4 Mapletree / Temasek Giant REITs (一叶知秋)

Posted on May 10, 2020 Written by
Mapletree Trust, MCT, MIT, MLT, MNACT, Temasek, REIT

Mapletree Investment is 100% owned by Temasek, a company with strength in private property funds and managing 4 Singapore giant REITs:

1) Mapletree Logistics Trust, MLT (SGX: M44U) – Giant Logistic REIT

2) Mapletree Industrial Trust, MIT (SGX: ME8U) – Giant Industrial REIT

3) Mapletree Commercial Trust, MCT (SGX: N2IU) – Giant Commercial REIT

4) Mapletree North Asia Commercial Trust, MNACT (SGX: RW0U) – Giant Commercial REIT

Learn further on how to position in these 4 Singapore REITs after cross comparison. MLT and MCT are 30 STI component stocks while MIT is the next to consider in reserve list for STI.

1) History & Sponsor

Among the 4 Mapletree REITs, MLT is the longest history in stock market (listed in year 2005), following by IPOs of MIT (Year 2010), MCT (Year 2011) and MNACT (Year 2013).  Despites all the 4 REITs are giant stocks (according to Dr Tee criteria) but 3 of them are relatively young giant stocks, only MLT has experienced the last Global Financial Crisis in Year 2008-2009 with share prices dropped by over 70%.  Mapletree has 6 other private property funds which may be listed as well in future, following similar REIT model.

In the recent global stock crisis in Mar 2020, all these 4 REITs are corrected by about 40% (MNACT is even cut by half for share price due to additional fear when Coronavirus was first started in China in Jan 2020).  Nevertheless, the scale of recent stock price correction is still not comparable with 2008-2009 subprime crisis.  During a global financial crisis, it is important to have a strong sponsor, which 4 REITs have: Mapletree Investment which is 100% owned and supported by Temasek.

In short, the main risk of 4 REITs is with cyclical stock prices due to economic cycle (i.e. potential capital loss, especially during global financial crisis), not so much on business risks.  When Coronavirus crisis is over or fading away, tenants would resume the business, continue to pay for the committed rentals.

2) Type of REITs

All the 4 REITs have different focuses of industries and countries, eg. MLT is on logistic REIT (Singapore / global), MIT is on industrial REIT (Singapore / global), MCT is on commercial / retail REIT (Singapore) and MNACT is on commercial REIT in North Asia (Hong Kong, China, Japan).

Geographically, each country has different economic performance but most of the REITs portfolios are in Singapore and Asia which have been growing over the past decades.  REITs focus on rental collection, therefore tenant stability (ability to pay rental with agreements) are related to economic cycles of each country. REITs usually are diversified over a portfolio of clients, tenants from different industries, therefore risk is relatively lower.

The current Coronavirus crisis has limited impact, even during lockdown period, property owner (REITs) can still collect most of the rental (partially supported by local government) but distribution of dividend may not be on time for Q1/Q2 2020 as REITs may reserve some cash for planning during the uncertain Year of 2020. For longer term investor who could hold more than 1 year, this should not be an issue as dividend kept (if any) would be distributed back to shareholders at later time.

3) Business

Fundamentally, all these 4 REITs are strong, disruption of Coronavirus crisis has limited impact. The dividend yields are currently around 4+% for MLT, MIT and MCT, below the minimum expectation of 5% for dividend investing (which is achievable if an investor could take action in Mar or Apr 2020 when share prices were under 30-40% correction, this window of opportunity is closed when over half of the correction is recovered with V-shape recovery in share prices).  MNACT still has 8+% dividend yield, mainly due to heavy correction in share prices (50%), recovering slower (less than 30% of total correction) than the other 3 REITs. 

Mapletree REITs are more suitable for positioning as midfielders, both capital gains (mainly for trading when stock market trend is more bullish in short term to medium term) and moderate dividend yield as bonus (about 3-4% is fine).  For long term investing, entry of Mapletree REITs or any giant dividend stock has to be aligned with STI or world stock market at low optimism, usually during a Global Financial Crisis.

Since Mapletree Investment strength is in property development and management, a good REIT manager would help to improve dividend yield with new property into REIT portfolio.  These 4 REITs have gearing ratio less than 40%, still having potential to grow bigger, especially for MCT (only 33% gearing ratio, far below 45% maximum gearing ratio allowed by current law). MCT is more concentrated in Singapore, benefiting from government plan on “Greater Southern Waterfront”, Vivo City contributing to about 1/3 of revenue.  Concentration could be viewed as a risk or an opportunity, depending on whether the focused properties are higher or lower quality.

Interestingly, 3 out of 4 REITs CEOs are female for MLT, MCT and MNACT.  REITs are relatively stable businesses, delivery of committed goals are key for any CEO, whether male or female management. The best judgement of a new management performance is through positive financial report of at least 3 years.

4) Timing & Return

The best time to buy a giant REIT is usually during crisis. The only question is how low is low to buy a stock. Therefore, dividend yield >5% is a reasonable criteria for dividend stock investor. A giant REIT or dividend stock investor may also consider entry in batches (if afraid of buy low get lower in share price), entering for every 10% or X% lower in share prices. 

In fact, an investor of REIT is similar to a REIT manager who consistently looks for better properties at lower prices to maximize the passive income with higher yield. It is much easier for a stock investor, just need to click a button to buy a stock to invest. However, since it is so easy, some investors may not consider properly: What to Buy, When to Buy/Sell.

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There are at least 26 Temasek / GLC stocks in Singapore including these 4 Mapletree stocks, controlling shareholder with 15% or more ownership directly or indirectly (investor has to focus only on giant Temasek stocks):
Singtel (SGX: Z74), DBS Bank (SGX: D05), ST Engineering (SGX: S63), Singapore Airlines (SGX: C6L), SIA Engineering (SGX: S59), Singapore Exchange (SGX: S68), SATS (SGX: S58), Sembcorp Industries (SGX: U96), Sembcorp Marine (SGX: S51), Olam (SGX: O32), CapitaLand (SGX: C31), CapitaLand Mall Trust (SGX: C38U), CapitaLand Commercial Trust (SGX: C61U), Ascendas Reit (SGX: A17U), Ascott Hospitality Trust (SGX: HMN), Ascendas Hospitality Trust (SGX: Q1P), CapitaLand Retail China Trust (SGX: AU8U), Ascendas-iTrust (SGX: CY6U), Keppel Corp (SGX: BN4), Keppel Reit (SGX: K71U), Keppel DC Reit (SGX: AJBU), Keppel Infrastructure Trust (SGX: A7RU), Mapletree Logistics Trust (SGX: M44U), Mapletree Commercial Trust (SGX: N2IU), Mapletree Industrial Trust (SGX: ME8U), Mapletree NAC Trust (SGX: RW0U).

Temasek stocks portfolio also affect about 15% of STI index stocks, which has strong impact on Singapore stock market. Here are 30 STI component stocks:
DBS Bank (SGX: D05), Singtel (SGX: Z74), OCBC Bank (SGX: O39), UOB Bank (SGX: U11), Wilmar International (SGX: F34), Jardine Matheson Holdings JMH (SGX: J36), Jardine Strategic Holdings JSH (SGX: J37), Thai Beverage (SGX: Y92), CapitaLand (SGX: C31), Ascendas Reit (SGX: A17U), Singapore Airlines (SGX: C6L), ST Engineering (SGX: S63), Keppel Corp (SGX: BN4), Singapore Exchange (SGX: S68), HongkongLand (SGX: H78), Genting Singapore (SGX: G13), Mapletree Logistics Trust (SGX: M44U), Jardine Cycle & Carriage (SGX: C07), Mapletree Industrial Trust (SGX: ME8U), City Development (SGX: C09), CapitaLand Mall Trust (SGX: C38U), CapitaLand Commercial Trust (SGX: C61U), Mapletree Commercial Trust (SGX: N2IU), Dairy Farm International (SGX: D01), UOL (SGX: U14), Venture Corporation (SGX: V03), YZJ Shipbldg SGD (SGX: BS6), Sembcorp Industries (SGX: U96), SATS (SGX: S58), ComfortDelGro (SGX: C52).

Dr Tee likes leaves of maple trees, still remember the first leaf collected about 3 decades ago in fall season when studying in US.  When the maple tree leaves turn into red color, it is a spectacular view, making fall or autumn as the most beautiful season (northeast of US near Canada and also Japan have nice views of maple trees during the fall). Change in leaves colors (一叶知秋) is similar to stock investment, showing the investment clock with 4 seasons, an important skill to master on how to take 4 actions: Buy, Hold, Sell, Wait. When an investor knows What Giant Stocks to buy, the remaining questions are simply When to Buy/Sell and How Much to Buy/Sell (position sizing, entry/exit in batches).

There are other giant REITs in Singapore and globally which an investor may consider beyond these 4 Mapletree REITs. Drop by Dr Tee free 4hr investment course to learn how to position in global giant stocks with 10 unique stock investing strategies, knowing What to Buy, When to Buy/Sell.

