1987 Black Monday stock crisis.  Indeed, human has proven that every global financial crisis could be overcome eventually, including the current Covid-19 crisis. Even the trading floor of NYSE was closed for a period of time during pandemic but modern online trading has overcome this weakness easily.

ICE is strong in earnings and cash flow with consistent growth over the decade, suitable to position for growth investing, leveraging on long term growth of US / world economy.  Covid-19 induced global stock crisis has corrected ICE share price by 1/3 but it has been recovering well, aligning to US stock market. ICE could be an alternative investment to US indices (eg. S&P 500 or NASDAQ) as its performance in shorter term is similar but much better in longer term.

3) Nasdaq Inc (NASDAQ: NDAQ) – US NASDAQ Stock Exchange Giant Stock

Nasdaq stock (NDAQ) has 9 global exchanges, including NASDAQ stock exchange in US and 8 other exchanges in Europe (major shareholder of NASDAQ is Swedish Wallenberg family through Investor AB). NASDAQ is the second largest stock exchange in the world which has about 3300 stocks listed, many are technology companies with global giant stocks could be found. Performance of NASDAQ stock (NDAQ) price is aligned with US stock market index (eg. S&P 500 & NASDAQ), having strong business fundamental but at the prices of relatively higher liability.

NDAQ stock is highly cyclic in prices, aligning with volatile prices of technology sector stocks within NASDAQ stock exchange.  After the burst of technology bubble in Year 2000, NASDAQ stock index dropped to 1/3 of value and NDAQ stock was cut by half in share prices.  Covid-19 induced global stock crisis has corrected NDAQ share price by about 40% but it has been recovering well, aligning to US stock market. NDAQ stock could be an alternative investment to NASDAQ stock index as its long term growth performance is stronger and less volatile than index.

4) Hong Kong Exchanges and Clearing (HKEx: 388) – Hong Kong Stock Exchange Giant Stock

History of Hong Kong stock market is longer than 100 years. So, Hong Kong stock exchange is more mature and closely regulated than younger stock exchanges of Shanghai and Shenzhen in China.  It has experienced British administration (100 years before Year 1997 when returning to China), therefore there is strong western styles in financial system.  Despite Shanghai has emerged has new financial center for China, Hong Kong is always the main financial gateway to the western world, especially through the Hong Kong Stock Exchange.

Hong Kong Exchanges and Clearing (HKEx) is a strong growth stock, share price over the past 2 decades has surged by 27 times from $10 to $270/share, partly due to historical opportunity of Hong Kong united with growing China after Year 1997, as well as connection of HKEx with Shanghai and Shenzhen stock exchanges, allowing capital to flow between Hong Kong and mainland China.  So, HKEx has become the first choice of stock exchange for IPO for some Asian companies who could easily leverage on capital from China and US investors, if not considering NYSE or NASDAQ stock exchanges.

A few years ago, Dr Tee has visited the building of Hong Kong Stock Exchange at The Exchange Square (building is owned by a property giant stock, Hongkong Land, listed in SGX: H78). However, most of the trading are done online, therefore the physical trading floor is closed permanently since Year 2017, the current Covid-19 crisis does not affect the electronic transaction.  In fact, Singapore and global investors could invest in Hong Kong stocks easily with pressing of a few buttons in online trading.  There is no withholding tax for dividends of Hong Kong stocks (unlike US stocks require 30% withholding tax for dividends to foreign investors). So, HKEx could gain from both global and local stock investors.

HKEx stock is still strong growth in business but the growth in share prices is slower, therefore entering low optimism in long term. Similar to SGX stock in the past decade (ranging between $6-$8/share for cyclic trading), HKEx stock is still suitable for medium term cyclic trading to Buy Low Sell High every few years, following medium term optimism strategy. Performance of HKEx stock is aligned with Hang Seng stock index in short term but performing much better in longer term.

5) Bursa Malaysia (Bursa: 1818) – Malaysia Stock Exchange Giant Stock

Bursa is Malaysia stock exchange has about 800 stocks listed, many are local companies with businesses in Malaysia. Therefore, there are many local stocks in sectors such as agriculture, plantation and manufacturing.  So, a stock with such business may not do well in Singapore (due to higher cost of business operation) but could become a giant stock in Malaysia due to unique local advantage.  So, the choice of giant stocks in each stock exchange is different, promising sectors could be country dependent.

Bursa stock (1818) is more cyclic in nature (suitable with Buy Low Sell High, applying long term optimism strategy), falling by nearly half (relative to peak price) in recent Covid-19 global stock crisis, just recovering from long term low optimism.  Bursa stock performance is much stronger than KLCI stock index, recovering to price before Covid-19. Fundamentally, Bursa stock is stagnant in business growth, therefore may not be suitable for long term investing. However, there are many other giant stocks within Bursa stock exchange worth consideration for long term.

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There are 30 STI index component stocks including Singapore Exchange (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).

Stock exchange is a gateway for businesses to leverage on enormous capital from local and global investors through stock trading and investing.  Stock performance of a stock exchange is also a reflection of a country stock market strength and economy growth, especially over a longer term. A smart investor may consider to invest in stock exchange stock directly (usually lower risk due to its unique financial role, especially if it is a monopoly stock) or having the choice to invest in individual giant stocks listed under the stock exchange.

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, Stock Market, Technical Analysis Tagged: , , , , , , , , ,

Dr Tee Video Education: Divergence of Stock and Economy (股票与经济：背道而驰之谜)

Posted on May 16, 2020 Written by
divergence of stock and economy

In this Dr Tee 2-hr video education (Mystery of Divergence in Stock and Economy ), you will learn:
1) How to position with different direction in global stock and economy.
2) Master 3 key economic indicators for global economy (US, Singapore, China, Europe).
3) Mixed signals in investment clock of global stock markets, comparing US, Singapore, Hong Kong & China.
4) Technical Analysis of Coronavirus by country with stage of virus life cycle and estimated ending period.
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/Gs3tsbncBS4

在这Dr Tee 90分钟教育视频（股票与经济：背道而驰之谜），您可学习：
1） 学习定位全球股票与经济各奔东西。
2） 掌握三大经济指标，把脉环球经济（美国、新加坡、中国、欧洲）。
3） 各国新冠病毒技术分析：疫情周期，预估结束点。
4） 投资时钟的交叉讯号（短期、中期、长期）：全球、美国、新加坡、香港、中国。
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/uaPHWaRFuEM

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).

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.

