Decade-Fourbaggers In Singapore

(18-09-2018, 10:34 PM)Wildreamz Wrote: What I said about Singaporean corporate culture is purely anecdotal. It's my speculation because I couldn't find many good examples of forward thinking, risk taking companies (whose big bets paid off) in the past 10-20 years.

I could list a few negative examples though.

Comfortdelgro (dividend payout ratio >50%): disrupted by ride hailing apps, change in consumer habits , business model basically unchanged in last 10 years (correct me if I'm wrong)
SPH (dividend payout ratio >50%): https://www.drwealth.com/sph-sgxt39-is-this-the-end/
Challenger (dividend payout ratio >50%): top line basically flat-lined since 2014. I suspect the rise of ecommerce like Qoo10, Lazada, Carousell, Shopee, Facebook Marketplace, has something to do with it.
https://www.fool.sg/2018/08/06/challenge...d-quarter/
Singapore Telcos (dividend payout ratio >50%): disrupted by 4th telco, change in consumer habits (cord-cutting)

More anecdotal evidence that Singapore as a country is not forward thinking enough:

https://www.straitstimes.com/business/co...disruption
Preparing for era of disruption
FEB 5, 2018

Quote:Much of Singapore's economy and wealth creation is still heavily tied to the well-being of the local real estate sector. Despite its high lifestyle connectivity and tech literacy, the adoption rate of technology remains slow in Singapore.

A case in point is Singapore's mid-single-digit e-commerce penetration rate, which is below the global average (10 per cent) and far lower than China's (18 per cent), according to a Temasek study.

I would love to hear success stories of multi-decade multi-bagger companies from our local bourse too. Any examples of one that has a good track record, and is suitable to buy even today, and hold for the next decade, and have a good shot at returning 2-4x?

Thanks, that was a really interesting study. It also seems to be that an unusually large number of big real estate stocks on the SGX. If we're talking about historically, there are a few that give you a 2x increase over 10 years, which would equal a 7% return. The big banks - DBS profits doubled since 10 years ago. t's a bad year to start talking about decade four baggers because of the Great Recession, but if you take the years before 2007, or the average of 2006-2009, you'd get also about a double in profits. OCBC does a bit better at ~2.5 times of this period's profit. But I don't think any exist that have quadrupled their profits. But tripled, I did find a few who on the surface are a 3 bagger, but from a cursory glance they do it through a vast increase in debt. They are Sen Yue (construction), Moya (water utilities construction) and Avarga (paper and paper packaging)

LionFlyer was probably talking about Singapore Stock Exchange (SGX).

I'm currently not invested in any Singaporean companies, but I would love to invest in a local "scale-up" company. Valuation is cheap now, but still can't find any at the moment though.

The conditions that allowed for companies to do well in the past may not be the same in the future. Whether a company can grow depends on not only its future management, but also its future environment. While it is true that companies that have a good track record are more likely to do well in the future -- being the result of superior management capabilities -- the future environment may change so much that even superior management cannot help. Think of the numerous 'disrupted' businesses.

And so when we look for growth stocks by looking at their historical data -- revenue growth rate, margins, dividends, etc -- we may have already missed that period of growth (in the company's profit, and share price) we would like to capture.

I think it is very difficult to make accurate predictions about the future. And even if your prediction turns out to be accurate, your investment may not be profitable, since it may have been bought at a high valuation; the valuation is likely high because many people think it will grow a lot in the future. A possible profitable scenario is when you bought a growth stock at low valuation. But this meant you were highly contrarian; necessitating a very well-thought and researched thesis for the investment, and plenty of courage to buy meaningful stakes.

For the average person, it is probably easier to just look for regular cheap stocks.

Ready to take off?
Quite easy to spot them. Just look at the top right hand corner.

(28-09-2018, 10:23 PM)Wildreamz Wrote:
LionFlyer was probably talking about Singapore Stock Exchange (SGX).

I'm currently not invested in any Singaporean companies, but I would love to invest in a local "scale-up" company. Valuation is cheap now, but still can't find any at the moment though.

