Thai Beverage Public Company Limited Is Down More Than 35% In The Last 12 Months: Is It Cheap Now?
- Original Post from The Motley Fool Sg

Thai Beverage Public Company Limited (SGX: Y92) is a company operating in four different segments, namely, Spirits, Beer, Food, and Non-Alcoholic Beverages.Year-to-date, Thai Beverage’s stock price is down more than 35% to S$0.59 (as of the time of writing). This raises a question: Is Thai Beverage cheap now? The question is important because if the firm’s shares are cheap, it might be a good opportunity for investors to buy its shares.


Unfortunately, there is no easy answer. However, we can still get some insight by comparing Thai Beverage’s current valuations with the market’s valuation. The three valuation metrics I will focus on are the price-to-book (PB) ratio, price-to-earnings (PE) ratio, and dividend yield.


I will be using the SPDR STI ETF (SGX: ES3) as a proxy for the market; the SPDR STI ETF is an exchange-traded fund that tracks the fundamentals of Singapore’s stock market benchmark, the Straits Times Index (SGX: ^STI).


Thai Beverage currently has a PB ratio of 4.0, which is higher than the SPDR STI ETF’s PB ratio of 1.1. Similarly, its PE ratio is higher than that of the SPDR STI ETF’s (26.8 vs 11.2). Also, the firm’s dividend yield of 2.0% is lower than the market’s yield of 3.6%. The lower a stock’s yield is, the higher is its valuation.


In sum, we can argue that Thai Beverage is priced at a premium to the market average due to its high PB ratio, high PE ratio and low dividend yield.


$STI(^STI.IN) $STI ETF(ES3.SI) $ThaiBev(Y92.SI)

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Thai Beverage Public Company Limited’s Stock Is Down 25% In The Last 12 Months. Is It A Good Business?
- Original Post from The Motley Fool Sg

Thai Beverage Public Company Limited (SGX: Y92) is a company operating in four different segments, namely, Spirits, Beer, Food, and Non-Alcoholic Beverages.


In the last 12 months, Thai Beverage’s stock price is down by about 25% to S$0.70 (as of writing). This captured my attention and got me interested in finding out more about the company. In particular, I want to understand: Does it have a high quality business?


This question is important. If Thai Beverage has a high quality business, its current low stock price could be an investment opportunity. Unfortunately, there’s no easy answer to the question. But, a simple metric can help shed some light on the question: The return on invested capital (ROIC).


A brief introduction to the ROIC


In a previous article, we explained how the ROIC can be used to evaluate the quality of a business.



The simple idea behind the ROIC is that a business with a higher ROIC requires less capital to generate a profit, and it thus gives investors a higher return per dollar that is invested in the business. High-quality businesses tend to have high ROICs while the reverse is true – a low ROIC is often associated with a low-quality business.


You can see how the math works for the ROIC in the formula above.


Thai Beverage’s ROIC


The table below shows how Thai Beverage’s ROIC looks like. I had used numbers from its fiscal year ended 30 September 2018 (FY2018).



Source: Thai Beverage’s Financial Statement


In FY2018, Thai Beverage generated a ROIC of 26.5%. This means that for every THB 1 of capital invested in the business, Thai Beverage earned THB 0.265 in profit. The company’s ROIC of 26.5% is above the average, based on the ROICs of many other companies I have studied in the past. This suggests that Thai Beverage has a high quality business.


$ThaiBev(Y92.SI)

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Institutional Investors Have Been Buying These 3 Singapore Blue Chip Stocks
- Original Post from The Motley Fool Sg

There are many ways to find investment insights. Some useful ways are to screen for stocks or to look at a list of stocks near their 52-week lows to sieve out potential bargains. Studying what institutional investors have been buying or selling is another avenue.


Institutional investors are typically large investment organisations, such as hedge funds, mutual funds, unit trust companies, sovereign wealth funds, insurance companies and so on. These investors tend to possess vastly greater resources than individual investors like you and me when researching stocks. Hence, it may be useful to keep a close eye on what they are doing, as a way to generate ideas.


