Friday, January 15, 2021

Wisdom of the Crowd - New Issues


1. How do you find the postal service in Singapoe?

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WOTC - America's role as a global leader

 Wisdom of the Crowd: 86% of the respondents have a negative opinion about America's role as a global leader.

WOTC - Opinion of President Trump

Wisdom of the Crowd: 79% of the respondents have a negative opinion about the President Trump during his four year term.

Subscribing to the Lippo Mall rights

I did not receive any information about the process of subscribing to the rights.

I sent an email to inquire with Central Depository (i.e. Singapore Exchange).

Soon after that, I found the letter giving instructions for payment of the rights. I was shocked to see that the deadline had already passed. I missed the opportunity to subscribe for the rights.

Later, I received an email reply from Central Depository that the rights subscription had already closed on 14 January. The letter was supposed to have been sent out at end of December.

It is not enough for CDP to give only 14 days between the mailing and the deadline.

In recent years, it takes many days for mail to arrive by post. There are many cases where mail were delivered to the wrong address.

In my specific case, I was not sure when the letter did arrive. It might have arrived earlier and I missed it. It may have arrived after the deadline.

We should now move towards electronic mail, rather than rely on paper mail.

For this rights issue, the price is the same as the mother shares. So, I could have bought the shares from the market at the same price.

But in most cases, the rights price is at a discount to the mother share. It could have caused a big financial loss to the shareholder who missed the rights issue.

Review of my investment in Hong Kong Land

 Hong Kong Land (H78.SI) is listed in Singapore (in USD) and in London. It is also listed in London. It is not listed in Hong Kong.

HKL has about half of its assets in Hong Kong (mainly in prime commercial properties). The other 50% is in prime commercial property in Singapore and Jakarta.

I became interested in HKL when I found that its price to book is 0.25. The price of the share shows a discount of 75% from the asset value.

It has a trailing PE of 48 times and a forward PE of 10 times. Its forward dividend yield is 2.6%.

I bought 30,000 stock at an average price of US$4.63. At the lowest point on 18 May 2020, the price as $3.52. I had a paper loss of $33,300. I ignored the loss and kept the stock because of its large discount to the asset value.

The stock moved up 25% over the past three months and is now at $4.65. My paper loss has fully disappeared.

I expect the stock to move up towards its value (which I project to be $6.50 i.e. 40% of the asset value). At that price, the PE ratio would be 14 times and the dividend yield would be 1.9%.

Is it safe to take the Sinovac vaccine?

 There is a news report that the Sinovac vaccine from China has an efficacy rate of 50.4% based on a trial in Brazil. This finding is preliminary and may be revised when more data becomes available.

If it remains at this efficacy rate, is it safe to take the vaccine?

The answer is - yes. The Sinovac vaccine uses traditional ingredients and should be safer than the vaccines using new methods.

If the Sinovac vaccine did not work to stop the covid virus, the person can take another vaccine at a later date.

My strategy on Singapore REITS

 I had $700,000 invested in Singapore REITS.

I have started to sell $500,000 of the REITS and to keep $200,000.

My reasons are:

a) The REITS now have an earning yield of about 4% but they pay a dividend of 5% (probably due to the higher revenue from past years).

b) I expect the earnings for 2020 (to be announced in 2021) to fall by 20% to 40% due to the impact of the lockdown (i.e. circuit breaker) imposed to control the spread of the covid infection. This is likely to result in a similar fall in the price of the REIT.

c) Some of the REITS have a price that is higher than the asset value per stock. This is grossly over priced. The asset value is likely to be revised downwards over the next two years.

Some of the property stocks have a price that shows a discount of 50% to 75% on the asset value. I prefer to invest in these stocks, rather than the overpriced REITS.

My investment in US growth stocks

 My biggest investment in US growth stock was in Tesla (TSLA). I invested in the stock when it was at a modest price. I was convinced about the potential for this stock. I did not invest in it because it was "growth stock".

