Here Are 3 Stocks Trading Near Their 52-Week Lows
- Original Post from The Motley Fool Sg

I’m a value investor. So, I like to search for companies that are trading at good value. A list of stocks that are near their respective 52-week lows is a good place to start my search for a good reason.
These are the stocks that are either neglected or beaten down by investors. And, some of these stocks can be bargains in relation to their actual economic worth because market participants can at times react too negatively to certain companies that have sound long-term prospects but have experienced some short-term stumbles.
As such, I will screen for stocks that are trading near 52-week lows nearly once every week. There are many stocks that pop up on my screen each time I run it. In here, let’s look at three such stocks: Singapore Airlines Ltd (SGX: C6L), Singapore Post Limited (SGX: S08), and Singapore Press Holdings Limited (SGX: T39).

Source: SGX Stock Facts; Yahoo Finance
Singapore Airlines is most well-known for running its namesake full-service carrier, which is also the national airline of Singapore. Beyond Singapore Airlines, the company also has other airline brands under its banner such as Silk Air and the low-cost carrier, Scoot.
The company has a listed subsidiary in SIA Engineering Company Ltd (SGX: S59) as well. SIA Engineering specialises in providing aircraft maintenance, repair, and overhaul (MRO) services. It has over 80 international airlines as customers.
In early February, Singapore Airlines announced its third quarter results for its fiscal year ending 31 March 2017 (the reporting quarter was the three months ended 31 December 2016). During the quarter, Singapore Airlines’ revenue slipped by 2.5% year-on-year but operating profit managed to increase by 1.7%.
Regarding its future, Singapore Airlines commented in its earnings release that “2017 is expected to be another challenging year amid tepid global economic conditions and geopolitical concerns, alongside other market headwinds such as overcapacity and aggressive pricing by competitors.” The company added that “loads and yields for both the passenger and cargo businesses are projected to remain under pressure.”
Over the last 12 months, Singapore Airlines’ stock price has declined steadily and is down a total of 13%. The downward price movement has resulted in Singapore Airlines having one of the highest dividend yields among the Straits Times Index’s (SGX: ^STI) constituents at 4.5%.
The next company is Singapore Post, which provides postal and logistics services.
Singapore Post’s latest results, announced in early February, is for the third quarter of its fiscal year ending 31 March 2017. Revenue for the quarter rose 16.8% due to acquisitions in the company’s eCommerce business. But, net profit attributable to shareholders decreased by 27.9%, while underlying net profit (which strips away one-off items) was down 28.5%.
The bottom-line decline was due to operating losses in the company’s US-based eCommerce business, costs related to the new Regional eCommerce Logistics Hub, and a fall in domestic mail volumes.
In a similar manner to Singapore Airlines, Singapore Post’s stock price has also been on a general decline over the last 12 months. Since 23 March 2017, the postal and logistics services company has seen its stock price fall by 19%. The decline also gives Singapore Post a high trailing dividend yield of 5%.
But, investors should be mindful of the sustainability of the company’s dividend in light of its weakening profitability in the past few years.
Singapore Press Holdings is the last stock I have here. The company publishes many of Singapore’s major newspapers – such as The Straits Times and The Business Times – and counts real estate development and ownership as another important business segment. As part of Singapore Press Holdings’ real estate business, it is the majority owner and manager of SPH REIT (SGX: SK6U), a REIT that owns retail malls in Singapore.
In its latest fiscal first quarter results (for the three months ended 30 November 2016), Singapore Press Holdings reported a 6% year-on-year decline in operating revenue. The bottom-line picture was way worse however, as net profit attributable to shareholders fell by 43.8% partly due to an impairment charge. Even if the impairment was excluded, the company’s profit would still have declined by 12.4%
Singapore Press Holdings’ weak result is due to a continuation of a decline in its Media business. The company expects its business conditions to remain challenging.
A Foolish conclusion
It’s worth noting that not every company with a stock price near a 52-week low is a legitimate bargain. A declining stock price can decline yet further if the underlying business performance continues to weaken.
Nothing we’ve seen here about Singapore Airlines, Singapore Post, and Singapore Press Holdings should be taken as the final word on their investing merits. The information presented in this piece should be viewed only as a useful starting point for further research.
$STI(^STI) $SIA(C6L) $SingPost(S08) $SPH(T39)

