The Weekly Nibble: A Focus on Singapore Blue-Chip Shares
- Original Post from The Motley Fool Sg

Here are some of the most popular articles that have appeared on The Motley Fool Singapore’s website for the week.


3 Singapore Blue-Chip Shares That Warren Buffett Might Like


Ever wanted to invest in stable companies that are part of the Straits Times Index (SGX: ^STI)? Look no further. In this article, I look at three blue-chips that have wide economic moats and why they could make good investments.


Companies discussed in the article: Singapore Exchange Limited (SGX: S68), DBS Group Holdings Ltd (SGX: D05) and SATS Ltd (SGX: S58).


3 REITS That Have More Than 8% Yield Right Now


Lawrence Nga explores three real estate investment trusts (REITs) that have distribution yields of above 8%. They are not excessively valued in terms of their book values as well.


REITs discussed in the article are Cache Logistics Trust (SGX: K2LU), First Real Estate Investment Trust (SGX: AW9U) and EC World Real Estate Investment Trust (SGX: BWCU).


Which Blue-Chip Property Developer Is The Cheapest Now?


With the additional property cooling measures introduced in July this year, shares of property developers have generally not been doing well. For instance, UOL Group Limited’s (SGX: U14) share price has tumbled close to 20% since the cooling measures were put in place.


Jeremy Chia, in his article, investigates which of the trio of property outfits that are part of the Straits Times Index – UOL, CapitaLand Limited (SGX: C31) and City Developments Limited (SGX: C09) – offer the best value amid the tumbling stock prices.


$STI(^STI.IN) $First Reit(AW9U.SI) $EC World Reit(BWCU.SI) $CityDev(C09.SI) $CapitaLand(C31.SI) $DBS(D05.SI) $Cache Log Trust(K2LU.SI) $SATS(S58.SI) $SGX(S68.SI) $UOL(U14.SI)

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The Better Dividend Stock: DBS Group vs. UOB
- Original Post from The Motley Fool Sg


One of the most stable industries in Singapore is our banking industry. In particular, our local banks have demonstrated an enviable track record of sustaining profitability over a long period of time. As such, these banks have become popular among conservative investors who want to generate stable returns over the long term, both in the form of dividends and capital appreciation.


But for dividend investors looking to invest in bank stocks, which local bank is a better dividend stock to buy now? Here, I’ll compare DBS Group Holdings Ltd (SGX: D05) and United Overseas Bank Ltd (SGX: U11), or UOB. The idea is to get a quick overview of which bank might be a better buy now for dividend investors.


Financial track record


To start with, we will compare the financial performance of both banks in the last decade. This will help us assess the sustainability of the banks’ performance in the future. Also, we can find out which bank did better, financially, in the last decade. With that, let’s look at some numbers for both banks.


Again, we will start with DBS Group. From 2008 to 2018, DBS’s total income grew from S$6.0 billion in 2008 to S$13.2 billion in 2018. Similarly, net profit attributable to shareholders grew from S$1.9 billion in 2008 to S$5.6 billion in 2018. The former was up by 120% while the latter was up by 194% during that period.


And now UOB. During that period, its total income grew from S$5.3 billion in 2008 to S$9.1 billion in 2018. Similarly, net profit attributable to shareholders grew from S$1.9 billion in 2008 to S$4.0 billion in 2018. The former was up by 72% while the latter was up by 111% during that period.


Both banks did well in growing their business in the last decade. Comparatively, DBS Group did better in growing its business, financially.


Winner: DBS Group


Dividend track record


The next comparison that we have here is to compare the dividend track record of the banks for the last 10 years. This will give us some indication of what we should expect in the future. Let’s begin with DBS Group.


In the last decade, DBS Group has grown its dividend per share from S$0.65 in 2008 to S$1.20 in 2018. In other words, its dividend was up by 85% during the period. And now for UOB, it has grown its dividend per share from S$0.60 in 2008 to S$ .20 in 2018. In other words, its dividend was up by 100% during the period.