Learn further from Dr Tee valuable 7hr Online Course, both English (How to Discover Giant Stocks) and Chinese (价值投资法: 探测强巨股) options, specially for learners who prefer to master stock investment strategies of over 100 global giant stocks at the comfort of home.

You are invited to join Dr Tee private investment forum (educational platform, no commercial is allowed) to learn more investment knowledge, interacting with over 9000 members.

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5 Genting Group Casino Stocks (神机妙算)

Posted on April 30, 2020 Written by
Genting Gerhad casino stocks Malaysia Singapore Hong Kong Plantation

Genting Group is a famous regional casino with 50 years of history, started in Malaysia (Genting Highland), then extending to whole world, including Singapore, UK and US, currently aiming for Japan casino license.  Usually there is no certainty in a business but casino is a unique sector which is almost guaranteed to win due to the “unfair” design of games (神机妙算) in favour of the house if there are positive incoming tourists in the region with supporting local government.

Casino stocks are usually cyclic in nature as business is dependent on economy condition, especially on wealthy gamblers (VIP and premium members) which may have more capital for gambling when stock market is bullish or vice versa.

Read the article further to understand the potential of Genting Group, both risks and opportunities, not learning only 1 but all 5 Genting stocks: Genting Berhad, Genting Malaysia, Genting Singapore, Genting Hong Kong, Genting Plantation.

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Genting Berhad is the parent stock, owning other 4 subsidiaries Genting companies with 4 distinct businesses:

1) Genting Berhad (Bursa: 3182) – Malaysia Giant Blue Chip Stock

2) Genting Malaysia (Bursa: 4715) – Malaysia Giant Casino Stock

3) Genting Singapore (SGX: G13) – Singapore Giant CasinoStock

4) Genting Hong Kong (HKEx: 678) – Hong Kong Cruise / ResortStock

5) Genting Plantations (Bursa: 2291) – Malaysia Giant Palm Oil / Property Stock

Genting Group main business is related to casino (main focus of this article). It diversifies business into plantation / property (through Genting Plantations, a giant stock but affected by low optimism palm oil prices) and cruise / resort (through Genting Kong Hong, a weak fundamental stock, would get worse during Coronavirus crisis).

Genting casino business depends on licenses issued by local country: monopoly in Malaysia, duopoly in Singapore (another casino is MBS – Marina Bay Sands), competing with many others in UK (the largest casino operator) and US. Despite casino is a “sure win” business, it requires huge capex in building the casino and integrated resort, paying high tax to local government and business is dependent on tourism (eg. casino business is badly affected for at least 2 months without income during global lockdown).

An investor may invest directly in Genting Berhad (parent stock) if requires more diversification of businesses and also casino business over the world (not dependent on certain country). Here, we would focus on 2 casino stocks in 2 countries, Genting Malaysia (which includes casino in Malaysia, UK, US) and Genting Singapore (which includes casino in Singapore and possibly Japan if license is obtained).

2) Genting Malaysia (Bursa: 4715) – Malaysia Giant Casino Stock

The founder of Genting is Mr Lim Goh Tong (林梧桐) who was already a successful businessman before taking high risks in building the first casino in Malaysia without government assistance in 1960s. During the construction of Genting Highland resort (which later becomes a casino), he nearly died 6 times in various unexpected accidents. He is awarded the only casino license (more than 50 years till now), a legend in Malaysia history. 

When Dr Tee was still a small kid, I remember my first trip in life was around 9 years old to Genting Highland. Of course, I could not enter casino as a child.  After growing up, I have been to casino all over the world: US (Las Vegas, Atlantic City), Malaysia (finally), Macau (a few there, see earlier article in my trip report to Hong Kong / Macau), Australia (Melbourne, Brisbane), etc, except for Singapore (well, there is admission fee for local Singapore people).  I like to visit casino but I seldom gamble (similar to windows shopping) because I understand lower probability of winning for most games, only those who are lucky may win eventually (with condition to stop gambling for the rest of life after the win). Instead, I like to watch the reaction of gamblers, 9/10 are not smiling, likely losing money, trying to gamble more to win back the money.  

Stock “investing” with stock tips or rumour or “insider news” is similar to gambling. A smart stock investor has to firstly understand the business (both risks and opportunities), sector prospect and stock market outlook for country and even the whole world. Let’s learn step by step here.

Genting Malaysia is a giant casino stock, business has been stable over the past 10 years, growing in revenue but stagnant in net profit, partly due to higher tax and also global expansion plans with more casino. It could generate steady cash flow (due to unlimited greed of gamblers who volunteer to donate or contribute money unknowingly) and having a culture to pay dividend which is growing each year (current dividend yield is 6.3%).

Of course, cash flow of Genting worldwide casino would be reduced by at least 2/12 months during the global lockdown, 20% or even more deduction in Year 2020.  The situation would improve gradually when Coronavirus has subsided over the next few months. It is hard to stop an addicted gambler from gambling for 2 months, likely the person may double the capital for gambling next time when Coronavirus fear is over. It is a sad social issue why some people are against gambling as it could destroy a family, although it also brings additional national revenue.

Over the past few years with weaker Malaysia stock market, Genting Malaysia has dropped more than 50% in share prices (low in last few months of global stock crisis is comparable to 11 years low in Year 2009), currently at low optimism < 25%, aligning with bearish KLCI Index in Malaysia (recovering in last few weeks). Both Genting Berhad and Genting Malaysia are 2 of 30 KLCI component stocks in Malaysia. More importantly, casino business has 50 years of history in Malaysia, the monopoly business would continue to be a strong economic moat for Genting Malaysia. When KLCI recovers, both Genting Malaysia and Genting Berhad would get more support in uptrend share prices.

3) Genting Singapore (SGX: G13) – Singapore Giant CasinoStock

Singapore took a long time to finally accept casino operating in the island.  Many years ago, Singapore gamblers have to go overseas (nearest is cruise in international sea or Genting Highland) when nature calls. Now, they could gamble within the island (local people has additional restrictions such as admission fee but probably could only stop some people such as Dr Tee from visiting), either in Resort World Sentosa (RWS, belongs to Genting Singapore) or MBS (belongs to Las Vegas Sands, NYSE: LVS, another overseas casino stock with reasonable business fundamental).  This way, at least the losses of gamblers could be recycled to help the Singapore needy people (through government tax) and also Singapore investors (who invest in Genting Singapore).

In fact, gamblers of Genting Singapore are mostly from overseas, eg. China, Malaysia and regional countries. So, lockdown in the regional during Coronavirus pandemic would definitely affect the Genting Singapore business.  During the last few months of global stock crisis, Genting Singapore share price is corrected by about 40%, low of 51 cent/share is 11 years low since Year 2009 (last Global Financial Crisis). Currently Genting Singapore is still at low optimism < 25%, aligning with bearish STI Index in Singapore (recovering in last few weeks). Genting Singapore is 1 of 30 STI component stocks in Singapore, trends of prices are well aligned with country and global stock market due to better outlook of Coronavirus condition.

Singapore government has granted both Genting Singapore (RWS) and MBS to expand further in future with more investment in non-gaming infrastructures to exchange for exclusive casino licenses till year 2030.  Building of integrated resort and other new tourist attractions (capex for casino companies) would help to attract more overseas tourists to Singapore. So, this is a positive long term plan but will take up a lot of cash (capex) from Genting Singapore which may reduce the free cash flow and dividend for the next 10 years.  The application of casino license in Japan is both a risk and opportunity for Genting Singapore as the share prices will be up or down, depending on the unpredictable outcome.  Regional expansion is a good move, especially in related casino and integrated resort business. For Genting Singapore and most casino, main revenue generator is gaming business (over 70%, especially VIP and premium members). “Integrated resort” is mainly a way of marketing to attract more tourists to come, which some of them would drop by casino during free time, contributing some money to local economy through gambling.

Both Genting Singapore and Genting Malaysia are cyclic in nature for share prices, therefore buying casino stocks at lower optimism prices in bearish economy would have higher upside potential as casino business is more defensive in nature (assuming Coronavirus pandemic would end eventually, gambles coming back again). However, it is more suitable for investors with stronger holding power because what if economic condition is beyond recovery (eg. permanent job loss, lower productivity with negative GDP, etc), stock market may fall to a new low during global financial crisis (of course, gamblers would continue to gamble, especially when they have limited money, thinking casino is the quickest place to make money). Genting Group has good culture of dividend payment over the decades, the same Lim family (Chairman is son of founder, Lim Kok Thay) would help to support the stock investors with 5-6% dividend yield (assuming casino may lose 50% gamblers, still have 3% dividend yield) during the winter time.

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So, gambling in casino is to give money to casino (not acceptable). However, investing in casino stock is to share the profits of gambling with casino and contributing high tax to local government to help the needy people (could be considered). However, not all casino stocks are good, therefore careful selection is important. In fact, there is another casino giant stock (the owner is also the Top 10 richest person in Malaysia, same list as Lim Kok Thay, boss of Genting Group) listed in Hong Kong, even stronger than Genting casino business.  I won’t mention here, interested readers may do a google of Top 10 richest person in Malaysia and their related businesses.

