Monday, May 20, 2019

Trade War Thoughts

As I am writing this, the US market is slightly red and treasury yields are edging down, signifying some flight to safety assets. The drama ensues where the US decided to ban Huawei from doing business with them, which I think will be further detrimental to the unfolding of the trade war. This is extremely likely to further deteriorate bilateral relations between US and China.

Honestly, I think the trade war is indeed room for worry in the short term, but I take comfort in the fact that Trump will not be in office forever (even if he gets re-elected) and someone who is less protectionist and friendlier towards China may eventually emerge in office (maybe an exit strategy then).

Therefore, I see this as a platform to enter battered stocks with good fundamentals. One of which I identified is Suntec Reit, and its current price stands at 1.81 which is still respectfully below its NAV of 2.09.Another stock which looks battered and hovering near its 52-week low (9.14) is SIA and also below its NAV of 10.36.

A quick glance at its recent financial presentation reveals a drop in operating profit mainly attributed to rising fuel prices. But since fuel prices are hedged to some extent in their presentation, the main point we should be looking at is if the volume of travelers will continue to increase and if the trade war will affect the company.

I also picked up a very insightful article here which I felt that some points here were very relevant. The basic premise here is that a trade war will cause incomes to drop which might lead to decreased air travel. Air cargo flows will also be reduced as the demand of air cargo drops due to increased costs.

These two stocks are worth considering in my opinion, but please let me know if you have any insights and/or comments. Another person's perspective is always very welcome.

Happy Vesak Day!

Sunday, May 12, 2019

Suntec Reit Ideas

Amidst the market movement this week, I have been on the hunt for any stocks to buy to add to my portfolio. I am sure the most prominent piece of news that caught everybody's attention was the two Trump tweets which knocked off $1.3 trillion off the global markets this week, where tariffs on USD 200 billion have already been effected. Recently, Trump even said 'a no rush' about the China deal. In the worst scenario, tariffs might lead to a continued slide in Singapore markets (it caused quite a drop this week) but we will see.

One stock which caught my eye was Suntec Reit, which looked cheaper as compared to its peers (it is currently trading at a price of 1.79 as of 10 May 2019.

Here is the performance for this quarter here.

Source: Suntec Reit 1Q 2019 Financial Presentation

Net Property Income dropped from last quarter, where possible reasons could be the depreciation of AUD against SGD and lower NPIs from its constituents (Suntec City and Suntec Singapore). Distribution Per Unit remains constant with about +0.04% y-o-y. Furthermore, office accounts for 66% of NPI and Singapore accounts for 85% of NPI. Net Asset Value stands at $2.09 which gives us a 30 cent discount over its current price. In terms of interest rate matters, average cost of debt is 3.04% and 77% fixed. However, I think this will largely depend on the Federal Reserve interest rates, which has yet to see a standstill with Trump.

Furthermore, looking at the occupancy numbers, Weighted Average Lease Expiry (WALE) is 2.24 years for Singapore and 5.37 years for Australia. Longer WALE might be more predictable and stable but since the bulk of money comes from Singapore (85%), a 2.24 year WALE may be worth zooming in to see if the economy will continue to strengthen beyond 2020 (or weaken).

I will be looking to buy the stock at a favorable price, where its last 52-week low was at 1.63 and I did have the intent to buy. But we will see again.

Friday, April 26, 2019

Starhub and its General Meeting

I requested a hard copy report because I prefer reading hard copy stuff which is easier on my eyes. :)

Nevertheless, it was pretty interesting reading about the company's future direction and how they manage their finances. I would also like to see if any reader here is going to the general meeting to find out more about the company.


Sunday, April 14, 2019

April Thoughts

I have been expecting some downward movement this year but it is a pity it has not materialized yet. Last night I was reading articles on Marketwatch on how the fear index is plummeting and how earnings and China have made recession a distant memory which were both pretty intriguing to me.

I have mentioned previously about the inverted yield curve and how it is used as a recession indicator. My take is this: so far the S&P 500 has returned approximately 10% from 1926 and it seems like any point of entry will not severely shortchange you (assuming the companies you buy do not go defunct).

Therefore, I have shortlisted a list of stocks which I would really love to buy. These are based on my initial interest and I will delve into the subsequent analysis later.

1) DBS
3) UOB
4) SGX
5) ST Engineering
6) Mapletree REITs

Please suggest any more stocks too, I will be happy to look at them.

Hope everyone has been investing well.

Saturday, March 30, 2019

Inverted Yield Curve and Thoughts

Recently, CNBC posted here that there was an inverted yield curve, which signifies that debts in the long term have lower yields as juxtaposed to their short term counterparts. The article is really very detailed, but what is key here is that it is considered an indicator of an upcoming recession, where it was largely accurate in the last 50 years and only a false alarm during this period.