As we can see, both banks have done reasonably well by sustaining, as well as growing their dividends over the decade. Among the two, UOB did better in growing its dividend during that period.


Winner: UOB


Conclusion


Overall, it’s a tie here. From the above, we can say that both banks have demonstrated stable financial and dividend track records, which render both of them worthy for dividend investors’ consideration.


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 has recommended shares of DBS Group Holdings Ltd and United Overseas Bank Ltd.


$DBS(D05.SI) $UOB(U11.SI)

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Better Buy: Parkway Life REIT vs. First REIT
- Original Post from The Motley Fool Sg


Parkway Life REIT (SGX: C2PU) and First Real Estate Investment Trust (SGX: AW9U) are real estate investment trusts (REITs) focused on healthcare and healthcare-related real estate assets throughout Asia.


In general, healthcare REITs have stable earning power by owning assets like hospitals and nursing homes. Such stability of income would appeal to conservative income investors, especially those who seek to generate sustainable dividends from their investments. But which is a better buy now? Let’s explore that further here.


DPU track record


We will first compare the distribution per unit (DPU) track record of both REITs in the last decade, to see which REIT did better in terms of growing its DPU over that period. Let’s begin with Parkway Life REIT. From FY2008 to FY2018, Parkway Life REIT grew its DPU from 6.83 cents to 12.87 cents. In other words, its DPU was up by 88.4% during that period, giving investors a compounded annual growth rate (CAGR) of 6.5%.


And now for First REIT. In the same period, First REIT grew its DPU from 3.39 cents (adjusted for the right issues in 2010 of 5 shares for every existing 4 shares) to 8.60 cents. In other words, the DPU was up by 153.7% during that period, giving investors a CAGR of 9.8%. Here, we assume that investors subscribed to the additional rights issues in 2010.


Both REITs did well in growing their DPU over the decade but First REIT, however, came out ahead with its higher growth rate.


Winner: First REIT


Valuation


The next aspect that we will focus on is valuation. Here, we will use two metrics which are price-to-book (PB) ratio and distribution yield (DY) to help us in our assessment.


Let’s begin with the PB ratio. Parkway Life REIT and First REIT have PB ratios of 1.7 and 0.9, respectively. The lower PB ratio for First REIT suggests that it has a lower valuation.


Meanwhile, Parkway Life REIT and First REIT have distribution yields of 4.2% and 8.5%, respectively. The higher a REIT’s yield is, the lower its valuation. Thus, we can see that First REIT has a lower valuation based on distribution yield. Clearly, we can conclude that First REIT has a lower valuation than that Parkway Life, given its low PB ratio and high distribution yield.


Winner: First REIT


Foolish takeaway


In summary, both REITs have done extraordinarily well in the last decade to grow their DPUs by that much. Still, First REIT is probably the better buy now given its stronger DPU growth track record as well as lower valuation.


Maximise dividends on your REITs with our brand-new Complete Guide To Buying The Best Singapore REITs. We reveal everything we think you need to know about finding the best REITs that hands you a fat dividend cheque …even if you have no REITs experience at all! Get instant access to your 100% FREE, actionable, 42-page PDF guide here.


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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 Parkway Life REIT and First Real Estate Investment Trust.



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Better Buy: DBS Group vs. OCBC
- Original Post from The Motley Fool Sg


One of the sectors that is out of favour right now is banking. After peaking in April this year, the local banks have seen their share prices down by more than 10% from their respective peaks. The decline in the banks’ stocks price might draw some interest from investors. Given their reputation for longer-term stability and income, it might be worth exploring which local bank is the better dividend stock right now.


Clearly, there is no quick answer to the above question. Still, we will compare the two biggest local banks (by market capitalisation), namely DBS Group Holdings Ltd (SGX: D05) and Oversea-Chinese Banking Corporation Limited (SGX: O39), or OCBC. The idea is to get a quick overview of which bank might be a better buy now for dividend investors. Here, we will pit the duo against each other in two simple tests.


