My 4 Key Ideas for 2018 and Beyond

These 4 positions is where I put most of my money on for the year 2017, they are my long term bets for 2018 and beyond
I believe that their valuations are still fair for entry despite this bull market

$ThaiBev(Y92.SI)
I believe earnings growth will explode again post thai king mourning.
The biz is very cash generative and the recent acquisitions will further help push earnings growth.
3% dividends + 5-8% long term earnings growth for total 8-11% expected long term returns

$SingTel(Z74.SI)
Solid decade track record of same or higher dividends, I believe I am getting close to 5% yield with long term dividend growth of around 3% for a solid and stable 8% long term total returns
ST is very diversified so I am not too fearful of the 4th telco's entry

$ComfortDelGro(C52.SI)
Even without the taxi biz, I believe their remaining biz will be able to maintain the 10 cent dividends payout for a solid 5% yield. I expect 2017 and 2018 earnings to be down by single digits, followed by growth resuming again in 2019 onward.
I expect a 5% yield and long term 3-5% earnings growth in their public transport segment (bus/train) for long term returns of 8-10%
do note that my valuation model conservatively puts their taxi biz as zero value

$Sheng Siong(OV8.SI)
I believe SS still has room to grow towards 50 stores in singapore, followed by their expansion into china market. I am expecting 4% dividends + 4-8% long term earnings growth for a total expected return of around 8-12%.

So far my strategy has been to look for solid companies with over 5-10 years track record of earnings and dividends. I often set a min return requirement of 8%, so therefore most if not all of my picks I aim for 8-10% returns or higher in the long run.
So far over the last decade plus I have made a XIRR of around 12%, so I intend to continue my current strategy of quality companies for long term ^^

As the market goes higher and in 2018 we are likely to see an even higher index... I probably wouldn't be doing anymore buying next year. I am done shopping and I'll be patiently riding this bull while rebalancng at times into some cash.

Do note that I am vested in all 4 counters and my views are strongly biased, please do your own due diligence before following the same bet.

Cheers

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146 comments
PomeloFarmer

added 10,000 TB today to bring my total position to 60,000
TB is now my top position cheers

Sporeshare

Reply to @RetiredOldMan : I Thnk Long term should see the benefit . Short term high debts , lower profit .

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PomeloFarmer

added 10,000 more shares of SS today ^_^
total now 40,000
looking to bring it to 50,000 if it goes even lower

PomeloFarmer

Reply to @matthewang : so far redmart and amazon these online players only taking 2% of the market share, 98% of groceries still bought physically from shop

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PomeloFarmer

SS pulling back a bit, 90 and 92 cents level seems decent for accumulation, i looking to add more ^_^

limraymond

Reply to @RetiredOldMan : I see the bottoming is near but as it is Dec side way movement i always there. Just look out for heavy selling.

PomeloFarmer

must see if CDG can reach 2.00 and hold above that level, if so would be a healthy sign

if still below 2.00 means traders still uncertain

PomeloFarmer

CDG up 3-4%, i think the bottom is likely over

PomeloFarmer

Reply to @seba240698 : if buy not scared
if scared dun buy

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eugenetavano

Singtel will disappoint!

limchris8

Reply to @eugenetavano : For near term, Singtel is upward trend. Recently, there is a worldwide re-rating of Telcos. That is why there is a spillover to Singtel. Currently it is trading with CD. When the Hill Street Telecom Bldg is finally sold, it should add to Singtel profits. I no longer have Singtel. I am merely talking about facts. No need to reply to me. It is too tedious for me to see too many threads. Cheers!

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matthewang

Reply to @matthewang : ST Huat ah!!! SH Huat ah!!!! SS not so huat.....

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Woshiprodevils

Singtel close at 3.8

limraymond

Reply to @thamwk : Market weak due to banking stock correction and the div in Singtel does provide the reason to be vested, the next resistance will be 3.85.

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DurianFarmer

CDG 1.93 now! Insiders sure know something?

tansoonchai

Reply to @Hachiko : Maybe 1.85 tmr , nobody will know..
1.80 is my base line, might grab some in between along the way. Feel no hurry for entry as the trend should be downwards for some period

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tansoonchai

Can share average price you are vested in?

tansoonchai

Reply to @RetiredOldMan : Haha fully understand your feelings

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Recommended & Related Posts

My updated portfolio post super re-balancing, sold everything else to really focus fire on these 6 stocks only

$ThaiBev(Y92.SI) 200,000 shares
$PropNex(OYY.SI) 200,000 shares
$OCBC Bank(O39.SI) 7,000+ shares
$JMH USD(J36.SI) 1000 shares
$Sheng Siong(OV8.SI) 50,000 shares
$HRnetGroup(CHZ.SI) 50,000 shares

totally out of cash to buy already, so will just leave these 6 stocks to grow for long long term, cheers ^_^