My investment in this stock has been spectacular. I must have made (and realized) a profit of over $300,000 USD over the past year. I have now sold all my holdings in this stock.
During the past month, I have invested in three other growth stocks, namely Nano Dimension, Bionano Genomics and Cryspr Therapeutics. I invested about $60,000 USD in each stock.
I found these growth stocks because they were actively covered by investment bloggers who were trying to build a YouTube channel. They produce a 5 to 15 minute video to explain the stock and why they were excited about its potential.
I watched a few videos on the same stock produced by different bloggers. I find their research to be useful. I make my own decision in these stocks.
I have sold off all my holdings in these three stocks and made a realized gain of $100,000 USD.
I want to reduce my exposure in case there is a market crash or civil commotion in the United States. I may buy back these stocks at a much lower price.
I find my approach in identifying the growth stocks to be quite reliable. After the market correction, which I hope will happen soon, I may come back to invest in these stocks.

Analysis of REITS owned by TKL

 I owned the REITS shown below.

All of them have a dividend yield of about 5%, which is attractive.

However, I expect the dividend to be cut by at least 20% in 2021, due to the impact of the circuit breaker. Many tenants of the retail malls are not able to pay their rent or have closed their operations.

It is likely that the prices of the REITS will also fall in line with the cut in dividend.

Some of the REITS have a price to book of over 1.0. This means that the price for each unit is higher than the asset value. I will be selling these REITS first. However, the price decline may affect the other REITS as well, i.e. those with price/book lower than 1.0.

Most of the REITS have a price earning ratio of more than 20 times. This implies a earnings yield lower than 5%. The current yield is not sustainable, even if the revenue is not reduced.

Thursday, January 14, 2021

Invest in broad based ETF

 An individual should invest in an exchange traded fund (ETF) to enjoy exposure to the blue chip shares that are included in the market index. An ETF usually has an expense ratio that is less than 0.5% per annum.

I present below the ETFs that are popular with individual investors in Singapore. They track the S&P 500, Nasdaq, China stock and Singapore stock.

The 1 year return of the Nasdaq was the best. However, the PE ratio of the component shares are at a high level.

The 1 year return of the S&P 500 and the China stocks are around 20%. They are quite attractive.

The 1 year return of Singapore stocks have been disappointing.

My investment in Capitaland

 I hold 60,000 Capitaland stock at an average cost of $3.143. The total investment is $188,000.

The stock price was $2.50 at the lowest point on 2 Nov 2020. I held on to the stock as the price to book was around 0.5. The stock was trading at a discount of 50% on its asset value.

The price went up 37% over the past two months to $3.43 today. My holding now show a gain of 10% or $18,500 over my cost.

I have decided to reduce my holding as it has reached its realistic value.

Wisdom of the Crowd - New Issues

 1. Is it wise for Congress to impeach President Trump?

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WOTC - Response to the covid-19 pandemic

 Wisdom of the Crowd: 71% of the respondents had a negative opinion of the government response to the covid-19 pandemic.

WOTC - Look after the interest of the people

 Wisdom of the Crowd: 96% of the respondents had a low opinion of the ministers in looking after the interest of the people.

My investment in Nano Dimension

I invested on several occasions in Nano Dimension (NNDM). At the peak, my holding was 15,000 stock (invested sum $120,000 SGD). I bought and sold the stock on several occasions in December and January.

My total realized gain on this stock for the past six weeks was $64,500 USD. At present, I have sold off all my stocks. I get to know about this company by watching the investment videos on YouTube. Several producers covered this stock. These videos give me a good insight into the business of the stock and the reasons for its volatile price movements. I watched several videos and make my decision about the price to enter and to exit the stock. I produced a PowerPoint to explain this process. If you are interested to attend my talk, you can register here. I may buy this talk again at a lower level.

Wednesday, January 13, 2021

My investment in China Railway

 I bought 150,000 of China Railway (0390.HK) stock at an average cost of HK 3.56 during the past two months.

The stock had a low price earning ratio of about 3.6 times and a dividend yield above 5%. The price in HK exchange showed a big discount of 43% compared to the price in Shanghai.

The price dropped slightly after I bought them and did not move much for more than a month. I held on to the stock for its attractive dividend yield and low PE ratio.

