Innovalues

Considerations

• Saga Tree Capital bought it since November 14 at an average price of $0.42
• It bought again on 4 jun 15 at an average price of $0.93
• FY2014 saw its net profit increase of 80% while its cash on hand doubled from $11 million to $22 million
• 1st Quarter 2015 saw a net profit increase of 100% while its cash on hand increase 22% from $22 million to $27 million
• Next results scheduled to release on 13 Aug 15

Lum Chang

Considerations

• 17 Feb: Announcement of Yishun mixed development valued at $487 million
• Brings total contract value to $1 billion in 2015
• director start buying back shares from Feb to Jun (after announcing contract win)
• Latest buyback price is at $0.375
• Increase of net cash from $79 million to $122 million in its 3rd Quarter Financial statements

F&N

Considerations

• Close to 5 year low (Figure 1.1)
• Strong SGD enable group to purchase goods at lower costs in Thailand and Malaysia
• Stable Vietnam economy with increase demand for dairy products. (F&N owns 11% stake in Vietnam's largest dairy producer Vinamilk)
• Myanmar brewery was valued at double the price offered by Myanma Economic Holdings.

Figure 1.1

Source: Bloomberg

Sources

• http://infopub.sgx.com/FileOpen/2Qtr-FN-HY15.ashx?App=Announcement&FileID=348596)
• http://www.financeasia.com/News/389490,fn-increases-stake-in-vinamilk.aspx 
• http://www.businesstimes.com.sg/companies-markets/fraser-neaves-myanmar-brewery-stake-worth-over-twice-the-bid-price

Beware of China markets

This article explained that the Chinese government are allowing the people to buy stocks with borrowed money, and they can even use their house as collateral to buy stocks. This move is aggressive and not sustainable.

Source: http://www.bloombergview.com/articles/2015-07-06/chinese-imitate-western-steps-with-stock-market-interventions

Although Goldman Sachs and DBS CEO said that the china markets are not in a bubble yet, it could probably be the case of easing the public about the dangers of the China market.

Source:
http://www.smh.com.au/business/markets/goldman-sachs-stays-bullish-on-china-stocks-20150708-gi7cjs

Today, Chinese government told China state-owned firms not to sell shares despite stock market plunge with hope to stablise share prices.

Source:
http://www.straitstimes.com/business/companies-markets/china-tells-central-government-owned-firms-not-to-sell-shares-as-stocks

If there is too much reliance on the government to influence share prices, markets may move up or down corresponding to government decisions rather than fundamentals.

As of now, i think that retail investors should still look into SGX stocks. Although SGX had reported failling liquidilty in the markets. However illiquid SGX may be, it based in Singapore and supported by a stable currency.

As SGX is highly regulated by MAS, it is for now safer to invest here than China.

20k Portfolio in Blue Chips SGX stocks

My perspective of a $20k blue chip stocks for retail investor. Below are a list of stocks that would construct a retail investor portfolio.

Prices of Stocks

• STI ETF ($3.38)
• M1 ($3.25)

4000 shares x STI ETF = $13,520

2000 shares of M1 = $6500

Total cost is = $20,020

STI ETF provides excellent diversification in the event of a single sector crash. Its top 5 holdings include 3 relatively strong Singapore banks namely DBS, OCBC and UOB.

Source: Bloomberg

Current Dividend Yield 2.75%

Over a 10 year period, the STI ETF provided a return of 9.06% including dividends and 5.89% excluding dividends

Source: STI ETF Annual Report

M1's recent drop in price due to news of a fourth telco had became an attractive buy with a dividend yield of 5.83%.

Source: Bloomberg

Its recent first quarter financial statements, M1 slashed off 16% of its debt. Lesser company debts keep M1's balance sheet healthy. 

19 Jun 15, chairman of M1 bought 50,000 shares at $3.23 each. This could be an indication of a slightly undervalued share value.