Friday, September 19, 2014

Keppel Land and Keppel REIT - MBFC Accquisition

I am just highlighting in this post, something interesting.

I am not a fan of conspiracy theories.

However, sometimes data does show a trail.

I will provide the data, you can draw your own conclusion.

In the first chart below, you see the Keppel REIT stock chart for the last six months.



You can see the break down on 24th July of this year.

The volume was around 3 million shares.

The average volume for the week before was 1.5 million shares.

The volume doubled and the share was down significantly breaking a 50 day moving average.

Now it gets a bit interesting.

In the next chart you see the comparison of Keppel REIT and Keppel Land.


For the six months prior to that, Keppel Land was underperforming Keppel REIT by 3%.

In this next chart, you see a significant jump in Keppel Land share on the very next day.



The volumes were significant on that day for Keppel Land and Keppel REIT.

I leave the reader to read this and draw your own conclusions.


Thursday, September 11, 2014

Parkson Retail

This is not going to be a long post.

Parkson seems to be trying to break out of its long downtrend.


My initial thought would be to wait for a confirmation and then trade in if it holds above 0.83 for a week.

The upside potential would be quite significant.

One is looking at a doubling of investment if its uptrend is as significant as its downtrend

Monday, September 8, 2014

Sembcorp Industries

I had outlined in April 2014 a trading idea for Sembcorp.

http://sgx-stocks-sti.blogspot.sg/2014/04/sembcorp-industries.html

I am just repeating the old post with the idea in a summary.

The trading idea for Sembcorp is

"Assuming the world does not go to hell in a handbasket, buy Sembcorp anywhere from May till November.

Ideally, buy at a price below 5 and sell it anywhere from November onwards till April of the following year when it hits 5.5.

The return on capital is around 10%, good enough for a year holding period."

Here is a look at the chart from April ex dividend date till now.


As you would have seen, one needs to be patient.

The reason, the fall did not occur immediately was due to a interim dividend.

It is within touching distance of 5.

Now, the only point to note is that in the previous year, it fell from 5.17 to 4.8 so, in a way, this fall is pretty similar.



A patient trade would be to buy at around 5 and trade out.

An enterprising trade would be to buy now, as it seems to be drifting up.

Only time shall tell.

I am confident that a purchase now at around 5.17 will provide a 10% return after trading costs anytime before May 2015.

Full Disclosure : I have no position in this stock and I may initiate one, as a repeat and rinse strategy.

Disclaimer :- 

I am not an investment professional.

I encourage you to do your own independent "due diligence" on any idea that I write about, because I could be and probably am wrong.

Nothing written here is an invitation to buy or sell any particular stock.

At most, I am handing out an educated guess as to what the markets may do.

The market will always find a new way to make a fool out of me (and maybe, even you!).

Even the best strategies of the past fail, sometimes spectacularly, when you least expect it.

I am not immune to that, so please understand that any past success of mine will probably be followed by failures

Sunday, September 7, 2014

Yanlord Land Group

This post is to take a look at the value of Yanlord Land group.

Here is a link to the company http://yanlord.listedcompany.com/

Let us first start with the NAV.


The current book value growth rate compounded over 2010-till date is 10.94%.


Let us assume this continues , but at 5.47% over 20 years.


In 20 years time, the book value will hit 24.54 RMB i.e. around 4.97 SGD at current RMB:SGD conversion rate.


However, 4.97 in 2034 is not worth 4.97 today.


To arrive at a discounting rate, I have used 8.76%.


The logic being that though this is thinly traded, it is a mid cap, so 8.76% discounting is fine.


This shows that 4.97 in 2034 is worth 0.92 dollars / share today.


Now, the PTB has swung between 0.67 to 1.42, which is a wild ride for shareholders.


Hence, pessimistically, the share is worth 62 cents and optimistically 1.3 SGD.


Next up is the dividend income.


The payout has been estimated between 1.2 to 1.86 cents on a random basis.


This in today's dollars is worth 14 cents.


This essentially means that the value for Yanlord Land is pessimistically 76 cents and optimistically 144 cents.


The upside potential seems to be 24% and the downside risk seems to be 35%.


A couple of interesting features you will need to keep in mind is that the float is low at 14%.


A few big share holders like Wilmar owner, UOB owner, Aberdeen have a big stake (>5%).


So, there may be privatization potential.


So, you can look at the optimistic case and hope for an upside of 24% or look at the pessimistic case and give it a miss.


While you are waiting, it will not give you much in terms of a yield of 1.2%, which to be fair, is your not main return source for this share.


Chances are this will serve a position in the portfolio where are investing in a hated sector i.e. Property in China is being cooled, no point investing, so, you are taking a contrarian approach.


The bull thesis is that, all you need is for majority share shareholders to privatize this and pay out a small premium to traded price of say 20% and you have made your 20%.

Full Disclosure : I have no position in this stock and I may initiate one, since i do not have a Y counter.

Disclaimer :- 

I am not an investment professional.

I encourage you to do your own independent "due diligence" on any idea that I write about, because I could be and probably am wrong.

Nothing written here is an invitation to buy or sell any particular stock.

At most, I am handing out an educated guess as to what the markets may do.

The market will always find a new way to make a fool out of me (and maybe, even you!).

Even the best strategies of the past fail, sometimes spectacularly, when you least expect it.

I am not immune to that, so please understand that any past success of mine will probably be followed by failures

Thursday, September 4, 2014

Hotung Investment Holdings

Hotung Investment holdings is a company which is based in Taiwan.