The price was at $3.35 on 4 January 2021. Over 10 days, it increased 14% to $3.85. I expect it to move up further.

Wisdom of the Crowd - New Issues

1. Will the inauguration of President Biden on 20 January be peaceful?

2. The media blamed President Trump for the riot at the Capitol on 6 January.

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WOTC - High speed rail to KL

 Wisdom of the Crowd: 78% of the respondents welcome the cancellation of the High Speed Rail between Singapore and Kuala Lumpur.

Wisdom of the Crowd: 86% of the respondents said that Singapore and Malaysia should act urgently to reduce the time taken for clearance at the checkpoints.

WOTC - Clearance at checkpoints

Wisdom of the Crowd: 86% of the respondents said that Singapore and Malaysia should act urgently to reduce the time taken for clearance at the checkpoints.

Problems with Health Hub app

Tuesday, January 12, 2021

International funds may move to emerging markets

 I have $800,000 invested in China blue chip stocks traded in Hong Kong. It now show a loss of about 5%. I get a dividend yield of about 5% per year, so it sets off the capital loss.

I expect the China stocks to move up significantly in 2021. These stocks have been undervalued by more than 50% compared to similar stocks in America. When the international fund move back into the emerging markets, which include China market, the under-valuation should be reduced or eliminated.

This would give a potential upside of 50% to 100%.

I have already seen several of my invested stocks move up by 5% to 10% during the past two weeks. I get a gut feel that this is the start of a longer term trend.

The below chart shows the price trend of the China ETF (MCHI) over the past year. It tracks the blue chip stock in China. The ETF had appreciated about 24% over the past year.

I bought the blue chip stocks traded in Hong Kong. It showed a discount of about 30% compared to the prices in China. These HK listed stock may not show the appreciation of the stock listed in Shanghai. I believe that this discount will decrease in 2021. It is likely to move up to catch the prices in Shanghai.

China blue chip shares quoted in Hong Kong

 I have been following several China blue chip shares quoted in Hong Kong. They are undervalued as the stock prices fell during the past two years.

Most of these stocks have low PE ratio (less than 7 times) and good dividend yield (4% or higher). The prices are at discounts of more than 50% compared to similar stocks in America.

I believe that the stock prices will recover strongly in 2021. Several of these stocks have already made impressive moves since the start of this year.

I have invested in all of these stocks.

Review of my investment in Alibaba

 I invested $166,000 (SGD) in Alibaba (BABA, 9988.HK) during the past two months. The current value of my stock is $166,000. My loss (realized an unrealized) is $23,000 or 13% of my invested sum.

Alibaba stock price dropped 29% from a high of $319 to $228 USD due to the following factors:

1) Suspension of IPO of Ant Financial
2) Draft anti-monopoly law presented by the government
3) The government investigated Alibaba for possible monopolist practices
4) Report that the founder Jack Ma had been missing from public view for the past three months
5) Possible delisting of Alibaba from the US exchanges in 3 years time, if it does not conform with US audit requirements.

I view that all these measures are temporary and will be sorted out over the next six months.

I will hold my existing position (and maybe add more due to the under-valuation).

The current price earning ratio of BABA is 24.42 compared to 91.05 for Amazon (AMZN). Both companies have strong business fundamentals. BABA is undervalued by 73% compared to AMZN.

The average 1 year price target for BABA is $330. This is 44% higher than the current price. I think that this target is realistic.

Update on Gilead Science - good news

I have a large investment of $104,000 USD in Gilead Science (GILD). It is now showing a loss of 22% or $22,600.

I bought this stock when the US and several other governments approved the remdesivir drug for treatment of covid-19. The subsequent reports on this drug was not great. Many investors sold the stock. I kept the stock because it has a good dividend yield of 4.31%. However, the price earning ratio is rather high. I just saw a good news for this stock. The news has not been reflected in the stock price yet. I will monitor the price closely over the next few days.

 Wisdom of the Crowd:

How do you describe Singapore's response to the covid pandemic?

Here is the answer:

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