Which overseas market is a good hunting ground for value stocks?

[d.o.g.]

hi d.o.g., thank you for your informative and insightful sharing. will you say taiwan is a good learning ground for SG investors interested in overseas markets?

My personal view is that Taiwan may not be the most suitable training ground as an introduction to foreign markets, due to results being published only in traditional Chinese, with limited management discussion. For someone fluent in traditional Chinese and who is willing and able to spend the time to speak with company management in Mandarin, it can be an interesting market.

Hong Kong is better as a first foreign market for Singapore investors because reports are published in both English and traditional Chinese. Usually there is a decent amount of management discussion. And the investor relations person often speaks English, Cantonese and Mandarin.

At present, based on the number of privatizations occurring, I believe valuations are also more attractive in Singapore and Hong Kong, compared to Taiwan.

The US market is also a good first overseas market because of the extensive discussions in the 10-K documents. However, the near-impossibility of doing proper due diligence generally limits the Singapore investor to just the usual blue chips, which are by most measures currently trading at historically high valuations. When the next crisis or war hits, by all means buy Johnson & Johnson, Procter & Gamble, Kimberly Clarke etc. Until then, it might be better to just read the 10-Ks and watch from afar.

As usual, YMMV.

[karlmarx]

Thank you psslo and d.o.g. for your generous and helpful sharing.

I believe most HK stocks are china-related, and our local s-chips have given me a poor impression of chinese companies. Is HKex as infected by fraudulent companies?

But i understand not all companies are from the mainland, so I was wondering, is there a difference in due diligence required between mainland-originated companies and HK-originated companies? Is their quality of 's-chips' better than ours, in general? When looking at HK stocks do you have to constantly be on the lookout for fraud (e.g. looking out for growing receivables, unrealistic margins, high cash but no dividends, over investment into ppe, etc)?

[BlueKelah]

Thank you psslo and d.o.g. for your generous and helpful sharing.

I believe most HK stocks are china-related, and our local s-chips have given me a poor impression of chinese companies. Is HKex as infected by fraudulent companies?

But i understand not all companies are from the mainland, so I was wondering, is there a difference in due diligence required between mainland-originated companies and HK-originated companies? Is their quality of 's-chips' better than ours, in general? When looking at HK stocks do you have to constantly be on the lookout for fraud (e.g. looking out for growing receivables, unrealistic margins, high cash but no dividends, over investment into ppe, etc)?

There is a chinese saying that when the road is far enough you will find out how much energy your horse has.

If you apply this theory and look at all companies and what has happened to them in a 10 year period in the least, the probability of hitting a "fraud" type company will be very much lower as it is pretty hard to be fradulent for such an extended period. 

Pretty sure there are some old companies on HKex that have prudent management, running profitable businesses with steady payout to shareholders every year, over 10 -20 year period. IMHO it is almost impossible for them to be fradulent with a good track record, whatever chip they are.

[soros]

If you trust Wheelock Properties listed on SGX, then you should trust Wharf ( No. 0004.HK ) and Wheelock ( No. 0020.HK) which are under the same management.

The companies which are components of the Hang Seng Index should be OK as the HS Bank would make due -diligence before including in their indices.

You can find the past 15 years dividend record for all HKEX listed companies on the www.aastocks.com website.

[EnSabahNur]

The US market is also a good first overseas market because of the extensive discussions in the 10-K documents. However, the near-impossibility of doing proper due diligence generally limits the Singapore investor to just the usual blue chips, which are by most measures currently trading at historically high valuations. When the next crisis or war hits, by all means buy Johnson & Johnson, Procter & Gamble, Kimberly Clarke etc. Until then, it might be better to just read the 10-Ks and watch from afar.

If you don't mind, can you share your views about ASX and the Malaysian Bursa?

[soros]

Here is some info on 10K filings - https://en.wikipedia.org/wiki/Form_10-K

[karlmarx]

There is a chinese saying that when the road is far enough you will find out how much energy your horse has.

If you apply this theory and look at all companies and what has happened to them in a 10 year period in the least, the probability of hitting a "fraud" type company will be very much lower as it is pretty hard to be fradulent for such an extended period. 

Pretty sure there are some old companies on HKex that have prudent management, running profitable businesses with steady payout to shareholders every year, over 10 -20 year period. IMHO it is almost impossible for them to be fradulent with a good track record, whatever chip they are.

日久见人心

yes, i agree with you. but it would take a very long time to work through so thoroughly with each of them, with the possibility of it turning out to be a dud. then again, those who are will and able to go through 1,600 prospects with that intensity will surely find value.

[BlueKelah]

If u are able to screen out at least 20 companies a day it should take u only around three months.

That imho is a small price to pay for getting a list of those good companies.

Besides many that don't pay dividend or have only been around for less than 5 years are easily screened out. If u increase listed time to 10years you would screen out even more very quickly.

Definitely not for those without patience.

But if u wanna make money, gotta be like buffet sit in the office all day reading reports in detail 😀 and put in the time.

Sent from my MotoG3 using Tapatalk

[bardsmanship]

路遥知马力 

Typically how much time does the average VB spend researching a company? When looking at a company for the first time I usually read most of the latest annual report and all the quarterly reports that are out for the current year, then get the main numbers from the annual reports of the past 5-8 years to get a sense of their profitability + cash flows.

For property companies (been looking at a couple of these lately) I also take the time to research their investment and development properties to figure out how much they cost to acquire & build... 

Finally I look at whether there are any share buybacks or insider transactions in the past year.

Wondering if this is detailed enough?

[weijian]

hi bardsmanship,
I try to test your process via forummer specuvestor's "Asset, Business, Structure". You seem to have handled the quantitative aspects quite well but maybe the qualitative part (ie. structure), which IMHO, is the most important aspect is missing out, at least from your brief description above (which may not have done justice to the amount of work you have done)

Our efforts most probably has to be judged from a relative perspective, because in the market, everything is relative. If you spend 100 useful hours when 90% of the participants spend only 50% of that, than you are most probably going to have an informational edge. But if 90% of the participants spend 200 useful hours, then you are in trouble..I think you should get what i mean

So, it is hard trying to answer your question "wondering if this is detailed enough?" as we need to gather a huge amount of sample size to establish the metrics for comparison purposes. Maybe the correct (replacement) question to ask would be "What is your edge?" over Mr Market? (taking into consideration that Mr Market contains insiders, fund managers like d.o.g, old birds like g.h chua/GG and so others like Boon/specuvestor who seems to demonstrate superior analytical power+hard work)