Singapore Exchange (SGX)

[CityFarmer]

Let me chip in on the topic. Feel free to comment if any mistake.

No one doubts on the company profitability. It is perfectly logical, with its net profit of 40-50%, ROA/ROE of 19%/38% and its monopoly operation in Singapore.

The doubts are mainly on the following
- growth rate in the near term of 3-5 years.
- price i.e. PE

Let's start with the growth rate. There are two major drivers of SGX, securities, and derivative markets.

Derivative market is growing in revenue in the past few years, each year growth numbers I got are 8% (2011), 11% (2012) and 20% (2013). Will the growth sustaining in the next few years? It should be with the current effort of SGX. In FY2013, the derivative market was 1/3 of total revenue, so it is a significant contributor to overall revenue. There is definitely good reason for YZJ to establish its trading office in Singapore, and the same for other international traders.

Next is the securities market. First of all, the chances of bull market in the next few years is definitely high. Next question is, will SGX attract sufficient business amid competition from neighbouring exchanges? After research on China reform, more SOEs will be securitized, and the exchanges of choice? IMO, SEHK and SGX are the prime choices, due to their offshore yuan centers status. There are good reasons for Haitong Securities to establish office in Singapore, IMO

In size, SGX securities business is half of SEHK, and also about half overall revenue. It is illogical to assume SGX business is saturated in years from now.

The final point is the pricing. Is PE 20 a fair price, after comparing with its closest competitor, SEHK which priced at PE of 32? I recalled the quote below. A PE 20 seems a fair price to pay for SGX, not a wonderful price, I admit.

"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."

[Temperament]

SGX will remain as a stalwart to me, after the discussion

i think it will be for a long, long time. But it does not mean you can buy any stalwart anytime as you like. Or for that matter, any stocks.

Just for the sake of discussion. Uncle Temp.

I agree that I may not able to buy SGX at the right price anytime as I like. But if there is a large pool of similar stalwarts, I might be able to buy one at the reasonable price, most of time as I like.

The challenge is to find enough stalwart stocks to build-up the pool. It also depends on whether opportunities arises for other types of stock, e.g. grower, asset play (special situation) etc at the bargain price.

You are right! Besides the stalwarts listed in the STI INDEX which have been cheery picked for us; there are still a lot of stalwarts for us to pick ourselves and many other types like you said. But for people who are like me not so bright, i go for stalwarts first before i like to look at other plays. (aka grower, asset play, cyclical, etc..) Actually i think all stocks are "cyclical".. only some stocks are more cyclical than others.
Ha! Ha!

[Belg]

SGX will remain as a stalwart to me, after the discussion

i think it will be for a long, long time. But it does not mean you can buy any stalwart anytime as you like. Or for that matter, any stocks.

Just for the sake of discussion. Uncle Temp.

I agree that I may not able to buy SGX at the right price anytime as I like. But if there is a large pool of similar stalwarts, I might be able to buy one at the reasonable price, most of time as I like.

The challenge is to find enough stalwart stocks to build-up the pool. It also depends on whether opportunities arises for other types of stock, e.g. grower, asset play (special situation) etc at the bargain price.

You are right! Besides the stalwarts listed in the STI INDEX which have been cheery picked for us; there are still a lot of stalwarts for us to pick ourselves and many other types like you said. But for people who are like me not so bright, i go for stalwarts first before i like to look at other plays. (aka grower, asset play, cyclical, etc..) Actually i think all stocks are "cyclical".. only some stocks are more cyclical than others.
Ha! Ha!

Ha Ha!
Every stock goes through the cycle of Bull and the Bear. I.e. they are cyclical in nature.
More cyclical nature stocks - property play, commodities, oil & gas etc.

Although cyclical, we are all interested to know that there are many still who has that investment moat to withstand the cycles well and infact still keeping good profit margins.

[Temperament]

SGX will remain as a stalwart to me, after the discussion

i think it will be for a long, long time. But it does not mean you can buy any stalwart anytime as you like. Or for that matter, any stocks.

Just for the sake of discussion. Uncle Temp.

I agree that I may not able to buy SGX at the right price anytime as I like. But if there is a large pool of similar stalwarts, I might be able to buy one at the reasonable price, most of time as I like.

The challenge is to find enough stalwart stocks to build-up the pool. It also depends on whether opportunities arises for other types of stock, e.g. grower, asset play (special situation) etc at the bargain price.

You are right! Besides the stalwarts listed in the STI INDEX which have been cheery picked for us; there are still a lot of stalwarts for us to pick ourselves and many other types like you said. But for people who are like me not so bright, i go for stalwarts first before i like to look at other plays. (aka grower, asset play, cyclical, etc..) Actually i think all stocks are "cyclical".. only some stocks are more cyclical than others.
Ha! Ha!

Ha Ha!
Every stock goes through the cycle of Bull and the Bear. I.e. they are cyclical in nature.
More cyclical nature stocks - property play, commodities, oil & gas etc.

Although cyclical, we are all interested to know that there are many still who has that investment moat to withstand the cycles well and infact still keeping good profit margins.