There are 30 STI index component stocks including Genting Singapore (investor has to focus only on giant stocks for investing):
DBS Bank (SGX: D05), Singtel (SGX: Z74), OCBC Bank (SGX: O39), UOB Bank (SGX: U11), Wilmar International (SGX: F34), Jardine Matheson Holdings JMH (SGX: J36), Jardine Strategic Holdings JSH (SGX: J37), Thai Beverage (SGX: Y92), CapitaLand (SGX: C31), Ascendas Reit (SGX: A17U), Singapore Airlines (SGX: C6L), ST Engineering (SGX: S63), Keppel Corp (SGX: BN4), Singapore Exchange (SGX: S68), Hongkong Land (SGX: H78), Genting Singapore (SGX: G13), Mapletree Logistics Trust (SGX: M44U), Jardine Cycle & Carriage (SGX: C07), Mapletree Industrial Trust (SGX: ME8U), City Development (SGX: C09), CapitaLand Mall Trust (SGX: C38U), CapitaLand Commercial Trust (SGX: C61U), Mapletree Commercial Trust (SGX: N2IU), Dairy Farm International (SGX: D01), UOL (SGX: U14), Venture Corporation (SGX: V03), YZJ Shipbldg SGD (SGX: BS6), Sembcorp Industries (SGX: U96), SATS (SGX: S58), ComfortDelGro (SGX: C52).

There are 30 Malaysia Bursa KLCI index component stocks including Genting Berhard and Genting Malaysia (investor has to focus only on giant stocks for investing):
CIMB (Bursa: 1023) CIMB GROUP HOLDINGS BERHAD, DIALOG (Bursa: 7277) DIALOG GROUP BERHAD, DIGI (Bursa: 6947) DIGI.COM BERHAD, GENM (Bursa: 4715) GENTING MALAYSIA BERHAD, GENTING (Bursa: 3182) GENTING BERHAD, HAPSENG (Bursa: 3034) HAP SENG CONSOLIDATED BERHAD, HARTA (Bursa: 5168) HARTALEGA HOLDINGS BERHAD, HLBANK (Bursa: 5819) HONG LEONG BANK BERHAD, HLFG (Bursa: 1082) HONG LEONG FINANCIAL GROUP BERHAD, IHH (Bursa: 5225) IHH HEALTHCARE BERHAD, IOICORP (1961) IOI CORPORATION BERHAD, KLCC (Bursa: 5235SS) KLCC PROPERTY HOLDINGS BERHAD, KLK (Bursa: 2445) KUALA LUMPUR KEPONG BERHAD, MAXIS (Bursa: 6012) MAXIS BERHAD, MAYBANK (Bursa: 1155) MALAYAN BANKING BERHAD, MISC (Bursa: 3816) MISC BERHAD, NESTLE (Bursa: 4707) NESTLE MALAYSIA BERHAD, PBBANK (Bursa: 1295) PUBLIC BANK BERHAD, PCHEM (Bursa: 5183) PETRONAS CHEMICALS GROUP BERHAD, PETDAG (Bursa: 5681) PETRONAS DAGANGAN BHD, PETGAS (Bursa: 6033) PETRONAS GAS BERHAD, PMETAL (Bursa: 8869) PRESS METAL ALUMINIUM HOLDINGS BERHAD, PPB (Bursa: 4065) PPB GROUP BERHAD, RHBBANK (Bursa: 1066) RHB BANK BERHAD, SIME (Bursa: 4197) SIME DARBY BERHAD, SIMEPLT (Bursa: 5285) SIME DARBY PLANTATION BERHAD, TENAGA (Bursa: 5347) TENAGA NASIONAL BHD, TM (Bursa: 4863) TELEKOM MALAYSIA BERHAD, TOPGLOV (Bursa: 7113) TOP GLOVE CORPORATION BHD.

It is better to learn how to fish (investing), instead of waiting for the fishes (stock investing ideas). Drop by Dr Tee free 4hr investment course to learn how to position in global giant stocks with 10 unique stock investing strategies, knowing What to Buy, When to Buy/Sell.

Learn further from Dr Tee valuable 7hr Online Course, both English (How to Discover Giant Stocks) and Chinese (价值投资法: 探测强巨股) options, specially for learners who prefer to master stock investment strategies of over 100 global giant stocks at the comfort of home.

You are invited to join Dr Tee private investment forum (educational platform, no commercial is allowed) to learn more investment knowledge, interacting with over 9000 members.

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7 CapitaLand Giant REITs for Dividend (CMT + CCT = CICT) (双剑合璧)

Posted on April 29, 2020 Written by
CapitaLand Giant REITs for Dividend

CapitaLand is Temasek property giant stock, having 2 giant Singapore REITs: CapitaLand Mall Trust (CMT) and CapitaLand Commercial Trust (CCT). Many Singapore investors like REITs for passive income generation through quarterly dividend payment. After the announcement of merging, both REITs suffer about 40% price correction during global stock crisis with Coronavirus fear, dividend yields are more than 6%, attractive for long term investors.

Some potential REIT investors would like to know should they invest in CMT or CCT before the merging, which one has more potential, or should they wait until the merging of 2 REITs into CapitaLand Integrated Commercial Trust (CICT), the largest Singapore REIT by June 2020.

Read the article further to find out the critical answers for CMT and CCT, not learning only 2 REITs but all 7 stocks related to parent stock CapitaLand, including 4 REITs and trusts in the same group: Ascendas REIT, Ascott Residence Trust, Ascendas India Trust and CapitaLand Retail China Trust.

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CapitaLand is the largest property developer in Asia (after merging with Ascendas and Singbridge), becoming a key Temasek property investment portfolio.  CapitaLand has total of 6 REITs / Business Trust in Singapore:

1) CapitaLand (SGX: C31) – Singapore Property Giant Stock

2) CapitaLand Mall Trust, CMT (SGX: C38U) – Retail REIT Giant Dividend Stock

3) CapitaLand Commercial Trust, CCT (SGX: C61U) – Office REIT Giant Dividend Stock

4) Ascendas REIT (SGX: A17U) – Industrial REIT Giant Dividend Stock

5) Ascott Residence Trust (SGX: HMN) – Hospitality REIT Dividend Stock

6) Ascendas India Trust (SGX: CY6U) – Business Trust Dividend Stock

7) CapitaLand Retail China Trust (SGX: AU8U) – Retail REIT Dividend Stock

In summary, all 7 CapitaLand group of stocks have reasonable strong business fundamental, all 6 REITs / trusts may be considered for dividend investing but only 3 of them are giant REITs stocks (based on Dr Tee giant criteria): CMT, CCT and Ascendas REIT. Sibling stocks of Ascott Residence Trust, Ascendas India Trust and CapitaLand Retail China Trust are relatively weaker, more suitable for pure dividend investing but subject to cyclic stock market risk (eg. capital loss during global stock crisis with limited long term growth). Parent stock, Capitaland, is a blue chip stock, behaving as if a fund with all the subsidiary stocks, more suitable for low capital investor who needs diversification.

There are 30 STI index component stocks including CapitaLand Mall Trust and CapitaLand Commercial Trust (investor has to focus only on giant stocks for investing):
DBS Bank (SGX: D05), Singtel (SGX: Z74), OCBC Bank (SGX: O39), UOB Bank (SGX: U11), Wilmar International (SGX: F34), Jardine Matheson Holdings JMH (SGX: J36), Jardine Strategic Holdings JSH (SGX: J37), Thai Beverage (SGX: Y92), CapitaLand (SGX: C31), Ascendas Reit (SGX: A17U), Singapore Airlines (SGX: C6L), ST Engineering (SGX: S63), Keppel Corp (SGX: BN4), Singapore Exchange (SGX: S68), HongkongLand (SGX: H78), Genting Singapore (SGX: G13), Mapletree Logistics Trust (SGX: M44U), Jardine Cycle & Carriage (SGX: C07), Mapletree Industrial Trust (SGX: ME8U), City Development (SGX: C09), CapitaLand Mall Trust (SGX: C38U), CapitaLand Commercial Trust (SGX: C61U), Mapletree Commercial Trust (SGX: N2IU), Dairy Farm International (SGX: D01), UOL (SGX: U14), Venture Corporation (SGX: V03), YZJ Shipbldg SGD (SGX: BS6), Sembcorp Industries (SGX: U96), SATS (SGX: S58), ComfortDelGro (SGX: C52).

By law, 90% of REIT incomes has to be redistributed back to shareholders in the form of dividend, therefore it is a popular passive income generator. If a REIT pay 4 times yearly, an investor with 3 REITs could receive 12 payments yearly, helping to offset monthly expenses. When return from monthly dividend is more than monthly expenses, an investor would become financial free. However, certain REITs may not pay consistent dividend due to unstable business and a few could even go bankrupt if not properly managed. Business Trust (eg. Ascendas India Trust) seems similar to REIT but it is not required by law to pay dividend, therefore creating an uncertainty in the future which dividend payment is not guaranteed.

