City Developments

Singapore's real estate developer, City Developments on 16th Feb also announced it's results. Some key statistics were that the company had a 7.4% gain in revenue thanks to it's hospitality wing while earnings skyrocketed 73.4% due to a divestment of it's assets.

Similarly, this may seem an excellent counter to purchase with it's stellar results and performance! But is it?

If you take a look on the 16th Feb, City Devt opened lower and closed even lowered as compared to the previous day. A drop of $0.04 is not a huge sum but is explainable as the real estate sector in Singapore is very shaky especially with all the new rules of stamp duty and loans. Furthermore, the private property market is experiencing a downturn with prices falling 1 percent in the previous quarter. Thus this may serve as a obstacle with many unsold rooms, which may sound okay since they are not perishables but because the government is starting to sell lands with 99 year leaseholds, every year after TOP makes it harder to sell as it doesn't benefits buyers.

Let's just hope City Devt is able to better handle their sales so as to cope with the housing problems in Singapore. 

Signing off~

Billy

Raffles Medical Group

Raffles Medical Group, mainly in charge of Raffles Hotel and the various Raffles Medical Clinics you see in shopping malls and heartlands announced it's financial results on 16th Feb.

This company saw a rose in both revenues and profit before tax of 9.9% and 10.3% respectively. Sounds awesome right?? Furthermore, Raffles Medical has cash on hand averaging $150m and do you know what's the best reason to buy this company? It has zero gearing / leverage / debt. Yes, it does not have any debt.

One of the major factor affecting results of companies is the amount of debt they have. The larger the debt, the longer they take to repay, the higher the interest paid, the lower the returns to shareholders.

Based on Raffles Medical's results, everyone would have expected this counter to skyrocket right? Wrong! After announcing it's results before market opened, Raffles Medical Group closed 1.5% lower, decreasing 6 cents closing at $4.04.

That being said, Raffles Medical has been on a long term uptrend ever since it listed. I suppose investors are starting to go slow on this counter if it doesn't come up with more plans for the future.

Watch this blog for the other 2 counters!

Signing off~
Billy

OUE Limited

What's the first thing that comes to your mind when you see this picture? 

I'm sure many of you will immediately think that it's going to rain pretty soon right??

However, what if I told you 10 mins later, this was what happened

What many of you had just committed is known as the Argument Fallacy.

Similar in the stock market, many investors would equate good results to rise in prices but that may not necessarily be the case. Let me present to you 4 case studies in 4 separate posts which happened in the span of 4 days.

OUE Limited

Last Friday, 13th Feb, OUE announced a net profit of $1.1b. No, your eyes aren't playing tricks on you. It's $1,100,000,000. This is huge jump from the previous year with a loss of $50.2m. The sudden increase in profit is due to the divestment of a couple of properties, namely Mandarin Orchard, Mandarin Galleria last year and Crowne Plaza Changi Airport just end of last month.

Investors looking for bargains after seeing this news would definitely flock to purchase this share, in turn driving up it's share price right? WRONG

OUE went down $0.03 to $2.19 although such a wonderful news was announced. 

Why?

With so much cash in hand, investors are anticipating special dividends to be paid out to shareholders. However, OUE only announced a dividend of $0.01 for this quarter as compared to 1 OUE Hospitality Trust share paid out for every 6 OUE shares held for the previous quarter. In total the distributions for 2014 would amount to roughly 16 cents. But apparently this isn't enough to impress shareholders therefore leading to the drop in price.

Stay tuned to the other 3 companies I'll be talking about!

Types of Investors

In the investing world, investors are usually classified into 2 main groups: Technical & Fundamental. I've used these terms previously but have not explained what it meant yet.

So, read on to find out the explanation!

Technical Investors 

What you will see on the monitors of these people's electronic devices would be charts and financial report. Technical investors uses many complicated charting tools to find out if it is the right time to buy/sell. I will elaborate on the tools commonly used.

Fundamental Investors 

What you see on the monitors of these people's electronic devices are news articles. Fundamental investors decide when to invest based on news reports on that company. For e.g, if capitaland manage to sell 100% of a particular property or should Keppel Corp be able to secure additional contracts, fundamental investors would be quick to snap up these stocks.

Which would I recommend? 

Personally I feel that one should take into account both analysis to analyse a company. Now why do I say so? One can never rely on just a single analysis to analyse a stock as there are many factors affecting the stock price and thus all factors must be taken into account. Trends may show that the share would rise but if announcements regarding the share's poor performance are made, there is a higher probability the stock would decline instead. 

Invest wisely!

Signing off~

Billy

Intro to Purchasing Shares Part 2 - Terminologies

Moving on to part 2 of my introduction on how to purchase stocks. In this part, I will cover the various terminologies used in the stock market which you as an investor is expected to understand. I will try my best to explain this in the most layman term as possible

Initial Public Offering a.k.a IPO - The period when a business wants to be listed on the Stock market and thus starts to issue stocks for investors to ballot

Straits Times Index a.k.a STI - This index takes the average price of the total share price of the top 30 companies in Singapore. Some examples of the shares included in this index are DBS, SIA, SGX etc. The shares are changed according to the performance of the companies in Singapore. This index also acts as a gauge of the direction for the whole Singapore market.

Types of Stocks

Penny Stocks - Small public companies trading at very low prices e.g Blumont @ $0.02
(A word of caution, shares like these are extremely volatile and their management may not be as stable and trustable as normal companies)

Blue Chip - Well-established, reliable and renowned stock e.g SIA

Real Estate Investment Trusts - These are stocks of companies that deal with, as the name suggests, real estates. 90% of these company's incomes are required to be acquired through rentals. It may either be shop space or office space that they are renting out.
E.g Suntec Reit (Retail + Office), Sabana Reit (Office) etc.

