January 2021 Returns: 10.97%
Total Returns since 9 Sept 2020: 22.49%
No changes to any holdings since its inception in September 2020
Main driver of returns : UMS, Propnex, Ifast, Powermatic Data
With earnings season coming up, there will be some review of results and re-adjustment
Are things cheap at the moment?
January 2021 has proved to be a volatile month, in fact i feel that it is probably one of the most volatile months in the past 6 months. As any what goes up quickly comes down and goes down even further for some.
I would look at 3 stocks listed in the SGX and give my own opinion.
1) UMS
At a 5 years high, surpassing 2018 price. In terms of profit, 35 million in 9 months of 2020 isn't bad at all. However unless it can post another 18 million, it will not beat 2017 results which coincidentally led to the rise of it in 2018. The key question will be will demand for semi-conductor continue to be robust? As we know that it is a cyclical industry but has the trend changed?
With a decent forecast of 10% growth over previous quarter and around 25% over Q1 2020 for applied material's Semiconductor Systems Segment, things bode well currently. With the addition of TSMC's forecast of a 15% growth in 2021, it seems like growth will continue and this will probably justify its valuations.
2) SBS Transit
A good gauge of the economic activity is this resilient transport operator that has run into bottom-line trouble thanks to the circuit breaker and covid 19 outbreak. From a peak of 4.2 to about 2.95 now, it has retraced roughly 30%.
Looking at its ridership, 2020 2H is 60% of 2019 2H, which does not bode well even though economic activities have resumed. Furthermore with all of its profits coming from Covid 19 Support, i am not sure what the dividend policy will be. At this price, its reasonable for a normal market condition but given that earnings release(probably bad) is coming right up and an unknown dividend policy.....it would be good to hold back for now and await till results are out.
3) DBS
Leaving the hardest for the last, we have one of Singapore's top bank DBS Bank.
Share price currently is not anywhere near its 5 year highs of around $30.
However its current share price is back to pre-covid levels. Which is puzzling because it seems to show that business is back to normal. However is that so? Lets take a look
As such, it is almost certain that the outlook for 2021 is more rosy than 2020. As such the current price is probably pricing that in as well.
I feel that current price is getting reasonable for the following reasons.
1) Low interest rate environment to boost wealth management. When crediting ur salary and not using it becomes a pain for ordinary folks due to the ever lowering of interest rates, whether you choose to invest it (Wealth Management) or take a loan to purchase a house (Bank Loan) or spend more of the money to enjoy life due to covid stress (Credit Card). You seem to have trap yourself.
2) Indication of a reduced allowance will improve bottom-line
3) With better results, surely a better dividend is on the horizon?
Potential Pit falls
1) Extension of MAS rules on dividend for banks
2) Covid Infection again, affecting business to a greater extent
3) Implicatiosn from Lakshmi Vilas Bank
To conclude in short
1) UMS- Not Cheap but because growth is factored in
2) SBS Transit- Cheap but uncertainty lies
3) DBS- Reasonable if based on current conditions
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