In this article, we will focus on 2 giant REITs, CMT and CCT which will be merged soon. Sharing is for educational purpose, please make your own decision. Before merging announcement, CMT performs relatively better than CCT from overall investing consideration.  So, CCT investors would benefit more than CMT investor.

CapitaLand Giant REITs for Dividend CCT CMT

The merging deal is for CMT to acquire CCT by exchange every share of CCT with 0.72 share of CMT + cash $0.259/share.  Since the announcement from 22 Jan 2020 until today, CMT and CCT share prices are closely correlated as mirror image with this formula:

CCT = 0.72 CMT + 0.259

It means after the merging announcement, there is not much difference now as CMT and CCT prices movement of stocks follow the equation above closely. Even if an investor is interested in CMT, the decision of whether to invest now or after official merging in June 2020, should be based on stock market outlook, not expecting any drastic change in share price after the official merging.  In fact, over the past 2 months of global stock crisis, both CMT and CCT dropped by about 40% in share prices, even after recovering in the last few weeks, CMT is still at low optimism < 25%. In general, before merging, CMT is more defensive while CCT is more cyclic, therefore future CICT REIT may behave in between both REITs, more cyclic than CMT, more defensive than CCT.

Coronavirus pandemic has affected both CMT and CCT as some tenants may not pay rents on time but this could be recovered later when Coronavirus has ended or fading away over the next few months.  Occupancy rates of both REITs are high (about 99%), any withdrawal by tenant (eg. a few weaker F&B or consumer companies may not be able to sustain) may be quickly replaced by new tenant but rental increase would be limited. If Coronavirus is not a long term issue (under the worst case, vaccine could be developed in about 1 year), major correction in share prices for either CMT or CCT could be an opportunity to accumulate with dividend yield around 6%. Assuming the worst case of losing 20% tenants (dropping from 99% to 80% occupancy) if Coronavirus may stay for 1 more year with 20% people in the world staying at home during lockdown, average dividend yield is correct to around 5%, still better than keeping cash in bank with only 1% dividend. When crisis is over, an investor could enjoy the capital gains with potential share price appreciation due to market greed.

Before merging, CMT and CCT already has joint portfolio, eg. Raffles City (40% CMT, 60% CCT). After merging, the new CICT REIT would dominate both retail shopping malls and offices in Singapore, having more capital to expand in overseas.  However, inorganic growth through more acquisition (eg. overseas properties) may or may not add value to CICT as it depends on expertise of REIT manager, able to find high quality properties at discounted prices (eg. during economic crisis), adding more potential to DPU (dividend per unit). Over expansion sometimes may result in higher risk (higher gearing ratio, which would become higher after merging as CMT has to pay some cash to CCT investors) but acceptable for CICT with dual level sponsors of CapitaLand and Temasek.

There could be more merging and acquisition activities during the global stock crisis. A giant stock does not need to be the “biggest” company, more importantly, strong in fundamental with growing business, therefore even a small company could be a giant stock.

A smart investor may consider only the strongest subsidiary giant stock of CapitaLand group, which is protected by the sponsor CapitaLand, which is further protected by another bigger sponsor, Temasek.  This implies for the giant stock to fail (eg. go bankrupt), it has to hurt CapitaLand or even Temasek first.  However, safer stocks may not be the best choice for investment as growth are limited.

There are 52 REITs and Business Trusts stocks including CapitaLand Mall Trust and CapitaLand Commercial Trust (investor has to focus only on giant stocks for investing):
AIMS APAC Reit (SGX: O5RU), ARA Hospitality Trust USD (SGX: XZL), ARA LOGOS Logistics Trust (SGX: K2LU), Ascendas Reit (SGX: A17U), Ascendas India Trust (SGX: CY6U), Ascott Trust (SGX: HMN), Asian Pay Tv Trust (SGX: S7OU), BHG Retail Reit (SGX: BMGU), CapitaLand Commercial Trust (SGX: C61U), CapitaLand Mall Trust (SGX: C38U), CapitaLand Retail China Tr (SGX: AU8U), CDL Hospitality Trust (SGX: J85), Cromwell Reit EUR (SGX: CNNU), Cromwell Reit SGD (SGX: CSFU), Dasin Retail Trust (SGX: CEDU), Eagle Hospitality Trust USD (SGX: LIW), EC World Reit (SGX: BWCU), Elite Commercial Reit (SGX: MXNU), ESR-REIT (SGX: J91U), Far East Hospitality Trust (SGX: Q5T), First Reit (SGX: AW9U), Frasers Centrepoint Trust (SGX: J69U), Frasers Hospitality Trust (SGX: ACV), Frasers Logistics & Commercial Trust (SGX: BUOU), FSL Trust (SGX: D8DU), HPH Trust SGD (SGX: P7VU), HPH Trust USD (SGX: NS8U), IREIT Global (SGX: UD1U), Keppel Infrastructure Trust (SGX: A7RU), Keppel Pacific Oak US REIT (SGX: CMOU), Keppel DC Reit (SGX: AJBU), Keppel Reit (SGX: K71U), Lendlease Reit (SGX: JYEU), Lippo Malls Trust (SGX: D5IU), Manulife Reit (SGX: BTOU), Mapletree Commmercial Trust (SGX: N2IU), Mapletree Industrial Trust (SGX: ME8U), Mapletree Logistics Trust (SGX: M44U), Mapletree North Asia Commercial Trust (SGX: RW0U), NetLink NBN Trust (SGX: CJLU), OUE Commercial Reit (SGX: TS0U), ParkwayLife Reit (SGX: C2PU), Prime US Reit (SGX: OXMU), RHT HealthTrust (SGX: RF1U), Sabana Reit (SGX: M1GU), Sasseur Reit (SGX: CRPU), Soilbuild Business Space Reit (SGX: SV3U), SPH Reit (SGX: SK6U), Starhill Global Reit (SGX: P40U), Suntec Reit (SGX: T82U), United Hampshire US Reit (SGX: ODBU).

Learn from Dr Tee 4hr Free investment course on global dividend giant stocks to collect passive income during low optimism in stock crisis, then enjoying capital gains with growing share prices when crisis is over.

Learn further from Dr Tee valuable 7hr Online Course, both English (How to Discover Giant Stocks) and Chinese (价值投资法: 探测强巨股) options, specially for learners who prefer to master stock investment strategies of over 100 global giant stocks at the comfort of home.

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Filed Under: Property Market, Stock Market, Technical Analysis, Value Investing Tagged: , , , , , , , , , , , , , , , , , , ,

5 Cheung Kong Super Hong Kong Stocks (长江一号)

Posted on April 27, 2020 Written by
Cheung Kong Stock CKH CKI CKA Power Assets Fortune Reit HKEx HPH Trust

Sir Li Ka-Shing (李嘉诚) is the richest person in Hong Kong for decades, earning a nickname of “Superman Li” for his reputation in the business world. He was born in 1928 in Chao Zhou (潮州) of China (Dr Tee visited there several years ago, Li Ka-Shing donated a lot of money to his hometown), therefore 92 years old so far. Technically he has retired but mentally never stop working for 1 day, still an advisor to his children and his beloved Cheung Kong Holdings.

Cheung Kong Group is famous initially as a property company, then expanding over the decades, becoming a multinational conglomerate with diversified businesses. CK parent stock is assigned #1 stock ticker in HKEx stock exchange (长江一号), showing its strength as a Hong Kong blue chip giant stock. In Year 2015, there is a major restructuring of Cheung Kong, merging with Hutchison Whampoa, forming a new company Cheung Kong Holdings (registered in Bermuda, could be due to long term planning) with 2 main companies with 2 stocks:

CK Hutchison (CKH) – (HKEx: 1) – For non-property related business

CK Assets (CKA) – (HKEx: 1113) – For proper related business

This way, it is clearer to investors on choices of investment based on these 2 divisions. However, the reorganization has affected the long term analysis of Cheung Kong as there are significant relocation of assets between 2 divisions of companies.  Therefore, it is a born of 2 “new” companies with 5 years of history in integrated business reporting but share price of CKH is much longer due to its extension of former parent stock, providing additional references on share prices.  It is important for a smart investor to analyze each segment of business for both CK companies before making decision of which stock to invest.

In fact, CK Holdings have at least 11 stocks listed within the group (only 5 highlighted ones are giant stocks):

1) CK Hutchison (CKH) – (HKEx: 1) – CK Parent Giant Stock (Non-property Division)

2) CK Infrastructure (CKI) – (HKEx: 1038) – Utility Parent Giant Stock

3) Power Assets (PA) – (HKEx: 6) – Utility Subsidiary Giant Stock

4) CK Life Sciences – (HKEx: 775) – Biotechnology Stock

5) Tom Group – (HKEx: 2383) – Chinese language media stock

6) HPH Trust – (SGX: P7VU) – Port Trust Stock

7) Husky Energy – (TSE: HSE) – Energy stock listed in Canada

8) CK Assets (CKA) – (HKEx: 1113) – CK Parent Giant Stock (Property Division)

9) Fortune Reit – (HKEx: 778) – CK Giant Reit

10) Hui Xian REIT – (HKEx: 87001) – CK Reit

11) Prosperity REIT – (HKEx: 808) – CK Reit

Out of 10 CK stocks, there are 4 giant stocks included in 50 Hang Seng Index component stocks: CKH, CKA, CKI and PA.  So, technically Superman Li could move Hong Kong stock market (about 4%).  This is similar to “rival” Jardine Group, could move Singapore Straits Times Index (about 15%) with 5 component stocks. In 1980s, Li Ka-shing was aiming to “invest” more in Hongkong Land of Jardine Group but was defeated by cross-shareholding structure of Jardine (another long story, read Dr Tee earlier article on Jardine Group of 7 giant stocks).

