Securities

A security is a negotiable financial instrument that holds some type of monetary value.

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Securities
  • Asked by Isaac Chan

    Isaac Chan
    Isaac Chan, Business at NUS
    Top Contributor

    Top Contributor (Apr)

    Level 7. Grand Master
    Updated on 22 May 2019
    TL;DR Their financials had taken some hit previously, but there is a good chance that earnings could recover. Moreover, their balance sheet has also improved over time, which is quite a positive sign. Source: Aspire Shares Investment Business Profile Thai Bev may not be a household name, but some of its brands are, one of which is Chang Beer. They also have business segments spanning spirits, beer, non-alcoholic beverages, and food. The company also has associate stakes in both Singapore-listed Fraser & Neave Ltd (FNN) and Frasers Property Limited (FPL). Source: The Edge Singapore Income Statement Source: Thai Bev Annual Report 2018 For FY18, revenue had increased significantly by 21%, leading to subsequent increases in gross profit as well. Operating Income, however decreased due to SG&A expenses increasing by more than 33%. Net income from continuing operations had also decreased due to significantly higher interest expense (due to additional debt taken on) and "other expenses" exceeding "other income". Overall, net profit had almost fallen by 50% YOY. Balance Sheet Source: Thai Bev Annual Report 2018Source: Thai Bev Annual Report 2018 Overall, short-term liquidity had improved due to a much stronger cash position and the paying down off short-term debt. Long term debt, had improved however, due to the taking on of a huge amount of debt. Overall, the increase in debt has made the business a lot more levered than before. ThaiBev's acquisitions of other F&B players is also reflected in the amount of goodwill and intangible assets created. The trickle effects of such M&A activity can be seen through the 3 financial statements. Source: Thai Bev Annual Report 2018 Cashflow Statment The decrease in operating cashflow can mostly be attributed to the decrease in profitability, but can also be attributed to the increase in inventory, operating activities and other liabilities. The most significant aspect of the investing cashflows is the extremely high amount of investments that they have made, which are not really present in other FYs. The most jarring expect of the financing cashflows are the large inflow of borrowings that they took, as well as the paying down of short-term debt. Overall, it seems that the borrowing of funds and the increased investments was one of the most significant events. Valuation Source: Masterworks Coaching Group Based on DBS's Sum Of The Parts valuation (SOTP), their target price is currently $0.87. With ThaiBev shares trading at $0.86, ThaiBev seems priced correctly. ThaiBev is actually primed to grow this year, due to the elections and the King's corronation. Such national events usually increase beer consumption by quite a bit. The recovery of farm income that has seen a slump over the last few years is also likely to boost sales. Risks Source: SEEK Safely Firstly, the slump in the Thai economy probably could continue, leading to potentially decreased consumption. Moreover, the long, infamous and unstable policitcal risks of Thailand could affect the overall economy and sentiment of the people. There is also a chance that pexcise taxes on alcohol consumption coudl increase, that may stunt growth again.
  • Asked by Anonymous

    Billy Ko
    Billy Ko, President - Investment Club at Singapore Institute Of Technology
    Top Contributor

    Top Contributor (Apr)

    Level 5. Genius
    Answered 5d ago
    The reason for the stock price is due to a 2-for-1 stock split by the company - https://www.cnbc.com/id/48134915 It is considerably a defensive stock given how it falls under consumer staples. That being said, it's Gross Profit has been decreasing over the years. Fortunately, cost control has been good with the company lowering it's expenses more than the decrease in profit, hence net income is still considerably stable. Coke's margins are to the left whereas industry average is to the right. Coke can be seen performing significantly better than its peers in the industry. The latest Q4 results seems rather gloomy with revenue falling 4%. leading to the stock falling by $4+ (~8%) https://www.cnbc.com/2019/02/14/coca-cola-earnings-q4-2018.html But if you see the advertising and publicity of coke - through ads + campaigns + Warren Buffett during his AGM (and how he owns this stock also).
  • Asked by Anonymous

    Isaac Chan
    Isaac Chan, Business at NUS
    Top Contributor

    Top Contributor (Apr)