Ha! Ha!
You sound like a veteran in the investment markets. i think you must have been investing for many years already. If you say only 5 years, i will be very surprised. i guess at least 15 to 20 years already.
Right?

[Belg]

i think it will be for a long, long time. But it does not mean you can buy any stalwart anytime as you like. Or for that matter, any stocks.

Just for the sake of discussion. Uncle Temp.

I agree that I may not able to buy SGX at the right price anytime as I like. But if there is a large pool of similar stalwarts, I might be able to buy one at the reasonable price, most of time as I like.

The challenge is to find enough stalwart stocks to build-up the pool. It also depends on whether opportunities arises for other types of stock, e.g. grower, asset play (special situation) etc at the bargain price.

You are right! Besides the stalwarts listed in the STI INDEX which have been cheery picked for us; there are still a lot of stalwarts for us to pick ourselves and many other types like you said. But for people who are like me not so bright, i go for stalwarts first before i like to look at other plays. (aka grower, asset play, cyclical, etc..) Actually i think all stocks are "cyclical".. only some stocks are more cyclical than others.
Ha! Ha!

Ha Ha!
Every stock goes through the cycle of Bull and the Bear. I.e. they are cyclical in nature.
More cyclical nature stocks - property play, commodities, oil & gas etc.

Although cyclical, we are all interested to know that there are many still who has that investment moat to withstand the cycles well and infact still keeping good profit margins.

Ha! Ha!
You sound like a veteran in the investment markets. i think you must have been investing for many years already. If you say only 5 years, i will be very surprised. i guess at least 15 to 20 years already.
Right?

Uncle Temp, I am really flattered by your comments.
In front of the very good teachers here, I am still learning along. Not as much experience as you have mentioned, though I have lose a lot before I start learning about value investing and also Warren Buffett.

TA is not a safe and sound method to gauge market in general, at most they offer a good indication whether its a good entry point.

FA is just like a guide, good enough to entice people to take the first step to buy. Really, whether there is real growth in the company, only the insiders or people familiar in the industry knows. Take a leaf out from Blumont saga.

Market to me is just like a game, make how much eat how much has already been decided.

Invest and prosper.

[Temperament]

Just for the sake of discussion. Uncle Temp.

I agree that I may not able to buy SGX at the right price anytime as I like. But if there is a large pool of similar stalwarts, I might be able to buy one at the reasonable price, most of time as I like.

The challenge is to find enough stalwart stocks to build-up the pool. It also depends on whether opportunities arises for other types of stock, e.g. grower, asset play (special situation) etc at the bargain price.

You are right! Besides the stalwarts listed in the STI INDEX which have been cheery picked for us; there are still a lot of stalwarts for us to pick ourselves and many other types like you said. But for people who are like me not so bright, i go for stalwarts first before i like to look at other plays. (aka grower, asset play, cyclical, etc..) Actually i think all stocks are "cyclical".. only some stocks are more cyclical than others.
Ha! Ha!

Ha Ha!
Every stock goes through the cycle of Bull and the Bear. I.e. they are cyclical in nature.
More cyclical nature stocks - property play, commodities, oil & gas etc.

Although cyclical, we are all interested to know that there are many still who has that investment moat to withstand the cycles well and infact still keeping good profit margins.

Ha! Ha!
You sound like a veteran in the investment markets. i think you must have been investing for many years already. If you say only 5 years, i will be very surprised. i guess at least 15 to 20 years already.
Right?

Uncle Temp, I am really flattered by your comments.
In front of the very good teachers here, I am still learning along. Not as much experience as you have mentioned, though I have lose a lot before I start learning about value investing and also Warren Buffett.

TA is not a safe and sound method to gauge market in general, at most they offer a good indication whether its a good entry point.

FA is just like a guide, good enough to entice people to take the first step to buy. Really, whether there is real growth in the company, only the insiders or people familiar in the industry knows. Take a leaf out from Blumont saga.

Market to me is just like a game, make how much eat how much has already been decided.

Invest and prosper.

Ha! Ha!
Who can think he can stop learning in life?

i still keep on reading books on investments from FOC NLB even until today.
In the beginning, reading too many books sometimes confused me because every author has his own merits. Of course a few may not be suitable readings yet we have to read them to find out what is suitable and what is not suitable for our temperaments.

I am here because i like to learn from everyone who is willing to share his acquired knowledge and even more important his experiences.
Besides, if i stop learning, i think is the day i will be dementia or gone with the wind.

"The truth will set you free" is very true indeed!
Happy learning!
Shalom.

[arriyana]

I think it is still plausible to think of SGX as a saturated market. Stock exchange are derivatives of companies in the country. Hong Kong exchange is a stronghold because of its China backing where China companies list there.

Whereas in Singapore, we have and will likely have little homegrown major companies that stimulate trading demand. Going forward, while derivatives are good move, if base shares trading volume is not in demand, I think it is challenging to expect great growth in SGX. For example, SGX introduced options trading but the response was fairly poor whereas in US, the reverse was true.