Not all the 10 CK stocks are strong based on Dr Tee giant stock criteria. There is only 1 more giant CK subsidiary stock, Fortune Reit is a giant Reit (formerly dual listing, after delisting from SGX, now only listed in HKEx).

So, additional comments will be given below on these 5 giant CK stocks from different businesses. An investor may select either the parent group (CKH or CKA) if want to consider average of entire group business (non-property vs property) as if a fund, or focusing on smaller individual stock of subsidiaries (CKI, PA, Fortune Reit) on specific business segment.

1) CK Hutchison (CKH) – (HKEx: 1) – CK Parent Giant Stock (Non-property Division)

CK Hutchison has 5 main business segments in non-property division. Investing in CKH stock means investing in all business segments.

1.1) Port

The port businesses are relatively stable in the past but Coronavirus crisis in Year 2020 would affect the results for Year 2020. HPH trust (not a giant stock with limited business potential) is only a small part of CK port business.

1.2) Retail

Major business is Watson for health and beauty (15794 stores with 12 brands worldwide). Business growth in China and Asia are faster than in western world. This is consumer related business, therefore Coronavirus would seriously affect the business for a few quarters. Temasek is also a shareholder for Watson, was planning to sell it.

1.3) Infrastructure / Utilities

This is main passive income generator for CKH. More details later under discussions of subsidiary giant stocks CK Infrastructure and Power Assets.

1.4) Telecommunication

This segment of business is growing in general, having mixed performance in different countries. It is a more defensive business.

1.5) Energy / Investment / Others

Energy segment is making losses while other remaining business is less significant to contributing to entire group.

CKH business (non-property) is not as defensive as CKA (property), therefore over the past 5 years since the group reorganization, share price has been dropping to nearly to 1/3 from peak of $120 to $45. Despite the Price to Book (PB) ratio is 0.5 but the asset is non-property, not as high quality.  The main investing advantage for CKH is low optimism level < 25%, aligning to global stock crisis (following economic cycles) but it could suffer in business during Coronavirus crisis due to global lockdown.

Dividend yield of 5.7% is attractive but investors may need to prepare for potential 50% cut as the worst case scenario (despite CKH has good track record of consistent dividend payment) during the winter time of CKH business, implying 3% yield which is still better than holding cash with 1% interest for cash deposit in bank.  CKH has significant business in Europe, when economy is restarted, CKH quarterly business performance would improve gradually.

2) CK Infrastructure (CKI) – (HKEx: 1038) – Utility Parent Giant Stock

3) Power Assets (PA) – (HKEx: 6) – Utility Subsidiary Giant Stock

Both CKI and PA stocks may be studied together as CKH owns CKI, then CKI owns PA, all inter-related, just different ways of grouping. So, an investor may decide investing in parent company or subsidiary business specifically in utilities.

CKI has many global businesses of infrastructures and utilities (electricity, water, gas), holding strategic asset of certain countries and cities (eg. main electricity supplier of London). Power Assets invests mainly in electricity, eg. providing partial electricity supply to Hong Kong, duopoly with another giant electricity stock, China Light and Power, CLP (HKEx: 2). Readers may guess if CKH could get HKEx stock ticker #1, CLP could get stock ticker #2, implying it is another blue chip stock with proven history (if there is a chance, we may share further on CLP or other monopoly stocks in future).

Utilities business are defensive as people may not need to shop during Coronavirus pandemic or global financial crisis but they still need basic usages of electricity, water and gas. So, utilities or infrastructure related stocks usually show their strength during economic crisis as defensive stocks which could still pay dividend with steady cash flow generated, then gradual capital gains in longer term with recovery and subsequent growth of economy.

In general, both CKI and PA are having close performance in stocks, prices have dropped by half over the past 5 years (more defensive than parent stock CKH which dropped to nearly 1/3 from the peak price), dividend payment has been stable due to defensive industry, current dividend yield is over 5%.  The main “risk” of both stocks is bearish price trend over the past few years (despite at lower optimism level, buy low may still get lower in prices), not so much on business risks (minimal), therefore investors who are reluctant to catch the falling knife in prices, may wait for uptrend in prices, sacrificing passive income (dividend yield) with higher price to exchange for confirmation in price reversal to bullish range.

4) CK Assets (CKA) – (HKEx: 1113) – CK Parent Giant Stock (Property Division)

CK Assets are property-based businesses, listed as a new stock, therefore only having 5 years of share price history so far which are more defensive than CKH (dropping to 1/3), but price is cyclic in nature, dropping to half price. Price to Book (PB) ratio is also coming to a new low of 0.5, having 50% safety margin for high quality asset of property. 

However, Hong Kong property market (about 20 years for 1 market cycle) has been at high optimism after the average prices gone up by 4 times over the past 2 decades. Therefore, property stocks in Hong Kong in longer term, may suffer “loss” in valuation due to lower property prices if there are any crisis related to China or Hong Kong property bubble.  CKA at current price is 50% discount but “rival” property stock, Hongkong Land has 75% discount with PB around 0.25. So, after relative comparison with peers, CKA 50% discount in price may not be excellent.  In fact, there are many other property giant stocks in Hong Kong which are “cheap and good”, readers may learn from Dr Tee to explore more in future.

5) Fortune Reit – (HKEx: 778) – CK Giant Reit

There are 3 REITs listed from CKA parent group: Prosperity Reit and Hui Xian Reit are relatively weaker, so we focus only in Fortune Reit.  Previously, Fortune Reit has dual listing in both HKEx and SGX but now only left HKEx. There is little difference to Singapore investors as there is no capital gain tax nor dividend withholding tax for Hong Kong stocks, except HKD/SGD is currently at high optimism (HKD is pegged to USD, similar trend for USD/SGD), future potential forex loss (when USD or HKD is depreciated vs SGD) could be compensated by dividend and capital gains of Hong Kong or US stock.

Fortune Reit drops over 40% in share price over the past 2 months of global stock crisis, resulting in high dividend yield of 7.4% with consistent dividend payout of its REIT portfolio. Risks of Coronavirus is minimized as China / Hong Kong conditions are much better than the rest of the world. Social unrest (eg. Hong Kong protesters last year) is also a lower risk now. The REIT is protected by Price-to-Book (PB) ratio of 0.4, rare for a strong REIT with 60% discount, implying under the worst case scenario, even if the company goes bankrupt, investors could still get back the capital (unlike other investors would suffer permanent loss buying stocks with low quality assets).  Usually PB is not a strong criteria for REIT, consistent rental collection from tenants is more important which Fortune Reit has a good track record. The REIT manager is also another familiar name: ARA Asset Management, used to be a giant stock with good reputation in Singapore but delisted several years ago (not surprise as this company is too good to share in long term with the public).

In short, investing in Fortune Reit could receive the protection from sponsor, CK Group, in addition to 60% safety margin in share price to property asset value. REIT (rental payment) could be more predictable than property-based business (eg. parent company CKA) which may suffer when property value declines. For a reit, even property value may decline, rental won’t fall as much, especially if located in strategic places with higher populations.

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If you could read until this line, it means that you are a serious investor as Dr Tee has spend half a day to write this article, you only need less than 30 min to read but need a few more days to digest to align the right CK stocks (1 of the 5 giant stocks) to your own personality. Each of the 5 CK giant stocks has its own pros and cons, may not be suitable for everyone. Overall, they all are at low optimism < 25%, implying higher potential for longer term investors. Their main “risks” may not be on business (Coronavirus could affect for Year 2020 but may not for long term), but more on bearish stock price trends since the group reorganization in 2015 till now. Global investors still try to find a sweet spot of balance between price and value for the “new” CK group of stocks.

Cheung Kong has been blue chip stocks for decades in Hong Kong, paying consistent dividend despite bearish stock prices or fluctuation in businesses. The main intangible “asset” of CK Group could be Li Ka-Shing, a trusted icon of CK for decades. Despite Mr Li has retired, he has transferred his business and investment knowledge to his 2 sons, Victor Li (taking over his empire of CK business) and Richard Li (inheriting most of his cash to start own business beyond CK Group). This way, 2 “tigers” won’t be in same jungle (only 1 main decision maker), smart move by a father with far vision to minimize potential family conflicts in the same business.

