Wednesday, November 07, 2007

Entered Singpost

STI didn't do too well despite Dow closing up 117 points yesterday. Today it was down by 10 pts to close at 3673 points, with a volume of 2.17 billion, despite a wonderful morning showing.

Oil and gold is hitting record high. Gold is a safe haven for investors if they wanted another place to park their cash instead of the stock market. Oil prices at record high should spell good news for alternative energy stocks (look at indoagri, golden agri and wilmar today). Difficult times ahead it seems.

Had a wonderful discussion with HH and Charlesming over at the chatbox today. This is one of the most fruitful discussion I had and I learnt a couple of things that i would like to share here:

1. There are a lot of ways to make your money grow. I learnt from charlesming that besides the usual savings account (which pays a miserable 0.25% per annum) and fixed deposit (a little higher but still miserable at 1.8% per annum), there is also another way to deposit your money. It's actually fixed deposit but using another currency. I verified that some of currency pays interest rate ranging from 3% to 7%, so just compare this with SGD Fixed Deposit! Those currencies which pays a greater interest are australian dollars and new zealand dollars. But of course, the risk is that the currecny pair might devaluate more than the interest rate you earn. That's why I think for short tenure of 1 to 3 mths (even 6 mths) I think it's perfectly fine. Currency don't change that much unless something drastic happens.

2. Learnt from HH that defensive plays that pay good dividends can provide a good investment returns. A run through the stock selection at poems gave me a few stocks that have dividend yields of 5 to 15%. But of course, for such income play, the stock must ideally be less volatile, even illiquid :) If the dividend payment is consistent and increasing over a period of say 5 years, that's even better. Reits could be another such income stocks that I totally ignored out of ignorance (and fear).

3. Mutual funds is another thing that my friend LS introduced to me. I recently went through fund supermart to take a look at some of the offers that have and was suitably impressed. There are a wide variety of asset classes that the fund can represent - bonds, commodities, equities (in different region as well), so this could be another area I might be looking at. One thing for sure - don't buy funds from banks - it's a con job! My gf's relative got sweet-talked into buying a bond fund that is correct losing money (lost 2k out of 20k - 10% losses!). That is the catalyst that made me want to find out more about such funds. I want to help them.

4. ILP - this one i already know. I never liked ILP. Interestingly, my catalyst to find out and enter the stock market came AFTER I bought a life plan from my agent. He wanted to sell me an ILP but last minute, I dropped out. This set me thinking if my choice is good or not. At the same time, I wanted to really invest for myself instead of relying on other professionals. I wanted to make informed choices about stocks which I knew nothing about back then. I want to learn, not pass the learning over to them using my money. I never looked back since despite my 2 big losses - 18k losses last year and 30k losses this year (which thankfully I had recovered)

Oh my, received news that Jiutian had a 12.1% drop in profits because earnings dropped. Hmm...Fri have show to see.

I bought 5 lots of singpost at 1.18 today. There are 2 such chances to enter at this price when it experienced huge selldown by 2 angmoh houses - Merrill Lynch and Morgan stanley. At certain times of the day, they are throwing out huge lots (250 lots) in intervals to press down the market. But singpost isn't called defensive play for nothing - the price went back promptly up despite the huge selldown (twice as heavy volume averaged over 50 days).

Merrill lynch (ML) sold quite a lot of counters today. I saw from other threads in cna forum that they are dumping china fishery too, but buying up all the 'agri' stocks - golden agri, indo agri and wilmar. Their selling might have nothing to do with anything but fighting the fire in their own backyard due to the subprime losses. Not sure about that.

Singpost is resting at support level of 1.18, though in practice I think the support level is more like 1.190, judging the fierce fighting in over that price. If it fails to support the price, it'll drop, probably finding relieve at 1.14 or a stronger one at 1.10. It's quite unlikely to me, from other indicators. The next time I would add is near 1.10.

After I bought, I went to read up more (haha, I always do action first and thinking later, tsk tsk) about its dividend policy. They are committed to paying a dividend of at least 5 cts per share and their policy is to give a total annual net dividend of 80 to 90% of its net profit, whichever is higher. The payment is made on a quartely basis and a special dividend on the 4th quarter (if any). Works out to be 1.25 cts per quarter to make up at least 5 cts per share per annum.

Dividend history:
FY 02/03 - 4.2%
FY 03/04 - 4.2%
FY 04/05 - 5.0%
FY 05/06 - 5.5%
FY 06/07 - 6.25%

They have been showing consistent growth over the past 4 years, just take a look at this link to sgx stocks.

Hmm, impressive :)

Europe all red...Dow shouldn't be much better. Tmr STI on holiday, maybe can skip some blooshed then Fri cheong? Haha, my wishful thinking :P


sm@ll.fry said...

Hi lp!

First of all to answer your question, I'm trying to be FA. "trying" 'cos I'm teaching myself by reading and learning from books. Also try to get ideas from blogs like yours! Another reason to the word "trying" is cos I no money lah. So even got ideas also no use! =P

I wanted to response to this post also because of the mention of Singpost. I've been interested in this company for some time, since reading about it from The Edge. Did some calculations back then and found it too expensive. My estimated value is about $0.80, so I did not buy. Just thought I share with you. I also dunno if its a good buy at this price, cos not forgetting its a very defensive stock with a near monopoly in its business and growing in other segments! Beauty in eye of the beholder bah! Best wishes to your investments!


la papillion said...

Hi fishman,

How did you value singpost to be 80cts? Which method did you use? Care to share?

I haven't tried valuing it yet (i dunno how) :)

sm@ll.fry said...

Hi lp,

sure I'd lover to share. It's actually in my blog. I left an entry there. It's titled "Valuation Excercise of SingPost", dated 9th sep 2007.


Musicwhiz said...

Hi la papillion,

Merril Lynch selling China Fish all this time ? Haha that's what I heard on CNA forums but this cannot be verified. Anyhow that gave me the chance to buy this fish cheap, and PAH has been buying it as well. :)

Cheers, Musicwhiz

Jon Sigurdsson said...

Thanks for the heads up

Australian Shares to Buy