In this article, I will look at three Singapore stocks (among the top ten stocks) that have seen the highest net purchases in dollar value by institutional investors for the week ended 11 January 2019. They are DBS Group Holdings Ltd (SGX: D05), United Overseas Bank Ltd (SGX: U11) andOversea-Chinese Banking Corp Limited (SGX: O39).



Source: Singapore Exchange; SGX Stock Facts


From the above, we can see that institutional investors have been excited about the local banks, buying up all three companies’ stocks in the past week. There are many good reasons that might have driven the recent purchase. For one, the local banks have been delivering solid results in the last few quarters.


Let’s start with DBS Group. For the quarter ended 30 September 2018, DBS Group reported that income grew by 10% from a year ago to S$3.4 billion. Net interest income (income from loans) improved by 15% year-on-year to S$2.3 billion, driven by improvement in net interest margin and loan volume growth. As a result, net profit jumped 72% to S$1.4 billion due to higher income and lower allowances.


Similarly, UOB reported that total income grew by 8% from a year ago to S$2.3 billion. Net interest income (income from loans) grew 14% year-on-year to S$1.6 billion, driven by improvement in net interest margin and loan volume growth. Higher total income, as well as lower allowances, resulted in a higher net profit of 17% year-on-year to S$1.0 billion.


Now let’s move on to OCBC. Similar to its peers above, OCBC reported that total income grew by 5% from a year ago to S$2.5 billion. Net interest income (income from loans) grew 9% year-on-year to S$1.5 billion, driven by improvement in net interest margin and loan volume growth. Moreover, higher total income resulted in net profit up by 12% year-on-year to a record S$1.25 billion!


The banks are expected to report the last quarter result for 2018 in the coming next few weeks. Despite all negative macro news, such as trade war and Brexit, there’s no clear indication that the banks are going to report weaker performance anytime soon.


Another compelling reason that suggests the current purchase of the local banks’ stocks is their valuation. For example, OCBC’s share price of S$11.66, is trading at 1.2 price-to-book (PB) ratio, price-to-earnings (PE) ratio of 10.5 and a dividend yield of 3.4%. The DBS share price of S$ 25.03, on the other hand, is trading at price-to-book (PB) ratio of 1.3, price-to-earnings (PE) ratio of 11.9 and a dividend yield of 4.9%.


Comparatively, the market average’s PB ratio, PE ratio and dividend yield is at 1.1 times, 11.5 times and 3.5% respectively. If we useSPDR STI ETF (SGX: ES3) as a proxy for the market; the SPDR STI ETF is an exchange-traded fund that tracks the fundamentals of Singapore’s stock market benchmark, the Straits Times Index (SGX: ^STI).”


Overall, we can see that the banks trading at a valuation that is comparable to the market average.


Conclusion:


Looking at what institutional investors are doing could be a useful tool in your toolkit when sourcing for investment ideas. But do note that the information presented here is by no means a recommendation to take any action on the stocks mentioned. Instead, it should be viewed only as a useful starting point for further research.


$STI(^STI.IN) $DBS(D05.SI) $STI ETF(ES3.SI) $OCBC Bank(O39.SI) $UOB(U11.SI)

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Institutional Investors Have Been Buying These 3 Singapore Blue Chip Stocks
- Original Post from The Motley Fool Sg

There are many ways to find investment insights. Some useful ways are to screen for stocks or to look at a list of stocks near their 52-week lows to sieve out potential bargains. Studying what institutional investors have been buying or selling is another avenue.


Institutional investors are typically large investment organisations, such as hedge funds, mutual funds, unit trust companies, sovereign wealth funds, insurance companies and so on. These investors tend to possess vastly greater resources than individual investors like you and me when researching stocks. Hence, it may be useful to keep a close eye on what they are doing, as a way to generate ideas.