So, if readers may not have the same wisdom as Li Ka-Shing on investing, we may leverage on him through investing in CK group of giant stocks at lower optimism prices. Li family are unlikely to sell their stocks, therefore they would work day and night for you to grow the business as they are major shareholders (interest is aligned). Better still, readers may contribute no effort except just capital for investment at the right price (ability to press the button when seeing the signal with strategy aligning to own personality), Li family could then work for you for another generation until Victor Li may retire one day as well or passing to the third generation. Of course, you may then sell the stocks for capital gains one day or transfer the stock to your own second generation to keep.

If readers worry Li Ka-Shing may go bankrupt during global financial crisis (he went through at least 9 times over his 92 years of life experience), then smart investor may look for Top 10 richest persons in the world (Li Ka-Shing is only the 30th richest in the world), investing in their best stocks with stronger business than CK Group, forming a portfolio of Top 10 richest person’s giant stocks as a dream team portfolio.  Of course, you may not get a good discount in share prices when their businesses are very strong now, therefore stock “crisis” is usually a good opportunity to own some of these giant stocks with growing businesses.

Li Ka-shing stocks are stronger than many 50 Hang Seng HSI index component stocks or 30 STI index component stocks (investor has to focus only on giant stocks for investing):
DBS Bank (SGX: D05), Singtel (SGX: Z74), OCBC Bank (SGX: O39), UOB Bank (SGX: U11), Wilmar International (SGX: F34), Jardine Matheson Holdings JMH (SGX: J36), Jardine Strategic Holdings JSH (SGX: J37), Thai Beverage (SGX: Y92), CapitaLand (SGX: C31), Ascendas Reit (SGX: A17U), Singapore Airlines (SGX: C6L), ST Engineering (SGX: S63), Keppel Corp (SGX: BN4), Singapore Exchange (SGX: S68), Hongkong Land (SGX: H78), Genting Singapore (SGX: G13), Mapletree Logistics Trust (SGX: M44U), Jardine Cycle & Carriage (SGX: C07), Mapletree Industrial Trust (SGX: ME8U), City Development (SGX: C09), CapitaLand Mall Trust (SGX: C38U), CapitaLand Commercial Trust (SGX: C61U), Mapletree Commercial Trust (SGX: N2IU), Dairy Farm International (SGX: D01), UOL (SGX: U14), Venture Corporation (SGX: V03), YZJ Shipbldg SGD (SGX: BS6), Sembcorp Industries (SGX: U96), SATS (SGX: S58), ComfortDelGro (SGX: C52).

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7 Jardine King of Singapore Stocks (狮城股王)

Posted on April 10, 2020 Written by
Jardine Group SGX Jardine Matheson J36 Jardine Strategic Holding J36 Jardine Cycle & Carriage C07 Astra Asii Mandarin Oriental Hotel M04 Hongkong Land H78 Dairy Farm D01 Singapore Stocks Creative Technology C76 Berkshire BRK NYSE Sheng Siong OV8

Jardine Group is not just a company, it is a giant group with nearly 200 years of business history (started in 1832, then controlled by Keswick family for many generations till now).  Jardine group of companies cover many industries, eg. engineering, automotive, properties, hotel, supermarkets, etc.

Jardine group has 7 giant stocks (Jardine Matheson, Jardine Strategic, Jardine Cycle & Carriage, Astra, Hongkong Land, Dairy Farm, Mandarin Oriental Hotel), all are falling to very low optimism (mostly with optimism <10%) over the past 2 months of global stock crisis.  Since 5 of Jardine giant stocks (except Mandarin Oriental Hotel and Astra International – listed in Indonesia) are 30 STI component stocks (contributing to about 15% weightage), it has the strongest influence to Singapore stock exchange, more than individual stock of 3 major banks (DBS, OCBC, UOB) and Singtel.

There are 30 STI index component stocks including 5 Jardine stocks (investor has to focus only on giant stocks for investing):
DBS Bank (SGX: D05), Singtel (SGX: Z74), OCBC Bank (SGX: O39), UOB Bank (SGX: U11), Wilmar International (SGX: F34), Jardine Matheson Holdings JMH (SGX: J36), Jardine Strategic Holdings JSH (SGX: J37), Thai Beverage (SGX: Y92), CapitaLand (SGX: C31), Ascendas Reit (SGX: A17U), Singapore Airlines (SGX: C6L), ST Engineering (SGX: S63), Keppel Corp (SGX: BN4), Singapore Exchange (SGX: S68), Hongkong Land (SGX: H78), Genting Singapore (SGX: G13), Mapletree Logistics Trust (SGX: M44U), Jardine Cycle & Carriage (SGX: C07), Mapletree Industrial Trust (SGX: ME8U), City Development (SGX: C09), CapitaLand Mall Trust (SGX: C38U), CapitaLand Commercial Trust (SGX: C61U), Mapletree Commercial Trust (SGX: N2IU), Dairy Farm International (SGX: D01), UOL (SGX: U14), Venture Corporation (SGX: V03), YZJ Shipbldg SGD (SGX: BS6), Sembcorp Industries (SGX: U96), SATS (SGX: S58), ComfortDelGro (SGX: C52).

6 Jardine stocks listed in Singapore Stock Exchange are secondary listing (primary listing in London Stock Exchange) and traded in USD (currently at high optimism vs SGD). USD usually performs better in bear market (safe haven), weaker during bull market, the longer term forex disadvantage of USD/SGD (about -2%/year USD depreciation) could be compensated by higher growth of 10+%/year of Jardine stock prices.

So, let’s learn to position in 7 Jardine stocks, all are giant stocks based on Dr Tee criteria but each Jardine stock has different characteristic, which may be considered for different personality of investors.

1) Jardine Matheson Holding – JMH (SGX: J36)

2) Jardine Strategic Holding – JSH (SGX: J37)

Jardine Matheson Holding, JMH is “King” of Singapore stocks (狮城股王), the highest share price in Singapore stock market history. JMH share price was peak around US$70/share a few months ago, before falling by 30% during Coronavirus crisis to about US$50/share. It is costly to invest even with minimum of 100 shares per lot (price in USD) = $50 x 1.43 (USD/SGD) x 100 = S$7150.

Highest stock price may not be always a giant stock, although most of the time, high stock prices are giant stocks, higher prices due to growing business over the decades. For example, world’s most expensive stock, Berkshire Hathaway (NYSE: BRK) managed by Warren Buffett, 1 share alone could be US$344,000 (nearly S$500k, could buy a 5-room HDB flat), currently selling at discount of US$290,000 (for details of Berkshire stock, refer to free eBook by Dr Tee on global Top 10 stocks).

The former Singapore stock king was Creative Technology (SGX: C76) with over S$60/share peak stock price recorded in year 2000 dotcom bubble. After the burst of technology bubble, not only stock price in crisis, Creative Technology also lost the giant stock title, company is no longer growing, share prices declining for 20 years till as low as $1/share. Therefore, long term investing requires monitoring of business fundamental, otherwise buy low may get lower over time, suffering huge capital loss. A common mistake for beginner in stock investing is usually buy a famous brand of stock at historical low price or 5-10 years low, assuming the price may recover in future which may not because future business is the key.

Similarly, during Coronavirus crisis, some sectors are badly affected (eg, airlines, F&B, hotel, etc), an investor needs to review whether the business with losses (more than 90% drop in revenue) could last with cash or net asset available. After the crisis is over, could the business recover quickly?

Jardine Strategic Holding, JSH is sibling of JMH, both are owning each other, a special cross-holding structure which could prevent hostile takeover. See another article of this topic: https://www.ein55.com/2017/03/jardine-group-uob-group-cross-holding-stock-network/

Both JMH and JSH stock performance are very close in longer term (eg over 10 years). Investing in either JMH or JSH is as if investing in Jardine fund of stocks with most the Jardine businesses. JMH has average of 1% higher dividend yield than JSH but JSH has average of about 1% higher yearly growth in share price than JMH, so effect is about the same. More details of JMH in earlier article: https://www.ein55.com/2016/04/choose-stocks-grow-30-times-price/


Both JMH and JSH are considered cyclic growth stocks, need to position with optimism less than 25%, best during global stock crisis or global financial crisis. Due to cyclic nature of these 2 stocks with minimal dividend for protection, it is more suitable for investing during recovery phase of stock crisis, avoid buying low get lower. When positioned right at significant low optimism in a severe global stock crisis, JMH and/or JSH may be considered for longer term holding due to high growth but need to monitor its cyclic businesses to certify that they are giant stocks (based on Dr Tee criteria) as this title of giant stock is not forever, eg. Creative Technology lost this title about 20 years ago.

“Buy Low” could only have chance to “Sell High” in longer term with condition that it is a giant stock. If not, “Buy Low” may become “Lower” in prices.

3) Jardine Cycle & Carriage – JCC (SGX: C07)

4) Astra International (IDX: ASii)

Jardine Cycle & Carriage, JCC is only a subsidiary of JSH but itself is already a giant automotive stock (familiar car brands:  Mercedes-Benz, Toyota, Honda and Kia). JCC also owns Indonesian automotive giant stock, Astra International (listed in Indonesia Stock Exchange).