If we think about it from another view, higher short-term rates mean it is harder for businesses and people to borrow money and might lead to an economy contraction, which results in a recession.

Well, I am looking at this from a different perspective of the article, where I am camping to buy stocks at depressed levels, which this opportunity might bring about.

I talked about the Shiller Ratio in my previous post, where Singapore shares still look pretty undervalued compared to their US counterparts, but still at a score of 15+.

Source: Barclays Shiller Ratio (Singapore)

However, if we use the 52-week low method, we do find out that not many stocks are near 52-week lows. The bottom 3 stocks which are nearest now is about 4+%. Not a lot of things to buy in my opinion...

With growth concerns looming for 2019, I doubt there is ample bandwidth for stocks to rise significantly. So instead I will be waiting for opportunities to buy when prices drop (hopefully). But of course, my guess is as good as yours.

What's your strategy? Pray tell!

Thursday, March 21, 2019

My Survey List

I received some comments about a survey list so here I go!

1) Surveyon
This is one of my favourites as the number of surveys here is quite plentiful and you get about 9,000 points per survey and some mini surveys for 100-1000 points during certain events. Minimum redemption is 20,000 points which equate USD 2.

Mode: App/Desktop
Payment Currency: USD
Payment Mode: Paypal
Duration: 2-4 days

2) Viewfruit
This is another in my list but one caveat here is that you can get disqualified in surveys pretty easily. Sometimes they give you 1-2 participation points and some points in a lucky draw (randomly). Minimum redemption is 2,500 points and in multiples of 2,500 points. 2,500 points equate USD5.

Mode: App/Desktop
Payment Currency: USD
Payment Mode: Paypal
Duration: 2-4 days

3) Rakuten Surveys
I particularly like this website as they email you when there is a new survey so you don't have to intermittently check the website for surveys. Surveys also generally have a high qualification rate. Minimum redemption is 45 points and in multiples of 45 points. 45 points equate SGD3.

Mode: Desktop
Payment Currency: SGD
Payment Mode: Paypal
Duration: 1 month

4) Milieu
I love this app too because I can (almost) get one survey per day and I think I have not been disqualified by any survey yet. There are a variety of rewards here where you can get vouchers but for those looking for the cash, minimum redemption for Paypal/Paynow/Grabpay is 9,500 points for SGD10 and 18,500 points for SGD20.

Mode: App
Payment Currency: SGD
Payment Mode: Paypal/Paynow/Grabpay
Duration: 10 working days

5) Yougov
This is not bad too but one caveat is that the frequency of surveys is just too slow. But good thing is they will email you when there is a new survey and disqualification is pretty rare. Minimum redemption is 5,000 points which equate SGD25.

Mode: Desktop/App
Payment Currency: SGD
Payment Mode: Paypal
Duration: not sure because I have not redeemed yet

I used other websites such as Prizerebel and Toluna which were pretty good last time but I think as of now, the survey generation rates are not as good so I have not been visiting these websites recently. If you do find success there, please let me know!

I would like to post a disclaimer that I am not paid or recruited by the above survey sites, I am just a pure user who is trying to give some real feedback on what I used. Moreover, please note that you might not have the exact experience as I stated here, so please keep your mind open. Lastly, I did not put the links here because I think it's quite easy to google for them. Nevertheless, have fun playing around and let me know if there are any queries :)

Sunday, March 17, 2019

Survey Taking- A worthwhile effort?

I thought I would like to share about what I have been recently doing and hear any opinions about it.

In December last year, my friend shared with me about taking surveys for some pocket money and I guess my curiosity got the better of me. Therefore, I decided to run a little experiment on my own and start to google and take some surveys to see how 'lucrative' it could be.

I have been taking surveys for 3 months and I went to check my Paypal wallet yesterday and I thought I would like to talk about the results to see if it was a worthwhile effort (or not) and whether you should consider it given the potential returns.

Firstly, I started a Paypal account back in December with a beginning balance of $0 and come March now, my balance is $183.74. The diagram further illustrates the breakdown on a monthly basis.

Secondly, I have been using mainly my travel time on the MRT to do surveys so instead of looking at photos on Instagram or surfing Facebook feeds, I thought why not monetize my free time?

$183.74 over a period of 3-4 months is about a monthly amount of $45-50. I would like to think of it as a nice amount which can pay off my phone bills. But that is how far it can go and no further.

Different readers will definitely draw their own conclusions from this post based on their very own experiences. But I will be looking forward to hear about your own experience and even advice regarding my little experiment.

And off to reading more financial news!