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My updated portfolio post super re-balancing, sold everything else to really focus fire on these 6 stocks only

$ThaiBev(Y92.SI) 200,000 shares
$PropNex(OYY.SI) 200,000 shares
$OCBC Bank(O39.SI) 7,000+ shares
$JMH USD(J36.SI) 1000 shares
$Sheng Siong(OV8.SI) 50,000 shares
$HRnetGroup(CHZ.SI) 50,000 shares

totally out of cash to buy already, so will just leave these 6 stocks to grow for long long term, cheers ^_^

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updated

About Pomelo Farmer

Growth Stocks Portfolio
Small Caps -$HRnetGroup(CHZ.SI) , $PropNex(OYY.SI) ,$Sheng Siong(OV8.SI)
Blue Chips - $OCBC Bank(O39.SI) ,$ThaiBev(Y92.SI) ,$JMH USD(J36.SI)

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updated

About Pomelo Farmer

Growth Stocks Portfolio
Small Caps -$HRnetGroup(CHZ.SI) , $PropNex(OYY.SI) ,$Sheng Siong(OV8.SI)
Blue Chips - $OCBC Bank(O39.SI) ,$ThaiBev(Y92.SI) ,$JMH USD(J36.SI)

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Understanding and analyzing growth stocks

I previously mentioned my love for good growth stocks and the key points were

- easy to understand biz
- track record of growth
- high ROE
- net cash position

This post will take the few points into details

Easy to understand business

If you do not know how the company makes money, dont buy it! Example a company like noble is a super black box, how do they make money trading commodities?

Start from easy to understand businesses that you face in your daily lives. Shopping for groceries? $Sheng Siong(OV8.SI) Taking mrt or taxi? $ComfortDelGro(C52.SI) using a property agent? Using a job agent? Etc

Track record of growth

So what is growth, it simply means doing more each year than before, i usually like to look at over 10 years data to make sure its not a cyclical

A cyclical is one that will show a big decline during down cycle, example marine, during the oil crisis orders were cancel and new orders were none, ship yards when idle

Sheng siong - how many stores it had before and how many new stores opening

Banks - loan growth, how much loan done as compared to previous year. AUM - asset under management. For our big 3 banks, earnings can decline 10-20% during down turns, but book value per shares has grown every year for past decade

Propnex - how many agents, more agents this year? % percentage of trancation volume for hdb/private? Earnings can be volatile as property market is cyclical, however the key data i want to know is how much % of the pie are they taking and if they further strengtening their leader ship position

CDG - number of total taxi fleet? Train total ridership?

Hrnet - total number of agents? Total number of jobs matches per year?

Why High ROE?

A normal company with 10% roe can use $3 to generate 30 cents of returns
If it retains 100% of earnings
Next year its $3.30 of equity can generate 33 cents of earnings

A high roe company with 30% roe can use $1 to generate 30 cents of returns
If it retains 100% of earnings
Next year its 1.30 equity can generate 39 cents of earnings!

Net cash position - cash generative

Generally good growth stocks generate a lot of cash and their business are very asset light

Cyclical stocks tend to be very asset heavy

Example a manufacturing company originally has one factory, to double up it has to open a second factory of the same size. Same for a marine company building rigs, to grow they have to build more ship yards.

Example propnex grows by hiring more agents, if the agents makes a deal propnex gets a cut of the commission fees.

Sheng siong grows by bidding and opening new stores, they pay a minimal sum to outfit the store and they stock it up with groceries and they are good to go. Upfront they do not pay anything to their suppliers, after the goods are sold then they pay the suppliers typically 30-60 days later so SS is very asset light, they basically are just renting a place to turnover those grocceries

So thats about it, just a rough outline about what i look for when picking growth stocks for my details please read up on my full analysis on how i analyzed and picked these stocks

In the long run growth stocks always out perform dividend stocks, you buy a good reit or a good telco you are mostly looking at like 6+2 for 8% returns, 6% dividends and 2% growth in dpu/nav due to inflation

But when you pick the right growth stock you returns can be very high if earnings growth 10% or even 20% a year, typically as earnings increase the stock price increases equally

Example a 1.00 growth stock at PE 20 for 5 cents earnings
If earnings go up by 20% to 6 cents, at PE 20 this stock could be worth 1.20, up 20%!

However on the flip side is that dividend stocks are lower risk thus lower returns

Growth stocks are higher risk for sure, if growth came in zero or negative it can be sold down sharply... like how thaibev fell 40% from 1.00 to 0.60 when its earnings disappointed

Cheers

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