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5 Charts from Singapore Airlines Ltd’s Annual Report
- Original Post from The Motley Fool Sg


Singapore Airlines Ltd (SGX: C6L) had a mixed financial year, with revenue reaching new highs but earnings per share dropping by nearly 50%. The group, which counts Scoot, SIA Engineering Company Ltd (SGX: S59), and SilkAir as subsidiaries, released its annual report for the year ended 31 March 2019.


In it, there were five charts that highlighted some of the significant trends over the year.


Operating expenses



Source: Singapore Airlines 2019 Annual Report


The chart above shows the breakdown of operating expenses. As you can see, the biggest expense came from fuel costs, which made up 30.1% of total operating expenses.


Fuel price trend


The chart below shows fuel cost trends over the last eight quarters.



Source: Singapore Airlines Ltd 2019 Annual Report


The most obvious pattern is the steady increase in fuel prices starting from the second quarter of financial year 17/18, which has caused the group to suffer higher expenses. That said, fuel prices dropped in the fourth quarter of 18/19.


If fuel prices continue to decline, operating expenses could decrease this year.


5-year operating profit and margin


Another important chart is this one, showing the company’s operating profit and operating profit margin over the last five years.


Source: Singapore Airlines 2018/19 Annual Report


As you can see, operating profit and operating profit margin have been very erratic. This is not unusual for airline companies, which are highly susceptible to changes in fuel prices. However, one thing to note is that despite higher fuel prices this year, operating profit and margin held up well, and both were higher than in the three years prior to FY17/18.


Cash flow


Cash is the lifeblood of a company. This is especially so for a capital-intensive company like Singapore Airlines. The group has been quite consistent in this regard, generating healthy cash flow from operations each year. The chart below shows internally generated cash flow, which includes sales of assets.



Source: Singapore Airlines 2018/19 Annual Report


Net cash position


Lastly, it is essential to monitor the financial strength of a company. The chart below shows the net liquid assets, or net debt position, of Singapore Airlines over the last five financial years.



Source: Singapore Airlines FY18/19 Annual Report


Despite good operating cash flow in the past five years, Singapore Airlines’ financial position has deteriorated. Its net liquid asset position turned negative in 2018 and widened in 2019.


The weaker balance sheet is largely due to the group’s heavy capital expenditures over the last two years. In the two years, the group spent close to S$11 billion on aircraft, spares, and engines.


Putting it all together


The first things investors should have noticed from these charts is that Singapore Airlines, like other airline companies, is highly susceptible to changes in fuel prices.


Despite higher revenue this year, the group ended the year with lower profit and lower profit margins.


It also spent heavily on capital expenditures over the last two years, which weakened its balance sheet. However, the new aircraft, spares, and engines will hopefully serve to improve the company’s profit and cash flow generation over the next few years.


Investors will have to keep an eye on revenue, profit, and cash flow over the next few years to see if these investments have paid off.


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. Motley Fool Singapore contributor Jeremy Chia does not own shares in any of the companies mentioned.


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2 Major Risks for Singapore Airlines
- Original Post from The Motley Fool Sg

Singapore Airlines Ltd (SGX: C6L), or SIA, is Singapore’s flagship airline engaging in passenger and cargo air transportation. It operates the following airline segments: Singapore Airlines, Scoot, Silkair, SIA Engineering Company Ltd (SGX: S59), and Singapore Airlines Cargo (SIA Cargo).


