(25-05-2023, 04:45 PM)dreamybear Wrote: Thanks for all the replies.
Actually, the context in the course of the discussion and my post is more of fundamentals catching up with undervalued stocks, and not the other way round. I should have been clearer, apologies.
Cld perhaps China Sunsine be an example for discussion ? Why is it trading at such valuations low P/E, P/B, etc and I think for long periods of time ? Will it one day trade consistently at a higher valuation, e.g. 10x - 15x P/E henceforth ? Wld it have been any different if there were more international investors or if it was listed in other markets like US ?
While I'm not intimately familiar with the company, I notice that it is a microcap (market cap US$300mil) based in China (political risk, geopolitical risk, S-Chip/Corporate governance risk etc.) selling a niche product (rubber accelerators) that isn't experiencing tremendous growth (export volume, domestic rubber sales etc seems flattish to down in the last 7 years). Margins does look decent, but does require Capex (not asset-light kind of business).
Combining all these factors, it would be unlikely to command high valuation nor high shareholder returns long term IMHO, unless someone have further insights on managements future plans or their product roadmap. Especially in the current political landscape (East-West decoupling etc).
Perhaps other buddies could have further insights.
“If you buy a business just because it’s undervalued, then you have to worry about selling it when it reaches its intrinsic value. That’s hard. But if you can buy a few great companies, then you can sit on your ass. That’s a good thing.” - Charlie Munger
18-04-2024, 09:46 AM (This post was last modified: 18-04-2024, 09:47 AM by weijian.)
Hi dreamybear,
I agree with Mr David Gerald that the local bourse hasn't regain its mojo after the penny stock saga of 2013. A stock market is generally reflective of the local economy and so, it is what it is. That said, I do think the local bourse SGX (disclosure: I am a shareholder for more than a decade now) has punched above its weight - having many non-Spore domiciled companies listed here and based on the numbers from SGX's derivative business, it is the offshore center of choice for certain commodities, foreign exchange and index futures. And none of these are Sporean in nature.
As for local stocks that list themselves elsewhere, one of the main reasons that I see would be the "stringent" rules imposed by SGX for listing in terms of track record/profitability. For example, section210(2) of SGX rulebook details some qualitative requirements for a mainboard listing - and that would include profitability, historical track record and engaging similar business model/Mgt etc. There are some exceptions for life sciences/mining firms.
I suspect some of the local companies who have majority operations in Spore but listed elsewhere (eg. Propertyguru), do not qualify based on the listing requirements, regardless of whether they want to list here or not. In other words, it could be also a case of "Do you qualify" than "Do you want".
Let us use Grab as an example. Grab started out as MyTeksi in Malaysia, before it moved its incorporation/HQ to Spore. Folks were applauding the authorities in Spore and condemning the one in Msia. When Grab listed on Nasdaq via a SPAC in US in 2021, people started to condemn the Spore authorities, whom were just the recipient of applauds a little while ago. Fast forward 2 years, Grab Holdings is down 75% from its IPO price. While that is much better than the performance of the 2013 penny stocks, it is probably much worst off than many asset-heavy/low ROE/family dominated/poor governance "value" traps on SGX.
In an alternate universe where Grab listed via a primary listing on SGX SPAC, I wonder how locals will respond when they are staring at a 75% loss with no dividend panadols?
There are pros and cons to every approach, and we have to accept the pros/cons as a package. Plenty of folks make money on Nasdaq, plenty lost too. Plenty of people make money on SGX, plenty didn't too. One thing I am very sure of - Markets are definitely not made with the primary purpose for minorities to get rich.
18-04-2024, 11:16 AM (This post was last modified: 18-04-2024, 11:17 AM by Mushy.)
Just to include here another article reported in the Straits Times yesterday.
Quote" He added that the company, which has 100 employees, is choosing not to list on the SGX due to its low liquidity, weak valuations and a lack of interest in tech start ups from investors here."
I also want to add a personal comment on the 2013 peny stock saga. This keep being highlighted as 1 main reason for the poor performance of local market. I personally doubt if the situation today would be much different if it never happened.
In all media that I read since 2013, they always portray the case as 8 billion dollars wiped off the market in a short time. Instead, we should be concerned how the market (or authorities) allow those 8 billion dollars of value to be there in the first place. The market did not lose 8B of value, it was not there in the first place.
Another angle to think of is that Asians have a tendency of keeping wealth in the property market rather than the stock market. This depsite now property at leveraged givens about 5% yield while there are companies here giving about 6-7% dividends on blue chip status.
The aversion to stocks and fondness to the property market means less cash is channelled to the Singapore stock market unlike the US's. Maybe there needs to be a mass advertising of companies in Singapore which are providing higher yields than proeprty investors investing and renting out their condos
@Mushy,
I agree with you that local valuations were probably not impacted by the penny stock saga. I suspect people like to confound observations that can form plausible cause-effect relationships. But that said, the saga definitely had an impact on animal spirits extending to trading liquidity/interest on the local bourse - And I have numbers to back me up since I am a SGX shareholder and have hold historical records of daily security trading volume/value. Back of envelope calculations, trading volume/value had a permanent 30-40% dent post-saga, or maybe could we explain that penny stocks made up 30% of trading volume/value back then?
@CY09,
Spore situation is not too different from China, I suppose. And both countries are made up of majority ethnic Chinese and were controlled by one political party since independence! (ok, I am not going to wade into a political discourse here).
And I really don't think there is a need to do advertisement. I see myself a net buyer of stocks in the foresable future and I definitely don't want high valuations. That said, a part of me definitely wish for high valuations for stocks that I have "full allocation" on!
15-07-2024, 07:23 PM (This post was last modified: 15-07-2024, 07:26 PM by dreamybear.)
