Today Soilbuild announced a delisting offer by major shareholder at 0.80. For the past few trading session, I noticed a sudden surge on share price. This proves again market know what is going to happen next. Maybe those familiar with the deal have already buy in advance.
One less good stock to buy. It is in my watch list, waiting for a lower entry point. The company average ROE more than 20% for the past few years and is on track for recurrent income which could give yield up to 5%. It is a good stock, major shareholder thinks that it is cheap to take it private now rather than later.
We might be seeing more such deal or M&A coming.
Tuesday, 21 September 2010
Sunday, 19 September 2010
Excited about ADR trading on SGX
The past few months haven't been easy on me, I was very busy with work. It will be even so in the coming months. However, this didn't stop me from reading and thinking about investment. I guess I was too obssesed in finding good company. Nevertheless, the stock hunt is coming to the end as I have a list of stock that I am interested and following.
The big news last week is about ADR trading on SGX. It is coming in Oct. The details are not known yet. Just the news itself already make me excited. Now, it is possible to buy the China growth without incurring the broker custody fee. The unknown to this assumption is how SGX will charge on holding the ADR. On short term, currency is also a risk.
Cost aside, the primary reason I am excited is because now you have a chance to buy the premier growth company. I scanned through the list, not that interested in the more prominent one like Baidu or Petro China. This interesting stock - ctrip.com caught my attention. The company is the leader in China online hotel and travel booking. However, the stock is not cheap, it is selling at USD 43.21 on PE 52.
52 looks like a crazy number to me. But, business look interesting to warrant a follow up. The most important part of ADR trading is the convenience. Valuation is a separate consideration.
The big news last week is about ADR trading on SGX. It is coming in Oct. The details are not known yet. Just the news itself already make me excited. Now, it is possible to buy the China growth without incurring the broker custody fee. The unknown to this assumption is how SGX will charge on holding the ADR. On short term, currency is also a risk.
Cost aside, the primary reason I am excited is because now you have a chance to buy the premier growth company. I scanned through the list, not that interested in the more prominent one like Baidu or Petro China. This interesting stock - ctrip.com caught my attention. The company is the leader in China online hotel and travel booking. However, the stock is not cheap, it is selling at USD 43.21 on PE 52.
52 looks like a crazy number to me. But, business look interesting to warrant a follow up. The most important part of ADR trading is the convenience. Valuation is a separate consideration.
Saturday, 18 September 2010
Long term share investment is about compounding growth
The primary reason for people wanting to trade stock is to buy low sell high. So, they can earn the price difference. Market is driven by greed and fear. Many people made wrong decision because of emotional factor, which causes them to sell low and buy high.
Buying stock is different from buying things from supermarket. In supermarket, everyone has a benchmark on the value of goods, you will buy if the item is on sale, the price is now lower. Stock price is different, when the price is low, people are afraid it will fall further. This is because of the fear factor. On the other hand, if your favourite stock is going up each day, sooner or later you will get sucked into the rally and buy it too high.
How do we avoid that? We need to have a mental framework of establishing the value of stock. Once you have a benchmark on what price this stock is worth. When it is selling below the benchmark, you can take time to accumulate. When it is selling way above the benchmark, you can take time to unload it.
My colleague was asking me what share to buy every day. However, she doesn’t have much capital and want to make quick bucks. I said I don’t know how to do it. I have no idea what price this share will sell tomorrow and day after. She missed the point – we know buy low sell high will make money, but who can do it consistently? Not many.
Buy and sell too frequently will not get you too far. The attractiveness of long term investing is good company takes time to evolve and outperform. In my opinion, this is the essence of stock investing or rather you call it business investing. If you have bought a wonderful business that can grow your money at above average rate every year, the ideal time frame to hold it, is forever.
That’s what I am trying to say in this post. You keep good stock for long term and let the compounding effect work its wonder. If the business can achieve return on equity over 20% a year, just be patient, compounding takes time. Eventually you will find that your investment has grown to a big amount that you dreamed for.
Buying stock is different from buying things from supermarket. In supermarket, everyone has a benchmark on the value of goods, you will buy if the item is on sale, the price is now lower. Stock price is different, when the price is low, people are afraid it will fall further. This is because of the fear factor. On the other hand, if your favourite stock is going up each day, sooner or later you will get sucked into the rally and buy it too high.
How do we avoid that? We need to have a mental framework of establishing the value of stock. Once you have a benchmark on what price this stock is worth. When it is selling below the benchmark, you can take time to accumulate. When it is selling way above the benchmark, you can take time to unload it.