Warrants - This is an entirely different form of stock and requires a different execution tactic to gain profit. I shall elaborate on this in later posts.

Options - Similar to Warrants

Bonds - Provides fixed and constant interest payout every year. These payouts comes from the debts of the company. Bonds have a higher risk of going bankrupt as it is like loaning money to the company at the specific interest stated e.g SIA 2.15%b150930 Bonds also have maturity dates as you can see from the above example, SIA bonds pays out a yearly interest of 2.15% and this bond would mature on 30 Sept 2015.

Preference Shares - Similar to bonds, these type of shares provides a fixed and constant payout too. But what I prefer about preference shares rather than bonds is that in the scenario a company goes liquidated (bankrupt), they are liable to pay the Preference Shareholders money first as compared to even their main shareholders. Furtheremore, preference shares payouts can be as high as 7.5% a year!

Dividend

Dividend - Money companies distribute to shareholders as an incentive when they gain profits for that fiscal year. This may occur once, twice or four times a year depending on companies

Cum Dividend a.k.a CD - After announcing the results of the company, companies would usually provide dividends to shareholders. Following this announcement, there will be a CD beside the stock symbol. Depending on the results of the company, if it has a higher earning this year and decides to increase their dividends paid to shareholders, share prices would usually go up.

Books Closure - As long as you purchase the stock before this book closure date, you will be entitled to the dividend announced by the company.

Ex Dividend a.k.a XD - The day after the books closure date, XD would appear beside stock symbols. This means that should you decide to buy the stock now, you would not receive the dividends announced by the company.

Date Payable - This is the date when you should check your bank account for the dividend to be credited into your account.

Rights Issued - Occasionally, investors are given a choice to decide if they would like to receive the dividend in terms of monetary terms (cash) or shares. Picking shares may be a advantage / disadvantage depending on how much the dividend is but if you take up the rights issued, more shares would flood the market and this would dilute the share and in turn lead to a lower dividend per share in the future as there are more shares.

Other Terms

Halt a.k.a H - This sign would appear when there is a big announcement going to be made (in the case of Keppel Corp & Keppel Land) or when there is a sudden spike / decrease in price which SGX is required to investigate

Hope that this article has been of help to you all aspiring investors.

Shall blog on ways to pick stocks next time!

Signing Off~
Billy

Intro to Purchasing Shares Part 1 - Accounts and Commissions

For those of you who have been constantly reading my blog and have the interest to trade, this post will explain the steps to take to make your first trade :)

1) Opening an SGX (CDP) account

Firstly, you are required to have an SGX CDP account. This account is responsible for holding your shares for you. Whenever you purchase a stock, it would be shown here. As long as you are above 18 years old, you are eligible to open an SGX CDP account. Using this account, you are able to make your first purchase of stock (but not sell). 

Whenever new companies request to be listed on the stock market, they would issue shares known as Initial Public Offering (IPO). This would be the indicated price by the company after considering how much they think their company is worth.

2) Opening a brokage account
There are countless brokage firms in Singapore which you could open your account with. But in order to open an account on your own, you have to be 21. If you'd like to open an account at an earlier age, you may open a joint account instead. The brokage firms around Singapore generally offer the same commission rates (min. $25 or 0.28% of the total trade)

Using this brokage account, you are then able to buy and sell shares. Another alternative to opening a brokage account before 21 would be to open a cash deposit brokage account. This account requires you to deposit money into the specific brokage firm account and trade using that amount of money.

With these 2 accounts set up, you are all prepared to step into the market. Money is waiting for you out there, may the market ever be in your favour :)

I'll be blogging more on investing terms on the next post! Stay tuned~

Signing off~
Billy

Keppel Corp purchasing Keppel Land

The shares of both Keppel Land and Keppel Corp had been halted for 3 days during which the results for both companies were reported.

There were various speculations for the stoppage of trading, some thought it to be a special dividend being announced while others thought it to be a takeover by Keppel Corp. The latter provided the precise speculation! Keppel Corp is buying over Keppel Land for $4.38 / $4.60 (if it hits the 90% mark). This is after the Special Dividend of $0.14 announced by Keppel Land & $0.30 by Keppel Corp as well! Thereafter, Keppel Corp would acquire the Keppel Land shares at $4.24 / $4.46 (90% approval)

Now, for Keppel Land owners, it's a 26% premium compared to the last traded price. I'm sure most of you have read about such statistics therefore I'm gonna provide a more interesting insight on this situation.

Keppel Land closed at $4.54 today (27th Jan 2015). Assuming the price at which Keppel Corp would purchase would be $4.46 (after dividends + obtain 90% approval), one would be able to make a slight profit from this!

Let's take the total commission as $30 (rounded up), Therefore it would be an additional 3 cents to the purchase price, which adds up to $4.57. After the Books Closure Date, I highly doubt that Keppel Land would fall below the acquisition price of $4.46. However, if Keppel Corp is true to their words and purchase Keppel Land at $4.60 (before dividends are paid), you can see from here that one is able to gain $30 for every 1000 shares! Oh well, it may not be a lot, but if you purchase many lots, you'd be able to make quite a small sum!

These are just thoughts of mine and it may or may not turn out that way. Hope that those of you who take on this method would be able to gain some cash! (: