Now is Not The Time For You to Give Up On The Stock Market
- Original Post from The Motley Fool Sg

Fear is rampant in the stock market right now. Investors have taken it on the chin but it is not the time to give up.


Singapore’sStraits Times Index (SGX: ^STI) peaked in early May this year and proceeded to fall past the dreaded 10% mark in less than two months to enter correction territory. Today, more than six months after this year’s high, the STI is still down by around 16%.


As the downturn drags on, some investors are beginning to feel the strain. In some ways, fear has given way to exhaustion. After all, it’s been a tough year for any investor to eke out any sort of gain. Consider these statistics:



  1. Less than a quarter of the 30 companies that make up the Straits Times Index are showing positive returns for 2018.

  2. The average year-to-date return of a blue-chip stock is negative 9.7%.


Meanwhile, good news is in short supply. Instead, negative developments, such asAsian Pay TV Trust’s (SGX: S7OU) massive dividend cut, are dominating media headlines. At the face of all the mounting challenges, it is not surprising that some investors are feeling fearful — and tired too.


From the above, you can see why it is tempting to take the easy way out and give up. But you really, really shouldn’t.


Courage, Singapore Investors


Investors were feeling weary in April 2008 too.


Prior to that, the US-basedS&P 500index had peaked in October 2007 and had fallen into correction territory in less than two months. By mid-April 2008, there was no stock market recovery in sight and the index had been languishing in the doldrums for more than six months. As investors’ hearts started to waver, Motley Fool co-founders Tom and David Gardner implored our members to stay invested. In April 2008, they wrote in a memo:


“We are all touched by fear: fear of death, fear of failure, fear of what a bear market can wreak upon our retirement portfolios. But courage is forging ahead, taking action, being productive despite the fear that we feel.”


You see, our co-founders understood early on that investing is more than just numbers and a bunch of ratios. Much like today, fear was rampant in the stock market back in 2008. But as investors, we have to find the courage, despite the fear we feel, to invest.


With the benefit of hindsight, we can now see the wisdom in their timely words — that is if we had stayed invested.


From the start of April 2008, shares of companies such as local bankDBS Group (SGX: D05), airline catererSATS (SGX: S58) and vehicle test inspectionVICOM (SGX: V01) have delivered total returns of over 120%, 265%, and over 500%, respectively. Investors that exited the market back then would have missed out on these satisfying gains.


So, like Tom and David Gardner before me, I say to you:Courage, Singapore investor.


Our Promise to You


Even in uncertain markets, there is still a way to invest profitably. It’s about knowing where to find these opportunities.


We do not shy away when markets fall.


That’s why we can consistently offer our members one stock pick every month … Even as the stock market suffers from bouts of fear and exhaustion.


Since we started, we have 24 active stock recommendations. We think they will be able to weather through tough times and potentially make you wealthy over the long term.


If you want to find out what stocks to buy in these uncertain times, simply click here to get started.


$STI(^STI.IN) $DBS(D05.SI) $SATS(S58.SI) $VICOM(V01.SI) $S&P 500(^GSPC.IN)

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1 Simple Number for Understanding 3 Important Areas of SATS Ltd in 2019
- Original Post from The Motley Fool Sg

SATS Ltd (SGX: S58) is a company providing food solutions and gateway services solutions. The Food Solutions segment covers airline catering, food distribution, and industrial catering, whereas the Gateway Solutions segment is involved in the ground handling services of passengers, flights, and cargo.


Let’s dig deep into SATS’s return on equity, or ROE.


The choice of ROE


We’re using one metric — the return on equity, or ROE — to understand SATS’s business. This financial metric gives investors important insight into a company’s ability to generate a profit using the shareholders’ capital it has.


A ROE of 20% means a company generates $0.20 in profit for every dollar of shareholders’ capital invested. In general, the higher a company’s ROE, the more profitable it is. A high ROE can also be a sign that a company has a high-quality business.


It’s worth noting that the use of high leverage — which increases the financial risk faced by a company — can also increase a company’s ROE.


Calculating the ROE


ROE can be calculated using the following formula, which is the way many investors do it:


ROE = Net Profit / Shareholder’s Equity


ROE can also be calculated using a different approach, as shown below:


ROE = Asset Turnover x Net Profit Margin x Leverage Ratio


Calculating a company’s ROE will reveal three important things: how well a company is managing its assets, how efficient it is at turning revenue into profit, and how much financial risk it could be taking on.You canlearn moreabout this formula for ROE.


With that, let’s turn our attention to the ROE of SATS.


The actual numbers


Asset turnover measures the efficiency of a company in using its assets to generate revenue. It is calculated by dividing a company’s total revenue by its assets.


SATS had total revenue of S$1,828 million and total assets of S$2,408 million in its fiscal year ended 31 March 2019 (FY2019). This gives it an asset turnover of 0.76.


Net profit margin measures the percentage of revenue that is left as a profit after deducting all expenses. In FY2019, SATS had a net profit margin of 14.0%, given its net profit of S$256 million and revenue of S$1,828 million.