Here is a link to the company's web-site.

http://www.hihl.com.sg/eng/hotunggroup.htm

My interest in this was sparked by a thread in valuebuddies.com

http://www.valuebuddies.com/thread-2654.html

I took a cursory glance at it a while back before it went ex-dividend as it was thrown up by a high yield scan as well as by a Dividend Yield to Price to book scan as well.

The theory behind the DYPTB is explained in this article

http://www.btinvest.com.sg/markets/stocks/time-to-re-assess-price-to-book-stock-picks/

A look at the long term chart shows the high expectations (which failed, nothing new in that).



To cut a long story short, the bull case for Hotung is that they have almost 132 companies, they have invested in, primarily in China and Taiwan. Even if one becomes like a Tencent or Alibaba, we are in for a windfall.

Well, the bear case is seen from the long term chart and in the last 5 years, it has grown 32%, before you say, wow, that is great, remember that the average index has doubled or tripled in this period, so, 32% is nothing to sing and dance about i.e. this investment exposes you to the worst i.e. a steep fall, followed by much lower upside than the average equity investment.

The truth as always is somewhere in between.

Looking at the cents and sensibilities of it (since it is a penny stock, cannot say dollars and cents),

Let us first start with the NAV.

The current book value growth rate compounded over 2009-till date is 0.13%.

No, that is not a typo, that is the growth rate, 0.13%.

Let us generously assume this continues in the long term for 20 years

Hence, book value will hit 0.301 in 2034

However, the interesting thing is that they are reducing share count by re-purchase at around 2.23% a year, again compounded from 2009 till date.

Assuming this continues, (And that is a big assumption, as it may not), the book value in 2034 will be 47.23 cents.

To arrive at a discounting rate, you can use 8.76% or 10.76%.

The logic being that this is a thinly traded small cap and hence you need a better margin of safety, so 10.76%, else, you can argue that the spread is quite thin and hence 8.76% is okay.

This shows that 47.23 cents in 2034 is worth 6 - 9 cents a share today.

Now, the PTB has slowly increased from 0.39 to 0.52. (In a way, what it means is that the market is warming up to the company, but is very slow and very gradual.

Hence, pessimistically, the share is worth 4 cents and optimistically 5 cents. This is good, because the difference is not so major.

Next up is the dividend income.

The payout has been estimated between 1 to 1.6 cents on a random basis.

This in today's dollars is worth 12 cents.

This essentially means that the value for Hotung Investment Holdings is pessimistically 16 cents and optimistically 17 cents at a discount rate of 8.76% and 14 cents at a discount rate of 10.76%.

The share is trading at 15-15.1 cents today.

So, you can look at the optimistic case and hope for an upside of 12% or look at the pessimistic case and give it a miss.

While you are waiting, it will give you a yield of 8%, which to be fair, is your main return source.

Chances are this will serve a position in the portfolio where you park your funds in something while waiting for a good opportunity to come.

Or, you can go back to the initial bull thesis that, all you need is one big hit and you will triple or quadruple your money, i wish you good luck with that.

Full Disclosure : I have no position in this stock and nor do i plan to initiate one

Disclaimer :- 

I am not an investment professional.

I encourage you to do your own independent "due diligence" on any idea that I write about, because I could be and probably am wrong.

Nothing written here is an invitation to buy or sell any particular stock.

At most, I am handing out an educated guess as to what the markets may do.

The market will always find a new way to make a fool out of me (and maybe, even you!).

Even the best strategies of the past fail, sometimes spectacularly, when you least expect it.

I am not immune to that, so please understand that any past success of mine will probably be followed by failures


Tuesday, September 2, 2014

The Time for Tips is now

Nope, this is not a post to promote tipping in restaurants (though, that is your prerogative).

This is a post to highlight a suggestion for protecting against inflation.

Inflation in the United States is close to hitting 2%.

A good read on this investment idea is available at this link.

http://www.schwab.com/public/schwab/nn/articles/Is-Now-the-Time-to-Invest-in-Treasury-Inflation-Protected-Securities

Now, that is all very good, but how do I buy exposure into this without opening a foreign brokerage account, you say?

Lucky you, there is a ETF on SGX which offers just that.

http://www.etf.db.com/SGP/ENG/Download/Factsheet/LU0429459513/KF5/USD-Treasuries-Inflation-Linked-UCITS-ETF/Retail

At the risk of boring you with one more link, here is a link which shows the performance of this index.

https://index.db.com/dbiqweb2/servlet/indexsummary?redirect=benchmarkIndexSummary&indexid=14733&currencyreturntype=USD-Local&rebalperiod=2&pricegroup=STD&history=4&reportingfrequency=1&returncategory=TR&indexStartDate=20110207&priceDate=20140207&isnew=true

The gist of the thesis is that as inflation rises, this provides protection in the form of a inflation protected yield.

So, in case there is no / low inflation, you are likely to see low returns, Annualized returns are around 4.7%, but bear in mind that this is in a low inflation period.

Somebody on valuebuddies.com said that in the bond market, returns are slow and steady and what can happen in a day in the stock market will take a year in the bond market, well, my guess is that the TIPS market will make the bond market look like a hare and the TIPs market a tortoise

So, why now?

Because the breakeven rate is correct.

Note: Breakeven inflation is the difference between the nominal yield on a fixed-rate investment and the real yield (fixed spread) on an inflation-linked investment of similar maturity and credit quality.
Source: Bloomberg, monthly breakeven rates as of July 28, 2014.

Generally, at breakeven rate, TIPS makes sense.

Full Disclosure : I am likely to initiate a half position in this once I accumulate enough to take a position.