While SIA has managed to weather many downturns and storms since its formation in 1972, the airline is currently caught in a funk. While it reported record revenue of S$16.3 billion in its full-year earnings release last week, net profit plunged 47.5% year on year to just S$683 million from S$1.3 billion. A situation where revenue increases while profit plunges certainly warrants a closer look, and investors need to be mindful of risks on the horizon that may further cloud SIA’s prospects. I explore two of these risks below.


Macroeconomic environment


SIA’s current passenger load factor has hit an all-time high of 83% from 81%, while revenue per passenger kilometre rose 7% year on year. Load factor measures the utilisation rate of SIA’s aircraft — the higher the load factor, the better for SIA, as this means more of its aircraft is being utilised (remember that the fuel required to fly an aircraft stays constant whether it is empty or full). While these operating statistics are certainly encouraging, it could all change very quickly should the current trade war between the US and China escalate further.


The trade war would make goods and services more expensive, which then affects worldwide supply chains as producers and distributors pass the costs down to final consumers. As the higher prices trickle down to consumers, the effect would be for them to tighten their wallets and rein in their spending. Air travel would thus get hit as it is considered a discretionary expense for most people.


Fuel costs


Another major risk for SIA is escalating fuel costs. Higher net fuel costs contributed two-thirds of the total increase in expenditure for SIA for fiscal year 2019 (FY 2019), as there was a 21.6% increase in average jet fuel prices over the period. While hedging did mitigate some of the increase, it was unable to offset the full impact of the higher fuel costs.


With fuel being a major cost component of SIA’s operations, a sustained rise in oil prices could further crimp profits for the airline. Though SIA has hedged 64% of its fuel requirement for FY 2020, the airline is still exposed to rising prices that it is unable to fully mitigate.


Investors should adopt a cautious stance


With these two significant risks looming over SIA, investors should adopt a more cautious stance and monitor macro-developments and oil prices before deciding if they should invest in the airline.


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. Motley Fool Singapore contributor Royston Yang does not own shares in any of the companies mentioned.


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Singapore Airlines’ Latest Earnings: Fuel Costs Hit Profits
- Original Post from The Motley Fool Sg

Singapore Airlines Ltd (SGX: C6L), the national carrier of Singapore, reported a downbeat set of earnings yesterday for the full fiscal year ending 31 March 2019 (2018/2019). Here are some of the key financial highlights from its latest full-year results:


1) Revenue grew 3.27% year-on-year to S$16.3 billion.


2) Total operating costs increased by 7.0% to S$15.3 billion.


3) As a result, operating profit declined by 31.1% to S$1.07 billion.


4) Profit attributable to shareholders followed suit, dropping by 47.5%, from S$1.30 billion to S$682.7 million.


5) Similarly, earnings per share plunged by 47.6% from 110.1 cents to 57.7 cents.


6) As of 31 March 2019, SIA’s balance sheet had S$2.94 billion in cash and bank balances, and S$6.65 billion in total debt. This translates to a net debt position of S$3.71 billion. This was a major step back from the S$559 million in net debt that SIA reported on 31 March 2018.


7) Operating cash flow rose by 7.3% year-on-year, from S$2.61 billion to S$2.80 billion. Capital expenditure, on the other hand, remained rather stable increasing by 6.8% from S$5.21 billion to S$5.56 billion. This resulted in SIA’s free cash flow dropping by 6.2%, from negative S$2.6 billion to negative S$2.76 billion.


8) SIA declared a final dividend of 22 cents per share, bringing its total dividend to 30 cents for the fiscal year.


Revenue increased on the back of growth in passenger traffic and cargo was flown revenue.Looking at the breakdown of operating profits according to different segments in the group, the biggest decline in operating profits was seen at its budget carrier Scoot, which reported negative operating profits. This was due to expansion costs which outweighed revenue growth and a slowdown in the rate of growth of Chinese travel.


Outlook


Singapore Airlines commented on its outlook:


“Growth in forward passenger bookings in the months ahead is tracking positively against capacity injection, with robust premium cabin demand. Most key markets, including those that have seen significant capacity growth such as the US, Japan, Indonesia, and New Zealand, continue to grow at a healthy pace. However, China’s international traffic growth rates have softened, at a time of increased supply in the market.