When it comes to drawing MNCs listing, SGX still faces huge challenge. I don't see derivatives as the magic pill to SGX. Do correct me if I am wrong.

Let me chip in on the topic. Feel free to comment if any mistake.

No one doubts on the company profitability. It is perfectly logical, with its net profit of 40-50%, ROA/ROE of 19%/38% and its monopoly operation in Singapore.

The doubts are mainly on the following
- growth rate in the near term of 3-5 years.
- price i.e. PE

Let's start with the growth rate. There are two major drivers of SGX, securities, and derivative markets.

Derivative market is growing in revenue in the past few years, each year growth numbers I got are 8% (2011), 11% (2012) and 20% (2013). Will the growth sustaining in the next few years? It should be with the current effort of SGX. In FY2013, the derivative market was 1/3 of total revenue, so it is a significant contributor to overall revenue. There is definitely good reason for YZJ to establish its trading office in Singapore, and the same for other international traders.

Next is the securities market. First of all, the chances of bull market in the next few years is definitely high. Next question is, will SGX attract sufficient business amid competition from neighbouring exchanges? After research on China reform, more SOEs will be securitized, and the exchanges of choice? IMO, SEHK and SGX are the prime choices, due to their offshore yuan centers status. There are good reasons for Haitong Securities to establish office in Singapore, IMO

In size, SGX securities business is half of SEHK, and also about half overall revenue. It is illogical to assume SGX business is saturated in years from now.

The final point is the pricing. Is PE 20 a fair price, after comparing with its closest competitor, SEHK which priced at PE of 32? I recalled the quote below. A PE 20 seems a fair price to pay for SGX, not a wonderful price, I admit.

"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."

[CityFarmer]

So far, I have been proven wrong, by its immediate operation performance, but proven right by market price...

The reason that I can decipher is, nobody is looking at short-term performance within a year, but on longer term of 1-3 years.

The securities market might be benefited by more IPO from China SOEs, and also asset transferred into SGX listed companies. SEHK will get a major share of it, but the remaining still substantial to SGX, within a time frame of 1-3 years, IMO

(vested)

Securities trading on SGX falls 25% in March

SINGAPORE — Securities trading on the Singapore Exchange (SGX) declined last month even though there was an additional trading day compared with the same month last year.

There was a 25 per cent on-year decline in securities trading to S$23.9 billion and the daily average traded value fell 29 per cent to S$1.1 billion, SGX said in a statement yesterday.

The decline in trading continues the trend seen in the first two months of the year, with a 44 per cent fall in January and a 35 per cent drop in February.

But on a month-on-month basis, securities traded value was 14 per cent higher last month, while daily traded value was up by 9 per cent. March had one more trading day than February.

Derivatives volume was steady at 9.5 million contracts, with a daily average of 463,811, compared with the previous year. On a month-on-month basis, total trading volume rose 18 per cent.

Commodities trading was a bright spot, with iron ore futures volume nearly doubling to 91,086 contracts compared with February. The volume of cleared iron ore swaps rose 88 per cent to 69,710 contracts year-on-year, while the volume of cleared iron ore options was 14 times that of a year earlier at 9,755 contracts.

Meanwhile, on a year-on-year basis, SICOM rubber futures volume grew 61 per cent to 39,649 contracts.

A fall in securities trading contributed to a 2 per cent fall in SGX’s net profit in the last three months of 2013, with SGX Chief Executive Officer Magnus Bocker pointing the finger of blame at the lower participation by both retail and institutional investors.

SGX is due to report its next set of quarterly earnings on April 23.
http://www.todayonline.com/business/secu...s-25-march

[corydorus]

Frankly i am pleased with SGX performance in current tough market situation. Which means the market can only properly support max. 1 provider. Despite on that, their integrity has improved a lot compared to previous management. Their eagerness to continuously seeking new challenges is a huge plus imo. They are also distributing cash regularly. If we ignore capital movement, the dividends are as good as it gets currently. All these are HALLMARK of good management.

Vested

[CityFarmer]

SGX loses out from SEHK on China company listings, but SGX is the exchange of choice in this region.

(vested)

Offshore services firm POSH seeks US$304 mln to US$334 mln in IPO: Term sheet
08 Apr 2014 09:46
[SINGAPORE] PACC Offshore Services Holdings (POSH)is looking to raise between US$304 million and US$334 million in a Singapore listing, according to a term sheet seen by Reuters.

POSH, which is part of the empire of Malaysia's richest man, Robert Kuok, operates a fleet serving offshore oilfields in Asia, Africa and Latin America.

The company is also reserving the right to issue additional shares worth up to US$46 million under a greenshoe option, meaning the total amount raised could be as much as US$380 million.

Bank of America Merrill Lynch, DBS Group Holdings Ltd and Oversea-Chinese Banking Corp Ltd are the joint issue managers, bookrunners and underwriters.

Hwang Investment Management Berhad and Fortress Capital Asset Management are cornerstone investors in the deal. -Reuters

Source: Business Times Breaking News