I pretty much concur with your findings.
Mostly due to our market size and corporate culture, real multi baggers are rare.

(30-09-2018, 03:31 PM)chialc88 Wrote: Ready to take off?
Quite easy to spot them. Just look at the top right hand corner.

Shouldn't you post the above on Penguin's thread proper too?

(30-09-2018, 01:15 PM)karlmarx Wrote: The conditions that allowed for companies to do well in the past may not be the same in the future. Whether a company can grow depends on not only its future management, but also its future environment. While it is true that companies that have a good track record are more likely to do well in the future -- being the result of superior management capabilities -- the future environment may change so much that even superior management cannot help. Think of the numerous 'disrupted' businesses.

And so when we look for growth stocks by looking at their historical data -- revenue growth rate, margins, dividends, etc -- we may have already missed that period of growth (in the company's profit, and share price) we would like to capture.

I think it is very difficult to make accurate predictions about the future. And even if your prediction turns out to be accurate, your investment may not be profitable, since it may have been bought at a high valuation; the valuation is likely high because many people think it will grow a lot in the future. A possible profitable scenario is when you bought a growth stock at low valuation. But this meant you were highly contrarian; necessitating a very well-thought and researched thesis for the investment, and plenty of courage to buy meaningful stakes.

For the average person, it is probably easier to just look for regular cheap stocks.

My opinion is slightly different on this. I believe in the school of thought that long term investing is simple, although not easy. In that, sometimes, a good investment opportunity could be quite obvious, especially when you are familiar with the company, the product and the business model. But it takes some foresight and the stomach to ride the volatility. Historic data is good for assessing quality of management (how consistent are they, what drives them, are they shareholder friendly etc.). Assessing growth prospect of a company however, is always a qualitative, forward-looking, strategic exercise, that require one to take into account current industry trends, tech trends, consumer spending habits, and competitive landscape.

The example I like to use is Apple. In 2010, when the iPhone 4 is taking off, Apple's trailing P/E was around 20. At that point, Apple already had 3 years of track record with the iPhone, Nokia was still dominant, and the potential total addressable market was huge. If you are a millennial at that time, most of your friends are starting to use smart phones, and clearly you will understand Apple's edge in brand, OS, hardware, and ecosystem. And if you follow their WWDC and Keynote like most Apple loyalist, you will understand that mobile and the App economy is completely changing the way we live our life (the way we consume entertainment, the way we commute, the way we communicate, the way we use the internet etc.). Moreover, the team assembled by Steve Jobs at that time was one of the most innovative and consistent in the industry since his return in 1997, with clear vision in marketing and technology.

Sometimes, all it takes is to bet big at the right times.

(28-09-2018, 07:59 PM)Kaimin Wrote:

(18-09-2018, 10:55 PM)LionFlyer Wrote:

(18-09-2018, 10:34 PM)Wildreamz Wrote: I would love to hear success stories of multi-decade multi-bagger companies from our local bourse too. Any examples of one that has a good track record, and is suitable to buy even today, and hold for the next decade, and have a good shot at returning 2-4x?

SGX   1 +dollar in the 2000s, 7 dollars now.

There are examples of multi baggers but whether those multi baggers are sustainable and not a flash in the pan is the issue. 

Where Singapore is weak on are product companies, since our "deep tech" isn't really that deep. If we do get one (aka unicorn), the challenge is always scaling up. That's where they face global competition (and fall) or they are acquired. The other type which I reckon such a multi bagger might come from are services companies that are part of some global supply chain.

But at no point around 2000s would you get a seven fold gain. The closest is the lowest point of ~850 in 1998, which would give you a 3.7 fold increase compared to today's STI of ~3500.

LionFlyer is talking about SGX SP share price.

It's always obvious when we look back. Even for SGX SP despite the oft quoted limited local bourse growth potential.

(01-10-2018, 09:44 AM)Wildreamz Wrote:

(30-09-2018, 01:15 PM)karlmarx Wrote: The conditions that allowed for companies to do well in the past may not be the same in the future. Whether a company can grow depends on not only its future management, but also its future environment. While it is true that companies that have a good track record are more likely to do well in the future -- being the result of superior management capabilities -- the future environment may change so much that even superior management cannot help. Think of the numerous 'disrupted' businesses.