Lastly, we have the leverage ratio, which shows the relationship of a company’s total assets to its equity. It is calculated by dividing total assets by equity. A higher ratio means a company is funding its assets with more liabilities, hence resulting in higher risk. In FY2019, SATS had total assets and total equity of S$2,408 million and S$1,817 million, respectively. This gives it a leverage ratio of 1.33.


When we put all of the numbers together, we arrive at a ROE of 14%.


Foolish takeaway


Return on equity is a good metric to use to understand the quality of a business, but investors should be aware of (and understand) all three components that make up the ROE. I usually pay more attention to asset turnover and profit margin since those two metrics better reflect a company’s underlying business performance.


Last but not least, calculating the ROE is just the start of our research of a company. We should also compare SATS’s ROE with those of its peers, as well as its historical ROE, in order to get a better understanding of SATS’s performance.


Click here nowfor yourFREEsubscription toTake StockSingapore, The Motley Fool’s free investing newsletter. Written byDavid Kuo,Take Stock Singaporetells you exactly what’s happening in today’s markets, and shows how you can GROW your wealth in the years ahead.


TheMotley Fool’s purpose is to help the world invest, better.Like us on Facebook to keep up-to-date with our latest news and articles.


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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned. The Motley Fool Singapore recommends SATS Ltd.


$SATS(S58.SI)

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The Weekly Nibble: Banking on DBS Group Holdings Ltd
- Original Post from The Motley Fool Sg

Here’s a weekly roundup of some articles you may have missed this week.


2 Top Business Risks to DBS Group Holdings


DBS Group Holdings Ltd (SGX: D05) is one of the world’s most recognised banks, winning accolades such as the “World’s Best Digital Bank,” “Asia’s Best Bank,” and “Safest Bank in Asia.”


To be always on top of its game, the bank has embarked on many growth initiatives, including increasing its digital footprint. However, there are also some key risks to consider for DBS at the moment. Understanding such risks allows investors to have a holistic view when buying DBS shares.


3 Companies That Pay You Dividends Every 3 Months


From the first quarter of 2019, DBS has started paying a dividend every three months to provide “shareholders with more regular income streams.” Previously, the bank paid dividends only every six months. DBS joins other companies that pay quarterly dividends. What are some of those businesses? You can find out from this article.


3 Ways to Supercharge Your Dividend Income


Looking to increase your dividend income stream? There are three ways to do so, which Royston Yang discusses in his article.


What the DBS Global Income Note Says About Income Investing


Dividend investing is as popular as ever. Jump into this article from Tim Phillips to find out why.


Investing in Asia: Banking on Singapore


Join David Kuo and Chong Ser Jing as they talk Singapore banks in this new “Investing in Asia” podcast series.


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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore recommends shares of DBS Group. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.


$DBS(D05.SI)

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2 Top Business Risks to DBS Group Holdings
- Original Post from The Motley Fool Sg

DBS Group Holdings Ltd (SGX: D05), or DBS for short, is one of the three big banks in Singapore, providing a wide range of financial services to clients. The bank recently released its first quarter 2019 earnings, while my colleague Lawrence also talked about DBS’s planned digital transformation in order for the bank to stay competitive and fend off competition from new technologies.


I would like to add on to the discussion by highlighting two major risks that could potentially pose a threat to the bank’s planned growth initiatives. As investors probably know, any discussion of an investment is not complete without a comprehensive review of the risks involved. So, here are the two risks that spring to mind and which investors should account for when assessing the growth prospects of DBS.


1. US trade tariffs imposed on China


President Donald Trump has just announced his intention to raise tariffs on billions of dollars of imports from China from 10% to 25%. The effect of these tariffs will raise costs across the entire value chain for many categories of products and could cast a shadow over companies’ growth plans.


A direct effect of the tariff imposition could be companies cutting costs and conserving cash, instead of borrowing more for expansion. Time will be needed for the supply chains to absorb the news of the tariff increases and for sellers to adjust prices to compensate for their higher cost of materials and of doing business. The exact impact is still unknown but DBS, being a major lender to Singapore and Asian businesses, could potentially see the growth of its loan book negatively impacted by these tariffs.


2. Virtual banking in Singapore


A recent announcement by the Monetary Authority of Singapore (MAS), Singapore’s central bank, states that it is studying the feasibility of allowing financial technology (fintech) firms to operate digital-only banks in Singapore. This move is in line with what regulators in other Asian countries (e.g. Hong Kong) have done, with some already issuing virtual banking licenses. The MAS needs time to engage stakeholders to determine the value of such virtual banks and also understand how risks can be monitored and contained.


If MAS does decide to issue virtual banking licenses, it could open the floodgates for fintech firms to set up shop in Singapore and challenge the incumbent banks. Virtual banks should have a much lower cost-to-income ratio as they do not operate physical branches or have automated teller machines (ATMs). The main area of concern is that these fintechs would wrestle deposits away from DBS, an essential part of the lending business for banks.


Watch out for next steps


These two risks are looming over the horizon and investors in DBS should sit up and ensure they monitor developments closely, watching out for how the management team at DBS is dealing with or mitigating these threats.


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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Royston Yang does not own shares in DBS Group Holdings Ltd. The Motley Fool Singapore has recommended shares of DBS Group Holdings Ltd.