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

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

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

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

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

15 Hong Leong Group and Kwek Family Stocks (新马郭家)

Posted on May 12, 2020 Written by
Hong Leong Group Stocks

Hong Leong Group is established by Kwek/Quek family in Singapore and Malaysia. They are influential in both banking/finance and property/hospitality sectors. Learn from Dr Tee on how to position in these 15 Kwek family stocks, 5 from Hong Leong Singapore (Kwek Leng Beng) and 8 from Hong Leong Malaysia (Quek Leng Chan). There are 2 surprise bonus giant stocks waiting in between the article to reward patient reader, from another unrelated “Kwek” family. There are also a few other bonus examples, read every word in this article which could reward reader in future when taking the right action.

Kwek Leng Beng (Hong Leong Singapore):

1) City Developments Limited, CDL (SGX: C09) – Singapore Giant Property Stock

2) CDL Hospitality Trusts, CDLHT (SGX: J85) – Singapore Hospitality REIT

3) Hong Leong Finance, HLF (SGX: S41) – Singapore Finance Stock

4) Hong Leong Asia, HLA (SGX: H22) – Singapore Industrial Stock

5) Millennium & Copthorne, MLC (LSE: MLC) – UK Hospitality Stock

Quek Leng Chan (Hong Leong Malaysia):

6) Hong Leong Bank, HLBANK (Bursa: 5819) – Malaysia Giant Bank Stock

7) Hong Leong Finance Group, HLFG (Bursa: 1082) – Malaysia Giant Finance Stock

8) Hong Leong Industries, HLIND (Bursa: 3301) – Malaysia Giant Industrial Stock

9) GuocoLand Malaysia, GUOCO (Bursa: 1503) – Malaysia Property Stock

10) GuocoLand Limited (SGX: F17) – Singapore Property Stock

11) GL Limited (SGX: B16) – Singapore Hospitality Stock

12) Hong Leong Capital, HLCAP (Bursa: 5274) – Malaysia Investment Stock

13) Hume Industries, HUMEIND (Bursa: 5000) – Malaysia Cement Stock

Bonus Stocks from Another “Kwek” Family (hidden in between article)

14) Bonus Stock No 1 – Malaysia Giant F&B Growth Dividend Stock

15) Bonus Stock No 2 – Malaysia Giant Plantation Growth Dividend Stock

Kwek Leng Beng and Quek Leng Chan are actually cousin (堂兄弟) under Kwek family, their fathers are siblings, originally from Fujian of China. Why they don’t share the same family name in English, Kwek vs Quek? Well, it is quite common in older generation (both of the Hong Leong Groups Chairmen are nearly 80 years old, born around World War II time) in Singapore and Malaysia, even the surname is the same in Chinese (郭) but the possible miscommunication between the persons who reported (verbally say) and registered (listen with sounds like, then write in own way…) may result in difference in English name on birth certificate, even within the same family. 

In Year 1965, Singapore and Malaysia split into 2 countries and Hong Leong Group was also divided into 2 groups. Quek Leng Chan decided to start a new business world in Malaysia with family fund while other Kwek family members (including Kwek Leng Beng) chose to stay in Singapore. Due to this historical national event, now we have 2 different Hong Leong groups in 2 countries with independent businesses.  Of course, in modern world now, there is no limit in border, business could reach any country globally.  Here, Dr Tee will comment on each of the Kwek/Quek family stocks.

Kwek Leng Beng (Hong Leong Singapore)

For Kwek Leng Beng (Hong Leong Singapore), the most famous stock is City Developments Limited, CDL, a giant property stock in Singapore, also 1 of 30 STI component stocks. CDL is the second largest property developer in Singapore, performance is close to another property giant stock (largest property developer in Singapore and Asia), CapitaLand (SGX: C31). Both CDL and CapitaLand are typical blue chip stocks, slower growth but stable (property), more suitable for positioning as a midfielder stock, aiming for moderate capital gains and dividend incomes over time. For investors who aim for higher growth, then both slower giant stocks may not be ideal. An ideal giant stock may not need to be large in size but has to strong in business with growth, more importantly, aligning with unique personality of individual investor.

CDL Hospitality Trusts, CDLHT, is a REIT with reasonable business fundamental (before Coronavirus crisis) but more for dividend investing, although recent Coronavirus crisis has helped to push up dividend yield to about 10% after huge correction in share price, the regular dividend payout may not be sustainable in Year 2020 due to deep impact of COVID-19 on tourism which affects the hotel business. Hong Leong Finance has reasonably good business fundamental but mainly for consideration for dividend investing (read further to the end, bonus stock is a better choice for dividend investing). Hong Leong Asia is a weak stock and Millennium & Copthorne (listed in LSE of UK) are related to hotel business in crisis, may not be considered.

Quek Leng Chan (Hong Leong Malaysia)

For Quek Leng Chan (Hong Leong Malaysia), there are more giant stocks (based on Dr Tee criteria), the best would be Hong Leong Bank, a Malaysia giant bank stock, comparable with another biggest bank giant stock, Public Bank (Bursa: 1295). Public Bank owner is also the Top 10 richest person in Malaysia, “Teh” Hong Piow (郑鸿标), the surname in English is also another variation from Dr “Tee” surname (郑) and more popular “Tay” in Singapore, but from different families. Both Hong Leong Bank and Public Bank are the few remaining private banks with excellent management (but from older generation, success plan could be a concern) in Malaysia which survive decades of merging and acquisition by government linked banks. Although Public Bank is not the “Bonus Stock” here but readers may want to consider together with Hong Leong Bank when planning for bank stocks, both are equally good, but Public Bank is bigger in size (No 3 largest bank in Malaysia).

Hong Leong Finance Group is another giant finance stock in Malaysia, excellent business performance is comparable with Hong Leong Bank. An investor may only need to consider 1 giant stock from Hong Leong groups of Kwek/Quek family, so that limited capital may be diversified with lower risks to more businesses, sectors and countries. Hong Leong Industries are slightly lower performance than both giant stocks (Hong Leong Bank and Hong Leong Finance Group), having growing business as well. 

Guoco Group has 3 stocks listed, acceptable business but may not worth investing: GuocoLand Limited (SGX: F17) – Singapore Property Stock (No 5 largest property developer in Singapore), GL Limited (SGX: B16) – Singapore Hospitality Stock, GuocoLand Malaysia (Bursa: 1503) – Malaysia Property Stock. Remaining 2 stocks may not worth consideration: Hong Leong Capital, HLCAP (Bursa: 5274) – Malaysia Investment Stock (suspended due to public shareholding <25%) and Hume Industries, HUMEIND (Bursa: 3301) – Malaysia Cement Stock which has weak performance, could be due to bearish property construction industry in Malaysia.

Bonus Stock No 1: Hup Seng (Bursa: 5024) – Malaysia F&B Growth Dividend Stock

Sounds confusing of Kwek vs Quek? Another little giant F&B stock in Malaysia, Hup Seng (Bursa: 5024), biscuit family from a small town, Batu Bahat of Johor, Malaysia also share the same surname of Kwek (郭) in Chinese but all 3 brothers (founders) have different surnames spelled in English: Kuo Choo Song, Keh Chu Koh and Kerk Chiew Siong, same reason as above (also same generation as Hong Leong leaders).  This difference won’t stop the family to develop Hup Seng from a tiny biscuit factory into a listed public company in Bursa. In fact, Hup Seng has growing business with steady cash flow (products such as “ping pong” Marie biscuit and crackers are popular in Malaysia and Singapore).  Hup Seng is actually a growth dividend stock (nearly no debt for past decade), share price is only corrected by 20% during recent global stock crisis during pandemic and quickly recover, now even higher before the Coronavirus crisis. This bonus stock is a good example of a giant stock does not need to be big in size.

Bonus Stock No 2: Hap Seng (Bursa: 3034) – Malaysia Plantation Growth Dividend Stock

Be careful when searching for Hup Seng stock, don’t mix up with another giant stock (Bonus No 2), Hap Seng (Bursa: 3034) with slightly different “surname” but it is a plantation stock, may also be positioned for growth dividend investing. So, regardless which “Kwek” or which “Hup/Hap” Seng stock, as long as it is a giant stock, then it could potentially reward the investors with growing business but patience is required.

In fact, there are 3 “Kwek” families from the Top 10 richest families in Singapore and Malaysia.  Besides Kweks from Hong Leong Group (Kweks of Hup Seng are too small) are in the Forbes’ list, there are Kuok Family (Robert Kuok – the richest person in Malaysia and nephew Kuok Khoon Hong – Wilmar Chairman, No 9 richest person in Singapore) and Kwee Family (Pontiac Land Group), No 8 richest family in Singapore. Perhaps these could be future articles for Dr Tee.

Based on Forbes’ wealth estimation, Quek Leng Chan (Hong Leong Malaysia) has about US$9 Billion net worth, about 3 times more than cousin, Kwek Leng Beng (Hong Leong Singapore). The difference in wealth (assuming starting fund is close 50 years ago) could be due to more giant growth stocks in Hong Leong Malaysia, resulting in faster growth in wealth over the past decades for Quek Leng Chan.

A person or family could become very rich, business (private company) itself may be insufficient, usually is supported by at least a giant stock, then wealth could become more than 10 or 100 times over time after public listing. A convincing example is the world richest person, Jeff Bezos with US$143 Billion net worth (more than 10 times of entire Hong Leong Group of 2 countries), becoming very rich because of Amazon stock (NASDAQ: AMZN), not just because of earning in business (Price Earning ratio, PE is 102, implying he could multiply his wealth 102 times through stock market). Of course, there are more examples, including Mark Zuckerberg, founder of Facebook, No 6 richest person in the world, net worth of $63 Billion is only possible after Facebook is listed (NASDAQ: FB) with support of growing business. Both Amazon and Facebook businesses may not be recession proof but certainly “Coronavirus pandemic proof”, with more lockdown globally, users could be even more, strong share price performance is a recognition of high growth stock.

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

There are 30 Malaysia Bursa KLCI index component stocks including Hong Leong Bank and Hong Leong Finance Group of Quek Family (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.

Readers may feel that the riches are too far to reach. In fact, retail investors may leverage on these rich families or individual, investing in their giant stocks at lower optimism prices during global financial crisis when others are fearful (mastery of investment clock), while their strong businesses continue to grow during the crisis, eventually could reward the investors with capital gains when crisis is over and others are greedy this time.

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, Stock Market Tagged: , , , , , , , , , , , , , ,

4 Mapletree / Temasek Giant REITs (一叶知秋)

Posted on May 10, 2020 Written by
Mapletree Trust, MCT, MIT, MLT, MNACT, Temasek, REIT

Mapletree Investment is 100% owned by Temasek, a company with strength in private property funds and managing 4 Singapore giant REITs:

1) Mapletree Logistics Trust, MLT (SGX: M44U) – Giant Logistic REIT

2) Mapletree Industrial Trust, MIT (SGX: ME8U) – Giant Industrial REIT

3) Mapletree Commercial Trust, MCT (SGX: N2IU) – Giant Commercial REIT

4) Mapletree North Asia Commercial Trust, MNACT (SGX: RW0U) – Giant Commercial REIT

Learn further on how to position in these 4 Singapore REITs after cross comparison. MLT and MCT are 30 STI component stocks while MIT is the next to consider in reserve list for STI.

1) History & Sponsor

Among the 4 Mapletree REITs, MLT is the longest history in stock market (listed in year 2005), following by IPOs of MIT (Year 2010), MCT (Year 2011) and MNACT (Year 2013).  Despites all the 4 REITs are giant stocks (according to Dr Tee criteria) but 3 of them are relatively young giant stocks, only MLT has experienced the last Global Financial Crisis in Year 2008-2009 with share prices dropped by over 70%.  Mapletree has 6 other private property funds which may be listed as well in future, following similar REIT model.

In the recent global stock crisis in Mar 2020, all these 4 REITs are corrected by about 40% (MNACT is even cut by half for share price due to additional fear when Coronavirus was first started in China in Jan 2020).  Nevertheless, the scale of recent stock price correction is still not comparable with 2008-2009 subprime crisis.  During a global financial crisis, it is important to have a strong sponsor, which 4 REITs have: Mapletree Investment which is 100% owned and supported by Temasek.

In short, the main risk of 4 REITs is with cyclical stock prices due to economic cycle (i.e. potential capital loss, especially during global financial crisis), not so much on business risks.  When Coronavirus crisis is over or fading away, tenants would resume the business, continue to pay for the committed rentals.

2) Type of REITs

All the 4 REITs have different focuses of industries and countries, eg. MLT is on logistic REIT (Singapore / global), MIT is on industrial REIT (Singapore / global), MCT is on commercial / retail REIT (Singapore) and MNACT is on commercial REIT in North Asia (Hong Kong, China, Japan).

Geographically, each country has different economic performance but most of the REITs portfolios are in Singapore and Asia which have been growing over the past decades.  REITs focus on rental collection, therefore tenant stability (ability to pay rental with agreements) are related to economic cycles of each country. REITs usually are diversified over a portfolio of clients, tenants from different industries, therefore risk is relatively lower.

The current Coronavirus crisis has limited impact, even during lockdown period, property owner (REITs) can still collect most of the rental (partially supported by local government) but distribution of dividend may not be on time for Q1/Q2 2020 as REITs may reserve some cash for planning during the uncertain Year of 2020. For longer term investor who could hold more than 1 year, this should not be an issue as dividend kept (if any) would be distributed back to shareholders at later time.

3) Business

Fundamentally, all these 4 REITs are strong, disruption of Coronavirus crisis has limited impact. The dividend yields are currently around 4+% for MLT, MIT and MCT, below the minimum expectation of 5% for dividend investing (which is achievable if an investor could take action in Mar or Apr 2020 when share prices were under 30-40% correction, this window of opportunity is closed when over half of the correction is recovered with V-shape recovery in share prices).  MNACT still has 8+% dividend yield, mainly due to heavy correction in share prices (50%), recovering slower (less than 30% of total correction) than the other 3 REITs. 

Mapletree REITs are more suitable for positioning as midfielders, both capital gains (mainly for trading when stock market trend is more bullish in short term to medium term) and moderate dividend yield as bonus (about 3-4% is fine).  For long term investing, entry of Mapletree REITs or any giant dividend stock has to be aligned with STI or world stock market at low optimism, usually during a Global Financial Crisis.

Since Mapletree Investment strength is in property development and management, a good REIT manager would help to improve dividend yield with new property into REIT portfolio.  These 4 REITs have gearing ratio less than 40%, still having potential to grow bigger, especially for MCT (only 33% gearing ratio, far below 45% maximum gearing ratio allowed by current law). MCT is more concentrated in Singapore, benefiting from government plan on “Greater Southern Waterfront”, Vivo City contributing to about 1/3 of revenue.  Concentration could be viewed as a risk or an opportunity, depending on whether the focused properties are higher or lower quality.

Interestingly, 3 out of 4 REITs CEOs are female for MLT, MCT and MNACT.  REITs are relatively stable businesses, delivery of committed goals are key for any CEO, whether male or female management. The best judgement of a new management performance is through positive financial report of at least 3 years.

4) Timing & Return

The best time to buy a giant REIT is usually during crisis. The only question is how low is low to buy a stock. Therefore, dividend yield >5% is a reasonable criteria for dividend stock investor. A giant REIT or dividend stock investor may also consider entry in batches (if afraid of buy low get lower in share price), entering for every 10% or X% lower in share prices. 

In fact, an investor of REIT is similar to a REIT manager who consistently looks for better properties at lower prices to maximize the passive income with higher yield. It is much easier for a stock investor, just need to click a button to buy a stock to invest. However, since it is so easy, some investors may not consider properly: What to Buy, When to Buy/Sell.

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There are at least 26 Temasek / GLC stocks in Singapore including these 4 Mapletree stocks, controlling shareholder with 15% or more ownership directly or indirectly (investor has to focus only on giant Temasek stocks):
Singtel (SGX: Z74), DBS Bank (SGX: D05), ST Engineering (SGX: S63), Singapore Airlines (SGX: C6L), SIA Engineering (SGX: S59), Singapore Exchange (SGX: S68), SATS (SGX: S58), Sembcorp Industries (SGX: U96), Sembcorp Marine (SGX: S51), Olam (SGX: O32), CapitaLand (SGX: C31), CapitaLand Mall Trust (SGX: C38U), CapitaLand Commercial Trust (SGX: C61U), Ascendas Reit (SGX: A17U), Ascott Hospitality Trust (SGX: HMN), Ascendas Hospitality Trust (SGX: Q1P), CapitaLand Retail China Trust (SGX: AU8U), Ascendas-iTrust (SGX: CY6U), Keppel Corp (SGX: BN4), Keppel Reit (SGX: K71U), Keppel DC Reit (SGX: AJBU), Keppel Infrastructure Trust (SGX: A7RU), Mapletree Logistics Trust (SGX: M44U), Mapletree Commercial Trust (SGX: N2IU), Mapletree Industrial Trust (SGX: ME8U), Mapletree NAC Trust (SGX: RW0U).

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

Dr Tee likes leaves of maple trees, still remember the first leaf collected about 3 decades ago in fall season when studying in US.  When the maple tree leaves turn into red color, it is a spectacular view, making fall or autumn as the most beautiful season (northeast of US near Canada and also Japan have nice views of maple trees during the fall). Change in leaves colors (一叶知秋) is similar to stock investment, showing the investment clock with 4 seasons, an important skill to master on how to take 4 actions: Buy, Hold, Sell, Wait. When an investor knows What Giant Stocks to buy, the remaining questions are simply When to Buy/Sell and How Much to Buy/Sell (position sizing, entry/exit in batches).

There are other giant REITs in Singapore and globally which an investor may consider beyond these 4 Mapletree REITs. 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, Stock Market, Value Investing Tagged: , , , , , , ,

5 Stages of Stock Market Patient in Pandemic (心中有数)

Posted on May 7, 2020 Written by
stock market Singapore US Hong Kong China Europe Germany World Coronavirus

Global stock market so far has experienced 6 months of Covid-19 pandemic (Dec 2019 – May 2020), struggling between greed and fear, falling badly (20-40%) during initial fear of Coronavirus, then V-shape recovery (recover more than half of earlier correction) with support of unlimited QE or stimulus plans by global government, currently uncertain (gradual sideways stock movement) due to uncertain ending of global Coronavirus (especially for US) with worry of historical worst monthly economic data since Great Depression 1929 may become a norm beyond recovery.

There is a mismatch among stock market, world economy and Coronavirus conditions. Main reason is stock market is forward looking (usually a few months ahead of time), past or current news (eg. Coronavirus condition) or predictable outcome (eg. worst economic data during lockdown) has been considered in stock prices.

China is the first country to start and end Coronavirus, restarting economy gradually now, serving as leading indicator for the world (eg. Korea, Europe, US, Singapore, etc, which hope to restart economy as well). World is following similar footsteps of China for both Coronavirus cycle (start, peak to end / minimal), stock market cycle (down and up) and economy cycle (down and possibly up). Likely scenario for world economy and stock market would be 5-Stages models, similar to a patient:

stock market Singapore US Hong Kong China Europe Germany World Coronavirus

1) Early Symptom (Start of Coronavirus Pandemic), Dec 2019 – Jan 2020

During the initial phase of Coronavirus outbreak, the stock market was not fearful due to limited spreading to the world (mostly concentrated in China) and world economy is still not affected. So, the stock correction was limited, mainly within infected Asia countries in Dec 2019 – Jan 2020. US controls over 50% of stock value, was not affected in this period, even achieving high optimism in stock market in Jan 2020.

2) Heart Attack (Lockdown), Feb-Mar 2020

When Coronavirus was spread to Europe and US, which contributes greatly to world stock market, there was a crash (20-40% stock correction) in Feb – Mar 2020 for global stock market, mainly due to the fear with stock market at higher optimism before the pandemic was declared. The global stock crisis was complicated by crude oil price war between OPEC (Saudi) and non-OPEC (Russia), extending the fear from stock market to oil market.

Most of the countries in the world started to under lockdown to stop the spreading of Covid-19, the fear of people and business (not able to operate) is similar to a patient under heart attack without blood supply, falling down suddenly, not able to function at all. Global government have to do blood (cash) transfusion to save the patient (local economy), eg. supporting the salary of employees, giving loans to business in crisis sectors (transportation, F&B, consumer, etc).

3) Wake up from Coma (First light at the end of tunnel), Mar 2020

After experiencing the worst month and worst day (23 Mar 2020), global stock market started to recover, similar to a patient wake up from 1 month of coma, seeing hope in future. There was still no real proof of economy recovery (in fact, still bad) and Coronavirus was still severe but since there was no new fear factor (thanks to world news agency and social media for effort in spreading all possible bad news each day), stock market responded ahead of time with a reversal, hopeful of future, especially with support of local government.

No one is able to predict the future, but stock market prices could reflect the consensus of global stock investors after struggling between greed and fear.  However, the price trend was not smooth, especially for daily stock market which was still volatile.

4) Initial Recovery (Economy Support), Apr-May 2020

Despite Q1/2020 economy data is poor (predictable due to global lockdown for about 2 months for each country), the global stock market experienced V-shape recovery in Apr 2020, as there is clearer light at the end of tunnel, less daily new cases of Coronavirus infection in most countries (US and world are stable at peak cases, having high chance to improve in condition) and more government subsidies for business and individual with financial crisis.

The daily global stock market prices start to cross above 20 days moving averages, the first technical indicator to show at least technical rebound in share prices. This helps to motivate more global traders to start entering stock market again. The stock market (bullish for short term) is deviated from monthly economic data (bearish for short term, eg. GDP, PMI, unemployment rates, etc).  Eventually the gap between stock and economy would be narrower after clearer signals on Coronavirus condition, especially whether it may end in summer 2020.

5) Full Recovery / Economy Restart, Jun 2020 and beyond

When economy is restarted for each country (started for China and Korea, some EU countries, more countries in the world including Singapore will follow), due to low economic monthly data during lockdown period, there would be strong month-to-month relative rebound. Statistics could be an illusion as comparison is between 2 sets of data at 2 conditions (eg. before/after crisis, before/after economy restart, etc), therefore would generate a dramatic difference.

The key is whether a patient could fully recover to function normally. Similarly, whether global stock market could back to full strength again, depends on whether global Coronavirus may end or fade away in summer (hottest period, higher chance to end the pandemic). If yes, economy could be restarted smoothly, global investor confidence could be restored, injured business could recover in a few quarters, even airlines could start to fly again (lower capacity but able to survive on its own).

If not, Coronavirus may continue for another 1 more year until an effective vaccine is developed or more deadly strain may come back in next winter, then the world would need to struggle with slower economy recovery. when dragging over 1 year, world economy may end up similar to Great Depression 1929 as there is limited financial assistance could be given by local government. Although US has “unlimited” QE but this may be a time bomb for bigger future crisis with high national debt.

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There is no need to predict the future which is not predictable in nature. A long term investor could protect oneself with a strong portfolio of 10-20 giant stocks, ideally some could provide stable passive income with dividend to last through winter time and some are supported by growing business (eg. technology, healthcare, etc) which are not affected much by pandemic crisis.

For counter-trend investor, multiple entries strategies may be applied for capital allocation (eg. 10 x 10%, 5 x 20%, 3 x 33%, etc) to take advantage of each major correction in giant stock prices at low optimism due to market fear. A follow-trend trader could also benefit from stock crisis by following the stock market trend (eg. clearer reversal signal from bear to bull, trading timeframe based on personality), protected by S.E.T. (Stop Loss, Entry, Target Prices) plan with position sizing.  As for follow-trend investor, one may integrate giant stocks selection with timing to buy/sell aligned with trading (trend-following), to have the best of 2 worlds (fundamental and technical).

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

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

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

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9 Stocks of Frasers Property & Thai Beverage (醉翁之意不在酒)

Posted on May 5, 2020 Written by
FCT Frasers Centrepoint Trust Thai Beverage Frasers Property Stock Market

Behind each giant stock, there is usually a giant businessman.   In this article, you will learn the business empire of the third richest person in Thailand, Charoen Sirivadhanabhakdi with not 1 but 9 F&B and property stocks (6 Singapore stocks & 3 Thailand stocks):

1) Thai Beverage (SGX: Y92) – Singapore Giant F&B Stock

2) F&N (SGX: F99) – Singapore F&B Stock

3) Frasers Property (SGX: TQ5) – Singapore Property Stock

4) Frasers Centrepoint Trust, FCT (SGX: J69U) – Singapore Giant Retail REIT

5) Frasers Logistics & Commercial Trust (SGX: BUOU) – Singapore Commercial REIT

6) Frasers Hospitality Trust (SGX: ACV) – Singapore Hospitality REIT

7) Frasers Property Thailand (SET: FPT) – Thailand Property Stock

8) Frasers Property Thailand Industrial REIT (SET: FTREIT) – Thailand Industrial REIT

9) Golden Ventures REIT (SET: GVREIT) – Thailand Commercial / Hospitality REIT

These 9 stocks are in common as they all owned by Charoen Sirivadhanabhakdi (苏旭明), a Chinese Thai whose Thai surname is granted by King of Thailand, showing strong reputation in Thailand. He started business originally in F&B sector (the largest alcoholic drinks producer in Thailand, eg. whiskey, beer, etc), then diversifying into property (the largest landlord in Thailand, owning with the most areas of land), becoming 2 main business pillars of his business. 

Charoen took a major action in Year 2012 to acquire F&N, which is later reorganized into “new” F&N (mainly non-alcoholic drinks business in Singapore, familiar brands such as 100plus, Fruit Tree, Seasons, NutriSoy, etc) and Frasers Property (property segment).  The new F&N after the reorganization, is no longer a giant stock, just a normal F&B company (non-alcoholic drinks usually have lower profit margin with more competition).

Frasers Property is the parent stock of property segment, including other 6 subsidiary property stocks / REITs, 3 in Singapore and 3 in Thailand. All 7 Frasers group of property stocks have reasonably good business due to stable property business but there is only 1 giant stock, Frasers Centrepoint Trust (FCT).

In this article, out of 9 stocks of Charoen, we will focus only in his 2 giant stocks, ThaiBev and FCT.

1) Thai Beverage (SGX: Y92) – Singapore Giant F&B Stock

Charoen expanded his empire further over the past decades with aggressive Merging & Acquisitions, into F&B of regional countries (Vietnam, Myanmar, Singapore, etc).

Initially, he planned to list ThaiBev in Thailand Stock Exchange (SET) but encountering opposing voices (alcoholic drinks) as Thailand is a Buddhism country. Eventually, ThaiBev is listed in Singapore Stock Exchange, so Singapore investors has a local giant F&B stock to consider, leveraging on growing alcoholic drinks business in Thailand and regional countries. ThaiBev is 1 of the 30 STI component stocks, proving its strength in stock and business.

FCT Frasers Centrepoint Trust Thai Beverage Frasers Property Stock Market

ThaiBev is a growth stock, strong in business fundamental with growing business and solid cash flow.  However, debt level is high, especially in acquisition of Sabeco beer business in Vietnam. The share prices over the past decade has gone up 5 times, facing 2 times of major price corrections of nearly 50% during high debt period and again over the past few months of global stock crisis. Currently, the stock price has gradually recovered together with global stock markets. Unlike other sectors of business which may be affected by black swan such as Coronavirus pandemic, ThaiBev is defensive in F&B business (during the last Global Financial Crisis of 2008-2009, business was stable).  Perhaps during crisis, people may consume more alcoholic drinks to forget the pains? Besides 5 times capital gains in stocks, ThaiBev gives consistent dividend with about 3% yield currently. It is a good midfielder stock for both capital gains and passive income.

There are 30 STI index component stocks including Thai Beverage (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).

2) Frasers Centrepoint Trust, FCT (SGX: J69U) – Singapore Giant Retail REIT

Besides Capitamall Trust, CMT (SGX: C38U), Frasers Centrepoint Trust is another giant retail REIT, both control most of the shopping malls in Singapore.  FCT has 7 shopping malls (Causeway Point, Waterway Point, Northpoint City, Bedok Point, Changi City Point, Anchorpoint, YewTee Point) but about half of rental revenue is from Causeway Point, having portfolio concentration risk but tenants distribution are diversified with over 99% occupancy rate for Causeway Point.

FCT Frasers Centrepoint Trust Thai Beverage Frasers Property Stock Market

Besides consistent growing dividend payout record (average 5% dividend yield, it was over 7% dividend yield when share prices dropped nearly to half over the past few months of global stock crisis), FCT has attracted long term investors to support the share prices by about 5 times with growing business.  FCT is a cyclic REIT, following economic cycles in stock performance, therefore more suitable to Buy Low Sell High with mega economic cycle, buying low during low optimism in global financial crisis, holding for 5 to 10+ years until high optimism, selling for capital gains.

Despite Coronavirus would affect the income distribute for the next 1-2 quarters due to possible cash reserve and also delay in rental payment by tenants, it won’t affect longer term investor with a few years of holding power, collecting over 5% dividend yield (even if DPU may be cut by 50%, still more than bank interest rate of 1%) during crisis, enjoying capital gains when crisis is over one day.

There are 52 REITs and Business Trusts Stocks in Singapore including Frasers Centerpoint Trust (investor has to focus only on giant stocks for investing):
AIMS APAC Reit (SGX: O5RU), ARA Hospitality Trust USD (SGX: XZL), ARA LOGOS Logistics Trust (SGX: K2LU), Ascendas Reit (SGX: A17U), Ascendas India Trust (SGX: CY6U), Ascott Trust (SGX: HMN), Asian Pay Tv Trust (SGX: S7OU), BHG Retail Reit (SGX: BMGU), CapitaLand Commercial Trust (SGX: C61U), CapitaLand Mall Trust (SGX: C38U), CapitaLand Retail China Tr (SGX: AU8U), CDL Hospitality Trust (SGX: J85), Cromwell Reit EUR (SGX: CNNU), Cromwell Reit SGD (SGX: CSFU), Dasin Retail Trust (SGX: CEDU), Eagle Hospitality Trust USD (SGX: LIW), EC World Reit (SGX: BWCU), Elite Commercial Reit (SGX: MXNU), ESR-REIT (SGX: J91U), Far East Hospitality Trust (SGX: Q5T), First Reit (SGX: AW9U), Frasers Centrepoint Trust (SGX: J69U), Frasers Hospitality Trust (SGX: ACV), Frasers Logistics & Commercial Trust (SGX: BUOU), FSL Trust (SGX: D8DU), HPH Trust SGD (SGX: P7VU), HPH Trust USD (SGX: NS8U), IREIT Global (SGX: UD1U), Keppel Infrastructure Trust (SGX: A7RU), Keppel Pacific Oak US REIT (SGX: CMOU), Keppel DC Reit (SGX: AJBU), Keppel Reit (SGX: K71U), Lendlease Reit (SGX: JYEU), Lippo Malls Trust (SGX: D5IU), Manulife Reit (SGX: BTOU), Mapletree Commmercial Trust (SGX: N2IU), Mapletree Industrial Trust (SGX: ME8U), Mapletree Logistics Trust (SGX: M44U), Mapletree North Asia Commercial Trust (SGX: RW0U), NetLink NBN Trust (SGX: CJLU), OUE Commercial Reit (SGX: TS0U), ParkwayLife Reit (SGX: C2PU), Prime US Reit (SGX: OXMU), RHT HealthTrust (SGX: RF1U), Sabana Reit (SGX: M1GU), Sasseur Reit (SGX: CRPU), Soilbuild Business Space Reit (SGX: SV3U), SPH Reit (SGX: SK6U), Starhill Global Reit (SGX: P40U), Suntec Reit (SGX: T82U), United Hampshire US Reit (SGX: ODBU).