And so when we look for growth stocks by looking at their historical data -- revenue growth rate, margins, dividends, etc -- we may have already missed that period of growth (in the company's profit, and share price) we would like to capture.

I think it is very difficult to make accurate predictions about the future. And even if your prediction turns out to be accurate, your investment may not be profitable, since it may have been bought at a high valuation; the valuation is likely high because many people think it will grow a lot in the future. A possible profitable scenario is when you bought a growth stock at low valuation. But this meant you were highly contrarian; necessitating a very well-thought and researched thesis for the investment, and plenty of courage to buy meaningful stakes.

For the average person, it is probably easier to just look for regular cheap stocks.

My opinion is slightly different on this. I believe in the school of thought that long term investing is simple, although not easy. In that, sometimes, a good investment opportunity could be quite obvious, especially when you are familiar with the company, the product and the business model. But it takes some foresight and the stomach to ride the volatility. Historic data is good for assessing quality of management (how consistent are they, what drives them, are they shareholder friendly etc.). Assessing growth prospect of a company however, is always a qualitative, forward-looking, strategic exercise, that require one to take into account current industry trends, tech trends, consumer spending habits, and competitive landscape.

The example I like to use is Apple. In 2010, when the iPhone 4 is taking off, Apple's trailing P/E was around 20. At that point, Apple already had 3 years of track record with the iPhone, Nokia was still dominant, and the potential total addressable market was huge. If you are a millennial at that time, most of your friends are starting to use smart phones, and clearly you will understand Apple's edge in brand, OS, hardware, and ecosystem. And if you follow their WWDC and Keynote like most Apple loyalist, you will understand that mobile and the App economy is completely changing the way we live our life (the way we consume entertainment, the way we commute, the way we communicate, the way we use the internet etc.). Moreover, the team assembled by Steve Jobs at that time was one of the most innovative and consistent in the industry since his return in 1997, with clear vision in marketing and technology.

Sometimes, all it takes is to bet big at the right times.

The problem isn't so much about recognizing changes in consumer trends, thats the easy part, the difficult part is about predicting which companies (the disruptors) will have moats that allow them to capture market share and grow it. Apple was just another smart phone manufacturer back in 2010, it was impossible to predict if they'd be able to retain their first mover advantage back then, of course with the benefit of hindsight we know that Apple users are not stuck with Iphones due to brand loyalty, its the ecosystem that motivates them to purchase new Iphones. 

Its important to note that first mover advantage does not exist in all industries, more often than not consumers will move on to the cheaper, better option when it comes along, the ride sharing app business is a good example.

Yes, not all disruptive trends can be taken advantage off. At least it is not that easy.

But I would argue that in the case of Apple, it was rather obvious. The reason being it was the only company with the confluence of multiple advantages (moats, trends, management etc.): (1) Brand (consistent marketing over the years; marketing strategy was used as university case study); only Apple has people queuing up for it days before launch, since the Original iPhone (2) App ecosystem; right from the beginning, the Apple app ecosystem has an incredible network effect; because the iPhone hardware and iOS was so many years ahead of the competition, and do not suffer from software and hardware fragmentation, the higher quality apps was all first found on iOS, then ported over to Android and other platforms (at a lower quality); only Apple has iTunes (since the iPod), songs bought on iTunes cannot be ported over to Android  (3) technical advantages; they are the only iOS provider in town, Android OEMs have to compete with one another; they are the only company making money off both hardware and software (app) sales; Apple was the only company that has hardware and software vertical integration (4) Management with a proven track record of success since the original iPod. (5) Valuation was not demanding; even if it didn't grow as far as predicted, you would not lose much. (6) Poor competitors; before Samsung, their closest competition was Nokia and Blackberry, with incoherent software and marketing strategy.

天时 (riding the right market trend), 地利 (having the right moats), 人和 (quality management; lousy competitors).

I think to tech savvy investors that paid attention in 2010, their success was almost inevitable. All they had to do was stay the course.