JMH owns JSH, JSH owns JCC, JCC owns Astra. So, it is as if 4 levels of stock connection but stock performances are close. JMH and JSH could be considered together (either one). Similarly, JCC and Astra may be considered together through JCC (if easier to invest in Singapore stock than Indonesian stock, Astra).

JCC is a dividend growth giant stock (not for Astra), suitable for investing during low optimism stock market, protected by nearly 6% dividend yield (assuming car business drops during crisis, 50% cut in dividend still has about 3% dividend yield left, more than 1% bank interest rate for cash). When crisis is over, likely the growing business will justify for normal distribution of dividend. However, since it is not a REIT (by law needs to distribute 90% taxable income to shareholders as dividend), the company has the right to choose not to give dividend. Over the past 10 years, JCC has record of giving around 3% dividend yield, current high dividend yield of nearly 6% is mainly due to price dropped by about 50% over the past few months of global stock crisis, therefore dividend yield is doubled from 3 to 6%.

If one believes the Coronavirus crisis or any future crisis are unlikely to stop people from buying cars more than 1 year (eg. could not get out of home for 1 year to view the cars in showroom), then crisis in JCC stock prices could be an opportunity. However, for Q1-Q2/2020 with less shoppers due to global lockdown, there could be temporary drop in business which may be justified by 50% discount in share price.

5) Hongkong Land (SGX: H78)

Hongkong Land is a well-known property stock, owning grade-A commercial properties in both Hong Kong central and Singapore marina area. There are quite a few past articles by Dr Tee on Hongkong Land (https://www.ein55.com/tag/hongkong-land/), mainly an undervalue property stock. However, over the past few years, buy low may get lower as Hongkong Land is not only following Jardine group, also affected by Level 2 property sector (Hong Kong / Singapore) and Level 3 stock property, as well as political economy (eg. over 100 days of Hong Kong protesters last year before Coronavirus crisis).

Among all the 7 Jardine giant stocks, Hongkong Land is the “safest” due to property asset selling at over 70% discount (price to book ratio, PB, is less than 0.3). The high dividend yield of 5% (eg from property rental) is a bonus for long term investor of Hongkong Land, providing passive income (even if 5% dividend yield is cut by half for next 12 months, still suitable as defender), no issue even if “crisis” of any form (protester, virus, etc) may last more than 5 years. During Coronavirus crisis, tenants of property could lose money due to less shoppers but landlord (Hongkong Land) still could collect stable rental.

Mid-term risk of Hongkong Land could be high property valuation in Hong Kong may not be sustainable if the average 20 years property cycle of Hong Kong falls from high optimism. So far Coronavirus only affects global stock markets and badly affect business of certain sectors, but not yet on property sector. Even so, long term outlook for Hong Kong and Singapore property sectors are steady gradual growth as a country surrounded by sea with limited land but nearly unlimited future population (both has the top 10 highest population density in the world with growing economy for decades) would support the growing property prices in decades to come.

In short, investing in Hongkong Land stock is an investment in Singapore and Hong Kong countries through as integrated stock and property markets.

6) Mandarin Oriental Hotel (SGX: M04)

Mandarin Oriental Hotel is not only a hotel in Singapore, it has many hotels globally. During Coronavirus crisis, hotel (hospitality sector) is badly affected. So, investor needs to monitor Q1 and Q2/2020 results of Mandarin Oriental Hotel before making decision.

Mandarin Oriental Hotel is a marginal giant stock, the weakest among 7 Jardine stocks. Even before Coronavirus crisis, business fundamental has been declining. Despite 60% discount in hotel asset with PB of 0.4, Mandarin Oriental Hotel is not as valuable as Hongkong Land.

For short term or mid-term cyclic trading strategy, this stock may be considered if there is a strong reversal in price trend, especially when Coronavirus condition may improve but risk is relatively higher than other 6 Jardine stocks.


7) Dairy Farm International (SGX: D01)

Dairy Farm is famous of its supermarket and consumer business (Wellcome, Cold Storage, Seven Eleven, IDEA, etc) in Hong Kong, Singapore and regional countries. During Coronavirus period, supermarket business should perform better (see how crowded when lockdown was announced) as is a consumer staples business, people still need to eat and drink, if they could not go out from home.

However, before Coronavirus crisis, Dairy Farm only has average business performance. It even sells some its seven eleven stores. It has stable dividend payment record, about 4% yield currently, possible to position as midfielder role. Competitor supermarket stock, Sheng Siong (SGX: OV8) performs better than Dairy Farm for business and stock prices. Sheng Siong has recovered the “losses” in stock prices as business is doing too good during Coronavirus period. Sheng Siong is only a young giant stock but does well in the current global stock crisis, having potential to be a true giant stock in future with more proven record.

Therefore, not all sectors are affected by the same crisis. Investor may explore stocks with stable businesses, leveraging on market fear to ask for over 20% discount in those growth stocks. Crisis is Opportunity when stock prices fall due to fear but business is still strong. Crisis is crisis when stock prices fall mainly due to weaker business.

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In summary, all 7 Jardine stocks are giant stocks at low optimism. However, the stock prices have been bearish for a few years, undervalue asset becomes more undervalue each year. Therefore, these Jardine stocks may not possible for traders without strong holding power as buy low may get lower in short term to medium term, unless there is a clear reversal in stock prices to uptrend again.

For long term investors who apply undervalue investing may consider Hongkong Land and Jardine Cycle & carriage stocks which pay over 5% dividend yield (but assume this amount may be cut by 50%). For very conservative investor, Hongkong Land with over 70% discount in asset value (PB < 0.3) is another strong consideration, even if Hongkong Land could not survive the unlikely Great Depression (<5% chance it may happen), investors may not lose the capital due to high safety of margin.

Strategies for investing in Jardine group is similar as other giant stocks at low optimism, multiple entries, eg 1, 3 or 5 “bullets” of capital, first entry at low optimism < 25%, subsequently optional entries could be either downtrend (5-10% lower, average down for investing) counter-trend investing or uptrend (5-10% higher, average high for trading) follow-trend trading if optimism is still less than 25%. It is fine if only 1 “bullet” (1 entry) is triggered (eg. stock market has V-shape recovery), future may follow short term or mid term trading for actions, to be reviewed again.

Sharing above for 7 Jardine stocks are for educational purpose (almost spend 1 day of Dr Tee valuable time writing this long article, hope it is an useful reference for readers). Please make your own decision with independent thinking. If you could read until this sentence, implying you have the determination to learn and apply stock investing.

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Temasek Dividend Stock Singtel (掌上明珠)

Posted on April 1, 2020 Written by
Temasek Dividend Stock Singtel

Temasek invests in about 40 global stocks, the largest investment by market capitalization is in Singtel (52% shareholding), jewel in the crown. Singtel (SGX: Z74) is not just the fixed deposit of Temasek (through consistent dividend payment for decades), also cash generator for over 1 millions Singaporeans who are Singtel retail investors, the most popular stock in Singapore.

Over the past few years, due to competitive global and local Telco industry (eg. new player TPG in Singapore, uncertain regional markets), despite Singtel is more defensive than other peers, share prices has dropped by half from the peak of $4.40 to $2.28/share (about 30% price dip was over the past 2 months of global stock crisis). This is relatively stronger compare with local competitor Starhub (SGX: CC3) with share prices drop to about 1/3 of peak price. Even M1 was acquired and delisted during this period. TPG is listed in Australia (ASX: TPM), share price has also dropped by half over the past few years.

So, this is not Singtel stock crisis (Level 1 – individual stock), rather, it is Level 2 crisis (Telco sector) and even Level 3 crisis (country level – Singapore and most Asian stock markets).

Singtel is not just a Telco giant of Singapore, also a major regional Telco in Asia Pacific (Australia, India, philippines, Indonesia). It has diversification geographically, but also suffer uncertainty in each country (eg. legal cases in Thailand and India which affect its last few quarters of earnings).

Telco industry used to be a defensive sector as usually only a few licenses are given in each country for Telco operators, nearly a sure-win oligopoly business. Introduction of smart phones in 2000s, following by 3G, 4G, etc, has helped Telco industry to grow further over the past 2 decades. The yearly capex (difference of operating cashflow and free cashflow) is usually stable, therefore Singtel’s consistent earnings have contributed to stable free cashflow, eventually predictable dividend payment 2 times yearly to shareholders for decades, about 4-5% average dividend yield over the past 10 years, better than fixed deposit interest rates of 1-2% in banks.

With recent global stock crisis, Singtel share price has dropped to 11 years low, approaching the last low recorded in 2009 global financial crisis. Singtel will announce 2020 final year report (financial year ending 31 Mar 2020) in a few months time but results are predictable to be much weaker than last year due to losses in Bharti (India investment) and weaker earning over the past 2 quarters (especially with Coronavirus).

Singtel is defensive partly because it is a major Telco operator, price competition could affect its earning but few people may terminate the mobile phone lines in this internet era. During global financial crisis, perhaps some people may cut 3 meals into 1 meal to save cost but likely will still keep the phone line which is the meal of “soul’.