    Level 7. Grand Master
    Updated on 09 May 2019
    Hi everyone! I will just give some stats here that might be relevant for the members. Business Profile Source: Singapore Business Review Most of us are similar with this supermarket chain that is usually nestled in the heartlands. As of now, they have more than 50 outlets, as compared to the 24 outlets that they had when they first listed on the SGX in 2011. Sheng Siong is most likely well known for it's more "wet market" setting as compared to other grocery chains like NTUC Fairprice, and appeals more to the older generation in Singapore. It recently ventured into China too. Source: Singapore Business Review Based on FY18's results Income Statement Source: Sheng Siong Group Annual Report 2018 Both Sheng Siong's top line and bottom line have grown over the past few years. With a CAGR of 6.2% from 2011 to 2017 for its revenue. In 2018, a portion of revenue growth could also be attributed to the growth in the Chinese market as well. Profitability have also improved, with the different profitability margins, such as gross profit and net profit, improving significantly. The opening of new stores have hampered such growth a little due to the increase in admin and staff costs. Balance Sheet Strength Compared to other firms, I do believe that their liquidity term liquidity is not as strong. However, the nature of their business do requires them to hold more inventory, so Sheng Siong isn't an exception. The company seems to have paid off all their debt as well. Cashflows The company seems to be quite a cash generating machine, as others have mentioned. This is evidenced by their high free cashflow, as well as free cashflow to equity. Despite having high capital expenditures, the firm is more than able to account for such cash outflows. Working Capital Management Sheng Siong's working capital management seems quite strong, with a negative cash conversion cycle. This is supported by Sheng Siong's trade payable days of more than 60, while having much shorter receivable days of 5-6 and a inventory cycle of 30 over days. This means that Sheng Siong has more cash to operate with based on their working capital management because they can delay payment to their suppliers. The short receivable days should not come as too much of a surprise though, since their B2C grocery store model requires payment from customers upon selling of the items. Valuation DBS forward P/E ratio for 2019 was 25X, slightly lesser than their projected regional average of 26X. If you were to compare Sheng Siong to their regional peers like that, it seems that Sheng Siong is valued at the right price. However, this slightly higher valuation may not be warranted because their growth rates may not be able to be sustained over time, since the Singapore market for groceries is already becoming increasingly saturated. I am particularly worried about the high P/B ratio that they have. Given that the business might have trouble growing earnings over time, I think that such valuation isn't quite justified. Risks Source: Intelligence Nodes I think that Sheng Siong faces similar risks to the disruption that faces other retail businesses in Singapore. Firstly, there has been large speculation on how e-commerce will disrupt traditional grocery purchases in Singapore, especially with players like Red Mart. One silver lining for Sheng Siong is that they have traditionally served the older generation, who may be less tech savvy. Another bigger risk that they face is the saturation of the Singapore grocery space. Since Singapore has an aging population and slow population growth, increasing the market size of this industry would be quite tough. For players like Sheng Siong to grow and compete, they probably need to adapt to newer trends and innovate, or expand into other international markets as they already did. But with such moves comes great risk as well. Sheng Siong may also have to change its strategy of continually opening new stores, and focus on increasing same store sales. (SSTS) Share Price Performance Source: Yahoo Finance Relative to the STI, Sheng Siong's stocks had performed better. This is probably due to the positive earnings resulst that were released throughout the year, and the strong fundamentals that I believe Sheng Siong possesses. In contrast, so far in 2019, the STI had actually outperformed Sheng Siong. For the past 5 years, Sheng Siong has actually made a share price return of almost 70%! This is reflective of the strong growth that the firm has achieved over the years. Currently, the firm is trading at 89% of their Last Twelve Month's high.
  • Asked by Anonymous

    Junus Eu
    Junus Eu
    Top Contributor

    Top Contributor (Apr)

    Level 7. Grand Master
    Answered 2w ago
    I would still choose to diversify my portfolio accordingly ie. Not put 100% of my investment capital solely into robo advisors. Not the norm, but sometimes it's fun to invest in something based on your evaluation process, to see how the investment turns out.
  • Asked by Jacky Yap

    Gabriel Tham
    Gabriel Tham, Kenichi Tag Team Member at Tag Team
    Top Contributor

    Top Contributor (Apr)

    Level 8. Wizard
    Answered 2w ago
    Use a brokerage platform with access to US and SGX markets. Most digital brokerage platforms will have a trade alert or price alert system. I am using POEMS for SGX and they have an alert system, will send sms, email to me once my alert price is reached.
  • Asked by Vance Kang