Sunday, March 10, 2019

CAGR Analysis on Singtel

Building on my previous post, I would like to extend the model to a more bearish stock to see how the results are. I will be using Singtel here for my analysis and below is the CAGR for Singtel across different possible entry points on the entire time frame. (for more details on this implementation, please check my previous post)

A quick observation shows that CAGR was generally around 5% which can be attributed to the depressed levels during the 2009 periods. CAGR then plummeted below 0 around 2014-2015 periods and stayed negative aside for the anomaly there which is attributed to the 52-week low of 2.8 levels which is a distance from its current price of 2.94. This is inclusive of the dividends distributed over the period.

The point which I want to make here is that the time of entry point is not the only important factor if the stock itself is not faring well. Indeed, Singtel has not been performing up to standard since the entry of the 4th telco in Singapore. The picture we have here is definitely not as rosy as the previous example I used (Capitamall trust).

Let us look at a comparison between CAGR of the two for clearer analysis.

We see that the CAGR of Capitamall has been generally superior over Singtel, lest the 2018 periods of volatility. This further reinforces the point that finding a fundamentally sound stock which can dish out a constant stream of dividends is more important than ever.

For those who are interested in the technical details of this implementation, I downloaded the data from Yahoo Finance and used Excel VBA to calculate the ending value (with dividends) which I can in turn calculate the CAGR. I wish I could have built a more robust model without much hardcoding but I guess this is a good starting point as my time is rather limited nowadays.

I am putting the Excel VBA here and who knows, maybe someone will build something much better than me? Hopefully you will have fun with this too!

Tuesday, March 5, 2019

Thoughts about timing the market

I haven't posted a while because school was really busy this month with me rushing through my FYP! Nevertheless, I am glad to post again and share some ideas I have.

We always ask ourselves when to enter a stock and either lament when the stock drops after we bought, or when the stock rises if we did not buy. Now, I would like to present this situation in a more technical format, in the form of an Excel spreadsheet. One example I will be taking here is Capitamall Trust.

I scrapped the price and dividends data from Yahoo finance and did a simple analysis here. For simplicity's sake, I used the closing data of every month to look at it from a monthly point of view. The gain here is the net profit here. For example, if gain is 172.82%, that means you will get $1.72 for every $1 invested.

Compound Annual Growth Rate (CAGR) will be what I'm using to gauge here and for those not familiar with it, it is just the (Ending Value of Asset - Beginning Value of Asset) taken to the power of (1/number of years), then divided by 1. Basically, it measures the growth rate of an initial investment to its current value. To be clear too, I am accounting for dividends in the ending value to have a more accurate view and the ending value is the current price of Capitamall Trust now. For a more elaborate explanation of CAGR, you can check here.

I then plotted a CAGR graph over time here for a better visualization. 

So we notice that CAGR has been fairly constant at about 6-7% and then a sudden spike up at 2017-2018. This can be attributed to the run-up prices during the 2017-2018 period if many of you all may recall. But ignoring this outlier, we can see that any point of entry will yield us a decent CAGR of at least 6%. So during any point, it will be good to enter even when prices are higher than normal. 

But of course this model has its caveats. The reason why the picture looks so rosy is because the reit now is close to its 52-week high, which greatly inflates its ending value. If the price was any lower, CAGR would be lower than the current illustration. Another reason would be because of the consistent flow of dividends. I suppose if you replace Capitamall Trust with a bearish stock, things will not be so brilliant. 

However, I hope to bring through the message that timing the market might not be that important after all, it is identifying stocks with good potential that is the key. Of course, if we can time the market, our returns will be better enhanced but if we can't do that, we still can enjoy pretty good returns.

But of course, based on the argument that I have just presented, should I buy Capitamall Trust when it is hovering very high? Well, of course I hope I can time the market if possible. But we will see...

Wednesday, February 13, 2019

SGX Opinion

I hope Chinese New Year is great for everybody, a good break amidst a busy schedule! One more stock which I am interested in is SGX. My recent thoughts were invoked by this article which was about the 'shrinking stock market' in Singapore. From face value, this translates into a lower trading volume which does not bide well for SGX. But I thought it would be interesting to read the financial statements.

Here is the quick look at the financial performance for this quarter.

Source: SGX 2Q 2019 Financial Presentation

Net profit went up in spite of an increasing expense.

A breakdown in the revenue shows that the bulk of increased profit came from derivatives trading. Market data and connectivity also helped contribute an increase in revenue. Notably, SDAV (security daily average value) went down which contributed a slight drop in revenue. This is in tandem with the article which I posted above. Other factors contributing to the decline included a drop in fixed income revenue too.

Source: SGX 2Q 2019 Financial Presentation

Dividend for this quarter stands at 7.5 cents which is a comfortable amount given that earnings per share is 9 cents.