Notwithstanding the current demand picture, ongoing trade disputes and slowing economic growth in key markets pose uncertainty to the operating environment. Efforts will be made to capture opportunities and mitigate any arising weaknesses in both cargo and passenger segments.


Fuel cost headwinds may persist on supply risks in the oil market. However, the SIA Group’s significant fuel hedges should help to mitigate the effect of higher fuel prices. For the financial year 2019/20, the Group has hedged 64% of its fuel requirement in MOPS and 5% in Brent at weighted average prices of USD76 and USD53 per barrel, respectively. Longer-dated Brent hedges with maturities extending to the financial year 2024/25 cover up to 46% of the Group’s projected annual fuel consumption, at average prices ranging from USD58 to USD63 per barrel.


SIA’s Transformation program continues to progress well, resulting in revenue growth, and improvements to operational efficiency and organizational structure. The Airline’s digital transformation is also making good progress, with significant investments in support of an ambition to be the world’s leading digital airline. At the same time, new industry-leading products and services continue to be rolled out on more routes, as new fuel-efficient aircraft enter the fleet. With these and other initiatives, the Group is well positioned to navigate through ongoing challenges in the operating environment.”


SIA’s closing price on Thursday stood at S$9.40 per share, resulting in a price-to-earnings ratio of 16.3 and a dividend yield of 3.2%.


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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Motley Fool writer Esjay contributed to this article. Esjay does not own shares in Singapore Airlines.


The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Tim Phillips does not own shares in any of the companies mentioned.


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Singapore Post’s Earnings: 8 Key Numbers
- Original Post from The Motley Fool Sg

Singapore Post Limited(SGX: S08), or SingPost, released its full-year earnings for 2018/19 yesterday. SingPost is a ubiquitous presence in Singapore. It is a mail and logistics company, organised into four major segments; Post and Parcel, Logistics, eCommerce, and Property.


Let’s have a look at eight things that investors should know from its latest earnings update:



  1. Sales revenue for the quarter improved by 2.9% year-on-year to S$1.56 billion.

  2. Full year operating profit, however, declined 7.2% year-on-year to S$136.3 million.

  3. Net profit for the quarter dropped 86% year-on-year to S$19 million. Excluding exceptional items, underlying net profit was down 5.8% to S$100.1 million.

  4. Similarly, earnings per share attributable to shareholders declined from 5.32 cents last year to 0.18 cents in 2019.

  5. For the full year, SingPost generated free cash flow of S$120.9 million, down from S$136.1 million last year, mainly due to lower operating cash flow.

  6. As at 31 March 2019, SingPost’s borrowing stood at S$290.9 million while its cash and bank balances stood at S$392.2 million, giving it a net cash position of S$101.3 million. This was up from a net cash position of S$70.1 million on year.

  7. The postal segment’s revenue grew by 4.1% for the year. This was offset by lower revenue in the Logistics and e-Commerce segments, with both seeing a 0.3% reduction. The property segment registered a 13.5% increase in revenue on year.

  8. The company proposed a final dividend of 2 cents per ordinary share, bringing its total dividend for the year to 3.5 cents.


SingPost Outlook


Mr. Paul Coutts, Group CEO of SingPost, commented:


“Despite our best efforts in turning the U.S. business around, we faced increasingly intense challenges which impacted our performance. As a result, we made the difficult decision to commence the sale process for our U.S. eCommerce business.We remain committed to our eCommerce business, as it remains a key part of our strategy towards future financial growth.


The Group’s competitive advantage lies in the Asia Pacific where we are seeing the strongest growth in volumes and yields, and we will continue to refine our businesses to leverage the growth. In the immediate term, we continue to focus on improving our operations in Singapore to better serve the needs of customers in our home market.”


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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Motely Fool writer Esjay contributed to this article. Esjay does not own shares in Singapore Post.