$DBS(D05.SI)

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DBS Group Holdings Ltd’s Outlook for 2019
- Original Post from The Motley Fool Sg

DBS Group Holdings Ltd (SGX: D05) or DBS in short, is one of the three major banks based out of Singapore.The bank recently published its annual report for the year ended 31 December 2018. Given that reading an annual report is one of the best ways to keep up with a company’s developments, I decided to go through DBS Group’s latest annual report to understand the company’s prospects, and how it had performed in 2018.


Generally, when reading an annual report, I will pay close attention to the letter to shareholders that the company’s chairman and/or CEO writes. In this article, I will share one interesting thing to note from the letter — the outlook for 2019.


To start with, the company gave an overview of the macro environment outlook. Here’s what the chairman and CEO wrote:


“While 2019 looks uncertain with the ongoing US-China trade war, China deleveraging and general elections in India and Indonesia, as an Asian bank, it is imperative that we take a long-term view of the region. Alongside this, we believe it is important to continue investing in Asia’s two biggest markets – China and India.”


In particular, the bank’s CEO and chairman mentioned how DBS Group is positioning itself in China and India, as seen below:


In India, we recently converted our India branch licence and became a wholly-owned subsidiary. This allows us to expand our physical footprint, and we target to establish over 100 customer touchpoints across 25 cities in the next 12 to 18 months. A larger brick-and-mortar presence will strongly complement digibank, our mobile only offering.”


And last but not least, here’s how the bank is positioning itself in the medium to long term:


“While we have made huge strides in digital transformation, we cannot rest on our laurels. Big fintech trends in the next three to five years include Big Data, artificial intelligence/ machine learning and blockchain/ distributed ledger. We intend to continue to leverage these technologies and form ecosystem partnerships where they can make banking simpler or more effortless for our customers. Advancing the sustainability agenda also remains a priority.”


The Foolish conclusion


In sum, DBS Group will continue to invest in Asia, in particular, China and India, in spite of the uncertainties in 2019. Longer term, it expects to capitalise on the technology trends to offer better services to its customers.


Click here nowfor yourFREEsubscription toTake StockSingapore, The Motley Fool’s free investing newsletter. Written byDavid Kuo,Take Stock Singaporetells you exactly what’s happening in today’s markets, and shows how you can GROW your wealth in the years ahead.


TheMotley Fool’s purpose is to help the world invest, better.Like us on Facebook to keep up-to-date with our latest news and articles.


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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned. Motley Fool has recommendations for DBS Group Holdings Ltd.


$DBS(D05.SI)

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DBS Group Holdings Ltd’s Latest Earnings Update: Record Income And Net Profit
- Original Post from The Motley Fool Sg

Yesterday, DBS Group Holdings Ltd (SGX: D05), one of the three major banks in Singapore, released its 2019 first-quarter earnings update.Here’s 10 things that investors should know from the latest earnings update.



  1. Net interest income improved by 9% year-on-year to S$2.31 billion. Total income increased by 6% year-on-year to S$3.6 billion, which was a record high.

  2. Profit before allowance was up by 5% year-on-year to S$2.1 billion. Profit before allowance grew at a slower pace (as compared to total income) mainly due to higher expenses.

  3. Net profit was up by 9% year-on-year to a high of S$1.7 billion, driven by higher income and lower allowance.

  4. Customer loans and deposits were up by 6% and 5%, respectively, as compared to last year.

  5. DBS Group’s net interest margin (NIM) improved from 1.83% to 1.88%. The higher NIM was driven by higher interest rates in Singapore and Hong Kong.

  6. DBS Group’s cost to income ratio grew from 41.6% to 42.2%.

  7. The non-performing loans (NPL) ratio was at 1.5%, down by 0.1%.

  8. On a year-on-year basis, annualised return on shareholders’ equity (ROE) improved from 13.1% to 14.0%, while book value per share rose from S$18.29 to S$18.75.

  9. DBS Group’s Common Equity Tier 1 capital adequacy ratio (CAR), Tier 1 CAR and Total CAR, as of 31 March 2019, were 14.1%, 15.2% and 17.0%, respectively. These ratios are well above the respective regulatory requirement of 6.5%, 8% and 10%, respectively.

  10. DBS CEO Piyush Gupta commented:


“We have had a good start to the year as business momentum was sustained and non-interest income recovered from the recent weakness. The record earnings and ROE progression demonstrate the strengthened profitability of our franchise from digitalisation, a shift towards higher-returns businesses and more nimble execution. We are well placed to continue capturing growth opportunities across the region and delivering healthy shareholder returns.”


Click here nowfor yourFREEsubscription toTake StockSingapore, The Motley Fool’s free investing newsletter. Written byDavid Kuo,Take Stock Singaporetells you exactly what’s happening in today’s markets, and shows how you can GROW your wealth in the years ahead.


TheMotley Fool’s purpose is to help the world invest, better.Like us on Facebook to keep up-to-date with our latest news and articles.


More reading



The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned. Motley Fool has recommendations for DBS Group Ltd.


$DBS(D05.SI)

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