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宋·欧阳修《醉翁亭记》：“醉翁之意不在酒，在乎山水之间也”。

A stock investor may not need to be an alcoholic to invest in F&B giant stock such as ThaiBev. Similarly, Charoen is smart to hide his fortune in property (a way of diversification), one could outsmart him by investing in his best giant REIT, FCT.  The higher level of investing is to leverage on Top 10 richest persons in each country or even in the world as your defender, investing in their best giant stocks at lousy prices during low optimism period, eg Global Financial Crisis when others are fearful.

There are 30 STI index component stocks including Thai Beverage (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).

It is better to learn how to fish (investing), instead of waiting for the fishes (stock investing ideas). Drop by Dr Tee free 4hr investment course to learn how to position in global giant stocks with 10 unique stock investing strategies, knowing What to Buy, When to Buy/Sell.

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

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

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5 Genting Group Casino Stocks (神机妙算)

Posted on April 30, 2020 Written by
Genting Gerhad casino stocks Malaysia Singapore Hong Kong Plantation

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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7 CapitaLand Giant REITs for Dividend (CMT + CCT = CICT) (双剑合璧)

Posted on April 29, 2020 Written by
CapitaLand Giant REITs for Dividend

CapitaLand is Temasek property giant stock, having 2 giant Singapore REITs: CapitaLand Mall Trust (CMT) and CapitaLand Commercial Trust (CCT). Many Singapore investors like REITs for passive income generation through quarterly dividend payment. After the announcement of merging, both REITs suffer about 40% price correction during global stock crisis with Coronavirus fear, dividend yields are more than 6%, attractive for long term investors.

Some potential REIT investors would like to know should they invest in CMT or CCT before the merging, which one has more potential, or should they wait until the merging of 2 REITs into CapitaLand Integrated Commercial Trust (CICT), the largest Singapore REIT by June 2020.

Read the article further to find out the critical answers for CMT and CCT, not learning only 2 REITs but all 7 stocks related to parent stock CapitaLand, including 4 REITs and trusts in the same group: Ascendas REIT, Ascott Residence Trust, Ascendas India Trust and CapitaLand Retail China Trust.

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CapitaLand is the largest property developer in Asia (after merging with Ascendas and Singbridge), becoming a key Temasek property investment portfolio.  CapitaLand has total of 6 REITs / Business Trust in Singapore:

1) CapitaLand (SGX: C31) – Singapore Property Giant Stock

2) CapitaLand Mall Trust, CMT (SGX: C38U) – Retail REIT Giant Dividend Stock

3) CapitaLand Commercial Trust, CCT (SGX: C61U) – Office REIT Giant Dividend Stock

4) Ascendas REIT (SGX: A17U) – Industrial REIT Giant Dividend Stock

5) Ascott Residence Trust (SGX: HMN) – Hospitality REIT Dividend Stock

6) Ascendas India Trust (SGX: CY6U) – Business Trust Dividend Stock

7) CapitaLand Retail China Trust (SGX: AU8U) – Retail REIT Dividend Stock

In summary, all 7 CapitaLand group of stocks have reasonable strong business fundamental, all 6 REITs / trusts may be considered for dividend investing but only 3 of them are giant REITs stocks (based on Dr Tee giant criteria): CMT, CCT and Ascendas REIT. Sibling stocks of Ascott Residence Trust, Ascendas India Trust and CapitaLand Retail China Trust are relatively weaker, more suitable for pure dividend investing but subject to cyclic stock market risk (eg. capital loss during global stock crisis with limited long term growth). Parent stock, Capitaland, is a blue chip stock, behaving as if a fund with all the subsidiary stocks, more suitable for low capital investor who needs diversification.

There are 30 STI index component stocks including CapitaLand Mall Trust and CapitaLand Commercial Trust (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), 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).

By law, 90% of REIT incomes has to be redistributed back to shareholders in the form of dividend, therefore it is a popular passive income generator. If a REIT pay 4 times yearly, an investor with 3 REITs could receive 12 payments yearly, helping to offset monthly expenses. When return from monthly dividend is more than monthly expenses, an investor would become financial free. However, certain REITs may not pay consistent dividend due to unstable business and a few could even go bankrupt if not properly managed. Business Trust (eg. Ascendas India Trust) seems similar to REIT but it is not required by law to pay dividend, therefore creating an uncertainty in the future which dividend payment is not guaranteed.

In this article, we will focus on 2 giant REITs, CMT and CCT which will be merged soon. Sharing is for educational purpose, please make your own decision. Before merging announcement, CMT performs relatively better than CCT from overall investing consideration.  So, CCT investors would benefit more than CMT investor.

CapitaLand Giant REITs for Dividend CCT CMT

The merging deal is for CMT to acquire CCT by exchange every share of CCT with 0.72 share of CMT + cash $0.259/share.  Since the announcement from 22 Jan 2020 until today, CMT and CCT share prices are closely correlated as mirror image with this formula:

CCT = 0.72 CMT + 0.259

It means after the merging announcement, there is not much difference now as CMT and CCT prices movement of stocks follow the equation above closely. Even if an investor is interested in CMT, the decision of whether to invest now or after official merging in June 2020, should be based on stock market outlook, not expecting any drastic change in share price after the official merging.  In fact, over the past 2 months of global stock crisis, both CMT and CCT dropped by about 40% in share prices, even after recovering in the last few weeks, CMT is still at low optimism < 25%. In general, before merging, CMT is more defensive while CCT is more cyclic, therefore future CICT REIT may behave in between both REITs, more cyclic than CMT, more defensive than CCT.

Coronavirus pandemic has affected both CMT and CCT as some tenants may not pay rents on time but this could be recovered later when Coronavirus has ended or fading away over the next few months.  Occupancy rates of both REITs are high (about 99%), any withdrawal by tenant (eg. a few weaker F&B or consumer companies may not be able to sustain) may be quickly replaced by new tenant but rental increase would be limited. If Coronavirus is not a long term issue (under the worst case, vaccine could be developed in about 1 year), major correction in share prices for either CMT or CCT could be an opportunity to accumulate with dividend yield around 6%. Assuming the worst case of losing 20% tenants (dropping from 99% to 80% occupancy) if Coronavirus may stay for 1 more year with 20% people in the world staying at home during lockdown, average dividend yield is correct to around 5%, still better than keeping cash in bank with only 1% dividend. When crisis is over, an investor could enjoy the capital gains with potential share price appreciation due to market greed.