Hope things improve.
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IN FOCUS: Singapore’s stock market at ‘rock bottom’. What will it take to shake things up? https://www.channelnewsasia.com/business...us-4471856
"SINGAPORE: Mr S Nallakaruppan recalls 1993 as the “golden year” for the Singapore stock market...
.....“Applying for an IPO back then (felt) like winning the lottery. There’s very high chance of making some decent money,” he said....
.... On the other hand, departures from the SGX have consistently stayed in double digits. There were 25 delistings last year, 36 in 2022 and 31 in 2021, based on reports by The Business Times.
Already, bourse data has shown at least 10 exits in the first five months of 2024. This figure is only set to increase, with privatisation bids ongoing for the likes of department store Isetan.
The result of this is a shrinking stock market, which had 632 listed securities at the end of last year, down from 665 in mid-2022 and 715 in May 2020 ...."
15-07-2024, 09:18 PM (This post was last modified: 16-07-2024, 09:58 AM by weijian.)
(15-07-2024, 07:23 PM)dreamybear Wrote: Hope things improve.
---------------------
IN FOCUS: Singapore’s stock market at ‘rock bottom’. What will it take to shake things up? https://www.channelnewsasia.com/business...us-4471856
"SINGAPORE: Mr S Nallakaruppan recalls 1993 as the “golden year” for the Singapore stock market...
.....“Applying for an IPO back then (felt) like winning the lottery. There’s very high chance of making some decent money,” he said....
.... On the other hand, departures from the SGX have consistently stayed in double digits. There were 25 delistings last year, 36 in 2022 and 31 in 2021, based on reports by The Business Times.
Already, bourse data has shown at least 10 exits in the first five months of 2024. This figure is only set to increase, with privatisation bids ongoing for the likes of department store Isetan.
The result of this is a shrinking stock market, which had 632 listed securities at the end of last year, down from 665 in mid-2022 and 715 in May 2020 ...."
If one believes the fish in the pond are not appropriate, I'll suppose it is easier to change ponds than hope for the pond to change. "Hope" is very abstract.
Alternatively, we could try to change the tackle to handle the type of fish prevalent in the pond, if we want to hang around. For example, if delisting is the trend, maybe we should think of how to profit from it? It is still much better than "hope" for something we can't change, to change.
Glass half full OR Glass half empty? Same problem, different solutions?
03-08-2024, 10:04 PM (This post was last modified: 03-08-2024, 10:18 PM by dreamybear.)
(15-07-2024, 09:18 PM)weijian Wrote: If one believes the fish in the pond are not appropriate, I'll suppose it is easier to change ponds than hope for the pond to change. "Hope" is very abstract.
Alternatively, we could try to change the tackle to handle the type of fish prevalent in the pond, if we want to hang around. For example, if delisting is the trend, maybe we should think of how to profit from it? It is still much better than "hope" for something we can't change, to change.
Glass half full OR Glass half empty? Same problem, different solutions?
Well, investing in overseas markets has different sets of challenges, e.g. field research, attending in-person AGM/analyst briefings, holding significant amounts of forex long term, understand listing rules.
And if one were to broaden the scope of "pond fishing" and assuming investing is primarily to make money, perhaps one could benchmark agst index returns/alternate asset classes or even SG median income from work, etc.
At the end of the day, I suppose the question is - is investing in SG stocks still worth it ?
https://www.investingnote.com/posts/2807915
"....Now, the 2nd thing that you’d need, is of course, access to significant amounts of capital..... Some other dude, spent his time doing other stuff, travelling perhaps, or just working harder at his job, or whatever it is, didn’t pay a single attention to the markets and just threw everything into S&P… and you only beat him by an additional $25k per year. I mean, that’s just not going to change your life. It’s hardly a good remuneration for your efforts....."
Besides questions, I think quality answers are equally important.
Keynote Speech by Tan Boon Gin, CEO of SGX RegCo, at the inaugural ISCA-SAC BOD Masterclass https://www.sgxgroup.com/media-centre/20...ca-sac-bod
"The heart of effective market discipline is the active investor – a shareholder who is prepared to ask the difficult questions, requisition meetings to compel change, and vote with both hands and wallet to hold companies and boards accountable."
03-08-2024, 11:18 PM (This post was last modified: 03-08-2024, 11:19 PM by CY09.)
"The heart of effective market discipline is the active investor – a shareholder who is prepared to ask the difficult questions, requisition meetings to compel change, and vote with both hands and wallet to hold companies and boards accountable."
--> Many of us are unable to do that due to the controlling shareholder stakes of family run.
The only avenue and that I advocated for in Best World Scenario was the removal of all the independent directors. That happened.
Hence, If push comes to shove, pherhaps MAS shouls allow a recourse that IDs are to act in the interest of the minority. (1) The IDs can be voted out by 50% of the votes held by the non controlling shareholders. (2) In the event if it happens, the company has to make a delisting offer that is fair and reasonable. (3) If financing is required, a state owned avenue at a certain SORA+ x% be offered.
I learnt the hard way for (3) where a Singapore company played the hard way of refusing to seek for refinancing when it was forced to delist. In the end, minority became certificate holders for a profitable company while the CEO continues to draw a good pay.
There are many mechanisms that is needed to make it fair for minorities. But if I am to move it to be political, many businessman are in the circle of the ruling party ranks, it will be hard to force fairness for minorities. This is why I have given up in investing in Singapore as well because I know the cards are not in my favour
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That said, I do think the local bourse SGX (disclosure: I am a shareholder for more than a decade now) has punched above its weight - having many non-Spore domiciled companies listed here and based on the numbers from SGX's derivative business, it is the offshore center of choice for certain commodities, foreign exchange and index futures. And none of these are Sporean in nature.