This implies despite Singtel has more downside in both business (especially for the coming 2020 annual report) and stock prices (especially if Coronavirus is beyond control, resulting in global financial crisis), it is unlikely the company would go bankrupt with share price dropping to $0. Singtel is a dividend giant stock, current dividend yield is nearly 7%. Assuming the earnings, cashflow and dividend available may drop by 50% (due to 1-time loss in Bharti), there is still 3.5% dividend yield.

Singtel Z74 SGX Historical Stock Price

An investor who is interested in Singtel may apply progressive entries at low optimism level, eg 5 times x 20%. Assuming $2.50/share is the first trigger at low optimism. and investor may consider (just a sample investing plan, not a personal financial advice, please make your own decision):

$2.50 or $X – First Entry (Level 1-3 crisis)

$1.50 or $Y – Second Entry (Level 4 crisis)

$0.50 or $Z – Third Entry (Great Depression, when people cut from 3 meals to 1 meal, still cannot survive, Telco is no longer important)

Assuming 3 levels of crisis happen, average price will be $1.50/share over 3 entries. Investor may also consider these prices after it drops to bottom and recover again (uptrend), no need to suffer with falling prices in bear market. The strategy is personality dependent, counter-trend (contrarian investor) and/or follow-trend (trader mindset).

Singtel may remain at low optimism (below $2.50/share) for several years, investors could collect >3% dividend yield (pessimistic assumption) during the winter period of crisis. This way of averaging method (investors may define own $X, $Y, $Z prices above, the sample prices given above are just for example purpose).

The strategies above may be applied for any dividend giant stock. There are about 100 global dividend giant stocks (you may learn the strategies from Dr Tee in 6 days comprehensive course or note down a few sample stocks in free 4hr workshop for the public), some are much stronger and more stable than Singtel. In fact, Singtel is slower in growth, more suitable for dividend investing (as if fixed deposit in stock market) at low optimism but may not suitable for growth to achieve higher capital gains.

There are many ways to make money in stocks, may not be investing, could be trading (higher probability is shorting for current stock market but risk is high due to high market volatility). It is possible for short term trader to short at bearish Telco stocks (may not be Singtel) to profit from the falling prices, especially when breaking below a critical price support, driven by fear of declining business and global events (Coronavirus, etc). So, it is possible for different persons to take different actions (Buy, Hold, Sell, Wait, Shorting) and all could make money in stocks if strategies aligned with personalities and market conditions.

There are at least 26 Temasek / GLC stocks in Singapore including Singtel, controlling shareholder with 15% or more ownership directly or indirectly (investor needs to focus only on giant Temasek stocks):
Singtel (SGX: Z74), DBS Bank (SGX: D05), ST Engineering (SGX: S63), Singapore Airlines (SGX: C6L), SIA Engineering (SGX: S59), Singapore Exchange (SGX: S68), SATS (SGX: S58), Sembcorp Industries (SGX: U96), Sembcorp Marine (SGX: S51), Olam (SGX: O32), CapitaLand (SGX: C31), CapitaLand Mall Trust (SGX: C38U), CapitaLand Commercial Trust (SGX: C61U), Ascendas Reit (SGX: A17U), Ascott Hospitality Trust (SGX: HMN), Ascendas Hospitality Trust (SGX: Q1P), CapitaLand Retail China Trust (SGX: AU8U), Ascendas-iTrust (SGX: CY6U), Keppel Corp (SGX: BN4), Keppel Reit (SGX: K71U), Keppel DC Reit (SGX: AJBU), Keppel Infrastructure Trust (SGX: A7RU), Mapletree Logistics Trust (SGX: M44U), Mapletree Commercial Trust (SGX: N2IU), Mapletree Industrial Trust (SGX: ME8U), Mapletree NAC Trust (SGX: RW0U).

Temasek stocks portfolio also affect about 15% of STI index stocks, which has strong impact on Singapore stock market. Here are 30 STI component stocks:
DBS Bank (SGX: D05), Singtel (SGX: Z74), OCBC Bank (SGX: O39), UOB Bank (SGX: U11), Wilmar International (SGX: F34), Jardine Matheson Holdings JMH (SGX: J36), Jardine Strategic Holdings JSH (SGX: J37), Thai Beverage (SGX: Y92), CapitaLand (SGX: C31), Ascendas Reit (SGX: A17U), Singapore Airlines (SGX: C6L), ST Engineering (SGX: S63), Keppel Corp (SGX: BN4), Singapore Exchange (SGX: S68), HongkongLand (SGX: H78), Genting Singapore (SGX: G13), Mapletree Logistics Trust (SGX: M44U), Jardine Cycle & Carriage (SGX: C07), Mapletree Industrial Trust (SGX: ME8U), City Development (SGX: C09), CapitaLand Mall Trust (SGX: C38U), CapitaLand Commercial Trust (SGX: C61U), Mapletree Commercial Trust (SGX: N2IU), Dairy Farm International (SGX: D01), UOL (SGX: U14), Venture Corporation (SGX: V03), YZJ Shipbldg SGD (SGX: BS6), Sembcorp Industries (SGX: U96), SATS (SGX: S58), ComfortDelGro (SGX: C52).

Temasek has 40 stocks in the global portfolio, about half are giant stocks (based on Dr Tee criteria). Singtel is Temasek’s largest investment but not Temasek’s best giant stock. An investor may invest in the Top 3 Temasek giant stocks, buying lower than Temasek (hopefully with help of global stock crisis), selling higher than Temasek (if timing is right). Even the stock with business may be in trouble (eg. Olam previously, SIA currently), Temasek is a strong sponsor, likely will help if having significant investment.

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Actions on High Dividend Blue Chip Stocks (Example on Singtel)

Posted on July 21, 2018 Written by
High Dividend Blue Chip
The decision to buy high dividend blue chip stocks (eg. 5-6% dividend yield for Singapore Telco and REITs, etc) depends on 3 main strategies which have to be aligned to 3 personalities.
 
Here is an example of Singtel (SGX: Z74), a strong blue chip in Singapore, current share price at $3.31, falling nearly 25% from $4.30 / share since a few years ago, dividend yield is about 5.3%, Optimism is 28%. Let’s learn to take action (Buy / Hold / Sell / Wait / Shorting) based on different unique personality.
 
1) Trader for short term capital gains
– Singtel share price is still a falling knife (although not as sharp as M1 and Starhub which dropped more than 50% in share prices) in short to medium term stock prices, therefore may not yet a good buy for traders who need support of strong uptrend. Singtel share price is affected in short to medium terms by Level 4 (global stock market weakness), Level 3 (weaker Singapore STI index) and Level 2 (bearish Singapore Telco sector, including Starhub and M1), despite the Level 1 business is still strong for Singtel. Although current short term bearish stock market supports shorting (profit from falling price), usually a stable dividend stock with strong fundamental may not be a good choice for shorting.
 
Possible Action: Wait.
 
2) Investor for long term capital gains
– Possible to be a contrarian investor to buy low for Singtel (it was less than 25% Optimism when price is nearly $3, even it may get lower in share price, long term holding would have high chance of winning. The concern is more on short to medium term share prices correction, especially global / US stock market is still at high optimism, there is a potential threat of global financial crisis, it may not be wise to hold a stock unless it is defensive with high growth in nature. Singtel is considered a defensive stock but a slow growth stock.
 
Possible Action: Wait.
 
3) Investor for long term passive income
– Since the objective is to collect dividend, falling in share prices have exchanged for higher yield for Singtel (5.3% currently). Singtel fulfills the criteria of a dividend stock with stable business (despite slow growth) with stable free cashflow and consistent dividend payment. The critical consideration for passive income investor is on the overall return. If one has $100k capital, is it satisfied to get $5.3k annual return (regardless of up and down in share prices)? What if Singtel share price drops further, yield goes up to 8%, will an investor regret of not able to get $8k dividend? So, the decision depends on reward expectation or greediness of an investor. If compares with bank interest rate (1-2%), property rental (2-3%), even current moderate yield of 5-6% dividend stocks are considered better. In general, the spread between yield of blue chip dividend stocks (5-6%) and risk-free investment (eg. 4% for CPF, 2% for Singapore Saving Bond) is narrow. The trick is on capital allocation, maximize the yield by entry in phases. It means if one could not hold the capital with little return in bank deposit, it is fine for investor to consider 5-6% return (ignoring the share price could drop by the same amount in certain week) with partial capital. Bulk of capital may be reserved for higher yield return aligning to the next global financial crisis
 
Possible Action: Buy (partial capital only) or Wait
 
It is clear by now there could be different possible actions for the same stock because the right decision has to be aligned with own personality, eg. holding for short term trading or long long term investing, aiming for capital gains or dividends or both, reward expectation and risk tolerance level, etc.
 
Learn from Dr Tee to learn 10 different stock trading and investing strategies (including high dividend blue chip stocks as a strategy), aligning with 10 unique personalities. 
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