Before merging, CMT and CCT already has joint portfolio, eg. Raffles City (40% CMT, 60% CCT). After merging, the new CICT REIT would dominate both retail shopping malls and offices in Singapore, having more capital to expand in overseas.  However, inorganic growth through more acquisition (eg. overseas properties) may or may not add value to CICT as it depends on expertise of REIT manager, able to find high quality properties at discounted prices (eg. during economic crisis), adding more potential to DPU (dividend per unit). Over expansion sometimes may result in higher risk (higher gearing ratio, which would become higher after merging as CMT has to pay some cash to CCT investors) but acceptable for CICT with dual level sponsors of CapitaLand and Temasek.

There could be more merging and acquisition activities during the global stock crisis. A giant stock does not need to be the “biggest” company, more importantly, strong in fundamental with growing business, therefore even a small company could be a giant stock.

A smart investor may consider only the strongest subsidiary giant stock of CapitaLand group, which is protected by the sponsor CapitaLand, which is further protected by another bigger sponsor, Temasek.  This implies for the giant stock to fail (eg. go bankrupt), it has to hurt CapitaLand or even Temasek first.  However, safer stocks may not be the best choice for investment as growth are limited.

There are 52 REITs and Business Trusts stocks including CapitaLand Mall Trust and CapitaLand Commercial Trust (investor has to focus only on giant stocks for investing):
AIMS APAC Reit (SGX: O5RU), ARA Hospitality Trust USD (SGX: XZL), ARA LOGOS Logistics Trust (SGX: K2LU), Ascendas Reit (SGX: A17U), Ascendas India Trust (SGX: CY6U), Ascott Trust (SGX: HMN), Asian Pay Tv Trust (SGX: S7OU), BHG Retail Reit (SGX: BMGU), CapitaLand Commercial Trust (SGX: C61U), CapitaLand Mall Trust (SGX: C38U), CapitaLand Retail China Tr (SGX: AU8U), CDL Hospitality Trust (SGX: J85), Cromwell Reit EUR (SGX: CNNU), Cromwell Reit SGD (SGX: CSFU), Dasin Retail Trust (SGX: CEDU), Eagle Hospitality Trust USD (SGX: LIW), EC World Reit (SGX: BWCU), Elite Commercial Reit (SGX: MXNU), ESR-REIT (SGX: J91U), Far East Hospitality Trust (SGX: Q5T), First Reit (SGX: AW9U), Frasers Centrepoint Trust (SGX: J69U), Frasers Hospitality Trust (SGX: ACV), Frasers Logistics & Commercial Trust (SGX: BUOU), FSL Trust (SGX: D8DU), HPH Trust SGD (SGX: P7VU), HPH Trust USD (SGX: NS8U), IREIT Global (SGX: UD1U), Keppel Infrastructure Trust (SGX: A7RU), Keppel Pacific Oak US REIT (SGX: CMOU), Keppel DC Reit (SGX: AJBU), Keppel Reit (SGX: K71U), Lendlease Reit (SGX: JYEU), Lippo Malls Trust (SGX: D5IU), Manulife Reit (SGX: BTOU), Mapletree Commmercial Trust (SGX: N2IU), Mapletree Industrial Trust (SGX: ME8U), Mapletree Logistics Trust (SGX: M44U), Mapletree North Asia Commercial Trust (SGX: RW0U), NetLink NBN Trust (SGX: CJLU), OUE Commercial Reit (SGX: TS0U), ParkwayLife Reit (SGX: C2PU), Prime US Reit (SGX: OXMU), RHT HealthTrust (SGX: RF1U), Sabana Reit (SGX: M1GU), Sasseur Reit (SGX: CRPU), Soilbuild Business Space Reit (SGX: SV3U), SPH Reit (SGX: SK6U), Starhill Global Reit (SGX: P40U), Suntec Reit (SGX: T82U), United Hampshire US Reit (SGX: ODBU).

Learn from Dr Tee 4hr Free investment course on global dividend giant stocks to collect passive income during low optimism in stock crisis, then enjoying capital gains with growing share prices when crisis is over.

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

Posted on April 27, 2020 Written by
Cheung Kong Stock CKH CKI CKA Power Assets Fortune Reit HKEx HPH Trust

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

1.1) Port

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

1.2) Retail

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

1.3) Infrastructure / Utilities

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

1.4) Telecommunication

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

1.5) Energy / Investment / Others

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Li Ka-shing stocks are stronger than many 50 Hang Seng HSI index component stocks or 30 STI index component stocks (investor has to focus only on giant stocks for investing):
DBS Bank (SGX: D05), Singtel (SGX: Z74), OCBC Bank (SGX: O39), UOB Bank (SGX: U11), Wilmar International (SGX: F34), Jardine Matheson Holdings JMH (SGX: J36), Jardine Strategic Holdings JSH (SGX: J37), Thai Beverage (SGX: Y92), CapitaLand (SGX: C31), Ascendas Reit (SGX: A17U), Singapore Airlines (SGX: C6L), ST Engineering (SGX: S63), Keppel Corp (SGX: BN4), Singapore Exchange (SGX: S68), Hongkong Land (SGX: H78), Genting Singapore (SGX: G13), Mapletree Logistics Trust (SGX: M44U), Jardine Cycle & Carriage (SGX: C07), Mapletree Industrial Trust (SGX: ME8U), City Development (SGX: C09), CapitaLand Mall Trust (SGX: C38U), CapitaLand Commercial Trust (SGX: C61U), Mapletree Commercial Trust (SGX: N2IU), Dairy Farm International (SGX: D01), UOL (SGX: U14), Venture Corporation (SGX: V03), YZJ Shipbldg SGD (SGX: BS6), Sembcorp Industries (SGX: U96), SATS (SGX: S58), ComfortDelGro (SGX: C52).

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Are you interested to invest in giant stocks of Warren Buffett, Bill Gates and Jeff Bezos? Learn from Dr Tee Free 4hr investment course to master how to take advantage of global giant stocks and funds, know What to Buy, When to Buy / Sell. Leverage on investment education to grow your wealth in a safer way.

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 member.

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