Source: SGX 2Q 2019 Financial Presentation

I think I have mentioned before in my previous posts but potential risks include a possible trade war and interest rate hikes, which will affect the financial markets. From the recent financial statements, we can also infer that there is a shift of preference from the traditional stock market trading to derivative trading, which is pretty notable. In volatile times, more market participants might turn to derivatives either to hedge or initiate a position.

Besides this, what I like is SGX's dividend policy, which the management will aim to pay 7.5 cents per quarter. Of course, we cannot 100% take their words for it, but a word of assurance does help boost investor confidence. We do note that dividends per share are currently below earnings per share too.

With reference to the article which I posted, there is some worry that companies will choose the HK market over Singapore due to the higher liquidity there, which will affect SGX's business as a whole. Since the derivatives section for SGX seems to be the highlight for now, it is pretty good that an increase in volatility will mean an increase in derivatives trading. Currently SGX is trading at 7.7 with a PE of around 22. Dividend yield is 3.89% at current price, assuming 30 cent dividend policy stays constant. The 52-week low is 6.72 which is pretty far from its current price. At that price, dividend yield is 4.46% instead.

If we go by 'common sense', SGX can be considered a defensive stock with no natural competitors here. But we should not forget that SGX has competitors nearby in Hong Kong where IPOs can flock to.

I will be looking to accumulate at 7 which seems to be the last support here.

Happy Valentines too! :)

Monday, February 4, 2019

Learning the Shiller Ratio and some random thoughts

Happy Chinese New Year everybody! I can't believe that it has been 2 months since I started blogging.

I guess if you have been following my previous posts, I am mainly concerned about the current valuation of the stock market as it gives me an indication of when to buy. So one thing that caught my eye on Investopedia was this which was quite interesting to me.

The Shiller Ratio is a measure which is equivalent to the current price divided by the average of 10-year period of real earnings per share. It is inherently an extension of the Price-Earnings ratio, albeit adjusted for inflation and different phases of a normal economic cycle. It is a ratio to determine an overvaluation or undervaluation of any financial asset, but also accounting for cyclical factors that artificially inflate or deflate a company's earnings.

Of course, Singapore is my main point of interest, so I managed to find the historic Shiller Ratio from the Barclays website.

Source: Barclays Shiller Ratio (Singapore)

As of 31 December 2018, Singapore's Shiller Ratio stands at 15.21, which is pretty decent considering that it is rather low given the peaks you see in the above diagram. Notably, the peak was around 35 in October 2007 before plummeting during the Great Financial Crisis. Looking at current levels, it does seem compelling for a buy.

Let's look at the pros and cons here. The pros should be quite evident, where the Shiller Ratio has accounted for expanding and contracting business cycles using a 10-year period to smooth earnings, which is not represented in a normal PE ratio. This can ensure that outliers like the Great Financial Crisis will not greatly affect the conclusion we will get. After all, this is all about the law of large numbers, where the end result should be stable and generally similar.

Obviously, there are some disadvantages which might/might not be of significance. I think the first point is that the Shiller Ratio is based on past data which is retrospective and does not provide any prospective meaning, aka knowing what happens in the past does not make you 100% sure about what the future entails. 

But still, I think the Shiller Ratio is a good enough gauge for us to assess the valuation of the market.

As we celebrate Chinese New Year in Singapore, US markets are still up and running so I thought I should have a look there too 

I am currently thinking of diversifying outside of Singapore and buying some undervalued US shares but if we do apply the Shiller Ratio which we previously discussed, it seems that the US market is even more overvalued than the Singapore market.

Source: Barclays Shiller Ratio (Singapore and USA)

The US market has a Shiller score of 26.64 which represents a pretty huge margin over Singapore's score of 15.21, which generally means it is harder to find undervalued gems in the market. But it is always good to shortlist first, and then pull the trigger later.

The current Shiller Ratio for the S&P 500 is 29.75, with mean of 16.6, median of 15.7 and a range from 4.78 to 44.19, where the current market is slightly overvalued and above its mean.

My recent call on SATS at 4.5 has not been feasible, where SATS is trading at 4.8 currently. Parkwaylife Reit is also at 2.79 and Capitamall Trust at 2.39 which is a tad too high for my taste. Mapletree Industrial is at 1.99 and Mapletree NAC is at 1.25. All the stocks had run up pretty high after my writing so I didn't get the chance to buy. But I do hope I am rewarded for my patience as I am of the view that high prices don't always last, just like how bullish markets don't continue forever. We will see again!

I will write more again after the new year about some US stocks I had some interest in. But for now, it's visiting time. Cheers to the new year ahead!

Trade War Thoughts

As I am writing this, the US market is slightly red and treasury yields are edging down, signifying some flight to safety assets. The drama ...