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


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Should You Invest in Singapore Airlines Ltd’s Latest 5-year Bonds?
- Original Post from The Motley Fool Sg

Last week, Singapore Airlines Ltd (SGX:C6L) announced that it will be issuing S$500 million worth of bonds with an annual interest rate of 3.03%. The bonds will mature in 2024. Of the S$500 million sum, S$300 million will be issued to the general public while the rest will go to institutional investors. Further, if the bond is oversubscribed, Singapore Airlines will increase the total issuance to S$750 million.


The application for the bond issue closes on 26 March 2019. Here’s what you need to know before investing.


Details of the bond



  • Coupon rate: 3.03%

  • Tenor: 5 years

  • Minimum amount: S$1,000, and in multiples of S$1,000 thereafter

  • Interest payment frequency: Semi-annual payment

  • Maturity date: 28 March 2024

  • Bond type: Unsecured bond (meaning that there is no collateral backing the bonds)


Singapore Airlines’ financial position


The most important consideration when investing in bonds is whether your capital is secure. There are many factors that can affect the bond-issuer’s abilityto pay back its financial obligations, such as the issuer’s balance sheet, earnings, and cash flow generation.Here are the key numbers for Singapore Airlines that investors should take note of, from the first nine months of FY2019 (financial year ended 31 March 2019) and FY2018.




Source: Singapore airlines earnings announcement


There are a few things to note here. First, Singapore Airlines is a profitable business that has been generating positive cash flow from its operations. But in the last nine months, its balance sheet has deteriorated from a net debt position of S$559 million on 31 December 2017 to a net debt position of S$3.60 billion as of 31 December 2018.


The main reason for the higher net debt position is the company’s aggressive stance in making investments in recent times. Singapore Airlines had a net spend of S$8.29 billion on investments for the first nine months of FY2019 and FY2018; the investment amount far exceeds the cash generated from its operations.


Financial ratios


You should also consider a few financial ratios that can give you an idea of how easily Singapore Airlines can pay off its debts and interest expenses. I have highlighted some of them in the table below:




Source: Author’s computation using data from Singapore Airlines’ earnings update


The net debt-to-equity ratio and debt-to-asset ratios are both manageable at 29.3% and 17.9% respectively. The interest cover, which is calculated by dividing the company’s earnings before interest and tax (EBIT) by its interest expenses, measures how easily Singapore Airlines can pay off its financial expenses.At 6.7 times, the company looks to be able to comfortably service the interest on its borrowings.


Yield comparisons


You should compare a bond’s yield against other fixed income securities too. The table below shows the yields from other common fixed-income type of investments.




Source: Author’s compilation of data from various websites


The table above is a non-exhaustive list of other investment options available to retail investors. The Singapore Airlines five-year bond provides a higher yield than interest savings as well as the Singapore Savings 5-year Bond. However, these are relatively risk-free investments, while Singapore Airlines’ bonds – including the latest issue – carry with them the risk of default and missed coupon payments.


The Foolish takeaway


Before investing in Singapore Airlines’ latest five-year bond, you should consider whether your investment capital will be safe and if the company has the means to meet its financial obligations to pay the bond’s semi-annual coupons. Based on Singapore Airlines’ current balance sheet and the cash generated from operations in recent times, the company is in a reasonably good position to meet its financial obligations, in my view.


These being said, you should also take note of the huge decline in Singapore Airlines’ earnings in 2019. An airline’s profits could swing erratically due to fluctuating oil prices, which could, in turn, affect its cash flow generation. An extended period of lower earnings and plunging cash flows could put Singapore Airlines in a more difficult financial position.


On top of the risks involved, investors should be looking at the yield-spread between Singapore Airlines’ latest bond issue and other lower-risk investment options. A 3.03% yield is not much higher than the 2.12% yield on a Singapore Savings Bond with a similar term. As such, you will need to decide whether the marginally higher yield makes it worthwhile putting your money in the more risky Singapore Airlines bond.


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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 Jeremy Chia doesn't own shares in any companies mentioned.


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