Dividend track record


The first test is to compare the dividend track record of the banks for the last 10 years. This will give us some hint as to what we should expect in the future. Let’s begin with DBS. In the last decade, DBS has grown its dividend per share from S$0.65 in 2008 to S$1.20 in 2018. In other words, its dividend was up by 85% during the period.


And now for OCBC. It has grown its dividend per share from S$0.28 in 2008 to S$ 0.43 in 2018. In other words, its dividend was up by 54% during the period. As we can see, both banks have done reasonably well by sustaining, as well as growing their dividends over the decade. Among the two, DBS did better in growing its dividends during that period.


Winner: DBS


Financial track record


However, dividend growth is not possible unless the banks have also grown their underlying profitability over time. Thus, dividend investors will need to assess the banks’ financial track records, say for the last decade, in order to gain confidence in the sustainability of the banks’ dividends in future (especially given the growth trajectory).


With that, let’s look at some numbers for both banks. Again, we’ll start with DBS. From 2008 to 2018, DBS’s total income grew from S$6.0 billion in 2008 to S$13.2 billion in 2018. Similarly, net profit attributable to shareholders grew from S$1.9 billion in 2008 to S$5.6 billion in 2018. The former was up by 120% while the latter was up by 194% during that period.


But what about OCBC? During that period, its total income grew from S$4.4 billion in 2008 to S$9.7 billion in 2018. Similarly, net profit attributable to shareholders grew from S$1.7 billion in 2008 to S$4.5 billion in 2018. The former was up by 120% while the latter was up by 164% during that period.


Again, both banks have done well in growing their business in the last decade. Still, DBS did better in growing its underlying profitability.


Winner: DBS


Conclusion


From both of the above, we can say that DBS and OCBC have demonstrated stable financial and dividend track records, which render both of them worthy for dividend investor’s consideration.


Yet, if investors have to choose one, then DBS might come out slightly ahead due to its stronger growth over the last decade.


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 and Oversea-Chinese Banking Corporation Limited.



$DBS(D05.SI) $OCBC Bank(O39.SI)

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DBS, OCBC or UOB: Which Singapore Bank is Least Exposed to China?
- Original Post from The Motley Fool Sg

The US-China trade war has been rumbling on and, naturally, investors have been jittery. In Singapore, this uncertainty has hit sentiment for the three big banks – DBS Group Holdings (SGX: D05), United Overseas Bank (SGX: U11), or UOB, and Oversea-Chinese Banking Corporation Limited (SGX: O39), or OCBC – given all three have at least some exposure to China within their businesses. Any escalation in trade tensions could mean a further slowdown in the Chinese economy.


However, the question on most people’s minds is which bank is the least exposed to China? Let’s take a further look at this crucial question and how we can determine the answer.


China loans exposure


Banks derive the bulk of their earnings by taking in deposits from customers and lending out this money in the forms of loans – either to individuals who may perhaps want a mortgage or corporates that need money as working capital.


Regardless, the loan books of banks can tell investors a lot about banks’ level of exposure to certain sectors/countries because if there’s a downturn or slowdown in an economy, the ability of borrowers to repay these loans could be impacted. With that, let’s take a look at the Singaporean banks’ loan exposure to China.


DBS Group


The largest Singapore bank, DBS, has a well-known presence in Hong Kong and Greater China, with its businesses there (particularly in the former) having helped drive growth in recent years. As at the end of the first quarter of 2019, DBS had total gross loans of S$351.8 billion. By country/region that the bank breaks down its loans by, Hong Kong + Rest of Greater China made up S$54.6 billion and S$51.5 billion, respectively, of the total. That means out of the above loan book of S$351.8 billion, DBS has a total of S$106.1 billion in exposure to what can be classified as “China” loans – equating to around 30% of its loan book.