My colleague was asking me what share to buy every day. However, she doesn’t have much capital and want to make quick bucks. I said I don’t know how to do it. I have no idea what price this share will sell tomorrow and day after. She missed the point – we know buy low sell high will make money, but who can do it consistently? Not many.
Buy and sell too frequently will not get you too far. The attractiveness of long term investing is good company takes time to evolve and outperform. In my opinion, this is the essence of stock investing or rather you call it business investing. If you have bought a wonderful business that can grow your money at above average rate every year, the ideal time frame to hold it, is forever.
That’s what I am trying to say in this post. You keep good stock for long term and let the compounding effect work its wonder. If the business can achieve return on equity over 20% a year, just be patient, compounding takes time. Eventually you will find that your investment has grown to a big amount that you dreamed for.
Monday, 6 September 2010
Better US job data send market soaring
Last Friday, US release better than expected job data, this cause the worldwide market to soar. I think economy is a complex system where nobody has exact idea on where it will head to. Sometime analyst or economist is right, sometime is wrong.
Market has been bearish for quite sometime and this could be the exercise for a relief rally. After that, the fear will set in, the invisible hand will focus on the negative side. I listened to quite a lot "expert" analysis on paper or news, market is going to be volatile. On which day it doesn't? The investor is trying to price the risk now, by selling when pessimistic and buying when optimistic.
Where does the long term investor stands here? Exploit the opportunity when it arises. If you are long, time is on your side and market volatility is your friend. It allows you to buy cheap and wait for business fundamental to take over. I am bull by nature, because I believe stock appreciate on the long run and when business is doing better and better.
I don't know where market is going to, you cannot get it right always. I am concentrating in finding good company to invest, and when the opportunity arises, buy on a reasonable price.
Market has been bearish for quite sometime and this could be the exercise for a relief rally. After that, the fear will set in, the invisible hand will focus on the negative side. I listened to quite a lot "expert" analysis on paper or news, market is going to be volatile. On which day it doesn't? The investor is trying to price the risk now, by selling when pessimistic and buying when optimistic.
Where does the long term investor stands here? Exploit the opportunity when it arises. If you are long, time is on your side and market volatility is your friend. It allows you to buy cheap and wait for business fundamental to take over. I am bull by nature, because I believe stock appreciate on the long run and when business is doing better and better.
I don't know where market is going to, you cannot get it right always. I am concentrating in finding good company to invest, and when the opportunity arises, buy on a reasonable price.
Sunday, 5 September 2010
Keep in mind the megatrend
For fundamental investors, some focus solely on the company fundamental and pay little attention on the economy or industry condition. Some will combine the technical analysis or other factor in analysing the company. Although I am fundamentalist, I also take note of the megatrend around us.
A simple example and also my favourite will be China. China is going through the urbanization process and there is no turning back. Through this process, when consumer become more wealthy, they will spend more. China consumer story is my constant favourite. Beside this, China property looks good on the long run. More people living in the city will mean more demand for housing. As more people get richer, the demand for luxury goods or housing will rise too.
Analysts have been talking up the commodity story and emerging market story for past few years. I believe that is true but the timing is quite tricky. Commodity sector has been volatile all the while, I think it make sense to buy only when there is bad news and wait for turn around, buying cheap and keep for longer term. Beside China, Indonesia might have turn the corner, the Asia growth story is very much alive and on track.
Once you have identified the megatrend, what can you do to leverage on it? Buy stocks that are beneficiary of it. For example, China consumer stock, I wish those listed on HK exchange is easily accessible to SG investor. Those strong player like Tingyi and Want Want listed in HK. I am quite reluctant to pay the month custody fee. I observed there is a trend for Indonesia company to list in Singapore. This is an opportunity to the investor here as Indonesia is a big market. Hopefully more quality company will come.
A simple example and also my favourite will be China. China is going through the urbanization process and there is no turning back. Through this process, when consumer become more wealthy, they will spend more. China consumer story is my constant favourite. Beside this, China property looks good on the long run. More people living in the city will mean more demand for housing. As more people get richer, the demand for luxury goods or housing will rise too.
Analysts have been talking up the commodity story and emerging market story for past few years. I believe that is true but the timing is quite tricky. Commodity sector has been volatile all the while, I think it make sense to buy only when there is bad news and wait for turn around, buying cheap and keep for longer term. Beside China, Indonesia might have turn the corner, the Asia growth story is very much alive and on track.