In this article, I will look at three Singapore stocks (among the top ten stocks) that have seen the highest net purchases in dollar value by institutional investors for the week ended 11 January 2019. They are DBS Group Holdings Ltd (SGX: D05), United Overseas Bank Ltd (SGX: U11) andOversea-Chinese Banking Corp Limited (SGX: O39).



Source: Singapore Exchange; SGX Stock Facts


From the above, we can see that institutional investors have been excited about the local banks, buying up all three companies’ stocks in the past week. There are many good reasons that might have driven the recent purchase. For one, the local banks have been delivering solid results in the last few quarters.


Let’s start with DBS Group. For the quarter ended 30 September 2018, DBS Group reported that income grew by 10% from a year ago to S$3.4 billion. Net interest income (income from loans) improved by 15% year-on-year to S$2.3 billion, driven by improvement in net interest margin and loan volume growth. As a result, net profit jumped 72% to S$1.4 billion due to higher income and lower allowances.


Similarly, UOB reported that total income grew by 8% from a year ago to S$2.3 billion. Net interest income (income from loans) grew 14% year-on-year to S$1.6 billion, driven by improvement in net interest margin and loan volume growth. Higher total income, as well as lower allowances, resulted in a higher net profit of 17% year-on-year to S$1.0 billion.


Now let’s move on to OCBC. Similar to its peers above, OCBC reported that total income grew by 5% from a year ago to S$2.5 billion. Net interest income (income from loans) grew 9% year-on-year to S$1.5 billion, driven by improvement in net interest margin and loan volume growth. Moreover, higher total income resulted in net profit up by 12% year-on-year to a record S$1.25 billion!


The banks are expected to report the last quarter result for 2018 in the coming next few weeks. Despite all negative macro news, such as trade war and Brexit, there’s no clear indication that the banks are going to report weaker performance anytime soon.


Another compelling reason that suggests the current purchase of the local banks’ stocks is their valuation. For example, OCBC’s share price of S$11.66, is trading at 1.2 price-to-book (PB) ratio, price-to-earnings (PE) ratio of 10.5 and a dividend yield of 3.4%. The DBS share price of S$ 25.03, on the other hand, is trading at price-to-book (PB) ratio of 1.3, price-to-earnings (PE) ratio of 11.9 and a dividend yield of 4.9%.


Comparatively, the market average’s PB ratio, PE ratio and dividend yield is at 1.1 times, 11.5 times and 3.5% respectively. If we useSPDR STI ETF (SGX: ES3) as a proxy for the market; the SPDR STI ETF is an exchange-traded fund that tracks the fundamentals of Singapore’s stock market benchmark, the Straits Times Index (SGX: ^STI).”


Overall, we can see that the banks trading at a valuation that is comparable to the market average.


Conclusion:


Looking at what institutional investors are doing could be a useful tool in your toolkit when sourcing for investment ideas. But do note that the information presented here is by no means a recommendation to take any action on the stocks mentioned. Instead, it should be viewed only as a useful starting point for further research.


$STI(^STI.IN) $DBS(D05.SI) $STI ETF(ES3.SI) $OCBC Bank(O39.SI) $UOB(U11.SI)

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Are Singapore Shares Cheap or Expensive Right Now?
- Original Post from The Motley Fool Sg

Since the start of January 2019, the Straits Times Index (SGX: ^STI) has increased by 4.7%. With the recent stock market rally, investors might be wondering if Singapore shares are still as attractively priced as before.


There are two methods to determine if Singapore shares are cheap or expensive right now.


The first method is to compare the market’s current price-to-earnings (PE) ratio to the market’s long-term average PE ratio. The second approach involves looking at the number of net-net stocks in the stock market.


PE valuation method


Since it is difficult to get the past daily PE ratios of the Straits Times Index, the PE ratios of SPDR STI ETF (SGX: ES3) can be used as a proxy. The SPDR STI ETF is an exchange-traded fund (ETF) that tracks the fundamentals of the Straits Times Index.