  • Asked by Anonymous

    Gibson Junxun
    Gibson Junxun
    Level 3. Wonderkid
    Answered 3w ago
    Personal preference, I’ll go for stocks for its dynamism in the market. Bonds in general are more towards wealth preservation. At the start of the transaction, you‘ll know what would be the end value of your investments but your money will be stucked throughout the duration of the bond. A lot of opportunities and events can happen from the time you transact to the end of your bond period. Stocks, on the other hand, would require slightly more effort in monitoring and nurturing your portfolio.but in return you get more flexibility with your money and potentially higher returns over time as the money you invested in it is used as the same purpose as to how your money would be used if let says the company issues a bond. Cheers to a wonderful investing journey ahead!
  • Asked by Anonymous

    Jonathan Chia Guangrong
    Jonathan Chia Guangrong, Fund Manager at JCG Fund
    Level 6. Master
    Answered 3w ago
    For me I make use of options on stocks and futures to generate the returns I want to beat the market and move closer to retirement.
  • Asked by Anonymous

    Isaac Chan
    Isaac Chan, Business at NUS
    Top Contributor

    Top Contributor (Apr)

    Level 7. Grand Master
    Updated on 10 May 2019
    TL;DR : Personally, I don't think it's a good buy, looking at the financials on the surface, and considering that the F&B business is a very tough market both locally and abroad. Anyway, I have collated some pointers here that I picked up from other sources. Hope it helps! Source: TODAYonline Business Profile Most of us would recognise that the namesake bakery outlets but they also have got other businesses. They currently operate and franchise bakery/confectionary outlets, foodcourts and restaurants with 900 outlets over 17 countries. You could split their operations up into Bakery, Food Atrium and Restaurant. The bakery has almost 850 outlets, but almost 75% of them are run by franchisees. The Food Atrium segment operates under the chain of food courts under the name Food Republic, with 53 of them operating in SG and China. The restaurant segment operates 27 Din Tai Fung outlets in SG and Thailand. Financial figures used are for FY18 Profitability Source: BreadTalk Group Ltd Annual Report 2018 The overall profitability of BreadTalk Group is only 3.18%, quite low. Gross Margin is 56.2% while operating margin is 5.12%. The profit margin for the bakery segment is less than 1%, whereas the most profitable segment is actually the restaurant segment is around 20%. Since the bakery segment forms most of the revenue (almost 50%), this has resulted in the low profit margins. This actually shouldn't come as a surprise since prices charged for their bakery products need to be low to compete with other heartland bakeries. Moreover, the bakeries are usually positioned at mall locations with good frontage and high shopping traffic, which usually has very high rent too. For the restaurant segment, they can more easily differentiate themselves and charge more premium prices Balance Sheet Strength Source: BreadTalk Group Ltd Annual Report 2018 Compared to its peers, BreadTalk is quite highly leveraged. Based on the latest financials, their current and quick ratio fall below 1. It's capital structure is also made up mainly of debt, with debt being almost 1.5X of equity. It's debt mainly comprises of an equal proportion of short-term and long-term debt. Most of this debt had been taking on to finance overseas expansion, but a saving grace is that they have strong operating cashflows. Valuation Last Update: 23rd April BreadTalk's P/E ratio is currently near 32X. This higher P/E ratio could siginify investor's optimism that BreadTalk's ventures internationally would be positive. However, this valuation seems much higher than other players such as Kimly (13X), Koufu (16X), Jumbo (20X). Not sure if this high valuation for P/E is justified since BreadTalk has been experiencing some growth issues overseas. Personally, I do not think this valuation is justified since F&B market is quite tough overseas also, and value differentiation is still tough. As compared with other F&B businesses in Singapore, BreadTalk has the highest P/E and P/B ratio, and yet has the lowest dividend yield. This is quite an interesting phenomenon. Based on their financials, I do believe that other players such as Soup Restaurant and Japan Foods Holdings do have a lead on Breadtalk, as well as with Kimly and Koufu. This could be so because of the the weak profitability of the bakery segment. At a much higher P/E ratio, it seems that BreadTalk could be overvalued. Share Price Performance BreadTalk's last twelve month's performance reflected quite a huge dip since their peek in July, when earnings were released. I would say that most of such changes are due to the performances of their overseas outlet. I suspect that much of the valuation given were from expectations of overseas growth. Over the last 5 years, share prices did make a return of 17%, much better than the STI. With a 52-week high of $1.26, shares are trading at 65% of this high.
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