Once you have identified the megatrend, what can you do to leverage on it? Buy stocks that are beneficiary of it. For example, China consumer stock, I wish those listed on HK exchange is easily accessible to SG investor. Those strong player like Tingyi and Want Want listed in HK. I am quite reluctant to pay the month custody fee. I observed there is a trend for Indonesia company to list in Singapore. This is an opportunity to the investor here as Indonesia is a big market. Hopefully more quality company will come.
Sunday, 29 August 2010
Pay for growth
When buying things, we usually compare the price across different shop, hoping to get a bargain. This is not usually the case with stock investing, investor watching the price going up has tendency of catching the train. However, generally the seasoned investor knows when to buy and hopefully buy on cheap.
I was reading extensively recently. In general, I would also like to buy on cheap, but sometime it is not easy to carry out. Good stock will be in hot demand, and it pays to pay for growth. Don't buy cheap, buy value.
I was reading extensively recently. In general, I would also like to buy on cheap, but sometime it is not easy to carry out. Good stock will be in hot demand, and it pays to pay for growth. Don't buy cheap, buy value.
Tuesday, 3 August 2010
Market knows what is going to happen
I was puzzled by Etika share price for past two days, it keep going up for no apparent reason. The answer is out now. Templeton fund is subscribing to the convertible bond that the company issues. The conversion price is 1.05 which is higher than current share price. However, if you look at the long term and potential of the company, it is very cheap. The company is trading at prospective PE of 9. If the earning does grow strongly, my estimate that it is going to worth a lot more.
That's the exciting part of investing in small cap. It is possible to get multi bagger faster if the company is able to grow strongly.
That's the exciting part of investing in small cap. It is possible to get multi bagger faster if the company is able to grow strongly.
Tuesday, 20 July 2010
Bull or bear, where market going to next?
As this juncture, the direction of the market is less clear to most of the people. Some are still fearful for the Europe problem or the double dip situation. They haven't happen yet, but there is still posibility.
As fundamental investor, I am less concern on the market direction. If you know the company you are investing in is doing well. Naturally, sooner or later, the share price will reflect that. However, I am more mindful nowadays on the market direction. I don't want to being caught off guard like the credit crisis time. There is no guarantee it won't happen again and you will escape unhurt, I think it taught me to be careful.
I recognize the direction of the market for coming 3-5 years is up. I am not so worried about the short term fluctuation. Again, there is no guarantee the market will definitely go up, but we have suffered for two years. It is time market adjust back to normal. Overall, I remain positive on the general direction.
I bought C&O Pharm before the dividend go XD. The key selling points to me are
China Pharmaceutical sector is going to continue to do well
The valuation in PE term is not high after you discount the dividend amount
The cashflow is strong and they are likely to keep paying high dividend
There will be new product launch which can open up new revenue stream
Soon, market will forget about the 4 cts dividend it paid out and re-adjust back the share price. The business is stable and has potential to do well in coming years. Giving cash back to share holder also signal management confidence in the company.
The other stock Longcheer I bought months back had a buy call from DBS. The stock is cheap, by any measure. The PE is low, business doing well in and outside China, giving good dividend, they are doing share buy back. The only potential downside is handset design business is very competitive and it might turn quickly. Keep the finger crossed that it is going to do well.
As fundamental investor, I am less concern on the market direction. If you know the company you are investing in is doing well. Naturally, sooner or later, the share price will reflect that. However, I am more mindful nowadays on the market direction. I don't want to being caught off guard like the credit crisis time. There is no guarantee it won't happen again and you will escape unhurt, I think it taught me to be careful.
I recognize the direction of the market for coming 3-5 years is up. I am not so worried about the short term fluctuation. Again, there is no guarantee the market will definitely go up, but we have suffered for two years. It is time market adjust back to normal. Overall, I remain positive on the general direction.
I bought C&O Pharm before the dividend go XD. The key selling points to me are
China Pharmaceutical sector is going to continue to do well
The valuation in PE term is not high after you discount the dividend amount
The cashflow is strong and they are likely to keep paying high dividend
There will be new product launch which can open up new revenue stream
Soon, market will forget about the 4 cts dividend it paid out and re-adjust back the share price. The business is stable and has potential to do well in coming years. Giving cash back to share holder also signal management confidence in the company.
The other stock Longcheer I bought months back had a buy call from DBS. The stock is cheap, by any measure. The PE is low, business doing well in and outside China, giving good dividend, they are doing share buy back. The only potential downside is handset design business is very competitive and it might turn quickly. Keep the finger crossed that it is going to do well.
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