As of 15 January 2019, the SPDR STI ETF had a PE ratio of 11.6. Here are some of the other important PE ratios that we need:


1) The long-term average PE ratio: The STI’s average PE ratio from 1973 to 2010 was 16.9;


2) An instance of a high PE ratio for the STI: Back in 1973, the index’s PE ratio hit 35; and


3) An example of a low PE ratio for the STI: At the start of 2009, the index was valued at 6 times trailing earnings.


Based on the data above, we can see that Singapore stocks are cheaper than average currently.


Net-net stocks method


In this method, we will look at the number of net-net stocks available in the local stock market. To know what a net-net stock is, you can head to the explanation here. If there is a large number of net-net stocks than usual in the stock market, it could mean that stocks are cheap at that moment.


The following is a chart that shows the net-net stock count in Singapore since 2005:



Source: S&P Global Market Intelligence


When the Straits Times Index is at a peak (such as in the second half of 2007), the net-net stock count is low. The reverse is also true: When the Straits Times Index is at a low (like in the first half of 2009), the net-net stock count is high. In the second half of 2007, the net-net stock count was below 50 while in the first half of 2009, the figure was at the peak of almost 200.


As of 15 January 2019, there were 112 net-net stocks. This is comfortably between the net-net stock count’s peak-and-trough from 2005 till today.


The Foolish takeaway


Based on the two different valuation methods, we can safely say that stocks in Singapore are not that expensive, but they not in extreme bargain territory either.


$STI(^STI.IN) $STI ETF(ES3.SI)

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Are Singapore Shares Cheap or Expensive Right Now?
- Original Post from The Motley Fool Sg

Since the start of January 2019, the Straits Times Index (SGX: ^STI) has increased by 4.7%. With the recent stock market rally, investors might be wondering if Singapore shares are still as attractively priced as before.


There are two methods to determine if Singapore shares are cheap or expensive right now.


The first method is to compare the market’s current price-to-earnings (PE) ratio to the market’s long-term average PE ratio. The second approach involves looking at the number of net-net stocks in the stock market.


PE valuation method


Since it is difficult to get the past daily PE ratios of the Straits Times Index, the PE ratios of SPDR STI ETF (SGX: ES3) can be used as a proxy. The SPDR STI ETF is an exchange-traded fund (ETF) that tracks the fundamentals of the Straits Times Index.


As of 15 January 2019, the SPDR STI ETF had a PE ratio of 11.6. Here are some of the other important PE ratios that we need:


1) The long-term average PE ratio: The STI’s average PE ratio from 1973 to 2010 was 16.9;


2) An instance of a high PE ratio for the STI: Back in 1973, the index’s PE ratio hit 35; and


3) An example of a low PE ratio for the STI: At the start of 2009, the index was valued at 6 times trailing earnings.


Based on the data above, we can see that Singapore stocks are cheaper than average currently.


Net-net stocks method


In this method, we will look at the number of net-net stocks available in the local stock market. To know what a net-net stock is, you can head to the explanation here. If there is a large number of net-net stocks than usual in the stock market, it could mean that stocks are cheap at that moment.


The following is a chart that shows the net-net stock count in Singapore since 2005:



Source: S&P Global Market Intelligence


When the Straits Times Index is at a peak (such as in the second half of 2007), the net-net stock count is low. The reverse is also true: When the Straits Times Index is at a low (like in the first half of 2009), the net-net stock count is high. In the second half of 2007, the net-net stock count was below 50 while in the first half of 2009, the figure was at the peak of almost 200.


As of 15 January 2019, there were 112 net-net stocks. This is comfortably between the net-net stock count’s peak-and-trough from 2005 till today.


The Foolish takeaway


Based on the two different valuation methods, we can safely say that stocks in Singapore are not that expensive, but they not in extreme bargain territory either.


$STI(^STI.IN) $STI ETF(ES3.SI)

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