My lesson on Bukit Sembawang

I bought this stock last year at $4.5 and it dropped to $3.80 subsequently. I didn't know what was going on initially and thought that this stock did not perform well. After which in August this year, I decided to sell the stock because I thought it had gone back to its high of $4.77.

However, this stock did not drop further when i sold it, instead it shoot all the way up to $6.80 on last Friday 14 Dec 12's closing on SGX.

After this incident, i realised that i don't actually know what i was buying at that point of time. This 2Q2013, its Net Asset Value (NAV) went up from $3.08 last year 2Q2012 to $4.29. Its balance sheet reflected little low debts and almost 88% of its assets were made up of its share capital and reserves.

Shareholders were owning more of its assets than their company debts and thus, it reflected more value in the company followed by the rise of share price value.

Prices in private home in Singapore are not likely to go down. It is because more wealthy people from all over the world are coming here to settle down due to a number of factors like low crime, stable government, clean environment and good infrastructure transport network. (International Living 2010) "The wealthy are attracted to Singapore for its location, low taxes, clean environment and low crime; that’s why there are so many rich Chinese and Indians living there. Singapore also attracts the global wealthy, such as hedge fund managers who need a base in Asia."

My lesson on this is that as property prices go up, earnings of property holding companies are likely to go up as well.

The principal activity of the Bukit Sembawang Estates is an investment holding company whilst the principal activities of the subsidiaries are those of property development, property mortgage financing and the holding of properties and investments. The Group mostly developes landed properties around the Seletar and Sembawang areas.

Reference List
International Living. 2010. Singapore: Where Wealthy People Are Putting Their Money. [ONLINE] Available at:http://internationalliving.com/2010/08/singapore-where-wealthy-people-are-putting-their-money/. [Accessed 15 December 12].