OCBC


OCBC is Singapore’s second-largest bank, by market capitalisation, and also owns a well-known wealth management arm; Bank of Singapore. OCBC’s overall loans as of the end of the first quarter 2019 totaled S$259 billion. Of this amount, S$63 billion were classed as loans to Greater China – meaning its total exposure is around 24.3% of its loan book.


UOB


Finally, we have the third Singapore bank; UOB. It is generally known as a bank with a stronger focus on Singapore and Southeast Asia rather than Hong Kong/China. This is also borne out by the numbers. As of the end of the first quarter of 2019, out of a total of S$270 billion in loans by UOB, only S$43 billion were classified as loans to Greater China. That means UOB’s total China exposure was approximately 16% of its loan book.


Monitoring the trade war


Overall then, UOB has the lowest level of China exposure out of all three Singapore banks. However, investors should also be mindful that these US-China trade war tensions could die down if an agreement can be reached and, instead of being a potential liability, increased China exposure could actually be a boon to growth for the likes of DBS or OCBC (given the recent robust numbers in their China businesses). But if you’re an investor who is looking for a Singapore bank – with limited China exposure – then UOB looks to be the safest bet.


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.


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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 has recommended shares of DBS Group Holdings, United Overseas Bank, and Oversea-Chinese Banking Corp Limited. Motley Fool Singapore contributor Tim Phillips does not own shares in any of the companies mentioned.


$DBS(D05.SI) $OCBC Bank(O39.SI) $UOB(U11.SI)

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Better Buy: CapitaLand vs. City Developments
- Original Post from The Motley Fool Sg

CapitaLand Limited (SGX: C31) and City Developments Limited (SGX: C09), or CDL, are two large listed real estate giants. Each has wide-ranging operations spanning many countries in Asia, and both also deal with different property types. So, which company will provide investors with better exposure and overall improved prospects as an investment idea? Here’s what I think.


Source: CapitaLand and CDL FY 2018 Earnings


The table above shows the market capitalisation of each of the companies as well as the full-year 2018 revenue and net profit figures. The market capitalisation is calculated using the closing price as of 14 June 2019.


Property types


The first round looks at the exposure to different types of properties within each company’s portfolio. This gives a sense of how diversified each player is, and different classes of properties are also able to buffer one another in case of stress in one sub-segment (e.g. hotels).


Source: CapitaLand and CDL Q1 2019 Presentation Slides


From the table, it can be seen that CapitaLand has a wider range of property types compared to CDL, as it also deals with serviced residences and retail in addition to hotels, commercial properties (i.e. offices) and residential.


Winner: CapitaLand


Profitability


Next, I assessed the profitability of each company using gross margins, operating margins and net margins.


Source: Q1 2019 Earnings for both companies


CapitaLand has better gross and net margins compared to CDL, implying that CapitaLand has better overall control of its expenses and pricing power for its development projects compared to CDL.


Winner: CapitaLand


Valuation


In the final round, I compared the valuations of each company to see which is more expensive and also assessed the dividend yields to see how attractive each might be to income-driven investors.


Source: Q1 2019 and FY 2018 Earnings for both companies


It appears that CapitaLand is a fair bit cheaper than CDL on a price-to-book basis and is trading at a 25% discount to its book value of S$4.55 per share. It also boasts a dividend yield of 3.5%, paid once a year, which is higher than CDL’s 2.1% dividend yield. However, investors should note that CDL pays dividends twice a year.


Winner: CapitaLand


The Foolish summary


CapitaLand comes out on top as and appears to be the more attractive real estate company to own. However, investors need to also look at other aspects of each company, such as the size of its land bank, development pipeline, return on equity and free cash flow generation. Based on the additional information, they can then decide which would be the better investment to suit their needs.


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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 has recommended the shares of CapitaLand Limited and City Developments Limited. Motley Fool Singapore contributor Royston Yang does not own shares in any of the companies mentioned.


$CapitaLand(C31.SI) $CityDev(C09.SI)

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